Ng v. Philippine Business Bank, Inc.
REITERATIONFacts
The Antecedents: Philippine Business Bank, Inc. (respondent) filed a collection suit against Jonathan Lim, Carolina Lim, and Ng Ching Ting (petitioner) for an outstanding loan obligation amounting to P5,183,416.40. This obligation was secured by a continuing suretyship agreement executed by Carolina and the petitioner, and a real estate mortgage over a parcel of land. Jonathan defaulted on his payments, leading to the extrajudicial foreclosure of the mortgaged property, which was sold for P915,600.00. The deficiency of P4,267,816.40 remained unpaid, prompting the bank to file the collection suit. Procedural History: The petitioner filed a Motion to Dismiss, which was denied by the Regional Trial Court (RTC) on September 20, 2010. Subsequently, the RTC, motu proprio, dismissed the case on August 11, 2011, due to the inaction of both parties. The respondent filed a Motion for Reconsideration on October 17, 2011, which was granted by the RTC on November 16, 2012, setting aside the dismissal order. The petitioner then filed a petition for certiorari with the Court of Appeals (CA), arguing that the RTC gravely abused its discretion in granting the motion for reconsideration which was filed out of time. The CA affirmed the RTC's order, leading to the present petition. The Petition: The petitioner seeks review under Rule 45 of the Rules of Court, contending that the CA erred in upholding the RTC's decision to set aside the dismissal order. The petitioner argues that the respondent's motion for reconsideration was filed beyond the reglementary period, and the dismissal for failure to prosecute had already become final and executory. The petitioner asserts that the respondent's explanation for its inaction, namely the resignation of its in-house counsels, does not constitute excusable neglect, and that the respondent failed to diligently pursue its case and file its motion within the prescribed period. The petitioner further argues that the respondent's claim of not receiving the dismissal order on the date indicated by postal certifications is unsubstantiated and contradicted by official records.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion in affirming the Regional Trial Court's Order which set aside the dismissal of the case due to failure to prosecute, despite the motion for reconsideration being filed out of time. Whether the respondent's explanation for its inaction constituted excusable neglect justifying the relaxation of procedural rules, and the application of substantial justice over technical rules.
Ruling
The petition is meritorious. The Decision dated September 29, 2015 and Resolution dated June 1, 2016 of the Court of Appeals in CA-G.R. SP No. 128864 are REVERSED and SET ASIDE. The Order dated November 16, 2012 of the RTC, Branch 125, Caloocan City, in Civil Case No. C-22359, is DECLARED NULL and VOID, and the Order dated August 11, 2011 is REINSTATED and AFFIRMED.
Ratio Decidendi
On the issue of the timeliness of the motion for reconsideration and the finality of the order of dismissal: The Court held that procedural rules, particularly those prescribing time limits for specific acts, are absolutely indispensable for the orderly administration of justice. In this case, the respondent received the order of dismissal on September 23, 2011. Under Section 1, Rule 52 of the Rules of Court, a motion for reconsideration must be filed within fifteen (15) days from notice. The respondent filed its motion on October 17, 2011, which was twenty-four (24) days after receipt, or nine (9) days beyond the reglementary period. Consequently, the order of dismissal dated August 11, 2011, had already become final and executory by operation of law. The Court emphasized that once a judgment or order becomes final and executory, the trial court loses jurisdiction to modify or set it aside, and not even an appellate court can review it. The finality of a judgment occurs by operation of law when the reglementary period to appeal or file a motion for reconsideration lapses without such remedy being perfected. On the issue of whether the respondent's explanation constituted excusable neglect, and the application of substantial justice over technical rules: The Court found that the respondent's explanation for its inaction, namely the resignation of its in-house counsels, did not constitute excusable neglect. It is incumbent upon a litigant, especially the one who initiated the action, to exert all efforts to retain legal counsel and diligently prosecute its case. The respondent's failure to promptly hire new lawyers after the resignation of its previous counsels, leading to an unexplained inaction for almost a year, demonstrated a lack of vigilance. The Court stressed that the invocation of substantial justice is not a magical incantation to suspend procedural rules; it requires valid and compelling reasons, which were absent in this case. The respondent's bare denial that the person who received the notice was not an employee was also unconvincing, especially when official post office certifications and a letter-carrier's affidavit, supported by a logbook entry, indicated receipt by a person wearing the bank's uniform and manning the correspondence section. The presumption of regularity in the performance of official duty by the post office personnel prevailed over the respondent's unsubstantiated denial. While the Court acknowledges that procedural rules may be relaxed in the interest of substantial justice, this is an exception and not the rule. Such relaxation must be in proper cases and under justifiable causes and circumstances. In this instance, the respondent's repeated oversight of procedural rules – failing to prosecute diligently and failing to file the motion for reconsideration on time – did not warrant the liberal application of the rules. The Court reiterated that rules of procedure exist for a purpose, and disregarding them in the guise of liberal construction would defeat that purpose. The principle that "laws aid the vigilant, not those who slumber on their rights" was invoked, underscoring the importance of diligence in pursuing legal remedies.
Main Doctrine
A motion for reconsideration filed beyond the reglementary period renders the assailed order final and executory by operation of law, divesting the court of jurisdiction to modify or set it aside, even on the ground of substantial justice. The presumption of regularity in the performance of official duty, supported by official post office logbooks and certifications, prevails over a bare denial of receipt of notice.