G.R.No.

170232December5,2006

VETTEINDUSTRIALSALESCO.,INC.,KENNETHTAN,ESTRELLACHENG,
LUISITORAMOS,YVETTETAN,KESSENTHCHENG,VEVETTECHENGand
FELESAVETTECHENG,petitioners,vs.SUISOANS.CHENGa.k.a.CHENGSUI
SOAN,respondent.

xx

G.R.No.170301December5,2006

SUI SOAN S. CHENG a.k.a. CHENG SUI SOAN, petitioner, vs.VETTE

INDUSTRIAL SALES CO., INC., KENNETH TAN, ESTRELLA CHENG,
LUISITORAMOS,YVETTETAN,KESSENTHCHENG,VEVETTECHENGand
FELESAVETTECHENG,respondents.

DECISION

YNARESSANTIAGO,J.:

These consolidated Petitions for Review on Certiorari1 assail the Decision2 dated
September22,2005oftheCourtofAppealsinCAG.R.SPNo.88863entitled,"Vette
IndustrialSales,Company,Inc.,KennethTan,EstrellaCheng,LuisitoRamos,Yvette
Tan,KessenthCheng,VevetteCheng,andFelesavetteCheng, Petitioners versusHon.
RegionalTrialCourtofManila,Branch173,andSuiSoanS.Chenga.k.a.ChengSui
Soan, Respondents."AlsoassailedistheResolution 3 datedOctober27,2005denying
petitioners motion for partial reconsideration and respondent Suis motion for
reconsideration.

InhisComplaint4 forspecificperformanceanddamagesfiledagainstVetteIndustrial
SalesCompany,Inc.,KennethTan,EstrellaCheng,LuisitoRamos,YvetteTan,Kessenth
Cheng,VevetteCheng,andFelesavetteCheng(petitioners)anddocketedasCivilCase
No.03105691,SuiSoanS.Chenga.k.a.ChengSuiSoan(Sui)allegedthatonOctober
24,2001,heexecutedaDeedofAssignment,5wherehetransferredhis40,000sharesin
thecompanyinfavorofKennethTan,VevetteCheng,FelesavetteCheng,andYvette
Tan (PetitionersAssignees). To implement the Deed of Assignment, the company
acknowledgedinaMemorandumofAgreement(MOA),6thatitowedhimP6.8million
pesos, plus insurance proceeds amounting to P760,000.00 and a signing bonus of
P300,000.00.Thereafter,hewasissued48postdatedchecksbutafterthe11thcheck,the
remainingchecksweredishonoredbythebank.Suialsoclaimedthatpetitionersdidnot
remittohimtheinsuranceproceeds,thus breachingtheirobligationundertheMOA
whichentitledhimtomoralandexemplarydamages,andattorneysfees.

IntheirAnswerWithCompulsoryCounterclaim, 7 petitionersallegedthatSuisoldhis
shares for only P1.00 per share which they already paid; that the MOA was
unenforceablebecauseitwasexecutedwithoutauthorizationfromtheboardofdirectors;
that the MOA was void for want of consideration; and that petitioner Kenneth Tan
executedtheMOAafterSuiissuedthreatsandrefusedtosignthewaiverandquitclaim.

Aftertheissueswerejoined,pretrialwassetonJuly3,2003. 8 However,thecasewas
firstsubmittedformediationbutitwasreferredbacktothecourtforcontinuationofthe
proceedingswhennosettlementwasarrivedatduringmediation.
SuithereafterfiledaMotiontoSetPretrial 9onDecember16,2003.Petitionersreceived
themotionbuttheydidnotattendbecausetherewasnonoticefromtheCourtsettingthe
pretrialdate.OnDecember29,2003,petitionersreceivedtwoordersfromthetrialcourt.
The first Order10 allowed Sui to present evidence exparte, while the second Order11
revokedthefirstorderafterthetrialcourtnotedthat"whatwassetforconsiderationon
December16,2003wasmerelyamotiontosetpretrial."Thus,thetrialcourtresetthe
pretrialonJanuary15,2004butitwaspostponedandmovedtoMay21,2004.Onsaid
date, Sui and his counsel, Atty. Pedro M. Ferrer (Atty. Ferrer), failed to appear.
Consequently,thetrialcourtorderedthedismissalofthecasewithoutprejudiceonthe
part of petitioners to present and prove their counterclaim and set the hearing for
receptionofevidenceonJune22,2004.12
Atty. Ferrer filed a Manifestation and Motion for Reconsideration 13 of the order of
dismissal,explainingthathearrivedlateforthehearingbecausehehadtodropbyhis
officetogetthecasefolderbecausehehadjustarrivedfromSouthCotabatowherehe
servedasChiefCounselintheProvincialBoardofCanvassersforGovernorDatuPax
MangudadatuandCongressmanSuhartoMangudadatu.

The trial court required petitioners to file their Comment on the Manifestation and
MotionforReconsideration.IntheirOpposition,14petitionersassertedthatthemotionfor
reconsiderationbedeniedoutrightbecause(1)Suididnotcomplywiththethreeday
notice rule which is mandatory under Section 4, Rule 15 of the Rules of Court
consideringthatpetitioners receivedthemanifestationandmotionforreconsideration
onlyonedaypriortothedateofhearingofthemotionforresolution,thusthesamemust
betreatedasamerescrapofpaper;(2)thetrialcourtdidnotcomplywithSection6of
Rule15oftheRules15whenitactedonthemanifestationandmotionofSuidespitethe
lattersfailuretosubmitproofofreceiptbypetitionersofthemanifestationandmotion;
(3)thenegligenceofcounselbindstheclient,thus,whenAtty.Ferrerarrivedlateforthe
hearing,thetrialcourtcorrectlydismissedthecomplaint;and(4)theexplanationofAtty.
Ferrerisunacceptablebecausetrafficgridlocksaredailyeventsinthemetropolis,thus,
Atty.Ferrershouldhavelefthisplaceearly.

InhisReply,16 SuiaverredthatthemotioncompliedwithSection5ofRule15ofthe
Rules17andthatthesettingofthehearingofthemotiononMay28,2004waswithinthe
threedayperiodforitwasfiledonMay25,2004.Headdedthatthesamewasnotheard
becausethetrialcourtallowedpetitionerstofileacommentonthemanifestationand
motionforreconsideration,whichwasreceivedbythelatterpriortothesaidsetting.

In an Order dated December 16, 2004,18 the trial court granted Suis motion for
reconsiderationandsetasidethedismissalofthecomplaint,thedispositiveportionof
whichprovides:

WHEREFORE,prescindingwithsuchrulingandintheinterestofsubstantialjustice,
plaintiffsmotionisGRANTEDandtheorderdatedMay21,2004isherebyliftedand
setasidewiththewarningthatanydelayinthisproceedingswillnotbecountenancedby
theCourt.

SetpretrialanewonFebruary15,2005.

Notifytheparties.

SOORDERED.19

ThetrialcourtcitedAceNavigationCo.,Inc.v.CourtofAppeals,20whichheldthatsince
rulesofprocedurearemeretoolsdesignedtofacilitatetheattainmentofjustice,their
strictandrigidapplicationwhichwouldresultintechnicalitiesthattendtofrustraterather
thanpromotesubstantialjusticemustalwaysbeavoidedthedismissalofanappealon
purelytechnicalgroundisfrowneduponespeciallyifitwillresulttounfairness.

The Motion for Reconsideration21 filed by petitioners was denied by the trial court 22
hencetheyfiledaPetitionforCertiorari23withtheCourtofAppealswhichgrantedthe
petition,thus:

UPONTHEVIEWWETAKEOFTHISCASE,THUS,thewritappliedforispartly
GRANTED. The assailed orders must be, as they hereby are, VACATED and SET
ASIDE, and another hereby issued dismissing the instant complaint, but "without
prejudice."ThismeansthatthecomplaintcanbeREINSTATED.Ontheotherhand,
petitionersareherebygivenleavetopresentbeforetheTrialCourtevidenceoftheir
counterclaim.Withoutcostsinthisinstance.

SOORDERED.24

TheCourtofAppealsnotedthatbothAtty.FerrerandSuiwerenotinattendanceatthe
pretrialconference;thatSection5ofRule18mentionsonlytheeffectofthefailureto
appearonthepartof"theplaintiff"butissilentontheeffectoffailureofthepartys
counseltoappearatthepretrial;thattheManifestationandMotionforReconsideration 25
mentionedonlythereasonswhyAtty.Ferrerwasabsentwithoutstatingthathewasfully
authorizedinwritingtoenterintoanamicablesettlement,ortosubmittoalternative
modesofdisputeresolution,ortoenterintostipulationsoradmissionsoffactsandof
documents;andthattherewasnoexplanationforSuisnonappearance.Thus,basedon
thesecircumstances,theCourtofAppealsheldthatdismissalofthecaseisproperbut
withoutprejudicetothefilingofanewaction.26

BothpartiesmovedforreconsiderationbutthesamewerejointlydeniedinaResolution
datedOctober27,2005.

Hence,theseconsolidatedPetitions.

InG.R.No.170232,petitionersraisethefollowingerrors:

I.

THECOURTOFAPPEALSERREDINNOTDISMISSINGTHECOMPLAINTOF
RESPONDENTCHENGINCIVILCASENO.03105691WITHPREJUDICE.

II.

THECOURTOFAPPEALSERREDINCONCLUDINGTHATRESPONDENTS
COUNSELFAILEDTOAPPRECIATETHEBASICRULESONPRETRIAL.

III.

THECOURTOFAPPEALSERREDINNOTCONSIDERINGTHEMISTAKEOR
NEGLIGENCEOFRESPONDENTSCOUNSELASBINDINGONTHE
RESPONDENTHIMSELF.

IV.

THECOURTOFAPPEALSERREDINAPPLYINGTHERULINGSOFTHE
HONORABLECOURTINTHEDELOSREYESVS.CAPULE(102PHIL.464)AND
SUAREZVS.COURTOFAPPEALS(220SCRA274)CASES.
 V.

THECOURTOFAPPEALSERREDINNOTCONSIDERINGRESPONDENTS
MANIFESTATIONANDMOTIONFORRECONSIDERATIONDATEDMAY21,
2004FILEDBEFORETHETRIALCOURTASAMERESCRAP,ANDAUSELESS
PIECE,OFPAPERANDINNOTCONSIDERINGTHEORDERDATEDMAY21,
2004OFTHETRIALCOURTASALREADYFINALINVIEWOFTHE
PROCEDURALINVALIDITY/DEFECTIVENESS(I.E.ITFAILEDTOCOMPLY
WITHSECTIONS4AND6OFTHERULES)OFRESPONDENTS
MANIFESTATIONANDMOTIONFORRECONSIDERATIONDATEDMAY21,
2004.

InG.R.No.170301,Suiraisesthefollowingissues,thus:

I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE NON

APPEARANCEOFPETITIONERINTHEPRETRIALMAYBEEXCUSEDFORA
VALIDCAUSE.

II.THECOURTOFAPPEALSERREDINNOTRULINGTHATTHECASEOFACE
NAVIGATIONCO.INC.VS.COURTOFAPPEALSISSQUARELYAPPLICABLE
TOTHEINSTANTCASE.

ThecoreissueforresolutioniswhethertheCourtofAppealserredindismissingwithout
prejudiceCivilCaseNo.03105691andinrulingthatthetrialcourtcommittedgrave
abuseofdiscretionwhenitgrantedSuismotionforreconsiderationtosetasidetheorder
ofdismissalofthecomplaint.

Thejudgehasthediscretionwhetherornottodeclareapartynonsuited. 27Itis,likewise,
settledthatthedeterminationofwhetherornotanorderofdismissalissuedundersuch
conditionsshouldbemaintainedorreconsideredrestsuponthesounddiscretionofthe
trial judge.28 The next question to be resolved is whether there was grave abuse of
discretionofthetrialjudge.Weholdthattherewasnone.

ThecaseofEstateofSaludJimenezv.PhilippineExportProcessingZone 29discussedthe
proprietyoffilingaPetitionforCertiorariunderSection1ofRule65oftheRulesof
Court,thus:

A petition for certiorari is the proper remedy when any tribunal, board, or officer
exercising judicial or quasijudicial functions has acted without or in excess of its
jurisdiction,orwithgraveabuseofdiscretionamountingtolackorexcessofjurisdiction
andthereisnoappeal,noranyplain,speedy,andadequateremedyatlaw.Graveabuseof
discretion is defined as the capricious and whimsical exercise of judgment as is
equivalenttolackofjurisdiction.Anerrorofjudgmentcommittedintheexerciseofits
legitimate jurisdiction is not the same as "grave abuse of discretion." An abuse of
discretionisnotsufficientbyitselftojustifytheissuanceofawritofcertiorari.The
abusemustbegraveandpatent,anditmustbeshownthatthediscretionwasexercised
arbitrarilyanddespotically.

Asageneralrule,apetitionforcertiorariwillnotlieifanappealistheproperremedy
theretosuchaswhenanerrorofjudgmentaswellasofprocedureareinvolved.Aslong
asacourtactswithinitsjurisdictionanddoesnotgravelyabuseitsdiscretioninthe
exercisethereof,anysupposederrorcommittedbyitwillamounttonothingmorethanan
errorofjudgmentreviewablebyatimelyappealandnotassailablebyaspecialcivil
actionofcertiorari.However,incertainexceptionalcases,wheretherigidapplicationof
suchrulewillresultinamanifestfailureormiscarriageofjustice,theprovisionsofthe
RulesofCourtwhicharetechnicalrulesmayberelaxed.Certiorarihasbeendeemedto
bejustified,forinstance,inordertopreventirreparabledamageandinjurytoaparty
wherethetrialjudgehascapriciouslyandwhimsicallyexercisedhisjudgment,orwhere
theremaybedangerofclearfailureofjustice,orwhereanordinaryappealwouldsimply
beinadequatetorelieveapartyfromtheinjuriouseffectsofthejudgmentcomplained
of.30(Emphasissupplied)

Lackofjurisdictionandexcessofjurisdictionaredistinguishedthus:therespondentacts
withoutjurisdictionifhedoesnothavethelegalpowertodeterminethecase;wherethe
respondent,beingclothedwiththepowertodeterminethecase,overstepshisauthorityas
determinedbylaw,heisperformingafunctioninexcessofhisjurisdiction. 31Thus,we
nowdiscusswhetherthetrialcourtgrantedthemotionforreconsiderationofSuiand
reinstatedthecomplaintwithoutbasisinlaw.CitingthecaseofAceNavigationCo.,Inc.
v.CourtofAppeals,32thetrialcourtheldthatrulesofproceduresaremeretoolsdesigned
tofacilitatetheattainmentofjusticeandmustberelaxedifitsstrictandrigidapplication
wouldfrustrateratherthanpromotesubstantialjustice.Thus,itliftedandsetasideits
orderofdismissalintheinterestofsubstantialjustice,whichisthelegalbasisforthetrial
courttograntthemotionforreconsiderationofSui.

We have repeatedly warned against the injudicious and often impetuous issuance of
defaultorders.33WhileitisdesirablethattheRulesofCourtbefaithfullyobserved,courts
should not be so strict about procedural lapses that do not really impair the proper
administration of justice. If the rules are intended to ensure the proper and orderly
conduct of litigation, it is because of the higher objective they seek which is the
attainmentofjusticeandtheprotectionofsubstantiverightsoftheparties.Thus,the
relaxation of procedural rules, or saving a particular case from the operation of
technicalitieswhensubstantialjusticerequiresit,asintheinstantcase,shouldnolonger
besubjecttocavil.34

WhentheCourtofAppealsheldthatthecaseisdismissiblebecauseSuididnotattend
the pretrial conference, it failed to consider the explanation of Atty.Ferrer that Sui
executeda"SpecialPowerofAttorney"inhisbehalfandthathewasnotabsentonthe
scheduledpretrialbutwasonlylate.

UnderSection4ofRule18oftheRules,35thenonappearanceofapartyatthepretrial
maybeexcusedwhenthereisavalidcauseshownorwhenarepresentativeshallappear
inhisbehalf,andisfullyauthorizedinwritingtoenterintoanamicablesettlement,to
submit to alternative modes of dispute resolution, and to enter into stipulations or
admissionsoffactsandofdocuments.AlthoughSuiwasabsentduringthepretrial,Atty.
FerrerallegedthathewasfullyauthorizedtorepresentSui.Moreover,itisnotentirely
accuratetostatethatAtty.Ferrerwasabsentduringthepretrialbecausehewasonlylate,
thereasonsforwhichheexplainedinhisManifestationandMotionforReconsideration.
ThecircumstancesattendantintheinstantcasecompelthisCourttorelaxtherulesof
procedureintheinterestofsubstantialjustice.

PetitionersclaimthatthemotionforreconsiderationofSuiwasprocedurallydefective
becauseitwas notservedthreedays beforethedateofthehearingandnoproofof
servicewasgiventothecourt,inviolationofSections4and6ofRule15.Petitioners
alsoaverthattheyreceivedtheManifestationandMotionforReconsiderationofSuion
May27,2004butthehearingwasscheduledonMay28,2004.Thus,itisnothingbuta
scrapofpaperbecauseitviolatedthethreedaynoticerule.

Wearenotpersuaded.
Intheinstantcase,wefindthatthepurposeofanoticeofhearinghadbeenserved.In
VlasonEnterprisesCorporationv.CourtofAppeals,36weenumeratedtheexceptionsto
theruleonnoticeofhearing,towit:

TheCourthasconsistentlyheldthatamotionwhichdoesnotmeettherequirementsof
Sections4and5ofRule15oftheRulesofCourtisconsideredaworthlesspieceof
paper,whichtheclerkofcourthasnorighttoreceiveandthetrialcourthasnoauthority
toactupon.Serviceofacopyofamotioncontaininganoticeofthetimeandtheplaceof
hearingofthatmotionisamandatoryrequirement,andthefailureofmovantstocomply
with these requirements renders their motions fatally defective. However, there are
exceptionstothestrictapplicationofthisrule.Theseexceptionsareasfollows:

"xxxLiberalconstructionofthisrulehasbeenallowedbythisCourtincases(1)where
arigidapplicationwillresultinamanifestfailureormiscarriageofjustice;especiallyifa
partysuccessfullyshowsthattheallegeddefectinthequestionedfinalandexecutory
judgmentisnotapparentonitsfaceorfromtherecitalscontainedtherein;(2)wherethe
interestofsubstantialjusticewillbeserved;(3)wheretheresolutionofthemotionis
addressedsolelytothesoundandjudiciousdiscretionofthecourt;and(4)wherethe
injusticetotheadversepartyisnotcommensurate[to]thedegreeofhisthoughtlessness
innotcomplyingwiththeprocedureprescribed."

Thepresentcasefallsunderthefirstexception.Petitionerwasnotinformedofanycause
ofactionorclaimagainstit.Allofasudden,thevesselswhichpetitionerusedinits
salvagingbusinesswerelevieduponandsoldinexecutiontosatisfyasupposedjudgment
againstit.Toallow this tohappensimplybecauseofalapseinfulfillingthenotice
requirementwhich,asalreadysaid,wassatisfactorilyexplainedwouldbeamanifest
failureormiscarriageofjustice.

Anoticeofhearingisconceptualizedasanintegralcomponentofproceduraldueprocess
intendedtoaffordtheadversepartiesachancetobeheardbeforeamotionisresolvedby
thecourt.Throughsuchnotice,theadversepartyispermittedtimetostudyandanswer
theargumentsinthemotion.

Circumstancesinthecaseatbarshowthatprivaterespondentwasnotdeniedprocedural
dueprocess,andthattheverypurposeofanoticeofhearinghadbeenserved.Ontheday
ofthehearing,Atty.DesiertodidnotobjecttothesaidMotionforlackofnoticetohim;
infact,hewasfurnishedinopencourtwithacopyofthemotionandwasgrantedbythe
trialcourtthirtydaystofilehisoppositiontoit.Thesecircumstancesclearlyjustifya
departurefromtheliteralapplicationofthenoticeofhearingrule.Inothercases,afterthe
trialcourtlearnsthatamotionlackssuchnotice,thepromptresettingofthehearingwith
duenoticetoallthepartiesisheldtohavecuredthedefect.

Verily, the notice requirement is not a ritual to be followed blindly. Procedural due
process is not based solely on a mechanistic and literal application that renders any
deviationinexorablyfatal.Instead,proceduralrulesareliberallyconstruedtopromote
theirobjectiveandtoassistinobtainingajust,speedyandinexpensivedeterminationof
anyactionandproceeding.Fortheforegoingreasons,webelievethatRespondentCourt
committedreversibleerrorinholdingthattheMotionforReconsiderationwasamere
scrapofpaper.37(Emphasissupplied)

WhenthetrialcourtreceivedSuisManifestationandMotionforReconsideration,itdid
notimmediatelyresolvethemotion.Instead,itallowedpetitionerstofiletheircomment
andalsoleavetofilearejoinderifSuifiles areply. 38 Thesecircumstances justifya
departure from the literal application of the rule because petitioners were given the
opportunitytostudyandanswertheargumentsinthemotion.

PetitionersclaimthatSuifailedtoattachproofofserviceinviolationofSection6,Rule
15oftheRule,mustfail.InRepublicofthePhilippinesv.CourtofAppeals, 39weheld,
thus:

Nonetheless,consideringthequestionraisedintheappealofthegovernmentandthe
amountinvolvedinthiscase,wethinktheCourtofAppealsshouldhaveconsideredthe
subsequentserviceofthemotionforreconsiderationtobeasubstantialcompliancewith
therequirementinRule15,6.InDeRapisurav.Nicolas,themovantalsofailedto
attachtohismotionforreconsiderationproofofserviceofacopythereoftotheother
party.Nonetheless,thisCourtheldthefailurenotfatalastheadversepartyhadactually
receivedacopyofthemotionandwasinfactpresentincourtwhenthemotionwas
heard.Itwasheldthatthedemandsofsubstantialjusticeweresatisfiedbytheactual
receiptofsaidmotionunderthoseconditions.40

Petitioners admittedthattheyreceivedacopyofSuisManifestationandMotionfor
Reconsideration. In fact, they had the opportunity to oppose the same. Under these
circumstances,we find that the demands of substantial justice and dueprocess were
satisfied.

ItisthepolicyoftheCourttoaffordpartylitigantstheamplestopportunitytoenable
themtohavetheircasesjustlydetermined,freefromtheconstraintsoftechnicalities. 41It
shouldberememberedthatrulesofprocedurearebuttoolsdesignedtofacilitatethe
attainmentofjustice,suchthatwhenrigidapplicationoftherulestendtofrustraterather
thanpromotesubstantialjustice,thisCourtisempoweredtosuspendtheiroperation.42

WHEREFORE,inviewoftheforegoing,theDecisiondatedSeptember22,2005andthe
ResolutiondatedOctober27,2005oftheCourtofAppealsinCAG.R.SPNo.88863is
REVERSEDandSETASIDE.TheOrderoftheRegionalTrialCourtinCivilCaseNo.
03105691,liftingitspreviousorderofdismissalisREINSTATEDandAFFIRMED.

SOORDERED.

Panganiban,C.J.(Chairperson),AustriaMartinez,Callejo,Sr.,andChicoNazario,JJ.,
concur.