FIRST DIVISION
|
LAND BANK
OF THE Petitioner, - versus - Respondents. |
G.R. No. 175163 Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, AZCUNA, and GARCIA, JJ. Promulgated: October 19, 2007 |
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D E C I S I O N
GARCIA, J.:
Before the Court is this petition for certiorari and mandamus filed by
1.
Resolution[1] dated
2.
Resolution dated
The ultimate facts:
Sometime
in March 1992, after the Philippine Airlines (PAL) was
privatized, Land Bank purchased from the National Government some
75,000,000 PAL shares at P14.3925 per share
or for a total consideration of P1,079,437,485.01.
Meanwhile,
respondents, together with the Philippine National Bank (PNB), the
Development Bank of the Philippines (DBP), the AFP Retirement and Separation Benefits System
(AFP-RSBS), all stockholders of PAL, and several other parties, formed a
consortium in order to purchase 67% of PAL’s capital
stocks which were then being sold by public bidding. For this purpose, the
aforesaid consortium organized a holding company – the PR
Holdings Inc. (PR Holdings) - to hold the PAL shares of stock.
As it were, Land Bank, with the Government
Service Insurance System (GSIS) and the National
Government, owned 33% of the issued and outstanding shares of stock of PAL, while
respondents and other stockholders of PR Holdings owned the other 67%.
On March 29, 1995, the minority
stockholders in PR Holdings filed a case with the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 03-95-5019, seeking the
distribution of PR Holdings’ shares of stock in PAL to its
stockholders in proportion to their equity.
While the aforementioned
SEC case was pending, the said minority stockholders of PR Holdings agreed to
dissolve the latter and distribute its assets, consisting of PAL shares, to its stockholders by way of
liquidating dividends. However, the majority group
composed of the respondents, joined by Land Bank, PNB, DBP,
AFP-RSBS and GSIS, voted in favor of respondents' proposal
to increase PAL's capital stocks from Five Billion Pesos (P5,000,000,000.00)
to Ten Billion Pesos (P10,000,000,000.00). Land Bank,
along with PNB, DBP, AFP-RSBS and GSIS, however, have the so-called
put-option to sell their PAL shares of stock to respondents
and the latter are obligated to buy the same at Five Pesos (P5.00) per
share on the sixth year after the effectivity of the Stockholders’
Agreement executed by and among respondents, PNB and GSIS in 2002.
It was also stipulated in said agreement
that respondents’ obligation under the put-option shall be guaranteed by Fortune Tobacco Corporation
and Asia Brewery Inc., the two (2) flagship corporations of Mr. Lucio
Tan, as joint and solidary co-obligors of respondents.
Pursuant to the aforementioned
Stockholders' Agreement, Asia Brewery Inc. and
Fortune Tobacco Corporation, as joint and solidary co-obligors of the
respondents, executed a Guaranty Agreement in favor of Land
Bank, DBP, PNB, GSIS, AFP-RSBS, and the National Government. Thereunder,
Asia Brewery Inc. and Fortune Tobacco Corporation undertook, in firm
and unqualified commitment, to buy-back the PAL
shares of stock at P5.00 per share, should
the respondents be unable to perform their obligation to buy the same. The
pertinent portions of the Guaranty
Agreement read:
WHEREAS, in
a Stockholders' Agreement (the 'Agreement') executed by and among ASCOT
HOLDINGS & EQUITIES, INC., CUBE FACTORS HOLDINGS, INC., SIERRA HOLDINGS &
EQUITIES, INC., NETWORK HOLDINGS & EQUITIES, INC. and POL HOLDINGS, INC.
(as party of the First Part); PHILIPPINE NATIONAL BANK, DEVELOPMENT BANK OF THE
PHILIPPINES and AFP-RETIREMENT AND SEPARATION BENEFITS SYSTEM (as Party of the
Second Part); GOVERNMENT SERVICE INSURANCE SYSTEM, LAND BANK OF THE PHILIPPINES
and the REPUBLIC OF THE PHILIPPINES (as a party of the Third Part), which is
made and integral part hereof by reference, the Party of the First Part agreed,
in par. 4 thereof, as follows:
4. The Parties of the Second and Third Part
shall have the option to sell their existing PAL shares, inclusive of the PAL
shares acquired as a result of the dissolution of PRHI, to the Party of the
First Part, at P5.00 per share plus premium paid as provided in par. 1.b of
this Agreement, if any, which may be exercised on the sixth year after the
effectivity of this agreement, provided that if on the fifth year, the net book
value of PAL is more than P10 billion and had a net income of the preceding
twelve (12) months, the option may be exercised on the fifth year. The
obligation of the Party of the First Part under this provision shall be
guaranteed by Asia Brewery, Inc. and Fortune Tobacco Corporation.
NOW THEREFORE, for valuable consideration, the
GUARANTORS hereby jointly
and severally guarantee
the performance by the Party of the First Part of its
obligation to purchase the PAL shares of the Parties of the Second and Third
Part at P5.00 per shares plus premium paid as provided in par. 1.b of the
Agreement as and when required in par. 4 thereof. In the event that the Party
of the First Part is unable to perform its aforesaid obligation, GUARANTORS
hereby undertake irrevocably
and unconditionally to
purchase from the Parties of the Second and Third Part all of their PAL shares
as provided in par. 4 of the Agreement.
On July 23, 2002, instead of honoring
the Stockholders' Agreement, respondents filed with the RTC of Makati a complaint
against Land Bank, PNB, DBP, GSIS, AFP-RSBS and the Republic
of the Philippines, praying that they be released from the obligation to buy
the PAL shares of petitioner and other defendants therein at P5.00 per
share, as earlier agreed upon under the Stockholders' Agreement, on
ground of alleged radical change in the conditions prevailing at the time the
said agreement was entered and the present. In their complaint, docketed
as Civil Case No. 02-843, respondents, as
plaintiffs, argued that under the doctrine of “rebus sic stantibus” embodied
in Article 1267, in relation to Article 1174, of the
New Civil Code, the occurrence of unforeseen events alleged
in the complaint (such as “fleet expansion and re-equiptment of PAL,
the pilot strike, the Asian economic downturn, the devaluation of the peso and the purported
reduced demand for air travel”) released them from complying
with their obligation to purchase the PAL shares of stock from the defendants.
Land
Bank and the other defendants in Civil Case No. 02-843
contended that the events or circumstances cited by the respondents
were not valid grounds for the latter to be released from
their obligation under the doctrine of rebus sic
stantibus. According to the
defendants, when the parties entered into the said
Stockholders' Agreement, they have assumed the risk of deterioration and/or improvement
of the business of PAL, and that the parties made sure that
respondents' obligations to buy the PAL shares at P5.00 per
share will be fulfilled exactly under the terms of the
same Stockholders’ Agreement, as in fact respondents expressly
stipulated that their obligation thereunder shall be
assumed irrevocably and unconditionally by Fortune Tobacco
Corporation and Asia Brewery Inc. per the Guaranty
Agreement dated August 5, 1996. Additionally, Land
Bank argued that the case was not an intra-corporate dispute inasmuch as PAL is
not at all a party to the suit.
In a
“Judgment” dated
FOR THE
REASONS GIVEN, judgment is rendered in favor of the plaintiffs and against the
defendants, declaring plaintiffs released from the obligation to comply with
defendants' option to sell their shares in Philippine Airlines, Inc. under
Article IV (4) of the Stockholders Agreement (Annex A, Complaint) executed in
May 1996. The counterclaims interposed by all defendants are dismissed.
No
pronouncement as to costs.
SO
ORDERED.
On
Unfortunately,
the motion was denied by the CA in its first
assailed resolution dated
Consequently,
the filing by petitioner of a motion for reconsideration before the trial court
did not toll the reglementary period to appeal the judgment via a petition for
review under the Rule 43 of the 1997 Rules of Civil Procedure, as amended. The period of appeal having already lapsed or expired,
this Court has no more jurisdiction to entertain the present case, much less to
grant the motion for extension of time to file the intended petition.
ACCORDINGLY,
the present motion for extension of time filed on
SO
ORDERED.
On August 16, 2006, petitioner
Land Bank filed a motion for reconsideration of the
above resolution urging that even though a motion for reconsideration of
the March 15, 2006 “Judgment” of the trial court is not
allowed under the Interim Rules of Procedure Governing Intra-Corporate Controversies
under R.A. No. 8799, nonetheless it implored the appellate court to
consider the filing thereof as sufficient, “in the interest of substantial
justice,” to suspend the running of the reglementary period to appeal.
Petitioner hastens to add that the March 15, 2006 “Judgment” and the
July 4, 2006 Order of the trial court had created a
dangerous precedent when said court upheld respondents' contention
that the occurrence of the “fleet expansion and re-equiptment of PAL,
pilot strike, Asian economic downturn, the devaluation of the peso and the
purported reduced demand for air travel” have absolved them from
their obligation to comply with the Stockholders’
Agreement.
With its motion for
reconsideration having been denied by the CA in its equally challenged
resolution of September 11, 2006, petitioner is now with this Court via the present recourse,
urging the Court to compel the CA to
approve its motion for extension of time to file petition
for review, and, ultimately, to give due course to its intended petition
for review.
We DISMISS.
It is beyond quibbling that the assailed “Judgment” in Civil
Case No. 02-843 was issued by the RTC in the exercise of its special jurisdiction
over intra-corporate controversies under R.A. No. 8799.
Civil Case No. 02-843 was, therefore, governed by the Interim
Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing
Intra-Corporate Controversies under R.A. No. 8799, as well as A.M. No.
04-9-07-SC of this Court
prescribing the mode of appeal from decisions of the RTC in intra-corporate
controversies.
Under Section 8(3), Rule 1 of the
Interim Rules of Procedure Governing Intra-Corporate Controversies Under R.A. No.
8799, motion for new trial, or
for reconsideration of judgment or order, or for re-opening of trial are
prohibited pleadings in said cases. Hence, the
filing by petitioner of a motion for reconsideration before the trial court did
not toll the reglementary period to appeal the judgment via a petition for review under Rule
43 of the 1997 Rules of Civil Procedure, as amended. As a consequence, the CA has no
more jurisdiction to entertain the petition for
review which Land Bank intended to file before it, much
less to grant the motion for extension of time for the filing thereof.
The prohibited motion for
reconsideration filed by the petitioner with the trial court did not
suspend the period to appeal the RTC’s “Judgment” of
denying
petitioner’s motion for extension. There is no abuse, much
less grave abuse, of discretion, to speak of.
Petitioner insists,
however, that the CA committed grave abuse of discretion in denying its motion
for extension because the prohibited pleading it filed in the trial
court was still sufficient to suspend the running of the reglementary period to
appeal “in the
interest of substantial justice.” Unfortunately, there is
a scarcity of law or
jurisprudence to support petitioner’s novel theory. It is obvious that a prohibited pleading
cannot toll the running of the period to appeal since such pleading cannot be
given any legal effect precisely because
of its being prohibited.
In Sebastian and Cardenas v. Morales, et al.,[2] we held:
Under Rule 1, Section 6 of the 1997 Rules
of Civil Procedure, liberal construction of the Rules is the controlling
principle to effect substantial justice. Thus, litigations should, as much as
possible, be decided on their merits and not on technicalities. This does not
mean, however that procedural rules are to be ignored or disdained at will to
suit the convenience of a party. Procedural law has its own rationale in the
orderly administration of justice, namely, to ensure the effective enforcement
of substantive rights by providing for a system that obviates arbitrariness,
caprice, despotism, or whimsically in the settlement of disputes. Hence, it is
a mistake to suppose that substantive law and procedural law are contradictory
to each other, or as often suggested, that enforcement of procedural rules
should never be permitted if it would result in prejudice to the substantive
rights of the litigants.
x x x Hence, rules of procedure must be
faithfully followed except only when for persuasive reasons, they may be
relaxed to relieve a litigant of an injustice not commensurate with his failure
to comply with the prescribed procedure.
x x x
Procedural
rules setting the period for perfecting an appeal or filing an appellate
petition are generally inviolable. It is doctrinally entrenched that
appeal is not a constitutional right but a mere statutory privilege.
Hence, parties who seek to avail of the
privilege must comply with the statutes or
rules allowing it. The requirements for
perfecting an appeal within the reglementary period specified in the law must,
as a rule, be strictly followed. Such requirements are considered indispensable
interdictions against needless delays, and are necessary for the orderly
discharge of the judicial business. For sure, the perfection
of an appeal in the manner and within the period set by law is not only
mandatory, but jurisdictional as well. Failure to perfect an appeal renders the
judgment appealed from final and executory.[3]
We must stress that the bare
invocation of “the interest of substantial justice” is not a magic wand that
will automatically compel this Court to suspend procedural rules. Procedural
rules are not to be belittled or dismissed simply because their non-observance
may have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be
followed except only for the most persuasive of reasons when they may be
relaxed to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed.[4] The
Court reiterates that rules of procedure, especially those prescribing the time
within which certain acts must be done, have oft been held as absolutely
indispensable to the prevention of needless delays and to the orderly and
speedy discharge of business. Indeed, in no uncertain terms,
the Court held that the said rules may be relaxed only in “exceptionally
meritorious cases.”[5] This
case is not one of those.
Petitioner’s claim
that it supposedly stands to lose its substantial investment in shares of
stock amounting to P1,079,437,485.61 just
because it filed a motion for reconsideration,
is unfounded. As we see it, the
so-called loss
of substantial investment that petitioner
complains about is more imaginary than real.
As it is, petitioner’s shares in PAL have not been taken away from it; neither has petitioner been deprived of any of its proprietary rights vis-à-vis the said shares of
stock. Petitioner continues to hold and own the shares in its
name. Respondents, who own the majority
of the shares in PAL, have all the more reason to keep the company afloat and
thriving since they have more to lose.
Any benefit that respondents may derive from the continued profitable
operations of PAL will likewise benefit petitioner.
The Court may deign to veer away from the general rule only if, in its assessment, the
appeal on its face appears absolutely meritorious. Indeed, the Court has,
in a number of instances, relaxed procedural rules in order to serve and
achieve substantial justice.[6] In the circumstances obtaining in this case,
however, the occasion does not warrant the desired relaxation.
WHEREFORE,
this
petition is DISMISSED.
No
pronouncement as to costs.
SO ORDERED.
CANCIO C. GARCIA
Associate
Justice
WE
CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
|
ANGELINA SANDOVAL-GUTIERREZ Associate Justice |
RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA
Associate Justice
C E R T I F I C A T I O
N
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Penned by Associate Justice Martin S. Villarama with Associate Justices Lucas P. Bersamin and Celia C. Leagogo, concurring; rollo, p. 21.
[2] G.R. No. 141116,
[3] Manila Memorial Park Cemetery, Inc. v. CA, G.R. No. 137122,
[4] Gabriel Lazaro and the heirs of Florencia Pineda and Eva Viernes v. Court of Appeals and Spouses Jose and Anita Alesna, G.R. No. 137761, April 6, 2000, 330 SCRA 208.
[5] Videogram
Regulatory Board v. CA, supra. See
also Bank of America, NT & SA v.
Gerochi, G.R. No. 73210,
[6] Policarpio T. Cuevas v. Bais Steel Corporation and Steven Chan, G.R.
No. 142689,