Cortal vs. Inaki A. Larrazabal Enterprises

The dismissal of an appeal on purely technical and formal grounds is improper when it prevents the full, just, and equitable litigation of claims, particularly when the case involves intricate issues of social justice, expropriation, and just compensation under agrarian reform laws; procedural rules may be relaxed in the interest of substantial justice to afford every litigant the opportunity to establish the merits of their case.

Private respondent Inaki A. Larrazabal Enterprises owned three parcels of land in Ormoc City. In 1988, these lands were placed under the Compulsory Acquisition Scheme of Presidential Decree No. 27. Consequently, Emancipation Patents and new transfer certificates of title were issued to farmer-beneficiaries, which included the petitioners. Eleven years later, in 1999, Larrazabal Enterprises filed an action to recover the properties, alleging that it had not received just compensation, a prerequisite for the valid expropriation of its land.

• In 1999, Larrazabal Enterprises filed an Action for Recovery of three parcels of land against the petitioners before the Regional Agrarian Reform Adjudicator (RARAD), claiming its titles were cancelled and new titles were issued to petitioners in 1988 without just compensation being fixed or paid.
• Petitioners countered that just compensation had been paid, presenting Landbank certifications showing deposits of P80,359.37 and P95,691.49 in the name of Larrazabal Enterprises.
• The RARAD ruled in favor of Larrazabal Enterprises, finding no evidence of payment of just compensation and ordering the restoration of its ownership.
• On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) initially reversed the RARAD, ruling that Larrazabal's action was barred by prescription and laches, as it was filed 11 years after the Emancipation Patents were issued in 1988.
• However, upon a Motion for Reconsideration by Larrazabal, the DARAB reversed itself, holding that Larrazabal had been denied due process due to the lack of just compensation.
• Petitioners then filed a Petition for Review under Rule 43 with the Court of Appeals, but it was dismissed outright due to four technical defects: (1) an inconsistency in the list of petitioners between the Motion for Extension and the Petition itself; (2) failure to show competent evidence of identity in the verification; (3) failure to attach a copy of the original Complaint filed before the RARAD; and (4) their counsel's failure to indicate the place of issue of his IBP receipt.

• The petitioners argued that the Court of Appeals erred in dismissing their appeal based on purely formal and technical defects, which were not fatal and could have been easily corrected.
• They contended that the interest of substantial justice should prevail over a rigid application of procedural rules, especially since their property rights as farmer-beneficiaries under the agrarian reform law were at stake.

• N/A

• Procedural Issues:
• Whether the Court of Appeals was justified in dismissing the petitioners' appeal due to formal defects in the Petition for Review, namely: (a) inconsistency in the list of petitioners; (b) lack of competent evidence of identity in the verification; (c) failure to attach the original complaint; and (d) failure of counsel to indicate the place of issue of his IBP receipt.
• Substantive Issues:
• Whether the action for recovery filed by Larrazabal Enterprises was barred by prescription and laches.
• Whether there was a valid payment of just compensation for the expropriated properties.

• Procedural:
• The Supreme Court granted the petition, ruling that the Court of Appeals was not justified in dismissing the appeal. The Court held that the identified defects were not so fatal as to peremptorily deny petitioners the opportunity to ventilate their case. A defective verification is a formal, not jurisdictional, defect that can be corrected. The inconsistency in the list of petitioners could have been addressed by simply dropping the concerned party. Failure to attach the original complaint is not a fatal error, as Rule 43 only requires the attachment of relevant documents, and the appellate court could have required its submission if deemed necessary. Finally, the omission of the place of issue for the IBP receipt is a minor and easily remediable lapse. The Court emphasized that a liberal application of the rules was warranted to serve the greater interest of justice.
• Substantive:
• The Supreme Court did not make a substantive ruling on the issues of just compensation, prescription, or laches. It reversed the Court of Appeals' resolutions and remanded the case, ordering the appellate court to give due course to the petitioners' appeal so that these substantive issues could be properly pleaded, litigated, and resolved on the merits.

• Liberal Construction of Procedural Rules — This doctrine holds that procedural rules are tools designed to facilitate the administration of justice and should not be applied so rigidly as to defeat that purpose. The Court invoked this principle to hold that the Court of Appeals should have relaxed the application of procedural rules to avoid an injustice not commensurate with the petitioners' minor procedural lapses, thereby allowing for a full determination of the case on its merits.
• Substantial Compliance — This principle allows for procedural requirements to be considered as satisfied even if not followed to the letter, provided the purpose of the rule is met. The Court applied this to the defective verification and certification against forum shopping, stating that a defective verification is a mere formal defect and that where petitioners share a common interest, the signature of one can be deemed substantial compliance for the certification, preventing the outright dismissal of the entire case.

• "Procedural rules must be faithfully followed and dutifully enforced. Still, their application should not amount to 'plac[ing] the administration of justice in a straightjacket.' An inordinate fixation on technicalities cannot defeat the need for a full, just, and equitable litigation of claims."

• Obut v. Court of Appeals — Cited to support the principle that judicial action should be guided by giving a party-litigant the fullest opportunity to establish the merits of their case rather than losing on technicalities.
• Barnes v. Padilla — Referenced for its enumeration of circumstances that justify a liberal application of procedural rules, including cases involving property rights where the review sought is not frivolous or dilatory.
• Altres v. Empleo — Cited to distinguish between the effects of a defective verification (a formal, correctable error) and a defective certification against forum shopping (generally not curable, but subject to relaxation for compelling reasons).
• Quintano v. National Labor Relations Commission — Invoked to establish that an appellant is not required to attach all pleadings to a petition for review, only those that are relevant and pertinent, and that the failure to attach a document like the original complaint is not a fatal defect warranting immediate dismissal.
• Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz — Used as precedent to show that a defect in the jurat of a verification, such as the failure to present competent evidence of identity, is a minor technical defect that can be overlooked in the interest of substantial justice.

• Rule 1, Section 6, Rules of Court — Cited as the primary basis for the liberal construction of procedural rules to promote a just, speedy, and inexpensive disposition of every action.
• Rule 43, 1997 Rules of Civil Procedure — The rule governing the appeal from the DARAB to the Court of Appeals, which was the subject of the procedural dispute.
• Rule 7, Sections 4 and 5, Rules of Court — The rules on Verification and Certification Against Forum Shopping, which the petitioners were found by the Court of Appeals to have defectively complied with.
• 2004 Rules on Notarial Practice, Rule IV, Section 2(b)(2) and Rule II, Section 12 — Referenced in relation to the requirement for a notary public to personally know or identify a signatory through competent evidence of identity.
• Bar Matter No. 287 — The rule requiring lawyers to indicate their IBP official receipt number and date in all pleadings, which the petitioners' counsel had incompletely followed.