Spouses Sumndad vs. Friday's Holdings, Inc.

A motion for reconsideration filed beyond the fifteen-day reglementary period is ipso facto foreclosed, and the negligence of counsel's secretary or clerk in failing to report receipt of a resolution to the handling counsel is imputable to the counsel and the client, such that the resulting late filing cannot be excused by invocations of substantial justice.

Friday's Holdings, Inc. (FHI) filed a case of forcible entry against the petitioners before the 5th Municipal Circuit Trial Court (MCTC) of Buruanga-Malay, seeking to be declared the actual prior possessor and owner of the subject property and entitled to continuous, exclusive, peaceful, and actual possession thereof. The MCTC ruled in favor of FHI, and the Regional Trial Court (RTC) of Kalibo, Aklan affirmed with modification on appeal, directing the petitioners to pay FHI reasonable compensation for lost profits. The petitioners then elevated the matter to the Court of Appeals via Petition for Review.

Friday's Holdings, Inc. (FHI), represented by its director Mario B. Badiola, filed a case of forcible entry against the petitioners — spouses Mila Yap-Sumndad and Atty. Daligdig Sumndad, Datu Yap Sumndad, Joel Gelito, and John Does — before the 5th Municipal Circuit Trial Court (MCTC) of Buruanga-Malay. FHI prayed that it be declared the actual prior possessor and owner of the subject property and entitled to continuous, exclusive, peaceful, and actual possession thereof.

The MCTC rendered a Decision on April 24, 2015 in favor of FHI, finding it to have the better right to possession of the subject property prior to February 15, 2014, directing the petitioners to restore possession to FHI, and directing Mila Yap-Sumndad to pay reasonable compensation equivalent to 60% of the last rental paid under their expired Contract of Lease, plus ₱15,000.00 as attorney's fees and costs of suit. On appeal, the RTC Branch 7 of Kalibo, Aklan affirmed the MCTC Decision with modification on September 5, 2016, directing the petitioners to pay jointly and solidarily FHI ₱74,480,000.00 as reasonable compensation for lost profits, computed at ₱10,000.00 per room per day for nineteen premier rooms over 392 days, from February 15, 2014 to March 14, 2015.

The petitioners filed a Petition for Review with the Court of Appeals in Cebu City on March 7, 2017. On May 15, 2017, the CA issued a Resolution dismissing the Petition for Review on multiple procedural grounds: failure to file a Certificate of Non-Forum Shopping, failure to indicate material dates in the petition, failure to pay lawful fees for the prayer for injunctive relief, failure to attach copies of all relevant pleadings and documents, omission of page 13 of the MCTC Decision, lack of competent evidence of identity of petitioner Datu Yap Sumndad in the verification, and deficiencies in the notarial certificate. The petitioners' counsel received a copy of the CA Resolution on May 29, 2017, as reflected in the law office logbook; however, due to the office secretary's inadvertence, the resolution was neither reported to the handling counsel nor attached to the case folder. It was only on June 19, 2017, when Yap-Sumndad called her lawyer to follow up on the status of her case, that the resolution actually came to the handling counsel's attention.

The petitioners filed a Motion for Reconsideration on July 3, 2017 — twenty days beyond the fifteen-day reglementary period, which had expired on June 13, 2017. The petitioners admitted fault and prayed for leniency before the CA, arguing that what was at stake was a right worthy of careful examination with the end view of giving substantial justice rather than clinging to technicalities. On October 30, 2017, the CA denied the Motion for Reconsideration. The petitioners then filed the present Petition for Review on Certiorari before the Supreme Court.

• Belated Filing Due to Secretary's Inadvertence: Petitioners argued that June 19, 2017 was the actual date when the handling counsel became aware of the CA Resolution dated May 15, 2017, because the law office secretary had received the resolution on May 29, 2017 but, due to inadvertence, failed to report it to the handling counsel or attach it to the case folder.
• Invocation of Substantial Justice: Petitioners admitted fault and prayed for leniency, maintaining that what was in consideration was "a right worthy of careful examination of impartial minds with the end view of giving substantial justice to all parties, rather than clinging basically to technicalities of procedural laws."
• Procedural Deficiencies Were Mere Oversights: Petitioners argued that their failure to attach a Certificate of Non-Forum Shopping was a mere oversight, that the date of receipt of the denial of their motion for reconsideration was stated in the petition, that they honestly believed all lawful fees had been paid and were willing to pay additional fees if required, that they had attached all relevant pleadings and documents, and that the omission of page 13 of the MCTC Decision was not intentional.

• Timeliness of Motion for Reconsideration: Whether the Court of Appeals erred in denying the petitioners' Motion for Reconsideration for belated filing.

• Timeliness of Motion for Reconsideration: No. The Motion for Reconsideration was filed twenty days beyond the fifteen-day reglementary period, and the negligence of counsel's secretary in failing to report receipt of the CA Resolution is imputable to counsel, such that the invocation of substantial justice does not compel suspension of the procedural rules.

• Timeliness of Motion for Reconsideration: Section 1, Rule 52 of the Rules of Court provides that a motion for reconsideration of a judgment or final resolution should be filed within fifteen (15) days from notice. The petitioners' counsel received the CA Resolution on May 29, 2017, giving them until June 13, 2017 to file their Motion for Reconsideration; the motion was filed only on July 3, 2017, twenty days late. The purpose of filing a motion for reconsideration within the period to appeal is to allow an inferior court to correct itself before review by a higher court, but a motion filed beyond such period ipso facto forecloses the right to appeal. The Court emphasized that the resort to a liberal application or suspension of procedural rules must remain the exception to the principle that rules must be complied with for the orderly administration of justice, and that relaxation of the rules was never intended to forge a bastion for erring litigants to violate the rules with impunity. The petitioners' explanation — that the handling counsel learned of the resolution only on June 19, 2017 due to the secretary's inadvertence — did not justify the belated filing, because it is counsel's duty to adopt and strictly maintain a system ensuring that all pleadings are filed and duly served within the period, and the negligence of the secretary or clerk is imputable to counsel. The invocation of substantial justice did not automatically compel the Court to suspend the procedural rules, as procedural rules cannot simply be set aside on the basis that their non-observance may have prejudiced a party's substantive rights. Because the Motion for Reconsideration was belatedly filed, the CA Resolution became final and executory by operation of law, foreclosing the petitioners' right to seek reconsideration and their right to assail the CA Resolutions before the Supreme Court.

• Imputability of Counsel's Staff Negligence — The negligence of a lawyer's secretary or clerk in failing to report receipt of a court resolution or to file a pleading within the reglementary period is imputable to the counsel and, consequently, to the client. Counsel has the duty to adopt and strictly maintain a system that ensures all pleadings are filed and duly served within the prescribed period. In this case, the secretary's inadvertence in not reporting receipt of the CA Resolution to the handling counsel was attributed to counsel, and the resulting late filing of the Motion for Reconsideration could not be excused.

• Finality of Judgment Upon Failure to File Motion for Reconsideration on Time — Where no motion for reconsideration is filed within fifteen (15) days from notice of a judgment or final resolution, the judgment becomes final and executory by operation of law. A motion for reconsideration filed beyond the reglementary period ipso facto forecloses the right to appeal. In this case, because the petitioners' Motion for Reconsideration was filed twenty days late, the CA Resolution dated May 15, 2017 became final and executory, barring any further recourse.

• Liberal Construction of Procedural Rules as Exception — The liberal application or suspension of procedural rules must remain the exception to the principle that rules must be complied with for the orderly administration of justice. Relaxation of the rules in exceptional cases was never intended to forge a bastion for erring litigants to violate the rules with impunity. The invocation of substantial justice does not automatically compel the Court to suspend procedural rules, as they cannot simply be set aside on the basis that their non-observance may have prejudiced a party's substantive rights.

• "It is the counsel's duty to adopt and to strictly maintain a system that ensures that all pleadings should be filed and duly-served within the period; and if he fails to do so, the negligence of his secretary or clerk to file such pleading is imputable to the said counsel." — This passage articulates the ratio decidendi on the imputability of staff negligence to counsel, establishing why the petitioners' excuse for the late filing was insufficient.

• "The relaxation of the application of the Rules in exceptional cases was never intended to forge a bastion for erring litigants to violate the rules with impunity." — This formulation defines the Court's stance on the limits of liberal construction of procedural rules, frequently cited in subsequent jurisprudence on procedural relaxation.

• "Procedural rules cannot simply be set aside on the basis that their non-observance may have prejudiced a party's substantive rights." — This passage encapsulates the principle that substantial justice does not automatically override procedural compliance, a cornerstone of Philippine remedial law doctrine.

• Building Care Corporation vs. Macaraeg, 700 Phil. 749 (2012) — Cited for the principle that liberal application or suspension of procedural rules must remain the exception to the rule that rules must be complied with for the orderly administration of justice.

• Ponciano, Jr. vs. Laguna Lake Development Authority, et al., 591 Phil. 194 (2008) — Cited as an example where the Court refused to admit a motion for reconsideration filed only one day late, reinforcing that late filings without sufficient justification will not be excused.

• The Government of the Kingdom of Belgium vs. Hon. Court of Appeals, 574 Phil. 380 (2008) — Cited for the principle that the negligence of counsel's secretary or clerk is imputable to counsel, who has the duty to maintain a system ensuring timely filing of pleadings.

• Faculan-Faculan vs. Spouses Octal, et al., 760 Phil. 815 (2015) — Cited for the principle that procedural rules cannot simply be set aside on the basis that their non-observance may have prejudiced a party's substantive rights.

• Barrio Fiesta Restaurant, et al. vs. Beronia, 789 Phil. 520 (2016) — Cited for the principle that the purpose of filing a motion for reconsideration within the period to appeal is to allow an inferior court to correct itself before review by a higher court.

• Section 1, Rule 52, 1997 Rules of Civil Procedure — Provides that a motion for reconsideration of a judgment or final resolution should be filed within fifteen (15) days from notice. Applied to determine that the petitioners' Motion for Reconsideration, filed twenty days after receipt of the CA Resolution, was filed out of time.

• Section 10, Rule 51, 1997 Rules of Civil Procedure — Provides that if no appeal or motion for new trial or reconsideration is filed within the time provided, the judgment or final resolution shall be entered by the clerk in the book of entries of judgments. Applied to establish that the CA Resolution became final and executory upon the petitioners' failure to file a timely Motion for Reconsideration.

• Section 5, Rule 7, in relation to Section 2, Rule 42, 1997 Rules of Civil Procedure — Requires the filing of a Certificate of Non-Forum Shopping in petitions for review. Cited by the CA as one of the grounds for dismissing the Petition for Review, though the Supreme Court did not reach these issues due to the dispositive based on the belated filing.

Caguioa, Reyes, Lazaro-Javier, and Lopez, JJ., concurred.