Yao vs. Court of Appeals

A decision of a court, especially one resolving an appeal, must clearly and distinctly state the facts and the law on which it is based; a one-page decision that merely quotes the dispositive portion of the lower court's decision and affirms it in toto without any analysis of the evidence or citation of legal basis violates Section 14, Article VIII of the Constitution and is void.

The Philippine Electrical Manufacturing Company (PEMCO) is the only local subsidiary of GE-USA, while Tradeway Commercial Corporation (TCC) is a commercial corporation engaged in the sale of electrical products, with George Yao serving as its President and General Manager and Alfredo Roxas as a member of its Board of Directors. The case arose against the statutory backdrop of Article 189(1) of the Revised Penal Code, which penalizes unfair competition, and Section 14, Article VIII of the 1987 Constitution, which requires every court decision to express clearly and distinctly the facts and the law on which it is based.

In June 1990, the Philippine Electrical Manufacturing Company (PEMCO), the only local subsidiary of GE-USA, noticed the proliferation of General Electric (GE) lamp starters in the local market. This was a highly unlikely market situation because no GE starter had been locally manufactured or imported since 1983. PEMCO commissioned Gardsmarks, Inc. to conduct a market survey. Through its trademark specialist, Martin Remandaman, Gardsmarks, Inc. discovered that thirty (30) commercial establishments sold GE starters, all of which pointed to Tradeway Commercial Corporation (TCC) as their source. Remandaman purchased fifty (50) pieces of fluorescent lamp starters bearing the GE logo and design from TCC. Assessing these products to be counterfeit, PEMCO applied for the issuance of a search warrant, which the MeTC, Branch 49, Caloocan City issued. Eight boxes, each containing 15,630 starters, were thereafter seized from the TCC warehouse in Caloocan City.

Indicted before the MeTC, Branch 52, Caloocan City for unfair competition under Article 189 of the Revised Penal Code were George Yao, TCC's President and General Manager, and Alfredo Roxas, a member of TCC's Board of Directors. The indictment charged them with having mutually and in conspiracy sold fluorescent lamp starters bearing the GE logo, design, and containers, making them appear as genuine GE starters and inducing the public to believe them as such, when they were in fact counterfeit. The case was docketed as Criminal Case No. C-155713. Both accused pleaded not guilty.

At the trial, the prosecution presented evidence tending to establish the foregoing facts. It also presented Atty. Hofilena of the Castillo Laman Tan and Pantaleon Law Offices, who had undergone a familiarization seminar from PEMCO in 1990 on how to distinguish a genuine GE starter from a counterfeit, and Allan de la Cruz, PEMCO's marketing manager. Both described a genuine GE starter as having "a stenciled silk-screen printing which includes the GE logo . . . back to back around the starter, a drumlike glowbulb and a condenser/capacitor shaped like an M&M candy with the numbers .006." They compared and examined random samples of the seized starters with genuine GE products and concluded that the seized starters did not possess the full design complement of a GE original. Some of the seized starters did not have capacitors, or if they did, these were not shaped like M&M; still others merely had sticker jackets with prints of the GE logo. Mr. de la Cruz added that only Hankuk Stars of Korea manufactured GE starters and that if these were imported by PEMCO, they would cost P7.00 each locally. As TCC's starters cost P1.60 each, the witnesses agreed that the glaring differences in packaging, design, and cost indisputably proved that TCC's GE starters were counterfeit.

The defense presented YAO as its lone witness. YAO admitted that as general manager, he had overall supervision of the daily operation of the company and, as such, had the final word on the particular brands of products that TCC would purchase and in turn sell. He also admitted that TCC was not an accredited distributor of GE starters. He disclaimed liability for the crime charged, however, since (a) he had no knowledge or information that the GE starters supplied to TCC were fake; (b) he had not attended any seminar that helped him determine which TCC products were counterfeit; (c) he had no participation in the manufacture, branding, or stenciling of the GE names or logo in the starters; (d) TCC's suppliers of the starters delivered the same already branded and boxed; and (e) he only discussed with the suppliers matters regarding pricing and peak-volume items.

In its 13-page decision of 20 October 1993, the MeTC acquitted Roxas but convicted YAO. In acquitting Roxas, the trial court declared that the prosecution failed to prove that he was still one of the Board of Directors at the time the goods were seized. It anchored its conviction of YAO on the following: (1) YAO's admission that he knew that the starters were not part of GE's line products when he applied with PEMCO for TCC's accreditation as distributor; (2) the prosecution's evidence (Exhibit G-7), a delivery receipt dated 25 May 1989 issued by Country Supplier Center, on which a TCC personnel noted that the 2,000 starters delivered were GE starters despite the statement therein that they were China starters, giving rise to a presumption that the TCC personnel knew of the anomaly and that YAO, as general manager and overall supervisor, knew and perpetrated the deception of the public; (3) the fact that no genuine GE starter could be sold from 1986, whether locally manufactured or imported, or at the very least in such large commercial quantity as those seized from TCC; and (4) the presence of the elements of unfair competition.

YAO filed a motion for reconsideration, which the MeTC denied. He then appealed to the RTC, Branch 121, Caloocan City, which rendered a one-page decision on 27 July 1994 affirming in toto the MeTC decision. The RTC merely quoted the dispositive portion of the MeTC decision and stated that "[a]fter going over the evidence on record, the Court finds no cogent reason to disturb the findings of the Metropolitan Trial Court." YAO's motion for reconsideration was denied. He then filed a notice of appeal with the Court of Appeals, which declared the RTC decision final and executory and ordered the remand of the records for execution.

• Improvident Entry of Judgment: YAO contended that the entry of judgment was improvidently issued in the absence of a final resolution specifically dismissing the appeal, citing Section 1, Rule 11 of the Revised Internal Rules of the Court of Appeals, which provides that judgments and final resolutions of the Court of Appeals shall be entered upon the expiration of fifteen (15) days after notice to the parties.
• Cure of Procedural Infirmity: YAO argued that any procedural infirmity in the appeal was cured when the RTC gave due course to the appeal, elevated the records to the Court of Appeals, and the Court of Appeals issued a notice to file his Appellant's Brief and granted him an extension until 12 March 1995 within which to file the same.
• Denial of Due Process: YAO asserted that he was denied due process because (1) none of the elements of unfair competition were present; (2) he filed his appeal to the Court of Appeals within the reglementary period; and (3) his filing of a notice of appeal instead of a petition for review was a mere procedural lapse, a technicality which should not bar the determination of the case on intrinsic merits. He invoked jurisprudence where the Supreme Court, in the exercise of equity jurisdiction, decided cases on merits rather than on technicalities.

• Dismissal for Lack of Merit: The Office of the Solicitor General prayed that the petition be dismissed for lack of merit, maintaining that although the 25 April 1995 Resolution did not specifically state that the appeal was being dismissed, its intent and import were clear and unequivocal.
• Finality of the RTC Decision: The OSG asserted that the appeal was obviously dismissed because the RTC decision had long become final and executory, and that YAO failed to challenge the RTC decision within the reglementary period by filing a petition for review pursuant to Section 1, Rule 42 of the Rules of Court.
• Lapse of Period for Correct Remedy: The OSG argued that YAO instead filed an ordinary appeal by way of a notice of appeal, and that the period to file the correct procedural remedy had lapsed.

• Entry of Judgment: Whether the entry of judgment was improvidently issued in the absence of a final resolution specifically dismissing the appeal.
• Cure of Procedural Infirmity: Whether the procedural infirmity in the appeal was cured by the RTC's giving due course to the appeal and the Court of Appeals' grant of an extension to file the appellant's brief.
• Due Process: Whether YAO was denied due process.
• Compliance with Section 14, Article VIII: Whether the RTC decision complied with the constitutional requirement that decisions clearly and distinctly state the facts and the law on which they are based.

• Entry of Judgment: No. The 25 April 1995 Resolution, though not expressly stating that the appeal was being dismissed, in effect dismissed the appeal, and the entry of judgment issued pursuant thereto was proper.
• Cure of Procedural Infirmity: No. The wrong mode of appeal was not cured; the right to appeal is a statutory privilege that must be exercised in the manner and within the period fixed by law, and non-compliance renders the decision final and executory.
• Due Process: Yes, but not on the grounds invoked. YAO was denied due process because the RTC decision failed to comply with Section 14, Article VIII of the Constitution.
• Compliance with Section 14, Article VIII: No. The RTC decision was a one-page decision that merely quoted the MeTC's dispositive portion and affirmed in toto without stating the facts and the law on which it was based, rendering it void.

• Entry of Judgment: The Court noted that while the 25 April 1995 Resolution did not specifically state that the appeal was being dismissed, its intent and import were clear and unequivocal. The appeal was obviously dismissed because the RTC decision had long become final and executory. The Court agreed with the Office of the Solicitor General that YAO failed to challenge the RTC decision within the reglementary period by filing a petition for review pursuant to Section 1, Rule 42 of the Rules of Court, and that the period to file the correct procedural remedy had lapsed. The entry of judgment was therefore proper.

• Cure of Procedural Infirmity: The Court held that there was no dispute that YAO availed of the wrong procedural remedy in assailing the RTC decision. YAO received a copy of the adverse RTC judgment on 16 August 1994 and had fifteen (15) days or until 31 August 1994 within which to file either a motion for reconsideration or a petition for review with the Court of Appeals. Fourteen (14) days thereafter, or on 30 August 1994, YAO opted to file a motion for reconsideration, the pendency of which tolled the running of the period. He received a copy of the RTC's order denying the motion for reconsideration on 3 October 1994, leaving him only one day, 4 October 1994, within which to file a petition for review. However, on that date, YAO filed a notice of appeal, palpably availing of the wrong mode of appeal. Since he never instituted the correct one, he lost it. The Court emphasized that the right to appeal is not a constitutional, natural, or inherent right but a statutory privilege of statutory origin, available only if granted or provided by statute. Since it is not a natural right nor a part of due process, it may be exercised only in the manner and in accordance with the provisions of law, and its requirements must be strictly complied with. An appeal must be perfected in the manner and within the period fixed by law, which is not only mandatory but jurisdictional; non-compliance is fatal, rendering the decision sought to be appealed final and executory, with the result that no court can exercise appellate jurisdiction to review the decision.

• Due Process: The Court agreed with YAO that he was denied due process, but not on the grounds he ardently invoked. The denial arose from the RTC decision's palpable failure to comply with the constitutional and legal mandates of Section 14, Article VIII of the Constitution, thereby denying YAO his day in court. The Court held that while YAO indeed resorted to the wrong mode of appeal and his right to appeal is statutory, it is still an essential part of the judicial system that courts should proceed with caution so as not to deprive a party of the prerogative, but instead afford every party-litigant the amplest opportunity for the proper and just disposition of his case, freed from the constraints of technicalities. In the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance may be relaxed. If strict adherence to the letter of the law would result in absurdity and manifest injustice, or where the merit of a party's cause is apparent and outweighs consideration of non-compliance with certain formal requirements, procedural rules should definitely be liberally construed. A party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor, or property on mere technicalities.

• Compliance with Section 14, Article VIII: The Court held that the RTC decision palpably transgressed Section 14, Article VIII of the Constitution, which provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. The RTC decision was brief but starkly hollow, otiosely written, vacuous in its content, and trite in its form. It achieved nothing and attempted at nothing, not even at a simple summation of facts which could easily be done. The Court could not consider or affirm the RTC decision as a memorandum decision because it failed to comply with the measures of validity laid down in Francisco vs. Permskul. It merely affirmed in toto the MeTC decision without saying more. A decision or resolution, especially one resolving an appeal, should directly meet the issues for resolution; otherwise, the appeal would be pointless. The Court reiterated its admonition in Nicos Industrial Corporation vs. Court of Appeals that while brevity in the writing of decisions is an admirable trait, it should not and cannot be substituted for substance, and again in Francisco vs. Permskul that expediency alone, no matter how compelling, cannot excuse non-compliance with the constitutional requirements. The Court emphasized that faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due process and fair play, and is likewise demanded by the due process clause of the Constitution. The parties to a litigation should be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The losing party is entitled to know why he lost, so he may appeal to the higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. More than that, the requirement is an assurance to the parties that, in reaching judgment, the judge did so through the processes of legal reasoning. It is thus a safeguard against the impetuosity of the judge, preventing him from deciding ipse dixit. The Court therefore struck down as a nullity the RTC decision in question.

• Section 14, Article VIII, 1987 Constitution — Requirement that Decisions State Facts and Law — No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. This constitutional mandate is a paramount component of due process and fair play, and is likewise demanded by the due process clause of the Constitution. It ensures that parties are informed of how the case was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court, so that the losing party may pinpoint the possible errors of the court for review by a higher tribunal. It is also a safeguard against the impetuosity of the judge, preventing him from deciding ipse dixit. In this case, the RTC decision, which merely quoted the MeTC's dispositive portion and affirmed in toto without any analysis of the evidence or citation of legal basis, was struck down as a nullity for failing to comply with this constitutional requirement.

• Memorandum Decisions — Conditions for Validity — A memorandum decision is a specie of succinctly written decisions by appellate courts in accordance with Section 40, B.P. Blg. 129, allowed on grounds of expediency, practicality, convenience, and docket status of the courts. To be valid, a memorandum decision cannot incorporate the findings of fact and the conclusions of law of the lower court only by remote reference; it must provide for direct access to the facts and the law being adopted, which must be contained in a statement attached to the decision. The memorandum decision should actually embody the findings of fact and conclusions of law of the lower court in an annex attached to and made an indispensable part of the decision. The requirement is intended to allay the suspicion that no study was made of the decision of the lower court and that its decision was merely affirmed without a proper examination of the facts and the law on which it is based. The memorandum decision should be sparingly used lest it become an addictive excuse for judicial sloth, and may be resorted to only in cases where the facts are in the main accepted by both parties and easily determinable by the judge and there are no doctrinal complications involved that will require an extended discussion of the laws involved. It may be employed in simple litigations only, such as ordinary collection cases, where the appeal is obviously groundless and deserves no more than the time needed to dismiss it. In this case, the RTC decision failed to comply with these measures of validity.

• Right to Appeal — Statutory Privilege — The right to appeal is not a constitutional, natural, or inherent right. It is a statutory privilege of statutory origin and, therefore, available only if granted or provided by statute. Since the right to appeal is not a natural right nor a part of due process, it may be exercised only in the manner and in accordance with the provisions of law, and its requirements must be strictly complied with. An appeal must be perfected in the manner and within the period fixed by law, which is not only mandatory but jurisdictional. Non-compliance with such legal requirements is fatal, for it renders the decision sought to be appealed final and executory, with the end result that no court can exercise appellate jurisdiction to review the decision.

• Liberal Construction of Procedural Rules — In the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance may be relaxed. If strict adherence to the letter of the law would result in absurdity and manifest injustice, or where the merit of a party's cause is apparent and outweighs consideration of non-compliance with certain formal requirements, procedural rules should definitely be liberally construed. A party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor, or property on mere technicalities.

• "No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based." — This is the verbatim text of Section 14, Article VIII of the 1987 Constitution, which the Court invoked as the constitutional basis for nullifying the RTC decision. It is the ratio decidendi of the case and the controlling provision for evaluating the sufficiency of lower court decisions.

• "The memorandum decision, to be valid, cannot incorporate the findings of fact and the conclusions of law of the lower court only by remote reference, which is to say that the challenged decision is not easily and immediately available to the person reading the memorandum decision. For the incorporation by reference to be allowed, it must provide for direct access to the facts and the law being adopted, which must be contained in a statement attached to the said decision." — This passage from Francisco vs. Permskul, quoted with approval by the Court, lays down the canonical requirements for the validity of memorandum decisions. It is frequently cited in subsequent jurisprudence on the sufficiency of appellate court decisions.

• "The RTC decision is brief indeed, but it is starkly hallow, otiosely written, vacuous in its content and trite in its form. It achieved nothing and attempted at nothing, not even at a simple summation of facts which could easily be done. Its inadequacy speaks for itself." — This passage articulates the Court's assessment of the RTC decision's failure to comply with the constitutional mandate. It is a commonly quoted formulation of the standard for evaluating the sufficiency of a decision's factual and legal exposition.

• "The right to appeal is not a constitutional, natural or inherent right. It is a statutory privilege of statutory origin and, therefore, available only if granted or provided by statute." — This passage states the settled doctrine on the nature of the right to appeal, which the Court applied in holding that YAO's wrong mode of appeal was fatal. It is a frequently cited formulation in remedial law jurisprudence.

• Francisco vs. Permskul, 173 SCRA 324 [1989] — Controlling precedent. The Court laid down the conditions for the validity of memorandum decisions, which the RTC decision failed to comply with. The Court quoted extensively from this case and reiterated its admonition that expediency alone cannot excuse non-compliance with constitutional requirements.
• Nicos Industrial Corporation vs. Court of Appeals, 206 SCRA 127 [1992] — Followed. The Court reiterated its admonition that while brevity in the writing of decisions is an admirable trait, it should not and cannot be substituted for substance.
• Romero vs. Court of Appeals, 147 SCRA 183 — Followed. The Court cited Justice Feria's warning that if an appellate court failed to provide the appeal the attention it rightfully deserved, said court deprived the appellant of due process since he was not accorded a fair opportunity to be heard by a fair and responsible magistrate.
• People vs. Bongahoy, G.R. No. 124097, 17 June 1999 — Cited as an example of a decision sustained as having substantially complied with the constitutional injunction notwithstanding its laconic and terse manner.
• People vs. Landicho, 258 SCRA 1 [1996] — Cited as an example of a decision that was nullified for containing nothing more than a summary of the testimonies of the witnesses of both parties.
• People vs. Sandiosa, 290 SCRA 92 [1998] — Cited as an example of a decision that was nullified for consisting of five (5) pages, three (3) pages of which were quotations from the labor arbiter's decision.
• People vs. Gastador, 305 SCRA 659 [1999] — Cited as an example of a decision sustained as having substantially complied with the constitutional injunction for quoting the facts narrated in the prosecution's memorandum but making its own findings and assessment of evidence.
• Ginete vs. Court of Appeals, 296 SCRA 418 [1998] — Cited for the doctrine that in the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance may be relaxed.
• Soco vs. Court of Appeals, 263 SCRA 449 [1996] — Cited in connection with the computation of the period to file a petition for review.
• Aris, Phil. Inc. vs. NLRC, 200 SCRA 246 [1991] — Cited for the doctrine that the right to appeal is a statutory privilege of statutory origin.
• Pedrosa vs. Hill, 257 SCRA 373 [1996] — Cited for the doctrine that the right to appeal may be exercised only in the manner and in accordance with the provisions of law.
• Almeda vs. Court of Appeals, 292 SCRA 587 [1998] — Cited for the doctrine that an appeal must be perfected in the manner and within the period fixed by law, which is not only mandatory but jurisdictional.

• Article VIII, Section 14, 1987 Constitution — Provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. The Court held that the RTC decision palpably transgressed this provision, rendering it void. The Court emphasized that faithful adherence to this requirement is a paramount component of due process and fair play.
• Article 189(1), Revised Penal Code — Penalizes unfair competition. This was the offense for which YAO was convicted by the MeTC and which the RTC affirmed in toto.
• Section 40, B.P. Blg. 129 — Provides that every decision or final resolution of a court in appealed cases shall clearly and distinctly state the findings of fact and the conclusions of law on which it is based, which may be contained in the decision or final resolution itself, or adopted by reference from those set forth in the decision, order, or resolution appealed from. The Court cited this provision in discussing the validity of memorandum decisions.
• Section 2, Rule 20, Rules of Court — Provides for the form and contents of judgment in criminal cases, requiring that the judgment be written in the official language, personally and directly prepared by the judge and signed by him, and shall contain clearly and distinctly a statement of the facts proved or admitted by the accused and the law upon which the judgment is based. YAO invoked this provision in his motion for reconsideration before the RTC.
• Section 1, Rule 42, Rules of Court — Governs petitions for review from the RTC to the Court of Appeals. The Office of the Solicitor General invoked this provision in arguing that YAO should have filed a petition for review instead of a notice of appeal.
• Section 1, Rule 11, Revised Internal Rules of the Court of Appeals — Provides that unless a motion for reconsideration is filed or an appeal is taken to the Supreme Court, judgments and final resolutions of the Court of Appeals shall be entered upon the expiration of fifteen (15) days after notice to the parties. YAO invoked this provision in arguing that the entry of judgment was improvidently issued.

Puno, J., Pardo, J., and Ynares-Santiago, J., concurred. Kapunan, J., was on leave.