REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. COURT OF APPEALS, HON. PEDRO M. SUNGA, JR., AND TETRO ENTERPRISES, INC., RESPONDENTS.

Republic versus Court of Appeals

The Case

This is a petition for review on certiorari brought by the Republic of the Philippines against the Court of Appeals, Judge Pedro Sunga, Junior, and Tetro Enterprises, Incorporated. The private respondent sued the Republic to recover possession of a parcel of land on which the government had built a road, and to recover damages. The case matters because the Supreme Court here relaxes the strict application of the rule on proof of service of motions, holding that substantial compliance and the paramount interest of substantial justice may excuse a procedural lapse, especially where the government stands to lose a very large sum and its appeal is prima facie meritorious.

Procedural History

Tetro Enterprises filed a complaint for recovery of possession and damages before Branch 41 of the Regional Trial Court of San Fernando, Pampanga, presided over by Judge Sunga. The trial court created a board of commissioners to determine the actual value of the property. Acting on the board's report, the trial court rendered a decision fixing the price of the land at 6,000 pesos per square meter, for a total of 75,858,000 pesos. The Office of the Solicitor General moved for reconsideration, but the motion carried no proof of service. The trial court denied the motion, calling it a mere scrap of paper, and later granted the private respondent's motion for execution. When the government filed a notice of appeal, the trial court denied it on the ground that its decision had already become final and executory. The government then filed a petition for certiorari in the Court of Appeals, which dismissed the petition and later denied reconsideration. Hence this petition for review before the Supreme Court.

Facts

Tetro Enterprises owned a parcel of land of 12,643 square meters in San Fernando, Pampanga, covered by a transfer certificate of title. Sometime in 1974, the government, without acquiring the property through expropriation or negotiated sale, constructed a road on it as part of the Olongapo-Gapan Road. Despite demands, the government refused to return the land and to pay rent for its use.

In February 1992, Tetro Enterprises sued the Republic for recovery of possession and damages. The government answered that the complaint stated no cause of action, that the suit was against the State without its consent, and that the return of the land was no longer feasible. It expressed willingness to pay the fair market value at the time of taking. By agreement of the parties, the trial court created a board of commissioners, on which the government was represented, to determine the actual value of the property.

The board recommended a price of between 4,000 and 6,000 pesos per square meter, finding that the lot, once devoted to sugarcane, had become highly commercial. The trial court fixed the price at 6,000 pesos per square meter, for a total of 75,858,000 pesos. The government's motion for reconsideration, filed without proof of service, was denied as a mere scrap of paper. The trial court then granted execution and refused to give due course to the government's notice of appeal, treating its decision as final.

Issues

• Whether or not the Court of Appeals erred in strictly applying the rule requiring proof of service, instead of treating the subsequent actual service of the motion for reconsideration as substantial compliance.
• Whether or not the trial court should have given due course to the government's appeal in the interest of substantial justice, considering the amount involved and the prima facie merit of the appeal.

Applicable Provisions

Section 6 of Rule 15 of the old Rules of Court provides:

No motion shall be acted upon by the court, without proof of service of the notice thereof, except when the court is satisfied that the rights of the adverse party or parties are not affected.

This is the rule the government failed to comply with when it filed its motion for reconsideration without attaching proof of service, and it is the rule the Court construes as admitting of substantial compliance.

Ruling

On the first issue, the Court held that the Court of Appeals should have considered the subsequent service of the motion for reconsideration as substantial compliance with the rule. The Court noted that the adverse counsel actually received a copy of the motion on September 24, 1996, days before the scheduled hearing, and that she was still counsel of record at that time, having withdrawn only on September 30, 1996. There was thus effective service. The Court stressed that, as much as possible, cases should be determined on the merits rather than on technicality or procedural imperfections.

On the second issue, the Court held that the trial court should have exercised its discretion in favor of the government and given due course to the appeal. The amount involved, 75,858,000 pesos, together with the prima facie merit of the government's appeal that the value of the property should be based on its price at the time of taking in 1974 and not on its current market price, should have given the trial court pause. The Court added that this case presented a new aspect of the problem of compensation, namely, the agreement of the parties to have the actual value determined by a board on which the government was represented, which suggested the necessity of having the merits of the appeal decided by the appellate court.

Doctrine

The rule requiring proof of service of a motion is not to be applied with rigid severity where the adverse party actually received the motion and no substantial right was impaired. Such actual receipt amounts to substantial compliance. The broader principle is that cases should be decided on the merits, after full opportunity to all parties to ventilate their causes and defenses, rather than dismissed on technicality. This is especially so where vital government interests and a very large amount are at stake, and the appeal is prima facie meritorious. The Court cautioned, however, that this is not to tolerate carelessness or negligence on the part of government lawyers; disciplinary action against them is one thing, but protecting vital government interests is another.

Disposition

The Court reversed the decision of the Court of Appeals and ordered the Regional Trial Court of San Fernando, Pampanga, Branch 41, to give due course to the government's appeal.

Remember This

The single line worth memorizing is that substantial justice prevails over technical rules, and actual receipt of a motion cures the absence of proof of service. Examiners use this case to test the relaxation of procedural rules in favor of the government and the principle that cases should be decided on the merits.