GR 174982; (September, 2012) (Digest)
G.R. No. 174982; September 10, 2012
JOSE VICENTE ATILANO II, HEIRS OF CARLOS V. TAN, NELIDA F. ATILANO and ISIDRA K. TAN, Petitioners, vs. HON. JUDGE TIBING A. ASAALI and ATLANTIC MERCHANDISING, INC., Respondents.
FACTS
Atlantic Merchandising, Inc. obtained a revived judgment against Zamboanga Alta Consolidated, Inc. (ZACI). A writ of execution was returned unsatisfied, prompting Atlantic to examine ZACI’s debtors, including petitioners as its alleged stockholders. Petitioners denied liability for any unpaid stock subscriptions. The Regional Trial Court (RTC), however, relying on Securities and Exchange Commission records showing unpaid subscriptions, ordered petitioners to settle their alleged obligations to ZACI’s capital stock.
Aggrieved, petitioners filed a petition for certiorari before the Court of Appeals (CA), imputing grave abuse of discretion to the RTC for not following the proper procedure under Section 43, Rule 39 of the Rules of Court for claims against a third party allegedly indebted to a judgment debtor. The CA dismissed the petition outright on procedural grounds, including failure to attach certified true copies of the assailed RTC decisions, incomplete signatures on the verification, an outdated IBP receipt, and a deficiency in docket fees. Petitioners moved for reconsideration and substantially complied, but the CA denied the motion, finding the payment for the docket fee deficiency was made beyond the reglementary period.
ISSUE
Whether the Court of Appeals erred in dismissing the petition for certiorari on procedural grounds, thereby depriving petitioners of due process.
RULING
Yes. The Supreme Court granted the petition. While payment of full docket fees is indispensable for the perfection of an appeal, the Court has consistently held that procedural rules may be relaxed for persuasive and weighty reasons to prevent a grave injustice. The power to dismiss for non-compliance is discretionary, not automatic, and must be exercised with sound discretion in accordance with justice and fair play.
In this case, compelling reasons justify relaxation. Petitioners were involuntarily drawn into the case as alleged debtors of the judgment obligor, ZACI. They vehemently denied the indebtedness. The RTC should have directed Atlantic to institute a separate action against petitioners under Section 43, Rule 39, instead of summarily ordering them to pay. The CA’s strict application of procedural rules, despite petitioners’ subsequent substantial compliance, would result in a denial of due process and a travesty of justice. The interest of substantial justice demands that the case be heard on its merits. Thus, the CA Resolutions were set aside and the RTC Decision was nullified, without prejudice to the filing of a proper separate action.