7 - Panay Railways v. Heva - General Principles

CIVPRO - MORENO DIGESTS 2020 - 2021
7– Panay Railways v. Heva Management Procedural laws applicable to actions pending
GENERAL PRINCIPLES
PANAY RAILWAYS INC., Petitioner vs. HEVA MANAGEMENT and DEVELOPMENT

CORPORATION, PAMPLONA AGRO-INDUSTRIAL CORPORATION, and SPOUSES
CANDELARIA DAYOT and EDMUNDO DAYOT, Respondents.
G.R. NO., 154061, JANUARY 25, 2012
Mortgage on parcels of land in favor of Traders Royal Bank
Sereno, J.
Statutes and rules regulating the procedure of courts are considered applicable to actions pending and
unresolved at the time of their passage. Procedural laws and rules are retroactive in that sense and to that
extent. The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no merit. When this
Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-10-SC, the RTC’s dismissal of the action
may be considered to have had the imprimatur of the Court. Thus, the CA committed no reversible error when it
sustained the dismissal of the appeal, taking note of its directive on the matter prior to the promulgation of its
Decision.
FACTS:
Petitioner Panay Railways Inc., a government-owned and controlled corporation,
executed a Real Estate Mortgage Contract covering several parcels of lands in favor of
Traders Royal Bankto to secure ₱ 20 million worth of loan and credit accommodations.
Petitioner failed to pay its obligations to TRB, prompting the bank to extra-judicially foreclose
the mortgaged properties including Lot No. 6153. It was only in 1994 that petitioner realized
that the extrajudicial foreclosure included some excluded properties in the mortgage contract.
It filed a Complaint for Partial Annulment of Contract to Sell and Deed of Absolute Sale with
Addendum; Cancellation of Title No. T-89624; and Declaration of Ownership of Real Property
with Reconveyance plus Damages. It then filed an Amended Complaint and a Second
Amended Complaint. Respondents filed their respective Motions to Dismiss.
The RTC issued an Order granting the Motion to Dismiss of respondents. Petitioner
filed a Notice of Appeal without paying the necessary docket fees. Thereafter, respondents
filed a Motion to Dismiss Appeal on the ground of nonpayment of docket fees. In its Opposition,
petitioner alleged that its counsel was not yet familiar with the revisions of the Rules of Court
that became effective only on 1 July 1997. Furthermore, it contended that the requirement for
the payment of docket fees was not mandatory. It therefore asked the RTC for a liberal
interpretation of the procedural rules on appeals. On 29 September 1997, the RTC issued an
Order dismissing the appeal citing Sec. 4 of Rule 419 of the Revised Rules of Court. Petitioner
thereafter moved for a reconsideration, which was denied.
Petitioner filed with the Court of Appeals a Petition for Certiorari and Mandamus under
Rule 65 alleging that the RTC had no jurisdiction to dismiss the Notice of Appeal, and that the
trial court had acted with grave abuse of discretion when it strictly applied procedural rules.
The CA ruled that while the failure of petitioner to pay the docket and other lawful fees
within the reglementary period was a ground for the dismissal of the appeal pursuant to Sec.
1 of Rule 50 of the Revised Rules of Court, the jurisdiction to do so belonged to the CA and
CIVPRO - MORENO DIGESTS (2020 - 2021)

BUCU, GOLLA, GUICO, PALOMERA
GENERAL PRINCIPLES
not the trial court. Thus, appellate court ruled that the RTC committed grave abuse of
discretion in dismissing the appeal.
Thereafter, respondents filed their respective Motions for Reconsideration. It appears
that prior to the promulgation of the CA’s Decision, this Court issued Administrative Matter No.
00-2-10-SC which took effect on 1 May 2000, amending Rule 4, Sec. 7 and Sec. 13 of Rule
41 of the 1997 Revised Rules of Court. The circular expressly provided that trial courts may,
motu proprio or upon motion, dismiss an appeal for being filed out of time or for nonpayment
of docket and other lawful fees within the reglementary period. Subsequently, Circular No. 48-
200013 was issued on 29 August 2000 and was addressed to all lower courts.
By virtue of the amendment to Sec. 41, the CA upheld the questioned Orders of the
trial court by issuing the assailed Amended Decision14 in the present Petition granting
respondents’ Motion for Reconsideration. The CA’s action prompted petitioner to file a Motion
for Reconsideration alleging that SC Circular No. 48-2000 should not be given retroactive
effect. It also alleged that the CA should consider the case as exceptionally meritorious.
Petitioner’s counsel, Atty. Rexes V. Alejano, explained that he was yet to familiarize himself
with the Revised Rules of Court, which became effective a little over a month before he filed
the Notice of Appeal. He was thus not aware that the nonpayment of docket fees might lead
to the dismissal of the case. The CA issued the assailed Resolution denying petitioner’s Motion
for Reconsideration.
ISSUES:
Whether or not the CA erred in sustaining the RTC’s dismissal of the Notice of
Appeal?
HELD:
NO. Statutes and rules regulating the procedure of courts are considered applicable to
actions pending and unresolved at the time of their passage. Procedural laws and rules are
retroactive in that sense and to that extent. The effect of procedural statutes and rules on the
rights of a litigant may not preclude their retroactive application to pending actions. This
retroactive application does not violate any right of a person adversely affected. Neither is it
constitutionally objectionable. The reason is that, as a general rule, no vested right may attach
to or arise from procedural laws and rules. It has been held that "a person has no vested right
in any particular remedy, and a litigant cannot insist on the application to the trial of his case,
whether civil or criminal, of any other than the existing rules of procedure." More so when, as
in this case, petitioner admits that it was not able to pay the docket fees on time. Clearly, there
were no substantive rights to speak of when the RTC dismissed the Notice of Appeal.
The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no
merit. When this Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-10-
SC, the RTC’s dismissal of the action may be considered to have had the imprimatur of the

GENERAL PRINCIPLES
Court. Thus, the CA committed no reversible error when it sustained the dismissal of the
appeal, taking note of its directive on the matter prior to the promulgation of its Decision.
Moreover, the right to appeal is not a natural right and is not part of due process. It is
merely a statutory privilege, which may be exercised only in accordance with the law. We have
repeatedly stated that the term "substantial justice" is not a magic wand that would
automatically compel this Court to suspend procedural rules. Procedural rules are not to be
belittled or dismissed simply because their non-observance may result in prejudice to a party’s
substantive rights. Like all other rules, they are required to be followed, except only for the
most persuasive of reasons when they may be relaxed to relieve litigants of an injustice not
commensurate with the degree of their thoughtlessness in not complying with the procedure
prescribed.
We cannot consider counsel’s failure to familiarize himself with the Revised Rules of
Court as a persuasive reason to relax the application of the Rules. It is well-settled that the
negligence of counsel binds the client. This principle is based on the rule that any act
performed by lawyers within the scope of their general or implied authority is regarded as an
act of the client. Consequently, the mistake or negligence of the counsel of petitioner may
result in the rendition of an unfavorable judgment against it.


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CIVPRO - MORENO DIGESTS 2020 - 2021

7– Panay Railways v. Heva Management Procedural laws applicable to actions pending

PANAY RAILWAYS INC., Petitioner vs. HEVA MANAGEMENT and DEVELOPMENT

CIVPRO - MORENO DIGESTS (2020 - 2021)

CIVPRO - MORENO DIGESTS (2020 - 2021)

CIVPRO - MORENO DIGESTS (2020 - 2021)

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