Mindanao Savings and Loan Association Vs Vda de Flores

MINDANAO SAVINGS AND LOAN ASSOCIATION, INC., Petitioners, vs.VICENTA VDA.
DE FLORES, and HEIRS OF FLORENCIO FLORES, SR., namely, EDNA FLORES

EISEIDEL, BELINDA FLORES, FLORENCIO T. FLORES, JR., ROBERTO T. FLORES,
SYLVIA FLORES SICAT and LORNA FLORES FERNANDEZ, Respondent.
G.R. No. 142022 September 7, 2005
GARCIA, J. Ponente
FACTS: During his lifetime Florencio Flores, Sr., husband of respondent Vicenta Vda. De
Flores and predecessor-in-interest of the other respondents, entered into a Joint Venture
Agreement with DS Homes, Inc. (DSHI) for the development and commercial utilization of
the Flores spouses two (2) adjoining lots located at the center of the town of Malaybalay,
Bukidnon. Pursuant to the Joint Venture Agreement, Flores, Sr., as capitalist partner,
secured a loan of P1.5M from petitioner Mindanao Savings and Loan Association, Inc.
(MSLAI) using as collaterals therefor the two (2) aforementioned lots. Under the same
agreement, DSHI, as industrial partner, shall have the full and complete authority to
pursue the development project and the management thereof thereafter. In time, out of
the loan secured by Flores, Sr. from petitioner, a commercial building known as the Flores
Building was constructed on the lots in question. Business operations of the joint venture
commenced in August, 1984. A portion of the first floor of the building was leased by
DSHI to petitioner which used the space as office of its branch at Malaybalay, Bukidnon,
while the rest of the same floor were occupied by a fastfood establishment, a drugstore
and a grocery. The second floor of the building was used as a function room and the third
floor as lodging inn. In 1986, the joint venture suffered severe business reversals on
account of which DSHI discontinued the management of the Flores Building, prompting
respondents to take over its operations.
Meanwhile, on August 31, 1990, petitioner MSLAI, then operating under the name "Davao
Savings and Loan Association", was placed by the Monetary Board of the Central Bank
under receivership of the Philippine Deposit Insurance Corporation (PDIC) which was later
designated by the Monetary Board as liquidator of the already insolvent MSLAI. On
November 10, 1992, respondents received from PDIC a demand letter for the payment of
an outstanding obligation in the staggering amount of P23,756,477.61 as of October 31,
1992.
Unable to believe that the original loan of P1.5M obtained by their predecessor could
have reached that much, respondents then filed with the Regional Trial Court at Bukidnon
a complaint for Accounting and Liquidation of Joint Venture, Annulment of Loan &
Mortgages and Damages. Impleaded as defendants in the case were, among others,
DSHI, petitioner MSLAI and one Francisco D. Villamor and other officers of DSHI.
Albeit not a party to the Joint Venture Agreement, petitioner MSLAI was impleaded as a
party-defendant, it being respondents allegation that petitioner and DSHI were
practically one and the same, as in fact defendant Francisco Villamor was the general
manager of both corporate entities and that although the two (DSHI and MSLAI) are
separate and distinct corporations, they acted as one in the implementation and
execution of the Joint Venture Agreement under the effective direction and control of
Francisco Villamor who was the moving force in the manipulations of the loans and
dissipation of the funds of the joint venture.
In its answer, petitioner maintained that it is a separate and distinct corporation from
DSHI, adding that respondents have no cause of action against it as it is never a party to
the Joint Venture Agreement between DSHI and respondents predecessor-in-interest.
In a decision dated January 26, 1998, the trial court, upon a finding that [T]he sum total
of the foregoing evidence abundantly demonstrates further the unity of the corporate
defendants and how they manipulated the loan and the funds of the joint venture, about
which petitioner MSLAI failed to refute plaintiffs extensive evidence making out a strong
case of piercing the veil of corporate fiction against it and DHSI, rendered judgment for
the respondents. MSLA Filed a Notice of Appeal. Appellate court then ordered the partied
to file their respective brief. Petitioner however submitted their brief 20 days after the
deadline set by the appellate court, and consequently dismissed the appeal. Petitioner
filed MR, but was also denied by the appellate court. Petitioner then filed an appeal
before the SC, but challenged the decision of the lower court, and not CA.
ISSUES:
1. Whether SC can review errors committed by the trial court.
2. Whether the CA is correct in dismissing petitioners appeal on account of
petitioners failure to file its appellants brief on time
HELD:
1. No. in petitions for review on certiorari under Rule 45 of the Rules of Court, the
"errors" which are reviewable by SC are only those committed by the Court of
Appeals and not directly those of the trial court.
2. Yes. It must be emphasized that review is not a matter of right. Accordingly, there
should be strict adherence to Rule 45 of the Rules of Court, Section 6 of which
delineates the grounds for the allowance of review to avoid delays in the
enforcement of final judgments and orders of lower courts. Petitioner attempts to
justify its tardiness by claiming that its handling counsel who resigned from PDIC
on July 30, 1999 failed to turn over the subject case to another lawyer for reassignment. It bears emphasizing that petitioner is represented by no less than the
Office of the Chief Legal Counsel of the PDIC which has, at its helm and command,
a battery of lawyers. As pointed out by respondents, on July 7, 1999, the handling
counsel tendered his resignation from PDIC effective on July 30, 1999. 5 Petitioner,
therefore, had 29 days from July 7, 1999, or until August 5, 1999, the last day for
filing the subject brief. During those 29 days, petitioner had the luxury of time to
file its appellants brief, or, at the very least, ask for another extension from the
appellate court. It did not. Petitioner ought to be reminded that procedural rules
are not to be belittled or dismissed simply because their non-observance may have
resulted in prejudice to the parties substantive rights. Like all rules, they are
required to be followed except only for the most persuasive of reasons as when
"transcendental matters" of life, liberty or state security are involved. True,
litigation is not a game of technicalities. It is equally true, however, that every case
must be presented in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Doubtless, and judging from the very
nature of petitioners assigned errors, the instant petition was resorted to as a
substitute for the lost remedy of appeal. This cannot be allowed, more so when, as
here, such loss is occasioned by petitioners own neglect.

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MINDANAO SAVINGS AND LOAN ASSOCIATION, INC., Petitioners, vs.VICENTA VDA.

DE FLORES, and HEIRS OF FLORENCIO FLORES, SR., namely, EDNA FLORES

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