February 2008 - Philippine Supreme Court Decisions/Resolutions
G.R. No. 158941 - TIMESHARE REALTY CORP. v. CESAR LAO, ET AL.
[G.R. NO. 158941 : February 11, 2008]
TIMESHARE REALTY CORPORATION, Petitioner, v. CESAR LAO and CYNTHIA V. CORTEZ, Respondents.
D E C I S I O N
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the October 30, 2002 Resolution1 of the Court of Appeals (CA), which denied due course to the appeal of Timeshare Realty Corporation (petitioner) from the March 25, 2002 Decision2 of the Securities and Exchange Commission (SEC) in SEC Case No. 01-99-6199; and the July 4, 2003 CA Resolution,3 which denied petitioner's Motion for Reconsideration.
As found by the SEC,4 the antecedent facts are as follows:
On October 6, 1996, herein petitioner sold to Ceasar M. Lao and Cynthia V. Cortez (respondents), one timeshare of Laguna de Boracay for US$7,500.00 under Contract No. 135000998 payable in eight months and fully paid by the respondents.
Sometime in February 1998, the SEC issued a resolution to the effect that petitioner was without authority to sell securities, like timeshares, prior to February 11, 1998. It further stated in the resolution/order that the Registration Statement of petitioner became effective only on February 11, 1998. It also held that the 30 days within which a purchaser may exercise the option to unilaterally rescind the purchase agreement and receive the refund of money paid applies to all purchase agreements entered into by petitioner prior to the effectivity of the Registration Statement.
Petitioner sought a reconsideration of the aforesaid order but the SEC denied the same in a letter dated March 9, 1998.
On March 30, 1998, respondents wrote petitioner demanding their right and option to cancel their Contract, as it appears that Laguna de Boracay is selling said shares without license or authority from the SEC. For failure to get an answer to the said letter, respondents this time, through counsel, reiterated their demand through another letter dated June 29, 1998. But despite repeated demands, petitioner failed and refused to refund or pay respondents.5
Respondents directly filed with SEC En Banc6 a Complaint7 against petitioner and the Members of its Board of Directors - Julius S. Strachan, Angel G. Vivar, Jr. and Cecilia R. Palma - for violation of Section 4 of Batas Pambansa Bilang (B.P. Blg.) 178.8 Petitioner filed an Answer9 to the Complaint but the SEC En Banc, in an Order10 dated April 25, 2000, expunged the Answer from the records due to tardiness.
On March 25, 2002, the SEC En Banc rendered a Decision in favor of respondents, ordering petitioner, together with Julius S. Strachan, Angel G. Vivar, Jr., and Cecilia R. Palma, to pay respondents the amount of US$7,500.00.11
Petitioner received a copy of the June 24, 2002 SEC En Banc Order on July 4, 200214 and had 15 days or until July 19, 2002 within which to appeal. However, on July 10, 2002, petitioner sought from the CA an extension of 30 days, counted from July 19, 2002, or until August 19, 2002, within which to appeal.15 The CA partly granted the motion in an Order dated July 24, 2002, to wit:
As prayed for, but conditioned on the timeliness of its filing, the Motion for Extension to File Petition for Review dated 09 July 2002 and filed before this Court on 10 July 2002 is GRANTED and petitioners are given a non-extendible period of fifteen (15) days from 10 July 2002 or until 25 July 2002 within which to file the desired petition, otherwise, the above-entitled case will be dismissed. (Emphasis supplied.) 16
In the assailed October 30, 2002 Resolution, the CA dismissed the Petition for Review, thus:
Under Section 4, Rule 43 of the 1997 Revised Rules of Civil Procedure, petitioners shall not be given an extension longer than fifteen (15) days from the expiration of the reglementary period, except for the most compelling reason.
Thus, on 24 July 2002, in the absence of a compelling reason that justifies the granting of a longer period of extension, this Court issued a resolution wherein petitioners were given an extension of ONLY fifteen days from 10 July 2002 or until 25 July 2002 within which to file the Petition for Review, otherwise, the above entitled case will be dismissed.
However, records show that petitioners filed their Petition for Review only on 19 August 2002, which is twenty-five (25) days beyond the allowed 15-day extended period granted by this Court.
WHEREFORE, the appeal from the decision of the Securities and Exchange Commission (SEC) Case No. 01-99-6199 is hereby DISMISSED for failure of the petitioners to file their Petition for Review under the 15-day period granted by this Court as provided by Rule 43, Section 4 of the 1997 Revised Rules of Civil Procedure.
and denied petitioner's Motion for Reconsideration in the assailed Resolution dated July 4, 2003.20
Petitioner filed the present petition, urging us to look beyond the procedural lapse in its appeal, and resolve the following substantive issues:
Whether or not the eventual approval or issuance of license has retroactive effect and therefore ratifies all earlier transactions;
Whether or not a party in a contract could withdraw or rescind unilaterally without valid reason.21
We deny the petition.
A judgment must become final at the time appointed by law22 - - this is a fundamental principle upon which rests the efficacy of our courts whose processes and decrees command obedience only when these are perceived to have some degree of permanence and predictability. Thus, an appeal from such judgment, not being a natural right but a mere statutory privilege, must be perfected according to the mode and within the period prescribed by the law and the rules; otherwise, the appeal is forever barred, and the judgment becomes binding.23
Section 70 of Republic Act No. 879924 which was enacted on July 19, 2000, is the law which governs petitioner's appeal from the orders of the SEC En Banc. It prescribes that such appeal be taken to the CA "by Petition for Review in accordance with the pertinent provisions of the Rules of Court," specifically Rule 43.25
Section 4 of Rule 43 is restrictive in its treatment of the period within which a petition may be filed:
Section 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the docket fee before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the Petition for Review . No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days. (Emphasis supplied.)
Petitioner's Motion for Extension of Time to File Petition for Review flouted the foregoing restriction: it sought, not a 15-day, but a 30-day extension of the appeal period;26 and it did not even bother to cite a compelling reason for such extension, other than its counsel's caseload which, as we have repeatedly ruled, hardly qualifies as an imperative cause for moderation of the rules.27
Its motion for extension being inherently flawed, petitioner should not have presumed that the CA would fully grant the same.28 Instead, it should have exercised due diligence by filing the proper petition within the allowable period,29 or at the very least, ascertaining from the CA whether its motion for extension had been acted upon.30 As it were, petitioner's counsel left the country, unmindful of the possibility that his client's period to appeal was about to lapse - as it indeed lapsed on July 25, 1999, after the CA allowed them a 15-day extension only, in view of the restriction under Section 4, Rule 43. Thus, petitioner has only itself to blame that the Petition for Review it filed on August 19, 1999 was late by 25 days. The CA cannot be faulted for dismissing it.
The Court notes that the CA reckoned the 15-day extension it granted to petitioner from July 10, 1999, the date petitioner filed its Motion for Extension, rather than from July 19, 1999, the date of expiration of petitioner's original period to appeal. While such computation of the CA appears to be erroneous, petitioner did not question it in the present petition. But even if we do reckon the 15-day extension period from July 19, 1999, the same would have ended on August 3, 1999, making petitioner's appeal still inexcusably tardy by 16 days. Either way we reckon it, therefore, petitioner's appeal was not perfected within the period prescribed under Rule 43.
Nevertheless, the Court opts to resolve the substantive issues raised by petitioner in its appeal so as to determine the lawful rights of the parties and put an end to the litigation.
Petitioner claims that at the time it entered into a timeshare purchase agreement with respondents on October 6, 1996, it already possessed the requisite license and marketing agreement to engage in such transactions,31 as evidenced by its registration with the SEC as a corporation.32 Petitioner argues that when it was registered and authorized by the SEC as broker of securities33 - such as the Laguna de Boracay timeshares - this had the effect of ratifying its October 6, 1996 purchase agreement with respondents, and removing any cause for the latter to rescind it.
The Court is not persuaded.
As cited by the SEC En Banc in its March 25, 2002 Decision, as early as February 13, 1998, the SEC, through Director Linda A. Daoang, already rendered a ruling on the effectivity of the registration statement of petitioner, viz:
This has reference to your registration statement which was rendered effective 11 February 1998. The 30 days within which a purchaser may exercise the option to unilaterally rescind the purchase agreement and receive the refund of money paid, applies to all purchase agreements entered into by the registrant prior to the effectivity of the registration statement. The 30-day rescission period for contracts signed before the Registration Statement was rendered effective shall commence on 11 February 1998. The rescission period for contracts after 11 February 1998 shall commence on the date of purchase agreement. (Emphasis supplied.)34
Petitioner sought a reconsideration of said ruling but the same was denied by Director Daoang in an Order dated March 9, 1998.35 However, petitioner did not resort to any other administrative remedy against said ruling, such as by questioning the same before the SEC En Banc. Having failed to exhaust the administrative remedies available to it, petitioner is already bound by said ruling and can no longer question the same through a direct and belated recourse to us.36
Finally, the provisions of B.P. Blg. 178 do not support the contention of petitioner that its mere registration as a corporation already authorizes it to deal with unregistered timeshares. Corporate registration is just one of several requirements before it may deal with timeshares:
Section 8. Procedure for registration. - (a) All securities required to be registered under subsection (a) of Section four of this Act shall be registered through the filing by the issuer or by any dealer or underwriter interested in the sale thereof, in the office of the Commission, of a sworn registration statement with respect to such securities, containing or having attached thereto, the following:
x x x
(36) Unless previously filed and registered with the Commission and brought up to date:
(a) A copy of its articles of incorporation with all amendments thereof and its existing by-laws or instruments corresponding thereto, whatever the name, if the issuer be a corporation.
Prior to fulfillment of all the other requirements of Section 8, petitioner is absolutely proscribed under Section 4 from dealing with unregistered timeshares, thus:
Section 4. Requirement of registration of securities. - (a) No securities, except of a class exempt under any of the provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as hereinafter provided. (Emphasis supplied.)
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
1 Penned by Associate Justice Regalado E. Maambong and concurred in by Associate Justices Delilah Vidallon-Magtolis and Andres E. Reyes, Jr.; rollo, p. 17.
2 Id. at 40.
3 Id. at 110.
4 SEC Decision, rollo, pp. 42-43.
6 It is noted that the propriety of the filing of the complaint directly with the SEC En Banc was never raised as an issue.
7 Rollo, p. 30.
8 The Revised Securities Act, approved February 23, 1982.
9 Rollo, p. 36.
10 SEC Decision, supra note 4, at 42.
11 Id. at 44
12 Id. at 45.
13 Id. at 49.
14 CA rollo, p. 2.
16 CA rollo, p. 6.
17 Id. at 7.
19 Id. at 31-32.
20 Id. at 51.
21 Petition, rollo, p. 11.
22 Far East Bank and Trust Company v. Commissioner of Internal Revenue, G.R. No. 149589, September 15, 2006, 502 SCRA 87, 91.
23 Ang v. Grageda, G.R. No. 166239, June 8, 2006, 490 SCRA 424, 438; Neypes v. Court of Appeals, G.R. No. 141524, September 14, 2005, 469 SCRA 633, 646; Petilla v. Court of Appeals, G.R. No. 150792, March 3, 2004, 424 SCRA 254, 262.
25 Hongkong and Shanghai Banking Corporation, Ltd. v. G.G. Sportswear Manufacturing Corporation, G.R. No. 146526, May 5, 2006, 489 SCRA 578, 585.
27 Bernardo v. People of the Philippines G.R. No. 166980, April 4, 2007, 520 SCRA 332, 341-342. See also Philippine Amusement and Gaming Corporation v. Angara, G.R. No. 142937, November 15, 2005, 475 SCRA 41, 51; Marcial v. Hi-Cement Corporation/Union Cement Corporation, G.R. No. 144900, November 18, 2005, 475 SCRA 388, 396.
28 Bernardo v. People of the Philippines, supra note 27, at 341.
29 Gochan v. Gochan, 446 Phil. 433, 456 (2003); Sps. Galen v. Atty. Paguirigan, 428 Phil. 590, 596 (2002).
30 Ang v. Grageda, supra note 23, at 444.
31 Petition, rollo, p. 11.
32 Id. at 26.
33 Id. at 27.
34 Rollo, p. 90.
35 Id. at 91.
36 Hongkong and Shanghai Banking Corporation, Ltd. v. G.G. Sportswear Manufacturing Corporation, supra note 25, at 585-586.