J.A.B. Bulao & Associates

CASE 2012-0016: CHINA BANKING CORPORATION VS. QBRO FISHING ENTERPRISES (G.R. NO. 184556, 22 FEBRUARY 2012, VILLARAMA, JR. J.) SUBJECT/S: EFFECT OF MORTGAGE FORECLOSURE ON THIRD PARTY MORTGAGOR; EXCEPTION TO THE RULE THAT SC MUST ONLY RESOLVE QUESTIONS OF LAW (BRIEF TITLE: CHINA BANKING VS. QBRO FISHING)

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DISPOSITIVE:

WHEREFORE, the petition for review on certiorari is GRANTED.  The June 27, 2008 Decision and the September 5, 2008 Resolutionof the Court of Appeals in CA-G.R. CV No. 00226 are hereby REVERSED and SET ASIDE.  The February 26, 2004 Decision of the Regional Trial Court, Branch 23, of General Santos City in Civil Case No. 6665 is REINSTATED.

No costs.

SO ORDERED.

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FIRST DIVISION

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DECISION

VILLARAMA, JR., J.:

Petitioner China Banking Corporation appeals the June 27, 2008 Decision^[1][1] and September 5, 2008 Resolution^[2][2] of the Court of Appeals (CA) in CA-G.R. CV No. 00226 which set aside the Decision^[3][3] of the Regional Trial Court (RTC) of General Santos City in Civil Case No. 6665.

The facts follow:

In 1994, Trans-Filipinas Realty Corporation (TFRC) obtained a loan from petitioner China Banking Corporation in the amount of Seven Million Pesos (P7,000,000).  The loan was secured by a real estate mortgage over two parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-34226 and T-34227.  The credit line of TFRC was later increased to P14,000,000.^[4][4]

On May 10, 1996, the Board of Directors of respondent QBRO Fishing Enterprises, Inc. issued a resolution^[5][5] authorizing the mortgage of its properties to secure “the obligations incurred or which may [t]hereafter be incurred by [TFRC] with [petitioner] irrespective of the amount including any renewals, extensions and/or roll-overs thereof.”^[6][6] 

On June 3, 1996, respondent, represented by Armando Cesar A. Reyes and Concepcion R. Quintana, its president and treasurer, respectively, executed a real estate mortgage over nine parcels of land, covered by TCT Nos. T-38759 to T-38767, inclusive, as collateral for TFRC’s additional loan in the amount of P34,500,000.^[7][7]  The mortgage was annotated in the Registry of Deeds of General Santos City.

TFRC, however, defaulted on the payment of its obligation and failed to settle its account despite having received several demand letters from petitioner.^[8][8]   Thus, petitioner filed a petition for extrajudicial foreclosure of the real properties respondent and TFRC had mortgaged.^[9][9]  During the public auction, petitioner emerged as the highest bidder and was issued a Certificate of Sale.^[10][10]

          Aggrieved, respondent filed a Complaint^[11][11] with the RTC to annul the real estate mortgage, foreclosure proceedings and auction sale.  It alleged that petitioner unlawfully treated the TFRC and respondent’s separate loan accounts, which were secured by two different and separate real estate mortgages, as a single, inseparable account.  Furthermore, respondent claimed that the loan in the amount of P34,500,000 had unilaterally ballooned to an unconscionable amount of P72,208,673.19, thus preventing TFRC from settling its obligation. 

          In its Answer,^[12][12] petitioner denied that there were two separate loan accounts.  It maintained that the real estate mortgage over respondent’s properties was executed to serve as additional security to accommodate TFRC’s request for an increase in its loan line.  There being only one loan, petitioner asserted that the filing of a petition for extrajudicial foreclosure was proper.

          After trial on the merits, the RTC dismissed respondent’s complaint.  The RTC found that while there were two mortgage contracts, the foreclosure of respondent’s properties could not be set aside because to allow respondent to avoid liability based on the real estate mortgage over its properties would amount to unjust enrichment.  The RTC noted, first, that the incorporators of TFRC and respondent are composed of the same persons.  Second, it noted that respondent failed to act on its obligation to pay despite several demands from petitioner.  Thus, the RTC ruled that foreclosure was petitioner’s proper remedy, citing the case of Valmonte v. Court of Appeals,^[13][13] which held that “[t]he only condition the law requires in extrajudicial foreclosure is that the loan is already due and demandable and there was failure on the part of the mortgagor to pay the mortgage debt.” Lastly, the RTC also noted that there was no merit to respondent’s claim that the mortgage it signed was void for being irregular.^[14][14]

          Not satisfied with the above RTC Decision, respondent appealed to the CA.^[15][15]  The issues respondent raised were simplified by the appellate court as follows:

1.                  Whether or not the plaintiff-appellant and Trans-Filipinas Realty Corporation have separate and distinct personality from each other.

2.                  Whether or not it was proper for defendant-appellee bank to have merged and consolidated the respective loan accounts of plaintiff-appellant and Trans-Filipinas Realty Corporation, as well as the mortgaged properties into a single loan account and single mortgage, respectively, when defendant-appellee bank extrajudicially foreclosed the properties of both corporations.^[16][16]

          On June 27, 2008, the CA promulgated the assailed Decision declaring the foreclosure proceedings with respect to respondent’s properties null and void. The dispositive portion of the decision reads:

          WHEREFORE, the Decision dated February 26, 2004 of the Regional Trial Court, 11^th Judicial Region, Branch 23, General Santos City, in Civil Case No. 6665, is REVERSED and SET ASIDE.  A new judgment is hereby ENTERED declaring the November 17, 1997 foreclosure proceedings NULL and VOID, with respect to the mortgaged properties of plaintiff-appellant QBRO Fishing Enterprises, Inc[.], to wit:  TCT No. T-38759, TCT No. T-38760, TCT No. T-38761, TCT No. T-38762, TCT No. T-38763, TCT No. T-38764, TCT No. T-38765, TCT No. T-38766 and TCT No. T-38767.  Furthermore, the Ex-Officio Sheriff of the Regional Trial Court of General Santos City is hereby DIRECTED to ISSUE an amended certificate of sale in the name of defendant-appellee China Banking Corporation, covering only the foreclosed properties of Trans-Filipinas Corporation, to wit: TCT No. T-34226 and TCT No. T-34227.  Defendant-appellee China Banking Corporation’s counterclaim before the trial court is hereby DISMISSED.  No pronouncement as to costs.

            SO ORDERED.^[17][17]

          The CA ruled that respondent and TFRC are admittedly sister companies, having the same set of Board of Directors.  However, it found that there was no allegation that their separate corporate entities were being used to defeat public convenience, justify wrong, protect fraud, or defend crime to disregard the separate juridical personality of a corporation.  Moreover, the CA held that the fact that respondent agreed to mortgage its properties to secure the obligation of TFRC was not a valid reason for petitioner to consolidate the two loans and the real estate mortgages.  The CA concluded that the foreclosure proceedings with respect to respondent’s properties are null and void considering that there are two separate loans by different corporations.

          Petitioner filed a motion for reconsideration.^[18][18]  In a Resolution dated September 5, 2008, the CA denied the motion. 

          Petitioner elevated the case to us via the present petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

          Petitioner argues that:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO APPRECIATE THE FACT THAT THERE WAS ACTUALLY ONLY ONE (1) LOAN OBLIGATION BY TRANS-FILIPINAS REALTY CORPORATION, PAYMENT OF WHICH WAS PARTLY SECURED BY THE MORTGAGE OF QBRO FISHING ENTERPRISES, AS THIRD-PARTY MORTGAGOR, THUS, THERE BEING ONLY ONE OBLIGATION, ALBEIT SECURED BY TWO (2) MORTGAGES, ONLY ONE (1) FORECLOSURE THEREOF WAS LEGALLY SUFFICIENT.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ITS RULING WHEN IT FAILED TO APPRECIATE THE CORRECTNESS OF THE FORECLOSURE OF THE TWO (2) MORTGAGES WHERE BOTH MORTGAGORS WERE SPECIFICALLY NAMED AND IMPLEADED AS RESPONDENTS IN THE PETITION FOR EXTRA-JUDICIAL FORECLOSURE.^[19][19]

          The two issues to be resolved are: first, whether TFRC and respondent actually had two separate loan accounts and second, whether the petition for extrajudicial foreclosure is valid with respect to the mortgaged properties of respondent.

          Petitioner argues that there was only one loan extended to TFRC and that respondent never had a credit line with it.  It further contends that the CA erred in venturing into a non-issue, that is, the separate juridical personality of respondent and TFRC.  Petitioner stresses that it in fact recognized that the two corporations were distinct corporate entities; otherwise, it would not have required prior authorization from respondent’s board for the use of respondent’s properties as security to increase TFRC’s loan.  Petitioner insists that respondent’s role in the transaction was only as a third-party mortgagor.  Hence, the single petition for extrajudicial foreclosure was valid. 

          On the other hand, respondent submits that the issues raised in the petition are a mere rehash of the issues which were already passed upon and discussed by the CA.  Likewise, it points out that the issue of whether there was only a single loan account and not two is a question of fact as it involves the review of the evidence adduced.  Such factual issue may not be raised in the present petition.

          The petition is meritorious.

          The principle is well-established that this Court is not a trier of facts.  Therefore, in an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, only questions of law may be raised.  The resolution of factual issues is the function of the lower courts whose findings on these matters are received with respect and are, as a rule, binding on this Court.^[20][20]

          The foregoing rule, however, is not without exceptions.  Findings of fact of the trial court and the CA may be set aside when such findings are not supported by the evidence or where the lower courts’ conclusions are based on a misapprehension of facts.^[21][21]

          Here, we find that while there were indeed two different corporations that executed two separate mortgages, there was in fact only one loan account, that of TFRC.  Respondent failed to offer evidence to prove that it had a separate loan account with petitioner.  What is clear from the records is that respondent’s Board of Directors specifically authorized the mortgage of its properties to serve as additional security to accommodate TFRC’s request for the increase in its credit line.  This is evidenced by the minutes of the Special Meeting of respondent’s Board of Directors dated May 10, 1996, to wit:

          RESOLVED as it is hereby resolved that the corporation be authorized and empowered to mortgage and encumber its parcel of land:

            x x x x

of the Registry of Deeds of General Santos City for the purpose of securing the obligations incurred or which may hereafter be incurred by TRANS-FILIPINAS REALTY CORPORATION with China Banking Corporation irrespective of the amount including any renewals, extensions and/or roll-overs thereof.^[22][22]  [Emphasis ours.]

          Undeniably, the real estate mortgage executed by respondent in favor of petitioner was intended to serve as additional security to accommodate the request of TFRC.  Likewise, we note that petitioner’s Executive Committee held a meeting on May 24, 1996, approving the loan requested by TFRC using the properties of respondent as collateral.  A reading of the excerpts of the meeting further supports the contention of petitioner that there was only one obligation, thus:

            Acting on a memorandum dated March 25, 1996, the Committee, upon motion duly made and seconded, approved the following credit facilities in favor of TFR [Trans-Filipinas Realty Corp.]:

            A.  Seven-year term loan —- P20,000,000.00

                        x x x x

            B.   Loan Line —                     P14,500,000.00

             x x x x

under the following joint terms and conditions:

            1. Real Estate Mortgage for 34.5 Million shall be executed by QBRO Fishing Enterprises, Inc. (QFE) for the account of TFR on nine lots totalling 3,870 sq.m. atI. Santiago Blvd.,GeneralSantosCity under TCT Nos. T-38759 to T-38767, inclusive, with a total appraised value of P58.050 Million and loan value of (70%) P34.83 Million per appraisal report dated March 22, 1996.

            x x x x^[23][23]  [Emphasis ours.]  

          As can be gleaned from the foregoing, there was indeed only one loan account with petitioner.  It is also clear from the records that respondent does not have a separate credit line. When respondent mortgaged its properties described under TCT Nos. T-38759 to T-38767, inclusive, as security for the increase in the loan of TFRC, it bound itself as a third-party mortgagor.

          It has been held that third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property.^[24][24]  The fact that the loans were solely for the benefit of TFRC would not invalidate the mortgage with respect to respondent’s property as long as valid consent was given.  Thus, when respondent executed the real estate mortgage over its properties, such properties thereby secured the performance of the principal obligation notwithstanding the fact that respondent itself had not assumed any liability for the debt of TFRC. 

          We also note that on December 19, 1998, Armando Cesar Reyes, as President and General Manager of TFRC and respondent, wrote to petitioner requesting for an extension of the redemption period.^[25][25]  This is a clear indication that respondent recognized the rights of petitioner as mortgagee over the properties that were already foreclosed and sold to the highest bidder.  Respondent, therefore, is already estopped from questioning the validity of the foreclosure sale by raising issue on whether its mortgaged properties should answer for the loan indebtedness of a separate corporate entity.^[26][26]

          All told, we find that the CA overlooked and misappreciated facts and circumstances on record clearly showing that respondent’s role in the transaction was that of a third-party mortgagor who allowed its properties to be used as additional security for the loans obtained by TFRC.  Considering that the extrajudicial foreclosure proceedings initiated by petitioner pertain to only one loan account, we uphold the validity of the foreclosure sale which included the properties of respondent as third-party mortgagor.

WHEREFORE, the petition for review on certiorari is GRANTED.  The June 27, 2008 Decision and the September 5, 2008 Resolutionof the Court of Appeals in CA-G.R. CV No. 00226 are hereby REVERSED and SET ASIDE.  The February 26, 2004 Decision of the Regional Trial Court, Branch 23, of General Santos City in Civil Case No. 6665 is REINSTATED.

No costs.

SO ORDERED.

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CASE 2012-0015: NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN VS. ALVIN L. TENG (G.R. NO. 187122, 22 FEBRUARY 2012, VILLARAMA, JR. J.) SUBJECT/S: LATE FILING OF CERTIORARI CONSIDERED; FORUM SHOPPING; PENALTY OF DISMISSAL TOO HARSH. (BRIEF TITLE: NEGROS SLASHERS VS. TENG).

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DISPOSTIVE:

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit and the Decision of the Court of Appeals dated September 17, 2008 and Resolution dated February 11, 2009, in CA-G.R. SP No. 00817 are hereby AFFIRMED.

With costs against the petitioners.

SO ORDERED.

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FIRST DIVISION

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DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari assailing the Decision^[1][1] dated September 17, 2008 and Resolution^[2][2] dated February 11 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 00817.  The appellate court had reversed and set aside the September 10, 2004 Decision^[3][3] and March 21, 2005 Resolution^[4][4] of the National Labor Relations Commission (NLRC) and reinstated with modification the Decision^[5][5] of the Labor Arbiter finding respondent to have been illegally dismissed.

The facts are undisputed.

Respondent Alvin Teng is a professional basketball player who started his career as such in the Philippine Basketball Association and then later on played in the Metropolitan Basketball Association (MBA).

On February 4, 1999, Teng signed a 3-year contract^[6][6] (which included a side contract and agreement for additional benefits and bonuses) with the Laguna Lakers.  Before the expiration of his contract with the Laguna Lakers on December 31, 2001, the Lakers traded and/or transferred Teng to petitioner Negros Slashers, with the latter assuming the obligations of Laguna Lakers under Teng’s unexpired contract, including the monthly salary of P250,000, P50,000 of which remained to be the obligation of the Laguna Lakers.  On March 28, 2000, the management of the Laguna Lakers formally informed Teng of his transfer to the Negros Slashers.^[7][7]  Teng executed with the Negros Slashers the Player’s Contract of Employment.^[8][8]

On Game Number 4 of the MBA Championship Round for the year 2000 season, Teng had a below-par playing performance.  Because of this, the coaching staff decided to pull him out of the game.  Teng then sat on the bench, untied his shoelaces and donned his practice jersey.  On the following game, Game Number 5 of the Championship Round, Teng called-in sick and did not play.

On November 21, 2000, Vicente Tan, Finance Head of Negros Slashers, wrote^[9][9] Teng requiring him to explain in writing why no disciplinary action should be taken against him for his precipitated absence during the crucial Game 5 of the National Championship Round.  He was further informed that a formal investigation would be conducted on November 28, 2000.  The hearing, however, did not push through because Teng was absent on the said scheduled investigation.  Hearing was rescheduled for December 11, 2000.  On said date, the investigation proceeded, attended by Teng’s representatives, Atty. Arsenio Yulo and Atty. Jose Aspiras.^[10][10]  A subsequent meeting was also conducted attended by the management, coaching staff and players of the Negros Slashers team, wherein the team members and coaching staff unanimously expressed their sentiments against Teng and their opposition against the possibility of Teng joining back the team.^[11][11] 

On March 16, 2001, the management of Negros Slashers came up with a decision, and through its General Manager, petitioner Rodolfo Alvarez, wrote^[12][12] Teng informing him of his termination from the team. 

On July 28, 2001, Teng filed a complaint before the Office of the Commissioner of the MBA pursuant to the provision of the Uniform Players Contract which the parties had executed.  Subsequently, on November 6, 2001, Teng also filed an illegal dismissal case with the Regional Arbitration Branch No. VI of the NLRC.^[13][13] 

On July 16, 2002, the Labor Arbiter issued a decision finding Teng’s dismissal illegal and ordering petitioner Negros Slashers, Inc. to pay Teng P2,530,000 representing his unpaid salaries, separation pay and attorney’s fees.  The Labor Arbiter ruled that the penalty of dismissal was not justified since the grounds relied upon by petitioners did not constitute serious misconduct or willful disobedience or insubordination that would call for the extreme penalty of dismissal from service.  The dispositive portion of the Labor Arbiter’s decision reads:

            WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of complainant illegal and respondents Negros Slashers, Inc. are hereby ordered to PAY complainant the total sum of TWO MILLION FIVE HUNDRED THIRTY THOUSAND (P2,530,000.00) PESOS representing complainant’s unpaid salaries, separation pay and attorney’s fee, the award to be deposited with this Office within ten (10) days from receipt of this Decision.

            All other claims are hereby DISMISSED for lack of merit.

            SO ORDERED.^[14][14]

The case was then appealed to the NLRC.  On September 10, 2004, the NLRC issued a Decision setting aside the July 16, 2002 Decision of the Labor Arbiter and entering a new one dismissing the complaint for being premature since the arbitration proceedings before the Commissioner of the MBA were still pending when Teng filed his complaint for illegal dismissal. The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter a quo is hereby REVERSED and SET ASIDE. A new one is entered, dismissing the instant case for being premature.

SO ORDERED.^[15][15]

Teng filed a motion for reconsideration, but it was denied for being filed beyond the ten-day reglementary period provided for in Section 15,^[16][16] Rule VII of the NLRC Rules of Procedure. 

Aggrieved, Teng filed a petition for certiorari with the CA assailing the NLRC Decision datedSeptember 10, 2004and the Resolution datedMarch 21, 2005denying his motion for reconsideration.

OnSeptember 17, 2008the CA rendered the assailed Decision setting aside the September 10, 2004 Decision and March 21, 2005 Resolution of the NLRC and reinstating with modification the Labor Arbiter’s Decision.

The CA reinstated the findings of the Labor Arbiter that Teng was illegally dismissed because the grounds relied upon by petitioners were not enough to merit the supreme penalty of dismissal.  The CA held that there was no serious misconduct or willful disobedience or insubordination on Teng’s part.  On the issue of jurisdiction, the CA ruled that the Labor Arbiter had jurisdiction over the case notwithstanding the pendency of arbitration proceedings in the Office of the Commissioner of the MBA.

Petitioners sought reconsideration of the above ruling, but their motion was denied by the CA in a Resolution^[17][17] datedFebruary 11, 2009.

Petitioners now come to this Court assailing the Decision datedSeptember 17, 2008and Resolution datedFebruary 11, 2009of the CA. 

Firstly, petitioners argue that respondent Teng and his counsel committed a blatant violation of the rule against forum shopping.  Petitioners aver that onJuly 28, 2001, Teng filed a complaint before the MBA pursuant to the voluntary arbitration provision of the Uniform Players Contract he executed with Negros Slashers, Inc.  During the pendency of said complaint, Teng filed another complaint for illegal dismissal with the Labor Arbiter.  It is petitioners’ position that Teng lied by certifying under oath that there is no similar case pending between him and Negros Slashers, Inc., when in fact, months before he had filed a complaint with the MBA alleging the same factual antecedents and raising the same issues. 

Secondly, petitioners argue that the CA erred in ruling that Teng’s offenses were just minor lapses and irresponsible action not warranting the harsh penalty of dismissal.  Petitioners allege that the CA paid scant attention to two very important pieces of evidence which would clearly show the gravity and seriousness of the offenses committed by Teng.  Petitioners claim that these two documents, i.e., the minutes of the meeting^[18][18] of players, management, and coordinating staff, and a petition^[19][19] by the players to the management not to allow Teng to come back to the team, would show that Teng should not have been treated as an ordinary working man who merely absented himself by feigning sickness when called upon to work.  Petitioners argue that the nature of the work and team atmosphere should have been considered and given credence.  By neglecting these two documents, the CA failed to appreciate the gravity of the misconduct committed by Teng and the effects it had on the basketball organization.

Petitioners also argue that respondent’s petition for certiorari with the CA should have been dismissed outright because it was filed beyond the reglementary period.  Petitioners point out that Teng received the NLRC Decision on October 15, 2004and therefore had ten days^[20][20] or until October 25, 2004 within which to file a motion for reconsideration.  But he filed his motion for reconsideration only on October 26, 2004 and said motion was denied^[21][21] on March 21, 2005 for being filed late.  Thereafter he filed his petition for certiorari^[22][22] with the CA on June 20, 2005.  Petitioners contend that the petition for certiorari was filed beyond the period allowed by the Rules of Court because the 60-day period to file the petition for certiorari should have started to run from the receipt of the NLRC decision onOctober 15, 2004.  And it should have expired onDecember 14, 2004 because it was as if no motion for reconsideration was filed in the NLRC.  Further, petitioners argue that the CA could not take cognizance of the case because it is a settled rule that certiorari as a special civil action will not lie unless a motion for reconsideration is first filed before the NLRC to allow it an opportunity to correct its errors.  In this case, since the motion for reconsideration was filed late, it should have been treated as if no motion for reconsideration was filed. 

Teng, on the other hand, maintains that there is no violation of the rule against forum shopping.  He submits that he indeed filed his complaint before the MBA as early asJuly 28, 2001.  Unfortunately, for more than three months, the supposed voluntary arbitration failed to yield any result until the MBA itself was dissolved.  It was only on November 2001, after exhausting the arbitration process, did he file his complaint before the Labor Arbiter.   In other words, it was only after the MBA failed to come up with a resolution on the matter did he opt to seek legal redress elsewhere.

On the merits, Teng relies on the reasoning of the Labor Arbiter in finding that his alleged lapses and misconduct were too minor to justify the extreme penalty of dismissal from service.  In large part, he quotes the Labor Arbiter’s decision, and emphasizes the Labor Arbiter’s statements that (1) loosening of the shoe laces and the donning of the practice jersey are not indicative of serious misconduct that would justify dismissal from employment; (2) it cannot be concluded that he merely feigned sickness when he informed the Coach of his inability to play during Game No. 5; and (3) there is no showing of any bad faith or ill motive on his part that would qualify his actions as serious, severe and grave as to warrant termination from service. 

Teng also argues that the CA aptly clarified and explained the legal reason why the petition for certiorari was given due course despite some procedural lapses regarding the motion for reconsideration with the NLRC.  Teng stresses that jurisprudence allows the relaxation of procedural rules even of the most mandatory character in the interest of substantial justice.  In this particular case, justice and equity calls for the relaxation of the reglementary period for filing a motion for reconsideration as well as the rule prohibiting the filing of a petition for certiorari without first filing a motion for reconsideration.

Simply put, the basic issues for our resolution are as follows: (1) whether the CA erred in giving due course to respondent Teng’s petition for certiorari despite its late filing; (2) whether Teng violated the rule on forum shopping when he filed a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC while a similar complaint was pending in the Office of the Commissioner of the MBA; and (3) whether the CA erred in ruling that Teng’s dismissal from the Negros Slashers Team was unjustified and too harsh considering his misconduct.

The petition is bereft of merit.

On the first issue raised by petitioners, we rule that the CA did not commit a reversible error in giving due course to Teng’s petition for certiorari although said petition was filed late.  Ordinarily, rules of procedure are strictly enforced by courts in order to impart stability in the legal system.  However, in not a few instances, we relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merits.   This is in line with the time honored principle that cases should be decided only after giving all the parties the chance to argue their causes and defenses.  In that way, the ends of justice would be better served.   For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of justice.^[23][23]   In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation,^[24][24] we ruled:

            Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’ right to due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of substantial justice and equity. x x x

Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just determination of their causes, free from the constraints of needless technicalities. 

Here, besides the fact that a denial of the recourse to the CA would serve more to perpetuate an injustice and violation of Teng’s rights under our labor laws, we find that as correctly held by the CA, no intent to delay the administration of justice could be attributed to Teng.  The CA therefore did not commit reversible error in excusing Teng’s one-day delay in filing his motion for reconsideration and in giving due course to his petition for certiorari.

As regards the second issue, we likewise find no merit in petitioners’ claim that respondent’s act of filing a complaint with the Labor Arbiter while the same case was pending with the Office of the Commissioner of the MBA constituted forum shopping. 

For forum shopping to exist, it is necessary that (a) there be identity of parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in one action will, regardless of which party is successful, amount to res judicata in the other action.^[25][25]

Petitioners are correct as to the first two requisites of forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng.  Second, there is identity of rights asserted i.e., the right of management to terminate employment and the right of an employee against illegal termination.  However, the third requisite of forum shopping is missing in this case.  Any judgment or ruling of the Office of the Commissioner of the MBA will not amount to res judicata.  As defined in Agustin v. Delos Santos,^[26][26]

            Res Judicata is defined as “a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.”  According to the doctrine of res judicata, an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.  To state simply, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit.  (Emphasis supplied.)

To clarify, res judicata is defined in jurisprudence as to have four basic elements: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action.^[27][27]

Here, although contractually authorized to settle disputes, the Office of the Commissioner of the MBA is not a court of competent jurisdiction as contemplated by law with respect to the application of the doctrine of res judicata.  At best, the Office of the Commissioner of the MBA is a private mediator or go-between as agreed upon by team management and a player in the MBA Player’s Contract of Employment.^[28][28]   Any judgment that the Office of the Commissioner of the MBA may render will not result in a bar for seeking redress in other legal venues.  Hence, respondent’s action of filing the same complaint in the Regional Arbitration Branch of the NLRC does not constitute forum shopping.

On the third issue, we find that the penalty of dismissal handed out against Teng was indeed too harsh.

We understand petitioners in asserting that a basketball organization is a “team-based” enterprise and that a harmonious working relationship among team players is essential to the success of the organization.  We also take into account the petition of the other team members voicing out their desire to continue with the team without Teng.  We note likewise the sentiments of the players and coaching staff during the meeting ofFebruary 4, 2001stating how they felt when Teng “abandoned” them during a crucial Game Number5 inthe MBA championship round.

Petitioners rely heavily on the alleged effects of Teng’s actions on the rest of the team.  However, such reaction from team members is expected after losing a game, especially a championship game.  It is also not unlikely that the team members looked for someone to blame after they lost the championship games and that Teng happened to be the closest target of the team’s frustration and disappointment.  But all these sentiments and emotions from Negros Slashers players and staff must not blur the eyes of the Court from objectively assessing Teng’s infraction in order to determine whether the same constitutes just ground for dismissal.  The incident in question should be clear: Teng had a below-par performance during Game Number 4 for which he was pulled out from the game, and then he untied his shoelaces and donned his practice jersey.  In Game Number 5, he did not play.

As an employee of the Negros Slashers, Teng was expected to report for work regularly.  Missing a team game is indeed a punishable offense. Untying of shoelaces when the game is not yet finished is also irresponsible and unprofessional.  However, we agree with the Labor Arbiter that such isolated foolishness of an employee does not justify the extreme penalty of dismissal from service.  Petitioners could have opted to impose a fine or suspension on Teng for his unacceptable conduct. Other forms of disciplinary action could also have been taken after the incident to impart on the team that such misconduct will not be tolerated.

In Sagales v. Rustan’s Commercial Corporation,^[29][29] this Court ruled:

Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power.
            In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer. (Emphasis in the original.)

In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal.  There was no warning or admonition for respondent’s violation of team rules, only outright termination of his services for an act which could have been punished appropriately with a severe reprimand or suspension.

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit and the Decision of the Court of Appeals dated September 17, 2008 and Resolution dated February 11, 2009, in CA-G.R. SP No. 00817 are hereby AFFIRMED.

With costs against the petitioners.

SO ORDERED.

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.