INTERPHIL LABORATORIES, INC.

,
v.
OEP PHILIPPINES, INC.,

G.R. No. 203697, March 20, 2019

FACTS:

Petitioner Interphil Laboratories, Inc. (Interphil) is engaged in the business of

processing and packaging of pharmaceutical and other projects. Respondent OEP
Philippines, Inc. (OEP) is a corporation in the business of trading.

OEP and Interphil entered into a Manufacturing Agreement (Agreement) whereby

Interphil undertook to process and package 90- and 120-mg Diltelan capsules for OEP
under the terms and conditions stated in the Agreement.

Should a batch or any of the Products fail to meet the processing or packaging

standards specified by OEP, INTERPHIL shall either correct the deficiency in such
batch or destroy the batch on OEP's instructions.

The expenses incurred in the correction of a deficient batch or the loss and damages
resulting from the destruction of the batch shall be for the account of OEP unless the
failure of the batch to meet OEP's specifications can be attributed to INTERPHIL's
failure to observe written instructions of OEP or negligence or fault of INTERPHIL's
personnel.

Parties agreed to be jointly responsible for the quality of the Product without prejudice

to the liability after the determination of the cause in case of defect in quality.

The conflict between the parties arose on August 8, 2000, when OEP received a
facsimile from Elan Taiwan informing the former that Elan Taiwan had received several
urgent phone calls from certain hospitals in Taiwan regarding a defect in the packaging
of several 90-mg Diltelan capsules which had been sold and delivered by Interphil.

Elan Taiwan further reported that several 90-mg Diltelan capsules were inadvertently
wrapped in foils meant and labeled for 120-mg Diltelan capsules and then placed in
boxes meant and labeled for 90-mg Diltelan capsules.

As a result of the defectively packaged capsules and the necessary reworking of the
same to the public due to the danger and health risks, OEP alleges that it had no choice
but to recall and destroy all capsules belonging to the aforementioned Lot No. 001369.
As a consequence, this resulted in the incurring of numerous costs and expenses on the
part of OEP.

Due to the foregoing, OEP demanded that Interphil reimburse it the total of
P5,183,525.05 for the expenses that it had incurred for and in connection with the
recall and destruction of these capsules, including the costs of the materials
destroyed. However, Interphil refused and did not pay the amount demanded.
THE CASE

Due to Interphil's refusal to pay the same, OEP filed a complaint with the RTC of Makati
City. The RTC rendered a Decision in favor of OEP, finding that on the basis of the
doctrine of res ipsa loquitor, Interphil was negligent in the performance of its
obligations under the Agreement.

Interphil's Motion for Reconsideration was denied in an Order issued by the RTC.

On appeal to the CA, Interphil interposed the arguments that the RTC erred in both
applying the res ipsa loquitor rule to find Interphil liable for the product conundrum,
and in finding that OEP's action of unilaterally destroying the products was valid and
was not imbued with any bad faith.

The CA found that since Interphil failed to detect or rectify the erroneous
packaging despite multiple opportunities to do so, it was unnecessary to delve
into Interphil's allegation as to OEP's faults, since the former failed to overcome its
negligence as the immediate and proximate cause of the damage.
 
Interphil's Motion for Reconsideration was denied in a Resolution dated September 26,
2012, as the CA found that no matter of substance was adduced by Interphil that would
warrant the modification, much less the reversal, of the assailed decision.

Hence, this Petition

ISSUE

First, whether or not the Petition must be dismissed outright due to Interphil's failure
to timely serve the CA with a copy of the Petition, as required under Rule 45 of the
Rules of Court;

HELD:

The Supreme Court held that failure of Interphil to furnished copy of the
Petition to CA is a mere formal lapse, an excusable neglect.

Rationale:

In this case, Interphil admitted to the error and belatedly, yet subsequently, rectified
the same by furnishing a copy to the CA. In the mind of the Court, such an action, as
well as the mantra of the country's courts to refrain from dismissing cases on mere
technicalities, is enough to overcome the slight procedural infirmity.

OEP argues in its Comment/Opposition that the Petition filed by Interphil with the Court
is fatally defective for failure of Interphil to serve the CA with a copy of the Petition, an
omission of its responsibility under Rule 45 of the Rules of Court, and which would
necessitate the denial of the same.
The pertinent provisions of Rule 43 of the Rules of Court read:

Section 3. Docket and other lawful fees; proof of service of petition. —

Unless he has theretofore done so, the petitioner shall pay the corresponding docket
and other lawful fees to the clerk of court of the Supreme Court and deposit the amount
of P500.00 for costs at the time of the filing of the petition. Proof of service of a copy
thereof on the lower court concerned and on the adverse party shall be submitted
together with the petition.

Section 5. Dismissal or denial of petition. — The failure of the petitioner to comply with
any of the foregoing requirements regarding the payment of the docket and other
lawful fees, deposit for costs, proof of service of the petition, and the contents of and
the documents which should accompany the petition shall be sufficient ground for the
dismissal thereof.

The Supreme Court may on its own initiative deny the petition on the ground that the
appeal is without merit, or is prosecuted manifestly for delay, or that the questions
raised therein are too unsubstantial to require consideration.

CITED JURISPRUDENCE:
The Court invokes liberality and rules in favor of allowing the Petition.

As cited by Interphil in its Reply, in Pagdonsalan v. NLRC, et al.:

The failure to give a copy of the appeal to the adverse party was a mere
formal lapse, an excusable neglect. Time and again, We have acted on petitions to
review decisions of the CA even in the absence of proof of service of a copy thereof to
the CA as required by Section 1 of Rule 45, Rules of Court. We act on the petitions and
simply require the petitioners to comply with the rule.
In a later case, Sunrise Manning Agency, Inc. v. NLRC, the Court took the opportunity
to reiterate the relaxation of the rule for excusable reasons:

The appellant's failure to furnish copy of his memorandum appeal to respondent is not
a jurisdictional defect, and does not justify dismissal of the appeal. x x x
xxxx

Jurisprudential support is not absent to sustain Our action.

In Estrada vs. National Labor Relations Commission, G.R. 57735. March 19,
1982, 112 SCRA 688.

“this Court set aside the order of the NLRC which dismissed an appeal on the sole
ground that the appellant had not furnished the appellee a memorandum of appeal
contrary to the requirements of Article 223 of the New Labor Code and Section 9. Rule
XIII of its Implementing Rules and Regulations. The same rule was reiterated
in Carnation Phil. Employees Labor Union-FFW v. NLRC x x x.
______________________________________________________________________

The Parties' Arguments

On the procedural aspect:

OEP contends that Interphil failed to provide proof of service of the Petition on the CA,
prior to its filing to the Court.

This was admitted to by Interphil in a Manifestation Ad Cautelam dated March 27, 2013

that it filed with the CA, stating that a copy of the Petition was served only on the
undersigned counsel but not on the CA prior, or simultaneous, to its filing with the
Court. OEP also adds that, as a result, Interphil's failure to serve the CA with a copy of
the Petition prompted the CA to issue an Entry of Judgment on March 8, 2013.

Based on the foregoing, OEP submits that the Court should dismiss the Petition outright
for being fatally defective and for failing to comply with the mandatory requirements of
an appeal by certiorari to the Court.

In answer to OEP's contentions, Interphil submits that the Petition should not be
dismissed on the basis of a technicality, considering that the same had been rectified
through its furnishing of a copy to the CA on March 25, 2013.

NOTE ON THE RULING:

Even the Supreme Court accepted the Petition despite failure to funished copy
to CA the copy of petition prior filing of the same, the Court ruled in favor of
EOP stating that:

However, despite the lack of any procedural bar, the Court finds that Interphil's Petition
is unmeritorious. The CA did not commit any grave abuse of discretion in finding
Interphil liable for the defective packaging of the Diltelan capsules which caused much
prejudice to OEP and the latter's client Elan Taiwan.

Interphil is liable for the wrong packaging of Diltelan capsules.

The Supreme Court AFFIRMED the decision of Appellate Court (CA) and the Lower Court
(RTC).