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G.R. No. 179999 - ANSON TRADE CENTER, INC. ET AL. v. PACIFIC BANKING CORPORATION REPRESENTED BY ITS LIQUIDATOR, THE PRESIDENT OF THE PDIC

G.R. No. 179999 - ANSON TRADE CENTER, INC. ET AL. v. PACIFIC BANKING CORPORATION REPRESENTED BY ITS LIQUIDATOR, THE PRESIDENT OF THE PDIC

PHILIPPINE SUPREME COURT DECISIONS

THIRD DIVISION

[G.R. NO. 179999 : March 17, 2009]

ANSON TRADE CENTER, INC., ANSON EMPORIUM CORPORATION and TEDDY KENG SE CHEN, Petitioners, v. PACIFIC BANKING CORPORATION, Represented by Its Liquidator, the President of the Philippine Deposit Insurance Corporation, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed by petitioners Anson Trade Center, Inc., (ATCI), Anson Emporium Corporation (AEC), and Teddy Keng Se Chen (Chen), seeking the reversal and the setting aside of the Decision2 dated 31 May 2007 and Resolution3 dated 16 October 2007 of the Court of Appeals in CA-G.R. SP No. 93734. In its assailed Decision, the Court of Appeals annulled the Order4 dated 10 October 2005 of the Regional Trial Court (RTC) of Manila, Branch 52, dismissing Civil Case No. 01-102198 for failure of respondent Pacific Banking Corporation (PBC)5 to appear during the pre-trial. In its assailed Resolution, the Court of Appeals refused to reconsider its earlier Decision.

The following are the undisputed facts:

Petitioners ATCI and AEC are corporations engaged in retail and/or wholesale general merchandising.6 Petitioner Chen is the Vice Head of said commercial entities. Respondent is a closed banking institution undergoing liquidation by the Philippine Deposit Insurance Corporation (PDIC).

On different dates, petitioner ATCI obtained several loans7 from respondent, amounting to P4,350,000.00. On 26 October 1984, petitioner AEC also received the amount of P1,000,000.00 as a loan from respondent. As security for the said loan obligations, petitioner Chen, with the late Keng Giok,8 executed, on behalf of petitioners ATCI and AEC, two Continuing Suretyship Agreements on 16 September 1981 and 1 March 1982. The Continuing Suretyship Agreements provided that, as security for any and all the indebtedness or obligation of petitioners ATCI and AEC, the respondent had the right to retain a lien upon any and all moneys or other properties and/or the proceeds thereof in the name or for the account or credit of petitioners ATCI and AEC deposited or left with respondent. Subsequently, petitioners defaulted in the payment of their loans. Respondent made several demands for payment upon petitioners, to no avail.

This prompted respondent to file before the RTC a collection case against petitioners, docketed as Civil Case No. 01-102198.

On 14 January 2002, petitioner Chen, instead of filing an Answer to the Complaint of respondent in Civil Case No. 01-102198, filed a Motion to Dismiss. Petitioners ATCI and AEC, together with the Estate of Keng Giok, also jointly filed a Motion to Dismiss. Respondent filed its Comment/Opposition to the Motions to Dismiss Civil Case No. 01-102198, to which petitioners Chen, ATCI, and AEC, with the Estate of Keng Giok, filed their Replies. Due to the inaction of the RTC on the Motions to Dismiss, respondent filed Motions to Resolve on 14 January 2003 and on 29 October 2003. In an Order dated 4 November 2004, the RTC denied the Motions to Dismiss but granted the prayer to drop Keng Giok as defendant since he was long dead prior to the institution of Civil Case No. 01-102198.

After petitioners filed their joint Answer to the Complaint, a pre-trial conference was set by the RTC on 4 April 2005. All the parties were present at the scheduled pre-trial where the RTC first explored the possibility of an amicable settlement among the parties by referring the case to the Philippine Mediation Center for arbitration. The arbitration proceedings were, however, unsuccessful. Thus, the case was referred back to the RTC for a full-blown trial.

In order to simplify the issues to be threshed out in the trial, another pre-trial conference was scheduled by the RTC on 10 October 2005, which respondent failed to attend.

Petitioners moved for the dismissal of Civil Case No. 01-102198 on the ground of the non-appearance of respondent at the pre-trial of 10 October 2005, which was granted, without prejudice, by the RTC in an Order issued on even date. Respondent filed with the RTC a Motion for Reconsideration of the court's order of dismissal, in which respondent prayed for the relaxation of the rule on non-appearance in the pre-trial, citing excusable negligence on its part and in the interest of justice and equity. The RTC denied the Motion for Reconsideration of respondent in another Order dated 17 January 2006.

The above precipitated respondent to file with the Court of Appeals a Petition for Certiorari under Rule 65 of the Revised Rules of Court, which was docketed as CA-G.R. SP No. 93734. Respondent prayed for the reversal of the RTC Orders dated 10 October 2005 and 17 January 2006, arguing that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed Civil Case No. 01-102198 due to the non-appearance of respondent at the pre-trial held on 10 October 2005. Respondent asserted that its absence was not deliberate or intentional. Its liquidator, PDIC, was undergoing a reorganization resulting in, among other things, the trimming down of the departments handling litigation work from four to one; and the lack of manpower to handle more than 400 banks ordered closed by the Monetary Board. Respondent pleaded for the relaxation of the rules to avert irreparable damage to it.

The Court of Appeals rendered a Decision on 31 May 2007, granting the Petition of respondent and reversing the assailed RTC Orders which dismissed Civil Case No. 01-102198. According to the appellate court, the RTC lost sight of the fact that even the Rules of Court mandate a liberal construction of the rules and the pleadings in order to effect substantial justice; and that overriding all the foregoing technical considerations is the trend in the rulings of the court to afford every party-litigant the amplest opportunity for the proper and just determination of his cause, freed from the constraints of technicalities.9

In a Resolution dated 16 October 2007, the Court of Appeals refused to reconsider its earlier Decision.

Petitioners now come before us via this instant Petition for Review on Certiorari raising the following issues:

I

WHETHER OR NOT THE REVERSAL OF THE TRIAL COURT'S ORDER DATED OCTOBER 10, 2005 DISMISSING [herein respondent]'S COMPLAINT FOR ITS FAILURE TO APPEAR AT THE PRE-TRIAL WAS IN ACCORDANCE WITH THE 1997 RULES ON CIVIL PROCEDURE AND APPLICABLE JURISPRUDENCE.

II

WHETHER OR NOT THE TRIAL COURT ABUSED ITS DISCRETION IN DISMISSING RESPONDENT'S COMPLAINT BECAUSE OF ITS NON-APPEARANCE AT PRE-TRIAL.10

At the core of this controversy is a question of procedure.

The petitioners, on one hand, argue that the appearance of the parties during pre-trial is mandatory, and the absence of respondent therefrom constitutes a serious procedural blunder that merits the dismissal of its case.

On the other hand, respondent claims that the Rules must be relaxed if it will cause irreparable damage to a party-litigant and to promote the ends of justice. Respondent urges us to brush aside technicalities and to excuse its non-appearance during the pre-trial conference.

We find the Petition unmeritorious.

Pre-trial, by definition, is a procedural device intended to clarify and limit the basic issues raised by the parties11 and to take the trial of cases out of the realm of surprise and maneuvering.12 It is an answer to the clarion call for the speedy disposition of cases. Hailed as the most important procedural innovation in Anglo-Saxon justice in the nineteenth century,13 it thus paves the way for a less cluttered trial and resolution of the case.14

Pertinent provisions of Rule 18 of the Revised Rules of Court on Pre-Trial read:

SEC. 4. Appearance of parties. - It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.

SEC. 5. Effect of failure to appear. - The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.

Pursuant to the afore-quoted provisions, non-appearance by the plaintiff in the pre-trial shall be cause for dismissal of the action. However, every rule is not without an exception. In fact, Section 4, Rule 18 of the Revised Rules of Court explicitly provides that the non-appearance of a party may be excused if a valid cause is shown therefor. We find such a valid cause extant in the case at bar.

There is no question that herein respondent received notice of the pre-trial conference scheduled on 10 October 2005, but it failed to attend the same. Such non-appearance notwithstanding, the Court Of Appeals annulled the 10 October 2005 Order of the RTC dismissing Civil Case No. 01-102198 after finding that respondent did not intentionally snub the pre-trial conference. There is no reason for us to disturb such finding.

The Monetary Board ordered the closure of respondent by reason of insolvency on 5 July 1985, and it has since been represented by its liquidator PDIC in all its undertakings. Still in the course of the liquidation of respondent, its liquidator PDIC was reorganized in the late 2004 to early 2005. The four departments in the PDIC handling litigation were reduced to one, with the new Litigation Department having only four in-house counsels who assumed thousands of cases arising from the closure by the Monetary Board of more than 400 banks. It is understandable how the notice for the pre-trial conference in Civil Case No. 01-102198 scheduled on 10 October 2005 could be lost or overlooked, as the PDIC was still coping and adjusting with the changes resulting from its reorganization.

It is important to note that the respondent was not remiss in its duties to prosecute its case. Except for the lone instance of the pre-trial conference on 10 October 2005, respondent promptly and religiously attended the hearings set by the RTC. In fact, it appears on the records that a pre-trial conference in Civil Case No. 01-102198 was first held on 4 April 2005, during which respondent was present. When the RTC did not immediately act on the Motions to Dismiss of petitioners, it was respondent which filed two Motions to Resolve. The actuations of respondent reveal its interest in prosecuting the case, instead of any intention to delay the proceedings.

In Bank of the Philippine Islands v. Court of Appeals,15 we ruled that in the absence of a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules, courts should decide to dispense rather than wield their authority to dismiss.

If Civil Case No. 01-102198 is allowed to proceed to trial, it will not clog the dockets of the RTC or run counter to the purposes for holding a pre - trial. Inconsiderate dismissals, even without prejudice, do not constitute a panacea or a solution to the congestion of court dockets; while they lend a deceptive aura of efficiency to records of individual judges, they merely postpone the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to delay, justice is better served by a brief continuance, trial on the merits, and final disposition of cases before the court.16

Moreover, respondent is already insolvent and undergoing liquidation. It instituted Civil Case No. 01-102198 precisely to recover from petitioners the unpaid loans. Even if the dismissal of Civil Case No. 01-102198 by the RTC was without prejudice, the re-filing of the case would be injurious to respondent. Respondent already paid P344,878.23 as docket fees for Civil Case No. 01-102198 and with the dismissal of said case, the amount would be forfeited. Respondent would have to pay docket fees once more when it re-files its Complaint, a substantial amount considering that respondent is already financially shaped. As the Court of Appeals noted, for respondent to again pay docket fees for the re-filing of its Complaint against petitioners would truly be detrimental to the creditors of respondent.

Given the foregoing, the Court of Appeals did not err in pronouncing that the RTC committed grave abuse of discretion when it dismissed Civil Case No. 01-102198 for the failure of respondent to attend the pre-trial conference on 10 October 2005. As the appellate court so astutely stated:

In refusing to resuscitate Civil Case No. 01-102 198 despite a showing that there was an excusable ground for the [herein respondent]'s absence during the pre-trial, the respondent judge manifested a dire fixation towards procedural perfection. Indeed, the extraordinary writ of certiorari would lie when a trier's obsession with the stringent tenets of technicality would occasion an injustice against a party litigant.

Litigation is not a game of technicality, in which one more deeply schooled and skilled in the subtle art of movement and position entraps and destroys the other. It is rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfection of forms and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts.17

As we have stressed emphatically on previous occasions, the rules of procedure may not be misused and abused as instruments for the denial of substantial justice. Here is another demonstrative instance of how some members of the bar, availing themselves of their proficiency in invoking the letter of the rules without regard to their real spirit and intent, succeed in inducing courts to act contrary to the dictates of justice and equity, and, in some instances, to wittingly or unwittingly abet unfair advantage by ironically camouflaging their actuations as earnest efforts to satisfy the public clamor for speedy disposition of litigations, forgetting all the while that the plain injunction of Section 2 of Rule 1 is that the "rules shall be liberally construed in order to promote their object and to assist the parties in obtaining" not only "speedy" but more imperatively, "just ... and inexpensive determination of every action and proceeding."18

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 31 May 2007 and Resolution dated 16 October 2007 of the Court of Appeals are AFFIRMED. Costs against the petitioners.

SO ORDERED.

Endnotes:


* Per Special Order No. 568, dated 12 February 2009, signed by Chief Justice Reynato S. Puno, designating Associate Justice Antonio T. Carpio to replace Associate Justice Ma. Alicia Austria-Martinez, who is on official leave under the Court's Wellness Program.

1 Rollo, pp. 25 - 33.

2 Penned by Associate Justice Bienvenido L. Reyes with Associates Justices Aurora Santiago - Lagman and Apolinario D. Bruselas, Jr., concurring; rollo, pp. 25-32.

3 Rollo, pp. 34 - 36

4 Penned by Hon. Antonio Rosales, CA rollo, p. 19-A.

5 Represented by its Liquidator, President of the PDIC.

6 The pleadings did not allege the relationship between the two corporations. What was alleged was the fact that the two corporations had the same President and Vice Head.

7 These loans were obtained by petitioner ATCI on 30 August 1982, 5 July 1983, 2 November 1983, and 26 October 1984, in the amounts of P2,000,000.00, P1,000,000.00, P350,000.00, and P1,000,000.00, respectively, exclusive of interest and charges.

8 Keng Giok was the President of ATCI and AEC.

9 Rollo, pp. 29-30.

10 Id. at 12.

11 Interlining Corporation v. Philippine Trust Company, 428 Phil. 584, 588 (2002).

12 Permanent Concrete Products, Inc. v. Teodoro, 135 Phil. 364, 367 (1968).

13 Tiu v. Middleton, 369 Phil. 829, 835 (1999).

14 Id.

15 362 Phil. 362, 369 (1999).

16 Macasa v. Herrera, 101 Phil. 44, (1957).

17 Alonso v. Villamor, 16 Phil. 315, 322 (1910).

18 Tanhu v. Ramolete, 160 Phil. 1101, 1113-1114 (1975).

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