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G.R. No. 194638, July 02, 2014 - PARAÑAQUE KINGS ENTERPRISES, INC., Petitioner, v. CATALINA L. SANTOS, REPRESENTED BY HER ATTORNEY-IN-FACT, LUZ B. PROTACIO, AND DAVID R. RAYMUNDO, Respondents.

G.R. No. 194638, July 02, 2014 - PARAÑAQUE KINGS ENTERPRISES, INC., Petitioner, v. CATALINA L. SANTOS, REPRESENTED BY HER ATTORNEY-IN-FACT, LUZ B. PROTACIO, AND DAVID R. RAYMUNDO, Respondents.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 194638, July 02, 2014

PARAÑAQUE KINGS ENTERPRISES, INC., Petitioner, v. CATALINA L. SANTOS, REPRESENTED BY HER ATTORNEY-IN-FACT, LUZ B. PROTACIO, AND DAVID R. RAYMUNDO, Respondents.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated September 22, 2010 and the Resolution3 dated November 23, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 92522, which affirmed the following Orders of the Regional Trial Court of Makati City, Branch 57 (RTC), rendered in Civil Case No. 91-786 for breach of contract with damages: (a) First Order4dated July 7, 1998 denying petitioner Parañaque Kings Enterprises, Inc.’s (petitioner) motion to cancel pre-trial and ordering the parties “to go into pre-trial”; (b) Second Order5dated July 7, 1998 declaring petitioner non-suited for refusing “to go into pre-trial despite the Order of the [c]ourt to do so,” and dismissing the complaint; and (c) Order dated September 21, 19986 denying petitioner’s motion for reconsideration of the First and Second Orders.7

The Facts

Respondent Catalina L. Santos (Santos) entered into a Contract of Lease8 with Frederick O. Chua (Chua) over eight (8) parcels of land9 located in Parañaque City (leased premises), specifically giving the latter the “first option or priority to buy” the same in case of sale.10 Chua then caused the construction of a 6-door commercial complex11 on the leased premises but, by reason of business reverses, he was constrained to assign12 his rights thereon to Lee Ching Bing (Lee), who likewise assumed all obligations under the lease contract with Santos. Lee, in turn, executed a Deed of Assignment13 over the leased premises, including all improvements thereon, in favor of petitioner. On March 19, 1991, petitioner filed a Complaint14 before the RTC (docketed as Civil Case No. 91-786) against Santos and respondent David A. Raymundo (Raymundo) to whom Santos allegedly sold the leased premises on September 21, 1988 for a consideration of P5,000,000.00,15 without giving petitioner the opportunity to exercise its priority to buy the same. Petitioner claimed that, when it objected to the sale, Santos repurchased the subject properties for the same price,16 and offered them to petitioner for P15,000,000.00. The latter made a counter-offer of P5,000,000.00 but, before replying thereto, Santos sold the subject properties again to Raymundo on May 15, 1989 for P9,000,000.00.17 Petitioner argued that the sale was simulated and that there was collusion between Santos and Raymundo (respondents).

Respondents respectively moved18 for the dismissal of the Complaint on the main ground that it stated no cause of action. Raymundo alleged that there were, in fact, previous offers made to petitioner that the latter simply ignored.19 Santos, on the other hand, maintained that petitioner had already recognized and respected Raymundo’s status as the new owner-lessor of the subject properties due to its payment of lease rentals to Raymundo, and, as such, is now estopped from challenging Raymundo’s title.20 In addition, Santos claimed that the deed of assignment executed in favor of petitioner did not include the “first option” clause provided in the lease contract.21 On September 2, 1991, the RTC dismissed22 petitioner’s Complaint on the ground that it “does not contain any valid cause of action.”23 Petitioner then filed a motion for reconsideration24 which was, however, denied by the RTC in an Order25 dated October 11, 1991. Aggrieved, petitioner elevated the case on appeal before the CA (docketed as CA-G.R. CV No. 34987) which rendered a Decision26 dated March 29, 1993 affirming the dismissal of the Complaint. Eventually, the foregoing CA Decision was reversed27 on petition for review before the Court (docketed as G.R. No. 111538) in a Decision dated February 26, 1997 (February 26, 1997 Decision), upon a finding that the Complaint “sufficiently alleges an actionable contractual breach”28 on the part of respondents. The Court explained that the trial and appellate courts based their decision on the allegation that Santos had actually offered the subject properties for sale to petitioner prior to the final sale in favor of Raymundo, but that the offer was rejected. However, the Court held that in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale of the subject properties for the amount of P9,000,000.00, the price for which it was finally sold to Raymundo, should have likewise been first offered to petitioner.29

Necessarily, the Court remanded the case to the trial court for further proceedings. When respondents filed their Answer with Compulsory Counterclaims30 (Answer), they claimed that the first offer of P5,000,000.00 was declined by petitioner “because it could not afford the price.”31 After Raymundo reconveyed the subject properties to Santos, the latter offered it again to petitioner at the price of P15,000,000.00, which it found to be “ridiculous,” insisting that P5,000,000.00 is the “true and reasonable value” of the subject properties and that it is willing to buy the same only for said amount.32 Nevertheless, the reduced price of P9,000,000.00 was allegedly33 offered to petitioner, but the latter refused and maintained its stance on the value of the said properties. Protesting that certain allegations in the Answer tended to vary, contradict, and falsify the findings of the Court in the February 26, 1997 Decision, petitioner filed a Motion to Strike out from the Answer with Compulsory Counterclaims Certain Allegations or Matters34 (Motion to Strike Out), arguing that respondents are bound by the following conclusive findings of the Court and, hence, may no longer detract therefrom:

A careful examination of the complaint reveals that it sufficiently alleges an actionable contractual breach on the part of private respondents. Under paragraph 9 of the contract of lease between respondent Santos and petitioner, the latter was granted the “first option or priority” to purchase the leased properties in case Santos decided to sell. If Santos never decided to sell at all, there can never be a breach, much less an enforcement of such “right.” But on September 21, 1988, Santos sold said properties to Respondent Raymundo without first offering these to petitioner. Santos indeed realized her error, since she repurchased the properties after petitioner complained. Thereafter, she offered to sell the properties to petitioner for P15 million, which petitioner, however, rejected because of the “ridiculous” price. But Santos again appeared to have violated the same provision of the lease contract when she finally resold the properties to respondent Raymundo for only P9 million without first offering them to petitioner at such price. Whether there was actual breach which entitled petitioner to damages and/or other just or equitable relief, is a question which can better be resolved after trial on the merits where each party can present evidence to prove their respective allegations and defenses.35

Petitioner wanted to strike out, in particular, the allegations in the Answer that the subject properties were offered to it first at P5,000,000.00, and subsequently at P9,000,000.00.36 However, petitioner’s Motion to Strike Out was denied by the RTC in an Order37 dated May 18, 1998, emphasizing the inapplicability of the principle of res judicata with respect to the afore-quoted February 26, 1997 Decision. As indicated in the dispositive portion of the said Decision, the trial court was to conduct “further proceedings” which meant that respondents could not be deprived of the right to submit their own case and to proffer evidence to rebut the allegations in the Complaint.38 Petitioner moved39 for the reconsideration of the said Order, as well as the voluntary inhibition of the presiding judge for alleged acts of “undue deference for and haste in granting all the motions and wishes of [respondents] and his consistent denial of the motions of [petitioner].”40 The motion was, however, denied by the RTC, in an Order41 dated June 11, 1998, and the case was set for pre-trial on July 7, 1998. On July 2, 1998, petitioner filed a Motion to Cancel Pre-Trial,42 claiming that it was preparing a petition for certiorari and prohibition which (a) was to be filed with the CA before the scheduled pre-trial on July 7, 1998, and (b) was intended to challenge the validity of the RTC’s Orders dated May 18, 1998 and June 11, 1998 by raising alleged prejudicial questions that must be resolved first before the pre-trial and trial on the merits of the case could proceed. Incidentally, the petition for certiorari and prohibition43 (docketed as CA-G.R. SP No. 48214) that was actually filed at 2:1744 in the afternoon of July 7, 1998, (contrary to petitioner’s assertion in its Motion to Cancel Pre-Trial that it was to be filed before the July 7, 1998 pre-trial) was resolved by the CA in favor of petitioner in a Decision45 dated December 6, 1999 (December 6, 1999 CA Decision), where it was determined that the Motion to Strike Out was denied prematurely.

On the other hand, the CA declared the petition for voluntary inhibition moot and academic with the appointment of a regular judge for Branch 57. Thus, the Motion to Strike Out was ordered to be resolved by the regular judge. Subsequently, the petition for review on certiorari46 filed by respondents before the Court (docketed as G.R. No. 143562) to question the December 6, 1999 CA Decision was dismissed by the Court in a Decision47 dated October 23, 2006. Meanwhile, on July 7, 1998, the day of the pre-trial sought to be cancelled, the RTC denied petitioner’s Motion to Cancel Pre-Trial in its First Order48 of even date. Accordingly, the RTC directed the parties to proceed to pre-trial as scheduled. The trial court then required petitioner to start the pre-trial with the statement of its cause. However, counsel for petitioner, Atty. Nelson Santos, refused to do so saying he would just furnish the court the following day with a copy of the petition for certiorari and prohibition filed with the CA.49 Consequently, upon motion of the opposing counsel, the RTC (a) declared petitioner non-suited, and (b) dismissed the Complaint in its Second Order50 of the same day. Again, petitioner filed a motion for reconsideration,51 which was denied by the RTC in an Order52dated September 21, 1998, holding that the dismissal of the Complaint was due to petitioner’s defiance of the order to proceed with the pre-trial. Section 3, Rule 17 of the Rules of Court authorizes the court to dismiss the complaint, upon motion or motu propio, for failure of the plaintiff to comply with any of its orders. Petitioner then filed a Notice of Appeal53 with the RTC from the First and Second Orders both dated July 7, 1998 and the Order dated September 21, 1998. The same was, however, denied due course for being filed out of time in an Order54 dated November 27, 1998. The trial court held that the motion for reconsideration filed by petitioner on August 12, 1998 was pro forma and did not toll the running of the period to appeal. Petitioner had 15 days from July 29, 1998, the date of receipt of copies of the First and Second Orders both dated July 7, 1998, or until August 13, 1998, to perfect its appeal but it failed to do so. Petitioner filed its Notice of Appeal only on September 30, 1998, which was about 48 days late.55 Unperturbed, petitioner went up to the CA, for the third time, on a petition for certiorari, mandamus, and prohibition56 (docketed as CA-G.R. SP No. 50570), insisting that its motion for reconsideration substantially complied with the rules and, thus, effectively tolled the reglementary period to appeal. Nearly a decade after, or on May 23, 2008, the appellate court granted the petition, annulled the questioned orders of the trial court, and directed the lower court to give due course to petitioner’s appeal.57 

Upon motion for execution58 of petitioner, the trial court issued an Order59 dated November 11, 2008 elevating the entire records of the case to the CA. The appeal, which was the fourth time petitioner was before the CA, was docketed as CA-G.R. CV No. 92522. On September 22, 2010, the appellate court rendered the assailed Decision60affirming the First and Second Orders both dated July 7, 1998, as well as the Order dated September 21, 1998. The same court further denied61 petitioner’s motion for reconsideration62 of said Decision, hence, the instant petition.

 

The Issue Before the Court

 

The threshold issue for the Court’s resolution is whether or not the CA correctly upheld (a) the RTC’s denial of petitioner’s Motion to Cancel Pre-Trial, and (b) the dismissal of the Complaint for failure of petitioner to proceed to pre-trial as directed by the trial court.

The Court’s Ruling
At the outset, it should be emphasized that the trial court has the discretion on whether to grant or deny a motion to postpone and/or reschedule the pre-trial conference in accordance with the circumstances obtaining in the case. This must be so as it is the trial court which is able to witness firsthand the events as they unfold during the trial of a case. Postponements, while permissible, must not be countenanced except for clearly meritorious grounds and in light of the attendant circumstances.63 In this case, the RTC was able to explain to the satisfaction of the Court that the postponement of the pre-trial scheduled on July 7, 1998 was not warranted under the circumstances detailed below, viz.:
As far as the Court could gather, the sought postponement of the pre-trial on July 7 was dilatory, if movant was not trifling with this court, because at the pre-trial scheduled on March 26, 1998 it was plaintiff-movant through counsel, Justice Emilio Gangcayco, who asked for time and was given 10 days to file motion for contempt and to strike out averments in defendants answer. Thus, pre-trial was reset to May 21, 1998.But on May 21, 1998 the pre-trial was again reset to June 11, 1998 to enable movant's counsel, Atty. Nelson Santos, to prepare for pre-trial as he was not ready for pre-trial.The scheduled pre-trial on June 11, 1998 was blocked by plaintiff's Motion for Inhibition and to vacate and/or reconsider the order of May 18, 1998. Both counsel submitted the matter for resolution and agreed that the pre-trial likewise be scheduled in that resolution, considering that Atty. Tomacruz (counsel for defendants) may oppose the postponement of the pre-trial of the June 11 pre-trial if no date is fixed therein. (Order dated June 11, 1998) The June 11 pre-trial was accordingly reset to July 7, 1998 as the court denied the motion for inhibition and reconsideration.64 (Emphases and underscoring supplied)

The pattern to delay the pre-trial of the instant case is quite evident from the foregoing. Petitioner clearly trifled with the mandatory character of a pre-trial, which is a procedural device intended to clarify and limit the basic issues raised by the parties and to take the trial of cases out of the realm of surprise and maneuvering. More significantly, a pre-trial has been institutionalized as the 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, it paves the way for a less cluttered trial and resolution of the case.65 It is, thus, mandatory for the trial court to conduct pre-trial in civil cases in order to realize the paramount objective of simplifying, abbreviating, and expediting trial.66 Far from showing bias or prejudice, the RTC judge was merely complying with his sworn duty to administer justice without delay. It should be recalled that the Complaint was filed by petitioner on March 19, 1991. 

Seven (7) years later, or in 1998, no pre-trial had been conducted as yet. Hence, the cancellation of the pre-trial on the ground of the impending filing of a petition for certiorari and prohibition, as there was no proof at the time of the hearing that said petition was in fact filed, was obviously a dilatory tactic designed for petitioner to control the proceedings of the court. The Court finds nothing improper, irregular or jaundiced with the trial court’s course of action. As the latter aptly pointed out, since petitioner presented no copy of the petition for certiorari and prohibition duly received by the appellate court, there was nothing with which it could evaluate the “merits and demerits of the proposed postponement.”67 More importantly, even with the actual filing of the petition for certiorari at 2:1768 in the afternoon of July 7, 1998, no restraining order was issued by the CA enjoining the trial court from proceeding with the pre-trial.69 The appellate court correctly emphasized, in the assailed Decision dated September 22, 2010, that the mere elevation of an interlocutory matter through a petition for certiorari does not by itself merit a suspension of the proceedings before the trial court, unless a temporary restraining order or a writ of preliminary injunction has been issued.70 This pronouncement is squarely consistent with Section 7, Rule 65 of the Rules of Court which was instructively applied in Republic of the Phils. v. Sandiganbayan (First Div.)71 as follows:

The mere elevation of an interlocutory matter to this Court through a petition for Certiorari under Rule 65 of the Rules of Court, like in the present case, does not by itself merit a suspension of the proceedings before a public respondent, unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent. Rule 65, Section 7 of the Rules of Court so provides:
SEC. 7. Expediting proceedings; injunctive relief. — The court in which the petition [for Certiorari, Prohibition and Mandamus] is filed may issue orders expediting the proceedings, and it may also grant a temporary restraining order or a writ of preliminary injunction for the preservation of the rights of the parties pending such proceedings. The petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued, enjoining the public respondent from further proceeding in the case.
The burden is thus on the petitioner in a petition for Certiorari, Prohibition and Mandamus to show that there is a meritorious ground for the issuance of a temporary restraining order or writ of preliminary injunction for the purpose of suspending the proceedings before the public respondent. Essential for granting injunctive relief is the existence of an urgent necessity for the writ in order to prevent serious damage.72 (Italics, emphasis and underscoring in the original)
Thus, in light of the foregoing, petitioner’s refusal to proceed with the pre-trial could not be justified by the filing of the petition for certiorari and prohibition. Petitioner’s assertion that the alleged “sham, contemptuous lies contained in respondents’ Answer should be stricken off from the records”73 first before the pre-trial could proceed is, at best, speculative as it was palpably anchored on the mere supposition that its petition would be granted. It bears stressing that the rules of procedure do not exist for the convenience of the litigants. These rules are established to provide order to and enhance the efficiency of the judicial system. By trifling with the rules and the court processes, and openly defying the order of the trial court to proceed to pre-trial, petitioner only has itself to blame for the dismissal of its Complaint. The dismissal is a matter within the trial court’s sound discretion, which, as authorized by Section 3, Rule 17 of the Rules of Court hereunder quoted, must stand absent any justifiable reason to the contrary, as in this case:
SEC. 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. (Emphases supplied)

Verily, as the Court sees it, petitioner had the opportunity to present its case, yet chose to unduly forego the same. The appellate court in CA-G.R. CV No. 92522 pointed out the crucial fact that petitioner had already submitted its pre-trial brief and its counsel was armed with a special power of attorney for the pre-trial.74There was nothing that could have stopped petitioner from proceeding to pre-trial when its motion for postponement was denied. 

The trial court correctly opined that it would have been entirely different if petitioner simply objected to the proceeding and made of record its objection. But petitioner’s refusal to even start with the statement of its cause is a “clear, firm and open defiance” of the directive of the court,75 which justified the dismissal of its Complaint pursuant to Section 3, Rule 17 of the Rules of Court as above-cited. The Court finally considers that this case was elevated to the CA for four (4) times, and this is the third time that the Court has to resolve issues between the parties, at the instance of petitioner. If this case has dragged on for more than two (2) decades, surely petitioner cannot wash its hands of any responsibility therefor. The expeditious disposition of cases is as much the duty of petitioner, being the plaintiff, as the court’s. Indeed, respondents, as the defendants, cannot be wearingly denied of their right to the speedy disposition of the case filed against them. After more than two (2) decades, respondents certainly do not deserve the agony of going through the same issues all over again with petitioner, which could have been settled had the latter simply proceeded to pre-trial and had given the trial court the opportunity to evaluate the evidence, apply the law, and decree the proper judgment. At the end of the day, the unfortunate fault can fall on no one’s hands but on petitioner’s. Indeed, there is a price to pay when one trifles with the rules.

WHEREFORE, the petition is DENIED. The Decision dated September 22, 2010 and the Resolution dated November 23, 2010 of the Court of Appeals in CA-G.R. CV No. 92522 are hereby AFFIRMED. SO ORDERED.

Carpio, (Chairperson), Brion, Del Castillo, and Perez, JJ., concur.

Endnotes:


1 Rollo, pp. 12-79.

2 Id. at 82-95. Penned by Associate Justice Fernanda Lampas Peralta, with Associate Justices Priscilla J. Baltazar-Padilla and Danton Q. Bueser, concurring.

3 Id. at 97.

4 Id. at 98-99. Penned by Acting Presiding Judge Bonifacio Sanz Maceda.

5 Id. at 100.

6 Id. at 101-106.

7 Id. at 82-83.

8 Id. at 150-153. Dated November 28, 1977.

9 Covered by Transfer Certificates of Title (TCT) Nos. S-19637, S-19638, S-19643, S-19644, S-19645, S-19646, S-19647, and S-19648 (subject properties). See id. at 123-149.

10 Id. at 152, paragraph 9.

11 Id. at 155.

12 Id. at 154-156. Agreement dated February 12, 1979.

13 Id. at 157-159. Dated April 6, 1979.

14 Id. at 188-191.

15 See Deed of Absolute Sale; id. at 160-163.

16 See Deed of Reconveyance; id. at 166-169.

17Rollo, p. 19. See second Deed of Absolute Sale; id. at 175-178.

18 See Motion to Dismiss dated July 15, 1991 filed by Raymundo; id. at 192-198 and Motion to Dismiss filed by Santos on July 11, 1991; id. at 199-204.

19 Id. at 195-196.

20 Id. at 200-201.

21 Id. at 203-204.

22 Id. at 207-211. See Order penned by Judge Francisco X. Velez.

23 Id. at 211.

24 Id. at 212-213. Dated October 3, 1991.

25 Id. at 214.

26 Id. at 216-221. Penned by Associate Justice Emeterio C. Cui, with Associate Justices Jainal D. Rasul and Eduardo G. Montenegro, concurring.

27 See Decision in Parañaque Kings Enterprises, Inc. v. CA, 335 Phil. 1184 (1997).

28 Id. at 1196.

29 Id. at 1197.

30Rollo, pp. 243-256. Dated February 17, 1998.

31 Id. at 247.

32 Id. at 249-250.

33 Id. at 251.

34 Id. at 283-301. Dated April 14, 1998.

35 Id. at 285. See also Parañaque Kings Enterprises, Inc. v. CA, supra note 27, at 1196.

36 Id. at 298-299.

37 Id. at 313-315. Penned by Presiding Judge Bonifacio Sanz Maceda.

38 Id. at 315.

39 Id. at 317-329. Motion for the Voluntary Inhibition of His Honor the Presiding Judge and to Vacate and/ or Reconsider the Order of May 18, 1999 dated June 4, 1998.

40 Id. at 326.

41 Id. at 330-333.

42 Id. at 334-335.

43 Id. at 457-490.

44 Id. at 457.

45 Id. at 491-502. Penned by Associate Justice Mariano M. Umali, with Associate Justices Quirino D. Abad Santos, Jr. and Romeo J. Callejo, Sr., concurring.

46 Id. at 513-526.

47 See Santos v. Parañaque Kings Enterprises, Inc., 535 Phil. 776 (2006).

48 Id. at 98-99.

49 Id. at 100.

50 Id.

51 Id. at 336-343. Dated August 12, 1998.

52 Id. at 101-106.

53 Id. at 346-347. Dated September 30, 1998.

54 Id. at 358-363.

55 Id. at 363.

56 Id. at 364-425. Dated January 25, 1999.

57 Id. at 427-438. See CA Decision penned by Associate Justice Edgardo P. Cruz, with Associate Justices Fernanda Lampas Peralta and Marlene G. Sison, concurring.

58 Id. at 439-441.

59 Id. at 456. Penned by Pairing Judge Reynaldo M. Laigo.

60 Id. at 82-95.

61 Id. at 97.

62 Id. at 107-122. Dated October 11, 2010.

63Alcaraz v. CA, 529 Phil. 77, 82-83 (2006).

64Rollo, pp. 103-104. Order dated September 21, 1998.

65 See Anson Trade Center, Inc. v. Pacific Banking Corporation, 600 Phil. 806, 814 (2009).

66Dr. Vera v. Rigor, 556 Phil. 561, 562 (2007).

67Rollo, pp. 98-99. First Order dated July 7, 1998.

68 Id. at 457.

69 Id. at 103. Order dated September 21, 1998.

70 Id. at 90.

71 525 Phil. 804 (2006).

72 Id. at 807-808.

73Rollo, p. 41.

74 Id. at 93. CA Decision dated September 22, 2010.

75 Id. at 105-106.
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