G.R. No. L-16746 - Rexwell Corporation vs. Canlas

Rexwell Corporation (plaintiff/appellant) filed a complaint on October 28, 1959, before the Court of First Instance of Manila alleging breach of a contractual agreement with Dominador P. Canlas (defendant/appellee) regarding the drilling of a well in the defendant’s riceland in Minalin, Pampanga.
The plaintiff claimed that it had completed the drilling to the satisfaction of the defendant, but the defendant failed to pay the balance of P5,014.74, which was the remaining amount of the contract price, and also did not provide proper facilities for the removal of the plaintiff’s equipment. The plaintiff further sought damages amounting to P17,940.74, representing additional losses including attorney’s fees and litigation expenses.

On November 12, 1959, the defendant admitted that he had contracted the plaintiff for the well drilling service and agreed to provide the necessary facilities for equipment movement upon work completion.
However, the defendant raised special defenses including:

The tendering of an amount of P2,000.00 subject to adjustment after the final completion of the well.
The claim that the well was not completed in a satisfactory (good order and condition) manner by the plaintiff.
The assertion that materials used were in strict compliance with the agreed specifications.

The defendant also filed a counterclaim for P30,000.00, alleging that the plaintiff’s failure to complete the work as contractually obligated caused him damages.

After the issue join, the case was scheduled for hearing on December 4, 1959.
On November 23, 1959, defendant’s counsel filed a motion to transfer the hearing date because of a scheduling conflict with another case, seeking inclusion of the matter in the 1960 calendar.
On November 28, the court reset the hearing for December 18, 1959.
Before the notice of the rescheduled hearing was received, the plaintiff filed an urgent motion for postponement (originally for December 4) arguing that its principal witnesses – the company’s president and manager – had already departed for the United States on November 28. The plaintiff requested that the hearing be deferred to February 1960, when the witnesses were to return.

On December 5, 1959, acting on the plaintiff’s urgent motion for postponement, the court issued an order denying the motion on the basis that:

The motion was premised on the fact that the plaintiff was allegedly indisposed due to being abroad.
The court noted that the hearing had been set long before the plaintiff departed and the plaintiff’s counsel had not objected when the hearing was initially scheduled.

The case was not called for hearing on December 4 due to the previously issued order resetting the hearing to December 18.
On December 8, 1959, the plaintiff reiterated its request for postponement due to the ongoing absence of its two material witnesses.
Two days later, the defendant similarly filed a motion for postponement on the ground that his counsel was burdened with another trial. Both motions, however, were denied in an order dated December 12, 1959.
During the trial on December 18, 1959, the plaintiff’s counsel once again moved for resetting the hearing for February 1960 on the same ground of witness absence. That motion was summarily denied in open court, and a motion for reconsideration was also rejected.
On the same day, the court dismissed the case “in view of the failure of the plaintiff to present its evidence” during the trial session.

Plaintiff appealed directly to the Supreme Court, contesting primarily the denial of its motions for postponement and the dismissal of the case.
The pivotal legal contention was whether the lower court abused its discretion in refusing to postpone the trial, despite the plaintiff’s justification of the absence of its principal witnesses.
The dispute raised questions regarding the proper application of Section 2, Rule 115 of the Rules of Court, which governs continuances or postponements of trial on the application of either party for good cause.

Whether it was proper for the lower court to deny the plaintiff’s motions for postponement of the trial based on the absence of its material witnesses (the president and manager of Rexwell Corporation) who had left the country.
Whether the dismissal of the case on the ground that the plaintiff failed to present its evidence during the session was justified and within the sound judicial discretion of the lower court.
Whether the defendant’s interests were prejudiced by the postponement asked for by the plaintiff given that the defendant himself had indicated a desire to have the hearing rescheduled to the 1960 calendar.