Case Summary (G.R. No. 179999)
Factual Background and Loan Agreements
Petitioners ATCI and AEC are engaged in retail and wholesale merchandising. Petitioner Chen is Vice Head of these corporations. Respondent PBC, an insolvent banking institution under liquidation by PDIC, granted multiple loans to petitioners: ATCI secured loans totaling P4,350,000.00 across four separate dates; AEC obtained a loan of P1,000,000.00 on October 26, 1984. To secure these obligations, two Continuing Suretyship Agreements were executed by petitioner Chen and the late Keng Giok (President of ATCI and AEC) on behalf of the corporations in 1981 and 1982, granting respondent the right to retain a lien on funds or properties in the name or credit of the petitioners.
Procedural History: Collection Case and Motions Filed
Following petitioners’ default and failure to pay, respondent filed Civil Case No. 01-102198 for collection before the RTC of Manila. On January 14, 2002, petitioner Chen filed a Motion to Dismiss instead of an Answer, and petitioners ATCI, AEC, and the Estate of Keng Giok jointly filed a similar Motion. The respondent opposed these motions, and after a period of RTC inaction, respondent filed Motions to Resolve in 2003. The RTC denied the motions to dismiss on November 4, 2004, but dropped the Estate of Keng Giok as defendant due to his death prior to the filing of the case.
Pre-Trial Conferences and Non-Appearance of Respondent
A pre-trial was conducted on April 4, 2005, with all parties present, leading to an unsuccessful arbitration attempt. A second pre-trial was scheduled for October 10, 2005, which respondent failed to attend. Petitioners moved to dismiss the case for non-appearance, which the RTC granted without prejudice on the same date. Respondent filed a Motion for Reconsideration, citing excusable negligence due to PDIC’s ongoing reorganization and heavy caseload; this was denied by the RTC on January 17, 2006.
Petition for Certiorari and Court of Appeals Decision
Respondent filed a Petition for Certiorari under Rule 65 before the Court of Appeals, contending the RTC committed grave abuse of discretion in dismissing the case for non-appearance. The Court of Appeals agreed and reversed the RTC’s dismissal on May 31, 2007, ruling that the rules of court should be liberally construed to promote substantial justice, and that party-litigants should be afforded the broadest opportunity for the proper and just resolution of disputes free from technicalities. The Court of Appeals held that respondent’s absence was not intentional, given PDIC’s reorganization and limited manpower managing litigation from over 400 closed banks. The Court of Appeals refused to reconsider this decision in a resolution dated October 16, 2007.
Issues Presented to the Supreme Court
- Whether the reversal by the Court of Appeals of the RTC’s dismissal of respondent’s complaint due to non-appearance at pre-trial complied with the 1997 Rules on Civil Procedure and applicable jurisprudence.
- Whether the RTC abused its discretion in dismissing the complaint for respondent’s non-appearance at pre-trial.
Legal Analysis: Nature of Pre-Trial and Consequences of Non-Appearance
Pre-trial is a procedural mechanism designed to clarify and limit issues, prevent surprise, and expedite trial proceedings. Rule 18 of the Revised Rules of Court requires the appearance of parties at pre-trial. Failure of plaintiff to appear may result in dismissal with prejudice, and failure of a defendant may lead to ex parte presentation of evidence and judgment. However, Section 4 of the same rule provides that non-appearance may be excused for valid cause or by authorized representation.
The Court found that respondent’s absence on October 10, 2005, was excusable due to the privatized circumstances—specifically, PDIC’s reorganization coinciding with the adjustment period for handling thousands of litigations and decreased legal manpower. There was no indication that respondent deliberately avoided the hearing or sought to delay proceedings. Moreover, respondent consistently participated in all other hearings and actively pursued motions
...continue readingCase Syllabus (G.R. No. 179999)
Facts of the Case
- Petitioners Anson Trade Center, Inc. (ATCI) and Anson Emporium Corporation (AEC) are corporations engaged in retail and wholesale general merchandising; Teddy Keng Se Chen (Chen) is Vice Head of these entities.
- Respondent Pacific Banking Corporation (PBC) is a closed bank undergoing liquidation, represented by its liquidator, the Philippine Deposit Insurance Corporation (PDIC).
- ATCI borrowed multiple loans from PBC amounting to a total of P4,350,000.00 on various dates between 1982 and 1984.
- AEC likewise secured a loan of P1,000,000.00 from PBC on 26 October 1984.
- To secure these obligations, petitioner Chen and the late Keng Giok, President of ATCI and AEC, executed two Continuing Suretyship Agreements on 16 September 1981 and 1 March 1982.
- The Suretyship Agreements granted respondent the right to retain a lien on properties or monies held for or credited to petitioners as collateral.
- Petitioners defaulted on their loans despite repeated demands from respondent.
- Respondent filed a collection case before the Regional Trial Court (RTC) of Manila, docketed as Civil Case No. 01-102198.
- Instead of answering, respondent Chen filed a Motion to Dismiss, joined by petitioners ATCI, AEC, and the Estate of Keng Giok.
- After the RTC’s inaction on these motions, respondent filed Motions to Resolve; the RTC denied the Motions to Dismiss but dropped the deceased Keng Giok as defendant.
- Pre-trial conference was held on 4 April 2005 where all parties were present and the case was referred unsuccessfully to arbitration.
- A subsequent pre-trial scheduled on 10 October 2005 proceeded without the attendance of respondent PBC, prompting petitioners to move for dismissal due to respondent’s non-appearance.
- RTC granted the dismissal order on the same date.
- Respondent sought reconsideration citing excusable negligence and reorganization challenges; the RTC denied the motion on 17 January 2006.
- Respondent filed a Petition for Certiorari with the Court of Appeals (CA), which annulled the RTC’s dismissal and refused reconsideration of its decision.
Issues Presented
- Whether the re