G.R. No. 167403 - Makati Insurance Co., Inc. vs. Reyes

Case Summary (G.R. No. 167403)

Key Dates

Cargo arrival/unloading: August–September 1996 (as alleged).
Repeated pre-trial settings: between April 2000 and November 2001 (recorded postponements).
RTC dismissal order: 19 November 2001; petitioner received same on 29 November 2001.
Verified Motion for Reconsideration filed: 4 December 2001; denied by RTC order dated 17 June 2002; petitioner received denial 3 July 2002.
Notice of Appeal filed: 17 July 2002.
RTC Order dismissing Notice of Appeal: 2 October 2002.
Court of Appeals decision: 12 August 2004; denial of motion for reconsideration by CA: 17 February 2005.
Supreme Court decision date in the provided text: August 6, 2008 (decision summary reviewed).

Applicable Law and Constitutional Basis

1987 Constitution (applicable because the decision date is after 1990).
1997 Rules of Civil Procedure (Rule 17 Sec. 3 on dismissal for plaintiff’s fault; Rule 41 Sec. 1(h) on non-appealability of orders dismissing actions without prejudice; Rule 41 Sec. 3 on period of ordinary appeal).
Rule 65 (extraordinary writ of certiorari) as an extraordinary remedy.
Controlling jurisprudence cited: Neypes v. Court of Appeals (introducing the “fresh period rule”), and subsequent cases applying that rule.

Core Facts

Petitioner-insurer alleges that cargo discharged from M/V "Cherry" arrived damaged and that private respondents (shipowners/operators and port arrastre operator) were responsible due to gross negligence and breach of contractual duties. Petitioner paid the assured and was subrogated to its rights, then filed suit for P412,253.91 plus exemplary damages, attorney’s fees and litigation expenses. The litigation experienced numerous postponements and cancellations of pre-trial conferences. On 19 November 2001, after petitioner’s counsel failed to appear, the RTC dismissed the case without prejudice for plaintiff’s failure to prosecute.

Procedural History

After the RTC dismissal, petitioner filed a Verified Motion for Reconsideration (alleging counsel’s sickness), which the RTC denied on 17 June 2002 (notice received 3 July 2002). Petitioner filed a Notice of Appeal on 17 July 2002. The RTC dismissed the Notice of Appeal as filed three days late under Rule 41 Sec. 3. Petitioner sought relief in the Court of Appeals via certiorari (Rule 65), which affirmed the RTC’s dismissal of the Notice of Appeal and held the Notice was dismissible because an order dismissing an action without prejudice is not appealable; CA alternatively held the appeal would be untimely. Petitioner then elevated the matter to the Supreme Court by Petition for Review under Rule 45.

Issue Presented

Whether petitioner’s Notice of Appeal was filed within the reglementary period and whether the remedy pursued (notice of appeal) was appropriate given the RTC’s dismissal of the action without prejudice; alternatively, whether certiorari was the proper and available remedy and whether the RTC acted with grave abuse of discretion.

Analysis — Timeliness and the “Fresh Period Rule”

The Court applied Rule 41 Sec. 3, which prescribes a 15-day period to take an ordinary appeal and provides that the period is interrupted by a timely motion for new trial or reconsideration. The Court then considered Neypes v. Court of Appeals, which promulgated the “fresh period rule” permitting a fresh 15-day period to file a notice of appeal counted from receipt of the order denying a timely motion for new trial or reconsideration. Applying Neypes and subsequent precedents, the Court found that petitioner’s Notice of Appeal filed on 17 July 2002 was within the fresh 15-day period counted from petitioner’s receipt of the denial on 3 July 2002, and thus would be timely under that rule.

Analysis — Appealability and Appropriateness of Remedy

Despite finding the notice timely under the fresh period rule, the Court emphasized that an order dismissing an action without prejudice is specifically designated in Rule 41 Sec. 1(h) as non-appealable under Rule 41. The proper remedy from such an RTC order is a special civil action for certiorari under Rule 65 or refiling the case. The Court agreed with the Court of Appeals that the Notice of Appeal was the wrong remedy and thus dismissible on that ground.

Analysis — Certiorari and Grave Abuse of Discretion

The Court examined whether the RTC’s dismissal could be set aside by certiorari as an exercise of grave abuse of discretion. It reiterated the strict standard for grave abuse of discretion: the act must be so capricious or whimsical as to be equivalent to lack of jurisdiction or a virtual refusal to perform a duty enjoined by law. The Court reviewed the record of repeated postponements and the numerous instances when petitioner or its counsel failed to appear or to prosecute the case (multiple re-settings and cancellations between April 2000 and November 2001). Given this pattern and the trial court’s finding of lack of interest to pro

Case Syllabus (G.R. No. 167403)

Procedural Posture

Petition for Review under Rule 45 assails (1) the Court of Appeals Decision dated 12 August 2004 dismissing petitioner Makati Insurance Co., Inc.’s petition in CA-G.R. SP No. 74220 and affirming the RTC Order dated 2 October 2002 dismissing petitioner’s Notice of Appeal as filed three days beyond the reglementary period; and (2) the Court of Appeals Resolution dated 17 February 2005 denying petitioner’s Motion for Reconsideration.
The petition to the Supreme Court seeks review of the Court of Appeals’ affirmance of the RTC’s dismissal of the Notice of Appeal and denial of relief.
The Supreme Court’s Decision is penned by Justice Minita V. Chico-Nazario and is concurred in by Justices Consuelo Ynares-Santiago (Chairperson), Ma. Alicia Austria-Martinez, Antonio Eduardo B. Nachura, and Ruben T. Reyes.
The petition is ultimately DENIED; the assailed Decision (12 August 2004) and Resolution (17 February 2005) of the Court of Appeals are AFFIRMED and costs are imposed against petitioner.

Parties

Petitioner: Makati Insurance Co., Inc. (insurer and subrogee of the assured/consignee).
Private respondents/defendants in the underlying RTC action: Rubills International, Inc.; Tong Woon Shipping Pte. Ltd.; Asian Terminals, Inc.
RTC Presiding Judge named as respondent in the present certiorari/appeal petition: Hon. Wilfredo D. Reyes, Presiding Judge, Regional Trial Court of Manila, Branch 36.
Assured/consignee: Silver Allies Trading International (owner/assured/consignee to whom the insurer paid the loss and into whose rights the insurer was subrogated).

Factual Background (as alleged in the Complaint)

Rubills International, Inc. and Tong Woon Shipping Pte. Ltd. were alleged to be owners, operators, charterers, bailees, representatives, or agents of ocean-going vessels engaged in international carriage, including the vessel M/V “Cherry,” and thus bound to observe extraordinary diligence in the care and custody of goods.
Asian Terminals, Inc. (ATI) was alleged to be the arrastre operator at the Port of Manila, charged with receiving cargo discharged from vessels, safekeeping while in its protective custody, and delivering to consignees or their representatives.
On or about 11 August 1996 the vessel M/V “CHERRY” arrived in Manila and docked at Pier 15 South Harbor, and the shipment covered by Bill of Lading dated 1 August 1996 was completely unloaded on 9 September 1996: 120 MT Red Beans and 153.00 MT Cattle Meat Colloid (photocopy of Bill of Lading attached as Annex “A”).
After inspection, eighty-four (84) ton bags of the shipment were found in apparent damaged condition, partly to badly wet and loose/torn on sides and/or ends with spillages/wettages to contents apparent.
The losses and damages to the shipment were alleged to have been directly caused by wanton fault, gross negligence, malevolent mishandling, culpable disregard, recreance and/or breach of contractual obligations of all or either of the private respondents as common carrier and arrastre operator.
As a result of the alleged losses, the owner/assured/consignee Silver Allies Trading International sustained damages totaling P412,253.91, which the petitioner-insurer paid; petitioner was subrogated to the rights and interests of the consignee-assured.
Demands for compensation against the private respondents were allegedly ignored and refused.

Complaint: Causes of Action and Reliefs Prayed For

Cause of action: damages arising from breach of contract of carriage and related tortious conduct (wanton fault, gross negligence, malevolent mishandling).
Prayer for judgment ordering respondents, jointly and severally or whichever found liable, to pay:
- Actual damages: P412,253.91 with legal interest from filing of complaint until paid;
- Exemplary damages: at least P20,000.00 or amount proper under the Court’s discretion;
- Attorney’s fees: sum equivalent to 25% of the principal claim of P103,063.47;
- Litigation expenses: at least P10,000.00 or as proven, plus costs of suit.

Pre-Trial and Trial Court Proceedings: Chronology and Key Orders

Case set for initial pre-trial on 17 April 2000; parties agreed and re-set pre-trial multiple times (8 June 2000; 6 July 2000; 3 August 2000).
Petitioner moved to re-set pre-trial to 11 September 2000; on 11 September 2000 petitioner’s counsel absent; pre-trial cancelled and re-set to 17 October 2000.
On 17 October 2000 parties manifested possible settlement; pre-trial cancelled and re-set to 28 November 2000; again re-set to 17 January 2001 upon ATI’s motion.
Additional cancellations and re-settings occurred to 28 March 2001, 19 April 2001, 20 June 2001, 31 July 2001, 5 September 2001 (ground: counsel/representative lacked requisite authority), 15 October 2001 (ground: counsel failed to arrive at proper time).
On 19 November 2001, at third call of that day, only counsel for Rubills and ATI appeared; petitioner’s counsel failed to appear despite due notice. Private respondents moved for dismissal on grounds of petitioner’s failures to appear at prior pre-trials and lack of requisite authority for counsel/representative.
RTC (Judge Wilfredo D. Reyes) issued Order dated 19 November 2001 dismissing the case without prejudice for petitioner’s failure to appear at pre-trial despite ample opportunity; Order stated “No costs.”
Petitioner received the 19 November 2001 dismissal Order on 29 November 2001.
Petitioner filed Verified Motion for Reconsideration on 4 December 2001 alleging counsel’s sickness prevented attendance at pre-trial.
RTC issued Order dated 17 June 2002 denying the Verified Motion for Reconsideration (petitioner received this Order on 3 July 2002).
Petitioner filed a Notice of Appeal on 17 July 2002; private respondents opposed, contending it was filed out of time.
Petitioner filed Motion to Admit Notice of Appeal on 23 September 2002, arguing lack of intent to delay and invoking the dictum against undue importance on technicalities when substantial justice is at stake.
RTC issued Order dated 2 October 2002 dismissing petitioner’s Notice of Appeal as filed three days beyond the 15-day reglementary period and thereby ordered dismissal of the notice.
Petitioner filed a petition for certiorari under Rule 65 with the Court of Appeals challenging the RTC’s 2 October 2002 Order; Court of Appeals denied the petition and affirmed the RTC Order by Decision dated 12 August 2004.
Petitioner’s Motion for Reconsideration in the Court of Appeals