Title
Spouses Corpuz vs. Citibank, N.A.
Case
G.R. No. 175677
Decision Date
Jul 31, 2009
Cardholder's complaint dismissed for non-appearance at pre-trial; Citibank's counterclaim dismissed for failing to present evidence within the prescribed period.
credit card
checks
restaurant
A

Case Summary (G.R. No. 175677)

Factual Background

Azucena B. Corpuz held two credit cards issued by Citibank, N.A., a MasterCard and a VISA card, each with a credit limit of P40,000.00. She paid in full her monthly charges on December 7, 1998 and made additional advance check payments totalling P40,000.00 on December 8 and December 14, 1998. While in Italy on December 9, 1998 she experienced two refusals of card acceptance: first, her VISA card was declined at a restaurant but her MasterCard was subsequently honored; later both cards were refused at a shop and she paid in cash. Her husband inquired with Citibank by overseas telephone calls and was advised that the December check payments had not cleared at the time of the attempted transactions. Upon return, Azucena wrote Citibank on January 13, 1999 demanding reimbursement for overseas call expenses and later sought cancellation of the cards. Citibank continued to send billing statements and assessed interest and penalties, and only after counsel threatened legal action did Citibank provide an explanation that the payments were credited only after the three-working-day clearing period.

Trial Court Proceedings

The spouses filed a complaint for damages against Citibank on November 12, 1999 in Branch 255, RTC Las Piñas City. Citibank moved to dismiss for improper venue; the trial court denied that motion and also denied the spouses’ motion to declare Citibank in default. Citibank filed an answer with a compulsory counterclaim. After pleadings, the trial court repeatedly reset the pre-trial and ultimately scheduled it for May 5, 2003. The spouses and their counsel failed to appear at the May 5, 2003 pre-trial despite notice. On motion of Citibank the trial court dismissed the spouses’ complaint for non-appearance and ordered Citibank to present evidence on its counterclaim ex parte. The spouses’ motion for reconsideration was denied by Order dated September 17, 2003, which reiterated the 30-day period for Citibank to present evidence, a copy of which Citibank received on September 29, 2003.

Subsequent Trial Court Action on the Counterclaim

Citibank filed a motion to defer presentation of evidence on its counterclaim in view of the spouses’ then-pending certiorari petition before the Court of Appeals. The trial court denied Citibank’s motion for deferment after a re-filed motion with notice and a hearing on February 13, 2004. Citibank did not present evidence within the 30-day period ordered by the trial court and, on June 30, 2005, the trial court dismissed Citibank’s counterclaim. Citibank’s motion for reconsideration of that dismissal was denied.

Appellate Proceedings in the Court of Appeals

The spouses sought certiorari in the Court of Appeals in CA-G.R. SP No. 80095 to annul the trial court’s dismissal of their complaint. The Court of Appeals, by Decision of May 25, 2006, set aside the trial court’s September 17, 2003 Order insofar as it allowed Citibank to present evidence ex parte on its counterclaim, but it affirmed the dismissal of the spouses’ complaint and held that the proper remedy for that dismissal was an ordinary appeal, not certiorari. Both sides sought reconsideration in the Court of Appeals. By Resolution of November 30, 2006 the Court of Appeals granted only Citibank’s partial motion for reconsideration and allowed Citibank to prosecute its counterclaim. Separately, in CA-G.R. CV No. 86401 the Court of Appeals, by Decision dated September 27, 2006, affirmed the trial court’s dismissal of Citibank’s counterclaim for failure to present evidence within the ordered period. These appellate rulings produced the two petitions consolidated before the Supreme Court.

Issues Presented to the Supreme Court

The principal issues were: whether the spouses’ non-appearance at pre-trial amounted to excusable cause under Section 4, Rule 18 and thus warranted relief from dismissal; whether Citibank retained the right to prosecute its compulsory counterclaim notwithstanding dismissal of the spouses’ complaint under Section 3, Rule 17; whether the trial court’s Order allowing Citibank to present evidence ex parte was incomplete because it failed to specify the duration for ex parte presentation; whether the trial court erred in denying Citibank’s motion to defer presentation of evidence for lack of notice; and whether the pendency of a certiorari petition before the Court of Appeals automatically suspended the lower court proceedings absent an injunction under Section 7, Rule 65.

Parties’ Contentions

The spouses contended that their failure to appear at pre-trial could be excused for valid causes, including forgetfulness and heavy workloads of counsel, that their complaint should have been decided on the merits, and that certiorari was the proper remedy because the trial court’s dismissal contravened Section 5, Rule 18 and Section 3, Rule 17. Citibank contended that the appellate court had issued conflicting rulings regarding its right to prosecute the counterclaim, that the trial court’s order to present evidence ex parte lacked finality because it did not fix the period for presentation, that the trial court erred in requiring notice for an ex parte motion, and that it delayed seeking relief out of deference to the pending appellate proceeding.

Ruling of the Supreme Court

The Supreme Court denied the spouses’ petition in G.R. No. 175677 and denied Citibank’s motion for reconsideration in G.R. No. 177133 for lack of merit. The Court held that the dismissal of the spouses’ complaint for failure to appear at pre-trial under Section 5, Rule 18 was a final order and that the proper remedy was an appeal, not certiorari. The Court found the spouses’ excuses insufficient to establish excusable neglect or other valid cause under Section 4, Rule 18, citing precedent that counsel’s forgetfulness and heavy workload do not constitute excusable negligence. The Court also held that there was no irreconcilable conflict between the Court of Appeals’ rulings and that Citibank had been afforded a clear 30-day period by the trial court to present evidence ex parte and that Citibank failed to present any evidence within that period.

Legal Basis and Reasoning

The Court read Section 5, Rule 18 together with Section 3, Rule 17. It explained that dismissal for failure to appear at pre-trial under Section 5, Rule 18 amounts to dismissal due to the plaintiff’s fault and that, under Section 3, Rule 17, such dismissal is without prejudice to the defendant’s right to prosecute a counterclaim in the same or a separate action. The Court relied on its decision in Pinga v. Heirs of German Santiago to underscore that dismissal of the complaint for plaintiff’s failure to prosecute does not necessarily preclude the defendant from proving its counterclaim. The Court applied its prior holdings in Quelnan v. VHF Philippines to reject counsel’s forgetfulness and workload as excusable negligence. As to Citibank’s procedural claims, the Court observed that the trial court’s September 17, 2003 Order expressly allowed ex parte presentation within thirty days from receipt and thus was not incomplete; the clerk of court, as delegated under Section 9, Rule 31, had discretion over the termination of ex parte evidence. The Court further held that a petition for certiorari does not automatically suspend proceedings in the lower court absent a restraining order or injunction und

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