THIRD DIVISION

G.R. No. 141860 August 31, 2006

MALAYAN INSURANCE CO., INC., Petitioner,
vs.
IPIL INTERNATIONAL INC., ANCHOR ORIENT LINES-SINGAPORE, MED-LINES PHILIPPINES, BALTMED SHIPPING CO., and OCEAN MARINE MUTUAL PROTECTION & INDEMNITY ASSOCIATION, LTD., Respondents.

D E C I S I O N

TINGA, J.:

In this Petition for Review1 under Rule 45 of the 1997 Rules of Civil Procedure, petitioner Malayan Insurance Co., Inc. (Malayan) assails the Decision2 dated 6 October 1999 of the Fifteenth Division

1Rollo, pp. 13-34; Dated 27 March 2000.

2Id. at 36-42; Penned by Associate Justice Jose L. Sabio, Jr. with the concurrence of Associate Justices Hector L. Hofileña and Omar U. Amin.

of the Court of Appeals in C.A.-G.R. CV No. 56922 and its Resolution3 dated 2 February 2000 denying its Motion for Reconsideration.4

Following are the factual and legal antecedents.

On 25 January 1995, Malayan filed before the Regional Trial Court (RTC) of Manila, Branch 1, a complaint for civil damages, docketed as Civil Case No. 95-72660 (the civil case), against respondents Anchor Orient Lines-Singapore (Anchor), a foreign corporation, and its agent, Ipil International, Inc. (Ipil). Ipil and Anchor then filed their Answer on 27 March 1995.5 Having received a copy of the Answer on 4 April 1995, Malayan filed a motion to have the pre-trial set by the trial court.6 The trial court set the case for pretrial on 28 June 1995.7

The pre-trial on 28 June 1995 did not push through as Malayan requested that it be reset to either 19 or 20 July 1995. The trial court set it for 26 July 1995, on which date Ipil, Anchor and their counsels failed to appear. As a consequence, they were declared as in default

3Id. at 44-46.

4Id. at 73-81; Dated 27 October 1999.

5Id. at 14.

6Records, p. 23.

7Id. at 26.

and Malayan was allowed to present evidence ex parte on 1 August 1995. 8

Subsequently, however, the trial court lifted the order of default per Ipil and Anchor’s prayer in their motion filed on 3 August 1995. In addition, the trial court set the pretrial on 13 September 1995, 9 but which was again re-scheduled on 18 October 1995 by the trial court acting upon the Joint Motion to Reset Pre-trial filed by Malayan, Ipil and Anchor.10

On 18 October 1995, Malayan filed a Motion for Leave to File Amended Complaint, together with the Amended Complaint which the trial court admitted on 4 December 1995.11 The Amended Complaint impleaded additional defendants namely, Baltmed Shipping Company (Baltmed), Med-Lines Philippines (Med-lines), Ocean Marine Mutual Protection and Indemnity Association Ltd. (P&I Club) and Pandiman Philippines, Inc (Pandiman).12 In view of this, the trial court on 6 December 1995, reset the pre-trial until further notice.13

9Records, p. 56.

10Rollo, p. 37; Records, pp. 59 and 61.

11Id. at 37; id. at 77.

12Records, p. 66.

13Rollo, p. 37.

After summons were duly served upon the newly-impleaded defendants, Pandiman filed a Motion to Dismiss on 26 January 1996. Med-lines, on the other hand, had been granted two extensions before finally filing its Answer With Compulsory Counterclaim on 7 March 1996.14

On the scheduled hearing of Pandiman’s Motion to Dismiss, Malayan was granted ten (10) days to file its Comment thereto which it did file on 8 March 1996. Pandiman subsequently filed its Reply to the Comment. Thereafter, the trial court ordered Pandiman to be dropped as party-defendant per its Order15 dated 7 June 1996.16

Then on 7 February 1997, the trial court issued an Order17 dismissing the Civil case for failure to prosecute for an unreasonable length of time pursuant to Section 3, Rule 17 of the Rules of Court. Malayan filed a motion for reconsideration of the order which the trial court likewise denied per Order18 dated 23 May 1997, the pertinent portions of which we quote as follows:

14Id. at 37; Records, pp. 124-126.

15Records, pp. 141-142.

16Rollo, p. 37.

17Records, p. 147.

18Id. at 162-163; Penned by Judge Eloy R. Bello, Jr.

The last order of the court is dated June 7, 1996. After said order, the case was ready for pre-trial. It is admitted by the plaintiff that it should have moved for pre-trial. However, it failed to do so. The plaintiff claims that its failure was due to inadvertence.

x x x x

Is the admitted neglect on the part of the plaintiff, excusable negligence? Excusable neglect means a failure to take the proper steps at the proper time, not in consequence of [the] party’s own carelessness, inattention or willful disregard of the process of unavoidable hindrance or accident on (sic) reliance on the care and vigilance of his counsel or on promises made by the adverse party. (Black’s Law Dictionary, 5th Edition); (p. 122, Remedial Law, Vol. II, by Herrera).

In the present case, the inadvertence alleged is the plaintiff’s counsel forming a new partnership and having moved its office from Oriental Mindoro to Quezon City.

It appears on record that when plaintiff filed its opposition to the motion to dismiss by defendant Pandiman, plaintiff’s counsel was already at Suites B and C, 12th Floor, G.E. Antonio Building, T.M. Kalaw Street, Ermita, Manila. And that was March 6, 1996.

The last order of the court was dated June 6, 1996. Seven months passed from June 6, 1996 up to January 10, 1997, the date of the pleading when the counsel informed the court of the change of address. The said pleading informing the court of such change of address was mailed on February 25, 1997 and reached this court on March 10, 1997.

This court is of the opinion that the pleading informing the court of the change of address was made only after the plaintiff’s counsel received the order of dismissal on February 12, 1997, as shown by the return card attached to the record. The pleading is[,] no doubt, antedated to justify the herein movant’s ground for his motions.

From the foregoing, this court is of the view, that the failure of plaintiff to take the necessary steps in prosecuting its case is not an excusable negligence.19

Malayan filed an appeal before the Court of Appeals alleging that: (1) the trial court erred in not setting the Civil case in the pre-trial calendar pursuant to Section 5, Rule 20 of the Revised Rules of Court, the applicable rule at the time of dismissal; (2) the trial court did not decide in accord with law and jurisprudence when it imputed inexcusable negligence to Malayan for its failure to have the Civil case for pre-trial; (3) the trial court gravely abused its discretion in dismissing the Civil case; (4) the trial court gravely erred in dismissing the Civil case without considering Malayan’s meritorious cause of action.20

The Court of Appeals denied the appeal. Citing Montejo v. Urotia,21 it held that the question of what constitutes an unreasonable length of time to prosecute a case depends upon the circumstances of each case and is a matter best left to the sound discretion of the trial court, which will not be disturbed in the absence of any showing of abuse thereof. The appellate court moreover declared that while it is the duty of the Clerk of Court to include a case in the trial calendar after the issues are joined, fix the date for trial, and cause the corresponding notices to be served upon the parties, the plaintiff is not

19Rollo, pp. 53-54; Records, pp. 162-163.

20Rollo, p. 40.

21148-B Phil. 43, 50 (1971).

relieved of his own duty to prosecute a case diligently. If the clerk in the instant case had been negligent, it was Malayan’s duty to call the trial court’s attention to that fact so that the administration of justice would not suffer delay.22

The Court of Appeals moreover stressed that Malayan was less than honest in explaining why it failed to prosecute the case within a reasonable time. The appellate court in addition believed that due process was complied with when Malayan was given an opportunity to explain its side through its motion for reconsideration.23

In the instant Petition, Malayan asserts that the Court of Appeals’ reliance on Montejo v. Urutia is misplaced as the facts in the cited case are different from the those in the case at bar. Malayan points out that the cause for the dismissal of the case in Montejo was therein plaintiff’s failure to comply, for a period of more than two years, with the trial court’s order to cause the service of summons to seventeen (17) of the twenty (20) additional defendants. The dismissal thus involved the evasion for an unreasonable length of time by therein plaintiff of a positive duty imposed by the trial court.24 In the case at bar, Malayan only failed to have the case set for pre-trial which was the duty and obligation of the Clerk of Court, according to the Revised Rules of Court.

22Rollo, p. 41.

23 Id. at 42.

24Rollo, pp. 22-23.

Moreover, Malayan submits that the cases cited in Montejo involved special circumstances which warranted the dismissal of the actions therein. For instance in the cited case of See Chuan v. De La Fuente,25 the Court in ruling that therein petitioner failed to prosecute his action for an unreasonable length of time, i.e., one (1) year, four

(4) months and four (4) days, considered that the petitioner was prosecuting not an ordinary action but the provisional remedy of a writ of preliminary injunction.26

Malayan likewise claims that the appellate court gravely abused its discretion in failing to consider the circumstances surrounding the present case and in giving more weight to the rule of technicality than to the rule of equity and substantial justice.27

Ipil, in its two (2)-page Comment,28 states in the main that the determination of what constitutes an unreasonable length of time is discretionary on the part of the trial court and is a factual issue which may not be reviewed on a petition filed under Rule 45 of the 1997 Rules of Civil Procedure.29

2590 Phil. 813 (1952).

26Rollo, p. 21.

27Id. at 19.

28Id. at 90-91; Dated 20 September 2000.

29Id. at 90.

Med-Lines, in its Comment,30 avers that the dismissal of the Civil case was proper even if the duty to have the case set for trial devolved on the Clerk of Court as Malayan failed to take the necessary steps to prosecute the case within a reasonable length of time.31 It maintains that the appellate court correctly applied the doctrine in Montejo to the instant case.32

Malayan, in its Reply,33 while admitting that it was remiss in moving for the resumption of the pre-trial, submits that there was no unjustified inaction on its part. It maintains that it actively prosecuted the Civil case even after the trial court suspended the pre-trial until further orders. It contends that it did not violate any positive duty mandated by the Revised Rules of Court or by the trial court. To the contrary, the trial court unilaterally imposed on itself the duty to order the resumption of the pre-trial when it suspended the same until further orders.34

In a Resolution dated 12 December 2005, the Court noted that Anchor, Baltmed and P&I Club are not registered with the Securities and Exchange Commission and have no resident agents in the Philippines. Thus, we dispense with their respective Comments and resolve the instant case on the basis of the pleadings at hand.

30Id. at 98-104; Dated 22 March 2001.

31Id. at 101.

32Id. at 99-100.

33Id. at 181-186.

34Id. at 183-184.

There is merit in the petition.

The crux of the controversy is whether Malayan failed to

prosecute the Civil case for an unreasonable length of time for no

justifiable cause. The relevant provision is Section 3, Rule 17 of the

Revised Rules of Court which reads:

SEC. 3. Failure to prosecute.—If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court’s own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by the court. (Emphasis supplied.)

while the related Section 3, Rule 17 of the 1997 Rules of Civil

Procedure states:

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. (Emphasis supplied.)

The rules contemplate certain instances where the complaint

may be dismissed due to the plaintiff's fault: (1) if he fails to appear

during a scheduled trial, especially on the date for the presentation

of his evidence in chief; (2) if he fails to prosecute his action for an unreasonable length of time; (3) if he fails to comply with the rules or any order of the court; or (4) where the plaintiff fails to appear when so required at the pre-trial.35

There is failure to prosecute when the plaintiff, being present, is not ready or is unwilling to proceed with the scheduled trial or when postponements in the past are due to the plaintiff’s own making, intended to be dilatory or cause substantial prejudice on the part of the defendant.36 The failure of a plaintiff to prosecute the action without any justifiable cause within a reasonable period of time will give rise to the presumption that he is no longer interested to obtain from the court the relief prayed for in his complaint; hence, the court is authorized to order the dismissal of the complaint on its own motion or on motion of the defendants. The presumption is not, by any means, conclusive because the plaintiff, on a motion for reconsideration of the order of dismissal, may allege and establish a justifiable cause for such failure.37

Considering the circumstances of the case and the reasons given by Malayan, it cannot be concluded that it failed to prosecute the case for an unreasonable length of time for no justifiable cause. The dismissal of the Civil case on 7 February 1997 was mainly attributed to Malayan’s failure to have the case set for pre-trial anew for eight

35BPI v. Court of Appeals, 362 Phil. 362, 367-368 (1999).

36Belonio v. Rodriguez, G.R. No. 161379, 11 August 2005, 466 SCRA 557, 577-578.

37Olave v. Mistas, G.R. No. 155193, 26 November 2004, 444 SCRA 479, 494.

(8) months since the last order of the trial court.38 The last order of the court was dated 7 June 1996 wherein Pandiman was ordered to be dropped as defendant in the Amended Complaint. Previously on 6 December 1995, the trial court issued an order resetting the pre-trial "until further notice."39 At that time too, the duty to have the case set for pre-trial devolved on the Clerk of Court, according to Section 5, Rule 20 of the Revised Rules of Court, to wit:

SEC. 5. Pre-trial calendar. — The court shall cause to be prepared a pre-trial calendar of cases for consideration as above provided. Upon submission of the last pleading in a particular case, it shall be the duty of the clerk of court to place such case in the pre-trial calendar.

While we agree with the appellate court that this duty imposed on the clerk of court does not excuse the plaintiff from prosecuting his case diligently, bearing the foregoing in mind, we believe Malayan’s failure to have the case set for pre-trial is attended by justifiable cause. There is reason to believe that Malayan awaited the further orders of the trial court which explains its failure to have the case set for pretrial. Relatedly, the span of time involved is not unreasonably that long to give rise to the inference that Malayan has lost interest in the case. As to whether the other reasons offered are truthful, namely that counsel for Malayan had moved its office owing to the formation of a new partnership and that there was a delay in the transfer of files, these are matters which bear little significance in determining whether there was indeed failure to prosecute the case for an unreasonable

38Rollo, pp. 53-54.

39Id. at 81.

period of time. The Court is more focused as it should in finding out

whether Malayan has, based on the record, displayed lack of intent to

pursue its case. And we find that the opposite is true. From its

diligence in the prosecution of the civil case before the order of

dismissal, not to mention its vigor in appealing said Order, Malayan

has shown determination to pursue its case.

Pertinently, the Court ruled in Belonio v. Rodriguez,40 that:

The power of the trial court to dismiss an action for non-prosequitur is not without its limits. If a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff is not present, as in this case, courts should not wield their authority to dismiss. Indeed, while the dismissal rests on the prerogative of the trial court, it must soundly be exercised not be abused, as there must be sufficient reason to justify its extinctive effect on the plaintiff’s cause of action. Deferment of proceedings may be tolerated so that the court, aimed at a just and inexpensive determination of the action, may adjudge cases only after a full and free presentation of all the evidence by both parties. In this regard, courts are reminded to exert earnest efforts to resolve the matters before them on the merits, and adjudicate the case in accord with the relief sought by the parties so that appeals may be discouraged; otherwise, in hastening the proceedings, they further delay the final settlement of the case.41(Emphasis supplied.)

In the absence of a pattern or scheme to delay the disposition of

the case or a wanton failure to observe the mandatory requirement of

the rules on the part of the plaintiff, as in the case at bar, courts should

decide to dispense with rather than wield their authority to dismiss.42

40G.R. No. 161379, 11 August 2005, 466 SCRA 557.

41Id. at 582-583.

42Marahay v. Melicor, G.R. No. 44980, 6 February 1990, 181 SCRA 811, 817.

In the cases cited in Montejo, the case mainly relied upon by the appellate court in its disquisition, there were special circumstances which warranted the dismissal of the actions therein. In four (4) of the cited cases,43 including the frequently quoted Smith Bell & Co., Ltd., et al. v. American President Lines, Ltd., et al.,44 plaintiffs failed to prosecute for a period of four (4) years, a considerably longer period than that in the case at bar, from which plaintiffs’ disinterest in pursuing their respective cases can reasonably be inferred. In the other cases wherein the plaintiffs were found to have failed to prosecute their cases for less than a year,45 either there was a manifest scheme to delay the proceedings or plaintiffs had failed to perform an order of the trial court.

In contrast, Malayan, in the case at bar did not fail to perform an order of the trial court. There was no apparent pattern to delay the case, the period involved is much too short for one to conclude its disinterest in pursuing the case, and the civil case involved an action for damages—an ordinary action which is much less urgent than a special civil action or a provisional remedy. Quite the opposite,

43E.E. Elser, Inc. et al. v. De La Rama Steamship Co., Inc., et al., 94 Phil. 812 (1954); Adorable, et al. v. Bonifacio, et al., 105 Phil. 1269 (1959); Ventura, et al. v. Baysa, et al., 114 Phil. 122 (1962).

4494 Phil. 879 (1954).

45Flores v. Philippine Alien Property Administrator, 107 Phil. 773 (1960); Sunico v. Villapando, 14 Phil. 352 (1909); Masiglat v. Mayor of Pasay City, et al., 104 Phil. 319 (1958); Bautista v. Teodoro, Jr., 101 Phil. 701 (1957).

Malayan evinced earnestness in prosecuting the civil case by filing a motion to set it for pre-trial,46 appearing on the date of the pre-trial on 26 July 199547 and duly filing its Comment to Pandiman’s Motion to Dismiss.48 We also note that the trial court issued an order on 6 December 1995 resetting the pretrial "until further notice." These circumstances foist upon the Court no other action but to rule that the trial court should have exercised its discretion differently from how it actually did.

Further confirming our opinion is the case of Olave v. Mistas,49 decided under the present rules of procedure in which the responsibility to move for pre-trial has shifted to the plaintiff. In Olave, the Court amended the dismissal of the Amended Complaint to a dismissal without prejudice to serve the ends of substantial justice. We ruled, thus:

It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any justifiable cause for such delay, the extreme sanction of dismissal of the complaint might not be warranted if no substantial prejudice would be caused to the defendant, and there are special and compelling reasons which would make the strict application of the rule clearly unjustified

50

x x x x

46Records, p. 23.

47Rollo, p. 37.

48Id.

49Supra note 39 at 479-499.

50Id. at 495.

If, in this recent case, we have shown liberality to the plaintiff who failed to have the case set for pre-trial when it was clearly his responsibility to do so under the present Rules already in force at the time, there is no reason not to extend the same favorable treatment to Malayan which likewise failed to initiate the pre-trial when, under the Rules in effect at that time, the duty to have the case set for pre-trial was lodged not on the plaintiff but on the Clerk of Court.

All things considered, the Court of Appeals committed a reversible error.

WHEREFORE, the instant petition is GRANTED. The Decision dated 6 October 1999 of the Court of Appeals and its Resolution dated 2 February 2000 in C.A.-G.R. CV No. 56922 are REVERSED. The Regional Trial Court of Manila, Branch 1, is DIRECTED to try and decide Civil Case No. 95-72660 with deliberate dispatch.

SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING

Associate Justice
Chairperson

ANTONIO T. CARPIO, CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN

Chief Justice


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