THIRDDIVISION

ANSON TRADE CENTER,

G.R.No.179999
INC., ANSON EMPORIUM

CORPORATION and TEDDY

KENGSECHEN,
Present:
Petitioners,

YNARESSANTIAGO,J.,

Chairperson,
versus
CARPIO,*

CHICONAZARIO,

NACHURA,and
PACIFIC
BANKING
PERALTA,JJ.
CORPORATION, Represented

by Its Liquidator, the President

of the Philippine Deposit

Promulgated:
InsuranceCorporation,

Respondent.
March17,2009
xx

DECISION

CHICONAZARIO,J.:

[1]
BeforeUsisaPetitionforReviewonCertiorari under Rule 45 of the Revised Rules of
CourtfiledbypetitionersAnsonTradeCenter,Inc.,(ATCI),AnsonEmporiumCorporation(AEC),
[2]
andTeddyKengSeChen(Chen),seekingthereversalandthesettingasideoftheDecision dated
[3]
31May2007andResolution dated16October2007oftheCourtofAppealsinCAG.R.SPNo.
[4]
93734.InitsassailedDecision,theCourtofAppealsannulledtheOrder dated10October2005
oftheRegionalTrialCourt(RTC)ofManila,Branch52,dismissingCivilCaseNo.01102198for
[5]
failure of respondent Pacific Banking Corporation (PBC) to appear during the pretrial. In its
assailedResolution,theCourtofAppealsrefusedtoreconsideritsearlierDecision.

Thefollowingaretheundisputedfacts:

Petitioners ATCI and AEC are corporations engaged in retail and/or wholesale general
[6]
merchandising. Petitioner Chen is the Vice Head of said commercial entities. Respondent is a
closedbankinginstitutionundergoingliquidationbythePhilippineDepositInsuranceCorporation
(PDIC).

Ondifferentdates,petitionerATCIobtainedseveralloans

[7]
fromrespondent,amountingto

P4,350,000.00.On26October1984,petitionerAECalsoreceivedtheamountofP1,000,000.00asa
loanfromrespondent.Assecurityforthesaidloanobligations,petitionerChen,withthelateKeng
[8]
Giok, executed,onbehalfofpetitionersATCIandAEC,twoContinuingSuretyshipAgreements
on16September1981and1March1982.TheContinuingSuretyshipAgreementsprovidedthat,as
securityforanyandalltheindebtednessorobligationofpetitionersATCIandAEC,therespondent
hadtherighttoretainalienuponanyandallmoneysorotherpropertiesand/ortheproceedsthereof
in the name or for the account or credit of petitioners ATCI and AEC deposited or left with
respondent. Subsequently, petitioners defaulted in the payment of their loans. Respondent made
severaldemandsforpaymentuponpetitioners,tonoavail.

This prompted respondent to file before the RTC a collection case against petitioners,
docketedasCivilCaseNo.01102198.

On 14 January 2002, petitioner Chen, instead of filing an Answer to the Complaint of

respondent in Civil Case No. 01102198, filed a Motion to Dismiss. Petitioners ATCI and AEC,
togetherwiththeEstateofKengGiok,alsojointlyfiledaMotiontoDismiss.Respondentfiledits
Comment/Opposition to the Motions to Dismiss Civil Case No. 01102198, to which petitioners
Chen,ATCI,andAEC,withtheEstateofKengGiok,filedtheirReplies.Duetotheinactionofthe
RTContheMotionstoDismiss,respondentfiledMotionstoResolveon14January2003andon29
October 2003. In an Order dated 4 November 2004, the RTC denied the Motions to Dismiss but
grantedtheprayertodropKengGiokasdefendantsincehewaslongdeadpriortotheinstitutionof
CivilCaseNo.01102198.

AfterpetitionersfiledtheirjointAnswertotheComplaint,apretrialconferencewassetby
theRTCon4April2005.AllthepartieswerepresentatthescheduledpretrialwheretheRTCfirst
explored the possibility of an amicable settlement among the parties by referring the case to the

Philippine Mediation Center for arbitration. The arbitration proceedings were, however,
unsuccessful.Thus,thecasewasreferredbacktotheRTCforafullblowntrial.

Inordertosimplifytheissuestobethreshedoutinthetrial,anotherpretrialconferencewas
scheduledbytheRTCon10October2005,whichrespondentfailedtoattend.

PetitionersmovedforthedismissalofCivilCaseNo.01102198onthegroundofthenon
appearanceofrespondentatthepretrialof10October2005,whichwasgranted,withoutprejudice,
by the RTC in an Order issued on even date. Respondent filed with the RTC a Motion for
Reconsiderationofthecourtsorderofdismissal,inwhichrespondentprayedfortherelaxationof
theruleonnonappearanceinthepretrial,citingexcusablenegligenceonitspartandintheinterest
of justice and equity. The RTC denied the Motion for Reconsideration of respondent in another
Orderdated17January2006.

TheaboveprecipitatedrespondenttofilewiththeCourtofAppealsaPetitionforCertiorari
under Rule 65 of the Revised Rules of Court, which was docketed as CAG.R. SP No. 93734.
RespondentprayedforthereversaloftheRTCOrdersdated10October2005and17January2006,
arguing that the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdictionwhenitdismissedCivilCaseNo.01102198duetothenonappearanceofrespondentat
the pretrial held on 10 October 2005. Respondent asserted that its absence was not deliberate or
intentional.Itsliquidator,PDIC,wasundergoingareorganizationresultingin,amongotherthings,
the trimming down of the departments handling litigation work from four to one and the lack of
manpower to handle more than 400 banks ordered closed by the Monetary Board. Respondent
pleadedfortherelaxationoftherulestoavertirreparabledamagetoit.

The Court of Appeals rendered a Decision on 31 May 2007, granting the Petition of
respondent and reversing the assailed RTC Orders which dismissed Civil Case No. 01102198.
Accordingtotheappellatecourt,theRTClostsightofthefactthateventheRulesofCourtmandate
a liberal construction of the rules and the pleadings in order to effect substantial justice and that
overridingalltheforegoingtechnicalconsiderationsisthetrendintherulingsofthecourttoafford
everypartylitiganttheamplestopportunityfortheproperandjustdeterminationofhiscause,freed
[9]
fromtheconstraintsoftechnicalities.

InaResolutiondated16October2007,theCourtofAppealsrefusedtoreconsideritsearlier
Decision.


PetitionersnowcomebeforeusviathisinstantPetitionforReviewonCertiorariraisingthe
followingissues:

WHETHER OR NOT THE REVERSAL OF THE TRIAL COURTS ORDER DATED OCTOBER
10,2005 DISMISSING [herein respondent]S COMPLAINT FOR ITS FAILURE TO APPEAR AT
THE PRETRIAL WAS INACCORDANCE WITH THE 1997 RULES ON CIVIL PROCEDURE
ANDAPPLICABLEJURISPRUDENCE.

II

WHETHER OR NOT THE TRIAL COURT ABUSED ITS DISCRETION IN DISMISSING

[10]
RESPONDENTSCOMPLAINTBECAUSEOFITSNONAPPEARANCEATPRETRIAL.

Atthecoreofthiscontroversyisaquestionofprocedure.

The petitioners, on one hand, argue that the appearance of the parties during pretrial is
mandatory, and the absence of respondent therefrom constitutes a serious procedural blunder that
meritsthedismissalofitscase.

On the other hand, respondent claims that the Rules must be relaxed if it will cause
irreparable damage to a partylitigant and to promote the ends of justice. Respondent urges us to
brushasidetechnicalitiesandtoexcuseitsnonappearanceduringthepretrialconference.

WefindthePetitionunmeritorious.

Pretrial, by definition, is a procedural device intended to clarify and limit the basic issues
[11]
raisedbytheparties
andtotakethetrialofcasesoutoftherealmofsurpriseandmaneuvering.
[12]
It is an answer to the clarion call for the speedy disposition of cases. Hailed as the most
[13]
importantproceduralinnovationinAngloSaxonjusticeinthenineteenthcentury,
itthuspaves
[14]
thewayforalessclutteredtrialandresolutionofthecase.

PertinentprovisionsofRule18oftheRevisedRulesofCourtonPreTrialread:

SEC.4.Appearanceofparties.Itshallbethedutyofthepartiesandtheircounseltoappearat
thepretrial.Thenonappearanceofapartymaybeexcusedonlyifavalidcauseisshownthereforor

if a representative shall appear in his behalf fully authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or
admissionsoffactsandofdocuments.

SEC. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required
pursuanttothenextprecedingsectionshallbecausefordismissaloftheaction.Thedismissalshall
bewithprejudice,unlessotherwiseorderedbythecourt.Asimilarfailureonthepartofthedefendant
shallbecausetoallowtheplaintifftopresenthisevidenceexparteandthecourttorenderjudgment
onthebasisthereof.

Pursuanttotheaforequotedprovisions,nonappearancebytheplaintiffinthepretrialshall
be cause for dismissal of the action. However, every rule is not without an exception. In fact,
Section4,Rule18oftheRevisedRulesofCourtexplicitlyprovidesthatthenonappearanceofa
partymaybeexcusedifavalidcauseisshowntherefor.We find such a valid cause extant in the
caseatbar.

There is no question that herein respondent received notice of the pretrial conference
scheduled on 10 October 2005, but it failed to attend the same. Such nonappearance
notwithstanding,theCourtOfAppealsannulledthe10October2005OrderoftheRTCdismissing
Civil Case No. 01102198 after finding that respondent did not intentionally snub the pretrial
conference.Thereisnoreasonforustodisturbsuchfinding.

The Monetary Board ordered the closure of respondent by reason of insolvency on 5 July
1985, and it has since been represented by its liquidator PDIC in all its undertakings. Still in the
courseoftheliquidationofrespondent,itsliquidatorPDICwasreorganizedinthelate2004toearly
2005. The four departments in the PDIC handling litigation were reduced to one, with the new
LitigationDepartmenthavingonlyfourinhousecounselswhoassumedthousandsofcasesarising
from the closure by the Monetary Board of more than 400 banks. It is understandable how the
noticeforthepretrialconferenceinCivilCaseNo.01102198scheduledon10October2005could
belostoroverlooked,asthePDICwasstillcopingandadjustingwiththechangesresultingfromits
reorganization.

Itisimportanttonotethattherespondentwasnotremissinitsdutiestoprosecuteitscase.
Exceptfortheloneinstanceofthepretrialconferenceon10 October 2005, respondent promptly
andreligiouslyattendedthehearingssetbytheRTC.Infact,itappearsontherecordsthatapretrial
conferenceinCivilCaseNo.01102198wasfirstheldon4April2005,duringwhichrespondent
waspresent.WhentheRTCdidnotimmediatelyactontheMotionstoDismissofpetitioners,itwas
respondentwhichfiledtwoMotionstoResolve.Theactuationsofrespondentrevealitsinterestin
prosecutingthecase,insteadofanyintentiontodelaytheproceedings.


[15]
InBankofthePhilippineIslandsv.CourtofAppeals,
weruledthatintheabsenceofa
patternorschemetodelaythedispositionofthecaseorawantonfailuretoobservethemandatory
requirement of the rules, courts should decide to dispense rather than wield their authority to
dismiss.

IfCivilCaseNo.01102198isallowedtoproceedtotrial,itwillnotclogthedocketsofthe
RTCorruncountertothepurposesforholdingapretrial.Inconsideratedismissals,evenwithout
prejudice,donotconstituteapanaceaorasolutiontothecongestionofcourtdocketswhilethey
lend a deceptive aura of efficiency to records of individual judges, they merely postpone the
ultimatereckoningbetweentheparties.Intheabsenceofclearlackofmeritorintentiontodelay,
justice is better served by a brief continuance, trial on the merits, and final disposition of cases
[16]
beforethecourt.

Moreover,respondentisalreadyinsolventandundergoingliquidation.ItinstitutedCivilCase
No.01102198preciselytorecoverfrompetitionerstheunpaidloans.EvenifthedismissalofCivil
CaseNo.01102198bytheRTCwaswithoutprejudice,therefilingofthecasewouldbeinjurious
torespondent.RespondentalreadypaidP344,878.23asdocketfeesforCivilCaseNo.01102198
andwiththedismissalofsaidcase,theamountwouldbeforfeited.Respondentwouldhavetopay
docket fees once more when it refiles its Complaint, a substantial amount considering that
respondentisalreadyfinanciallyshaped.AstheCourtofAppealsnoted,forrespondenttoagainpay
docket fees for the refiling of its Complaint against petitioners would truly be detrimental to the
creditorsofrespondent.

Giventheforegoing,theCourtofAppealsdidnoterrinpronouncingthattheRTCcommitted
graveabuseofdiscretionwhenitdismissedCivilCaseNo.01102198forthefailureofrespondent
toattendthepretrialconferenceon10October2005.Astheappellatecourtsoastutelystated:

In refusing to resuscitate Civil Case No. 01102 198 despite a showing that there was an
excusable ground for the [herein respondent]s absence during the pretrial, the respondent judge
manifestedadirefixationtowardsproceduralperfection.Indeed,theextraordinarywritofcertiorari
wouldliewhenatriersobsessionwiththestringenttenetsoftechnicalitywouldoccasionaninjustice
againstapartylitigant.

Litigationisnotagameoftechnicality,inwhichonemoredeeplyschooledandskilledinthe
subtleartofmovementandpositionentrapsanddestroystheother.Itisratheracontestinwhich

each contending party fully and fairly lays before the court the facts in issue and then, brushing
asideaswhollytrivialandindecisiveallimperfectionofformsandtechnicalitiesofprocedure,asks
thatjusticebedoneuponthemerits.Lawsuits,unlikeduels,arenottobewonbyarapiersthrust.
Technicality,whenitdesertsitsproperofficeasanaidtojusticeandbecomesitsgreathindrance
[17]
andchiefenemy,deservesscantconsiderationfromcourts.

Aswehavestressedemphaticallyonpreviousoccasions,therulesofproceduremaynotbe
misused and abused as instruments for the denial of substantial justice. Here is another
demonstrativeinstanceofhowsomemembersofthebar,availingthemselvesoftheirproficiencyin
invoking the letter of the rules without regard to their real spirit and intent, succeed in inducing
courts to act contrary to the dictates of justice and equity, and, in some instances, to wittingly or
unwittingly abet unfair advantage by ironically camouflaging their actuations as earnest efforts to
satisfythepublicclamorforspeedydispositionoflitigations,forgettingallthewhilethattheplain
injunctionofSection2ofRule1isthattherulesshallbeliberallyconstruedinordertopromote
theirobjectandtoassistthepartiesinobtainingnotonlyspeedybutmoreimperatively,just...and
[18]
inexpensivedeterminationofeveryactionandproceeding.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby
DENIED.TheDecisiondated31May2007andResolutiondated16October2007oftheCourtof
AppealsareAFFIRMED.Costsagainstthepetitioners.

SOORDERED.

MINITAV.CHICONAZARIO
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

ANTONIOT.CARPIOANTONIOEDUARDOB.NACHURA
AssociateJusticeAssociateJustice

DIOSDADOM.PERALTA
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethecasewas
assignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,
itisherebycertifiedthattheconclusionsintheaboveDecisionwerereachedinconsultationbefore
thecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

*PerSpecialOrderNo.568,dated12February2009,signedbyChiefJusticeReynatoS.Puno,designatingAssociateJusticeAntonioT.
CarpiotoreplaceAssociateJusticeMa.AliciaAustriaMartinez,whoisonofficialleaveundertheCourtsWellnessProgram.
[1]
Rollo,pp.2533.
[2]
PennedbyAssociateJusticeBienvenidoL.ReyeswithAssociatesJusticesAuroraSantiagoLagmanandApolinarioD.Bruselas,Jr.,
concurringrollo,pp.2532.
[3]
Rollo,pp.3436
[4]
PennedbyHon.AntonioRosales,CArollo,p.19A.
[5]
RepresentedbyitsLiquidator,PresidentofthePDIC.
[6]
Thepleadingsdidnotallegetherelationshipbetweenthetwocorporations.Whatwasallegedwasthefactthatthetwocorporationshad
thesamePresidentandViceHead.
[7]
TheseloanswereobtainedbypetitionerATCIon30August1982,5July1983,2November1983,and26October1984,intheamounts
ofP2,000,000.00,P1,000,000.00,P350,000.00,andP1,000,000.00,respectively,exclusiveofinterestandcharges.
[8]
KengGiokwasthePresidentofATCIandAEC.
[9]
Rollo,pp.2930.
[10]
Id.at12.
[11]
InterliningCorporationv.PhilippineTrustCompany,428Phil.584,588(2002).
[12]
PermanentConcreteProducts,Inc.v.Teodoro,135Phil.364,367(1968).
[13]
Tiuv.Middleton,369Phil.829,835(1999).
[14]
Id.
[15]
362Phil.362,369(1999).
[16]
Macasav.Herrera,101Phil.44,(1957).
[17]
Alonsov.Villamor,16Phil.315,322(1910).
[18]
Tanhuv.Ramolete,160Phil.1101,11131114(1975).