Shimizu Philippines Contractors v. Magsalin
REITERATIONFacts
The Antecedents: Petitioner Shimizu Philippines Contractors, Inc. (Shimizu) entered into a subcontract with respondent Leticia Magsalin, doing business as "Karen's Trading," for the supply and installation of parquet tiles for a condominium project. Shimizu alleged that Magsalin breached the contract, failed to return unliquidated advance payments, and incurred other monetary liabilities. Consequently, Shimizu demanded damages from FGU Insurance Corporation (FGU Insurance) based on surety and performance bonds issued for the subcontract. Shimizu filed a complaint for sum of money and damages against Magsalin and FGU Insurance, seeking P2,329,124.60 in actual damages. Procedural History: Shimizu filed its complaint in the Regional Trial Court (RTC) of Makati City. While FGU Insurance was served, Magsalin could not be located. FGU Insurance's motion to dismiss was denied, and it was ordered to file an answer. FGU Insurance later filed a third-party complaint against Reynaldo Baetiong, Godofredo Garcia, and Concordia Garcia, who had executed counter-guaranties for the bonds. The RTC admitted the third-party complaint but denied Shimizu's motion to serve Magsalin by publication, deeming the action in personam. The RTC subsequently dismissed Shimizu's complaint for failure to prosecute. Shimizu's motion for reconsideration was denied. Shimizu appealed to the Court of Appeals (CA), which dismissed the appeal for lack of jurisdiction, ruling that it involved a pure question of law. The CA denied Shimizu's motion for reconsideration, leading to the present petition. The Petition: Shimizu filed this petition for review on certiorari under Rule 45 of the Rules of Court, assailing the CA's resolutions that dismissed its appeal. Shimizu argues that the CA erred in dismissing its appeal, contending that the appeal involved questions of fact and that the RTC's dismissal order was void for violating due process. Shimizu asserts that the RTC's dismissal for failure to prosecute was precipitate and lacked factual basis, as evidenced by the ongoing efforts to serve summons on third-party defendants and FGU Insurance's own motion to cancel a hearing. Shimizu contends that the dismissal order, which did not state the facts and law on which it was based, is a nullity and that the appeal to the CA under Rule 41 was proper.
Issue(s)
Whether the Court of Appeals erred in dismissing the petitioner's appeal on the ground of lack of jurisdiction. Whether the Regional Trial Court erred in dismissing the petitioner's complaint for failure to prosecute (non prosequitur). Whether the dismissal order dated December 16, 2003, is void for violation of due process; and whether the dismissal of Civil Case No. 02-488 was supported by facts.
Ruling
The Supreme Court granted the petition, reversed and set aside the resolutions of the Court of Appeals, declared the Regional Trial Court's dismissal order dated December 16, 2003, null and void, and ordered the reinstatement of the petitioner's complaint for further proceedings.
Ratio Decidendi
On the issue of the Court of Appeals' jurisdiction and the propriety of the appeal under Rule 41: The Supreme Court held that the appeal to the CA was properly filed under Rule 41 of the Rules of Court. The CA's reliance on Joaquin v. Navarro was misplaced because, unlike in Joaquin where the facts were stated in the judgment, the dismissal order in this case did not state the factual basis for the dismissal. The Court emphasized that even with undisputed records, the CA must still delve into factual questions to determine the propriety of a dismissal, such as the length of time between the receipt of the last pleading and the motion to set the case for pre-trial, or whether there was a manifest intention not to comply with the rules. Since the dismissal order did not disclose its factual basis, the CA had to examine the records to ascertain if facts justifying the dismissal existed, making the appeal one involving questions of fact. On the validity of the dismissal order for non prosequitur: The Supreme Court declared the December 16, 2003 dismissal order null and void for violation of due process. The order was a terse statement of conclusion (non prosequitur) without stating the facts on which it was based, thus violating Section 1, Rule 36 of the Rules of Court, which requires judgments and final orders to be in writing, stating clearly and distinctly the facts and the law on which they are based. Such a dismissal, being unqualified, is deemed with prejudice and an adjudication on the merits, forever barring refiling under the principle of res judicata. The lack of stated reasons left the petitioner and the reviewing court in the dark, preventing the petitioner from identifying assigned errors for appeal and denying them elementary due process, which demands information on how a case was decided and the factual and legal reasons behind it. On whether the dismissal order dated December 16, 2003, is void for violation of due process; and on whether the dismissal of Civil Case No. 02-488 was supported by facts: The Supreme Court found that the dismissal was not warranted. The events proximate to the dismissal, such as the admission of the third-party complaint, the cancellation of a hearing upon FGU Insurance's motion, and the filing of Baetiong's answer without service on the petitioner, did not square with the grounds for dismissal for failure to prosecute under Section 3, Rule 17 of the Rules of Court. These grounds include failure to appear for presentation of evidence, failure to prosecute for an unreasonable length of time, failure to comply with the Rules, or failure to obey a court order. The Court reiterated that the fundamental test for non prosequitur is whether the plaintiff is chargeable with want of due diligence, indicating an unwillingness to prosecute, which was not demonstrated by the petitioner. The Court stressed that dismissals should be made with care, ensuring that technicality does not prevail over substantial justice.
Main Doctrine
A dismissal order for failure to prosecute, to be valid, must clearly and distinctly state the facts and the law on which it is based, as required by Section 1, Rule 36 of the Rules of Court. Failure to do so renders the dismissal order void for violation of due process. Furthermore, an appeal under Rule 41 is proper to question such a dismissal, even if the facts are undisputed, if the appellate court must still delve into factual questions to determine the propriety of the dismissal.