Bank of the Philippine Islands v. Genuino
REITERATIONFacts
The Antecedents: Spouses Roberto and Teresita Genuino executed a Deed of Real Estate Mortgage with Bank of the Philippine Islands (BPI) to secure loans totaling ₱8,840,000.00. The Spouses Genuino defaulted in their payments. BPI foreclosed the mortgaged property, selling it for ₱2,900,000.00, leaving a deficiency of ₱27,744,762.49. Despite demands, the Spouses Genuino failed to pay the deficiency. BPI filed a Complaint for Sum of Money/Judgment on the Deficiency, praying for ₱10,626,121.69. Procedural History: The Spouses Genuino filed an Answer with Special and Affirmative Defenses, questioning the validity of the foreclosure and arguing waiver of remedy. BPI opted not to file a Reply. On May 17, 2010, the Regional Trial Court (RTC) dismissed the case without prejudice for lack of interest to prosecute under Rule 17, Section 3 of the Rules of Court. BPI's Motion for Reconsideration, explaining the case records were misplaced, was denied. The Court of Appeals (CA) affirmed the RTC's dismissal, finding no grave abuse of discretion. The Petition: BPI assails the CA's Decision, arguing that the issuance of A.M. No. 03-1-09-SC on August 16, 2004, shifted the burden to the Clerk of Court to set cases for pre-trial, making dismissal for failure to file a motion to set pre-trial improper. BPI cited Espiritu, et al. v. Lazaro, et al. to support its claim.
Issue(s)
Whether the trial court acted with grave abuse of discretion in dismissing the case without prejudice on the ground of failure to prosecute when BPI failed to file a motion to set case for pre-trial conference, and the effect of A.M. No. 03-1-09-SC on this duty to prosecute. Whether BPI provided a justifiable cause for its failure to set the case for pre-trial, considering its explanation regarding misplaced records and the application of relevant jurisprudence.
Ruling
The Petition is DENIED. The Court of Appeals did not commit grave abuse of discretion in affirming the trial court's dismissal of the case without prejudice.
Ratio Decidendi
On the issue of dismissal for failure to prosecute and the effect of A.M. No. 03-1-09-SC: The Court reiterated that Rule 17, Section 3 of the Rules of Court allows dismissal of a complaint if the plaintiff fails to prosecute the action for an unreasonable length of time or fails to comply with the Rules or any order of the court, without justifiable cause. This dismissal has the effect of an adjudication upon the merits, unless otherwise declared by the court. While A.M. No. 03-1-09-SC, which took effect on August 16, 2004, provides that the Clerk of Court shall issue a notice of pre-trial if the plaintiff fails to move for pre-trial within five days from the filing of the reply, this administrative matter does not remove the plaintiff's fundamental duty under Rule 18, Section 1 of the Rules of Court to promptly move to set the case for pre-trial after the last pleading has been served and filed. The administrative rule does not repeal Rule 17, Section 3, nor does it impose the sole burden of setting the pre-trial on the courts. Therefore, a plaintiff's failure to show a justifiable cause for not setting the case for pre-trial can still lead to dismissal. On the justification for BPI's failure to set the case for pre-trial and the application of cited jurisprudence: BPI's explanation that the case records were misplaced in the office bodega due to the secretary of its previous counsel leaving the firm was not considered a justifiable cause for its failure to set the case for pre-trial. The Court emphasized that a counsel is required to inquire, from time to time, about the status of handled cases. Furthermore, as an established financial institution, BPI is expected to have organizational structures and procedures to meet litigation deadlines. The Court noted that BPI is in a better position to bear the costs of such a procedural misstep, and its non-action could have been interpreted by the respondents as a signal that the bank was no longer interested in pursuing the claim, or at worst, it was negligence. The Court stressed that a plaintiff should not be rewarded for negligence, even if the Clerk of Court has a duty to issue a notice of pre-trial under A.M. No. 03-1-09-SC. The Court distinguished the present case from Olave v. Mistas, which involved a dismissal with prejudice prior to the effectivity of A.M. No. 03-1-09-SC. It also clarified that Espiritu, et al. v. Lazaro, et al., while correctly stating that A.M. No. 03-1-09-SC applies to cases filed after its effectivity, still affirmed the plaintiff's duty to prosecute the case diligently. The Court also cited Spouses Zarate v. Maybank Philippines, Inc. and Eloisa Merchandising, Inc. v. Banco de Oro Universal Bank to support the principle that dismissals are sustained when the plaintiff's failure to prosecute or comply with rules is without justifiable reason. The Court also applied by analogy the ruling in Regner v. Logarta, which stated that even if the clerk of court has a duty to perform, the plaintiff must still vigilantly pursue the case and call the court's attention to any negligence.
Main Doctrine
While A.M. No. 03-1-09-SC shifts the duty to issue a notice of pre-trial to the Clerk of Court if the plaintiff fails to move for pre-trial within five days from the filing of the reply, it does not relieve the plaintiff of the fundamental duty to prosecute the case diligently. Failure to show a justifiable cause for not setting the case for pre-trial can still lead to dismissal under Rule 17, Section 3 of the Rules of Court.