G.R. No. 179999 , March 17, 2009
ANSON TRADE CENTER, INC., ANSON EMPORIUM CORPORATION and TEDDY KENG SE CHEN, Petitioners, vs. PACIFIC BANKING CORPORATION, Represented by Its Liquidator, the President of the Philippine Deposit Insurance Corporation, Respondent.

FACTS

Petitioners Anson Trade Center, Inc. (ATCI) and Anson Emporium Corporation (AEC) obtained loans from respondent Pacific Banking Corporation (PBC), a closed banking institution undergoing liquidation by the Philippine Deposit Insurance Corporation (PDIC). Petitioner Teddy Keng Se Chen executed Continuing Suretyship Agreements as security for these loans. Upon petitioners’ default, respondent filed a collection case (Civil Case No. 01-102198). After the RTC denied petitioners’ Motions to Dismiss, a pre-trial conference was held on April 4, 2005, where both parties were present and the case was referred for mediation. After unsuccessful mediation, another pre-trial was scheduled for October 10, 2005. Respondent failed to appear at this second pre-trial. The RTC dismissed the complaint without prejudice due to respondent’s non-appearance. Respondent’s Motion for Reconsideration, citing excusable negligence due to PDIC’s reorganization which reduced litigation departments from four to one and left only four in-house counsels handling thousands of cases from over 400 closed banks, was denied. The Court of Appeals granted respondent’s Petition for Certiorari, annulling the RTC’s dismissal orders, finding the non-appearance excusable and emphasizing liberal construction of the rules to achieve substantial justice.

ISSUE

Whether the trial court abused its discretion in dismissing respondent’s complaint due to its failure to appear at the pre-trial conference.

RULING

No, the trial court abused its discretion. The Supreme Court denied the petitioners’ Petition for Review and affirmed the Court of Appeals Decision and Resolution. While Rule 18, Sections 4 and 5 of the Revised Rules of Court mandate the appearance of parties at pre-trial and provide dismissal as a sanction for the plaintiff’s non-appearance, the non-appearance may be excused for a valid cause. The Court found a valid cause for respondent’s absence. Respondent’s liquidator, PDIC, was undergoing a major reorganization during the relevant period, consolidating litigation work and drastically reducing manpower while coping with a massive caseload from numerous bank closures. This constituted excusable negligence. The Court noted that respondent had not exhibited any pattern of delay, having attended the first pre-trial and actively pursued the case by filing motions to resolve. The overriding objective is the just determination of causes, and technicalities should not prevail where they would cause irreparable damage. Dismissals should not be wielded inconsiderately, and justice is better served by a trial on the merits, especially given respondent’s insolvent status and the need for a final disposition of its assets.