G.R. No. 99431 August 11, 1992
GOLDLOOP PROPERTIES, INC., petitioner, vs. COURT OF APPEALS, ROBERTO S. ROBLES and ALICIA G. ROBLES, respondents.

FACTS

Private respondent-spouses Roberto S. Robles and Alicia G. Robles filed a complaint for reformation of instrument with damages against petitioner Goldloop Properties, Inc., before the Regional Trial Court of Pasig, Branch 158 (Civil Case No. 58027). They alleged that their contract dated June 17, 1988, involving a prime 618-square meter commercial parcel of land in San Juan, Metro Manila, was a mortgage and not an absolute sale. They prayed for a preliminary injunction to stop encumbrance or disposition of the property. During a hearing on the preliminary injunction on August 2, 1989, the parties manifested the possibility of an amicable settlement. The hearing was deferred to August 10, 1989, on which date the trial court granted the parties fifteen (15) days to submit a compromise agreement. No agreement was submitted. On October 25, 1989, the trial court motu proprio dismissed the complaint “for failure to prosecute.” The spouses received the order on November 8, 1989. On November 22, 1989, they filed a Motion for Reconsideration, intimating that negotiations were ongoing, but the motion lacked a notice of hearing. The trial court denied the motion on February 6, 1990. The spouses received the denial on February 14, 1990, and filed a Notice of Appeal on February 16, 1990. The trial court initially gave due course but later recalled the order. The spouses’ subsequent motions were denied on the ground that the dismissal had become final and executory. Their petition for extension of time to file a petition for review with the Court of Appeals was denied. They then filed a petition for mandamus in the Court of Appeals (CA-G.R. SP No. 22893) to set aside the dismissal and compel continuation of the hearing on the preliminary injunction. The Court of Appeals, treating the petition as one also for certiorari, annulled the order of dismissal on November 27, 1990, finding the dismissal “precipitate” and noting the equities of the case, as the spouses were trying to recover property allegedly worth P4,000,000.00 sold for only P650,000.00. Petitioner’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in annulling the trial court’s order of dismissal for failure to prosecute, despite the order having allegedly become final and executory.

RULING

The Supreme Court DENIED the petition for review and upheld the Decision of the Court of Appeals. The trial court’s order of dismissal was void for lack of jurisdiction due to gross procedural infirmity and a violation of due process. The dismissal was not justified under Rule 17, Section 3 of the Rules of Court. The trial court’s August 10, 1989 Order merely granted time to submit a compromise agreement but did not require it or warn of dismissal for non-compliance. Submission of a compromise is not mandatory, and failure to settle does not warrant dismissal. Furthermore, the dismissal for failure to prosecute for an unreasonable length of time was precipitate, as the case had not even reached pre-trial and was still at the stage of hearing the preliminary injunction. The delay was caused by ongoing settlement negotiations, which should not be penalized by dismissal. The spouses’ motion for reconsideration, though defective for lack of a notice of hearing, did not preclude relief, as a rigid application of technicalities would result in a manifest miscarriage of justice given the substantial value of the property involved. The order was annullable for being void due to lack of due process. The Court of Appeals correctly exercised its exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts under B.P. 129.