REXWELL CORPORATION, PLAINTIFF AND APPELLANT, VS. DOMINADOR P. CANLAS, DEFENDANT AND APPELLEE.

Rexwell Corporation versus Canlas

The Case

This is a civil action for the collection of a sum of money arising from a contract for the drilling of a water well. Rexwell Corporation sued Dominador Canlas to recover the unpaid balance of the contract price, together with damages, for work it had done on the defendant's riceland. The case matters to a reviewee not for its law on contracts but for its law on procedure: it is a classic ruling on the limits of a trial court's discretion to deny a postponement and to dismiss a case for failure to present evidence, and on the principle that such discretion must be exercised judicially and not arbitrarily.

Procedural History

The complaint was filed with the Court of First Instance of Manila. The defendant answered, setting up special defenses and a counterclaim, and the plaintiff replied to the counterclaim. The case was set for hearing, then reset twice. When the case was finally called on the reset date, the trial court denied the plaintiff's renewed motion to postpone, denied the motion for reconsideration, and on the same day issued an order dismissing the case for the plaintiff's failure to present its evidence. The plaintiff appealed directly to the Supreme Court, raising only the question of whether it was proper for the trial court to deny its motions for postponement and to dismiss the case under the circumstances.

Facts

Rexwell Corporation alleged that, under a previous agreement, it drilled a water well for Dominador Canlas on the latter's riceland in Minalin, Pampanga. It claimed that the well was finished and turned over to the defendant's satisfaction, but that the defendant failed to pay the balance of the contract price, including services and materials, and failed to provide proper facilities of egress for moving the plaintiff's equipment out of the job site. The plaintiff prayed for actual damages, attorney's fees, and litigation expenses.

The defendant admitted hiring the plaintiff to drill the well and admitted agreeing to provide facilities of egress. He asserted, however, that he had tendered part of the sum subject to adjustment after final completion, that the well was not completed in good order and condition, and that the materials conformed to specifications. He counterclaimed for damages.

The case was set for hearing. The defendant's counsel moved to transfer the date because he would be appearing in another case in a different branch, and asked that the case be placed in the following year's calendar. The court reset the hearing. Before receiving that order, the plaintiff also moved to postpone, because its principal witnesses, the corporation's president and manager, had left for the United States and would return in the latter part of January. The court denied the motion. The plaintiff reiterated its motion, and the defendant filed a similar motion; both were denied. When the case was finally called, the plaintiff again asked for a reset, which was denied in open court, as was its motion for reconsideration. The court then dismissed the case for the plaintiff's failure to present its evidence.

Issues

• Whether or not the trial court acted with sound judicial discretion in denying the plaintiff's motions for postponement of the hearing.
• Whether or not the trial court properly dismissed the case for the plaintiff's failure to present its evidence under the circumstances.

Applicable Provisions

Section 2 of Rule 115 of the Rules of Court, on continuance or postponement of trial, provides:

SEC. 2. Continuance or postponement of the trial.—The court on the application of either party or on its own motion may, in its discretion for good cause postpone the trial of the case for such period of time as the ends of justice and the right of the defendant to a speedy trial require.

This is the rule under which the trial court's discretion to grant or deny a postponement is measured, and it frames the whole appeal.

Ruling

On the first issue, the Court held that applications for continuance are addressed to the sound discretion of the court, but that the exercise of that discretion must be judicial and not arbitrary. Where a party, without malice, fault, or inexcusable negligence, is not really prepared for trial, the court abuses its discretion if it denies a reasonable opportunity to prepare. The Court noted that the plaintiff consistently maintained that its principal witnesses were abroad, that nothing showed the witnesses had not arranged their trip before the notice of hearing was received, and that the motion was filed and set for resolution more than three days before the hearing, as the rules require. It stressed that even the defendant's counsel had signified a desire to have the hearing placed in the next year's calendar, so the defendant would not be prejudiced by the postponement. It added that it was unlikely the plaintiff wanted to delay the case, since, without prejudging the merits, the plaintiff appeared to have a meritorious cause of action, the defendant having admitted hiring the plaintiff and having indirectly admitted that no final accounting had been made when he averred that his tender was subject to future adjustment.

On the second issue, the Court held that even if there had been delay, it was not of an unreasonable length. The case had been pending for more than one month only when it was dismissed, and the motions prayed for a hearing in February, when the material witnesses would have returned. The Court concluded that the lower court acted rather hastily in refusing a continuance and in dismissing the case, and that, to subserve the interests of justice, it would have been better if the order of dismissal were without prejudice.

Doctrine

A motion for postponement is addressed to the sound discretion of the trial court under Section 2 of Rule 115, but that discretion must be exercised judicially and not arbitrarily. A party who, without malice, fault, or inexcusable negligence, is not really prepared for trial must be given a reasonable opportunity to prepare; denying it is an abuse of discretion. Postponements and continuances are part and parcel of the procedural system of dispensing justice, and where no substantial rights are affected and no intention to delay is manifest, it is sound judicial discretion to allow them. A dismissal for failure to present evidence, entered hastily and without giving the party a reasonable opportunity to be heard, will be set aside.

Disposition

The Supreme Court set aside the order denying the postponement and the order of dismissal, declared them of no force and effect, and remanded the case to the lower court for trial or further proceedings, without pronouncement as to costs.

Remember This

The one line to memorize: the grant or denial of a continuance is discretionary, but the discretion must be judicial, not arbitrary, and a hasty dismissal that deprives a party of a reasonable opportunity to present material witnesses will not stand. Examiners use this case to test the limits of a trial court's discretion over postponements and dismissals for failure to prosecute.