PHILIPPINE NATIONAL BANK, PLAINTIFF-APPELLEE, VS. ESTANISLAO PINEDA,  DEFENDANT-APPELLANT.

Philippine National Bank versus Pineda

The Case

This is a simple collection-and-ejectment matter that became a lesson in procedure. The Philippine National Bank sued Estanislao Pineda, a lessee without a fixed term, to recover unpaid rent and to recover possession of the premises. The case matters to a reviewee not because of the lease, but because of what happened on appeal: the defendant and his counsel failed to appear at pre-trial before the Court of First Instance, and that failure cost him his appeal. The Supreme Court used the occasion to restate when a dismissed appeal revives the judgment of the inferior court, and to remind us that notices in litigation are served on counsel, not on the party.

Procedural History

The Bank filed its complaint in the City Court of Manila. That court rendered judgment ordering Pineda to vacate the premises within six months from receipt of the decision, provided he paid the rent in arrears in the sum of 149 pesos and 60 centavos as of April 30, 1967, and updated the payment of rental within ten days from receipt of the decision, with the express condition that he would not be entitled to the six-month grace should he fail to make those payments. The City Court also assessed attorney's fees of 50 pesos and costs against him.

Pineda appealed to the Court of First Instance of Manila. Issues having been joined there, the case was set for pre-trial. After the case was repeatedly called for the scheduled pre-trial on October 20, 1967, the last time at 9:05 in the morning, the defendant and his counsel failed to appear. The Court of First Instance dismissed the appeal for failure to prosecute. His efforts at reopening were thwarted below, and he came to the Supreme Court on appeal. The Supreme Court affirmed.

Facts

The Bank sued Pineda in the City Court of Manila for rent in arrears and for possession of the premises he occupied. Pineda was a lessee without a fixed term. The City Court gave judgment for the Bank, but tempered it with a six-month period to vacate, conditioned on his paying the arrears and keeping his rental payments current.

Pineda appealed to the Court of First Instance of Manila. Once issues were joined, the case was set for pre-trial. The case was called repeatedly on the scheduled date, the last call at 9:05 in the morning, and neither the defendant nor his counsel appeared. The Court of First Instance dismissed the appeal for failure to prosecute.

Pineda tried to have the case reopened below and failed. His excuse was that his counsel, Attorney Pompeyo L. Bautista, had withdrawn from the case. The lower court called that excuse very flimsy, and the Supreme Court agreed, because the record did not bear out any such withdrawal, and because under the law notices are given to counsel.

Issues

• Whether or not the failure of the defendant and his counsel to appear at the scheduled pre-trial is a ground to dismiss the appeal for failure to prosecute, thereby reviving the judgment of the inferior court.
• Whether or not the defendant has shown a valid defense that would make the reopening of the case worthwhile.

Applicable Provisions

Section 9 of Rule 40 of the Rules of Court, on dismissal of appeals, provides:

If the appeal is withdrawn or dismissed, the judgment of the inferior court shall be revived.

This is the provision that gives the dismissal its sting: the dismissal of the appeal does not leave the parties where they were, it restores the City Court's judgment.

Section 2 of Rule 13 of the Rules of Court, on service of notices, provides:

Notices shall be served upon the party or his attorney of record.

This is why the defendant could not excuse his absence by pointing to his counsel: notice to the attorney of record is notice to the party.

Article 1678 of the Civil Code of the Philippines, on the lessee's improvements, provides:

If the lessee makes, in good faith, useful improvements which are appropriate to the use for which the lease was intended, on the land leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary. With respect to ornamental or luxury improvements, the lessor shall not be bound to reimburse the lessee for the value of said improvements, but the lessee may remove them should it be possible without causing injury to the leased premises.

This bears on the defendant's claim for reimbursement of one-half of the value of his residential house on the land, a claim the Court rejected because the option to acquire the improvements belongs to the owner of the land.

Ruling

On the first issue, the Court held that the failure of the defendant and his counsel to appear is a ground to authorize dismissal for failure to prosecute, and that the judgment of the inferior court is thus revived. The defendant's excuse, that his counsel had withdrawn, was correctly called very flimsy by the lower court. With reason: the record does not bear out such withdrawal, and under the law notices are given to counsel.

On the second issue, the Court held that the defendant has not shown any valid defense. It is conceded that he is a lessee without a fixed term, which explains why the City Court gave him time to vacate the premises. Nor would his averment that he has a residential house on the land advance his cause. He may not require reimbursement of one-half of the value of the house, because the option to acquire the improvements is on the owner of the land. It follows that reopening the case would be futile.

Doctrine

First, the failure of the defendant and his counsel to appear at the scheduled pre-trial is a ground to dismiss the appeal for failure to prosecute. Second, once the appeal is dismissed, the judgment of the inferior court is revived, by force of Section 9 of Rule 40 of the Rules of Court. Third, notices are served upon the party or his attorney of record under Section 2 of Rule 13, so a party cannot excuse his non-appearance by claiming that his counsel had withdrawn when the record does not bear out the withdrawal. Fourth, a lessee without a fixed term who builds a residential house on the land may not demand reimbursement of one-half of its value, because under Article 1678 of the Civil Code the option to acquire the improvements belongs to the owner of the land. Fifth, where the defendant has no valid defense, reopening the case would be futile.

Disposition

The Supreme Court affirmed the judgment, with costs against the defendant-appellant.

Remember This

Memorize this line: the failure of the defendant and his counsel to appear at pre-trial is a ground to dismiss the appeal for failure to prosecute, and the dismissal revives the judgment of the inferior court. Examiners use this case on the consequences of non-appearance at pre-trial, on service of notices to counsel of record, and on the lessee's right to reimbursement for improvements under Article 1678 of the Civil Code.