GOVERMENT OF THE PHILIPPINES, PLAINTIFF-APPELLANT, VS. MOISES SONGCUYA AND ISIDRO LABRADOR, DEFENDANTS-APPELLEES.

Government of the Philippines versus Songcuya and Labrador

The Case

This is an appeal by the Government of the Philippines from an order of the Court of First Instance of Cotabato dismissing its complaint against Moises Songcuya and Isidro Labrador on the ground of failure to prosecute. The Government sued to recover the sum of 24,224.30 pesos, the total of eleven War Damage checks that the two defendants had endorsed to it and that the drawee bank refused to pay. The case matters because it is the classic illustration of how the Supreme Court tempers the harsh rule on dismissal for failure to prosecute with equity, and because it warns trial judges against prejudging the merits of a complaint before trial.

Procedural History

The Government filed its complaint in the Court of First Instance of Cotabato in March 1954. The case was first called for trial in October 1955, but both defendants asked for postponement and the trial was reset until further assignment. It was called again only in August 1959. When the Director of Posts or his representative failed to appear, the provincial fiscal moved in open court for postponement. The trial court denied the motion and, on the same day, dismissed the case for failure to prosecute with diligence. The fiscal promptly filed a motion for reconsideration, which the court denied in November 1959, adding in its order a statement suggesting it had already weighed the merits of the checks. The Government appealed to the Court of Appeals, which, since only a question of law was involved, certified the case to the Supreme Court.

Facts

The Government's action, filed in March 1954, sought to recover 24,224.30 pesos. That amount represented eleven War Damage checks drawn on the National City Bank of New York, Manila Branch, in favor of Sabel Bankono and ten other persons. The defendants, Moises Songcuya and Isidro Labrador, endorsed these checks to the Government of the Philippines. When the Government presented the eleven checks to the drawee bank, the bank refused payment. The Government then gave the corresponding notice of dishonor to both defendants, who likewise refused to pay.

In their separate answers, the defendants disclaimed liability. As a special defense, they alleged that, as bonded postmaster and money order clerk respectively, they were authorized under an unnumbered circular of the Bureau of Posts dated January 26, 1948 to pay the checks of war damage claimants, and that the other endorsers of the checks had not been impleaded.

The case was called for trial on October 10, 1955, but both defendants asked for postponement without opposition from the provincial fiscal, and the trial was postponed until further assignment. It was only on August 20, 1959 that the case was again called. The Director of Posts or his representative failed to appear, and the provincial fiscal was constrained to move in open court for postponement. The trial court denied the motion and dismissed the case the same day. A few hours later, the fiscal filed a motion for reconsideration, averring that this was his first request for postponement and attaching a telegram from Bureau of Posts Inspector Policarpio Baguio, stationed in Bacolod, who said he could not appear for lack of transportation but would arrive on August 24. The defendants objected. In November 1959 the court denied reconsideration and observed that the checks had been signed by witnesses who identified the payee and guaranteed payment, and that everything was done in the ordinary course of business.

Issues

• Whether or not the trial court erred in dismissing the complaint for failure to prosecute with diligence.
• Whether or not the dismissal, which by its terms amounted to a dismissal on the merits, should stand against the Government's claim.

Applicable Provisions

Section 31 of Act Number 296, as amended, governs certification of cases to the Supreme Court, and the Court of Appeals invoked it in relation to Section 17, paragraph 6 of the same Act:

Section 31. The Court of Appeals may certify a case to the Supreme Court when only questions of law are involved.

This provision explains why the case reached the Supreme Court directly rather than being decided by the Court of Appeals.

Ruling

On the first issue, the Court acknowledged that the Government had indeed failed to show sufficient interest, having allowed four years to elapse from the first date of trial before securing another assignment. Nevertheless, it found the dismissal unwarranted. Counsel for the Government was constrained to ask for postponement not only because the Director of Posts or his representative failed to appear, but also because other government witnesses had not been served with the subpoenas issued by the trial court. Inspector Baguio's absence was due to lack of transportation from his official station, for which he sent a telegram. The Court also held that the trial judge's statement in his order denying reconsideration was improper, because without due trial he appeared to have prejudged the merits of the complaint.

On the second issue, the Court weighed the equities. It noted the possibility that court sessions in the jurisdiction were not continuous, for which reason the Court itself seemed to have forgotten the case altogether, and it observed that the defendants had also shown lack of interest in having the case tried and disposed of. It concluded that, in equity, the order of dismissal, which by its terms would amount to a dismissal on the merits, should not be allowed to stand to the prejudice of the appellant entity.

Doctrine

First, dismissal for failure to prosecute is not automatic; it is addressed to the sound discretion of the court and must be exercised with regard to the equities of the case. A delay attributable in part to the court's own inactivity and to the defendants' own lack of interest does not justify a dismissal that operates as an adjudication on the merits. Second, a trial judge must not prejudge the merits of a complaint before trial; any statement suggesting a conclusion on the evidence is improper. Third, a dismissal that by its terms amounts to a dismissal on the merits is a severe sanction that should not lightly prejudice a claimant, especially the Government, where the failure to appear is satisfactorily explained.

Disposition

The Supreme Court reversed and set aside the appealed order and remanded the case to the trial court for the corresponding proceedings.

Remember This

The one line to memorize: a dismissal for failure to prosecute that operates as a dismissal on the merits will not be allowed to stand in equity where the delay is partly the court's own and the defendants showed equal lack of interest. Examiners use this case to test the limits of the trial court's discretion to dismiss and the rule against prejudging the merits before trial.