FAUSTINO T. CHINGKOE AND GLORIA CHINGKOE, PETITIONERS, VS. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF CUSTOMS, RESPONDENT.

Chingkoe versus Republic of the Philippines

The Case

This is a petition for review on certiorari brought by Faustino Chingkoe and Gloria Chingkoe against the Republic of the Philippines, represented by the Bureau of Customs. The Republic had sued to collect customs duties and taxes allegedly evaded through fake and spurious tax credit certificates, but the trial court dismissed both collection cases when the government's lawyers repeatedly failed to appear at the pre-trial. The Court of Appeals revived the cases by certiorari. The Supreme Court then had to decide two things: whether certiorari was the right remedy at all, and whether the dismissal was properly ordered. The case matters because it is the leading statement on the remedy against a dismissal for failure to appear at pre-trial, and on the effect of such a dismissal.

Procedural History

The Republic, through the Bureau of Customs, filed two complaints for collection of money and damages before the Regional Trial Court of Manila. The cases were consolidated and eventually raffled to Branch 34. After the pre-trial was reset several times and the Office of the Solicitor General and the Bureau of Customs repeatedly failed to appear, the trial court issued an order on July 14, 2006 dismissing both cases. The trial court denied the Republic's motion for reconsideration on August 31, 2007.

Instead of appealing, the Republic filed a petition for certiorari under Rule 65 before the Court of Appeals. The Court of Appeals granted the petition in its decision of April 30, 2008, revoked the trial court's orders, and remanded the cases for further proceedings, ruling that dismissing a huge tax collection case so swiftly was grave abuse of discretion. It denied the separate motions for reconsideration of the Chingkoes and of Filstar Textile Industrial Corporation in its resolution of June 27, 2008. The Chingkoes then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

In the first case, the Republic alleged that Chiat Sing Cardboard Incorporated, an importer, secured in 1997 fake and spurious tax credit certificates from Filstar Textile Industrial Corporation amounting to six million seventy-six thousand two hundred forty-six pesos, and used them to settle its customs duties and taxes. Chiat Sing in turn filed a third-party complaint against Filstar and against Faustino Chingkoe and Gloria Chingkoe, claiming it had bought the certificates from Filstar for valuable consideration and that Filstar had represented them to be good, valid, and genuine.

In the second case, the Republic alleged that from 1992 to 1998 Filstar fraudulently secured twenty tax credit certificates amounting to fifty-three million six hundred fifty-four thousand six hundred seventy-seven pesos and used them to pay customs duties and taxes, leaving its liability unpaid. The complaint was amended to include several individuals, among them Faustino Chingkoe and Gloria Chingkoe, as defendants.

The two cases were consolidated and referred to mandatory mediation, which produced no settlement. The pre-trial was then reset six times. Neither the Office of the Solicitor General nor the Bureau of Customs appeared at the earlier settings. On June 30, 2006, a lawyer appeared for the Bureau of Customs but was unprepared, and the trial court warned that a further failure to appear would constrain it to dismiss. On July 14, 2006, with the defendants' counsel present and waiting until 9:45 in the morning, neither office appeared. The trial court dismissed both cases.

Issues

• Whether or not the Court of Appeals erred in granting the petition for certiorari, when an ordinary appeal from the order of dismissal was the plain, speedy, and adequate remedy available to the Republic.
• Whether or not the trial court's dismissal of the complaints for the Republic's repeated failure to appear at pre-trial and to prosecute was proper, and whether it was attended with grave abuse of discretion.

Applicable Provisions

Section 5 of Rule 18 of the Rules of Court provides:

Section 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court.

This is the provision the trial court applied, and it fixes both the ground for dismissal and its effect as an adjudication on the merits.

Section 1 of Rule 41 of the Rules of Court, as discussed in the decision, governs appeal from final orders and identifies the cases in which appeal is not available. The Court used it to show that the dismissal order did not fall within any exception, so appeal was the correct remedy.

Rule 65 of the Rules of Court, as discussed in the decision, allows certiorari only where a tribunal acts without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and where there is no appeal or other plain, speedy, and adequate remedy in the ordinary course of law. The Court used it to test whether the Republic chose the right remedy.

Ruling

On the first issue, the Court ruled that certiorari does not lie. The dismissal order fully disposed of the cases and was a final adjudication; it fell into no exception to the rule on appeal. The proper remedy was a notice of appeal under Rule 41. The Court held that a petition for certiorari is not and cannot be a substitute for an appeal, especially where the loss results from one's own negligence or error in the choice of remedy, and that when an appeal is available, certiorari will not prosper even if the basis is grave abuse of discretion. The Republic's worry that the order did not say whether the dismissal was with prejudice was a misreading of the Rule, which itself supplies the answer. In not dismissing the petition outright, the Court said, the Court of Appeals committed grave and reversible error.

On the second issue, the Court nevertheless went into the merits and held that the trial court's dismissal was in order. The trial court gave the Republic every opportunity to be heard, resetting the pre-trial six times, yet neither office was ever properly represented and none offered a reasonable explanation. The Court stressed the importance of pre-trial, which serves the simplification, abbreviation, and expedition of the trial. The trial court was merely following the letter of Section 5 of Rule 18, so the Court of Appeals erred in finding grave abuse of discretion.

But because of the huge amount of tax collectibles involved, and considering that taxes are the lifeblood of the government, the Court held that the dismissal should be without prejudice.

Doctrine

• A dismissal for failure of the plaintiff to appear at pre-trial is with prejudice unless the order itself states otherwise; the trial court need not say so expressly.
• Such a dismissal is a final order that disposes of the case on the merits, so the remedy is an ordinary appeal under Rule 41, not a petition for certiorari under Rule 65.
• Certiorari and appeal are mutually exclusive and not alternative or successive; where appeal is available, certiorari will not prosper even on a claim of grave abuse of discretion.
• The importance of the subject matter, even the collection of taxes, does not exempt a party from complying with the rules of procedure, including the rules on appeal.
• Pre-trial is not a mere technicality; it is mandatory and serves the speedy disposition of cases, so repeated failure to appear is a ground for dismissal.

Disposition

The petition was granted; the Court of Appeals decision and resolution were reversed and set aside, and the trial court's order of dismissal was reinstated with the modification that the dismissal of the two civil cases shall be without prejudice.

Remember This

Memorize this line: a dismissal for failure to appear at pre-trial is with prejudice unless otherwise ordered, it is a final judgment on the merits, and the remedy is appeal, not certiorari. Examiners use this case to test the exclusivity of appeal and certiorari, and the effect of non-appearance at pre-trial under Section 5 of Rule 18.