Pimentel vs. Adiao

A trial court may relax the mandatory requirement in Section 6, Rule 18 of the Rules of Court that a pre-trial brief be filed and served at least three days before pre-trial, and should not dismiss the complaint for a late pre-trial brief, where the delay is not willful, is the party's only procedural lapse, and the adverse party will not be prejudiced.

Joanne Kristine G. Pimentel entered into a Construction Agreement with Reynaldo Adiao and Christian Adiao for the renovation of her bungalow in BF Resort Village, Pamplona, Las Piñas City. Cristy Adiao-Nierves is Reynaldo's daughter and signed an acknowledgment receipt for P30,000.00. The case turns on Rule 18, Sections 5 and 6 of the Rules of Court, which govern pre-trial briefs and the consequences of noncompliance.

On October 6, 2011, Joanne Kristine G. Pimentel entered into a Construction Agreement with Reynaldo Adiao and Christian Adiao. Reynaldo, as contractor, agreed to renovate Joanne's bungalow house at BF Resort Village, Pamplona, Las Piñas City, for P1,150,000.00, with a completion period of 180 working days. If Reynaldo became incapable of performing his responsibilities, Christian was designated as successor obliged to finish the renovation. Joanne paid Reynaldo and Christian a total of P1,200,000.00, including a down payment of P345,000.00 made in December 2011. On April 6, 2012, Joanne paid an additional P30,000.00 for repair of her other house at Mataas na Kahoy. Cristy allegedly conformed to the obligations of Reynaldo and Christian with respect to the renovation and repair of the two houses by signing her name in the acknowledgment receipt for the P30,000.00.

Joanne alleged that Reynaldo, in violation of their agreement, did not complete the renovation and left the project unfinished. She wrote a demand letter to Reynaldo to complete the work, but he refused. She also made verbal demands upon Cristy and Christian to comply with their obligation, but they did not heed her demands. Joanne took the position that their failure to complete the renovation and repair constituted a breach of the Construction Agreement and, having incurred delay, Reynaldo, Christian, and Cristy should indemnify her P1,000.00 per day. She prayed for P330,000.00 as damages for delay, P150,000.00 as the amount she spent to complete the renovation, and P150,000.00 as damages for breach of contract. She attached a list of alleged unfinished portions of the renovation project.

Reynaldo and Christian alleged that Joanne had no cause of action because Reynaldo completed the renovation of her BF Resort house in accordance with the Construction Agreement and the comparative material specification executed between him and Joanne. Reynaldo addressed each unfinished item listed by Joanne and explained why it should not be considered a breach. Christian alleged that his obligation was suspensive and would arise only if Reynaldo was rendered physically unfit to fulfill his obligations. They further alleged that the contract cost of P1,150,000.00 was way below the actual cost of materials and labor, which amounted to P1,352,256.42, and that Reynaldo proceeded with the project using his own funds. They prayed for dismissal. Cristy alleged that she was not a signatory to the Construction Agreement and had no knowledge of its terms and conditions. She signed the receipt dated April 6, 2012 because her father, Reynaldo, told her to sign as a witness to the fact that Reynaldo borrowed P30,000.00 from Joanne's parents to defray additional project expenses; the loan plus P3,000.00 interest was already paid by Reynaldo.

On January 29, 2014, the RTC issued a Notice of Preliminary Conference setting the case for preliminary conference on February 14, 2014 and requiring the parties to file their respective pre-trial briefs and serve the same on the adverse party at least three days before the scheduled date. A Notice of Pre-Trial issued January 30, 2014 set the case for pre-trial on March 17, 2014 and reiterated the directive on the filing of pre-trial briefs. On February 12, 2014, Cristy filed her pre-trial brief and furnished Joanne a copy by registered mail. During the preliminary conference on February 14, 2014, all the parties and their counsels appeared; Reynaldo and Christian filed their pre-trial brief and furnished Joanne a copy on that date; and the parties pre-marked their respective exhibits. On March 17, 2014, the pre-trial hearing was held and attended by the parties and their counsels. Joanne filed her pre-trial brief, which was objected to by the other parties' counsels as late. Atty. Edwin V. Patricio, Joanne's counsel, explained that the pre-marking of exhibits was done only on February 14, 2014 and he believed it was not yet terminated; he also planned to file a motion for extension of time to submit the pre-trial brief. The RTC dismissed the case because Atty. Patricio violated Section 6, Rule 18 in relation to Section 5, and because the other counsels manifested that they would no longer pursue their clients' counterclaims.

Joanne moved for reconsideration, alleging that her counsel received copies of the Notice of Preliminary Conference and Notice of Pre-Trial on February 12, 2014, making it improbable to submit the pre-trial brief at least three days before February 14, 2014. She and her counsel were present and actively participated in the preliminary conference, with her counsel provisionally marking photographs subject to a request to mark the originals on March 17, 2014. Her counsel honestly believed that the pre-marking of exhibits or the preliminary conference was not yet terminated and planned to submit a motion for extension of time to file the pre-trial brief. On March 17, 2014, Joanne filed her pre-trial brief and furnished the other parties copies. She claimed that she did not willfully commit an act constituting utter disregard of the Rules or orders of the RTC. She pleaded that the rule on timely submission of the pre-trial brief be interpreted liberally in her favor and asserted that the adverse parties also violated Section 6, Rule 18 because they failed to attach relevant documents and were late in filing their pre-trial briefs. The RTC denied her motion for reconsideration in its Order dated May 2, 2014, and Joanne appealed to the CA.

• Late Receipt of Notice: Petitioner argued that her counsel received the Notice of Preliminary Conference only on February 12, 2014, making it improbable for her to file her pre-trial brief at least three days before February 14, 2014, the date of the preliminary conference.
• Respondents' Noncompliance: Petitioner maintained that respondents likewise failed to comply with the Notice of Preliminary Conference and Section 6, Rule 18: Cristy filed her pre-trial brief on February 12, 2014 but furnished petitioner a copy only on February 14, 2014, while Reynaldo and Christian filed their pre-trial brief only on February 14, 2014 during the preliminary conference.
• Active Participation and Substantial Compliance: Petitioner argued that she and her counsel actively participated in the preliminary conference, where exhibits were marked, witnesses were identified, and trial dates were fixed; her counsel requested that original photographs be marked on March 17, 2014 and believed that pre-marking had not been terminated.
• Timely Filing on Pre-Trial Date and No Delay: Petitioner claimed that she filed her pre-trial brief on March 17, 2014, the pre-trial hearing date, and that she had been actively prosecuting her case, including attending mediation and judicial dispute resolution proceedings, without causing delay.
• Liberal Construction: Petitioner pleaded that the rule on timely submission of the pre-trial brief be interpreted liberally in her favor, as she did not willfully disregard the Rules or the RTC's orders.

• No Cause of Action / Performance: Reynaldo and Christian alleged that Joanne had no cause of action because Reynaldo completed the renovation in accordance with the Construction Agreement and the comparative material specification, and Reynaldo addressed each unfinished item to explain why it was not a breach.
• Suspensive Obligation: Christian alleged that his obligation was suspensive and would arise only if Reynaldo was rendered physically unfit to fulfill his obligations under the agreement.
• Cost Overrun and Own Funds: Reynaldo and Christian alleged that the contract cost of P1,150,000.00 was below the actual cost of materials and labor, which amounted to P1,352,256.42, and that Reynaldo proceeded with the project using his own funds.
• Cristy's Non-Participation: Cristy alleged that she was not a signatory to the Construction Agreement and had no knowledge of its terms and conditions; she signed the April 6, 2012 receipt only because her father, Reynaldo, told her to sign as a witness to the fact that Reynaldo borrowed P30,000.00 from Joanne's parents, which loan plus P3,000.00 interest was already paid.

• Dismissal for Late Pre-Trial Brief: Whether the CA erred in dismissing the complaint for Joanne's failure to file her pre-trial brief on time, given that respondents also violated Sections 5 and 6 of Rule 18.

• Dismissal for Late Pre-Trial Brief: Yes. The CA erred in affirming the dismissal. The untimely pre-trial brief was petitioner's only procedural lapse, she had been diligent, and respondents were not fully compliant, so the rules were relaxed to allow the case to proceed on the merits.

• Dismissal for Late Pre-Trial Brief: Sections 5 and 6, Rule 18 provide that the parties shall file and serve their pre-trial briefs at least three days before pre-trial, and failure to file the pre-trial brief has the same effect as failure to appear at pre-trial; under Section 5, the plaintiff's failure to appear is cause for dismissal with prejudice unless otherwise ordered. The Court in BPI vs. Dando recognized that "shall" is generally mandatory, but also held that courts have the prerogative to relax compliance with procedural rules of even the most mandatory character, reconciling the need for speedy litigation with the parties' right to an opportunity to be heard. Sanchez vs. Court of Appeals enumerated reasons for suspending strict adherence: matters of life, liberty, honor or property; special or compelling circumstances; the merits of the case; a cause not entirely attributable to the fault or negligence of the party favored; no showing that review is frivolous or dilatory; and no unjust prejudice to the other party. BPI vs. Dando further considered that the failure to file the pre-trial brief was the first and only procedural lapse, with no pattern or scheme to delay and with diligence in prosecuting the claim. Sps. Diaz vs. Diaz and Ginete vs. Court of Appeals reiterated that technicalities should give way to substantive rights and that suits should as much as possible be decided on the merits. Section 6, Rule 1 mandates liberal construction of the Rules to promote a just, speedy, and inexpensive disposition. Applying these principles, the Court was convinced by Joanne's explanations: her counsel received the notices only on February 12, 2014; the untimely filing was her only procedural lapse; she had been diligent and had not shown a proclivity to delay; several matters for the pre-trial hearing had already been accomplished in the preliminary conference, including the marking of exhibits, identification of witnesses, and agreement on trial dates; and respondents themselves were not fully compliant with the Rules. Respondents would not suffer substantial prejudice if the case were litigated on the merits, as they were not stripped of affirmative defenses or deprived of due process. The dismissal was therefore reversed and the complaint reinstated.

• Liberal Construction of Procedural Rules — Procedural rules are not to be belittled or disregarded, but courts have the prerogative to relax compliance with procedural rules of even the most mandatory character, mindful of reconciling the need to put an end to litigation speedily with the parties' right to an opportunity to be heard. The Court applied this to excuse petitioner's late pre-trial brief.
• Mandatory but Relaxable Pre-Trial Brief Rule — Under Sections 5 and 6, Rule 18, the filing and service of the pre-trial brief at least three days before pre-trial is mandatory, and failure to file the pre-trial brief has the same effect as failure to appear at pre-trial. However, the rule is not absolute and may be relaxed in the interest of substantial justice.
• Sanchez Factors for Suspending Strict Adherence to Procedural Rules — The reasons that may justify suspension of strict adherence include: (a) matters of life, liberty, honor or property; (b) special or compelling circumstances; (c) the merits of the case; (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension; (e) a lack of any showing that the review sought is merely frivolous and dilatory; and (f) the fact that the other party will not be unjustly prejudiced. The Court relied on these factors in granting relief.
• Only Procedural Lapse and No Pattern of Delay — Following BPI vs. Dando, a party's failure to file a pre-trial brief may be excused where it is the first and only procedural lapse, does not manifest a pattern or scheme to delay the disposition of the case, and the party has exhibited diligence and reasonable dispatch in prosecuting its claim. The Court found these circumstances present.
• Suits Should Be Decided on the Merits, Not Technicalities — Technicality and procedural imperfection should not serve as the basis of decisions; cases should be decided only after giving all parties the chance to argue their causes and defenses. The Court applied this principle to reinstate the complaint.
• Liberal Construction Under Section 6, Rule 1 — The Rules shall be liberally construed to promote their objective of securing a just, speedy, and inexpensive disposition of every action and proceeding. The Court invoked this provision to justify relaxing the pre-trial brief rule.

• "However, it is equally true that litigation is not merely a game of technicalities. Law and jurisprudence grant to courts the prerogative to relax compliance with procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to put an end to litigation speedily and the parties' right to an opportunity to be heard." — Articulates the controlling rule allowing relaxation of even mandatory procedural requirements.
• "In not a few instances, the Court relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merit. This is in line with the time-honored principle that cases should be decided only after giving all parties the chance to argue their causes and defenses. Technicality and procedural imperfection should, thus, not serve as basis of decisions." — States the merits-over-technicalities rationale applied to reinstate the complaint.
• "Section 6, Rule 1 of the Rules mandates that "[t]hese Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding."" — Identifies the express textual basis for liberal construction of the Rules.
• "The Court is convinced with the explanations of Joanna for her plea to relax the application of the Rules in her case. The Court notes that, like BPI, the untimely filing of her PT brief was so far the only procedural lapse that she committed." — Shows the Court's application of the BPI vs. Dando standard to petitioner's single procedural lapse.

• Bank of the Philippine Islands vs. Dando, 614 Phil. 553 (2009) — Controlling precedent. The Court relied on it for the rule that "shall" is mandatory but may be relaxed, and for the factors that the failure to file a pre-trial brief was the first and only procedural lapse, with no pattern or scheme to delay and with diligence in prosecution.
• Sanchez vs. Court of Appeals, 452 Phil. 665 (2003) — Followed. The Court restated the reasons that may justify suspension of strict adherence to procedural rules, including special or compelling circumstances, merits, lack of fault, non-frivolousness, and absence of unjust prejudice.
• Sps. Diaz vs. Diaz, 387 Phil. 314 (2000) — Followed. The Court cited it for the emerging trend to afford every party litigant the amplest opportunity for proper and just determination of the cause, free from technicalities.
• Ginete vs. Court of Appeals, 357 Phil. 36 (1998) — Cited through Sps. Diaz vs. Diaz. The Court used it for the principle that rules of court are not meant to bind and chain the hand that dispenses justice, and technicalities take a backseat to substantive rights.
• Spouses Mirasol vs. Court of Appeals, 403 Phil. 760 (2001) — Cited through BPI vs. Dando. The Court used it for the basic legal construction that words of command such as "shall," "must," and "ought" are generally regarded as mandatory.

• Section 5, Rule 18, Rules of Court — Provides that the failure of the plaintiff to appear when required is cause for dismissal of the action, with prejudice unless otherwise ordered, and that a similar failure by the defendant allows the plaintiff to present evidence ex parte. The Court considered this provision in relation to Section 6 but declined to apply dismissal strictly.
• Section 6, Rule 18, Rules of Court — Requires the parties to file with the court and serve on the adverse party their respective pre-trial briefs at least three days before the date of pre-trial, and provides that failure to file the pre-trial brief has the same effect as failure to appear at the pre-trial. The Court relaxed its application to petitioner's late filing.
• Section 6, Rule 1, Rules of Court — Mandates that the Rules shall be liberally construed to promote their objective of securing a just, speedy, and inexpensive disposition of every action and proceeding. The Court invoked this provision to justify liberal construction.

Carpio, Senior Associate Justice (Chairperson); Perlas-Bernabe; A. Reyes, Jr.; and J. Reyes, Jr. J. Reyes, Jr. was designated additional Member per Special Order No. 2587 dated August 28, 2018.