Philippine Charter Insurance Corp. v. Explorer Maritime Co.

G.R. No. 175409 (September 7, 2011)

Philippine Charter Insurance's damage lawsuit dismissed for non-prosecution; appeals court affirms.

Facts:

On March 22, 1995, the Philippine Charter Insurance Corporation (PCIC), acting as insurer-subrogee, filed a complaint against several respondents, including the unknown owner of the vessel M/V "Explorer," Wallem Philippines Shipping, Inc., Asian Terminals, Inc., and Foremost International Port Services, Inc. The complaint sought to recover P342,605.50 for lost or damaged shipments, along with interest and attorney's fees. The case was assigned as Civil Case No. 95-73340 to Branch 37 of the Regional Trial Court (RTC) of Manila.

On the same day, PCIC filed a similar complaint against the same respondents but involving a different vessel, M/V "Taygetus," which was assigned as Civil Case No. 95-73341 to Branch 38. The respondents in Civil Case No. 95-73340 filed their answers with counterclaims, to which PCIC responded.

On September 18, 1995, PCIC filed an ex parte motion to set the case for pre-trial, which was granted. However, on September 19, 1996, PCIC filed an amended complaint, prompting the respondents to file new answers with counterclaims. Foremost International Port Services, Inc. later filed a motion to dismiss, which was denied by the trial court.

On December 5, 2000, the respondents filed a motion to dismiss the case, arguing that PCIC had failed to prosecute the action for an unreasonable length of time. PCIC opposed this motion, claiming that it was waiting for the resolution of its Motion to Disclose, which it had filed on November 19, 1997, to ascertain the true identity of the "Unknown Owner" of the vessel M/V "Explorer."

On February 14, 2001, the RTC dismissed Civil Case No. 95-73340 for failure to prosecute. PCIC later realized that its Motion to Disclose had been mistakenly filed with Branch 38 instead of Branch 37. Consequently, PCIC filed a motion for reconsideration, which was denied on May 6, 2003. PCIC then appealed to the Court of Appeals, which affirmed the RTC's dismissal on July 20, 2006.

Legal Issues:

  1. Whether the trial court erred in dismissing the complaint for failure to prosecute.
  2. Whether PCIC's claim of excusable negligence by its former counsel justified the delay in prosecution.
  3. Whether the Motion to Disclose was necessary for the case to proceed to pre-trial.

Arguments:

  • Petitioner (PCIC):

    • PCIC argued that the merits of its case warranted a decision on the substance rather than on technicalities. It claimed that its former counsel's error in filing the Motion to Disclose with the wrong branch constituted excusable negligence. PCIC contended that it was premature to set the case for pre-trial while the Motion to Disclose was pending.

  • Respondents:

    • The respondents contended that PCIC had failed to prosecute the case for an unreasonable length of time, as nearly three years had passed without any action from PCIC after the filing of the Motion to Disclose. They argued that PCIC should have followed up on the status of its motion and that the delay prejudiced their right to a speedy resolution of the case.

Court's Decision and Legal Reasoning:

The Court of Appeals upheld the RTC's dismissal of the case, emphasizing that PCIC had not taken any action to resolve the Motion to Disclose for over three years. The appellate court noted that PCIC could have filed a motion to resolve the Motion to Disclose or inquired about its status, rather than waiting idly. The court highlighted that the failure to prosecute the case for an unreasonable length of time raised a presumption of lack of interest in pursuing the action.

The Supreme Court affirmed the decision, stating that the trial court acted within its discretion in dismissing the case. It reiterated that the burden was on PCIC to demonstrate compelling reasons to justify the delay, which it failed to do. The Court also clarified that the Motion to Disclose was unnecessary for the case to proceed to pre-trial, as the parties had already been properly impleaded.

Significant Legal Principles Established:

  1. Failure to Prosecute: A plaintiff's failure to prosecute a case for an unreasonable length of time can lead to dismissal, even in the absence of evidence of lack of interest or prejudice to the defendant.
  2. Burden of Proof: The burden lies with the plaintiff to show compelling reasons to justify delays in prosecution.
  3. Proper Impleading: A case can proceed to pre-trial even if a motion to disclose the identity of a defendant is pending, provided that the parties have been properly impleaded.