Shimizu vs. Magsalin G.R. No. 170026 June 20, 2012 - Digest

Michelle Jude G.
Tinio
G.R. No. 170026 June 20, 2012
SHIMIZU PHILIPPINES CONTRACTORS, INC., Petitioner,

vs.
MRS. LETICIA B. MAGSALIN, doing business under the trade name "KAREN'S TRADING," FGU
INSURANCE CORPORATION, GODOFREDO GARCIA, CONCORDIA GARCIA, and REYNALDO
BAETIONG, Respondents.
FACTS:
Shimizu Philippines (Shimizu) filed a complaint against Leticia Magsalin (Magsalin) and FGU
Insurance (FGU) claiming ₱2,329,124.60 as actual damages for the breach of contract. Shimizu claims
that Magsalin, doing business as "Karen’s Trading," had breached their subcontract agreement for the
supply, delivery, installation, and finishing of parquet tiles. Despite demand, Magsalin also refused to return
the petitioner’s unliquidated advance payment and to account for other monetary liabilities. Notice was also
sent to FGU demanding damages pursuant to the surety and performance bonds the former had issued for
the subcontract.
FGU Insurance was duly served with summons. However, corresponding officer’s return declared
that both Magsalin and "Karen’s Trading" could not be located at their given addresses, and that despite
further efforts, their new addresses could not be determined.
On December 16, 2003, RTC issued a tersely worded order dismissing Civil Case No. 02-488, “For
failure of [petitioner] to prosecute, the case is hereby DISMISSED”. The RTC denied the petitioner’s motion
for reconsideration, prompting the latter to elevate its case to the CA via a Rule 41 petition for review.
FGU Insurance moved for the dismissal of the appeal on the ground of lack of jurisdiction. It argued
that the appeal raised a pure question of law as it did not dispute the proceedings before the issuance of
the December 16, 2003 dismissal order. The petitioner, on the other hand, insisted that it had raised
questions of fact in the appeal. The CA agreed with FGU Insurance and dismissed the appeal, and denied
as well the subsequent motion for reconsideration. The petitioner thus filed the present petition for review
on certiorari.
ISSUE:
1. Whether or not the dismissal order of the RTC is void and violated due process?
2. Whether or not the Supreme Court may properly look into the validity of the dismissal order
even though it was never raised by the petitioner as an issue in the present petition?
HELD:
1. Yes. The dismissal order is void.
Dismissals of actions for failure of the plaintiff to prosecute is authorized under Section 3, Rule 17
of the Rules of Court. Procedurally, when a complaint is dismissed for failure to prosecute and the
dismissal is unqualified, the dismissal has the effect of an adjudication on the merits. As an adjudication on
Michelle Jude G. Tinio
the merits, it is imperative that the dismissal order conform with Section 1, Rule 36 of the Rules of Court on
the writing of valid judgments and final orders. The rule states that, “A judgment or final order determining
the merits of the case shall be in writing personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by him, and filed with the clerk of the court.”
In the case at bar, the December 16, 2003 dismissal order clearly violates this rule for its failure to
disclose how and why the petitioner failed to prosecute its complaint. Thus, neither the petitioner nor the
reviewing court is able to know the particular facts that had prompted the prejudicial dismissal. The
dismissal of Civil Case No. 02-488 constituted a denial of due process. Elementary due process demands
that the parties to a litigation be given information on how the case was decided, as well as an explanation
of the factual and legal reasons that led to the conclusions of the court. Where the reasons are absent, a
decision (such as the December 16, 2003 dismissal order) has absolutely nothing to support it and is thus a
nullity.
2. Yes. The Supreme Court may look into the validity of the dismissal order.
It is well-settled that a void decision is open to collateral attack. While it was noted that the validity
of the dismissal order with respect to Section 1, Rule 36 of the Rules of Court was never raised by the
petitioner as an issue in the present petition, the Supreme Court is vested with ample authority to review an
unassigned error if it finds that consideration and resolution are indispensable or necessary in arriving at a
just decision in an appeal. In this case, the interests of substantial justice warrant the review of an obviously
void dismissal order.
Hence, the Supreme Court may properly look into the validity of the dismissal order even though it
was never raised by the petitioner as an issue in the present petition.

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Michelle Jude G.

G.R. No. 170026 June 20, 2012

SHIMIZU PHILIPPINES CONTRACTORS, INC., Petitioner,

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