Peoples Realty Brokerage Corporation v. Lustre
REITERATIONFacts
The Antecedents: Andres Torres Yap filed a complaint for breach of contract with damages against Jose C. Desiderio & Co., Inc. and Peoples Realty Brokerage Corporation (Petitioner). Petitioner filed an answer with a cross-claim. Procedural History: The pre-trial was initially set for March 12, 1974, then reset to March 26, 1974, and again to May 30, 1974, by agreement. The notice of the May 30, 1974 resetting was written on the reverse side of the March 12, 1974 minutes and signed by petitioner's President and General Manager, A.M. Medina, for Peoples Realty & Atty. Ungson. Petitioner and its counsel failed to appear on May 30, 1974. The respondent court declared petitioner in default and ordered the presentation of evidence ex-parte. A copy of the default order was sent by registered mail to petitioner's counsel, Atty. Ungson, at an incorrect address, and was returned unclaimed. Petitioner's counsel filed a motion to lift the order of default, alleging he was hospitalized and did not receive the default order. The motion was denied for being filed too late. Subsequent motions for reconsideration were also denied by the incumbent judge. The Petition: Petitioner filed a petition for certiorari, prohibition, and mandamus, assailing the orders declaring it in default, denying its motion to lift the default, and enjoining further proceedings, seeking an opportunity to present its defenses.
Issue(s)
Whether the respondent court acted with grave abuse of discretion in declaring petitioner in default for failure to appear at the pre-trial. Whether the notice of the resetting of the pre-trial to May 30, 1974, was sufficient and properly served upon petitioner and its counsel. Whether the motion to lift the order of default was filed within a reasonable time.
Ruling
The petition is granted. The questioned orders declaring petitioner in default, denying the motion to lift the order of default, and denying the motions for reconsideration are annulled and set aside. The case is remanded for trial on the merits.
Ratio Decidendi
On the issue of grave abuse of discretion in declaring petitioner in default: The Court held that the respondent court acted with grave abuse of discretion. Petitioner's counsel contended that he was not notified of the resetting of the pre-trial on May 30, 1974. While the notice was signed by petitioner's President and General Manager, the counsel asserted he had not authorized anyone to receive or sign for him. The Court emphasized that a notice of pre-trial must be served separately upon the party and his counsel of record, citing previous rulings. On the sufficiency and proper service of the notice of pre-trial: The Court reiterated the ruling in Lim vs. Animas and subsequent cases, stating that the notice of pre-trial must be served separately upon the party affected and his counsel of record. The service upon the party may be made directly or through counsel, who is then obligated to notify the party. In this case, petitioner's counsel was not served with a separate notice of the pre-trial held on May 30, 1974. Therefore, the order of default and the ex-parte proceedings before the Commissioner were deemed null and void. On the timeliness of the motion to lift the order of default: The Court found that the respondent judge erred in denying the motion to lift the order of default for being filed "too late." The delay was attributed to the fact that petitioner's counsel did not receive a copy of the order of default due to an erroneous address used by the court. Although the counsel's address in the pleading might have been a typographical error, it was not made to mislead. The counsel learned of the default order only incidentally and promptly filed the motion to lift it. The Court reiterated that a motion to set aside an order of default, filed prior to judgment on the merits, should be considered with liberality if presented promptly and without unnecessary delay, especially when little inconvenience is caused to the court or the adverse party.
Main Doctrine
A notice of pre-trial must be served separately upon the party and his counsel of record. Failure to serve a separate notice on counsel renders the order of default and subsequent ex-parte proceedings void. A motion to lift an order of default, filed promptly and without unnecessary delay after the party learns of the default, should be considered with liberality, especially if filed before judgment on the merits.