Pacweld Steel Corporation v. Asia Steel Corporation
REITERATIONFacts
The Antecedents: Pacweld Steel Corporation (appellee) filed a complaint against Asia Steel Corporation (appellant) for the collection of an outstanding account. On May 21, 1964, Asia Steel acknowledged an indebtedness of P40,000.00 to Pacweld Steel and issued four checks for P10,000.00 each. One check was honored, but the other three were dishonored. As of July 29, 1964, Asia Steel had paid P18,700.00 of its debt, leaving a balance of P21,300.00. Subsequent payments totaling P5,400.00 were made, leaving an outstanding balance of P15,900.00 as of August 13, 1964, when the complaint was filed. The trial court ordered Asia Steel to pay the principal obligation of P15,900.00, accrued interests of P5,094.73, and legal interest until full payment. Procedural History: The trial court set a pre-trial conference for July 2, 1965. Asia Steel's motion to postpone, citing the president's illness, was denied. As no one appeared for Asia Steel, it was declared in default, and Pacweld Steel was allowed to present evidence ex parte. Asia Steel filed several motions to set aside the order of default, including an "ex-parte urgent motion to set aside order considering defendant in the above-entitled case in default" on July 28, 1965, and another on August 10, 1965. These motions were repeatedly denied due to the non-appearance of Asia Steel or its counsel at the scheduled hearings. A subsequent motion for reconsideration and relief from the order of default, filed on September 3, 1965, and a supplementary motion filed on October 11, 1965, were also denied. The trial court rendered its decision on October 21, 1965. The Petition: Asia Steel appealed the decision, raising assignments of error concerning the trial court's refusal to lift the order of default and to grant reconsideration and relief from the default order.
Issue(s)
Whether the trial court committed grave abuse of discretion in declaring the defendant-appellant as in default for non-appearance at the pre-trial conference and in subsequently refusing to lift said order despite multiple motions for relief.
Ruling
The appeal is dismissed for lack of merit. The decision of the court a quo is affirmed with costs against the defendant-appellant.
Ratio Decidendi
On Issue 1: The Court ruled that no abuse of discretion was committed by the trial court. Applying American Insurance Co. v. Republic, the Court highlighted that Rule 20 of the Rules of Court makes pre-trial mandatory and explicitly authorizes the court to declare a party in default for non-appearance. The Court emphasized that the parties and their counsel are required to appear, and dismissal or default is a sanctioned consequence of failure to do so. Furthermore, the Court noted that every presumption is in favor of the correctness of the trial court's action regarding default orders, as stated in Interisland Gas Service Inc. v. De la Cerna. Crucially, the Court observed that Asia Steel and its counsel failed to appear not just for the pre-trial, but also for the hearings on its own motions to set aside the default. This pattern of conduct disclosed a lack of interest in defending the suit and a desire to delay the disposal of the case, which, according to Saulog v. Custombuilt Manufacturing Corporation, justifies the trial court's refusal to lift the default. Consequently, the judgment for the principal obligation and accrued interest was upheld.
Main Doctrine
The trial court did not err in declaring the defendant-appellant in default and in refusing to reconsider the default order, given the repeated non-appearance of the defendant and its counsel, which demonstrates a lack of interest to defend itself and a desire to delay the disposal of the case.