Continental Leaf Tobacco (phil.) Inc. v. Honorable Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Respondent Pennel Commercial Co., Inc. filed a complaint for sum of money against petitioner Continental Leaf Tobacco (Phil.) Inc. for P77,500.00 for transportation and delivery services. Petitioner alleged that 50 cases of tobacco valued at P163,216.00 were missing due to respondent's gross negligence, and claimed compensation. Procedural History: Petitioner was declared in default on April 13, 1984, but the order was lifted, and the case was reset for pre-trial. On June 4, 1984, petitioner again failed to appear and was declared in default. Respondent presented evidence ex parte on June 5, 1984, and the trial court rendered judgment on June 6, 1984. Petitioner's motion to lift the order of default and set aside the decision was denied. The Intermediate Appellate Court dismissed petitioner's petition for certiorari, prohibition, and mandamus, ruling that appeal was the proper remedy. The Petition: Petitioner contended that the Intermediate Appellate Court committed grave abuse of discretion in affirming the trial court's judgment by default, which deprived petitioner of due process. Petitioner argued that the trial court acted with unusual speed, rendering judgment before petitioner could even receive notice of the default order.
Issue(s)
Whether the Intermediate Appellate Court committed grave abuse of discretion in dismissing the petition for certiorari. Whether the trial court gravely abused its discretion in declaring the petitioner in default and rendering a judgment by default without affording petitioner due process. Whether the petitioner's failure to appear at the pre-trial conference was due to excusable negligence. Whether the petitioner has a meritorious defense that warrants setting aside the default judgment.
Ruling
The petition is GRANTED. The questioned orders, decision, and resolution of the respondent trial court, as well as the writ of execution, are annulled and set aside. The case is remanded to the Regional Trial Court for further hearing and reception of petitioner's evidence.
Ratio Decidendi
On the propriety of certiorari despite the availability of appeal: The Court reiterated the general rule that certiorari cannot be availed of when the remedy of appeal is available. However, it emphasized that exceptions exist, and this case falls within them. A judgment by default, rendered without the defendant presenting evidence, cannot be based on the merits of the case. The Court found that an appeal would have been futile for the petitioner because its evidence would not form part of the records to be reviewed. Therefore, certiorari was deemed the more appropriate and adequate remedy, as an appeal would not have been a speedy and adequate remedy given the circumstances. On grave abuse of discretion in declaring default and rendering judgment by default: The Court found that the trial court acted with grave abuse of discretion. A judgment by default should be used with thoughtful hesitation, only as a last resort. The records should be free from any suspicion that the trial court seized an opportunity to avoid a full trial or to favor a litigant. The Court noted the unusual speed with which the trial court acted: default on June 4, ex parte evidence on June 5, and judgment on June 6, all before the petitioner could receive notice of the default order. This haste, coupled with the petitioner's claim of illness of its counsel, indicated a deprivation of due process. On excusable negligence: The Court acknowledged the petitioner's explanation that its counsel suffered from flu and upper respiratory tract infection, advising him to rest for 3 to 5 days. Due to the absence of a telephone at his residence, he was unable to communicate his condition to his office. The Court considered this failure to appear as potentially caused by accident and/or excusable negligence, especially since the counsel had previously appeared with a special power of attorney and had requested time to discuss settlement. On the existence of a meritorious defense: The Court found that the petitioner appeared to have a meritorious defense. The allegation of missing tobacco valued at P163,216.00 due to the respondent's alleged gross negligence, if proven, would raise the issue of compensation, which should have been considered by the court. This defense would have justified setting aside the order of default and the judgment by default, as it presented a substantial matter that deserved examination.
Main Doctrine
Certiorari may be availed of to assail a judgment by default even if appeal is available, when such appeal would be a futile remedy due to the denial of due process and the inability to present evidence, and when the trial court's haste in declaring default and rendering judgment suggests grave abuse of discretion.