Peña v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondent Dura-Tire & Rubber Industries, Inc. (Dura-Tire) is a manufacturer of tires. Petitioners Johanne J. Peña and Erlana G. Vda. de Inocencio, doing business as Largestone Enterprises, were customers and authorized sales agents of Dura-Tire. They purchased rubber products on credit for resale. On May 8, 1991, petitioner Inocencio executed a surety agreement, jointly and solidarily binding herself with petitioner Peña for all indebtedness incurred by Peña from Dura-Tire. Procedural History: Dura-Tire filed a collection suit against petitioners for P455,742.97, plus interest and attorney's fees, after checks issued by petitioners were dishonored and they failed to pay their outstanding account. The RTC of Manila declared petitioners in default for failure to appear at the pre-trial and file a pre-trial brief, despite issues with the service of notices. The RTC rendered judgment in favor of Dura-Tire. The Court of Appeals affirmed the RTC decision. Petitioners appealed to the Supreme Court. The Petition: Petitioners argued that the trial court erred in declaring them in default due to defective service of notices and in allowing the respondent to present evidence ex parte. They also questioned their joint and several liability and the sufficiency of evidence presented by the respondent.
Issue(s)
Whether the trial court erred in declaring the petitioners in default. Whether the petitioners are jointly and severally liable for the outstanding account. Whether the respondent adduced preponderant evidence to prove its claim.
Ruling
The petition is PARTIALLY GRANTED. The Decision of the Court of Appeals is AFFIRMED with the modification that the petitioners are ordered to pay, jointly and severally, to the private respondent the principal amount of P329,944.50.
Ratio Decidendi
On the issue of default: The Supreme Court ruled that the trial court erred in declaring the petitioners in default. The Court emphasized that service by registered mail is complete upon actual receipt, and a notation of 'unclaimed' is insufficient to establish constructive service without proof that the required notices were sent and received by the addressee. The petitioners' failure to appear at the pre-trial and file a pre-trial brief could not be a basis for default without proper notice. The Court stressed that the petitioners must be properly notified of scheduled hearings and deadlines. The presumption of constructive service based solely on a 'return to sender: unclaimed' notation is not sufficient without further proof of mailing and notice. On the issue of liability: The Court found that the petitioners are jointly and severally liable. While the petitioners admitted liability for certain sales invoices, they contested liability for others, claiming lack of involvement or poor quality of goods. However, the Court noted that the entries on sales invoices are not conclusive and can be contradicted by oral testimony and surrounding circumstances. The Court found that the petitioners purchased the merchandise and promised to pay but reneged. Furthermore, under the surety contract, petitioner Inocencio bound herself jointly and solidarily with petitioner Peña for the merchandise sold and delivered. The issuance of dishonored checks further evidenced their acknowledgment of the debt. On the sufficiency of evidence: The Court found that the respondent adduced sufficient evidence to prove its claim, albeit not for the full amount initially claimed. The Court meticulously reviewed the admitted liabilities of each petitioner and the evidence presented. While the respondent's lone witness's testimony was questioned, the Court found it sufficient to establish the petitioners' purchase of merchandise and their subsequent failure to pay. The Court also noted the absence of receipts proving payment for the amounts claimed by the petitioners as already remitted.
Main Doctrine
The trial court erred in declaring the petitioners in default for failure to file a pre-trial brief and appear at the pre-trial without incontrovertible proof of proper notice. Service by registered mail is complete upon actual receipt, and a notation of 'unclaimed' is insufficient without proof of proper notice being sent and received by the addressee.