Ong Guan Can v. Century Insurance Company
REITERATIONFacts
The Antecedents: Plaintiff Ong Guan Can commenced an action against defendant The Century Insurance Company, Ltd. to recover an amount due on an insurance policy. The complaint was served on May 15, 1923. Procedural History: Defendant filed its appearance on June 7, 1923, which was mailed from Manila on June 2, 1923. Plaintiff moved for a judgment by default on June 5, 1923, which was granted the same day. Defendant moved to set aside the judgment by default on June 8, 1923, alleging the delay in mail arrival due to a storm encountered by the steamship Vizcaya. The lower court denied this motion. A second motion, asserting a valid and meritorious defense, was also denied. The Petition: Defendant appealed the judgment by default, arguing the lower court erred in not granting its motions to set aside the judgment and permit it to answer.
Issue(s)
Whether the judgment by default rendered by the lower court should be set aside and annulled.
Ruling
The Supreme Court ruled that the lower court erred in not granting the defendant's motions. The judgment by default was set aside, and the defendant was granted ten days to answer.
Ratio Decidendi
On Issue 1: The Supreme Court ruled that the judgment by default should be set aside because the defendant's failure to appear within the prescribed time was due to no fault of its own but rather to unforeseen circumstances beyond its control. The defendant made an honest effort to comply with the law by mailing its appearance in due season, expecting it to arrive before the deadline based on ordinary mail delivery times. The delay of the mail, caused by a storm at sea affecting the steamship Vizcaya, amounted to an "accident or surprise" which serves as a recognized ground for vacating a judgment by default. To render a judgment against the defendant under these circumstances, without affording it an opportunity to be heard, would be a clear injustice. The Court emphasized that procedural rules, such as those fixing time for filing papers, are generally directory and that courts possess the inherent power, in the exercise of proper discretion, to extend such time whenever the ends of justice demand it. Considering both the excusable cause for delay and the defendant's showing of a meritorious defense, the Court found it proper to set aside the default judgment and allow the defendant to answer.
Main Doctrine
A judgment by default may be set aside when the failure to file an appearance within the prescribed period was due to accident or surprise, such as the miscarriage of mail containing the notice of appearance, provided the defendant shows a valid and meritorious defense.