Philippine British Co. v. Angeles
REITERATIONFacts
The Antecedents: On June 12, 1970, a fire occurred at the premises of private respondents Multifield Enterprises and Moises M. Tapia. Having insurance policies with petitioners Philippine British Co. Inc. and Cibeles Insurance Corporation, and failing to reach an extrajudicial settlement for their claims, private respondents filed separate civil actions against the petitioners in the Court of First Instance of Quezon City. Procedural History: The cases were assigned to respondent judge. Summons were served on Philippine British Assurance Co., Inc. on March 29, 1971, and on Cibeles Insurance Corporation on April 2, 1971. Despite motions for extensions, both petitioners filed their answers out of time. Consequently, private respondents filed motions to declare petitioners in default, which were granted. Evidence was received ex-parte, and judgments were rendered on April 28, 1971. Copies of the judgments were sent via registered mail on May 17, 1971. Petitioners' counsel received the order of default on May 24, 1971, and subsequently filed a motion to lift the order of default, which was denied for non-compliance with procedural requirements. An order for immediate execution of the judgments was issued on June 28, 1971. Petitioners then filed a joint "Petition for Relief from Judgment" with the trial court on July 1, 1971, but subsequently filed the instant petition with the Supreme Court on July 2, 1971. The Petition: Petitioners filed a petition for certiorari and prohibition, seeking to annul the default proceedings, judgments, and writs of execution issued by the respondent judge. They argued that they were erroneously declared in default and that the execution of the judgments was carried out without proper notice. The Supreme Court, however, found that the petitioners' motions to lift the order of default were fatally defective for not being under oath and not accompanied by an affidavit of merit. Furthermore, the Court found that the judgments were validly rendered, became final and executory, and that the execution was a matter of right. The Court also noted the lack of candor from petitioners' counsel regarding the alleged defenses and the actual status of the case, ultimately dismissing the petition and setting aside the preliminary injunction.
Issue(s)
Whether the respondent judge committed a grave abuse of discretion in declaring the petitioners in default. Whether the petitioners' motion to lift the order of default was valid and entitled them to notice of further proceedings. Whether the judgments rendered were valid and had become final and executory. Whether the petitioners were entitled to notice of the motion for immediate execution of the judgments. Whether the petitioners have demonstrated good and valid defenses that would warrant setting aside the default judgments.
Ruling
The petition is dismissed, and the writ of preliminary injunction is set aside. The executions enjoined by the writ may now proceed in accordance with law. Atty. Alfonso Felix, Jr. is ordered to show cause why no administrative action should be taken against him.
Ratio Decidendi
On the declaration of default: The Court found no grave abuse of discretion on the part of the respondent judge. Cibeles' motion for extension was filed out of time. British's answer was also filed beyond the extended period granted. The claim that counsel was not given enough time due to Holy Week was deemed insufficient, as the judge's pragmatic ratiocination that holidays might provide more time was reasonable. Furthermore, counsel was not entitled to notice of the motion to declare his clients in default. On the motion to lift the order of default: The Court held that the joint motion to lift the order of default was fatally defective because it was neither under oath nor accompanied by an affidavit of merit, as required by Section 3 of Rule 18. The Court reiterated the ruling in Ong Peng vs. Custodio that such omissions are fatal and deprive the court of authority to consider the motion. The claim that the judge verbally encouraged resetting the hearing was interpreted as an attempt to help counsel out of his predicament, but ultimately, the legal obstacles prevailed. Moreover, the motion was filed after judgment was rendered, violating the provision that such motions may only be filed before judgment. On the validity and finality of judgments: The Court found that the judgments were entered in the docket on April 28, 1971, as evidenced by the certification of the Clerk of Court and the affidavit of the Branch Clerk of Court. The mailing of the judgments on May 17, 1971, and the subsequent notices sent by the post office established that service was completed on May 24, 1971. The period for appeal commenced on May 25, 1971, and expired on June 23, 1971. Since no appeal was filed within this period, the judgments became final and executory. On notice of motion for execution: The Court ruled that petitioners were not entitled to notice of the motion for immediate execution. The filing of a defective motion to lift the order of default did not revive their right to notice of further proceedings under Section 9 of Rule 13. The Court emphasized that Section 9 must be read in conjunction with Section 3 of Rule 18, meaning the motion to set aside must comply with the requirements of Section 3. Since the motion was defective, the subsequent proceedings, including the order granting execution, were valid. Furthermore, execution of a final and executory judgment is a matter of right and ministerial on the part of the court, requiring no prior notice to the judgment debtor. On the existence of good and valid defenses: The Court found that petitioners failed to demonstrate good and valid defenses. Their allegations of arson and fraud against Moises Tapia were not substantiated by affidavits of merit. The Court noted that the evidence presented by petitioners, such as the report of Lt. Col. Jose Fernandez, was contradicted by their own adjusters and that no criminal action was filed against Tapia. The Court also pointed out that two other insurance companies, facing similar claims, had settled with Tapia without him being declared in default, indicating his willingness to go to trial. The Court concluded that petitioners' counsel's own letter advising that their case was "far from strong" undermined their claim of having good defenses.
Main Doctrine
A motion to lift an order of default must be under oath and accompanied by an affidavit of merit to be considered by the court. Failure to comply with these requirements renders the motion fatally defective and deprives the court of authority to entertain it. Furthermore, the right to notice of further proceedings under Section 9 of Rule 13 is contingent upon the filing of a valid motion to set aside the order of default as prescribed by Section 3 of Rule 18.