7/17/2019 Remedial Law Review

Case No 45

G.R. No. 193494, March 07, 2014

LUI ENTERPRISES, INC., Petitioner , v . ZUELLIG P!RM! C"RP"R!TI"N !N# TE
PILIPPINE $!N% "& C"MMUNIC!TI"NS, Respondents.

LE"NEN, J.'

There should be no inexplicable delay in the filing of a motion to set aside order of default. Even
when a motion is filed within the required period, excusable negligence must be properly alleged
and proven.

&ac(s'

Lui Enterprises, Inc. and Zuellig harma !orporation entered into a "#$year contract of
lease over a parcel of land. Zuellig received a letter from the hilippine %an& of
!ommunications '%!()*. !laiming to be the new owner of the leased property, the ban&
as&ed Zuellig to pay rent directly to it. Zuellig promptly informed Lui Enterprises of the
%!()+s claim. Lui Enterprises wrote to Zuellig and insisted on its right to collect the leased
property+s rent.

ue to the conflicting claims of Lui Enterprises and the %!() over the rental payments,
Zuellig harma filed a complaint for interpleader with the -T! of )a&ati. Zuellig prayed that it
be allowed to consign in court its succeeding monthly rental payments and that Lui Enterprises
and the %!() be ordered to litigate their conflicting claims.

Lui Enterprises filed a motion to dismiss on the ground that Zuellig+s alleged representative did
not have authority to file the complaint for interpleader on behalf of the corporation.

 ccording to Lui Enterprises, an earlier filed nullification of deed of dation in payment case
pending with the -T! of avao barred the filing of the interpleader case. Lui Enterprises filed
this nullification case against the %!() with respect to several properties it dationed to the
ban& in payment of its obligations. The property leased by Zuellig was among those allegedly
dationed to the %!(.)

In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which
corporation had the better right over the rental payments. Lui Enterprises argued that the same
issue was involved in the interpleader case. To avoid possible conflicting decisions of the avao
trial court and the )a&ati trial court on the same issue, Lui Enterprises argued that the
subsequently filed interpleader case be dismissed.

Zuellig argued that the motion to dismiss should be denied for having been filed late. /ith
respect to the nullification of deed of dation in payment case, Zuellig argued that its pendency
did not bar the filing of the interpleader case. It was not a party to the nullification case.

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!onsidering that Lui Enterprises filed its motion to dismiss beyond the "0$day period to file an
answer, Zuellig moved that Lui Enterprises be declared in default.

The %!() 1oined Zuellig in moving to declare Lui Enterprises in default, and in moving for the
denial of Lui Enterprises+ motion to dismiss.

The -T! of )a&ati found that Lui Enterprises failed to file its motion to dismiss within the
reglementary period. Thus, the trial court denied Lui Enterprises+ motion to dismiss and declared
it in default.

Lui Enterprises did not move for the reconsideration of the order. Thus, the )a&ati trial court
heard the interpleader case without Lui Enterprises+ participation.

espite having been declared in default, Lui Enterprises filed the manifestation with prayer to
2observe status quo with regard to the rental payments3 and continue remitting their rental
payments to Lui Enterprises while the nullification of deed of dation in payment case was being
resolved.4

Lui Enterprises argued that its failure to file a motion to dismiss on time was caused by the
negligence of its former counsel. This negligence was allegedly excusable because Lui
Enterprises was pre1udiced and prevented from fairly presenting its case.

Zuellig argued that a counsel+s failure to file a timely answer was inexcusable negligence which
bound his client. 5urther, Zuellig argued that the pending case for nullification of deed of dation
in payment did not preclude Zuellig from see&ing the relief prayed for in the interpleader case.

)a&ati trial court denied the manifestation with motion to dismiss the ground that Lui Enterprises
already lost its standing in court. The lower court ruled that Lui Enterprises was barred from any
claim in respect of the rental payments since it was declared in default.

Lui Enterprises appealed to the !. ! sustained the trial court. The ! found Lui Enterprises+
appellant+s brief insufficient. The ! found that Lui Enterprises filed its motion to dismiss four
days late. Lui Enterprises filed a motion for reconsideration. The ! denied Lui Enterprises+
motion for reconsideration.

Iss)es'

I. /hether the ! erred in dismissing Lui Enterprises+ appeal for lac& of sub1ect index, page
references to the record, table of cases, textboo&s and statutes cited, and the statement of
issues in Lui Enterprises+ appellant+s brief6
II. /hether the -T! of )a&ati erred in denying Lui Enterprises+ motion to set aside order of
default6

III. /hether the annulment of deed of dation in payment pending in the -egional Trial !ourt of
avao barred the subsequent filing of the interpleader case in the -egional Trial !ourt of
)a&ati.

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Lui Enterprises’ petition for review on certiorari is without merit.

L)* E+(err*ses -*- +o( co/ *(h (he r)/es o+ (he co+(e+(s o (he ae//a+(s r*e.

In this case, Lui Enterprises did not substantially comply with the rules on the contents of the
appellant+s brief. It admitted that its appellant+s brief lac&ed the required sub1ect index, page
references to the record, and table of cases, textboo&s, and statutes cited. 7owever, it did not
even correct its admitted 2technical omissions3by filing an amended appellant+s brief with the
required contents.Thus, this case does not allow a relaxation of the rules.

  II

L)* E+(err*ses a*/e- (o sho (ha( *(s a*/)re (o a+ser (he co/a*+( *(h*+ (he re)*re-
er*o- as -)e (o e6c)sa/e +e/*e+ce.

/hen a defendant is served with summons and a copy of the complaint, he or she is required to
answer within "0 days from the day he or she was served with summons.The defendant may
also move to dismiss the complaint within the time for but before filing the answer.

5ifteen days is sufficient time for a defendant to answer with good defenses against the
plaintiff+s allegations in the complaint. Thus, a defendant who fails to answer within "0 days from
service of summons either presents no defenses against the plaintiff+s allegations in the
complaint or was prevented from filing his or her answer within the required period due to fraud,
accident, mista&e or excusable negligence.

In either case, the court may declare the defendant in default on plaintiff+s motion and notice to
 

defendant. The court

grant the plaintiff suchshall
reliefthen try or
as his theher
case until 1udgment
complaint without defendant+s participation and
may warrant.

  defendant declared in default loses his or her standing in court. 7owever, the defendant
declared in default does not waive all of his or her rights. 7e or she still has the right to receive
notice of subsequent proceedings. lso, the plaintiff must still present evidence supporting his
or her allegations despite the default of the defendant.

Thus, should a defendant prefer to present evidence on his or her behalf, he or she must file
either a motion to set aside order of default, motion for new trial, or a petition for relief from
 1udgment.

In this case, Lui Enterprises had discovered its default before the -T! of )a&ati rendered
 1udgment. Thus, it timely filed a motion to set aside order of default, raising the ground of
excusable negligence. Excusable negligence is one which ordinary diligence and prudence
could not have guarded against. The circumstances should be properly alleged and proved. In
this case, we find that Lui Enterprises+ failure to answer within the required period is
inexcusable. Thus, the -T! of )a&ati did not err in refusing to set aside the order of default.

Lui Enterprises never explained why its counsel failed to file the motion to dismiss on time. It
 1ust argued that courts should be liberal in setting aside orders of default. Even assuming that it

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had a meritorious defense and that its representative and counsel had to fly in from avao to
)a&ati to personally appear and manifest in court its meritorious defense, Lui Enterprises must
first show that its failure to answer was due to fraud, accident, mista&e or excusable negligence.
This Lui Enterprises did not do.

Lui Enterprises argued that Zuellig  filed the interpleader case to compel Lui Enterprises and
the %!() to litigate their claims.

8nder -ule 9:, ;ection " of the "<<= -ules of !ivil rocedure, a person may file a special civil
action for interpleader if conflicting claims are made against him or her over a sub1ect matter in
which he or she has no interest.

 n interpleader complaint may be filed by a lessee against those who have conflicting claims
over the rent due for the property leased. This remedy is for the lessee to protect him or her
from double vexation in respect of one liability. 7e or she may file the interpleader case to
extinguish his or her obligation to pay rent, remove him or her from the adverse claimants+
dispute, and compel the parties with conflicting claims to litigate among themselves.

In this case, Zuellig harma filed the interpleader case to extinguish its obligation to pay rent. Its
purpose in filing the interpleader case 2was not defeated3 when the )a&ati trial court declared
Lui Enterprises in default.

The -T! of )a&ati declared Lui Enterprises in default when it failed to answer the complaint
within the required period. Lui Enterprises filed a motion to set aside order of default without an
acceptable excuse why its counsel failed to answer the complaint. It failed to prove the
excusable negligence. Thus, the )a&ati trial court did not err in refusing to set aside the order of 
default.

III

The +)//**ca(*o+ o -ee- *+ -a(*o+ *+ ae+( case -*- +o( ar (he */*+ o (he
*+(er/ea-er case. L*(*s e+-e+(*a *s +o( rese+( *+ (h*s case.

In this case, there is no litis pendentia since there is no identity of parties in the nullification of
deed of dation in payment case and the interpleader case. Zuellig harma is not a party to the
nullification case filed in the avao trial court. There is also no identity of rights asserted and
reliefs prayed for. The interpleader case was necessary and was not instituted to harass either
Lui Enterprises or the hilippine %an& of !ommunications.

Thus, the pending nullification case did not bar the filing of the interpleader case.

In this case, the nullification of deed of dation in payment case was filed by Lui Enterprises
against the %!(). The interpleader case was filed by Zuellig against Lui Enterprises and the
%!().  different plaintiff filed the interpleader case against Lui Enterprises and the %!().
Thus, there is no identity of parties, and the first requisite of  litis pendentia is absent.

8ERE&"RE, the petition for review on certiorari  is #ENIE#.

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Case No. 4

Pa/o P)a :s. L"UR#ES L. #E;T", -o*+ )s*+ess )+-er (he (ra-e +ae o <=# Gra*+s
Ce+(er<> a+- =ENNELIT! #E;T" !NG a.?.a. <=!NET !NG@.

G.R No. 17333, No:eer 2, 2012

$r*o+, =.'

 ttachment bond is not an indication of his intention to prosecute. The payment of an

attachment bond is not the appropriate procedure to settle a legal dispute in court6 it could not
be considered as a substitute for the submission of necessary pleadings or motions that would
lead to prompt action on the case.

&ac(s'

ua is engaged in the business of wholesale rice trading. mong his clients was respondent
>ennelita ng, allegedly operating under the business and trade name of > ?rains !enter. ua
delivered to ng truc&loads of rice. ng paid ua through : postdated chec&s. /hen the chec&s
fell due, ua tried to encash them, but they were dishonored. ua immediately went to ng+s
residence to complain. 8nfortunately, he was only able to tal& to ng+s mother and co@
respondent, Lourdes eyto, who told him that ng had been missing. 8nable to locate ng, ua
demanded payment from eyto, but she refused to pay.

ua filed a complaint with the -T! for collection of sum of money with preliminary attachment
against ng and eyto, as co@owners of > ?rains !enter. The complaint alleged that the
respondents were guilty of fraud in contracting the obligation, as they persuaded ua to conduct
business with them and presented documents regarding their financial capacity to fund the

postdated chec&s.
;ummons was duly served on eyto, but not on ng who had absconded. eyto submitted her
answer with special and affirmative defenses which was in the nature of a motion to dismiss.
The -T! denied eyto+s motion to dismiss. fter ua and eyto filed their respective pre@trial
briefs, the case was set for pre@trial conference. The -T!, upon motion by ua, also ordered
the sheriff to submit the return of summons for ng. ;ince service of summons could not be
effected on ng, ua moved for leave of court to serve summons by publication on ng .

ua filed a manifestation that, he had already paid )anila ;tandard for the publication of the
summons on ng, but it failed to do so. )anila ;tandard explained when ua paid the
publication fee, he issued a specific order to hold the publication until he ordered otherwise.
)ore than 9 months after the publication of summons for ng, the case was archived for
inactivity. ;ince neither party filed any further motions, the -T! dismissed the case for the
plaintiff+s lac& of interest to prosecute. ua submitted a motion for reconsideration and a motion
to declare ng in default. The -T!, however, denied the motion6 it added that the dismissal of
the main case amounts to the dismissal of the motion to declare ng in default. ua appealed
the case to the !. 7e argued that the reason for the delay in prosecuting the case was the

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untimely death of his counsel.7e added that he had shown interest in the case by securing the
properties of eyto6 paying the annual premium of the attachment bond.

! denied ua+s appeal. /hile the ! recogniAed some of ua+s actions in prosecuting the
case, it still found that the totality of the surrounding circumstances of the case pointed to gross
and immoderate delay in the prosecution of the complaint. ua moved for reconsideration,
which the ! denied in its resolution.

Iss)e'

/hether or not the plaintiff incurred unreasonable delay in prosecuting the present case.

R)/*+'

ua committed delay in prosecuting his case against the respondents.

The -ules of !ourt providesB SEC. 14. Ser:*ce )o+ -ee+-a+( hose *-e+(*( or
hereao)(s are )+?+o+. A In any action where the defendant is designated as an un&nown
owner, or the li&e, or whenever his whereabouts are un&nown and cannot be ascertained by
diligent inquiry, service may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such time as the court may order.

In Santos, Jr. v. PNOC Eploration Corporation , the !ourt authoriAed resort to service of
summons by publication even in actions in personam, considering that the provision itself allow
this mode in any action, i.e., whether the action is in personam, in rem, or quasi in rem. The
ruling, notwithstanding, there must be prior resort to service in person on the defendant and
substituted service, and proof that service by these modes were ineffective before service by
publication may be allowed for defendants whose whereabouts are un&nown, considering that

;ection "C, -ule

whereabouts. "Cthe
8ntil of the -ules of
summons !ourt
has beenrequires
served a
ondiligent
ng, theinquiry
caseof the defendant+s
cannot proceed since ng
is an indispensable party to the case. n indispensable party is one who must be included in an
action before it may properly go forward.  court must acquire 1urisdiction over the person of
indispensable parties before it can validly pronounce 1udgments personal to the parties. The
absence of an indispensable party renders all subsequent actions of the court null and void for
want of authority to act, not only as to the absent parties but even as to those present.

;ection D, -ule "= of the -evised -ules of !ourt authoriAes the dismissal of a case when the
plaintiff fails to prosecute his action for an unreasonable length of timeB SEC. 3. #*s*ssa/ -)e
(o a)/( o /a*+(*. B If, for no 1ustifiable cause, the plaintiff fails to appear on the date of the

presentation of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these -ules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court+s own motion,
without pre1udice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of ad1udication upon the merits, unless
otherwise declared by the court. (nce a case is dismissed for failure to prosecute, the dismissal
has the effect of ad1udication on the merits and is understood to be with pre1udice to the filing of
another action unless otherwise provided in the order of dismissal.

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In this case, ua failed to ta&e any action on the case after summons was served by publication
on ng. It too& him more than two years to file a motion to declare ng in default and only after
the -T! has already dismissed his case for failure to prosecute. ua+s renewal of the
attachment bond is not an indication of his intention to prosecute.

!((ache+( o+- *s +o( a+ *+-*ca(*o+ o h*s *+(e+(*o+ (o rosec)(e. The ae+( o a+

a((ache+( o+- *s +o( (he aror*a(e roce-)re (o se((/e a /ea/ -*s)(e *+ co)r(> *(
co)/- +o( e co+s*-ere- as a s)s(*()(e or (he s)*ss*o+ o +ecessar /ea-*+s or
o(*o+s (ha( o)/- /ea- (o ro( ac(*o+ o+ (he case. /7E-E5(-E, the petition is
EIE.

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