GR 190754; (November, 2010) (Digest)
G.R. No. 190754 ; November 17, 2010
SAN PEDRO CINEPLEX PROPERTIES, INC., Petitioner, vs. HEIRS OF MANUEL HUMADA ENAÑO, represented by VIRGILIO A. BOTE, Respondents.
FACTS
Respondents filed a complaint for quieting of title against petitioner corporation before the RTC of San Pedro, Laguna. Petitioner moved to dismiss the complaint on the ground of improper service of summons, arguing that service was made upon Jay Orpiada, alleged to be its manager, and not upon its president, general manager, corporate secretary, treasurer, or in-house counsel as required. Respondents moved to declare petitioner in default for failure to file an Answer. Nearly eleven months later, petitioner filed a “Motion to Withdraw Motion to Dismiss and to Admit Answer.” On the same day, the trial court denied the motion to dismiss and granted respondents’ motion, declaring petitioner in default.
Petitioner challenged the order of default via a special civil action before the Court of Appeals, which dismissed the petition. The CA held that service upon Orpiada as manager was proper, and any defect was cured by petitioner’s voluntary submission through its motion to admit its Answer. The Supreme Court initially denied petitioner’s subsequent petition for review. Petitioner filed this Motion for Reconsideration.
ISSUE
Whether the trial court correctly declared petitioner in default.
RULING
No. The Supreme Court granted the Motion for Reconsideration, set aside its prior resolution, and ordered the remand of the case to the trial court with instructions to admit petitioner’s Answer. The Court found it unnecessary to resolve the issue of the validity of the service of summons, as petitioner’s prayer for remand constituted a submission to the trial court’s jurisdiction.
The crucial error was the declaration of default. The Court emphasized the policy against default judgments, favoring the adjudication of cases on their merits after all parties have been given full opportunity to be heard. The rule is that an answer filed beyond the reglementary period but before a declaration of default should be admitted, provided there is no intent to delay and no prejudice to the plaintiff. In this case, petitioner filed its Motion to Admit Answer before the trial court issued the order of default on the same day. The procedural lapse was exacerbated by the trial court’s inaction for almost a year on both the motion to dismiss and the motion to declare in default, acting upon them only when petitioner sought to withdraw its motion and admit its answer. This sequence was procedurally unsound. Therefore, the trial court should have admitted the answer and proceeded to hear the case on its merits.