G.R. No. 254267 . February 01, 2023.
FAR EAST FUEL CORPORATION, PETITIONER, VS. AIRTROPOLIS CONSOLIDATORS PHILIPPINES, INC., RESPONDENT.

FACTS

Respondent Airtropolis Consolidators Philippines, Inc. (ACPI) filed a Complaint for Collection of Sum of Money against petitioner Far East Fuel Corporation (FEFC) before the Regional Trial Court (RTC). ACPI claimed that from 2014 to 2015, FEFC engaged its services for the carriage of oil products, as evidenced by several waybills, and incurred an unpaid obligation of PHP 1,721,800.00. Despite demands, FEFC failed to pay. Summons was served on September 26, 2016. On the last day to file a responsive pleading, October 11, 2016, FEFC moved for an extension. On October 28, 2016, it filed a Motion to Dismiss, which the RTC denied in an Order dated March 1, 2017, received by FEFC on April 18, 2017. FEFC failed to file an Answer thereafter. On June 27, 2017, ACPI moved to declare FEFC in default. On July 28, 2017, FEFC filed a “Comment with Motion to Admit Answer,” explaining that its counsel delayed filing due to ongoing settlement discussions and his busy schedule. The RTC denied this motion and declared FEFC in default in an Order dated September 4, 2017. FEFC then filed a “Motion to Lift Order of Default,” arguing excusable negligence. The RTC denied this motion, citing failure to show excusable negligence and because the motion was not accompanied by a required affidavit of merit. The RTC proceeded with ACPI’s ex parte presentation of evidence and rendered a Decision on November 27, 2018, ordering FEFC to pay PHP 1,721,800.00 with 12% interest per annum. FEFC filed a Petition for Certiorari with the Court of Appeals (CA) challenging the denial of its Motion to Lift Order of Default, and separately appealed the RTC’s decision on the merits. The CA consolidated the cases.

ISSUE

1. Whether the Court of Appeals erred in affirming the RTC’s denial of petitioner’s Motion to Lift Order of Default.
2. Whether the Court of Appeals erred in modifying the RTC’s decision by reducing the award to PHP 1,460,800.00 and imposing 6% legal interest per annum.

RULING

1. The Supreme Court denied the petition and affirmed the CA’s ruling. On the first issue, the Court held that the RTC did not commit grave abuse of discretion in denying the Motion to Lift Order of Default. The failure to file an Answer was not due to excusable negligence. Petitioner’s counsel had ample time from the service of summons and the receipt of the order denying the motion to dismiss to file an Answer. The proffered reasons—ongoing settlement talks and counsel’s busy schedule—do not constitute excusable negligence. Furthermore, the Motion to Lift Order of Default was fatally defective for not being accompanied by an affidavit of merit as required by Rule 9, Section 3(b) of the Rules of Court. The Answer attached to an earlier motion could not substitute for this requirement.
2. On the second issue, the Court affirmed the CA’s modification of the RTC’s decision. The CA correctly found that petitioner, in its Motion to Dismiss, admitted receipt of the shipments covered by waybills nos. 8355514, 137115, 1206415, and 940915, but merely alleged payment without presenting proof. Thus, the obligation for these shipments, totaling PHP 1,460,800.00, was duly established. However, for the shipments covered by waybills nos. 740715, 441215, and 1398915, respondent failed to prove actual delivery as these shipments were declared abandoned by the Bureau of Customs, and the evidence only showed a “lifting of abandonment,” not actual receipt by petitioner. Therefore, the amount due was correctly reduced. The CA also correctly imposed an interest rate of 6% per annum from the date of judicial demand (filing of the complaint) until finality of judgment, in accordance with prevailing jurisprudence, instead of the RTC’s award of 12%.