GR L 4125; (February, 1908) (Digest)

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📌 CORE DOCTRINE

“A court's denial of a motion for leave to file an answer after default is a proper exercise of discretion when the movants lack a direct interest in the underlying controversy and fail to preserve the issue through an exception.”

💡 PLAIN ENGLISH SUMMARY

The bondsmen were denied permission to file a late answer because they had no real stake in who got the money; their only job was to return it to the court. Since they didn't properly object to the denial, the Supreme Court upheld the lower court's decision.

📜 LEGAL MAXIM

Res judicata pro veritate accipitur | Interest reipublicae ut sit finis litium | Nemo dat quod non habet

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G.R. No. L-4125
FREDERICK GARFIELD WAITE, plaintiff-appellee, vs. F. THEODORE ROGERS, ET AL., defendants-appellants; AND J.J. PETERSON, sheriff of the city of Manila, plaintiff-appellee, vs. CHAS. P. NEWBERRY, ET AL., defendants-appellants.
February 5, 1908

FACTS:
In a prior case, Peterson v. Newberry (6 Phil. Rep., 260), it was ruled that a fund in controversy should be awarded to Theodore Rogers as assignee of the American Bank, in preference to other creditors of Fulgencio Tan Tongco. However, before this judgment, the fund had been erroneously paid out of the Court of First Instance to W.H. Bishop, attorney for Charles P. Newberry. Bishop, along with C.W. O’Brien and Choa Tek Hee, had given a bond to ensure the return of this fund.

The earlier action concerning the fund was consolidated with a later one initiated by Frederick Garfield Waite against Rogers, Bishop, O’Brien, Choa Tek Hee, and Joseph N. Wolfson. Waite claimed the fund as assignee of Antonio Torres, alleging Torres was the true beneficial owner.

Subsequently, Waite, Rogers, and Wolfson entered into a stipulation agreeing to divide the fund among themselves, thereby settling the serious questions of ownership and fraud. The only remaining controversy involved the bondsmen (Bishop, O’Brien, and Choa Tek Hee). After defaulting (failing to file a timely answer), the bondsmen moved for leave to serve an answer. This motion was denied by the Court of First Instance. Their proposed affirmative defense was that the fund should go to the American Bank, not the current plaintiffs, even though the American Bank’s receiver made no such claim. No exception was taken to the order denying their leave to answer.

ISSUE:
Did the Court of First Instance properly exercise its discretion in denying the bondsmen’s motion for leave to file an answer after they were in default?

RULING:
Yes. The Supreme Court affirmed the lower court’s decision, holding that the judge of First Instance properly exercised the discretion vested in the courts by Section 113 of the Code of Civil Procedure in denying the bondsmen’s motion for leave to serve an answer. The Court stated that the question of the application of the fund did not concern the bondsmen; their obligation was simply to pay back into court the money they had received under the erroneous judgment. Furthermore, the Court noted that there was no exception to the order denying them leave to answer, which would have been necessary to properly bring their contention before the Court.

The judgment of the lower court was affirmed, with costs against defendants Bishop, O’Brien, and Choa Tek Hee.

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