Facts:

On March 18, 1982, private respondents Samir Beiruty, a Jordanian national, and Mohammed A. Al-Sulaim, an Arabian national, arrived at the Manila International Airport aboard Cathay Pacific Airways, Ltd. (Cathay) from Hong Kong. Upon arrival, they were denied entry into the Philippines due to the absence of valid visas and were subsequently required to return to Hong Kong. The private respondents alleged that during their return journey, they lost two pieces of baggage containing valuables and critical documents related to their business, including bid tenders and contracts with their Philippine partner. Consequently, on March 29, 1982, they filed a Complaint for Damages against Cathay in the Court of First Instance of Rizal (now the Regional Trial Court), Pasay City, presided over by Judge Manuel V. Romillo, Jr.

Cathay received the summons and complaint on May 5, 1982, and subsequently filed two motions for extension to submit its answer, first for 15 days until June 4, 1...

Facts:

Arrival and Denial of Entry

• On March 18, 1982, private respondents Samir Beiruty (a Jordanian national) and Mohammed Al-Sulaim (an Arabian national) arrived at Manila International Airport aboard Cathay Pacific Airways from Hongkong. They were denied entry into the Philippines due to lack of visas and had to return to Hongkong.

Lost Baggage and Filing of Complaint

• Private respondents alleged that they lost two bags containing valuables and important documents (e.g., bid tenders, subcontracts) due to the negligence of Cathay Pacific personnel during their return to Hongkong.
• On March 29, 1982, they filed a Complaint for Damages against Cathay Pacific before the Court of First Instance of Rizal (Pasay City), presided over by Judge Manuel V. Romillo, Jr.

Cathay Pacific's Motions and Default Order

• Cathay Pacific received the summons and complaint on May 5, 1982. It filed two Motions for Extension to File Answer: one for 15 days (until June 4, 1982) and another for 10 days (until June 14, 1982). The judge did not act on these motions.
• On June 11, 1982, Cathay Pacific filed its Answer, asserting that private respondents had no cause of action. However, on June 30, 1982, the judge issued a default order against Cathay Pacific for "failure to file its Answer within the reglementary period."

Ex-Parte Proceedings and Default Judgment

• Private respondents presented their evidence ex-parte before the Deputy Clerk of Court.
• On November 9, 1982, the judge rendered a default judgment, awarding private respondents:
  • P412,960.00 as actual/compensatory damages,
  • P19,500,000.00 as loss of earnings/unrealized profits,
  • P3,000,000.00 as moral damages,
  • P500,000.00 as exemplary damages,
  • P500,000.00 as attorney’s fees, and
  • costs of suit.

Cathay Pacific's Motion to Lift Default and Appeal

• Cathay Pacific received the default judgment on December 9, 1982, and filed a Motion to Lift Order of Default and to Set Aside Decision on January 7, 1983. The motion was denied on February 15, 1983, with the judge stating it was filed seven months after the default order and that the judgment had become final and executory.
• Cathay Pacific filed a notice of appeal on February 23, 1983, but it was disallowed for being filed out of time.

Petition to the Supreme Court

• On June 17, 1983, Cathay Pacific filed a Petition for Certiorari, Prohibition, and Mandamus with the Supreme Court, challenging the default order, default judgment, and subsequent orders.
• The Supreme Court issued a Temporary Restraining Order to halt the execution of the default judgment.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Grave Abuse of Discretion: The respondent judge acted with bad faith by:

   • Failing to act on Cathay Pacific’s Motions for Extension.
   • Issuing a default order despite Cathay Pacific filing its Answer before the expiration of the requested extension.
   • Delaying notification of the default order to Cathay Pacific.
   • Denying Cathay Pacific’s right to appeal.
   • Awarding excessive damages without a trial on the merits.

2. Excessive Damages: The awards for loss of earnings, moral damages, exemplary damages, and attorney’s fees were speculative, unconscionable, and lacked evidentiary basis.

3. Administrative Liability: The respondent judge’s actions violated the principle of ensuring litigated cases are tried on the merits. His conduct undermined the integrity and efficiency of the judiciary, warranting dismissal from service.

Conclusion:

The Supreme Court emphasized the importance of fair and just proceedings, ensuring litigants are given the opportunity to present their case. The respondent judge’s actions demonstrated a disregard for due process and judicial integrity, leading to his dismissal from service.