G.R. No. L-22619 - Zenith Films, Inc. vs. The Honorable Judge Jose B. Herrera and Unit Films Enterprises, Inc.

Title: Zenith Films, Inc. vs. The Honorable Judge Jose B. Herrera and Unit Films Enterprises, Inc.

Case: G.R. No. L-22619

Decision Date: Mar 27, 1971

A foreign corporation sued for debt; defendant's motion to dismiss lacked notice, leading to improper default judgment. Supreme Court ruled certiorari proper, remanding for due process.

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Case Digest (G.R. No. L-22619)
Legal Reasoning Model

Facts:

Background of the Case

On April 12, 1966, United Films Enterprises Inc. filed a complaint in the City Court of Manila (Civil Case No. 147654) seeking the recovery of a sum of money from Zenith Films, Inc.

The summons, served on Zenith Films on April 19, 1966, ordered the defendant to answer the complaint and to appear in trial on May 5, 1966, at 2 o’clock in the afternoon.

Defendant’s Initial Response and Motion

Instead of filing an answer to the complaint within the prescribed five-day period, Zenith Films filed a motion to dismiss the case.

The motion to dismiss raised several grounds:

Venue was improperly laid, as the written contract was allegedly executed in the State of New York, U.S.A., and no venue agreement existed;

The plaintiff, being a foreign corporation, lacked the legal capacity to sue in Philippine courts because it had not been licensed to do business in the Philippines pursuant to Section 69 of the Corporation Law;

The complaint was alleged to state no cause of action.

Procedural Developments in the City Court

Zenith’s motion to dismiss was filed without a notice of hearing and was described by the plaintiff as “nothing but a piece of paper.”

Relying on the absence of a notice, the plaintiff moved to declare the defendant in default for not filing an answer within the period prescribed in Section 4 of Rule 5.

Without notifying or hearing the defendant regarding the motion to dismiss, the City Court sustained the plaintiff’s motion and ordered the reception of the plaintiff’s evidence.

Consequently, on April 30, 1966, a default judgment was rendered ordering Zenith Films to pay:

The sum of $1,150.00 converted at the legal exchange rate (P3.92 per $1.00) with legal interest accruing from June 25, 1965, until full payment;

Attorney’s fees in the amount of P500.00, exclusive of other costs.

The Court explicitly stated: “Defendant’s motion to Dismiss is denied and the same is hereby dismissed.”

Subsequent Developments

On the scheduled trial date, May 5, 1966, the defendant’s counsel appeared before the City Court only to be informed that a default judgment had already been rendered.

The following day, the defendant filed a motion to lift the order of default and set aside the judgment, asserting that the default order was improper because the motion to dismiss had allegedly suspended the running of the period for filing an answer.

On May 14, 1966, the City Court denied the defendant’s motion to set aside the default judgment.

Filing of the Petition for Certiorari

On June 2, 1966, Zenith Films filed a petition for certiorari with a preliminary injunction before the Court of First Instance of Manila. The petition prayed to:

Annul both the default judgment and the order denying the motion to dismiss;

Declare Judge Jose B. Herrera as lacking jurisdiction over Zenith Films;

Order the dismissal of civil case No. 147654.

On July 22, 1966, the lower court dismissed the petition for certiorari on the ground that it was not the proper remedy, emphasizing that an appeal was the available remedy.

The dismissal was rendered without costs against Zenith Films.

Central Procedural and Substantive Issue Raised on Appeal

The sole issue for the appellate court was whether the Court of First Instance erred in dismissing the petition for certiorari on the ground that it was not the proper remedy.

A subsidiary inquiry pertained to whether the City Court had committed a grave abuse of discretion in declaring the defendant in default and rendering judgment based on evidence presented ex parte.

Analysis of the Procedural Timing and Compliance with Rules

Section 4 of Rule 5 provided that the summons must set a trial date between two (2) and five (5) days after service.

The summons here set the deadline for filing an answer as May 5, 1966.

The City Court’s order (issued prior to May 5) for filing the answer and entry of default judgment violated this prescribed period, thereby depriving the defendant of the opportunity to file an answer.

The issue of whether the motion to dismiss required a notice of hearing (as provided by Section 5 of Rule 15 for Courts of First Instance) was ultimately not central since the focus was on the failure of the City Court to observe its own summons directives.

Issue:

Whether the petition for certiorari was the proper remedy given that an appeal was allegedly available.

The discussion revolved around the appropriate remedial procedure when a default judgment had been rendered without affording the defendant the full procedural rights as prescribed by the summons.

Whether emphasizing the remedy of appeal over substance resulted in the denial of substantive judicial inquiry into the factual and procedural irregularities committed by the City Court.

Whether the City Court committed a grave abuse of discretion by rendering a default judgment before the expiry of the time period provided for the defendant to answer the complaint.

This issue involves the interpretation and proper application of Section 4 of Rule 5 concerning the time limit for answering the complaint.

The inquiry examined whether the early reception of the plaintiff’s evidence and the subsequent default judgment were procedurally sound.

Ruling:

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Ratio:

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Doctrine:

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