Case Summary (G.R. No. 193494)
Key Dates
– Lease executed: March 9, 1995 (10-year term)
– Bank’s claim letter and new title: January 10, 2003
– Interpleader filed by Zuellig Pharma: May 7, 2003
– Summons to Lui Enterprises served: July 4, 2003
– Order of default: October 6, 2003
– Motion to set aside default: October 21, 2004
– RTC decision in interpleader: July 4, 2006
– CA decision: May 24, 2010; denial of reconsideration: August 13, 2010
– Supreme Court decision: March 7, 2014
Applicable Law
– 1987 Constitution (post-1990 case)
– 1997 Rules of Civil Procedure:
• Rule 44, Section 13 & Rule 50, Section 1 (Contents of appellant’s brief; grounds for dismissal)
• Rule 9, Section 3 (Relief from order of default)
• Rule 16, Section 1 (Motions to dismiss; time for filing)
• Rule 62 (Interpleader actions)
– Civil Code, Article 2208 (Attorney’s fees)
Factual Background
Lui Enterprises leased land to Zuellig Pharma in 1995. In 2003 the Philippine Bank of Communications claimed ownership under a subsequent title and demanded rent payments. Faced with conflicting instructions, Zuellig Pharma interpleaded P604,024.35 plus future rents with the Makati RTC and summoned Lui Enterprises and the Bank to litigate their claims. Lui Enterprises moved to dismiss, alleging lack of corporate authority to file interpleader and litis pendentia by a pending nullification of dation in payment case in Davao.
Procedural History in the Trial Court
Lui Enterprises filed its motion to dismiss four days beyond the 15-day deadline. The Makati RTC denied the motion, declared Lui Enterprises in default, and proceeded with the interpleader ex parte. Despite subsequent manifestations of conflicting Davao orders and status quo writs, the trial court refused to set aside default and ultimately rendered judgment awarding the consigned rents to the Bank and P50,000 legal fees to Zuellig Pharma.
Appellate Proceedings
Lui Enterprises appealed but submitted a brief lacking the subject index, page references, table of authorities, and statement of issues, as required by Rule 44, Section 13. The Court of Appeals dismissed the appeal under Rule 50, Section 1(f) and affirmed the RTC’s judgment in toto, including the award of attorney’s fees. The petition for reconsideration was denied.
Issue I: Dismissal for Deficient Appellant’s Brief
Under the 1987 Constitution and the Rules of Court, appeal is a statutory privilege requiring strict compliance with briefing requirements. The Court of Appeals correctly dismissed the appeal because Lui Enterprises failed to include a subject index, page references to the record, and a table of cases, textbooks, and statutes. The Supreme Court held that absent substantial compliance, liberal construction does not excuse admitted and unremedied procedural lapses.
Issue II: Motion to Set Aside Order of Default
Rule 9, Section 3(b) allows a defaulting party to move—before judgment—to set aside default upon proof of fraud, accident, mistake, or excusable negligence and a meritorious defense. Lui Enterprises filed its motion one year after default, blamed former counsel without detailing circumstances constituting excusable negligence, and failed to demonstrate diligence or a meritorious defense. The RTC did not abuse its discretion in denying relief from default.
Issue III: Effect of Pending Nullification Case (Litis Pendentia)
Litis pendentia requires identity of parties, rights asserted, and reliefs prayed for, such that one judgment would operate as res judicata in
...continue readingCase Syllabus (G.R. No. 193494)
Facts
- On March 9, 1995, Lui Enterprises, Inc. (“Lui”) and Zuellig Pharma Corporation (“Zuellig”) executed a ten-year lease of a parcel in Barrio Tigatto, Buhangin, Davao City (TCT No. T-166476, registered to Eli L. Lui).
- On January 10, 2003, the Philippine Bank of Communications (“PBC”) wrote to Zuellig claiming ownership (TCT No. 336962, derived from T-166476) and demanding rent payment to the Bank.
- Zuellig notified Lui of the Bank’s claim; on January 28, 2003, Lui insisted that rent remain payable to it.
Procedural History
- Facing conflicting demands, Zuellig consigned P604,024.35 in court and, on May 7, 2003, filed an interpleader complaint in RTC Makati (Branch 143), praying that Lui and PBC litigate their claims and that future rentals be paid into court.
- Summons was served on Lui on July 4, 2003; Lui answered by moving to dismiss on July 23, 2003—four days beyond the 15-day period.
- PBC joined Zuellig’s motion to declare Lui in default; RTC denied Lui’s motion to dismiss and declared it in default on October 6, 2003. Lui did not file for reconsideration.
- Despite default, Lui filed manifestations (April 15, 2004; April 21, 2005) invoking status-quo orders issued by RTC Davao in a pending nullification of deed of dation in payment case against PBC.
- On October 21, 2004, Lui moved, under oath, to set aside the order of default for “excusable negligence.” Zuellig opposed; RTC denied relief and, on July 4, 2006, rendered judgment awarding the consigned sum (P6,681,327.30) to PBC and P50,000.00 in attorney’s fees to Zuellig.
- Lui appealed; Court of Appeals (CA) dismissed the appeal on May 24, 2010 for non-complian