CARNELIAN HOLIDAY TOURS AND TRAVEL, CHERRY NUNEZ-ERISPE AND/OR ALVIN PONS NUNEZ, PETITIONERS, VS. DR. JEFFREY LEONARDO AND JOCELYN LEONARDO, RESPONDENTS.

Carnelian Holiday Tours and Travel versus Leonardo

The Case

This is a petition for review on certiorari brought by Carnelian Holiday Tours and Travel, together with Cherry Nunez-Erispe and Alvin Pons Nunez, against Dr. Jeffrey Leonardo and Jocelyn Leonardo. The spouses Leonardo sued the petitioners for a sum of money after the petitioners failed to fully refund the price of six Singapore Airlines tickets that the spouses had cancelled because of the SARS outbreak. The case matters because it is a clean illustration of the Rule on Summary Procedure: when a defendant fails to file an answer within the ten-day period, the court may render judgment on its own motion, and a motion for extension of time is a prohibited pleading. It also reminds us that the liberal construction of procedural rules cannot be used to reward dilatory tactics.

Procedural History

The spouses Leonardo filed a complaint for a sum of money before the Metropolitan Trial Court of Mandaluyong City, Branch 59. The petitioners failed to file any answer within the reglementary period despite proper service of summons. The Metropolitan Trial Court therefore rendered judgment on its own motion, ordering the petitioners to pay the principal obligation, attorney's fees, and the costs of suit. The petitioners appealed to the Regional Trial Court of Mandaluyong City, Branch 211, arguing that the trial court should have admitted their late answer in the interest of substantial justice. The Regional Trial Court affirmed the decision of the Metropolitan Trial Court. The petitioners then elevated the matter to the Supreme Court through a petition for review on certiorari.

Facts

On March 13, 2003, the spouses Leonardo purchased six Singapore Airlines tickets from Carnelian Holiday Tours and Travel, with routing from Manila to Los Angeles. They paid 5,480 dollars plus 8,910 pesos in travel tax, covered by an official receipt. Because of the outbreak of SARS in Singapore, the spouses decided to cancel their flight. On March 29, 2003, Jocelyn Leonardo verbally notified the petitioners through Cherry Nunez-Erispe of the cancellation, and the spouses returned the six tickets together with the official receipt. The petitioners promised that the refund would be made on April 9, 2003. Relying on that assurance, the spouses bought six Philippine Airlines tickets to Los Angeles and paid 5,323 dollars plus 9,720 pesos in Philippine travel tax.

When the spouses returned from the United States on April 28, 2003, no refund and no statement of the amount to be deducted had been made, despite repeated assurances. The petitioners later deposited 1,800 dollars as a partial refund into the dollar savings account of Jocelyn Leonardo. The spouses sent a demand letter dated May 28, 2003, asking for the refund of the value of the six tickets and for a statement of accounts. On July 4, 2003, the petitioners deposited 314 dollars and 100 dollars, or a total of 414 dollars, as further partial refund. On July 7, 2003, they deposited 8,910 pesos into the spouses' account.

The petitioners then furnished a statement of account showing deductions for United States tax, war tax, a total mark-up, and a no show charge, amounting to 1,014 dollars, leaving a balance of 4,266 dollars. The spouses questioned the mark-up and the no show charge, since they had already been charged a mark-up on the Philippine Airlines tickets and since Singapore Airlines had waived the no show charge because of the SARS outbreak. The petitioners made only a further partial payment of 500 dollars. The spouses demanded the remaining 2,766 dollars, and because the petitioners refused to pay, the spouses instituted the complaint for a sum of money.

Issues

• Whether or not the liberal interpretation of the rules should have been applied so that the petitioners' late answer could be admitted in the interest of substantial justice.
• Whether or not the petitioners should pay the respondents the sum of 2,766 dollars and the other reliefs granted by the trial court.

Applicable Provisions

Section 6 of the Rule on Summary Procedure, on the effect of failure to answer, provides:

Sec. 6. Effect of failure to answer. – Should the defendant fail to answer the complaint within the period above provided, the court, motu proprio, or on motion of the plaintiff, shall render judgment as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein: Provided, however, that the court may in its discretion reduce the amount of damages and attorney's fees claimed for being excessive or otherwise unconscionable. This is without prejudice to the applicability of Section 4, Rule 18 of the Rules of Court, if there are two or more defendants.

This provision is the very basis for the trial court's rendering of judgment on its own motion after the petitioners failed to file their answer within the ten-day period.

Ruling

On the first issue, the Court held that the liberal interpretation of the rules cannot be invoked. The case is covered by the Rule on Summary Procedure because the total amount claimed in the complaint does not exceed 200,000 pesos, exclusive of interests and costs. Under that Rule, the defendant must file an answer within ten days from service of summons. The petitioners were served with summons and a copy of the complaint on January 23, 2004, giving them until February 2, 2004 to file their answer. Instead of filing an answer, they filed a motion for extension of time, which is a prohibited pleading under the Rule on Summary Procedure. The Court stressed that the trial court had no legal obligation to resolve that motion, and that when the petitioners finally filed their answer on March 2, 2004, it was already twenty-nine days late. The Court explained that the Rule was promulgated to achieve an expeditious and inexpensive determination of cases, and that to admit a late answer would put a premium on dilatory maneuvers, the very mischief the Rule seeks to redress.

On the second issue, the Court affirmed the finding that the petitioners are liable to the respondents in the amount of 2,766 dollars. The spouses had paid 5,480 dollars for the six tickets and sought a refund when they cancelled. The records showed that the petitioners made only partial refunds totaling 2,714 dollars, leaving a balance of 2,766 dollars. The Court held that the petitioners' claim of further deductions was not duly proven, since the basis for those deductions was not fully established. The Court also rejected the petitioners' argument that they were merely a sub-agent for the International Air Transport Association and that World Master Tours and Travel was the agent then. The transaction was entered into between the petitioners and the respondents only, and World Master was not a party to it. The Court held that it would be improper for the respondents to run after World Master, who was not a privy to the transaction, and that the petitioners should give the refund to the respondents and then claim from World Master whatever amount may be validly due to them. Finally, the Court affirmed the award of attorney's fees, since the respondents were forced to litigate and incur expenses to protect their rights and interests.

Doctrine

Under the Rule on Summary Procedure, the defendant must file an answer within ten days from service of summons. If the defendant fails to do so, the court shall, on its own motion or on motion of the plaintiff, render judgment as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein. A motion for extension of time to file a responsive pleading is a prohibited pleading under the Rule on Summary Procedure, and the court has no legal obligation to resolve it. The liberal construction of procedural rules cannot be invoked to excuse a party's failure to comply with the mandatory periods under the Rule on Summary Procedure, because to admit a late answer would put a premium on dilatory maneuvers and defeat the Rule's objective of expeditious adjudication. A party who acts as a sub-agent in a transaction is directly liable to the other contracting party, and any liability of the principal agent is a matter between them alone.

Disposition

The Supreme Court dismissed the petition and affirmed the decision of the Regional Trial Court, which had affirmed the decision of the Metropolitan Trial Court ordering the petitioners to pay the respondents 2,766 dollars plus legal interest, attorney's fees, and the costs of suit.

Remember This

Memorize this line: under the Rule on Summary Procedure, a motion for extension of time to file an answer is a prohibited pleading, and the court may render judgment on its own motion upon the defendant's failure to answer within ten days from service of summons. Examiners like to use this case to test whether a candidate knows that the liberal construction of procedural rules yields to the mandatory and expeditious character of the Rule on Summary Procedure.