VENANCIO CASTAÑEDA, ET AL., PLAINTIFFS AND APPELLEES, VS. PASTOR DE AGO, ET AL., DEFENDANTS AND APPELLANTS.

Castañeda versus De Ago

The Case

This is an appeal by Pastor De Ago from a decision of the Court of First Instance of Manila and from the order denying his motions for reconsideration and new trial. Venancio Castañeda and his co-plaintiffs had delivered three pieces of machinery to De Ago as their contribution to a logging business they agreed to run together for one year, with a guaranteed minimum share in the profits for the plaintiffs. When the year ended, the plaintiffs demanded the return of the machinery and the payment of their share; De Ago refused and asked instead that the agreement be renewed. The plaintiffs sued to recover the machinery or its value, their share in the profits, attorney's fees, and costs. The case matters to a reviewee because it is a compact lesson on two things at once: the finality of the facts found by the trial court when the losing party never appeared to contradict the evidence, and the strict requirements for setting aside a judgment taken by default through a motion for reconsideration or new trial.

Procedural History

The plaintiffs filed their complaint in the Court of First Instance of Manila. The case was called for trial, but neither De Ago nor his counsel appeared, so the court allowed the plaintiffs to present their evidence. The trial court then rendered its decision, ordering De Ago to return the three pieces of machinery or to pay their value of 30,000 pesos, to pay the plaintiffs their share in the profits, attorney's fees, and costs. De Ago filed a verified motion for reconsideration, which was opposed. Seven months later he filed a verified amended motion for reconsideration and new trial, supported by affidavits. The trial court issued an order denying both the original and the amended motions. De Ago appealed directly to the Supreme Court, and the Court affirmed the decision and the order appealed from.

Facts

The plaintiffs delivered to De Ago three pieces of machinery, together with a D-7 Caterpillar Tractor with a bulldozer, as their share in the capital of a logging business they had agreed to engage in with him for one year beginning on the third of August, 1954. Their written contract provided that the parties would divide equally the profits realized in the business in excess of 1,750 pesos, and that this sum would be the least share of the plaintiffs in the profits, to which they would be entitled even if the profits were less than that amount. The tractor was returned to the plaintiffs after one month of use. On account of their share in the profits, De Ago paid the plaintiffs only 3,000 pesos.

When the one-year period expired, the plaintiffs demanded the return of the three pieces of machinery and the payment of their share in the profits. De Ago refused to comply and instead asked that their agreement be renewed. In his answer, De Ago alleged that the plaintiffs had not furnished the spare parts and accessories needed to place the machinery in working condition, and that he had to spend 19,640 pesos for this purpose. He also alleged that the tractor was not returned by him but was seized from him under a writ of replevin in another case, and he set up a counterclaim for damages.

When the case was called for trial, neither De Ago nor his counsel appeared, and the plaintiffs presented their evidence uncontradicted. In his original motion for reconsideration, De Ago blamed his absence on the fact that the notice of trial had been sent to the Manila address of Attorney Mariano Yap, who, he claimed, was no longer his attorney. The motion, however, was not accompanied by any affidavit of merits. The plaintiffs opposed it precisely on that ground. Only on the first of February, 1958, some seven months after filing the original motion, did De Ago file a verified amended motion supported by affidavits, claiming among other things that the written agreement had been cancelled before the complaint was filed and that the parties had agreed that he would simply rent the remaining machinery at 750 pesos a month.

Issues

• Whether or not the trial court erred in denying the original motion for reconsideration and the amended motion for reconsideration and new trial.
• Whether or not the evidence presented by the plaintiffs sufficiently supports the findings of fact and conclusions of law of the trial court.

Applicable Provisions

The decision refers to Section 3 of Rule 17 of the Rules of Court, which governs motions for new trial, as the standard against which the amended motion was measured:

Section 3. Grounds for new trial. Within the time and in the manner prescribed for taking an appeal, the party aggrieved may file a motion in the court in which the action was tried for a new trial upon any of the following grounds: (a) Fraud, accident, mistake, or excusable negligence which ordinary prudence could have guarded against, and by reason of which such party has probably been unjustly deprived of a hearing; (b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result.

This provision bears on the case because De Ago's motions rested on accident, mistake, or excusable negligence, and the Court measured them against its requirements of proof and of timeliness.

Ruling

On the first issue, the Court held that the trial court did not err. The attorneys of record who filed the answer were Attorneys Calo, Cupin, and Yap, and De Ago himself admitted that the notice of trial was sent to and received by Attorney Yap, a member of that firm. At that time no withdrawal of appearance had been filed by the firm or by Attorney Yap alone. The service of the notice of trial was therefore proper and in accordance with the rules. The Court also held that the original motion was fatally defective, first, because it did not sufficiently prove by affidavit or otherwise the accident, mistake, or excusable negligence relied upon, and second, because it was not supported by an affidavit of merits showing that De Ago had a good and valid defense. The amended motion, filed more than seven months later and only after the plaintiffs had already pointed out the lack of an affidavit of merits, came too late to cure the defect.

On the second issue, the Court held that the evidence presented by the plaintiffs was uncontradicted and sufficiently supported the findings of fact and conclusions of law of the trial court. The plaintiffs were therefore entitled to the return of the three pieces of machinery or to the payment of their value of 30,000 pesos, and, in accordance with the contract, to the sums of money specified in the dispositive part of the decision.

Doctrine

A motion for new trial on the ground of accident, mistake, or excusable negligence must be supported by an affidavit of merits showing that the movant has a good and valid defense; a motion that fails in this respect is fatally defective. Service of notice of trial upon a member of the law firm that appears as counsel of record is proper while no withdrawal of appearance has been filed, and the client cannot later claim that he was not legally notified. A defective motion cannot be cured by an amended motion filed months later, after the opposing party has already pointed out the defect and after the reglementary period has run; to allow it would, in effect, extend the periods fixed by the Rules of Court. Finally, where the evidence of the plaintiffs stands uncontradicted because the defendant failed to appear, the findings of fact of the trial court will be sustained on appeal.

Disposition

The Supreme Court affirmed the decision and the order appealed from, with costs, so that the plaintiffs prevailed and De Ago was ordered to return the machinery or pay its value, together with the sums awarded below.

Remember This

Memorize this line: a motion for new trial grounded on excusable negligence without an affidavit of merits is fatally defective, and an amended motion filed months later cannot cure it. Examiners use this case to test the requisites of a motion for new trial and the rule that notice to one member of the counsel of record binds the client.