ARMINIO RIVERA, IN HIS CAPACITY AS ADMINISTRATOR OF THE INTESTATE ESTATE OF THE DECEASED RAFAEL LITAM, PLAINTIFF AND APPELLEE, VS. LITAM & COMPANY, INC., ET AL., DEFENDANTS AND …

Arminio Rivera brought this action in his capacity as administrator of the
estate of the deceased Rafael Litam to recover from the defendants some 54/204
shares of stock belonging to the deceased in the Li Tam & Co. Inc., or their
value, alleging that the said shares have been fraudulently transferred by the
defendants and to render an accounting of the income or dividends that have
accrued to said shares of stock, with attorneys’ fees and costs.

The material allegations of the complaint are—That (1) Rafael Litam died
intestate in Manila on January 10, 1951 and plaintiff was appointed
administrator of his estate; (2) the wife of Rafael Litam, Marcosa Rivera, filed
a claim against his estate for the sum of P252,658.33 which the Court of First
Instance approved; (3) believing that the properties of the deceased were in the
possession of Li Tam & Co. Inc., the administrator filed a motion in the
probate court demanding that the President and Manager, Mr. Lee Chu, be required
to render an account of the income of the 54/204 shares of the deceased in said
company, but said President and Manager and Gregorio Dy Tam opposed the motion,
claiming that the entire assets or properties of the deceased were transferred
on January 25, 1950 to William Litam, Luis Litam, Henry Litam and Li Hong Hap,
and to show such transfer said defendants furnished photostat copies of the said
shares of stock and the transfers thereof; (4) said transfers are fictitious,
unsupported by any adequate or valuable consideration, and fraudulent, and
defendants unlawfully and fraudulently conspired to bring about the said
transfers; said transfers had been made to enrich themselves to the prejudice of
others; said transfers were made in fraud of creditors; (5) the value of such
shares is at Iteast P300,000; and the probate court, upon motion of
administrator, has authorized him to file the suit against the defendants.

All the defendants filed a common answer which their attorneys, Sycip,
Salazar, et al., presented. In said answer the defendant corporation alleged
that it has no knowledge or information sufficient to form a belief as to the
truth of all the allegations and denied the same.

The other defendants also denied the material allegations of the complaint
and alleged that the allegations of the complaint are conclusions of law; that
the transfers of the shares of stock to defendants are null and void. They also
denied the authority of the plaintiff to file the action; and as affirmative
defenses they alleged that the shares of stock in question were disposed of by
the intestate for good, sufficient and adequate consideration without intent of
committing fraud; that the corporation in which Rafael Litam had shares of
.stock is no longer existing and the present corporation, Li Tam & Company,
Inc., is formed by different incorporators; that the defendant corporation does
not have in its possession any of the properties belonging to the intestate
estate of Rafael Litam; and that the complaint states no cause of action against
the individual defendants, said defendants not having received any sum from the
deceased on January 25, 1950.

The case was set for hearing on April 2, 1956 but the trial had to be
postponed because two cases involving the same parties, G. R. No. L-7644 and
7645, were still pending before the Supreme Court. On March 31, 1957 attorney
for the plaintiff informed the court that the said cases had already been
decided so he prayed that the case be set for hearing anew on June 1957; this
was done but the case was again postponed to August 5, 1957. Various other
postponements took place until September 24, 1957 when the attorneys for the
defendants informed the court that they were withdrawing from the case but that
they had not as yet secured the conformity of their clients to their withdrawal.
The court again postponed the case to November 22, 1957 notifying the parties of
the postponment. When the case was called for hearing on November 22, 1957, all
the defendants failed to show up; so the court authorized the clerk of court to
hear the evidence for plaintiff without the presence of the defendants. The
case, however, was actually heard, without the presence of the defendants, only
on February 6 and 19, 1959.

On July 16, 1959 after the plaintiff had submitted his memorandum, the court
rendered judgment, the dispositive part of which reads as follows:

“PREMISES CONSIDERED, this Court finds the complaint to be substantiated by
the evidence on record and judgement is hereby rendered thus:

“(1) The transfer on June 25, 1950 of the certificates of stock of Rafael
Litam to wit: Nos. V-2, V-3, V-9, V-10, V-ll, V-12, V-13, V-14, all of Li Tam
& Co., Inc., in favor of the respective transferees is hereby declared null
and void and of no legal effect and! the estate of Rafael Litam remains the
owner of the above mentioned certificates of stock;

“(2) Because of the dissolution of Li Tam & Co., Inc. in 1952, the
successor defendant corporation is hereby directed either to cause the issuance
in favor of the. estate of Rafael Litam of the equivalent number of its shares
of capital stock or should that be not possible for one reason or another, to
pay to said estate, jointly and severally with the other defendants, the value
of said 54/204 shares of stock which is hereby fixed at P300,000.00; and

“(3) All the defendants are ordered to pay jointly and severally the herein
plaintiff the sum of P6,000.00 as attorney’s fees and expenses of litigation.”
(pp. 95-96, R.O.A.)

Against the above judgment the defendants have prosecuted this appeal.

Some antecedent facts constituting the background is necessary to an
understanding of the evidence on the main issue, namely, the validity of the
transfer of the 54/204 shares of the deceased Rafael Litam to the defendants
William, Henry, and Luis Litam and Li Hong Hap.

Rafael Litam was married to Marcosa Rivera on June 10, 1922. He died on
January 10, 1950 while a resident of Hulong Duhat, Malabon, Rizal. Upon his
death intestate proceedings were instituted for the settlement of his estate by
Gregorio Dy Tam, who alleged that he and the others namely, William, Henry, and
Luis Litam and Li Hong Hap are his (of Rafael Litam) children by a Chinese wife,
with whom he had contracted marriage in China in 1911. In the petition Gregorio
Dy Tam was proposed as administrator. The wife of the deceased, Marcosa Rivera,
proposed Arminio Rivera, a nephew. This proposal was opposed by the petitioner
Gregorio Dy Tam on the ground that Marcosa Rivera had a claim against the
intestate. The lower court approved the appointment cf Arminio Rivera, and the
case having come to this Court in G. R. No. L-6297, We held that the appointment
was proper as the administrator would have the duty of protecting the estate
against the pretending heirs. (See Exhibit “E”).

During the pendency of the intestate proceedings Marcosa Rivera, incompetent,
filed a claim for a total sum of P252,658.33 against the intestate. (Exhibit
“F”). The claim was approved upon the strength of a deed dated February 24, 1946
where the deceased Rafael’ Litam acknowledged a new indebtedness of P197,000.00
plus interest of P62,000 for the previous year (Exhibit “F-2”). The order was
appealed to this Court in G. R. No. L-7846, but We dismissed the appeal for the
reason that in two cases (G. R. No. L-7644-45) We had held that when Rafael
Litam was married to Marcosa Rivera, Rafael was not married to the mother of
Gregorio Dy Tam and his four brothers and three sisters. (Exh. “H”)

On November 15, 1944 Arminio Rivera, administrator of the intestate, moved
the court to require the president and manager of Li Tam & Company, Inc., to
give an account of the income derived from the 54/205 shares of stock of the
intestate (Exhibit “I”). In answer Lee Chu alleged that at the time of his
death, Rafael Litam was no longer a stockholder, having transferred his shares
to various persons (Exhibit “J”). Upon the filing of this answer the probate
court authorized the filing of this action against Henry Litam, Li Hong Hap,
Luis Litam and William Litam and others (Exhibit “K”).

The photostat copies of the original shares of stock (Exhibits L, L-1 to L-7)
of Rafael Litam show the following transfers of the stock:

6 shares to Luis Litam

6 shares to Luis Litam

6 shares to Luis Litam

4 shares to Luis Litam 2 to William Litam

1 share to Li Hong Hap

6 shares to William Litam

6 shares to William Litam

8 shares to William Litam

9 shares to Henry Litam (Exhs. “L, L-1 to L-7”).

In Civil Case No. 2071 of the Court of First Instance of Rizal, Gregorio Dy
Tam, sought to recover certain properties in Navotas, Rizal, Malabon, Rizal and
in Obando, Bulacan, alleging that Rafael Litam was survived by Li Hong Hap, Li
Ko, Qregorio Dy Tam, Henry Litam, Beatriz Lee Tam, Elsa Lee Tam, William Litam
and Luis Litam by a marriage in China in 1911 with Sia Khin. The Court of First
Instance dismissed the action and declared the properties to be exclusive,
separate paraphernal properties of Marcosa Rivera (Exhibit “M”). Upon appeal to
Us, in G. R. No. L-7644, We affirmed the decision with a slight modification.
(Exhibit “N”).

The evidence for plaintiff consists of the testimony of himself and various
documents. The gist of the testimony is as follows: Rafael Litam died on January
10, 1951, and his wife, on September 12, 1957. During his lifetime, Rafael Litam
was President and General Manager of the Li Tam and Company, Inc., and had
54/204 shares therein; that upon plaintiff’s qualification as administrator he
inspected the properties of the deceased in the Bicol Region and during the
inspection he met defendant Henry Litam at Casiguran, Sorsogon and Henry told
him that the properties were still intact in different places. He further
testified that he met the defendants several times in 1948 at their office at
928 San Fernando, San Nicolas, Manila and he was told that Rafael Litam owned
shares in the company valued at P300,000; that when he went to collect the debt
of Rafael Litam to his aunt, he was told not to worry as they did not claim the
shares as their own. These facts were not contradicted as defendants did not
appear in person or by attorney on the dates of the trial.

The main basis of the action are two documents, identified at the trial as
Exhibits “0” and “P’ They are as follows:

“KASULATAN SA PAGKAKAUTANG

ALAMIN NG LAHAT NA MAKABABASA NITO:

Na akong si RAFAEL LITAM, ciudadano chino, may sapat na gulang, may asawa at
nanirahan sa Malabon, Rizal, Pilipinas, ay malaya at kusang loob na

NAGSASAYSAY NG SUMUSUNOD:

1.—Na bago magsiklab ang katatapos na digmaan sa Pacifico, ako ay may
pagkakautang sa aking asawang si MARCOSA RIVERA ng halagang ISANG DAAN AT
TATLONGPU’T LIMANG LIBONG PISO (P135,000.00), kuwaltang pilipino, na tinanggap
ko ng buong kasiyahang loob sa nasabi kong asawa, at siya kong ginamit sa aking
negocio. Ang nasabing halaga ay salaping sarili ng aking asawa, at hanggang sa
sandaling ito ay hindi ko pa nababayaran sa kanya kahi’t bahagi nito,

2.—Na noong ika 4 ng Enero ng taong ito, sa hangad kong maitayong muli ang
aking negocio na nasira rig digmaan, ay napañgahasan kong galawin at kunin sa
kinatataguan ang halaga pang ANIMNAPU’T DALAWANG LIBONG PISO (P62,000.00)
kuwaltang pilipino, na salapi ding sarili ng aking asawang si Marcoaa Rivera,
kaya’t sa ngayon ako ay may pagkakautang sa kanya ng halagang ISANG DAAN AT
SIYAMNAPU’T PITONG LIBONG PISO (P197,000.00), kuwaltang pilipino, at sa
pamamagitan nito ay ipinangafigako kong babayaran sa kanya, u orden, ang
nasabing halaga pati ng pakinabang na 10% isang taon ng huling halagang
P62,000.00, sa ganitong paraan:

Sa dati kong utang na P135,000.00 ako ay maghuhulog ng halagang isang libong
piso (P1,000.00) isang buwan simula sa buwan ng Marzo, 1946, hanggang sa buwan
ng Disyembre, 1947; at LIMANG LIBONG PISO (P5,000.00) isang buwan simula sa
buwan ng Enero, 1948, hanggang sa matapusan ang nasabing halaga;

Sa huling halagang P62,000.00 ako ay maghuhulog ng P31,000.00 sa buwan ng
Disyembre, 1946, o bago dumating ang nasabing petsa, F31,000.00 sa buwan ng
Disyembre, 1947, o bago dumating ang nasabing petsa, at ang pakinabang na 10%
isang taon ay nasabing halagang P62,000.00 ay huhulugan ko buwan-buwan por
mensualidades vencidos at ang unang hulog ay gagampanan ko sa buwan ng Marzo,
1946.

3.—Kung sakaling hindi ko matupad ang alin man sa mga condicione3 na nasaad
sa kasulatang ito, ang kabuoan ng aking pagkakautang ay magiging vencido at
maaaring singilin lahat ng may hawak ng kasulatang ito.

4.—Bilang garantia ng aking pagkakautang na ito ay ipinangafigako kong sa
loob ng lalong madaling panahon ay gagawa ako ng isang escritura de hipoteca ng
lahat ng aking mga propiedades sa Sorsogon favor sa aking asawang Marcosa
Rivera.

SA KATUNAYAN NG LAHAT NG ITO, ako ay lumagda sa ibaba nito, dito sa Malabon,
Rizal, Pilipinas, ngayong ika 24 ng Febrero, 1946.

(Sgd.) Rafael Litam

NILAGDAAN SA HARAP NI:

MACARIO B. ASISTIO	ILLEGIBLE
ESTADOS UNIDOS DE AMERICA
	S.S.
COMMONWEALTH DE FILIPINAS
PROVINICIA DE RIZAL

En el Municipio de Malabon, Provincia de Rizal, Filipinas, hoy
a 25 de Febrero de 1946, A. D. comparecio personalmente a mi el Sr. Rafael
Litam, con su certificado de residencia No. A-268183, expedido en Malabon,
Rizal, el 25 de Febrero de 1946, de quien doy fe que conozco por ser la misma
persona que otorgo el preinserto documento y que ratifico haberlo otorgado libre
y espontaneamente, el cual se compone de dos paginas, inclusive la que contiene
esta ratification, la segunda de las cuales ha sido firmado en el margen
izquierdo por el otorgante y sus testigos, y sellada con mi timbre notarial.

Ante mi,

Illegible
NOTABIO PUBLICO
Mi comision expira el 31
de Die, 1946
Asiento No. 6; Pag. No. 2; Libro II;
Serie de 1946.

(Exhibit “0”)
Exhibit “P”

“Ang kabu-uan nang kualtang natangap ko na galing sa aking asawang si Marcosa
Rivera Simula nang ako ay pumasok sa Ospital ay LABING DALAWANG LIBONG PISO
(12,000.00.)

(Sgd.) Rafael Litam
Rafael Litam

Noviembre 28, 1950.
Manila.”

The court below found that the transfer of the shares of stock to defendants
was simulated, fictitious and without consideration; that it was in fraud of
creditors and the conduct of the defendants at the time the transfer of the
properties of the deceased was being made, renders the alleged sale doubtful.
The peculiar circumstances, such as the fact that defendants claimed to be
children of the deceased, and claimed various real properties as belonging to
Rafael Litam when as a matter of fact they were the exclusive paraphernal
properties of his wife—both of which facts were found in the decisions of the
Supreme Court—reveal why the transfer of the shares was disclosed only in the
year 1954, when as a matter of fact the transfers took place purportedly at the
same time on July 25, 1950.

The above findings as to the existence of fraud, the lack of consideration,
etc., are disputed by the appellants in their first assignment of error, it
being contended by them that the premises are insufficient to prove lack of
consideration, as defendants had no duty to make public the transfer and
disclose the consideration therefor, etc. Answering the above contention, We
state that defendants did not prove that they ever paid any price or
consideration for the transfer, or that they had the means to pay for the price,
or that the deceased had ever received any payment for the transfer, as it was
shown that he was so short of funds soon after the date of the supposed transfer
that he had to borrow the sum of P12,000.00 from his wife on November 28, 1950
(Exhibit “P”). When in 1949 and 1950 plaintiff Rivera saw the defendants William
Litam, Luis Litam and Henry Litam, these defendants admitted that Rafael Litam
owned shares in the corporation valued at P300,000 (t.s.n., p. 23). And even
after the death of Rafael Litam, in the year 1952, when plaintiff went to the
Bicol region to check up the properties left by the intestate for the purpose of
preparing the inventory thereof, he met Henry Litam in Casiguran, Sorsogon,
Henry Litam then did not say that the properties did not belong to the deceased
(t.s.n., p. 32), when the supposed endorsement of the shares bears dates of July
25, 1950. In the year 1952, before plaintiff filed the inventory, he took up
with Lee Chu the matter of the interest of Rafael Litam in the corporation, Li
Tam and Company, Inc. Lee Chu, who was then the president, admitted that the
deceased Rafael Litam owned 54 shares of the entire stock (t.s.n., p. 33). Our
conclusion from all the above facts and from these admissions in 1952 of Lee
Chu, then president of Li Tam and Company, Inc., and of Henry Litam, one of the
defendants, is that in 1952 the shares were still owned by Rafael Litam and had
not yet been endorsed or transferred on the books of the corporation to the
defendants.

Our examination of the certificates of stock show that the deceased Rafael
Litam’s signature to the indorsement were authentic, but the dates of
indorsement and the names are not; so we believe, Rafael must have signed the
indorsement not on January 25, 1950 but before, and the shares actually
transferred in the books already after 1952. From these circumstances we
conclude that the certificates of stock must have been delivered, already signed
by the deceased, before his death, in secret, to his alleged children,
the defendants herein, who, after Rafael Litam’s death in January 1951, wrote
their names on the shares as endorsees, in secret also. Their purpose is
evident—so that upon Rafael’s death his Filipino wife would not be able to claim
the shares of stock as part of Rafael’s assets and same (shares) would not be
subject to the payment of his debts. These debts at the time of his death in
1950 reached more than P250,000. The fact that the real properties, presumably
of the deceased, in the Bicol region were also in the name of the corporation,
not in Rafael’s own, must have been part of the scheme to insure that his (the
deceased) assets would pass to his children, the defendants, free from the
claims of his wife.

It appears, therefore, that the deceased Rafael Litam had been getting money
from his Filipina wife (to distinguish her from the Chinese wife by whom he had
his children, the defendants bearing his surname), borrowing from her big sums
which he put in the company, Li Tam and Company, Inc., in shares of stock of
this corporation, later endorsing the certificates evidencing transfer thereof,
without date, and delivering the shares to his children, also investing the
funds of the company, in the purchase of real estate also in the name of the
corporation, thus depriving his wife, from whom the money came, of the legal
means to get back the money loaned. And to complete the fraudulent scheme and in
order to make the properties more invulnerable to the claims of Rafael Litam’s
creditors, the defendants for no apparent reason, dissolved the old corporation
and formed the new Li Tam and Company, Inc., on October 3, 1952, the defendants,
children of the deceased being the new stockholders (See Exhibit “X”). The fact
that in the new corporation the respective shares of the incorporators do not
exactly coincide with the shares each had received from Rafael Litam, according
to the endorsements of the original shares, prove that Rafael Litam’s children
actually divided his assets among themselves, not according to the endorsements
of the shares.

The fraudulent character of the transfer of all his shares of stock by Rafael
Litam is clearly inferable from the following circumstances, namely, the
transferees are his own children, no consideration or price was given or
received for the transfer; the shares of stock were the only properties of
Rafael Litam; there was no apparent need for him to dispose of all of them as
the corporation was the only source of business that he had, and he had an
outstanding indebtedness of more than P250,000 with his wife with whom he had no
issue. It has been said that “the fertility of man’s invention in devising new
schemes of fraud is so great that courts have declined to define it, reserving
to themselves the liberty to deal with it under whatever form it may present
itself.” In the case at bar the fraudulent scheme is evidenced by a series of
related acts committed one after another, silently, quietly and surreptitiously.
Our jurisprudence abounds with cases where fraud had been held to exist but we
have found none in which all the circumstances above indicated are present, the
circumstances being varied as the men who schemed the fraud in each case. The
nearest to the case at bar is Ayles vs. Reyes & Reyes, 18 Phil., 243, where
the Supreme Court held that fraud was proved where it was shown that the debtor
went into insolvency and, conniving with his parents, sold part of his property
to them and the sales were simulated, and only for the purpose of frustrating
liabilities contracted.

One last point needs consideration, and this is the claim made by the
defendant corporation that its obligation to transfer the shares of stock to the
estate could not be inferred from the Articles of Incorporation (Exhibit “X”),
because the two corporations are distinct and separate, and under the
authorities cited by it, even if the new succeeded the old corporation. This
claim would have been correct had not the defendant corporation expressly
acquired the assets and properties of the old Li Tam and Company, Inc., and
assumed its obligations and liabilities in the articles of incorporation. (Exh.
“X”, Par “d”). The trial court, therefore, correctly held defendant corporation
liable to the estate for the equivalent number of shares of stock, otherwise,
said corporation would be enriching itself at the expense of the estate.

In view of the fraud and all the foregoing, the transfer of the shares must
be declared null and void and of no effect (Article 1409, Civil Code), and the
transferees, as well as the corporation which consented to the transfer, must
all be held liable for the return of the properties that the shares represented,
or their values (Articles 1352, Civil Code).

Another objection to the judgment raised by the appellants is that they
should not be required to pay the amount of P300,000 as well as the attorney’s
fees. The judgment for P300,000 is an alternative relief afforded the plaintiff
in case the shares of stock can not be recovered. Attorney’s fees should be
awarded because the plaintiff has been forced to various litigations in order to
enforce the payment of plaintiff’s claim.

“Art. 1388.—Whoever acquires in bad faith the things alienated in fraud of
creditors, shall indemnify the latter for damages suffered by them on account of
the alienation, whenever, due to any cause, it should be impossible for him to
return them.” (Civil Code of the Philippines)

“Art. 1170.—Those who in the performance of their obligations are guilty of
fraud, negligence or delay, and those who in any manner contravene the tenor
thereof, are liable for damages.”

“Liability for Non-Performance.—In general, every debtor who fails in the
performance of his obligation is bound to indemnify for the losses and damages
caused thereby. (De la Cruz vs. Seminary of Manila, 18 Phil., 330; Municipality
of Moncada vs. Cajuigan, 21 Phil., 184; De la Cavada vs. Diaz 37 Phil., 982;
Maluenda vs. Enriquez, 46 Phil., 916; Pampanga Sugar Mills vs. Chong, 49 Phil.,
1003; Pando vs. Gimenez, 54 Phil., 459; Acme Films vs. Theaters Supply, 63
Phil., 657).” (Tolentino’s The New Civil Code Annotated, p.
314).

Therefore the damages sustained by the plaintiff by reason of the fraudulent
transfer of the shares of stock are the value thereof and the expenses of
litigation, which plaintiff has testified to be P6,000, for which
defendantsappellants are liable by reason of the above-quoted provisions. We,
therefore, find without merit the second and last assignment of errors of
appellants and we, thereby, dismissed the same.

As their third assignment of error, it is claimed on behalf of the appellants
that defendants William Litam, Luis Litam and Li Tam and Company, Inc., did not
receive notice of the hearing on February 6 and 19, 1959; that the reason for
their failure to receive said notice is because they had already transferred
their places of residence; that they failed to notify the court of the changes
of address because they did not know that that is required of them; that if
allowed to present evidence, they would substantially prove the allegations in
their answer.

The arguments presented by appellants are the same as those contained in
their motion for new trial and/or reconsideration, which the lower court denied.
The rule in this jurisdiction is that a petition for new trial is addressed to
the discretion of the court and this Court will not disturb the same on appeal,
unless there is a grave abuse thereof (La O vs. Dee, et al., L-3890, January 23,
1952). We are only to examine the record of the case, to determine if the denial
constitutes an abuse of discretion.

There is no question that defendants Henry Litam, Gregorio Dy Tam and Li Hong
Hap actually received their copies of the order of the lower court setting the
case for hearing on February 6 and 19, 1959. Insofar as they are concerned,
therefore, they cannot claim denial of their day in court. Are the other
defendants, namely, Luis and William Litam and Li Tam and Company, Inc., guilty
of excusable negligence for their failure to appear during the trial?

The record discloses that as early as August 5, 1957, defendants’ counsel,
the law office Sycip, et al., was already withdrawing from the case and this
withdrawal was reiterated in another motion for continuance of the hearing
scheduled for September 24, 1957. As early as August 5, 1957, therefore,
defendants must have known that they would be without counsel. They should have,
therefore, taken steps to secure the services of another. Again on November 21,
1957, defendant Luis Litam agreed to the withdrawal of their counsel, and Luis
Litam signed the conformity to said withdrawal in his own behalf and in those of
the other defendants. There is nothing in the record, especially in the
affidavit of Luis Litam supporting defendants’ motion for new trial, that the
other defendants did not authorize him to sign for them. Having no lawyer to
assist them in the proceedings, and knowing that the case was then ready for
hearing, defendants should have taken the necessary precaution of hiring a new
lawyer for any subsequent hearing or hearings. Those who had changed their
addresses should also have informed the court thereof. They failed to do so, and
it was only when they received a copy of the decision that they hired their
present counsel. Their neglect in doing so is certainly inexcusable.

The defendants admit their places of residence alleged in the complaint in
their answer. As no notices of the changes of address was sent by them to the
court, naturally notices of hearing and orders of the court had to be sent to
their former addresses. With respect to defendant corporation, it is alleged in
the affidavit of Luis Litam that it had transferred its office to Sorsogon as
early as 1953,. but in their answer dated October 10, 1955, they admit that the
office of the defendant corporation is at 928 San Fernando, San Nicolas, Manila,
the same place where the notice of hearing was sent. This admission strengthens
the impression that defendants had deliberately refused to accept the notices of
hearing.

The record also discloses that the order setting the case for hearing was
sent to defendants Luis and William Litam and Li Tam and Company, Inc., who
failed to get said order inspite of the two notices sent to them. Inasmuch as
defendants failed to get their registered letters service upon them of said
order was deemed completed, five days from the date of the first notice, in
accordance with the provisions of Sec. 8, Rule 27 of the Rules. Consequently,
defendants cannot now claim that they have not been given their day in
court.

Furthermore, the petition for new trial could not be granted because there is
no showing that defendants have valid defenses to the compllaint. The affidavit
of Luis Litam supporting defendants’ motion for reconsideration and new trial do
not show any such valid defense. Consequently, the trial court correctly denied
defendants’ motion for new trial and/or reconsideration.

For all the foregoing considerations the judgment appealed from should be, as
it hereby is, affirmed. With costs. So ordered.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J. B. L., Paredes,
and Dizon, JJ., concur.