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SECOND DIVISION

G.R. No. 122346           February 18, 2000

PHILIPPINE TRANSMARINE CARRIERS, INC., HERNANDO S. EUSEBIO, ROSENDO GALLARDO, and AUGUSTO ARREZA, JR., petitioners,
vs.
COURT OF APPEALS and JULIE P. SONG, respondents.

MENDOZA, J.:

This is a petition for review on certiorari of the decision,¹ dated October 13, 1995, of the Court of Appeals, affirming the decision of the Regional Trial Court, Branch 135, Makati, which ordered petitioners to pay private respondent damages and attorney's fees in the total amount of P160,776.00, plus costs of suit.

The facts are as follows:

In 1985, private respondent Julie P. Song filed a complaint for attempted parricide against her husband, Hernane Song, in the Regional Trial Court, Branch 18, Manila, where the case was docketed as Crim. Case No. 85-34865. On August 5, 1988, private respondent and her husband entered into a compromise agreement² with respect to the civil aspect of the case, and on the same day, judgment³ was rendered by the trial court as follows:

In the conference this morning, the accused, Hernane B. Song, assisted by his counsel, Atty. Romeo R. Robiso, and the private complainant, Julie Parcon Song, assisted by her counsel, Atty. Dante Garin, and Trial Fiscal Leonardo L. Lacalda, filed the following compromise agreement, dated August 5, 1988:

The accused, assisted by his counsel, and the private complainant, Julie Parcon-Song, assisted by the Trial Fiscal, respectfully submit the following compromise agreement:

1. Whereas, the accused and the private complainant are husband and wife, although they have been estranged and living apart from each other since 1984;

2. Whereas, they have a daughter, Gladeslie P. Song, who is five years old and living with the private complainant;

3. Whereas the accused is a licensed seaman third mate, and his employment with the Prometheus Maritime Company was recently terminated.

4. Wherefore, for and consideration of their mutual premises hereunder specified, the accused and the private complainant have agreed to settle amicably the civil aspect of this case under the following terms and conditions;

(a) Whenever the accused is employed as seaman third mate or marine officer, his basic salary shall be distributed as follows:

(1) Forty (40%) percent shall be allocated, remitted or paid to the private complainant;

(2) Forty (40%) percent shall be retained by the accused;

(3) The remaining twenty (20%) percent shall be deposited in a trust account in the name and for the support and education of their daughter Gladys P. Song;

(4) At the start of his employment as a seaman third mate or marine officer, the accused shall, in addition, pay the sum of P1,800.00 per month to the private complainant for a period of ten (10) months, or a total of P18,000.00;

(5) The accused shall have the right to visit their daughter, Gladys P. Song, as often as necessary or possible.

WHEREFORE, it is respectfully prayed that the foregoing Compromise Agreement be approved.

Finding the Compromise Agreement not contrary to law, morals, good customs, public order, or public policy, the same is hereby approved.

WHEREFORE, judgment is hereby rendered on the basis of the compromise agreement and the parties are hereby enjoined to comply with the terms and conditions thereof.

SO ORDERED.

It appears, however, that Hernane Song failed to comply with his obligation under the decision for which reason, on December 1, 1992, a Notice of Garnishment⁴ was issued by the trial court to petitioner Philippine Transmarine Carriers, Inc., as Hernane Song's employer. The Notice of Garnishment reads:

YOU ARE HEREBY NOTIFIED by these presents that by virtue of the 2nd Alias Writ of Execution issued by the Honorable Perfecto A.S. Laguio, Jr., copy of which is hereto attached and served upon you, for the recovery by the private complainant against the accused is the amount as breakdown hereunder:

(a) US $420.00 — representing the 10% difference in allotment due to private complainant which was only 50% when it should have been 60% pursuant to the compromise agreement.

(b) US $1,457.40 — representing unpaid monthly allotment of US $466.20 for March 1991 and US $495.60 for January 1992 which were not remitted to the private complainant since the accused collected the same by way of cash advance and pay-on-board.

(c) US$1,877.40 — representing allotment of 60% of the basic salary of Hernane B. Song for the months of November 1992, December 1992, January 1993 and February 1993 or total of US $3,745.80 and

(d) P16,000.00 — balance of arrears in support remaining unpaid, due to said complainant in connection with this 2nd alias Writ of Execution, Garnishment is hereby made upon all the moneys, interests, receivables and other personal properties by the accused, Hernane B. Song under your control as of the date of service hereof, sufficient to cover the above-mentioned claim, attached hereof are the judgment and order dated August 28, 1989 of this Court and the breakdown prepared by the private complainant, Julie Song.

You are further notified that you should not deliver, transfer or otherwise dispose such properties in your possession or under your control belonging to said accused or to any person or entity except to the undersigned, deputy Sheriff, under Penalty Prescribed by Law.

You are requested to make a reply to this Garnishment as to such properties to the accused in your possession or under your control of any debt and receivables owned by you to said accused and forward the same to the undersigned within five (5) days from your receipt hereof, under warning that if no reply is made, you may be examined under oath before this Court.

The notice was served on petitioner-company on December 3, 1992. But, according to the Sheriff's Return,⁵ on May 24, 1993, petitioner-company released only two checks, with the total amount of P31,000.00, representing the allotment for May 1993 only. The rest of the amounts indicated in the Notice of Garnishment was unsatisfied.1âwphi1.nêt

On July 20, 1993, private respondent filed a complaint for damages against petitioner-company and its officers, petitioners Hernando S. Eusebio, Rosendo Gallardo and Augusto Arreza, Jr. The complaint, which was filed in the Regional Trial Court, Branch 135, Makati, alleged in pertinent parts:⁶

6. That despite the said Notice of Garnishment, the salaries of the accused for the remaining contract months of December 1992, January 1993 and February 1993 which were in the possession and under the control of defendants, were not being duly garnished; that instead, the allotments of herein plaintiff for the said months were withheld, so that during those months and the months that followed, plaintiff and her minor child greatly suffered financial problems as their support by way of allotment has been oppressively withheld by defendants; that it was only on 24 May 1993 that the allotments for plaintiff and that of the minor child representing only a total of 60% of the total salaries of the accused, were finally released and turned over by defendants thru the Deputy Sheriff, as evidenced by the Sheriff's Return, machine copy of which is hereto attached as Annex "C" forming integral part thereof;

7. That herein defendants, in total disregard of the Notice of Garnishment in a manner that is wanton, oppressive, reckless and fraudulent, and in contravention of the said Notice that defendants should not deliver, transfer or otherwise dispose such properties in their possession or under their control belonging to the accused to any person or entity except to the Deputy Sheriff, have caused the release of the remaining 40% of the accused's salaries together with his Leave Pay for two (2) months, to the accused, to the great prejudice and damage of herein plaintiff;

8. That the said willful, wanton and oppressive omission of defendants in not garnishing the total and entire salaries of the accused, has caused actual damages to plaintiff in the amount representing the remaining 40% or P20,776.00 plus the Leave Pay of P50,000.00 or a total of P70,776.00;

9. That the act of omission on the part of herein defendants has caused plaintiff to suffer several sleepless nights, mental anguish, serious anxieties, besmirched reputation, wounded feelings, moral shock and social humiliation, for which under the law, defendants individually are civilly liable to plaintiff for moral damages in the amount not less than P200,000.00; that the wrongful omission being done in a wanton manner, reckless, and oppressive, herein defendants are likewise individually liable to plaintiff for exemplary damages in the amount not less than P200,000.00;

10. That in order to protect the rights and interests of herein plaintiff, the latter sought legal services of counsel for an agreed attorney's fees of P30,000.00.

In their answer,⁷ petitioners denied private respondent's allegations. They alleged that —

8. After the notice of garnishment was received by defendant Company, the latter stopped the remittance of the allotments of Hernane Song to the bank of his designated allottees in compliance with the garnishment.

9. Subsequent to its receipt of the notice of garnishment, defendant Company before any further action on the matter, made its own verification with the court on the actual existence of the case filed against Hernane Song and the actual issuance of the notice of garnishment.

10. Contrary to plaintiff's claim that defendants withheld the amounts due her, plaintiff was the one who failed to come and get her share in the garnished salaries of Hernane Song. All the while defendant Company was waiting in good faith for her to claim her share and that of her minor child in the monthly allotments of her estranged husband.

11. In accordance with the compromise agreement approved by the court under which plaintiff's estranged husband is entitled to retain 40% of his basic salary, defendant allowed in good faith the release to Hernane Song for his subsistence an amount equivalent only to 20% of his basic salaries remitted to the Philippines.

Petitioners claimed that the P50,000.00 leave pay released to Hernane Song was not "basic salary" and, thus, private respondent was not entitled thereto. By way of counterclaim, petitioners prayed for moral damages of P500,000.00, exemplary damages of P200,000.00 and attorney's fees/litigation costs of P200,000.00.

After private respondent filed her reply and answer to petitioners' counterclaim, the trial court required the parties to submit their pre-trial briefs and scheduled the pre-trial conference on October 12, 1993.

On October 7, 1993, Atty. Mylene T. Marcia, on behalf of petitioners' counsel, Atty. Albert Q. Daquigan, filed an "Urgent Motion for Re-Setting" of the pre-trial conference on the ground that Atty. Daquigan was on sick leave and petitioners themselves were unavailable on the scheduled date. However, her motion was denied by the trial court in its order dated October 12, 1993 and petitioners were declared "as in default," on the ground that no medical certificate had been attached to the motion. Private respondent was then allowed to present her evidence ex parte.

On October 19, 1993, petitioners asked the court to set aside its order of default, attaching to their motion a duly notarized medical certificate as well as an affidavit of merit signed by Atty. Daquigan. Petitioners' motion was denied for lack of merit in an order dated December 1, 1993 and the case was considered submitted for decision on the basis of private respondent's evidence.

On December 8, 1993, the trial court rendered its decision,⁸ the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants:

1. Ordering the defendants to pay plaintiff the sum of the P70,776.00 as actual damages;

2. Ordering the defendants to pay plaintiff the sum of P50,000.00 by way of moral damages;

3. Ordering defendants to pay P20,000.00 by way of exemplary damages;

4. Ordering defendants to pay plaintiff the sum of P20,000.00 for attorney's fees; and,

5. To pay the costs of suit.

SO ORDERED.

Petitioners filed a motion for reconsideration but this was denied by the trial court on February 23, 1994.⁹ They then brought the matter to the Court of Appeals which, on October 13, 1995, rendered a decision affirming the trial court's decision in toto.

Hence, this petition for review. Petitioners assign the following errors:

I. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDERS OF THE TRIAL COURT DECLARING PETITIONERS AS IN DEFAULT AND DENYING THEIR MOTION TO LIFT SAID ORDER OF DEFAULT.

A. ATTY. DAQUIGAN'S ILLNESS WAS CONCLUSIVELY ESTABLISHED AND, THEREFORE, THE DEFAULT ORDER HAS NO FACTUAL AND LEGAL BASIS.

B. THE ABSENCE OF ATTY. DAQUIGAN SHOULD NOT HAVE AUTOMATICALLY WARRANTED THE ISSUANCE OF THE DEFAULT ORDER SINCE ATTY. MARCIA WHO BELONGED TO THE SAME LAW OFFICE AS THE FORMER WAS PRESENT IN COURT DURING THE PRE-TRIAL.

C. PETITIONERS' URGENT MOTION TO RESET THE PRE-TRIAL CONFERENCE WAS GROUNDED NOT ONLY ON ATTY. DAQUIGAN'S ILLNESS BUT ALSO ON THE UNAVAILABILITY OF INDIVIDUAL PETITIONERS WHO WANTED TO BE PRESENT DURING THE PRE-TRIAL.

D. PETITIONERS' FAILURE TO SUBMIT ON TIME THEIR PRE-TRIAL BRIEF WAS DUE TO JUSTIFIABLE REASONS.

E. PETITIONERS HAVE VALID AND MERITORIOUS DEFENSES.

II THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT'S AWARD OF ACTUAL, MORAL, AND EXEMPLARY DAMAGES, AND ATTORNEY'S FEES TO JULIE SONG.

A. THERE IS NO SHOWING THAT JULIE SONG SUFFERED ACTUAL LOSS IN THE AMOUNT OF P70,776.00.

B. THERE IS NO EVIDENCE THAT PETITIONERS ACTED IN BAD FAITH SO AS TO ENTITLE JULIE SONG TO MORAL AND EXEMPLARY DAMAGES.

The petition is meritorious.

It is true that under the 1964 Rules of Court, the trial judge has authority to declare "as in default" parties who fail to appear at the pre-trial conference.¹⁰ They may also be declared "as in default" for their failure to file their pre-trial briefs at least three days before the pre-trial conference.¹¹

In deciding whether to grant or deny a motion for postponement of pre-trial, the court must take into account the following factors: (a) the reason for the postponement, and (b) the merits of the case of movant.¹²

In this case, there is no showing that petitioners, in asking for the re-setting of the pre-trial conference, sought merely to cause unjustifiable delay in the proceedings. It is noteworthy that the motion to reset pre-trial, filed five days before the scheduled conference, was the first of such nature filed by petitioners. It was made on the ground that the lawyer handling the case, Atty. Daquigan, was indisposed and petitioners were unavailable due to "previously scheduled professional engagements." While it may be true that petitioners' counsel failed to attach to said motion a medical certificate attesting to the fact of his illness, the court should have lifted its default order after a duly notarized certificate signed by the attending physician was annexed to the motion to set aside the order of default.¹³ As this Court held in Sarmiento v. Juan:¹⁴

The denial by Judge Juan of the petitioner's motion to postpone the pre-trial scheduled on February 5, 1980 may have appeared valid at the outset, considering that it was filed at the last minute and was not accompanied by a medical certificate although the ground alleged was illness on the part of the petitioner. Nonetheless, a different appraisal of the petitioner's plea should have been made after the petitioner filed a motion for reconsideration which was made under oath. Due regard should have been given to the repeated pronouncements by this Court against default judgments and proceedings that lay more emphasis on procedural niceties to the sacrifice of substantial justice. After all, the ex-parte presentation of evidence had not yet been conducted nor had a decision been rendered in the case. It appeared to be a simple matter of giving the petitioner a chance to have his day in court in order to defend himself against the claim filed by the private respondent.

Moreover, the presence of another lawyer from counsel's law firm during the scheduled pre-trial conference negates any suggestion of bad faith or wanton disregard of the rules on the part of petitioners.¹⁵ As we noted in Tejero v. Rosete,¹⁶ in those cases where we sustained the orders declaring parties nonsuited for failure to appear at the pre-trial, the pattern and scheme to delay the disposition of the case was evident. But in the case at bar, no such pattern to delay or wanton attitude on the part of petitioner is disclosed by the records.

Above all, petitioners present valid and meritorious defenses — a fact which should have persuaded the trial court to reconsider its order of default. The allegations in petitioners' answer cannot simply be dismissed or ignored.

In Villareal v. Court of Appeals,¹⁷ we held:

[The term meritorious defense] may imply that the applicant has the burden of proving such a defense in order to have the judgment set aside. The cases usually do not require such a strong showing. The test employed appears to be essentially the same as used in considering summary judgment, i.e. whether there is enough evidence to present an issue for submission to the trier of fact, or a showing that on the undisputed facts it is not clear the judgment is warranted as a matter of law.

. . . The defendant must show that she has a meritorious defense otherwise the grant of her motion will prove to be a useless exercise. Thus, her motion must be accompanied by a statement of the evidence which she intends to present if the motion is granted and which is such as to warrant a reasonable belief that the result of the case would probably be otherwise if a new trial is granted.

In the case at bar, private respondent relies, in her complaint, on the Notice of Garnishment issued in Crim. Case No. 85-34865 and the sheriff's return indicating that the writ of execution was "unsatisfied." It is curious to note, however, that while the total amount indicated in the Notice of Garnishment and testified to by private respondent is $3,754.80 and P16,000.00,¹⁸ she is claiming actual damages in the amount of P70,776.00 only which is alleged to be equivalent to the remaining 40% of the monthly salary (P20,776.00) and the P50,000.00 leave pay released to Hernane Song.

For their part, petitioners claim that they have already paid 40% of Hernane Song's monthly salary, as evidenced by the checks issued to private respondent who admits receipt of the checks but claims to be entitled to something more. Petitioners also allege that private respondent is not entitled to the P50,000.00 leave pay since such benefits are not considered part of Hernane Song's "basic salary."

To be sure, private respondent cannot validly seek to obtain satisfaction of the writ of execution in this case. Precisely, garnishment proceedings are the means by which the judgment creditor seeks to subject to his claim the property of the judgment debtor in the hands of a third person; such proceedings must be had in the trial court which has jurisdiction over the suit in which the judgment creditor prevailed.¹⁹ Rule 39 of the 1964 Rules of Court provides the procedure in cases wherein the writ of execution is returned unsatisfied, viz.:

Sec. 38. Examination of judgment debtor when execution returned unsatisfied. — When an execution issued in accordance with law against property of a judgment debtor, or anyone of several debtors in the same judgment, is returned unsatisfied, in whole or in part, the judgment creditor, at any time after such return is made, shall be entitled to an order from the judge of the Court of First Instance of the province in which the judgment was rendered or of the province from which the execution was returned, requiring such judgment debtor to appear and answer concerning his property and income before such judge of the Court of First Instance, or before a commissioner appointed by him, at a specified time and place; and proceedings may thereupon be had for the application of the property and income of the judgment debtor toward the satisfaction of the judgment. But no judgment debtor shall be so required to appear before a judge of first instance or commissioner outside the province in which such debtor resides or is found.

Sec. 39. Examination of debtor of judgment debtor. — After an execution against the property of a judgment debtor has been returned unsatisfied in whole or in part, and upon proof, by affidavit of a party or otherwise, to the satisfaction of the judge, that a person, corporation, or other legal entity has property of such judgment debtor, or is indebted to him, the judge may, by an order, require such person, corporation, or other legal entity, or any officer or member thereof, to appear before the judge, or a commissioner appointed by him, at a time and place within the province in which the order is served, to answer concerning the same. The service of the order shall bind all credits due the judgment debtor and all money and property of the judgment debtor in the possession or in the control of such person, corporation, or legal entity from the time of service; and the judge may also require notice of such proceedings to be given to any party to the action in such manner as he may deem proper.

Moreover, it is well-settled that actual damages must be proved by the best evidence available to the injured party. The Court cannot rely on the uncorroborated testimony of a witness, particularly if he was not cross-examined.²⁰

Anent private respondent's claim of moral and exemplary damages on the ground that petitioners' wanton refusal to surrender to her the amounts indicated in the Notice of Garnishment caused her sleepless nights, serious anxiety and the like,²¹ petitioners allege that it was in fact private respondent who failed to collect the monthly allotments due her and her child. If this is true, there will be no basis for the award of moral and exemplary damages to private respondent.1âwphi1.nêt

Petitioners, however, cannot now question the validity of the Notice of Garnishment since it was not an issue raised in the courts below.²²

WHEREFORE, the decision of the Court of Appeals is REVERSED. The order of default, dated October 12, 1993, and the decision, dated December 8, 1993, both issued by the Regional Trial Court, Branch 135, Makati are SET ASIDE, and the case is REMANDED to said court for further proceedings according to law.

SO ORDERED.

Bellosillo, Quisumbing and De Leon, Jr., JJ., concur.
Buena, J., is on leave.

Footnotes

¹ Per Justice Jainal D. Rasul and concurred in by Justices Hector L. Hofileña and Oswaldo D. Agcaoili.

² Exh. C; RTC Records, pp. 6-7.

³ Exh. D; id., pp. 8-9.

⁴ Exh. G; id., pp. 9-10.

⁵ Exh. H; id., p. 12.

⁶ RTC Records, pp. 2-4.

⁷ Id., pp. 25-31.

⁸ Id., pp. 252-254.

⁹ Order; RTC Records, p. 315.

¹⁰ Rule 20, §2.

¹¹ SC Circular No. 1-89.

¹² Aguilar v. Court of Appeals, 227 SCRA 472 (1993).

¹³ RTC Records, p. 159.

¹⁴ 120 SCRA 403, 409 (1983).

¹⁵ Meralco v. Court of Appeals, 187 SCRA 200 (1990).

¹⁶ 137 SCRA at 75.

¹⁷ 295 SCRA 511, 531-532 (1998) (Italics in the original).

¹⁸ TSN, pp. 2-10, Oct. 14, 1993.

¹⁹ See Cebu International Finance Corporation v. Court of Appeals, G.R. No. 123031, October 12, 1999.

²⁰ Baliwag Transit, Inc. v. Court of Appeals, 256 SCRA 746 (1996).

²¹ TSN, pp. 11-13, Oct. 14, 1993.

²² Ysmael v. Court of Appeals, G.R. No. 132497, November 16, 1999.

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