BA Finance vs. Pineda

Under Section 4, Rule 16 of the Revised Rules of Court, when a motion to dismiss is denied, the period for filing a responsive pleading commences to run all over again from the time the movant receives notice of the denial, unless the court provides a different period; the movant is not limited to the remaining balance of the original period to answer.

Antonio Sy had been adjudged liable for damages in a vehicular accident case before the Court of First Instance of Nueva Ecija involving a cargo truck he supposedly owned. Sy attributed the adverse result to mishandling by his counsel and thereafter filed a new complaint for damages in the Court of First Instance of Rizal, impleading BA Finance Corporation as the asserted real owner of the truck, together with the insurer, his former counsel, and the driver of the other vehicle.

The Underlying Action: Antonio Sy filed a complaint for damages in the Court of First Instance of Rizal against BA Finance Corporation, Metro-Taisho Insurance Corporation, Atty. Ireneo Calderon, and Robert Chua. Sy alleged that he had been adjudged liable for damages in a prior case (Civil Case No. 7379, CFI Nueva Ecija) arising from a vehicular accident involving a cargo truck; that the adverse result was due to mishandling by his counsel, Atty. Calderon; and that BA Finance was the true owner of the truck. He sought moral and exemplary damages and attorney’s fees.

Pleadings and Extension: Summons was served on BA Finance on December 18, 1981. On December 29, 1981, BA Finance moved for an extension to file an answer or a motion to dismiss. The trial court granted the motion on January 4, 1982, giving BA Finance 15 days from January 2, 1982, or until January 18, 1982, to file its responsive pleading. On January 13, 1982, BA Finance filed a motion to dismiss on the ground that the complaint stated no cause of action. The motion was denied in an order dated March 1, 1982, a copy of which was received by BA Finance on March 8, 1982.

Default Declaration: BA Finance filed a motion for reconsideration of the denial on March 17, 1982. Private respondent Sy moved to strike out that motion, contending it was filed out of time because BA Finance had consumed 11 days of the 15‑day extension before filing its motion to dismiss, leaving only four days from receipt of the denial order to answer; thus, the motion for reconsideration was filed beyond the deadline. On April 5, 1982, respondent Judge Pineda granted the motion to strike out, declared BA Finance in default for failure to answer within the reglementary period, and allowed Sy to present evidence ex parte.

Motions to Lift Default: BA Finance moved to lift the default order on April 19, 1982; the motion was denied on May 4, 1982. A motion for reconsideration of that denial was filed on May 28, 1982. On June 10, 1982, the trial court set aside the default declaration and ordered BA Finance to answer within 15 days. BA Finance had already filed its answer on June 11, 1982.

Reinstatement of Default: Sy filed a “Motion to Remove From the Records Answer of Defendant BA Finance Corporation,” arguing that the May 28 motion for reconsideration was pro forma because it was identical to an earlier opposition, and that the June 10 order was obtained through misrepresentation. In an order dated July 14, 1982, respondent Judge Pineda set aside the June 10 order, reinstated the default, and struck BA Finance’s answer. The trial court reasoned that: (1) the motion for reconsideration of the denial of the motion to dismiss lacked proof of service and was therefore a mere scrap of paper; and (2) the motion for reconsideration of the order denying the motion to lift default was pro forma.

Judgment: On August 17, 1982, the trial court rendered a decision ordering BA Finance and other defendants to pay Sy ₱228,255.64. BA Finance then filed the present petition for certiorari.

• Period to Answer: Petitioner maintained that under Section 4, Rule 16 of the Revised Rules of Court, the period to file an answer after denial of a motion to dismiss runs anew from notice of the denial, not from the remaining balance of the original period to answer; thus, its motion for reconsideration was filed within the fresh 15‑day period and the default declaration was baseless.

• Proof of Service: Petitioner argued that its motion for reconsideration of the order denying the motion to dismiss contained the requisite notice of hearing and proof of service by registered mail, and that private respondent’s own motion to strike out demonstrated actual notice of the motion well before the scheduled hearing.

• Pro Forma Motion: Petitioner contended that its motion for reconsideration of the order denying the motion to lift default was not pro forma. Reiteration of the same ground was necessary because the motion sought reconsideration of an interlocutory order, and the same argument was the only basis to show that the default order was erroneous.

• Untimely Motion: Private respondent Sy contended that after filing a motion to dismiss, the movant must file its answer within the remaining period of the original extension, not a fresh period; therefore, BA Finance’s motion for reconsideration was filed out of time and properly struck out.

• Lack of Proof of Service: Respondents argued that the motion for reconsideration lacked proper proof of service, rendering it a mere scrap of paper that did not toll the period to answer.

• Pro Forma Motion: Sy argued that BA Finance’s motion for reconsideration of the May 4 order was pro forma because it merely reiterated arguments already raised in its earlier opposition to the motion to declare it in default, and that the June 10 order lifting the default was procured through false representations.

• Period to File Answer after Denial of Motion to Dismiss: Whether, under Section 4, Rule 16 of the Rules of Court, the period to file an answer after denial of a motion to dismiss commences anew from notice of the denial, or is limited to the remaining balance of the period within which to plead.

• Validity of Default Declaration: Whether the trial court properly declared petitioner in default for failing to file an answer within the reglementary period.

• Sufficiency of Proof of Service: Whether the motion for reconsideration of the order denying the motion to dismiss was a mere scrap of paper for lack of proof of service.

• Nature of Motion for Reconsideration of Interlocutory Order: Whether a motion for reconsideration of an interlocutory default order that reiterates previous grounds is necessarily pro forma and without legal effect.

• Grave Abuse of Discretion: Whether the trial judge committed grave abuse of discretion in issuing the orders of April 5, 1982 (default), July 14, 1982 (reinstating default and striking answer), and in rendering judgment based on such default.

• Period to File Answer after Denial of Motion to Dismiss: Section 4, Rule 16 explicitly provides that if a motion to dismiss is denied, the movant shall file his answer within the period prescribed by Rule 11, computed from the time he receives notice of the denial, unless the court fixes a different period. The rule means that the period for filing a responsive pleading commences to run all over again from notice of the denial; the movant is not restricted to whatever balance remained of the original period to answer. Petitioner received notice of the denial on March 8, 1982, and its motion for reconsideration filed on March 17, 1982 was well within the fresh 15‑day period. The trial court’s application of a “balance‑of‑the‑period” rule was a palpable error.

• Validity of Default Declaration: Because the motion for reconsideration was timely, the default declaration grounded on the supposed expiration of the period to answer was erroneous. The order of April 5, 1982 was therefore issued with grave abuse of discretion.

• Sufficiency of Proof of Service: The imputation that the motion for reconsideration lacked proof of service was a factual distortion. The motion itself contained a notice of hearing and indicated that a copy was sent by registered mail on March 17, 1982. Moreover, private respondent’s filing of a motion to strike out that motion on March 24, 1982 demonstrated that he had actual notice long before the scheduled hearing.

• Nature of Motion for Reconsideration of Interlocutory Order: A motion for reconsideration of an interlocutory order does not become pro forma merely because it reiterates grounds previously raised. A distinction must be drawn between motions against final judgments and those against interlocutory orders. With interlocutory orders, a reiteration of argument is often necessary because the motion serves to afford the court an opportunity to correct its error before the aggrieved party resorts to certiorari; a motion for reconsideration is a condition precedent to a petition for certiorari under Rule 65. Thus, the repetition of the same ground was not indicative of delay but rather an effort to seek corrective action from the trial court itself. The trial court’s characterization of the motion as pro forma and its consequent nullification of the June 10 order were therefore unfounded.

• Grave Abuse of Discretion: The trial judge’s successive and contradictory rulings, coupled with reliance on patently erroneous grounds to deprive petitioner of its day in court, constituted grave abuse of discretion. The proceedings, including the default‑based judgment, were accordingly annulled and set aside.

• Recommencement of Period to Answer under Rule 16, Section 4: When a motion to dismiss is denied, the period for filing an answer commences to run all over again from the time the defendant receives notice of the denial, unless the court provides a different period. The movant is entitled to the full period prescribed by Rule 11; the rule does not limit the defendant to the unused remainder of the original period to plead. (Citing Matute v. Court of Appeals, 26 SCRA 768; Acosta-Ofalia v. Sundiam, 85 SCRA 412.)

• Pro Forma Motions for Reconsideration of Interlocutory Orders: A motion for reconsideration of an interlocutory order is not automatically pro forma merely because it repeats arguments already advanced. Unlike motions against final judgments, reiteration of grounds when assailing an interlocutory order may be necessary and is not per se indicative of delay. A motion for reconsideration of an interlocutory order is a prerequisite to the special civil action of certiorari, and the movant is entitled to invite the trial court to take a second look at its ruling without being penalized for redundancy. The motion becomes pro forma only when the repetition is employed solely to gain time and has no substantial purpose.

• Proof of Service and Substantial Compliance: A motion for reconsideration that contains a notice of hearing and an indication of service by registered mail, and which in fact comes to the attention of the adverse party in time for the scheduled hearing, is not a mere scrap of paper. Actual notice cures any formal defect in the proof of service.

• “In other words the period for filing a responsive pleading commences to run all over again from the time the defendant receives notice of the denial of his motion to dismiss.” (Quoting Matute v. Court of Appeals, 26 SCRA 768.)

• “It is not every motion for reconsideration that reiterates grounds or arguments aired in a previous motion that may be declared pro-forma. It will be noted that the motion for reconsideration herein involved is of an interlocutory order, and not of a final judgment or final order. There should be a distinction in determining whether a motion for reconsideration may be declared pro-forma depending on whether it is directed against a final judgment or order, or only against an interlocutory order.”

• “The lack of palpable merit of said grounds leads to a natural impression that the respondent Judge was determined to prevent the petitioner from being given a chance to defend itself in the case filed against it by the private respondent, contrary to repeated exhortations and pronouncements from the Supreme Court frowning upon judgments by default on purely technical grounds.”

• Matute v. Court of Appeals, 26 SCRA 768 — Followed. This case categorically interpreted Section 4, Rule 16 to mean that the period for filing a responsive pleading runs anew from notice of the denial of a motion to dismiss. The Supreme Court relied on this interpretation to hold that BA Finance’s motion was timely.

• Acosta-Ofalia v. Sundiam, 85 SCRA 412 — Cited as supplementary authority reaffirming the rule that the period to answer recommences upon notice of denial.

• Section 4, Rule 16, Revised Rules of Court — Provides that if a motion to dismiss is denied, the movant shall file his answer within the period prescribed by Rule 11, computed from the time he receives notice of the denial, unless the court provides a different period. The provision was applied to reject the “balance of the period” computation and to establish that the 15‑day period began anew on March 8, 1982.

• Sections 1 and 2, Rule 65, Revised Rules of Court — Require that a motion for reconsideration of the questioned interlocutory order be filed as a condition precedent to a petition for certiorari. This requirement was invoked to explain why a motion for reconsideration of an interlocutory order that repeats earlier grounds is not necessarily pro forma.

Teehankee (Chairman), Melencio-Herrera, Plana, Relova, Gutierrez, Jr., JJ.