Far East Fuel Corporation vs. Airtropolis Consolidators Philippines, Inc.

A motion to lift an order of default must be accompanied by an affidavit of merit setting forth the facts constituting the party's meritorious defenses, unless the motion itself already contains both the reasons for the failure to answer and the facts constituting the prospective defenses, and is sworn to by the defendant; the bare invocation of settlement negotiations does not constitute excusable negligence. Additionally, under Articles 1496 and 1497 of the Civil Code, ownership and the obligation to pay do not arise from waybills or customs documents alone absent proof that the thing sold was placed in the control and possession of the vendee.

Far East Fuel Corporation (FEFC) engaged the services of Airtropolis Consolidators Philippines, Inc. (ACPI) sometime in 2014 and 2015 for the carriage of certain oil products from a foreign country into the City of Manila, Philippines. The parties did not reduce their agreement into writing, and ACPI relied on several waybills as evidence of the transactions. ACPI subsequently issued billing statements and a Statement of Account dated August 23, 2015 covering FEFC's accumulated unpaid obligation from May 2015 to July 2015, followed by a final demand letter dated September 10, 2015.

Sometime in 2014 and 2015, Far East Fuel Corporation (FEFC) engaged Airtropolis Consolidators Philippines, Inc. (ACPI) for the carriage of certain oil products from a foreign country into the City of Manila, Philippines. The agreement between the parties was not reduced into writing. As evidence of the transactions, ACPI attached several waybills covering the shipments: Document No. SIMNL1500937 / Waybill No. 8355514 issued November 24, 2014; SIMNL1500938 / Waybill No. 137115 issued December 10, 2014; SIMNL1502312 / Waybill No. 740715 issued December 28, 2014; SIMNL1502313 / Waybill No. 1206415 issued February 4, 2015; SIMNL1502314 / Waybill No. 441215 issued December 14, 2014; SIMNL1502315 / Waybill No. 940915 issued January 12, 2015; and SIMNL1502316 / Waybill No. 1398915 issued January 28, 2015.

According to ACPI, the shipments covered by waybills nos. 8355514 and 137115 were delivered by it and received by FEFC, as evidenced by delivery receipts dated March 6, 2015 and March 12, 2015. The shipments covered by waybills nos. 740715, 1206415, 441215, and 940915 were likewise allegedly delivered to FEFC after the lifting of abandonment under Memoranda for the District Collector dated March 17, 2015, March 21, 2015, March 3, 2015, and April 7, 2015, issued by the Manila International and Container Port (MICP) of the Bureau of Customs (BOC). With respect to the shipment covered by waybill no. 1398915, ACPI alleged that the same was transported at the port of its entry in Manila under PO2B MICP, evidenced by the BOC Import Entry and Internal Revenue Declaration Form.

ACPI issued the necessary billing statements to FEFC, but despite receipt, FEFC failed to settle its outstanding obligation. ACPI thus sent FEFC a Statement of Account dated August 23, 2015 showing accumulated unpaid obligations from May 2015 to July 2015 amounting to PHP 1,721,800.00, broken down as follows: waybill no. 8355514 — PHP 56,000.00; waybill no. 137115 — PHP 1,238,800.00; waybill no. 740715 — PHP 113,000.00; waybill no. 1206415 — PHP 53,000.00; waybill no. 441215 — PHP 95,000.00; waybill no. 940915 — PHP 113,000.00; and waybill no. 1398915 — PHP 53,000.00. Several verbal and written demands were made upon FEFC, and a final demand letter dated September 10, 2015 was sent, with proof of receipt through an LBC transmittal to FEFC's office address. FEFC allegedly ignored the letter and refused to pay.

Summons was served on FEFC on September 26, 2016. On October 11, 2016, the last day for filing its responsive pleading, FEFC moved for an extension of time to file an answer. On October 28, 2016, FEFC instead moved to dismiss the Complaint, arguing that ACPI had no cause of action because (a) there was no contractual relationship between the parties; (b) it had already paid the amounts due under waybills nos. 8355514, 137115, 1206415, and 940915; (c) there was no proof that the products covered by waybills nos. 740715, 441215, and 1398915 were actually delivered, considering that said shipments were declared abandoned by the BOC; and (d) no prior demand was made by ACPI. ACPI pointed out that FEFC did not attach any evidence to show payment for the waybills it claimed to have settled, whereas ACPI had shown proof of the transactions and the demands made. The trial court denied the motion to dismiss on March 1, 2017, holding that the issues raised were evidentiary matters to be threshed out in a full-blown trial.

On June 27, 2017, ACPI moved to declare FEFC in default, noting that the Order denying the motion to dismiss was received by FEFC on April 18, 2017, and that no answer or responsive pleading had been filed despite the lapse of the reglementary period. On July 28, 2017, FEFC filed a Comment with Motion to Admit Answer, explaining that its answer had long been prepared but that its counsel had been instructed to hold its filing because of ongoing efforts to reach an out-of-court settlement, and that due to the busy schedule of counsel requiring his presence in out-of-town meetings and hearings, he had forgotten the deadline and only realized the omission upon receiving the Motion to Declare Defendant in Default. The trial court did not give credence to these justifications and, in an Order dated September 4, 2017, denied the motion, declared FEFC in default, and allowed ACPI to present its evidence ex parte.

On October 2, 2017, FEFC filed a Motion to Lift Order of Default and to Cancel Plaintiff's Ex Parte Presentation of Evidence, arguing that its failure to timely file an answer was due to excusable negligence and that the action should be determined on its merits rather than on technicalities. ACPI countered that FEFC's negligence was not excusable and that the Motion to Lift Order of Default was not accompanied by an affidavit of merit. FEFC responded that the Answer attached to its Comment with Motion to Admit Answer already contained its defenses and was sufficient to satisfy the requirement of an affidavit of merit. The trial court denied the Motion to Lift Order of Default on January 8, 2018, reasoning that FEFC failed to show that its failure to file its answer was due to fault, accident, mistake, or excusable negligence, and that the Motion was fatally flawed for lack of an affidavit of merit. FEFC's motion for reconsideration was likewise denied on March 19, 2018.

Meanwhile, the proceedings in Civil Case No. R-PSY-16-21929-CV continued, and ACPI presented its evidence ex parte. On November 27, 2018, the trial court rendered its Decision holding that ACPI was able to prove that FEFC had an outstanding obligation of PHP 1,721,800.00 and that despite demand, FEFC failed to pay. It imposed 12% legal interest per annum from September 10, 2015 until full payment, and held FEFC liable for attorney's fees of PHP 50,000.00 and costs of suit. On appeal, the Court of Appeals found that FEFC admitted having received the shipments pertaining to waybills nos. 8355514, 137115, 1206415, and 940915 but raised the defense of payment, yet failed to present any receipt as proof thereof. As to waybills nos. 740715 and 441215, FEFC denied receipt, and the Memoranda issued by the MICP of the BOC lifting the orders of abandonment did not prove actual delivery; as to waybill no. 1398915, the BOC Import Entry and Internal Revenue Declaration Form likewise did not prove actual delivery to FEFC. The appellate court thus held that ACPI was only able to prove its claim as to waybills nos. 8355514, 137115, 1206415, and 940915, entitling it to PHP 1,460,800.00, and deleted the award of attorney's fees while reducing the interest to 6% per annum.

• Grave Abuse of Discretion: Petitioner argued that the appellate court erred when it ruled that the trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its Orders dated January 8, 2018 and March 19, 2018.
• Dispensation with Affidavit of Merit: Petitioner maintained that the affidavit of merit may be dispensed with, and that its attached Answer to its Comment should have sufficed to satisfy the requirement.
• Deciding on the Merits: Petitioner contended that cases should be decided on the merits and not on the game of technicalities, especially where petitioner had no deliberate intent to disregard the rules of procedure, since the non-filing of its answer was grounded purely on the honest belief of petitioner's counsel that the parties had been negotiating for an out-of-court settlement.
• Default as Exception: Petitioner posited that the order of default should have been the exception rather than the rule, and that courts are bound to relax the application of the rules to give the parties the opportunity to present their respective cases.
• Liability under the Waybills: Petitioner argued that the appellate court erred when it sustained the trial court's ruling that petitioner is liable under waybills nos. 8355514, 137115, 1206415, and 940915 in the aggregate amount of PHP 1,460,800.00.

• Absence of Proof of Payment: Respondent pointed out that petitioner did not attach any evidence to show that it had already paid the amounts due under waybills nos. 8355514, 137115, 1206415, and 940915, whereas respondent had shown proof of the transactions and the demand made upon petitioner.
• Inexcusable Negligence: Respondent countered that petitioner's negligence was not excusable and that the Motion to Lift Order of Default was not accompanied by an affidavit of merit.

• Grave Abuse of Discretion in Denying the Motion to Lift Order of Default: Whether the appellate court committed a reversible error in affirming the trial court's denial of petitioner's Motion to Lift Order of Default, notwithstanding petitioner's claim that the affidavit of merit may be dispensed with and that its attached Answer sufficed.
• Liability under the Waybills: Whether the appellate court committed a reversible error in sustaining petitioner's liability under waybills nos. 8355514, 137115, 1206415, and 940915 in the aggregate amount of PHP 1,460,800.00.

• Grave Abuse of Discretion in Denying the Motion to Lift Order of Default: No. The trial court did not commit grave abuse of discretion in denying the Motion to Lift Order of Default, the affidavit of merit being an indispensable requirement under Rule 9, Section 3(b) of the Rules of Court that petitioner failed to satisfy.
• Liability under the Waybills: No. The appellate court correctly held petitioner liable only for PHP 1,460,800.00, corresponding to the waybills for which actual delivery was proven, and correctly deleted the attorney's fees and reduced the interest to 6% per annum.

• Grave Abuse of Discretion in Denying the Motion to Lift Order of Default: Grave abuse of discretion warranting certiorari requires that the court exercised its jurisdiction in a capricious and whimsical manner equivalent to lack of jurisdiction, or in an arbitrary manner by reason of passion, prejudice, or personal hostility, so patent or gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Petitioner was validly served with Summons on September 26, 2016, and was required to answer within 15 days from receipt. It moved to dismiss on October 28, 2016, but the trial court denied the motion on March 1, 2017, which petitioner admitted receiving on April 18, 2017. Under the then provisions of the 1997 Rules of Civil Procedure, petitioner was required to file its answer within the balance of the period allowed under Rule 11, but not less than five days, upon receipt of the Order denying its motion to dismiss. Petitioner filed its Comment with Motion to Admit Answer only on July 28, 2017, almost three months from its receipt of the Order, and was thus rightly declared in default. Rule 9, Section 3(b) of the Rules of Court provides that a party declared in default may, at any time after notice and before judgment, file a motion under oath to set aside the order of default upon proper showing that the failure to answer was due to fraud, accident, mistake, or excusable negligence and that the party has a meritorious defense. In Spouses Manuel vs. Ong, the Court required that the motion be accompanied by an affidavit showing the invoked ground and another, denominated an affidavit of merit, setting forth facts constituting the party's meritorious defense or defenses, consistent with Rule 8, Section 5 of the Rules of Court requiring that circumstances constituting fraud or mistake be stated with particularity. Montinola, Jr. vs. Republic Planters Bank laid down three requisites for a motion to warrant the setting aside of an order of default: (1) it must be made by motion under oath by one that has knowledge of the facts; (2) it must be shown that the failure to file the answer was due to fraud, accident, mistake, or excusable negligence; and (3) there must be a proper showing of the existence of a meritorious defense. While jurisprudence allows the affidavit of merit to be dispensed with when a motion to lift an order of default contains the reasons for the failure to answer as well as the facts constituting the prospective defense of the defendant and is sworn to by said defendant, petitioner's Motion contained only the reasons for its failure to file its answer and lacked allegations of facts constituting its prospective defenses, so the exception found no application. The Answer attached to its Comment could not substitute for the required affidavit of merit because the trial court had already denied petitioner's motion to admit its answer as early as September 4, 2017, of which petitioner was aware when it filed its Motion to Lift Order of Default on October 2, 2017. Even disregarding the technical defects, the reasons given by petitioner — the honest belief of its counsel that the parties were entering into an out-of-court settlement, causing counsel to fail to notice that the 15-day period to file the answer had already passed — did not constitute excusable negligence, which jurisprudence defines as negligence that ordinary diligence and prudence could not have guarded against, and which must be properly alleged and proved. As held in Maripol vs. Tan, it is not error or an abuse of discretion for the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. The trial court, guided by the applicable rules and jurisprudence, thus cannot be said to have exercised its discretion in a capricious and whimsical manner.
• Liability under the Waybills: Only questions of law may be raised in a petition for review on certiorari, and factual findings of the appellate courts will not be reviewed nor disturbed on appeal, subject to recognized exceptions that must be alleged, substantiated, and proved by the parties. Petitioner failed to allege, substantiate, and prove any exception to warrant a review of the appellate court's factual findings. Nonetheless, upon review of the evidence, the appellate court's factual findings were found to be in order. Petitioner failed to attach any evidence of its alleged payment on waybills nos. 8355514, 137115, 1206415, and 940915, even in its Motion to Dismiss, and the best evidence to prove payment of the goods is the official receipt, which petitioner failed to present. As to the other waybills, the issue of what constitutes "delivery" is governed by the Civil Code. Under Article 1495, the vendor is bound to transfer the ownership of and deliver, as well as warrant, the thing which is the object of the sale. Article 1496 provides that ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. Article 1497 provides that the thing sold shall be understood as delivered when it is placed in the control and possession of the vendee. Ownership does not pass by mere stipulation but only by delivery; the delivery of the thing signifies that title has passed from the seller to the buyer, and the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership and the birth of the real right. Emphasis is placed on Article 1497, which contemplates real or actual delivery, when the thing sold is placed in the control and possession of the vendee. The shipments covered by waybills nos. 740715, 441215, and 1398915 are considered as not having been delivered, since there was no proof that the same were delivered at petitioner's official business address, or that the latter had gained control or possession thereof in some other way. The Memoranda issued by the MICP of the BOC lifting the orders of abandonment, and the BOC Import Entry and Internal Revenue Declaration Form, do not prove that the shipments were actually delivered to petitioner and/or placed in its control and possession. Absent any delivery receipt or other proof of actual delivery, respondent failed to prove its claims as to these shipments. As to whether there was a final demand upon petitioner, the appellate court correctly held that respondent had sufficiently proven petitioner's receipt thereof.

• Grave Abuse of Discretion — To constitute grave abuse of discretion warranting the issuance of a writ of certiorari, the court against which the writ is sought must have exercised its jurisdiction in such a capricious and whimsical manner as is equivalent to lack of jurisdiction; the power must have been exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. The Court applied this standard and found that the trial court acted within the bounds of its discretion in denying the Motion to Lift Order of Default.
• Requisites for Lifting an Order of Default (Montinola Test) — Under Rule 9, Section 3(b) of the Rules of Court, a party declared in default may, at any time after notice and before judgment, file a motion under oath to set aside the order of default upon proper showing that the failure to answer was due to fraud, accident, mistake, or excusable negligence and that the party has a meritorious defense. Montinola, Jr. vs. Republic Planters Bank enumerated three requisites: (1) the motion must be made under oath by one that has knowledge of the facts; (2) it must be shown that the failure to file the answer was due to fraud, accident, mistake, or excusable negligence; and (3) there must be a proper showing of the existence of a meritorious defense. The Court applied these requisites and found petitioner's Motion deficient.
• Affidavit of Merit Requirement — Consistent with Spouses Manuel vs. Ong, a motion to lift an order of default must show the ground relied upon for the non-filing of the answer and be accompanied by an affidavit of merit setting forth the facts constituting the party's meritorious defense or defenses, in keeping with Rule 8, Section 5 of the Rules of Court requiring that circumstances constituting fraud or mistake be stated with particularity. The exception, recognized in Tanhu vs. Judge Ramolete, is when the motion to lift an order of default itself contains the reasons for the failure to answer as well as the facts constituting the prospective defense of the defendant, and is sworn to by said defendant. The Court held that the exception did not apply because petitioner's Motion contained only the reasons for its failure to file its answer but lacked allegations of facts constituting its prospective defenses.
• Excusable Negligence — Excusable negligence is one which ordinary diligence and prudence could not have guarded against, and the circumstances constituting it should be properly alleged and proved. The Court held that petitioner's counsel's reliance on supposed settlement negotiations, which caused him to overlook the lapse of the 15-day period to file an answer, could have been prevented by ordinary diligence and prudence and therefore did not justify the setting aside of the order of default.
• Delivery as a Mode of Acquiring Ownership — Under Article 1495 of the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well as warrant, the thing which is the object of the sale. Article 1496 provides that ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. Article 1497 provides that the thing sold shall be understood as delivered when it is placed in the control and possession of the vendee. Ownership does not pass by mere stipulation but only by delivery; delivery signifies that title has passed from the seller to the buyer, and its purpose is not only the enjoyment of the thing but also a mode of acquiring dominion, determining the transmission of ownership and the birth of the real right. The Court applied Article 1497, which contemplates real or actual delivery, and held that the waybills and customs documents did not prove delivery because there was no showing that the shipments were placed in the control and possession of petitioner.
• Question of Law vs. Question of Fact in Rule 45 Petitions — Only questions of law may be raised in a petition for review on certiorari under Rule 45, Section 1 of the Rules of Court, and factual findings of the appellate courts will not be reviewed nor disturbed on appeal. A question of fact requires the Court to review the truthfulness or falsity of the allegations of the parties, including the probative value of the evidence presented, and exists when the issue presented is the correctness of the lower courts' appreciation of the evidence. The exceptions to this rule must be alleged, substantiated, and proved by the parties, and even in such cases the Court retains full discretion on whether to review the factual findings of the Court of Appeals. The Court held that petitioner failed to allege, substantiate, and prove any exception.

• "It is settled that to constitute 'grave abuse of discretion' warranting the issuance of a writ of certiorari, the court against which such writ is sought for must have exercised its jurisdiction in such a capricious and whimsical manner as is equivalent to lack of jurisdiction; or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." — This passage states the canonical formulation of the grave abuse of discretion standard applied by the Court in denying the petition for certiorari against the trial court's default orders.
• "Nonetheless, this rule is not absolute, for jurisprudence has allowed an instance when an affidavit of merit may be dispensed with as 'when a motion to lift an order of default contains the reasons for the failure to answer as well as the facts constituting the prospective defense of the defendant and it is sworn to by said defendant.'" — This passage articulates the recognized exception to the affidavit of merit requirement, which the Court found inapplicable because petitioner's Motion contained only the reasons for its failure to answer but not the facts constituting its prospective defenses.
• "Jurisprudence is clear that excusable negligence is 'one which ordinary diligence and prudence could not have guarded against,' and these circumstances should be properly alleged and proved." — This passage supplies the controlling definition of excusable negligence, which the Court applied in rejecting petitioner's reliance on settlement negotiations as a justification for the late filing of its answer.
• "Thus, ownership does not pass by mere stipulation but only by delivery. 'The delivery of the thing x x x signifies that title has passed from the seller to the buyer.' The purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right." — This passage states the ratio decidendi on the civil-law issue, grounding the reduction of petitioner's liability on the absence of proof of actual delivery under Articles 1496 and 1497 of the Civil Code.

• Spouses Manuel vs. Ong, 745 Phil. 589 (2014) — Cited as the controlling authority requiring that a motion to lift an order of default be accompanied by an affidavit showing the invoked ground and a separate affidavit of merit setting forth facts constituting the party's meritorious defense or defenses, consistent with Rule 8, Section 5 of the Rules of Court.
• Montinola, Jr. vs. Republic Planters Bank, 244 Phil. 49 (1988) — Cited for the three requisites that must be satisfied by a motion to warrant the setting aside of an order of default for failure to file an answer: (1) it must be made by motion under oath by one that has knowledge of the facts; (2) it must be shown that the failure to file the answer was due to fraud, accident, mistake, or excusable negligence; and (3) there must be a proper showing of the existence of a meritorious defense.
• Tanhu vs. Judge Ramolete, 160 Phil. 1101 (1975) — Cited for the exception allowing the affidavit of merit to be dispensed with when the motion to lift an order of default itself contains the reasons for the failure to answer as well as the facts constituting the prospective defense of the defendant and is sworn to by said defendant.
• Maripol vs. Tan, 154 Phil. 193 (1974) — Cited for the rule that it is not error or an abuse of discretion for the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer.
• Lui Enterprises, Inc. vs. Zuellig Pharma Corporation, 729 Phil. 440 (2014) — Cited for the definition of excusable negligence as one which ordinary diligence and prudence could not have guarded against, and for the requirement that the circumstances constituting it be properly alleged and proved.
• Momarco Import Co., Inc. vs. Villamena, 791 Phil. 457 (2016) — Cited in support of the principle that while courts should avoid orders of default and should be liberal in setting them aside, they cannot ignore the abuse of procedural rules by litigants who only have themselves to blame.
• Philippine National Bank vs. Spouses Perez, 667 Phil. 450 (2011) — Cited for the definition of grave abuse of discretion warranting certiorari.
• Cebu Winland Development Corporation vs. Ong Siao Hua, 606 Phil. 103 (2009) — Cited for the rules on delivery under Articles 1496 and 1497 of the Civil Code, including that ownership does not pass by mere stipulation but only by delivery, and that delivery signifies that title has passed from seller to buyer.
• El Oro Engraver Corporation vs. Court of Appeals and Everett Construction Supply, Inc., 569 Phil. 373 (2008) — Cited for the rule that the best evidence to prove payment of goods is the official receipt.
• Pascual vs. Burgos, 776 Phil. 167 (2016) — Cited for the rule that only questions of law may be raised in a petition for review on certiorari and that factual findings of the appellate courts will not be reviewed nor disturbed on appeal, as well as for the definition of a question of fact.
• Medina vs. Mayor Asistio, Jr., 269 Phil. 225 (1990) — Cited for the enumeration of the recognized exceptions to the rule that factual findings of the appellate courts are not reviewed on appeal.
• Bank of the Philippine Islands vs. Leobrera, 461 Phil. 461 (2003) — Cited in support of the rule that factual findings of the appellate courts will not be reviewed nor disturbed on appeal.
• Republic vs. Ortigas and Company Limited Partnership, 728 Phil. 277 (2014) — Cited in support of the definition of a question of fact and the rule on review of factual findings.
• Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., 665 Phil. 784 (2011) — Cited in support of the definition of a question of fact.
• Agravante vs. Patriarca, 262 Phil. 127 (1990) — Cited in Spouses Manuel vs. Ong for the affidavit of merit requirement.
• Chamber of Real Estate and Builders Associations, Inc. vs. The Secretary of Agrarian Reform, 635 Phil. 283 (2010) — Cited in Philippine National Bank vs. Spouses Perez for the definition of grave abuse of discretion.

• Rule 9, Section 3(b), Rules of Court — Provides that a party declared in default may, at any time after notice thereof and before judgment, file a motion under oath to set aside the order of default upon proper showing that the failure to answer was due to fraud, accident, mistake, or excusable negligence and that the party has a meritorious defense. The Court applied this provision in holding that petitioner's Motion to Lift Order of Default was deficient for failure to attach an affidavit of merit and for failure to establish excusable negligence.
• Rule 9, Section 3, Rules of Court — Provides for when a party to an action may be declared in default, allowing the court, upon motion of the claiming party with notice to the defending party and proof of failure to answer, to declare the defending party in default and proceed to render judgment granting the claimant such relief as the pleading may warrant. The Court cited this provision in upholding the trial court's declaration of default.
• Rule 11, Section 1, Rules of Court — Requires a defendant served with summons and a copy of the complaint to answer within 15 days from receipt. The Court applied this provision in finding that petitioner failed to file its answer within the reglementary period.
• Rule 16, Section 1, Rules of Court — Allows the defendant to move to dismiss the complaint within the time for but before filing the answer. The Court cited this provision in recounting petitioner's filing of its motion to dismiss.
• Rule 16, Section 4, 1997 Rules of Civil Procedure — Provides that if a motion to dismiss is denied, the movant shall file an answer within the balance of the period prescribed by Rule 11 to which he was entitled at the time of serving his motion, but not less than five days in any event, computed from receipt of the notice of denial. The Court applied this provision in holding that petitioner's answer was filed almost three months after its receipt of the Order denying its motion to dismiss.
• Rule 45, Section 1, Rules of Court — Provides that only questions of law may be raised in a petition for review on certiorari. The Court cited this provision in declining to review the appellate court's factual findings absent any substantiated exception.
• Rule 8, Section 5, Rules of Court — Requires that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity. The Court cited this provision, through Spouses Manuel vs. Ong, as consistent with the need for an affidavit of merit.
• Article 1495, Civil Code — Provides that the vendor is bound to transfer the ownership of and deliver, as well as warrant, the thing which is the object of the sale. The Court cited this provision as the starting point of its discussion on delivery.
• Article 1496, Civil Code — Provides that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. The Court applied this provision in holding that ownership does not pass by mere stipulation but only by delivery.
• Article 1497, Civil Code — Provides that the thing sold shall be understood as delivered when it is placed in the control and possession of the vendee. The Court emphasized this provision as contemplating real or actual delivery, and applied it in holding that the shipments covered by waybills nos. 740715, 441215, and 1398915 were not delivered because there was no proof that they were placed in petitioner's control and possession.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concur.