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MALAYAN INSURANCE CO. v. PHILIPPINE NAILS

FACTS:

Respondent Philippine Nails and Wires Corporation insured its shipment of steel billets valued at P67,156,300 with petitioner Malayan Insurance Company Inc. The shipment was delivered short by 377.168 metric tons, and respondent claimed insurance for the undelivered steel billets, as well as customs duties, taxes, and other charges. Petitioner refused to pay.

Respondent then filed a complaint against petitioner for the lost and/or undelivered cargo. Petitioner moved to dismiss the complaint on the grounds of failure to state a cause of action and improper venue, but the motion was denied. Petitioner filed a petition for prohibition with the Court of Appeals, which was also denied. The petition was reinstated upon motion for reconsideration but was eventually dismissed and became final.

Respondent filed a motion to admit an amended complaint, which the trial court granted. The trial court sent petitioner summons and a copy of the complaint, giving petitioner until October 31, 1993 to file an answer. On November 4, 1993, respondent moved to declare petitioner in default, and the trial court granted the motion. Petitioner filed its answer with compulsory counterclaim on November 11, 1993, but the answer was expunged from the records for being filed late.

On December 10, 1993, the trial court rendered a judgment by default in favor of respondent and ordered petitioner to pay the insured value of the lost and/or undelivered steel billets, plus interest, attorney's fees, and costs. Respondent moved to execute judgment pending appeal, which was granted. Petitioner filed a notice of appeal, and the entire records were elevated to the Court of Appeals.

The Court of Appeals affirmed the trial court's judgment, holding that the trial court did not abuse its discretion in expunging the answer from the records. The appellate court also found that respondent's witness was competent and that the conclusions and findings of the trial court were entitled to great weight on appeal.

ISSUES:

  1. Whether or not the trial court erred in rendering judgment by default.

  2. Whether or not the trial court erred in awarding damages to respondent based on unauthenticated documentary evidence and hearsay.

  3. Whether or not the trial court erred in admitting documentary evidence that is irregular in nature and not in accordance with the Rules of Court.

RULING:

  1. The trial court did not err in rendering judgment by default. Petitioner's answer was expunged from the records for being filed beyond the prescribed period.

  2. The trial court did not err in awarding damages to respondent based on unauthenticated documentary evidence and hearsay. The respondent's witness, who personally prepared the documentary evidence, was deemed competent and had personal knowledge of the allegations in the complaint.

  3. The trial court did not err in admitting documentary evidence that is irregular in nature and not in accordance with the Rules of Court. The appellate court held that the conclusions and findings of fact of the trial court were entitled to great weight and should not be disturbed unless for strong and cogent reasons, which were not present in this case.

PRINCIPLES:

  • A party's answer may be expunged from the records if filed beyond the prescribed period.

  • A witness who personally prepared documentary evidence and has personal knowledge of the allegations in the complaint is deemed competent.

  • Conclusions and findings of fact of the trial court are entitled to great weight and should not be disturbed unless for strong and cogent reasons.