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OTERO V TAN - Decision is contrary to law

15 August 2012 - Amount of judgment is excessive or different in kind

Petition for review on certiorari under Rule 45 seeking to annul and set aside from that prayed for
CA Decision affirming RTC Judgment - In this case, Otero asserts that Tan failed to prove the material allegations of
his complaint since the statements of account which he presented are
FACTS: inadmissible in evidence
- Complaint- Tan filed for collection of sum of money and damages with MTCC - Contrary then to CA, it is not accurate to state that having been declared in
Cagayan de Oro against Otero alleging that Otero purchased on credit default by the MTCC, Otero is already deemed to have waived any and all
petroleum products from his Petron outlet for P270k; despite demands, Otero defenses which he may have against Tan’s claim
- Despite receipt of summons through wife Otero, he failed to file answer with
- Tan then filed a Motion to declare Otero in default; Otero denied receiving G.R. No. 87917 August 7, 1990
- Hearings were conducted until MTCC issued an order declaring Otero in SPS. JUAN B. DULOS and MARIA C. DULOS petitioners,
default, to which a copy was sent to Otero, and thereby allowing Tan to present vs.
his evidence ex parte: his employees, showing various statements of account COURT OF APPEALS, SPS. MARIANO NOCOM and ANACORETA NOCOM
MTCC SHERIFF HONORIO SANTOS of the Office of the Sheriff of Makati, Metro
- In favor of Tan, noting that Otero’s failure to file an answer despite notice is a Manila, respondents.
tacit admission of Tan’s claim
- Otero appealed to RTC asserting that MTCC’s decision is factually baseless Santiago, Acosta, Arevalo & Associates for petitioners.
and that he was deprived of due process

RTC Melecio Virgilio Emata Law Office collaborating counsel for petitioners.
- Affirmed MTCC, noting that the statements of account presented were
overwhelming enough to prove Otero’s indebtedness, and that he was served Arturo S. Santos for private respondents.
due notice contrary to Otero’s claim of deprivation of due process
- Otero filed for MR but was denied; then filed for review with CA
- Explaining that evidence presented were presented by Betache
who was not a witness by Tan
- That the genuineness and due execution of said statements of CRUZ, J.:
account, being private, must first be established lest the said documents be
rendered inadmissible in evidence By this special civil action of certiorari and prohibition, the spouses Juan and
Maria Dulos would have this Court nullify the resolution of the respondent court
CA dated April 27, 1989, denying their application for a writ of preliminary injunction
- Assailed RTC and MTCC decision, noting that any defense which Otero may against the enforcement of the decision of the Metropolitan Trial Court of Las
have against Tan is already deemed waived due to Otero’s failure to file his Piñas dated October 4, 1988.
On June 24, 1988, the spouses Dulos were sued for forcible entry by the
spouses Mariano and Anacoreta Nocom, private respondents herein, in the
- WON Otero, declared in default by MTCC, in the appellate proceedings, may
Metropolitan Trial Court of Las Piñas. The case was set for a pre-trial
still raise the failure of Tan to authenticate the statements of account which he conference on August 18, 1988, with due notice to both parties.
adduced in evidence

HELD: Earlier, on August 16, 1988, the petitioners had filed a complaint against the
- YES private respondents for annulment of sale, reconveyance of title, and various
- A defendant who fails to file an answer may, upon motion, be declared by the other reliefs plus a writ of preliminary injunction. This was docketed as Civil
court in default Case No. 881663 in the Regional Trial Court of Makati. On August 17, 1988, the
- A party in default loses his right to present his defense, control the petitioners filed a motion for the suspension of the proceedings in the forcible
proceedings, and examine or cross-examine witnesses entry case on the ground that there was a prejudicial question of ownership
- However, the fact that a defendant has lost his standing in court for having involved in the annulment case. The petitioners' counsel, Atty. Pedro S. Ravelo,
been declared in default does not mean that he is left without recourse set August 18, 1988, for the hearing of the motion at the pre-trial conference
- Remedies available to party in default (Lina v CA, et al): scheduled on the same date.
- May, at any time after discovery thereof and after
judgment, file a motion, under oath, to set aside the order of default on the Neither petitioners nor their counsel appeared on that date. However, one
ground that his failure to answer was due to fraud, accident, mistake, or Ananita Rectra manifested at the hearing that she was duly authorized by virtue
excusable neglect, and that he has meritorious defenses of a special power of attorney to represent petitioner Juan Dulos, her brother,
- If judgment has been rendered when defendant who was then confined at the Manila Doctors Hospital after having undergone a
discovered default, but before the same has become final and executor, he may femur operation. The petitioners were nonetheless declared in default. Judge
file a motion for new trial Alfredo R. Enriquez denied the motion for the suspension of the proceedings,
- If defendant discovered the default after the judgment holding that the issue of ownership was not a prejudicial question in the
has become final and executor, he may file a petition for relief ejectment case. The evidence of the private respondents was subsequently
- He may also appeal from the judgment rendered against received in the absence of the petitioners.
him as contrary to the evidence or to the law, even if no petition to set aside the
order of default has been presented by him
On October 4, 1988, judgment was rendered in favor of the private
- Grounds that may be raised in such an appeal:
respondents, the dispositive portion reading as follows:
- Failure of plaintiff to prove material allegations of the
WHEREFORE, the Court finds the eviction of defendants (b) An affidavit of merit under the circumstances was no
to be warranted and accordingly hereby renders judgment longer necessary since the default order was anchored
in favor of the plaintiffs, ordering defendants as follows: upon petitioners' failure to appear during the pre-trial
(citing the case of Lucero v. Dacayo, 22 SCRA 1004).
1. and all persons claiming right under them to vacate the
portion of plaintiffs' property covered by TCT No. S-55015 (c) Petitioners have been in actual physical possession of
situated at Bo. Ibayo Las Piñas MM, and to remove the subject land from the time the said property was
structures and improvements thereon and to restore to acquired in 1979 by petitioner Maria Dulos from her co-
plaintiff peaceful possession thereof; heirs by virtue of the sale of hereditary rights until the
same was assigned to Dulos Realty in 1973 long before
2. ordering defendants to pay the sum of P20,000.00 as the execution of the simulated sale in favor of private
reasonable compensation for the use of property respondents in 1977.
beginning April 1988 and every month thereafter until
defendants shall have completely vacated the property; (d) As the August 18, 1988 Order was issued without or in
excess of jurisdiction, the same is null and void and all
3. ordering defendants to pay the plaintiffs the sum of proceedings subsequent thereto were also a nullity, there
P10,000.00; and is no judgment to speak of, hence there is nothing to
4. ordering defendants to pay the cost of the suit.
For their part, the private respondents assert that: (1) Rectra did not file her
special power of attorney with the Metropolitan Trial Court; (2) the petitioners
The petitioners received a copy of this decision on October 10, 1988. They filed did not do anything to have the order of default set aside; (3) the deed of sale
a motion for reconsideration on October 18, 1988, which was denied in an order sought to be nullified was executed way back on July 1, 1977, and the
dated November 17, 1988. complaint for nullification was filed only eleven years and nine months later; (4)
petitioner Maria Dulos could have appeared at the pre-trial hearing but failed to
Instead of taking an appeal, the petitioners filed on December 9, 1988, a special do so without any explanation whatsoever; and (5) certiorari cannot be a
civil action for certiorari and prohibition with preliminary injunction with the substitute for the lost right of appeal.
Regional Trial Court of Makati praying for the nullification of the said judgment
and the earlier order declaring them in default. The Court gave due course to the petition and required the parties to submit
simultaneous memoranda. After considering the issues and their arguments in
On December 19, 1988, while that case was pending, the private respondents their respective memoranda, we find the petition to be without merit.
moved for the immediate execution of the judgment of the Metropolitan Trial
Court on the ground that no appeal had been filed with the proper court and the First of all, it is clear that a case may be dismissed for failure of a party to
decision had become final and executory. The motion was granted, and the writ appear at the pre-trial conference, as authorized by Rule 20, Section 2, of the
of execution was issued on February 8, 1989. Rules of Court, thus:

On February 16, 1989, the petition for certiorari, etc. was dismissed on the Sec. 2. A party who fails to appear at a pre-trial
grounds that: (1) the petitioners had been properly declared in default for failure conference may be non-suited or considered as in
to appear at the scheduled hearing; (2) the filing of the action for nullification in default.
the Regional Trial Court was not a valid reason for the suspension of the
hearing in the Metropolitan Trial Court; (3) the motion for reconsideration was
fatally defective because it was not verified and accompanied by an affidavit of Rectra did appear at the scheduled hearing but did not present to the court her
merit; and (4) the grant of the motion for suspension or postponement was power of attorney to represent Juan Dulos or even the medical certificate of his
discretionary upon the court. 1 operation. In their memorandum, the petitioners say Maria Dulos did not appear
for herself because the spouses Dulos had long been separated. However, the
Dulos lawyer did not show up either although it was he who had asked that his
On March 20, 1989, on motion of the private respondents, the Metropolitan Trial motion to suspend proceedings be set on the date of the pre-trial conference.
Court issued a writ of demolition. The averment that Atty. Ravelo was already 73 years old at the time is a flimsy
excuse for carelessness nor do we accept the explanation that he was then
The petitioners then elevated the matter to the Court of Appeals in a petition attending to several detention prisoners. At any rate, the petitioners could have
for certiorari and prohibition with preliminary injunction. In its order dated April availed themselves of other counsel if their counsel then was unable to
27, 1989, the respondent court denied the application for preliminary represent them at the conference.
injunction, 2 prompting the petitioners to come to this Court on certiorari.
Secondly, the denial of the application for preliminary injunction was justified
Praying for a nullification of the said order and the proceedings held before the because the petitioners did not employ the proper remedy prescribed by the
MTC, they argue that: Rules of Court. As enumerated in Lina v. Court of Appeals, 3 the remedies
available to a defendant declared in default are:
(a) The pre-trial conference of August 18, 1988, was the
first hearing set for the purpose and with the appearance 1. The defendant in default may, at any time after discovery thereof and before
of the representative in the person of Mrs. Rectra, duly judgment, file a motion under oath to set aside the order of default on the
armed with a notarized hospital certification attesting to ground that was failure to answer or appear on the date set for pre-trial was due
the confinement of petitioner Juan Dulos and a special to fraud, accident, mistake or excusable negligence, and that he has a
power-of-attorney authorizing her to appear as meritorious defense;
representative of petitioner Juan Dulos during the
conference, Judge Enriquez should not have outrightly 2. If the judgment has already been rendered when the defendant discovered
declared petitioners in default. the default, but before the same has become final and executory, he may file a
petition for new trial under Sec. 1(a) of Rule 37;
3. If the defendant discovered the default after the judgment has become final answer was due to fraud, accident, mistake or excusable
and executory, he may file a petition for relief under Sec. 2, Rule 38; and neglect and that he has a meritorious defense. In such
case the order of default may be set aside on such terms
4. He may also appeal from the judgment rendered against him as contrary to and conditions as the judge may impose in the interest of
the evidence or the law, even if no petition to set aside the order of default has justice.
been presented by him.
The term used in the last quoted section is discovery, not notice. And this is so
The petitioners did not avail themselves of any of the above remedies. Instead, because the defendant declared in default is not entitled to "notice of
after taking no action whatsoever for all of sixty days, they filed a motion for subsequent proceedings" under the preceding rules.
reconsideration of the decision dated October 4, 1988, and, when this was
denied, went to the Regional Trial Court on certiorari and prohibition. As we In Suzara v. Caluag, 5 this Court held that a motion for reconsideration of a
held in the Lina case: judgment of default may be considered a petition for relief under Section 2 of
Rule 38 only if the following requisites are present: (1) it must be verified; (2) it
... where the judgment rendered by the respondent court must be filed within 60 days from the time petitioner learns of the decision but
is the one sought to be annulled, a petition for relief, not more than 6 months from entry thereof, and (3) in case of failure to file an
under Rule 38, which is a remedy in the ordinary course answer, the motion must be accompanied by affidavits of merit showing the
of law, could have been just as plain, adequate and fraud, accident, mistake and excusable negligence relied upon.
speedy as certiorari ...
We held in Yap v. Tañada 6 that a motion for reconsideration may be
No less significant is the fact that the judgment of the metropolitan trial court considered a motion for new trial under Sec. 2, Rule 37, if it is accompanied by
had already become final and executory because of the petitioners' failure to an affidavit of merit. Since petitioners assert that their rights were impaired
appeal therefrom on time. They were served with notice of the judgment on because they were prevented from presenting evidence of their defenses, it was
October 10, 1988, and filed a motion for reconsideration on October 18, 1988, a fatal omission for them not to attach to their motion an affidavit of merit, i.e.,
which was denied on November 17, 1988. They therefore had until December an affidavit showing the facts constituting the valid defense which the movant
10, 1988, within which to perfect their appeal. They did not. may prove in case a new trial is granted. The requirement of such an affidavit is
essential because a new trial would be only a waste of the time of the court if
the complaint turns out to be groundless or the defense ineffective.
Instead, they filed the petition for certiorari in the Regional Trial Court, which
correctly dismissed it. It is settled that the special civil action of certiorari is not
and cannot be made a substitute for an appeal, where the latter remedy is The motion for reconsideration filed by the petitioners on October 18, 1988, with
available, 4 as in this case. The filing of the petition for certiorari did not the Metropolitan Trial Court, and which is Annex "H" of the petition,
therefore suspend the period for appeal or prevent the judgment from becoming was not verified. It does not appear also that it was accompanied by an affidavit
final. of merit as required by the Rules.

It is also noteworthy that the petitioners made no move to set aside the order of While this Court did declare in Continental Leaf Tobacco v. Intermediate
default rendered by the Metropolitan Trial Court although they were aware of it. Appellate Court, 7 "that judgments by default are not looked upon with favor,"
Rectra was present when the said order was dictated in open court on August the default judgment in that case was set aside because there was excusable
18, 1988. It is reasonable to assume she immediately informed her brother, who neglect. Besides, the petitioners had a meritorious defense which justified a
had sent her there precisely to represent him at the proceedings. Even so, the relaxation of the procedural rules to allow full hearing on the substantive issues
petitioners did nothing until the judgment by default was rendered against them raised. Such circumstances have not been clearly shown in the case before us.
by Judge Enriquez on October 4, 1988. All of forty-six days had elapsed from
the order of default when the judgment of default was rendered. A little more familiarity with our rules of procedure could have avoided the
predicament in which the petitioners now find themselves. Unfortunately, the
The petitioners now contend that they could not have taken any action prior to Court cannot give them any relief. They have not justified a relaxation of the
the rendition of the judgment because they had never been furnished with said rules. While it is true that a litigation is not a game of technicalities, it is
copies of the order declaring them in default. This is unacceptable. It is obvious equally true that every case must be prosecuted in accordance with the
the petitioners have failed to take into account the following pertinent provisions prescribed procedure, to insure an orderly administration of justice. It is this
of the Rules of Court concerning notices in case a party is declared in default: symbiosis between form and substance that guarantees that desirable result.

Rule 18, Sec. 2. Effect of order of default. — Except as WHEREFORE, the petition is DISMISSED, with costs against the petitioner. It is
provided in Section 9 of Rule 13, a party declared in so ordered.
default shall not be entitled to notice of subsequent
proceedings, nor to take part in the trial. Gochangco vs CFI of Negros 157 scra 40
Facts: These appellate proceeding had its origin in an action of unlawful
Rule 13, Sec. 9. Service upon party in default. — No detainer filed
service of papers other than substantially amended or by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the
supplemental pleadings and final orders or judgments decision of the
shall be necessary on a party in default unless he files a lower court on the ground that a Clerk of Court is not legally authorized to
motion to set aside the order of default in which event he receive
shall be entitled to notice of all further processings evidence ex-parte.
regardless of whether the order of default is set aside or Issue: whether or not a Clerk of Court is not legally authorized to receive
not. evidence ex-
Held: No provision of law or principle of public policy prohibits a court from
Rule 18, Sec. 3. Relief from order of default. — A party
declared in default may at any time after discovery thereof
its clerk of court to receive the evidence of a party litigant. After all the reception
and before judgment file a motion under oath to set aside
the order of default upon proper showing that his failure to
evidence by the clerk of court constitutes but a ministerial task — the taking reversed the decision of the lower court on the ground that a Clerk of Court is
down of the not legally authorized to receive evidenceex-parte.
testimony of the witnesses and the marking of the pieces of documentary
evidence, if Issue: whether or not a Clerk of Court is not legally authorized to receive
any, adduced by the party present. evidenceex-parte.
Gochangco vs CFI of Negros 157 scra 40
Held: No provision of law or principle of public policy prohibits a court from
Facts: These appellate proceeding had its origin in an action of unlawful
authorizing its clerk of court to receive the evidence of a party litigant. After all
detainer filed
the reception of evidence by the clerk of court constitutes but a ministerial task
by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the
the taking down of the testimony of the witnesses and the marking of the pieces
decision of the
of documentary evidence, if any, adduced by the party present.
lower court on the ground that a Clerk of Court is not legally authorized to
evidence ex-parte. G.R. No. L-49396 January 15, 1988
Issue: whether or not a Clerk of Court is not legally authorized to receive
evidence ex-
JUAN A. GOCHANGCO, HON. FELINO GARCIA, as Presiding Judge of the
City Court of Bacolod, Branch I, and DEPUTY PROVINCIAL SHERIFF
Held: No provision of law or principle of public policy prohibits a court from
JOSUE DE JOSE, petitioners,
its clerk of court to receive the evidence of a party litigant. After all the reception
IV, SY HO and MILAGROS MINORIA, respondents.
evidence by the clerk of court constitutes but a ministerial task — the taking
down of the
testimony of the witnesses and the marking of the pieces of documentary
evidence, if
any, adduced by the party present. NARVASA, J.:
Gochangco vs CFI of Negros 157 scra 40
Facts: These appellate proceeding had its origin in an action of unlawful
detainer filed Application of no more than quite elementary principles governing the modes of
by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the acquisition of jurisdiction by a court over the person of a defendant, default,
decision of the substitution of parties plaintiff, judgment on the pleadings, and execution
lower court on the ground that a Clerk of Court is not legally authorized to pending appeal in ejectment cases, is what is chiefly called for in this appeal
by certiorari.
evidence ex-parte.
Issue: whether or not a Clerk of Court is not legally authorized to receive These appellate proceedings had their origin in an action of unlawful detainer
evidence ex- filed by C.N. Hodges in the City Court of Bacolod, Branch I, docketed as Civil
parte. Case No. 2838. Hodges sought the ejectment from certain parcels of land in
Held: No provision of law or principle of public policy prohibits a court from Bacolod City titled in his name, of several persons, namely: Basilicio Macanan,
authorizing Gertrude Nolan, Alejandro Santiago, Jr., Sy Ho, and Milagros Minoria. 1
its clerk of court to receive the evidence of a party litigant. After all the reception
of Macanan, Nolan and Santiago were duly served with summons. Macanan died
evidence by the clerk of court constitutes but a ministerial task — the taking afterwards, and since his heirs could not be located, and hence could not be
down of the substituted in his place, the case against him was eventually dismissed without
testimony of the witnesses and the marking of the pieces of documentary prejudice. 2 Santiago and Nolan voluntarily vacated the premises; so, the case
evidence, if was also dismissed as against them. 3
any, adduced by the party present.
Gochangco vs CFI of Negros 157 scra 40
Facts: These appellate proceeding had its origin in an action of unlawful Summons was also duly served on Minoria. Although she refused to
detainer filed acknowledge such service, she subsequently filed an answer to the complaint,
by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the thru counsel. 4
decision of the
lower court on the ground that a Clerk of Court is not legally authorized to Sy Ho also appears to have been served with summons, service being
receive evidenced, it is claimed, by the return to this effect of the Provincial
evidence ex-parte. Sheriff. 5 But, as, will shortly be recounted, Sy Ho would later deny such service.
Issue: whether or not a Clerk of Court is not legally authorized to receive
evidence ex- Plaintiff Hodges died during the pendency of the ejectment suit; and on August
parte. 20,1964, the court-appointed Administrator of his estate, the Philippine
Held: No provision of law or principle of public policy prohibits a court from Commercial and Industrial Bank (PCIB), was substituted as party
authorizing plaintiff. 6 PCIB thereafter filed a motion to declare Sy Ho in default for failure to
its clerk of court to receive the evidence of a party litigant. After all the reception answer the complaint. This was granted, by Order of the City Court dated
of February 18, 1967. Sy Ho filed on March 2, 1967, a verified "Opposition to the
evidence by the clerk of court constitutes but a ministerial task — the taking Motion for Default." He alleged that he had never received summons;
down of the apparently the summons had been served at the place where he maintained his
testimony of the witnesses and the marking of the pieces of documentary scrap iron business, which was not his residence and at which he had no
evidence, if representative authorized to receive court processes and notices; and he
any, adduced by the party present. prayed that 'he be allowed to present his answer within ten (10) days and that if
Gochangco vs CFI of Negros 157 scra 40 ever he has been already declared in default without due service of the notice to
Facts: These appellate proceeding had its origin in an action of unlawful him, the said order be lifted." 7 The City Court overruled his opposition and
detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros refused to lift the order of default against him, these dispositions being
contained in an Order dated April 8, 1967. 8 And in a separate Order issued on
the same date, the City Court granted PCIB's motion to require Sy Ho to pay having been perfected by her within the period therefor prescribed by law. And
monthly rentals corresponding to the premises occupied by him directly to it, as regards Sy Ho, whose second motion for reconsideration was still pending,
instead of to his co-defendant, Minoria, who apparently had therefore been immediate execution was proper since the judgment was against a defendant,
acting as caretaker of the property. 9 declared by Section 8, Rule 70 of the Rules of Court to be immediately
executory. 23 Over the joint opposition of Sy Ho and Minoria, the Court granted
At this point all proceedings in this ejectment suit, and another cases involving the motion and issued the writ of execution on October 19, 1977. 24 In a
the late C. H. Hodges, were for the most part suspended for all intents and 'Manifestation' dated October 25, 1975, Sy Ho stated that he had been "paying
purposes by reason of controversies as regards the administration and a monthly rental of P110.00 monthly directly to the Clerk of Court" and that
hereditary rights over his not inconsiderable estate. Settlement of these "pending the final decision ... all (such payments should be) properly kept by the
controversies did not come until some 16 or 1 7 years later when, in the Clerk of Court. 25
decisions of this Court in two (2) cases, dated March 29, 1974, 10 the heirs of C.
N. Hodges and their respective counsel were directed "to work together and Sy Ho and Minoria thereupon filed a joint petition for certiorari and prohibition
conjointly in order to sell and dispose of for adequate consideration, the real with application for preliminary injunction discretion with the Court of First
properties composing the intermixed assets of the said estate in favor of Instance of Negros Occidental. This was docketed as Civil Case No. 13484.
Filipinos ..." Among the estate assets sold pursuant to those decisions were the The petition imputed grave abuse of discretion to the City Court in denying Sy
lots subject of the ejectment suit at bar. They were sold to Juan A. Gochangco Ho's motion to set aside order of default and motion to dismiss; in granting
for P440,000.00 on December 17, 1975, and he obtained titles over them in his Gochangco's ex-parte motion to be substituted as party plaintiff; in receiving
name in due course.11 Gochangco's evidence ex parte despite his having Med a motion for judgment
on the pleadings; in authorizing immediate execution, and in not declaring itself
Gochangco lost no time in advising Minoria and Sy Ho of his acquisition of the to be without jurisdiction in view of P.D. No. 20 and G.O. No. 53.26 In the answer
property and demanding their vacation thereof. 12 He also filed an "Ex-Parte filed by him on requirement of the Court, Gochangco averred that the immediate
Motion for Substitution of Plaintiff and Reception of Evidence" dated March 26, execution of the judgment was justified by Section 8, Rule 70 of the Rules of
1976, which the City Court granted by Order dated March 26, Court and settled jurisprudence; that any defect in the service of summons on
1976. 13 Accordingly, Gochangco presented evidence ex-parte on March 30, Sy Ho had been cured by his voluntary appearance through submission of
1976; this, as regards Sy Ho, who had been declared in default. 14 various pleadings, that the motion for judgment on the pleadings was entirely
correct because Minorias answer stated no affirmative defense or otherwise
tendered no issue; the declaration of default against Sy Ho was also correct
As regards defendant Minoria, Gochangco filed on March 29, 1976 a motion for under the circumstances; that the action for certiorari could not result in an
judgment on the pleadings. 15 He contended that Minoria's answer failed to adjudication for the payment of damages since it is simply meant to cure
tender any issue because it admitted the material allegations of the complaint; jurisdictional defects, which are non-existent in the case; and Sy Ho's situation
that her answer also failed to disclose any privity between her and the late is not covered by PD No. 20 or G.O. No. 53 because he was occupying the
Manuel Moreno, whom she claimed to be co-owner of the house found on the premises in question not as a dwelling but for purposes of his scrap iron
premises in question, or any relationship whatever between Moreno, Hodges business. 27
and herself so as to substantiate her theory that she had been properly
designated caretaker of the house; that her occupation of the house was thus
by tolerance merely, and she was bound by an implied promise to vacate the At the pre-trial held on February 21, 1978, Sy Ho admitted, thru counsel, that he
same upon demand, and her failure to do so despite demand rendered her had indeed voluntarily appeared before the City Court and had thereby
amenable to summary ejectment. submitted himself to its jurisdiction. 28

In his turn, Sy Ho filed a motion to set aside order of default on April 5,1976 in On August 29, 1978, judgment was rendered by the Court of First Instance
which he also prayed to be allowed to present a written answer to the granting the writ of certiorari and annulling all the proceedings in Civil Case No.
complaint. 16 To this motion he attached an "Affidavit of Merits" in which he 2838 of the City Court of Bacolod. 29 The Court said:
claimed that his failure to file answer to the complaint was due to the fault of his
counsel who, according to him, failed to make the "proper follow-up" of the A fundamental tenet of procedural due process has been
case; and he asked to be excused for his mistake or negligence for 'depending violated in the case under review. Was the petitioner Sy
too much on his lawyer who formerly handled his case." 17 What the City Court Ho properly served with summons and complaint in Civil
did was to issue subpoenae for the appearance of Minoria and Sy on May 13, Case No. 2838? The 2nd Indorsement dated June 3,
1976, so that "they might have their day in Court." 18 But one day before his 1961 signed by Pat. R. Bravo of the Bacolod Police
scheduled appearance, or on May 12, 1976, Sy Ho filed a 15-page Motion to Department reads as follows:
Dismiss the complaint stating in substance that the complaint stated no cause
of action; the case against him had not been prosecuted for an unreasonably Respectfully returned to the Mun.
long span of time; and the cause of action was barred by the statute of Court copy with all summons and
limitations under PD No. 20 promulgated on October 12,1972 and G.O. No. 53 complaint has delivered personally
promulgated on August 21, 1975. 19 In the same motion he reiterated that in to Milagros Minoria but however
compliance with the Order of April 8, 1967, he had been paying rentals regularly she refused to sign dated 6-2-61 -
and faithfully. 20 8:30 a.m.

There followed various attempts by the parties, mostly on the court's initiative, to At the bottom of this indorsement a 3rd Indorsement
arrive at an amicable settlement. All failed Thereafter the City Court finally dated June 16, 1961 was made by Deputy Sheriff
rendered judgment dated February 18, 1977 ordering Sy Ho and Minoria to Esmalia, which reads:
vacate the premises within thirty (30) days, and to pay rentals to Gochangco at
the rate of P600.00 and P50.00 a month, respectively, from date of the decision
until they shall have left the property. 21 Motions for reconsideration separately Respectfully returned to the
filed by By Ho and Minoria were denied, as were also, their second motions for Municipal Court, Bacolod City, the
reconsideration. 22 within summons duly served as per
return of service of the Chief of
Police of Bacolod City.
On August 29, 1977, Gochangco moved for execution pending appeal. He
asserted that the judgment had become final as against Minoria, no appeal
Now, on the basis of this indorsement this Court is not is nothing in the record excusing that negligence, or showing fraud, accident or
convinced that proper service was made upon defendant mistake warranting the Court's setting aside of the order of default. 34
Sy Ho in Civil Case No. 2838. The return of the deputy
sheriff to the effect that summons was duly served is In any case, Sy Ho never really pressed the issue of the efficacy of service of
contradicted by the return made by Pat. R. Bravo which is summons on him with vigor or persistence Instead, he submitted himself to the
the basis of the 3rd Indorsement to the effect that Court's jurisdiction. His submission to the Court's jurisdiction is necessarily
summons and complaint has (sic) delivered personally to inferred from his act of request for leave to present his answer to the
Milagros Minoria but however she refused to sign. There complaint, 35 of voluntarily complying with the City Court's Order for the payment
is no showing at all in these endorsements that petitioner of rentals, and filing various other motions and pleadings. 36There is, too, his
Sy Ho himself was properly served with summons. counsel's admission already adverted to, that Sy Ho had really submitted
himself to the City Court's jurisdiction. 37 There can thus be no debate about the
If petitioner Sy Ho was not properly served with summons proposition that jurisdiction of his person had been acquired by the City court by
there was no basis at all for respondent court to declare his voluntary appearance and acquiescence. 38
him in default. By declaring Sy Ho in default under the
circumstances, the court acted with grave abuse of The record furthermore discloses that the prejudice to Sy Ho occasioned by the
discretion. This is elementary law too obvious to need any declaration of default against him was nominal and minimal. For his default
citation of authorities. If the declaration of default was null notwithstanding, he was in fact able fully and exhaustively to present his side to
and void all proceedings thereafter would be null and the Court. He submitted his defenses to the action to the Court. This he did by
void. Triggered by this illegal declaration of default, the filing a Motion to dismiss setting up said defenses, 39 and presenting two (2)
reception of evidence ex parte before a deputy clerk of motions for reconsideration of the City Court's decision, urging and arguing
court was null and void, not only because of the previous those same defenses. 40 And the record shows that these defenses were duly
nullity of the declaration of default but also because under considered and dealt with in the judgment of the City Court. 41
the doctrinal rule laid down in the recent case of Lim Tan
Hu vs. Ramolete, 66 SCRA 430, promulgated on August
29, 1975, a Clerk of Court is not legally authorized to Withal, an analysis of those defenses reveals their lack of merit. The assertion,
receive evidence ex-parte. The decision rendered on the for instance, that the complaint falls to state a cause of action is incorrect; an
basis of the evidence received ex parte would logically be examination of the complaint shows that it does set out the ultimate facts
a nullity. Hence, if only upon this ground alone the constituting causes of action for ejectment. 42 The assertion that the action had
proceedings in the court below would be fatally flawed. ... not been prosecuted for an unreasonably long period of time is without merit
since as shown by the record, the delay was not due to the fault or negligence
of the plaintiff, but to circumstances beyond control. The claim that the action for
The Trial Court erred. Whatever defect might have existed in the return of the ejectment is barred under PD 20 and GO 53 is also untenable, since it is not
service of summons on Sy Ho was rendered inconsequential by subsequent disputed that Sy Ho is being ejected, not from his residence but from his place
events, duly entered in the record, demonstrating that service of summons had of business. In the light of these considerations, it would be inutile to set aside
indeed been effected and Sy Ho had voluntarily submitted himself to the the order of default against Sy Ho, assuming there were basis therefor, to give
jurisdiction of the City Court. him opportunity to appropriately plead and present evidence on his aforesaid
defenses which cannot be sustained anyway and are on their face
Assuming it to be true, as claimed, that summons addressed to Sy Ho had been unmeritorious. 43
served not at his residence but at the place where he maintained his scrap iron
business, and at which he had no representative authorized to receive court The substitution of parties plaintiff effected in this case was also proper. Here,
processes and notices, this would be of no moment. This is valid service. It is the original plaintiff died pending trial. He was substituted by the administrator of
expressly authorized by the Rules. It is substituted service, allowed when the his estate, duly appointed by competent judicial authority. This substitution was
defendant cannot be served personally within a reasonable time, in which entirely correct, mandated in fact by Section 17, in relation to Section 3, Rule 3
event, service may be effected by leaving copies of the summons at defendants of the Rules of Court. 44 On the other hand, Gochangco's substitution as party
dwelling house or residence with some person of suitable age and discretion plaintiff in place of the administrator was also appropriate. Gochangco had
then residing therein, or at his office or regular place of business with some purchased the property of the decedent involved in the ejectment suit. He
competent person in charge thereof. 30 Nor is it necessary that the person in therefore became a real party in interest in that action, replacing the estate, or
charge of the defendant's regular place of business be specially authorized to the heirs, and his replacement of the latter was fully justified by Section 2, Rule
receive the summons. It is enough that he appears to be in charge. 3 requiring actions to be prosecuted in the name of the real party in interest,
and defining a party plaintiff as one "having an interest in the subject of the
Sy Ho's contention that "substituted service is not allowed in ejectment action and in obtaining the relief demanded," 45 as well as Section 20, of the
cases" 31 is absolutely without foundation. Implicit in that contention however is same rule providing that in case of any transfer of interest, the action may be
the acknowledgment that there had in truth been substituted service of continued by or against the original party, unless the court upon motion directs
summons on him. the person to whom the interest is transferred to be substituted in the action or
joined with the original party. 46
Moreover, in the Affidavit of Merits attached to his motion to set a side order of
default filed on April 5, 1976, 32 Sy Ho attributed his failure to the answer Also correct was the rendition of judgment on the pleadings as against Minoria.
seasonably to the fault of his counsel — who he said had failed to make the Minoria's answer admitted the material averments of the complaint and failed to
"proper follow-up" — and asked to be excused for "depending too much on his include allegations establishing her claim for compensation as being,
lawyer." Here is another clear admission, no less cogent because merely supposedly, the authorized caretaker of the house. Judgment on the pleadings
implied, that the reason for his omission to answer the complaint was not really was therefore properly rendered on plaintiff's motion. It is sanctioned by Section
the failure of service of summons on him but his lawyer's negligence. 1, Rule 19 of the Rules of court, which provides that "(w)here an answer fails to
tender an issue or otherwise admits the material allegations or admits the
The record also demonstrates that he was indeed correctly declared in default, material allegations of the adverse party's pleading, the court may, on motion of
and he failed to adduce any tenable grounds for the setting aside of that that party, direct judgment on such pleading." 47
declaration. He did fail to answer the complaint within the reglementary period
therefor prescribed, and proof of such failure had in due course been The propriety of the order authorizing execution of the ejectment judgment
adduced. 33 And even if that failure may in truth be blamed on his lawyer, there against the defendants also cannot be gainsaid. The order is squarely within the
provisions of Section 8, Rule 70 which declares that "(i)f judgment is directly prepare the decision based upon the evidence
rendered against the defendant, execution shall issue immediately, unless an reported (Province of Pang vs. Palisoc, 6 SCRA 299).
appeal has been perfected and the defendant, to stay execution, files a
sufficient bond approved by the justice of the peace or municipal court and The underlying philosophy of the doctrine of default is that the defendant's
executed to the plaintiff to enter the action in the Court of First Instance and to failure to answer the complaint despite receiving copy thereof together with
pay the rents, damages, and costs accruing down to the time of the judgment summons, is attributable to one of two causes: either (a) to his realization that
appealed from, and unless, during the pendency of the appeal, he deposits with he has no defenses to the plaintiffs cause and hence resolves not to oppose the
the appellate court the amount of rent due from time to time under the contract, complaint, or, (b) having good defenses to the suit, to fraud, accident, mistake
if any, as found by the judgment of the justice of the peace or municipal court to or excusable negligence which prevented him from seasonably filing an answer
exist. ..." 48 There is no showing that Sy Ho had taken these requisite steps to setting forth those defenses,. 53 It does make sense for a defendant without
stay execution of the judgment. defenses, and who accepts the correctness of the specific relief prayed for in
the complaint, to forego the filing of the answer or any sort of intervention in the
The respondent Court also declared null and void 'the reception of evidence ex action at all. For even if he did intervene, the result would be the same: since he
parte before ... (the) deputy clerk of court." It invoked what it termed 'the would be unable to establish any good defense, having none in fact, judgment
doctrinal rule laid down in the recent case of Lim Tan Hu vs. Ramolete, 66 would inevitably go against him. And this would be an acceptable result, if not
SCRA 430, promulgated on August 29, 1975 (inter alia declaring that) a Clerk of being in his power to alter or prevent it, provided that the judgment did not go
Court is not legally authorized to receive evidence ex-parte. 49 beyond or differ from the specific relief stated in the complaint. 54 It would
moreover spare him from the embarrassment of openly appearing to defend the
Now, that declaration does not reflect long observed and established judicial indefensible. On the other hand, if he did have good defenses, it would be
practice with respect to default cases. It is not quite consistent, too, with the unnatural for him not to set them up properly and timely, and if he did not in fact
several explicitly authorized instances under the Rules where the function of set them up, it must be presumed that some insuperable cause prevented him
receiving evidence and even of making recommendatory findings of facts on the from doing so: fraud, accident, mistake, excusable negligence. In this event, the
basis thereof may be delegated to commissioners, inclusive of the Clerk of law will grant him relief, and the law is in truth quite liberal in the reliefs made
Court. These instances are set out in Rule 33, treating of presentation of available to him: a motion to set aside the order of default prior to judgment; 55 a
evidence before commissioners, etc., in particular situations, such as when the motion for new trial to set aside the default judgment; 56 an appeal from the
trial of an issue of fact requires the examination of a long account, or when the judgment by default even if no motion to set aside the order of default or motion
taking of an account is necessary for the information of the court, or when for new trial had been previously presented; 57 a special civil action
issues of fact arise otherwise than upon the pleadings or while carrying a for certiorari impugning the court's jurisdiction. 58
judgment or order into effect; 50Rules 67 and 69, dealing with submission of
evidence also before commissioners in special civil actions of eminent domain A defendant in default is not and should not be placed in a situation more
and partition, respectively; Rule 86 regarding trials of contested claims in favorable than a defendant who has answered but who fails to appear for trial
judicial proceedings for the settlement of a decedent's estate; Rule 136 despite notice. In the latter case, as in the former, the trial may proceed ex
empowering the clerk of court, when directed by the judge inter alia to receive parte, 59 but is not invalidated by the fact merely that reception of evidence had
evidence relating to the accounts of executors, administrators, guardians, been undertaken by the clerk of court on the Court's instructions; this, despite
trustees and receivers, or relative to the settlement of the estates of deceased the fact that the judgment that may be rendered on the basis of such an ex
persons, or to guardianships, trusteeships, or receiverships. In all these parte trial may award reliefs exceeding the amount or different from that, prayed
instances, the competence of the clerk of court is assumed. Indeed, there would for in the complaint, unlike a judgment by default which cannot differ from or go
seem, to be sure, nothing intrinsically wrong in allowing presentation of beyond what is set down in the prayer of the complaint.
evidence ex parte before a Clerk of Court. 51 Such a Procedure certainly does
not foreclose relief to the party adversely affected who, for valid cause and upon It was therefore error for the Court a quo to have declared the judgment by
appropriate and seasonable application, may bring about the undoing thereof or default to be fatally flawed by the fact that the plaintiffs evidence had been
the elimination of prejudice thereby caused to him; and it is, after all, the Court received not by the Judge himself but by the clerk of court.
itself which is duty bound and has the ultimate responsibility to pass upon the
evidence received in this manner, discarding in the process such proofs as are
incompetent and then declare what facts have thereby been established. in One last word. The City Court and City Sheriff were impleaded as parties
considering and analyzing the evidence preparatory to rendition of judgment on petitioners in the petition at bar. This is incorrect. They are not proper parties.
the merits, it may not unreasonably be assumed that any serious error in the ex- They do not have — and should not have — any interest in the subject of the
parte presentation of evidence, prejudicial to any absent party, will be detected instant proceedings, either in obtaining any relief in respect thereto of any
and duly remedied by the Court, and/or may always, in any event; be drawn to nature whatsoever, or in the success of the petitioner. Only Gochangco is the
its attention by any interested party. As observed by the late Chief Justice Fred proper party petitioner.
Ruiz Castro — 52
WHEREFORE, the judgment of the Court of First Instance of August 29, 1978 is
No provision of law or principle of public policy prohibits a reversed and set aside, and that of the City Court dated February 18, 1977
court from authorizing its clerk of court to receive the reinstated and affirmed in toto. Costs against private respondents.
evidence of a party litigant. After all the reception of
evidence by the clerk of court constitutes but a ministerial INDIANA AEROSPACE UNIVERSITY vs. CHED
task — the taking down of the testimony of the witnesses
and the marking of the pieces of documentary evidence, if FACTS: Dr. Reynaldo B. Vera, Chairman, Technical Panel for Engineering,
any, adduced by the party present. This task of receiving Architecture, and Maritime Education (TPRAM) of [CHED], received a letter
evidence precludes, on the part of the clerk of court, the from Douglas R. Macias, Chairman, Board of Aeronautical Engineering,
exercise of judicial discretion usually called for when the Professional Regulat[ory] Commission (PRC) and Chairman, Technical
other party who is present objects to questions Committee for Aeronautical Engineering (TPRAME) inquiring whether
propounded and to the admission of the documentary [petitioner] had already acquired [u]niversity status in view of the latter's
evidence preferred (Wack Wack Golf and country Club, advertisement in [the] Manila Bulletin.
inc. vs. court of Appeals, 106 Phil. 501). More importantly,
the duty to render judgment on the merits of the case still Dr. Vera formally referred the aforesaid letter to Chairman Alcala with a request
rests with the judge who is obliged to personally and that the concerned Regional Office of [CHED] be directed to conduct
appropriate investigation on the alleged misrepresentation by [petitioner].
Thereafter, [CHED] referred the matter to its Regional Director in Cebu City, filed a Motion to Admit Written Opposition stating the reasons for the same,
requesting said office to conduct an investigation and submit its report. attaching thereto the Opposition with [F]ormal [E]ntry of [A]ppearance.

The report stated that there was a violation [committed by] his institution [when RTC then granted [Petitioner's] Motion to Declare [Respondent in Default].
it used] the term university unless the school ha[d] complied [with] the basic Respondent filed with the CA a Petition for Certiorari, arguing that the RTC had
requirement of being a university as prescribed in CHED Memorandum Order committed grave abuse of discretion (a) in denying the former's Motion to
No. 48, s. 1996. As a consequence of said Report, [respondent's] Legal Affairs Dismiss, (b) in issuing a Writ of Preliminary Injunction, and (c) in declaring
Service was requested to take legal action against [petitioner]. Subsequently, respondent in default despite its filing an Answer.
[respondent] directed [petitioner] to desist from using the term University,
including the use of the same in any of its alleged branches. The CA ruled that petitioner had no cause of action against respondent.
Petitioner failed to show any evidence that it had been granted university status
In the course of its investigation, [respondent] was able to verify from the by respondent as required under existing law and CHED rules and regulations.
Securities and Exchange Commission (SEC) that [petitioner had] filed a The CA also ruled that Writ of Preliminary Injunction had improvidently been
proposal to amend its corporate name from Indiana School of Aeronautics to issued. The doubtful right claimed by petitioner is subordinate to the public
Indiana Aerospace University, which was supposedly favorably recommended interest to protect unsuspecting students and their parents from the
by the Department of Education, Culture and Sports (DECS) and on [that] basis, unauthorized operation and misrepresentation of an educational institution.
SEC issued to [petitioner] Certificate of Registration.
CA also ruled that respondent should not have been declared in default,
Surprisingly, however, it ought to be noted, that SEC Chairman Perfecto R. because its Answer had been filed long before the RTC ruled upon petitioner's
Yasay, Jr. wrote a letter to the [c]hairman of [respondent] which stated that SEC Motion to declare respondent in default. Thus, respondent had not obstinately
records show that the corporation has not filed any amended articles of refused to file an Answer; on the contrary, its failure to do so on time was due to
incorporation that changed its corporate name to include the term 'University.' In excusable negligence.
case the corporation submit[s] an application for change of name, your Cease
and Desist Order shall be considered accordingly. Thus this petition.

In reaction to [respondent's] order for [petitioner] to desist from using the word ISSUE: Whether it was right to dismiss the case
'University', Jovenal Toring, [c]hairman and [f]ounder of [petitioner] wrote a letter
appealing for reconsideration of [respondent's] Order, with a promise to follow HELD: YES.
the provisions of CMO No. 48.
Petitioner claims that the CA went beyond its limited jurisdiction under Rule 65
The appeal of [petitioner] was however rejected by [respondent] in its decision when it reversed the trial court and dismissed the Complaint on the ground that
and [the latter] ordered the former to cease and desist from using the word petitioner had failed to state a cause of action. The RTC had yet to conduct trial,
'University.' However, prior to this decision, [petitioner] filed a Complaint for but the CA already determined the factual issue regarding petitioner's
Damages with prayer for Writ of Preliminary and Mandatory Injunction and acquisition of university status, a determination that is not permitted in certiorari
Temporary Restraining Order against [respondent] with the Regional Trial Court proceedings.
(RTC) of Makati City.
The CA ruled that the trial court gravely abused its discretion in denying
Respondent filed a Special Appearance with Motion to Dismiss, based on 1) respondent's Motion to Dismiss on the ground of lack of cause of action
improper venue; 2) lack of authority of the person instituting the action; and 3) because of petitioner's lack of legal authority or right to use the word
lack of cause of action. Petitioner filed its Opposition to the Motion to Dismiss "university."
[on] grounds stated therein, to which [respondent] filed a Reply reiterating the
same arguments in its Motion to Dismiss. An order denying a motion to dismiss is interlocutory, and so the proper remedy
in such a case is to appeal after a decision has been rendered. A writ of
After due hearing, [petitioner] formally offered its evidence while [respondent] certiorari is not intended to correct every controversial interlocutory ruling; it is
made a formal offer of evidence to which [petitioner] filed its resorted to only to correct a grave abuse of discretion or a whimsical exercise of
Comments/Objections and finally, [respondent] submitted its Memorandum judgment equivalent to lack of jurisdiction. Its function is limited to keeping an
relative thereto. inferior court within its jurisdiction and to relieve persons from arbitrary acts –
acts which courts or judges have no power or authority in law to perform. It is
The RTC denied [respondent's] Motion to Dismiss and at the same time, issued not designed to correct erroneous findings and conclusions made by the court.
a Writ of Preliminary Injunction in favor of [petitioner]. [Respondent], in the same
Order, was directed to file its Answer within fifteen (15) days from receipt of said In the case at bar, we find no grave abuse of discretion in the RTC's denial of
Order. the Motion to Dismiss, the CA erred in ruling otherwise. The trial court stated in
its Decision that petitioner was an educational institution, originally registered
Petitioner filed before the RTC a Motion To Declare [Respondent] in [D]efault with the Securities and Exchange Commission as the "Indiana School of
pursuant to Section 3, Rule 9 in relation to Section 4, Rule 16 of the Rules of Aeronautics, Inc." That name was subsequently changed to "Indiana Aerospace
Court, as amended, and at the same time praying [for] the Motion to [S]et for University" after the Department of Education, Culture and Sports had
[H]earing on October 30, 1998 at 8:30 a.m. On the same date, [respondent] interposed no objection to such change.
filed a Motion For Extension of Time to File its Answer.
Respondent issued a formal Cease and Desist Order directing petitioner to stop
Petitioner, on November 11, 1998 filed its Opposition to the Motion for Extension using the word "university" in its corporate name. The former also published an
of Time to File [Respondent's] Answer and a Motion to Expunge [Respondent's] announcement in an issue of Freeman, a local newspaper in Cebu City, that
Answer and at the same time praying that its [M]otion be heard on November there was no institution of learning by that name. The counsel of respondent
27, 1998 at 9:00 a.m. was quoted as saying in the March 28, 1998 issue of the newspaper Today that
petitioner had been ordered closed by the respondent for illegal advertisement,
RTC issued an Order directing the Office of the Solicitor General to file within a fraud and misrepresentation of itself as a university. Such acts, according to the
period of ten (10) days from date its written Opposition to the Motion to RTC undermined the public's confidence in petitioner as an educational
Expunge [Respondent's] Answer and within the same period to file a written institution.18 This was a clear statement of a sufficient cause of action.
[N]otice of [A]ppearance in the case. Unable to file their written Opposition to
the Motion to Expunge within the period given by public respondent, the OSG When a motion to dismiss is grounded on the failure to state a cause of action,
a ruling thereon should be based only on the facts alleged in the complaint. The PRELLIMINARY INJUNCTION: The trial court acted with grave abuse of
court must pass upon this issue based solely on such allegations, assuming discretion in issuing the Writ of Preliminary Injunction against respondent.
them to be true. For it to do otherwise would be a procedural error and a denial Petitioner failed to establish a clear right to continue representing itself to the
of plaintiff's right to due process. public as a university. Indeed, it has no vested right to misrepresent itself.
Before an injunction can be issued, it is essential that (1) there must be a right
in esse to be protected, and (2) the act against which the injunction is to be
SUMMARY OF OTHER ISSUES: directed must have violated such right. No school may claim to be a university
unless it has first complied with the prerequisites provided in Section 34 of the
TIMELINESS OF CERTIORARI: Respondent's Petition for Certiorari was Manual of Regulations for Private Schools. Section 3, Rule 58 of the Rules of
seasonably filed. In computing its timeliness, what should have been Court, limits the grant of preliminary injunction to cases in which the plaintiff is
considered was not the Order of august 14, 1998, but the date when clearly entitled to the relief prayed for.
respondent received the December 9, 1998 Order declaring it in default. Since it
received this Order only on January 13, 1999, and filed its Petition for Certiorari
on February 23, 1999, it obviously complied with the sixty-day reglementary Gajudo v Traders Royal Bank || Gr no 151098 || 14 March 2008
period stated in Section 4, Rule 65 of the 1997 Rules of Court. Moreover, the
August 14, 1998 Order was not a proper subject of certiorari or appeal, since it
was merely an interlocutory order.
Note: Petitioners here are the 4 Gajudos and 1 Chua and that the property was
MOTION FOR RECON or PETITION FOR CERTIORARI: The general rule is owned by them in common. (Thus, I’d refer to them as the Gajudos, Chua, or
petitioners (all of them).
that, in order to give the lower court the opportunity to correct itself, a motion for
reconsideration is a prerequisite to certiorari. It is also basic that a petitioner
must exhaust all other available remedies before resorting to certiorari. This
rule, however, is subject to certain exceptions such as any of the following: (1) Doctrine: The mere fact that a defendant is declared in default does not
the issues raised are purely legal in nature, (2) public interest is involved, (3) automatically result in the grant of the prayers of the plaintiff. To win, the latter
extreme urgency is obvious or (4) special circumstances warrant immediate or must still present the same quantum of evidence that would be required if the
more direct action.6 It is patently clear that the regulation or administration of defendant were still present. A party that defaults is not deprived of its rights,
educational institutions, especially on the tertiary level, is invested with public except the right to be heard and to present evidence to the trial court. If the
interest. Hence, the haste with which the solicitor general raised these issues evidence presented does not support a judgment for the plaintiff, the complaint
before the appellate court is understandable. For the reason mentioned, we rule should be dismissed, even if the defendant may not have been heard or allowed
that respondent's Petition for Certiorari did not require prior resort to a motion to present any countervailing evidence.
for reconsideration.

VALIDITY OF DEFAULT ORDER: Certiorari was the only plain, speedy and
adequate remedy in the ordinary course of law, because the default Order had Summary: Chua obtained a loan from TRB secured by a Real Estate Mortgage
improvidently been issued. Lina v. Court of Appeals discussed the remedies of a property owned in common by Chua and the Gajudos. They failed to settle
available to a defendant declared in default, as follows: (1) a motion to set aside the loan and thus there was an extrajudicial foreclosure of the property in which
the order of default under Section 3(b), Rule 9 of the Rules of Court, if the the winning bidder was the bank. The petitioners contend that they were
default was discovered before judgment could be rendered; (2) a motion for allowed by the bank to repurchase the property but it was sold to another. The
new trial under Section 1(a) of Rule 37, if the default was discovered after petitioners state that that said new defendants they included in their amended
judgment but while appeal is still available; (3) a petition for relief under Rule 38, complaint conspired with the bank in canceling the notice of lis pendens by
if judgment has become final and executory; and (4) an appeal from the falsifying a letter sent to and filed with the office of the Register of Deeds of
judgment under Section 1, Rule 41, even if no petition to set aside the order of Quezon City, purportedly for the cancellation of said notice so now they are
default has been resorted to. claiming for damages. Summons were served on the bank but they failed to file
their answer. Thus, the petitioners were allowed to present ex parte to claim for
These remedies, however, are available only to a defendant who has been damages. The petitioners contend that since the bank was declared in default
validly declared in default. Such defendant irreparably loses the right to the pieces of evidence they presented must already be sufficient for them to
participate in the trial. On the other hand, a defendant improvidently declared in have a favorable judgment. But evidence presented not sufficient. Hence,
default may retain and exercise such right after the order of default and the doctrine.
subsequent judgment by default are annulled, and the case remander to the
court of origin. The former is limited to the remedy set forth in Section 2,
paragraph 3 of Rule 41 of the pre 997 Rules of Court, and can therefore contest Facts:
only the judgment by default on the designated ground that it is contrary to
evidence or law. The latter, however, has the following options: to resort to this
same remedy; to interpose a petition for certiorari seeking the nullification of the
order of default, even before the promulgation of a judgment by default; or in the In mid 1977 Danilo Chua obtained a loan from the Traders Royal Bank in the
event that judgment has been rendered, to have such order and judgment amount of P75,000.00 secured by a real estate mortgage over a parcel of
declared void. land.

In prohibiting appeals from interlocutory orders, the law does not intend to
accord executory force to such writs, particularly when the effect would be to The loan was not paid and thus the bank commenced extra-judicial
cause irreparable damage. If, in the course of trial, a judge proceeds without or foreclosure proceedings on the property. The auction sale of the property was
in excess of jurisdiction, this rule prohibiting an appeal does not leave the set on 10 June 1981, but was reset to 31 August 1981, on Chu’s request,
aggrieved party without any remedy.8 In a case like this, a special civil action of which, however, was made without the knowledge and conformity of the other
certiorari is the plain, speedy and adequate remedy. petitioners (Gajudos). On the re-scheduled auction sale, the Sheriff of Quezon
City sold the property to the bank, the highest bidder therein, for the sum of
GRAVE ABUSE OF DISCREATION: The trial court gravely abused its discretion P24,911.30.
when it declared respondent in default despite the latter's filing of an Answer.
Placing respondent in default thereafter served no practical purpose.
The other petitioners (Gajudo) assailed this because bid price was shockingly or
unconscionably, low; that the other [petitioners] failed to redeem the property
due to their lack of knowledge of their right of redemption, and want of sufficient The CA ruled in favor of respondent bank. Even if the CA stated that the
education; that, although the period of redemption had long expired, Chua erroneous docket number placed on the Answer filed before the trial court was
offered to buy back, and bank also agreed to sell back the foreclosed property, not an excusable negligence by the bank’s counsel and that these were binding
on the understanding that Chua would pay the bank the amount of P40,135.53, on the bank, the petitioners had not convincingly established their right to
representing the sum that the bank paid at the auction sale, plus interest and relief as there was no ground to invalidate the foreclosure sale of the
that Chua made an initial payment thereon in the amount of P4,000.00 duly mortgaged property. They stated that an extrajudicial foreclosure sale did not
receipted by the bank; that, in a sudden change of position, the bank wrote require personal notice to the mortgagor, that there was no allegation or proof of
Chua asking that he could repurchase the property, but based on the current noncompliance with the publication requirement and the public posting of the
market value thereof; and that sometime later, the bank wrote Chua anew, notice of sale, and that there was no showing of inadequacy of price as no
requiring him to tender a new offer to counter the offer made thereon by another competent evidence was presented to show the real market value of the land
buyer. sold or the readiness of another buyer to offer a price higher than that at which
the property had been sold. Moreover, petitioners failed to prove that the bank
had agreed to sell the property back to them. After pointing out that the
redemption period had long expired, respondent’s written communications to
The bank, filed its answer with counterclaim, asserting that the foreclosure sale Petitioner Chua only showed, at most, that the former had made a proposal for
of the mortgaged property was done in accordance with law; and that the bid the latter to buy back the property at the current market price.
price was neither unconscionable, nor shockingly low; that petitioners slept on
their rights when they failed to redeem the property within the one year statutory
period; and that bank, in offering to sell the property to Chua on the basis of its
current market price, was acting conformably with law, and with legitimate The petitioners argue that the quantum of evidence for judgments flowing
banking practice and regulations. from a default order under Section 3 of Rule 9 is not the same as that
provided for in Section 1 of Rule 133 (Preponderance of Evidence rule -
which basically states that the party having the burden of proof must
establish his case by a preponderance of evidence)
A big conflagration hit the City Hall of Quezon City, which destroyed, amongst
other things, the records of the case. After the records were reconstituted, the
petitioners discovered that the foreclosed property was sold by the bank to the
Ceroferr Realty Corporation, and that the notice of lis pendens annotated on the Issues: Whether or not the CA erred in failing to apply the provisions of Sec 3,
certificate of title of the foreclosed property, had already been cancelled. Rule 9 ([and in applying instead] the rule on preponderance of evidence under
Accordingly, with leave of court, the petitioners amended their complaint, but Section 1, Rule 133 of the Rules of Court.) - No
the Trial Court dismissed the case ‘without prejudice’ due to their failure to pay
additional filing fees.The petitioners re-filed the complaint impleaded as
additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Held: No, the CA did not err. Between the two rules, there is no incompatibility
Lorna Roque, and included an additional cause of action, to wit: that said new that would preclude the application of either one of them. Section 3 of Rule 9
defendants conspired with the bank in canceling the notice of lis pendens governs the procedure the trial court is directed to take when a defendant fails
by falsifying a letter sent to and filed with the office of the Register of to file an answer. According to this provision, the court "shall proceed to render
Deeds of Quezon City, purportedly for the cancellation of said notice. judgment granting the claimant such relief as his pleading may warrant," subject
to the court’s discretion on whether to require the presentation of evidence ex
parte. The same provision also sets down guidelines on the nature and extent
Summons was served on the bank. Supposing that all the defendants had of the relief that may be granted.
filed their answer, the petitioners filed a motion to set case for pre-trial,
which motion was, however, denied by the Trial Court in its Order on the
ground that the bank has not yet filed its answer. The petitioners filed a Basic is the rule that the party making allegations has the burden of
motion for reconsideration, thereunder alleging that they received by registered proving them by a preponderance of evidence. Moreover, parties must
mail, on 19 October 1990, a copy of the bank’s answer with counterclaim, dated rely on the strength of their own evidence, not upon the weakness of the
04 October 1990, which copy was attached to the motion. The trial Court denied defense offered by their opponent. This principle holds true, especially
for lack of merit, the motion for reconsideration, therein holding that the answer when the latter has had no opportunity to present evidence because of a
with counterclaim filed by the bank referred to another civil case pending before default order. Needless to say, the extent of the relief that may be
Branch 90 of the same Court.
granted can only be as much as has been alleged and proved with
preponderant evidence required under Section 1 of Rule 133.
The petitioners filed a motion to declare the bank in default, thereunder
alleging that no answer has been filed despite the service of summons on
it on 26 September 1990. The Trial Court declared the motion submitted for Complainants are not automatically entitled to the relief prayed for, once
resolution upon submission by petitioners of proof of service of the motion on the defendants are declared in default. Favorable relief can be granted
the bank. Upon proof that petitioners had indeed served the bank with a only after the court has ascertained that the relief is warranted by the
copy of said motion, the Trial Court issued an Order of default against the evidence offered and the facts proven by the presenting party. Being
bank. On petitioners’ motion, they were by the Court allowed to present declared in default does not constitute a waiver of rights except that of
evidence ex parte. Thereafter, the Trial Court rendered the new questioned being heard and of presenting evidence in the trial court. Although the
partial decision. defendant would not be in a position to object, if the evidence presented should
not be sufficient to justify a judgment for the plaintiff, the complaint must be
Aggrieved, the bank filed a motion to set aside the partial decision by default
against Traders Royal Bank and admit their Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said answer
was due to an honest mistake of the typist and inadvertence of its counsel.
While petitioners were allowed to present evidence ex parte under Section 3 of conditional sale over the parcel of land was later issued in favor of
Rule 9, they were not excused from establishing their claims for damages by sps. Relova.
the required quantum of proof under Section 1 of Rule 133.
 Monzon was indebted to the Coastal Lending Corporation. Coastal
Lending then extrajudicially foreclosed the property of Monzon which
included Lots 2A and 2B. The winning bidder in this extrajudicial
Moreover, the grant of damages was not sufficiently supported by the evidence
foreclosure was Addio properties. Of the amount paid by Addio,
for the following reasons.
there was a residue of roughly P1.6M (indebtedness of Monzon was
only around P3.4M while Addio paid P5M for the property that‘s why
there‘s an excess). This residue is in the custody of Atty. Luna as
1. The petitioners were not deprived of their property without cause. Branch Clerk of Court.
There has been no allegation or proof of noncompliance with the
requirement of publication and public posting of the notice of sale.  Monzon argues that she has already fulfilled her obligation to the
Neither has there been competent evidence to show that the price spouses via dacion en pago evidenced by the Deed of Conditional
paid at the foreclosure sale was inadequate. Thus, there was no Sale and the Deed of Absolute Sale.
ground to invalidate the sale. RTC:
2. The petitioners have not convincingly established their right to  Due to Monzon and counsel’s absence on said hearing date despite
damages on the basis of the purported agreement to repurchase. due notice, granted an oral Motion by the respondents by issuing an
Without reiterating our prior discussion on this point, we stress that Order allowing the ex parte presentation of evidence by respondents.
entitlement to actual and compensatory damages must be proved
even under Section 3 of Rule 9.  Atty. Luna should deliver the residue to spouses Relova and Perez.
At this point in time, Addio properties intervened.
In sum, the petitioners have failed to convince this Court of the strength of CA: Affirmed RTC, denied Monzon’s appeal re : violation of due process since
their position, notwithstanding the advantage they enjoyed in presenting she was not allowed to present in court again after not appearing in first hearing
their evidence ex parte. Not in every case of default by the defendant is the (order of default)
complainant entitled to win automatically.
Issue : Whether or not there was a cause of action against Atty Luna. – No.

Hence, the petition is denied. Held.

SC : Reversed and set aside the ruling of the CA. Atty. Luna should not deliver
Case : Monzon v Relova the residue to the spouses since Rule 68 governs judicial foreclosure and the
Doctrine : A cause of action is the act or omission by which a party violates the issue at bar is under Act 3135 Extrajudicial Foreclosure.
right of another. A cause of action exists if the elements are present: Also, the SC ruled that the Failure to file a responsive pleading within the
1. Right in favor of plaintiff by whatever means and under whatever law reglementary period is the sole ground for an order of default and not the non-
it arises or is created appearance during oral motion.
2. An obligation on the part of the named defendant to respect or not to
violate such right The case is remanded back to trial court for respondents to submit a
3. An act or omission on the part of such defendant violative of the right manifestation where the petition for injunction should be treated as complaint for
of plaintiff or constituting breach of the obligation of defendant to the the collection of money.
plaintiff for which the latter may maintain an action for recovery of Ratio:
Rule 68 governs judicial foreclosure of mortgages. Extrajudicial foreclosure of
Fast Recit : Spouses Relova and Perez filed a petition for injunction since mortgages which was what transpired in the case at bar is governed by Act
Monzon issued promissory notes to the respective spouses with lots as security 3135. Unlike Rule 68, Act 3135 does not grant to junior encumbrancers the right
(2A- Perez, Lot 2B- Relova). Monzon was indebted to Coastal Lending which to receive the balance of the purchase price. The only right given to second
foreclosed the property due to the non-payment of Monzon’s 3.4 million debt. mortgagees in said issuances is the right to redeem foreclosed property
Addio was the highest bidder in the sale. There was an excess of 1.6 M from pursuant to Sec 6 of Act 3135 “any person having lien on the property
Addio’s payment of 5M. The Spouses contend that they should be given the subsequent to mortgage or deed of trust under which the property is sold, may
residue as stated in Rule 68, Sec 4. The residue money is with Atty. Luna (clerk redeem the same at any time within the term of one yr from and after date of the
of court). However, case at bar involves Extrajudicial Foreclosure (Act 3135) sale.
and not Rule 68’s judicial foreclosure. Spouses do not have cause of action
against Atty. Luna. Case is remanded back to trial court to check if motion for A cause of action is the act or omission by which a party violates the right of
injunction is to be treated as complaint for collection of money. another. A cause of action exists if the elements are present:

1. Right in favor of plaintiff by whatever means and under whatever law

Facts : it arises or is created
 Spouses Relova and Perez filed a petition for Injunction. They allege 2. An obligation on the part of the named defendant to respect or not to
that Monzon issued a promissory note in favor of sps. Perez. The violate such right
amount was P600K and secured by Lot2A in Brgy Kaybagal, 3. An act or omission on the part of such defendant violative of the right
Tagaytay City with about 300 sqm. A deed of absolute sale over the of plaintiff or constituting breach of the obligation of defendant to the
parcel of land was later executed in favor of the Perez spouses. plaintiff for which the latter may maintain an action for recovery of
 The same thing happened with sps. Relova wherein a promissory
note in the amount of P200k was issued secured by Lot2B with In view of the foregoing, the respondent spouses do not have a cause of action
about 200 sqm. There was a 5% interest per month. A deed of against Atty Luna for the delivery of amounts. The case should be dismissed in
so far Atty Luna is concerned but the same is not necessarily true with respect
to Monzon.
The case is remanded back to trial court for respondents to submit a noted that the second sentence of Section 1 of Rule 9 does not only supply
manifestation where the petition for injunction should be treated as complaint for exceptions to the rule that defenses not pleaded either in a motion to dismiss or
the collection of money. If respondents answer in affirmative, case shall in the answer are deemed waived, it also allows courts to dismiss cases motu
proceed with presentation of evidence for defense. If Monzon successful in proprio on any of the enumerated grounds. The tenor of the second sentence of
proving defense of dacion en pago, there would be double sales with Addio. the Rule is that the allowance of a motu propio dismissal can proceed only from
The remedy of respondent is to recover possession. If Addio is entitled to the exemption from the rule on waiver; which is but logical because there can
properties, respondents’ remedy is to file action for damages against Monzon. be no ruling on a waived ground.

If respondents answer in negative, the case shall be dismissed without A failure to allege earnest but failed efforts at a compromise in a complaint
prejudice to the exercise of respondents’ rights as mortgage creditors. They will among members of the same family, is not a jurisdictional defect but merely a
be first mortgagor if their mortgage was executed prior to execution of contract defect in the statement of a cause of action.
with Addio. In the case at hand, the proceedings before the trial court ran the full course.
The complaint of petitioners was answered by respondents without a prior
motion to dismiss having been filed. The decision in favor of the petitioners was
appealed by respondents on the basis of the alleged error in the ruling on the
CASE DIGEST: HEIRS OF DR. MARIANO FAVIS, SR. v. JUANA GONZALES merits, no mention having been made about any defect in the statement of a
cause of action. In other words, no motion to dismiss the complaint based on
FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar the failure to comply with a condition precedent was filed in the trial court;
(Capitolina) with whom he had seven children. When Capitolina died in March neither was such failure assigned as error in the appeal that respondent brought
1994. Dr. Favis married Juana Gonzalez (Juana), his common-law wife with before the Court of Appeals.
whom he sired one child, Mariano G. Favis (Mariano), he executed an affidavit
acknowledging Mariano as one of his legitimate children. Mariano is married to Therefore, the rule on deemed waiver of the non-jurisdictional defense or
Larcelita D. Favis (Larcelita), with whom he has four children. objection is wholly applicable to respondent. If the respondents as parties-
defendants could not, and did not, after filing their answer to petitioners
Dr. Favis died intestate on July 29, 1995. On October 16, 1994, prior his death, complaint, invoke the objection of absence of the required allegation on earnest
he allegedly executed a Deed of Donation transferring and conveying properties efforts at a compromise, the appellate court unquestionably did not have any
in favor of his grandchildren with Juana. Claiming the said donation prejudiced
authority or basis to motu propio order the dismissal of petitioners complaint.
their legitime, Dr. Favis children with Capitolina, petitioners herein, filed an
action for annulment of the Deed of Donation, inventory, liquidation, liquidation
The correctness of the finding was not touched by the Court of Appeals. The
and partition of property before the RTC against Juana, Sps. Mariano and
respondents opted to rely only on what the appellate court considered,
Larcelita and their grandchildren as respondents.
erroneously though, was a procedural infirmity. The trial court's factual finding,
therefore, stands unreversed; and respondents did not provide us with any
RTC nullified the Deed of Donation. The trial court found that Dr. Favis, at the argument to have it reversed.
age of 92 and plagued with illnesses, could not have had full control of his
mental capacities to execute a valid Deed of Donation. The decision of the Court of Appeals is reversed and set aside and the
Judgment of the Regional Trial Court is AFFIRMED. GRANTED.
The Court of Appeals ordered the dismissal of the petitioners nullification case.
The CA motu proprioproprio ordered the dismissal of the complaint for failure of
petitioners to make an averment that earnest efforts toward a compromise have
been made, as mandated by Article 151 of the Family Court.

ISSUE: May the appellate court dismiss the order of dismissal of the
complaint for failure to allege therein that earnest efforts towards a
compromise have been made?
HELD: The appellate court committed egregious error in dismissing the

The appellate court committed egregious error in dismissing the complaint. The
appellate courts decision hinged on Article 151 of the Family Code, Art.151.No
suit between members of the same family shall prosper unless it should appear
from the verified complaint or petition that earnest efforts toward a compromise
have been made, but that the same have failed. If it is shown that no such
efforts were in fact made, the case must be dismissed.

The appellate court correlated this provision with Section 1, par. (j), Rule 16 of
the 1997 Rules of Civil Procedure, which provides: Section 1. Grounds. - Within
the time for but before filing the answer to the complaint or pleading asserting a
claim, a motion to dismiss may be made on any of the following grounds:(j) That
a condition precedent for filing the claim has not been complied with.
The appellate courts reliance on this provision is misplaced. Rule 16 treats of
the grounds for a motion to dismiss the complaint. It must be distinguished from
the grounds provided under Section 1, Rule 9 which specifically deals with
dismissal of the claim by the court motu proprio. Section 1, Rule 9 of the 1997
Rules of Civil Procedure. Section 1, Rule 9 provides for only four instances
when the court may motu proprio dismiss the claim, namely: (a) lack of
jurisdiction over the subject matter; (b) litis pendentia; (c) res judicata; and (d)
prescription of action.

It was in Heirs of Domingo Valientes v. Ramas cited in P.L. Uy Realty

Corporation v. ALS Management and Development Corporation where we