EFFECT OF ORDER OF DEFAULT
GOMEZ VS. MONTALBAN
G.R. No. 174414 | March 14, 2008 | J. Chico-Nazario
Digested by: Aves, Genelle L.
DOCTRINE: There are several remedies provided by law to lift an order of
default. A Petition for Relief from Judgment is not included.
FACTS:
Elmer Gomez filed a Complaint with the RTC Davao for sum of money and
damages against Lita Montalban. The Complaint alleged that in 1998,
Montalban obtained a P40,000 loan from Gomez with a voluntary proposal
on her part to pay 15% interest per month.
Montalban issued a postdated check as security in the sum of P46,000,
covering the principal loan amount and interest charges for one month.
When the check became due, Montalban failed to pay the loan despite
several demands.
In May 2003, Gomez filed the Complaint praying for the payment of
P238,000, representing the principal loan and interest charges, plus 25% of
the amount to be awarded as attorney's fees, as well as the cost of suit.
Summons was served, but despite her receipt, Montalban failed to file her
Answer. Consequently, she was declared in default and upon motion, Gomez
was allowed to present evidence ex parte.
The RTC rendered a Decision ordering Montalban to pay Gomez: P40,000 for
the amount of the principal loan, P57,000 for interest, and P15,000
attorney’s fees.
Montalban filed a Petition for Relief from Judgment alleging that there was
no effective service of summons upon her since there was no personal
service of the same. She attributes her failure to file an Answer to fraud,
accident, mistake or excusable negligence. She also claimed that the RTC had
no jurisdiction as the principal amount was only P40,000, an amount falling
within the jurisdiction of the MTC.
The Petition was set for hearing. Montalban still failed to appear despite
being duly notified, hence, her Petition for Relief was dismissed. On her
motion for reconsideration, the petition was heard. The RTC granted the
petition on the ground of lack if jurisdiction. Hence, the present Petition filed
directly before the Supreme Court.
ISSUE: Whether or not a Petition for Relief was the proper remedy from an
Order of Default. - NO
HELD: Even assuming arguendo that the RTC had no jurisdiction over
respondent on account of the non-service upon her of the summons and
complaint, the remedy of Montalban was to file a motion for the
reconsideration of the Order of default or a motion for new trial within 15
days from receipt of notice thereof. Unfortunately, however, Montalban
opted to file a Petition for Relief from the Judgment of the RTC, which was
the wrong remedy.
When Montalban was declared in default for her failure to file an Answer to
the Complaint, she did not immediately avail herself of any of the remedies
provided by law:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion, under oath, to set aside the order of default
on the ground that his failure to answer was due to fraud, accident, mistake
or excusable negligence, and that he has a meritorious defense (Sec. 3, Rule
18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant
discovered the default, but before the same has become final and executory,
he may file a motion for new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become
final and executory, he may file a petition for relief under Section 2 [now
Section 1] of Rule 38; and
d) He may also appeal from the judgment rendered against 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 (Sec. 2, Rule 41)
Moreover, petition for certiorari under Rule 65 to declare the nullity of a
judgment by default is also available if the trial court improperly declared a
party in default, or even if the trial court properly declared a party in default,
if grave abuse of discretion attended such declaration.
DAVID VS. GUTIERREZ-FRUELDA
G.R. No. 170427 | January 30, 2009 | J. Quisumbing
Digested by: Aves, Genelle L.
DOCTRINE: In availing the remedies from an order of default, the party must
comply with all the requirements provided in Rule 9 Section 3.
FACTS:
In 2004, private respondents Panlilio, et al. filed a complaint for accounting,
reconveyance and damages with prayer for preliminary attachment against
Roberto David, his wife Marissa, and the Register of Deeds of Pampanga.
Panlilio, et al. alleged that David fraudulently exceeded his SPA to cause the
conversion of their agricultural lands to those for residential, commercial and
industrial purposes by registering in his name some of the lands, mortgaging
others, failing to remit and account any money received from any transaction
involving their lands, and absconding.
Service of summons failed as David was abroad. RTC then ordered service by
publication. Thereafter, Panlilio, et al. moved that David be declared in
default since he failed to answer within 60 days from date of last publication.
David filed a motion for extension of 15 days within which to file Answer,
with opposition to the motion to declare him in default.
In its Order, the RTC declared David in default. The RTC noted that the period
to file the Answer lapsed on May 19, 2005, 60 days after the last publication
on March 19, 2005, and that David failed to answer despite the "many
opportunities" given to him. The RTC also denied petitioner's motion for
extension to file Answer.
David moved to lift the order of default and sought another extension of 15
days within which to file Answer. David stated that declarations of default
are frowned upon, that he should be given the opportunity to present
evidence in the interest of substantial justice, and that he has meritorious
defenses.
The RTC denied the motion and ruled that while judgments by default are
generally looked upon with disfavor, David’s motion to lift the order of
default was fatally flawed under Section 3(b), Rule 9 of the Rules of Court.
The RTC noted that the motion was not under oath; unaccompanied by an
affidavit of merit; and without any allegation that his failure to file Answer
was due to fraud, accident, mistake or excusable negligence. The RTC also
ruled that it was not sufficient for David to merely allege that he has a
meritorious defense. Hence, this direct petition to the Supreme Court.
ISSUE: Whether or not Respondent Judge gravely abused her discretion
amounting to lack of jurisdiction in denying the motion to lift the order of
default. - NO
HELD: There are several remedies available for David and the filing of a
motion to set aside order of default due to fraud, accident, mistake or
excusable negligence, and that he has a meritorious defense is included.
However, the RTC denied this motion.
We affirm the RTC's denial. Indeed, default orders are not viewed with favor,
but in this case, petitioner failed to comply with the basic requirements of
Section 3(b), Rule 9 of the Rules of Court. The motion was not under oath.
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There was no allegation that the failure to file an Answer or any responsive
pleading was due to fraud, accident, mistake, or excusable negligence. David
merely stated that declarations of default are frowned upon, that he should
be given the opportunity to present evidence in the interest of substantial
justice, and that he has meritorious defenses. Unfortunately, his claim that
he has meritorious defenses is unsubstantiated. He did not even state what
evidence he intends to present if his motion is granted.
Furthermore, David’s failure to attach to the petition a copy of the motion to
lift the order of default, a relevant document required by Section 3, Rule 46
of the Rules of Court, is sufficient basis for us to dismiss the petition.
PETITION IS DISMISSED.
SAN PEDRO CINEPLEX PROPERTIES, INC. VS. HEIRS OF MANUAL EÑANO, ET
AL.
G.R. No. 190754 | November 17, 2010 | J. Carpio-Morales
Digested by: Aves, Genelle L.
DOCTRINE: When the answer is filed beyond the reglementary period but
before the defendant is declared in default and there is no showing that
defendant intends to delay the case, the answer should be admitted.
FACTS:
In 2006, the Heirs filed a complaint for quieting of title with damages against
San Pedro Cineplex before RTC San Pedro, Laguna. San Pedro Cineplex filed a
Motion to Dismiss on the ground that the RTC did not validly acquire
jurisdiction over it due to improper service of summons. It argued that there
was no observance of the rule that service of summons on a defendant-
corporation must be made upon its president, general manager, corporate
secretary, treasurer or in-house counsel.
The Heirs contended that the Return showed that the summons addressed to
San Pedro Cineplex was served upon and received by Jay Orpiada, its
manager. They thus moved to declare petitioner in default for failure to file
an Answer within the reglementary period.
11 months after San Pedro Cineplex filed a Motion to Dismiss, it filed
a Motion to Withdraw (its still unresolved) Motion to Dismiss and to Admit
Answer. The RTC denied the motion to dismiss and declared San Pedro
Cineplex in default.
San Pedro Cineplex filed a petition for certiorari, prohibition and mandamus
before the CA. The CA ruled that the RTC properly acquired jurisdiction over
petitioner via manager Orpiada and any flaw in the service of summons was
cured by the voluntary submission to the trial court's jurisdiction when it filed
the Motion to Withdraw Motion to Dismiss and to Admit Answer.
ISSUE: Whether or not the Answer should be admitted where it is
filed before a declaration of default and no prejudice is caused to the
plaintiff. – YES
HELD: Indeed, where the answer is filed beyond the reglementary period but
before the defendant is declared in default and there is no showing that
defendant intends to delay the case, the answer should be admitted.
In the case at bar, it is inconsequential that the trial court declared petitioner
in default on the same day that petitioner filed its Answer. As reflected
above, the trial court slept on petitioner's Motion to Dismiss for almost a
year, just as it also slept on respondents' Motion to Declare petitioner in
Default. It was only when petitioner filed a Motion to Withdraw Motion to
Dismiss and to Admit Answer that it denied the Motion to Dismiss, and acted
on/granted respondents' Motion to Declare petitioner in Default. This is
procedurally unsound.
The policy of the law is to have every litigant's case tried on the merits as
much as possible. Hence, judgments by default are frowned upon. A case is
best decided when all contending parties are able to ventilate their
respective claims, present their arguments and adduce evidence in support
thereof. The parties are thus given the chance to be heard fully and the
demands of due process are subserved. Moreover, it is only amidst such an
atmosphere that accurate factual findings and correct legal conclusions can
be reached by the courts.
PETITION IS GRANTED.
MOMARCO IMPORT COMPANY, INC. VS. VILLAMENA
G.R. No. 192477 | July 27, 2016 | J. Bersamin
Digested by: Aves, Genelle L.
DOCTRINE: A default judgment is frowned upon because of the policy of the
law to hear every litigated case on the merits. But the default judgment wijl
not be vacated unless the defendant satisfactorily explains the failure to file
the answer, and shows that it has a meritorious defense.
FACTS:
In 2007, Villamena filed a complaint for Nullification of Deed of Sale and of
the Title Issued against MOMARCO alleging that she is the owner of a parcel
of land with improvements located in Caloocan.
MOMARCO sent a letter to Villamena stating that her TCT over said property
has already been cancelled since Villamena’s husband already sold it to
MOMARCO. However, Villamena claims that what was executed in favor of
MOMARCO was a mortgage not a deed of sale.
Villamena filed a motion to declare MOMARCO in default for failure to file its
answer as of said date despite the filing of an Entry of Appearance by its
counsel. Beyond the reglementary period, MOMARCO still filed its Answer
with Counterclaim, but RTC declared MOMARCO in default and ordered that
the answer be stricken from the records.
RTC rendered a judgment nullifying the deed of absolute sale. The CA
affirmed the Decision on the ground that Villamena has sufficiently
established her claim. Hence, this appeal. by the petitioner.
ISSUE: Whether or not the the Answer filed beyond the reglementary period,
but before an order of default should be admitted. - NO
HELD: MOMARCO filed its Answer only after a period of more than four
months from when it entered its voluntary appearance in the case a quo, and
only after almost a month from when Villamena moved to have it declared in
default.
If MOMARCO truly believed that it had a meritorious defense which if
properly ventilated could have yielded a different conclusion by the trial
court, then it could very well have moved to set aside the Order of Default
immediately after notice thereof or anytime before judgment. Under the
circumstances, that would have been the most expeditious remedy.
Inauspiciously, MOMARCO instead elected to wager on a favorable
judgment. Defeated, MOMARCO would now have us set aside the Order of
Default on Appeal and remand the case for further proceedings.
While the Supreme Court is aware that it is vested with some discretion to
condone procedural errors, we do not find that doing so will serve the best
interests of justice. To remand this case to the court a quo on the invocation
that we must be liberal in setting aside orders of default, would be to reward
MOMARCO with more delay. It bears stating that the Rules of Procedure are
liberally construed not to suit the convenience of a party, but "in order to
promote their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding.”
It is true that the RTC had the discretion to permit the filing of the answer
even beyond the reglementary period, or to refuse to set aside the default
order where it finds no justification for the delay in the filing of the
answer. Conformably with the judicious exercise of such discretion, the RTC
could then have admitted the belated answer of MOMARCO and lifted the
order of default instead of striking the answer from the records. However,
the RTC opted not to condone the inordinate delay taken by MOMARCO, and
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went on to render the default judgment on August 23, 1999. Such actions
were fully within its discretion. We uphold the default. While the courts
should avoid orders of default, and should be, as a rule, liberal in setting
aside orders of default, they could not ignore the abuse of procedural rules
by litigants like the MOMARCO, who only had themselves to blame.
the facts;
(2) it must be shown that the failure to file 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."

PETITION IS DENIED.
SPOUSES BENEDICT AND SANDRA MANUEL VS. RAMON ONG
G.R. No. 205249 | October 15, 2014 | J. Leonen
Digested by: Aves, Genelle L.
DOCTRINE: Pursuant to Rule 9, Section 3, a court may proceed to render
judgment as the pleading may warrant should a defendant fail to timely file
his or her answer. However, a court may decline from immediately rendering
judgment and instead require the plaintiff to present evidence. Per Rule 9,
Section 3(a), a party declared to be in default shall nevertheless be "entitled
to notice of subsequent proceedings," although he or she may no longer take
part in the trial.
In this case, the Court of Appeals noted that the Spouses Manuel's motion to
lift order of default was not made under oath. We add that this motion was
not accompanied by an affidavit of merit specifying the facts which would
show that their non-filing of an answer within fifteen (15) days from March
16, 2010 was due to fraud, accident, mistake, or excusable negligence.
Failing both in making their motion under oath and in attaching an affidavit
of merits, the Spouses Manuel's motion to lift order of default must be
deemed pro-forma. It is not even worthy of consideration.
PETITION IS DISMISSED.

FACTS:
In 2009, Ramon Ong filed with RTC Benguet a complaint for accion
reivindicatoria. Ong charged the Spouses Manuel with having constructed
improvements — through force, intimidation, strategy, threats, and stealth
— on a property he supposedly owned.

In 2010, Ong filed a motion to declare the Spouses Manuel in default for
failure to file the Answer within the allowed period. RTC issued an order of
default. 3 months after, the Spouses Manuel filed a motion to lift the order of
default on the ground that the summons was served to a different address.
The motion to lift order of default was denied because it was not sworn to
and did not show that their failure to timely file an answer "was due to fraud,
accident, mistake or excusable negligence."

Aggrieved, the Spouses Manuel filed a petition for certiorari before the CA,
but the CA dismissed the petition for lack of merit. Hence, this petition.

ISSUE: Whether or not Spouses Manuel are entitled to relief from the order
of default. - NO

HELD: As explained in Spouses Delos Santos v. Carpio, there are three

requirements which must be complied with by the claiming party before the
court may declare the defending party in default:

(1) the claiming party must file a motion asking the court to declare the
defending party in default;
(2) the defending party must be notified of the motion to declare him in
default;
(3) the claiming party must prove that the defending party has failed to
answer within the period provided by the Rule.

All these requisites were complied with by respondent Ramon Ong.

It is not disputed that Ong filed a motion to declare the Spouses Manuel in
default. It is also not disputed that the latter filed their answer after the
fifteen-day period, counted from March 16, 2010, had lapsed. The Spouses
Manuel only filed their answer along with their motion to lift order of default
on September 13, 2010.

Not only were the requisites for declaring a party in default satisfied, the
Spouses Manuel's motion to lift order of default was also shown to be
procedurally infirm.

In Montinola, Jr. v. Republic Planters Bank, this court noted that the three (3)
requisites that must be satisfied by a motion in order "to warrant the setting
aside of an order of default for failure to file answer, are:

(1) it must be made by motion under oath by one that has knowledge of