Civpro_rule9_digests.docx

OTERO V TAN 15 August 2012 Petition for review on certiorari under Rule 45 seeking to annul and set aside CA Decision affirming RTC Judgment FACTS: - Complaint- Tan filed for collection of sum of money and damages with MTCC Cagayan de Oro against Otero alleging that Otero purchased on credit petroleum products from his Petron outlet for P270k; despite demands, Otero defaulted - Despite receipt of summons through wife Otero, he failed to file answer with MTCC - Tan then filed a Motion to declare Otero in default; Otero denied receiving summons - Hearings were conducted until MTCC issued an order declaring Otero in default, to which a copy was sent to Otero, and thereby allowing Tan to present his evidence ex parte: his employees, showing various statements of account MTCC - In favor of Tan, noting that Otero’s failure to file an answer despite notice is a tacit admission of Tan’s claim - Otero appealed to RTC asserting that MTCC’s decision is factually baseless and that he was deprived of due process RTC - Affirmed MTCC, noting that the statements of account presented were overwhelming enough to prove Otero’s indebtedness, and that he was served 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 account, being private, must first be established lest the said documents be rendered inadmissible in evidence CA - Assailed RTC and MTCC decision, noting that any defense which Otero may have against Tan is already deemed waived due to Otero’s failure to file his answer ISSUE: - WON Otero, declared in default by MTCC, in the appellate proceedings, may still raise the failure of Tan to authenticate the statements of account which he adduced in evidence HELD: - YES - A defendant who fails to file an answer may, upon motion, be declared by the court in default - A party in default loses his right to present his defense, control the proceedings, and examine or cross-examine witnesses - However, the fact that a defendant has lost his standing in court for having been declared in default does not mean that he is left without recourse - Remedies available to party in default (Lina v CA, et al): - May, at any time after discovery thereof and after 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 neglect, and that he has meritorious defenses - If judgment has been rendered when defendant discovered default, but before the same has become final and executor, he may file a motion for new trial - If defendant discovered the default after the judgment has become final and executor, he may file a petition for relief - 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 - Grounds that may be raised in such an appeal: - Failure of plaintiff to prove material allegations of the complaint

- Decision is contrary to law - Amount of judgment is excessive or different in kind from that prayed for - 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 inadmissible in evidence - Contrary then to CA, it is not accurate to state that having been declared in default by the MTCC, Otero is already deemed to have waived any and all defenses which he may have against Tan’s claim

G.R. No. 87917 August 7, 1990 SPS. JUAN B. DULOS and MARIA C. DULOS petitioners, vs. COURT OF APPEALS, SPS. MARIANO NOCOM and ANACORETA NOCOM and SPS. LORENZO ONG ENG CHONG and CARMEN SOCO, and DEPUTY SHERIFF HONORIO SANTOS of the Office of the Sheriff of Makati, Metro Manila, respondents. Santiago, Acosta, Arevalo & Associates for petitioners. Melecio Virgilio Emata Law Office collaborating counsel for petitioners. Arturo S. Santos for private respondents.

CRUZ, J.: 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 dated April 27, 1989, denying their application for a writ of preliminary injunction against the enforcement of the decision of the Metropolitan Trial Court of Las 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 Metropolitan Trial Court of Las Piñas. The case was set for a pre-trial conference on August 18, 1988, with due notice to both parties. Earlier, on August 16, 1988, the petitioners had filed a complaint against the private respondents for annulment of sale, reconveyance of title, and various other reliefs plus a writ of preliminary injunction. This was docketed as Civil Case No. 881663 in the Regional Trial Court of Makati. On August 17, 1988, the petitioners filed a motion for the suspension of the proceedings in the forcible entry case on the ground that there was a prejudicial question of ownership involved in the annulment case. The petitioners' counsel, Atty. Pedro S. Ravelo, set August 18, 1988, for the hearing of the motion at the pre-trial conference scheduled on the same date. Neither petitioners nor their counsel appeared on that date. However, one Ananita Rectra manifested at the hearing that she was duly authorized by virtue of a special power of attorney to represent petitioner Juan Dulos, her brother, who was then confined at the Manila Doctors Hospital after having undergone a femur operation. The petitioners were nonetheless declared in default. Judge Alfredo R. Enriquez denied the motion for the suspension of the proceedings, holding that the issue of ownership was not a prejudicial question in the ejectment case. The evidence of the private respondents was subsequently received in the absence of the petitioners. On October 4, 1988, judgment was rendered in favor of the private respondents, the dispositive portion reading as follows:

WHEREFORE, the Court finds the eviction of defendants to be warranted and accordingly hereby renders judgment in favor of the plaintiffs, ordering defendants as follows: 1. and all persons claiming right under them to vacate the portion of plaintiffs' property covered by TCT No. S-55015 situated at Bo. Ibayo Las Piñas MM, and to remove structures and improvements thereon and to restore to plaintiff peaceful possession thereof; 2. ordering defendants to pay the sum of P20,000.00 as reasonable compensation for the use of property beginning April 1988 and every month thereafter until defendants shall have completely vacated the property; 3. ordering defendants to pay the plaintiffs the sum of P10,000.00; and 4. ordering defendants to pay the cost of the suit. The petitioners received a copy of this decision on October 10, 1988. They filed a motion for reconsideration on October 18, 1988, which was denied in an order dated November 17, 1988. Instead of taking an appeal, the petitioners filed on December 9, 1988, a special civil action for certiorari and prohibition with preliminary injunction with the Regional Trial Court of Makati praying for the nullification of the said judgment and the earlier order declaring them in default. On December 19, 1988, while that case was pending, the private respondents 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 decision had become final and executory. The motion was granted, and the writ of execution was issued on February 8, 1989. On February 16, 1989, the petition for certiorari, etc. was dismissed on the grounds that: (1) the petitioners had been properly declared in default for failure to appear at the scheduled hearing; (2) the filing of the action for nullification in 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 merit; and (4) the grant of the motion for suspension or postponement was discretionary upon the court. 1 On March 20, 1989, on motion of the private respondents, the Metropolitan Trial Court issued a writ of demolition. The petitioners then elevated the matter to the Court of Appeals in a petition for certiorari and prohibition with preliminary injunction. In its order dated April 27, 1989, the respondent court denied the application for preliminary injunction, 2 prompting the petitioners to come to this Court on certiorari. Praying for a nullification of the said order and the proceedings held before the MTC, they argue that: (a) The pre-trial conference of August 18, 1988, was the first hearing set for the purpose and with the appearance of the representative in the person of Mrs. Rectra, duly armed with a notarized hospital certification attesting to the confinement of petitioner Juan Dulos and a special power-of-attorney authorizing her to appear as representative of petitioner Juan Dulos during the conference, Judge Enriquez should not have outrightly declared petitioners in default.

(b) An affidavit of merit under the circumstances was no longer necessary since the default order was anchored upon petitioners' failure to appear during the pre-trial (citing the case of Lucero v. Dacayo, 22 SCRA 1004). (c) Petitioners have been in actual physical possession of the subject land from the time the said property was acquired in 1979 by petitioner Maria Dulos from her coheirs by virtue of the sale of hereditary rights until the same was assigned to Dulos Realty in 1973 long before the execution of the simulated sale in favor of private respondents in 1977. (d) As the August 18, 1988 Order was issued without or in excess of jurisdiction, the same is null and void and all proceedings subsequent thereto were also a nullity, there is no judgment to speak of, hence there is nothing to appeal. 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 did not do anything to have the order of default set aside; (3) the deed of sale sought to be nullified was executed way back on July 1, 1977, and the 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 do so without any explanation whatsoever; and (5) certiorari cannot be a substitute for the lost right of appeal. The Court gave due course to the petition and required the parties to submit simultaneous memoranda. After considering the issues and their arguments in their respective memoranda, we find the petition to be without merit. First of all, it is clear that a case may be dismissed for failure of a party to appear at the pre-trial conference, as authorized by Rule 20, Section 2, of the Rules of Court, thus: Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. Rectra did appear at the scheduled hearing but did not present to the court her power of attorney to represent Juan Dulos or even the medical certificate of his 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 motion to suspend proceedings be set on the date of the pre-trial conference. 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 attending to several detention prisoners. At any rate, the petitioners could have availed themselves of other counsel if their counsel then was unable to represent them at the conference. Secondly, the denial of the application for preliminary injunction was justified because the petitioners did not employ the proper remedy prescribed by the Rules of Court. As enumerated in Lina v. Court of Appeals, 3 the remedies available to a defendant declared in default are: 1. 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 was failure to answer or appear on the date set for pre-trial was due to fraud, accident, mistake or excusable negligence, and that he has a meritorious defense; 2. 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 petition for new trial under Sec. 1(a) of Rule 37;

3. If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Sec. 2, Rule 38; and 4. He may also appeal from the judgment rendered against him as contrary to the evidence or the law, even if no petition to set aside the order of default has been presented by him. The petitioners did not avail themselves of any of the above remedies. Instead, after taking no action whatsoever for all of sixty days, they filed a motion for 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 held in the Lina case: ... where the judgment rendered by the respondent court is the one sought to be annulled, a petition for relief, under Rule 38, which is a remedy in the ordinary course of law, could have been just as plain, adequate and speedy as certiorari ... No less significant is the fact that the judgment of the metropolitan trial court had already become final and executory because of the petitioners' failure to appeal therefrom on time. They were served with notice of the judgment on October 10, 1988, and filed a motion for reconsideration on October 18, 1988, which was denied on November 17, 1988. They therefore had until December 10, 1988, within which to perfect their appeal. They did not. 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 available, 4 as in this case. The filing of the petition for certiorari did not therefore suspend the period for appeal or prevent the judgment from becoming final. It is also noteworthy that the petitioners made no move to set aside the order of default rendered by the Metropolitan Trial Court although they were aware of it. Rectra was present when the said order was dictated in open court on August 18, 1988. It is reasonable to assume she immediately informed her brother, who had sent her there precisely to represent him at the proceedings. Even so, the petitioners did nothing until the judgment by default was rendered against them 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. The petitioners now contend that they could not have taken any action prior to the rendition of the judgment because they had never been furnished with copies of the order declaring them in default. This is unacceptable. It is obvious the petitioners have failed to take into account the following pertinent provisions of the Rules of Court concerning notices in case a party is declared in default: Rule 18, Sec. 2. Effect of order of default. — Except as provided in Section 9 of Rule 13, a party declared in default shall not be entitled to notice of subsequent proceedings, nor to take part in the trial. Rule 13, Sec. 9. Service upon party in default. — No service of papers other than substantially amended or supplemental pleadings and final orders or judgments shall be necessary on a party in default unless he files a motion to set aside the order of default in which event he shall be entitled to notice of all further processings regardless of whether the order of default is set aside or not. Rule 18, Sec. 3. Relief from order of default. — A party declared in default may at any time after discovery thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to

answer was due to fraud, accident, mistake or excusable neglect and that he has a meritorious defense. In such case the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. The term used in the last quoted section is discovery, not notice. And this is so because the defendant declared in default is not entitled to "notice of subsequent proceedings" under the preceding rules. In Suzara v. Caluag, 5 this Court held that a motion for reconsideration of a 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 must be filed within 60 days from the time petitioner learns of the decision but not more than 6 months from entry thereof, and (3) in case of failure to file an answer, the motion must be accompanied by affidavits of merit showing the fraud, accident, mistake and excusable negligence relied upon. We held in Yap v. Tañada 6 that a motion for reconsideration may be considered a motion for new trial under Sec. 2, Rule 37, if it is accompanied by an affidavit of merit. Since petitioners assert that their rights were impaired because they were prevented from presenting evidence of their defenses, it was a fatal omission for them not to attach to their motion an affidavit of merit, i.e., an affidavit showing the facts constituting the valid defense which the movant 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. The motion for reconsideration filed by the petitioners on October 18, 1988, with the Metropolitan Trial Court, and which is Annex "H" of the petition, was not verified. It does not appear also that it was accompanied by an affidavit of merit as required by the Rules. While this Court did declare in Continental Leaf Tobacco v. Intermediate Appellate Court, 7 "that judgments by default are not looked upon with favor," the default judgment in that case was set aside because there was excusable neglect. Besides, the petitioners had a meritorious defense which justified a relaxation of the procedural rules to allow full hearing on the substantive issues raised. Such circumstances have not been clearly shown in the case before us. A little more familiarity with our rules of procedure could have avoided the predicament in which the petitioners now find themselves. Unfortunately, the Court cannot give them any relief. They have not justified a relaxation of the said rules. While it is true that a litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure, to insure an orderly administration of justice. It is this symbiosis between form and substance that guarantees that desirable result. WHEREFORE, the petition is DISMISSED, with costs against the petitioner. It is so ordered. Gochangco vs CFI of Negros 157 scra 40 Facts: These appellate proceeding had its origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the decision of the lower court on the ground that a Clerk of Court is not legally authorized to receive evidence ex-parte. Issue: whether or not a Clerk of Court is not legally authorized to receive evidence exparte. Held: No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of

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. Gochangco vs CFI of Negros 157 scra 40 Facts: These appellate proceeding had its origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the decision of the lower court on the ground that a Clerk of Court is not legally authorized to receive evidence ex-parte. Issue: whether or not a Clerk of Court is not legally authorized to receive evidence exparte. Held: No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of 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. Gochangco vs CFI of Negros 157 scra 40 Facts: These appellate proceeding had its origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the decision of the lower court on the ground that a Clerk of Court is not legally authorized to receive evidence ex-parte. Issue: whether or not a Clerk of Court is not legally authorized to receive evidence exparte. Held: No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of 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. Gochangco vs CFI of Negros 157 scra 40 Facts: These appellate proceeding had its origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros reversed the decision of the lower court on the ground that a Clerk of Court is not legally authorized to receive evidence ex-parte. Issue: whether or not a Clerk of Court is not legally authorized to receive evidence exparte. Held: No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of 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. Gochangco vs CFI of Negros 157 scra 40 Facts: These appellate proceeding had its origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod. CFI of Negros

reversed the decision of the lower court on the ground that a Clerk of Court is not legally authorized to receive evidenceex-parte. Issue: whether or not a Clerk of Court is not legally authorized to receive evidenceex-parte. Held: No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of 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. G.R. No. L-49396 January 15, 1988 JUAN A. GOCHANGCO, HON. FELINO GARCIA, as Presiding Judge of the City Court of Bacolod, Branch I, and DEPUTY PROVINCIAL SHERIFF JOSUE DE JOSE, petitioners, vs. THE COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL, BRANCH IV, SY HO and MILAGROS MINORIA, respondents.

NARVASA, J.: Application of no more than quite elementary principles governing the modes of acquisition of jurisdiction by a court over the person of a defendant, default, substitution of parties plaintiff, judgment on the pleadings, and execution pending appeal in ejectment cases, is what is chiefly called for in this appeal by certiorari. These appellate proceedings had their origin in an action of unlawful detainer filed by C.N. Hodges in the City Court of Bacolod, Branch I, docketed as Civil Case No. 2838. Hodges sought the ejectment from certain parcels of land in Bacolod City titled in his name, of several persons, namely: Basilicio Macanan, Gertrude Nolan, Alejandro Santiago, Jr., Sy Ho, and Milagros Minoria. 1 Macanan, Nolan and Santiago were duly served with summons. Macanan died afterwards, and since his heirs could not be located, and hence could not be substituted in his place, the case against him was eventually dismissed without prejudice. 2 Santiago and Nolan voluntarily vacated the premises; so, the case was also dismissed as against them. 3 Summons was also duly served on Minoria. Although she refused to acknowledge such service, she subsequently filed an answer to the complaint, thru counsel. 4 Sy Ho also appears to have been served with summons, service being evidenced, it is claimed, by the return to this effect of the Provincial Sheriff. 5 But, as, will shortly be recounted, Sy Ho would later deny such service. Plaintiff Hodges died during the pendency of the ejectment suit; and on August 20,1964, the court-appointed Administrator of his estate, the Philippine Commercial and Industrial Bank (PCIB), was substituted as party plaintiff. 6 PCIB thereafter filed a motion to declare Sy Ho in default for failure to answer the complaint. This was granted, by Order of the City Court dated February 18, 1967. Sy Ho filed on March 2, 1967, a verified "Opposition to the Motion for Default." He alleged that he had never received summons; apparently the summons had been served at the place where he maintained his scrap iron business, which was not his residence and at which he had no representative authorized to receive court processes and notices; and he prayed that 'he be allowed to present his answer within ten (10) days and that if ever he has been already declared in default without due service of the notice to him, the said order be lifted." 7 The City Court overruled his opposition and 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 monthly rentals corresponding to the premises occupied by him directly to it, instead of to his co-defendant, Minoria, who apparently had therefore been acting as caretaker of the property. 9 At this point all proceedings in this ejectment suit, and another cases involving the late C. H. Hodges, were for the most part suspended for all intents and purposes by reason of controversies as regards the administration and hereditary rights over his not inconsiderable estate. Settlement of these controversies did not come until some 16 or 1 7 years later when, in the 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 conjointly in order to sell and dispose of for adequate consideration, the real properties composing the intermixed assets of the said estate in favor of Filipinos ..." Among the estate assets sold pursuant to those decisions were the lots subject of the ejectment suit at bar. They were sold to Juan A. Gochangco for P440,000.00 on December 17, 1975, and he obtained titles over them in his name in due course.11 Gochangco lost no time in advising Minoria and Sy Ho of his acquisition of the property and demanding their vacation thereof. 12 He also filed an "Ex-Parte Motion for Substitution of Plaintiff and Reception of Evidence" dated March 26, 1976, which the City Court granted by Order dated March 26, 1976. 13 Accordingly, Gochangco presented evidence ex-parte on March 30, 1976; this, as regards Sy Ho, who had been declared in default. 14 As regards defendant Minoria, Gochangco filed on March 29, 1976 a motion for judgment on the pleadings. 15 He contended that Minoria's answer failed to tender any issue because it admitted the material allegations of the complaint; that her answer also failed to disclose any privity between her and the late Manuel Moreno, whom she claimed to be co-owner of the house found on the premises in question, or any relationship whatever between Moreno, Hodges 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 same upon demand, and her failure to do so despite demand rendered her amenable to summary ejectment. In his turn, Sy Ho filed a motion to set aside order of default on April 5,1976 in which he also prayed to be allowed to present a written answer to the complaint. 16 To this motion he attached an "Affidavit of Merits" in which he 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 case; and he asked to be excused for his mistake or negligence for 'depending too much on his lawyer who formerly handled his case." 17 What the City Court did was to issue subpoenae for the appearance of Minoria and Sy on May 13, 1976, so that "they might have their day in Court." 18 But one day before his scheduled appearance, or on May 12, 1976, Sy Ho filed a 15-page Motion to 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 long span of time; and the cause of action was barred by the statute of limitations under PD No. 20 promulgated on October 12,1972 and G.O. No. 53 promulgated on August 21, 1975. 19 In the same motion he reiterated that in compliance with the Order of April 8, 1967, he had been paying rentals regularly and faithfully. 20 There followed various attempts by the parties, mostly on the court's initiative, to arrive at an amicable settlement. All failed Thereafter the City Court finally rendered judgment dated February 18, 1977 ordering Sy Ho and Minoria to 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 filed by By Ho and Minoria were denied, as were also, their second motions for reconsideration. 22 On August 29, 1977, Gochangco moved for execution pending appeal. He asserted that the judgment had become final as against Minoria, no appeal

having been perfected by her within the period therefor prescribed by law. And as regards Sy Ho, whose second motion for reconsideration was still pending, immediate execution was proper since the judgment was against a defendant, 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 the motion and issued the writ of execution on October 19, 1977. 24 In a 'Manifestation' dated October 25, 1975, Sy Ho stated that he had been "paying a monthly rental of P110.00 monthly directly to the Clerk of Court" and that "pending the final decision ... all (such payments should be) properly kept by the Clerk of Court. 25 Sy Ho and Minoria thereupon filed a joint petition for certiorari and prohibition with application for preliminary injunction discretion with the Court of First Instance of Negros Occidental. This was docketed as Civil Case No. 13484. The petition imputed grave abuse of discretion to the City Court in denying Sy Ho's motion to set aside order of default and motion to dismiss; in granting Gochangco's ex-parte motion to be substituted as party plaintiff; in receiving 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 to be without jurisdiction in view of P.D. No. 20 and G.O. No. 53.26 In the answer filed by him on requirement of the Court, Gochangco averred that the immediate execution of the judgment was justified by Section 8, Rule 70 of the Rules of Court and settled jurisprudence; that any defect in the service of summons on Sy Ho had been cured by his voluntary appearance through submission of 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 under the circumstances; that the action for certiorari could not result in an adjudication for the payment of damages since it is simply meant to cure jurisdictional defects, which are non-existent in the case; and Sy Ho's situation is not covered by PD No. 20 or G.O. No. 53 because he was occupying the premises in question not as a dwelling but for purposes of his scrap iron business. 27 At the pre-trial held on February 21, 1978, Sy Ho admitted, thru counsel, that he had indeed voluntarily appeared before the City Court and had thereby submitted himself to its jurisdiction. 28 On August 29, 1978, judgment was rendered by the Court of First Instance granting the writ of certiorari and annulling all the proceedings in Civil Case No. 2838 of the City Court of Bacolod. 29 The Court said: A fundamental tenet of procedural due process has been violated in the case under review. Was the petitioner Sy Ho properly served with summons and complaint in Civil Case No. 2838? The 2nd Indorsement dated June 3, 1961 signed by Pat. R. Bravo of the Bacolod Police Department reads as follows: Respectfully returned to the Mun. Court copy with all summons and complaint has delivered personally to Milagros Minoria but however she refused to sign dated 6-2-61 8:30 a.m. At the bottom of this indorsement a 3rd Indorsement dated June 16, 1961 was made by Deputy Sheriff Esmalia, which reads: Respectfully returned to the Municipal Court, Bacolod City, the within summons duly served as per return of service of the Chief of Police of Bacolod City.

Now, on the basis of this indorsement this Court is not convinced that proper service was made upon defendant Sy Ho in Civil Case No. 2838. The return of the deputy sheriff to the effect that summons was duly served is contradicted by the return made by Pat. R. Bravo which is the basis of the 3rd Indorsement to the effect that summons and complaint has (sic) delivered personally to Milagros Minoria but however she refused to sign. There is no showing at all in these endorsements that petitioner Sy Ho himself was properly served with summons. If petitioner Sy Ho was not properly served with summons there was no basis at all for respondent court to declare him in default. By declaring Sy Ho in default under the circumstances, the court acted with grave abuse of discretion. This is elementary law too obvious to need any citation of authorities. If the declaration of default was null and void all proceedings thereafter would be null and void. Triggered by this illegal declaration of default, the reception of evidence ex parte before a deputy clerk of court was null and void, not only because of the previous nullity of the declaration of default but also because under 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 receive evidence ex-parte. The decision rendered on the basis of the evidence received ex parte would logically be a nullity. Hence, if only upon this ground alone the proceedings in the court below would be fatally flawed. ... The Trial Court erred. Whatever defect might have existed in the return of the service of summons on Sy Ho was rendered inconsequential by subsequent events, duly entered in the record, demonstrating that service of summons had indeed been effected and Sy Ho had voluntarily submitted himself to the jurisdiction of the City Court. Assuming it to be true, as claimed, that summons addressed to Sy Ho had been 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 processes and notices, this would be of no moment. This is valid service. It is expressly authorized by the Rules. It is substituted service, allowed when the defendant cannot be served personally within a reasonable time, in which event, service may be effected by leaving copies of the summons at defendants dwelling house or residence with some person of suitable age and discretion then residing therein, or at his office or regular place of business with some competent person in charge thereof. 30 Nor is it necessary that the person in charge of the defendant's regular place of business be specially authorized to receive the summons. It is enough that he appears to be in charge. Sy Ho's contention that "substituted service is not allowed in ejectment cases" 31 is absolutely without foundation. Implicit in that contention however is the acknowledgment that there had in truth been substituted service of summons on him. 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 seasonably to the fault of his counsel — who he said had failed to make the "proper follow-up" — and asked to be excused for "depending too much on his lawyer." Here is another clear admission, no less cogent because merely implied, that the reason for his omission to answer the complaint was not really the failure of service of summons on him but his lawyer's negligence. The record also demonstrates that he was indeed correctly declared in default, and he failed to adduce any tenable grounds for the setting aside of that declaration. He did fail to answer the complaint within the reglementary period therefor prescribed, and proof of such failure had in due course been adduced. 33 And even if that failure may in truth be blamed on his lawyer, there

is nothing in the record excusing that negligence, or showing fraud, accident or mistake warranting the Court's setting aside of the order of default. 34 In any case, Sy Ho never really pressed the issue of the efficacy of service of summons on him with vigor or persistence Instead, he submitted himself to the Court's jurisdiction. His submission to the Court's jurisdiction is necessarily inferred from his act of request for leave to present his answer to the complaint, 35 of voluntarily complying with the City Court's Order for the payment of rentals, and filing various other motions and pleadings. 36There is, too, his 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 proposition that jurisdiction of his person had been acquired by the City court by his voluntary appearance and acquiescence. 38 The record furthermore discloses that the prejudice to Sy Ho occasioned by the declaration of default against him was nominal and minimal. For his default notwithstanding, he was in fact able fully and exhaustively to present his side to the Court. He submitted his defenses to the action to the Court. This he did by filing a Motion to dismiss setting up said defenses, 39 and presenting two (2) motions for reconsideration of the City Court's decision, urging and arguing those same defenses. 40 And the record shows that these defenses were duly considered and dealt with in the judgment of the City Court. 41 Withal, an analysis of those defenses reveals their lack of merit. The assertion, for instance, that the complaint falls to state a cause of action is incorrect; an examination of the complaint shows that it does set out the ultimate facts constituting causes of action for ejectment. 42 The assertion that the action had 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 ejectment is barred under PD 20 and GO 53 is also untenable, since it is not disputed that Sy Ho is being ejected, not from his residence but from his place of business. In the light of these considerations, it would be inutile to set aside the order of default against Sy Ho, assuming there were basis therefor, to give him opportunity to appropriately plead and present evidence on his aforesaid defenses which cannot be sustained anyway and are on their face unmeritorious. 43 The substitution of parties plaintiff effected in this case was also proper. Here, the original plaintiff died pending trial. He was substituted by the administrator of his estate, duly appointed by competent judicial authority. This substitution was entirely correct, mandated in fact by Section 17, in relation to Section 3, Rule 3 of the Rules of Court. 44 On the other hand, Gochangco's substitution as party plaintiff in place of the administrator was also appropriate. Gochangco had purchased the property of the decedent involved in the ejectment suit. He therefore became a real party in interest in that action, replacing the estate, or the heirs, and his replacement of the latter was fully justified by Section 2, Rule 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 action and in obtaining the relief demanded," 45 as well as Section 20, of the same rule providing that in case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party. 46 Also correct was the rendition of judgment on the pleadings as against Minoria. Minoria's answer admitted the material averments of the complaint and failed to include allegations establishing her claim for compensation as being, supposedly, the authorized caretaker of the house. Judgment on the pleadings was therefore properly rendered on plaintiff's motion. It is sanctioned by Section 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 material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading." 47 The propriety of the order authorizing execution of the ejectment judgment 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 rendered against the defendant, execution shall issue immediately, unless an 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 executed to the plaintiff to enter the action in the Court of First Instance and to pay the rents, damages, and costs accruing down to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under the contract, if any, as found by the judgment of the justice of the peace or municipal court to exist. ..." 48 There is no showing that Sy Ho had taken these requisite steps to stay execution of the judgment. The respondent Court also declared null and void 'the reception of evidence ex parte before ... (the) deputy clerk of court." It invoked what it termed 'the doctrinal rule laid down in the recent case of Lim Tan Hu vs. Ramolete, 66 SCRA 430, promulgated on August 29, 1975 (inter alia declaring that) a Clerk of Court is not legally authorized to receive evidence ex-parte. 49 Now, that declaration does not reflect long observed and established judicial practice with respect to default cases. It is not quite consistent, too, with the several explicitly authorized instances under the Rules where the function of receiving evidence and even of making recommendatory findings of facts on the basis thereof may be delegated to commissioners, inclusive of the Clerk of Court. These instances are set out in Rule 33, treating of presentation of evidence before commissioners, etc., in particular situations, such as when the trial of an issue of fact requires the examination of a long account, or when the taking of an account is necessary for the information of the court, or when issues of fact arise otherwise than upon the pleadings or while carrying a judgment or order into effect; 50Rules 67 and 69, dealing with submission of evidence also before commissioners in special civil actions of eminent domain and partition, respectively; Rule 86 regarding trials of contested claims in judicial proceedings for the settlement of a decedent's estate; Rule 136 empowering the clerk of court, when directed by the judge inter alia to receive evidence relating to the accounts of executors, administrators, guardians, trustees and receivers, or relative to the settlement of the estates of deceased persons, or to guardianships, trusteeships, or receiverships. In all these instances, the competence of the clerk of court is assumed. Indeed, there would seem, to be sure, nothing intrinsically wrong in allowing presentation of 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 appropriate and seasonable application, may bring about the undoing thereof or the elimination of prejudice thereby caused to him; and it is, after all, the 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 considering and analyzing the evidence preparatory to rendition of judgment on the merits, it may not unreasonably be assumed that any serious error in the exparte presentation of evidence, prejudicial to any absent party, will be detected and duly remedied by the Court, and/or may always, in any event; be drawn to its attention by any interested party. As observed by the late Chief Justice Fred Ruiz Castro — 52 No provision of law or principle of public policy prohibits a court from authorizing its clerk of court to receive the evidence of a party litigant. After all the reception of 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. This task of receiving evidence precludes, on the part of the clerk of court, the exercise of judicial discretion usually called for when the other party who is present objects to questions propounded and to the admission of the documentary evidence preferred (Wack Wack Golf and country Club, inc. vs. court of Appeals, 106 Phil. 501). More importantly, the duty to render judgment on the merits of the case still rests with the judge who is obliged to personally and

directly prepare the decision based upon the evidence reported (Province of Pang vs. Palisoc, 6 SCRA 299). The underlying philosophy of the doctrine of default is that the defendant's failure to answer the complaint despite receiving copy thereof together with summons, is attributable to one of two causes: either (a) to his realization that he has no defenses to the plaintiffs cause and hence resolves not to oppose the complaint, or, (b) having good defenses to the suit, to fraud, accident, mistake or excusable negligence which prevented him from seasonably filing an answer setting forth those defenses,. 53 It does make sense for a defendant without 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 action at all. For even if he did intervene, the result would be the same: since he would be unable to establish any good defense, having none in fact, judgment would inevitably go against him. And this would be an acceptable result, if not being in his power to alter or prevent it, provided that the judgment did not go 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 indefensible. On the other hand, if he did have good defenses, it would be unnatural for him not to set them up properly and timely, and if he did not in fact set them up, it must be presumed that some insuperable cause prevented him from doing so: fraud, accident, mistake, excusable negligence. In this event, the law will grant him relief, and the law is in truth quite liberal in the reliefs made available to him: a motion to set aside the order of default prior to judgment; 55 a motion for new trial to set aside the default judgment; 56 an appeal from the judgment by default even if no motion to set aside the order of default or motion for new trial had been previously presented; 57 a special civil action for certiorari impugning the court's jurisdiction. 58 A defendant in default is not and should not be placed in a situation more favorable than a defendant who has answered but who fails to appear for trial despite notice. In the latter case, as in the former, the trial may proceed ex parte, 59 but is not invalidated by the fact merely that reception of evidence had been undertaken by the clerk of court on the Court's instructions; this, despite the fact that the judgment that may be rendered on the basis of such an ex parte trial may award reliefs exceeding the amount or different from that, prayed for in the complaint, unlike a judgment by default which cannot differ from or go beyond what is set down in the prayer of the complaint. It was therefore error for the Court a quo to have declared the judgment by default to be fatally flawed by the fact that the plaintiffs evidence had been received not by the Judge himself but by the clerk of court. One last word. The City Court and City Sheriff were impleaded as parties petitioners in the petition at bar. This is incorrect. They are not proper parties. They do not have — and should not have — any interest in the subject of the instant proceedings, either in obtaining any relief in respect thereto of any nature whatsoever, or in the success of the petitioner. Only Gochangco is the proper party petitioner. WHEREFORE, the judgment of the Court of First Instance of August 29, 1978 is reversed and set aside, and that of the City Court dated February 18, 1977 reinstated and affirmed in toto. Costs against private respondents. INDIANA AEROSPACE UNIVERSITY vs. CHED FACTS: Dr. Reynaldo B. Vera, Chairman, Technical Panel for Engineering, Architecture, and Maritime Education (TPRAM) of [CHED], received a letter from Douglas R. Macias, Chairman, Board of Aeronautical Engineering, Professional Regulat[ory] Commission (PRC) and Chairman, Technical Committee for Aeronautical Engineering (TPRAME) inquiring whether [petitioner] had already acquired [u]niversity status in view of the latter's advertisement in [the] Manila Bulletin. Dr. Vera formally referred the aforesaid letter to Chairman Alcala with a request 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, requesting said office to conduct an investigation and submit its report.

filed a Motion to Admit Written Opposition stating the reasons for the same, 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 it used] the term university unless the school ha[d] complied [with] the basic requirement of being a university as prescribed in CHED Memorandum Order No. 48, s. 1996. As a consequence of said Report, [respondent's] Legal Affairs Service was requested to take legal action against [petitioner]. Subsequently, [respondent] directed [petitioner] to desist from using the term University, including the use of the same in any of its alleged branches.

RTC then granted [Petitioner's] Motion to Declare [Respondent in Default]. Respondent filed with the CA a Petition for Certiorari, arguing that the RTC had committed grave abuse of discretion (a) in denying the former's Motion to Dismiss, (b) in issuing a Writ of Preliminary Injunction, and (c) in declaring respondent in default despite its filing an Answer.

In the course of its investigation, [respondent] was able to verify from the Securities and Exchange Commission (SEC) that [petitioner had] filed a proposal to amend its corporate name from Indiana School of Aeronautics to Indiana Aerospace University, which was supposedly favorably recommended by the Department of Education, Culture and Sports (DECS) and on [that] basis, SEC issued to [petitioner] Certificate of Registration. Surprisingly, however, it ought to be noted, that SEC Chairman Perfecto R. Yasay, Jr. wrote a letter to the [c]hairman of [respondent] which stated that SEC records show that the corporation has not filed any amended articles of incorporation that changed its corporate name to include the term 'University.' In case the corporation submit[s] an application for change of name, your Cease and Desist Order shall be considered accordingly. In reaction to [respondent's] order for [petitioner] to desist from using the word '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 the provisions of CMO No. 48. The appeal of [petitioner] was however rejected by [respondent] in its decision and [the latter] ordered the former to cease and desist from using the word 'University.' However, prior to this decision, [petitioner] filed a Complaint for Damages with prayer for Writ of Preliminary and Mandatory Injunction and Temporary Restraining Order against [respondent] with the Regional Trial Court (RTC) of Makati City. Respondent filed a Special Appearance with Motion to Dismiss, based on 1) improper venue; 2) lack of authority of the person instituting the action; and 3) lack of cause of action. Petitioner filed its Opposition to the Motion to Dismiss [on] grounds stated therein, to which [respondent] filed a Reply reiterating the same arguments in its Motion to Dismiss. After due hearing, [petitioner] formally offered its evidence while [respondent] made a formal offer of evidence to which [petitioner] filed its Comments/Objections and finally, [respondent] submitted its Memorandum relative thereto. The RTC denied [respondent's] Motion to Dismiss and at the same time, issued 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 Order. Petitioner filed before the RTC a Motion To Declare [Respondent] in [D]efault pursuant to Section 3, Rule 9 in relation to Section 4, Rule 16 of the Rules of Court, as amended, and at the same time praying [for] the Motion to [S]et for [H]earing on October 30, 1998 at 8:30 a.m. On the same date, [respondent] filed a Motion For Extension of Time to File its Answer. Petitioner, on November 11, 1998 filed its Opposition to the Motion for Extension of Time to File [Respondent's] Answer and a Motion to Expunge [Respondent's] Answer and at the same time praying that its [M]otion be heard on November 27, 1998 at 9:00 a.m. RTC issued an Order directing the Office of the Solicitor General to file within a period of ten (10) days from date its written Opposition to the Motion to Expunge [Respondent's] Answer and within the same period to file a written [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

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 by respondent as required under existing law and CHED rules and regulations. The CA also ruled that Writ of Preliminary Injunction had improvidently been issued. The doubtful right claimed by petitioner is subordinate to the public interest to protect unsuspecting students and their parents from the unauthorized operation and misrepresentation of an educational institution. CA also ruled that respondent should not have been declared in default, because its Answer had been filed long before the RTC ruled upon petitioner's Motion to declare respondent in default. Thus, respondent had not obstinately refused to file an Answer; on the contrary, its failure to do so on time was due to excusable negligence. Thus this petition. ISSUE: Whether it was right to dismiss the case HELD: YES. Petitioner claims that the CA went beyond its limited jurisdiction under Rule 65 when it reversed the trial court and dismissed the Complaint on the ground that petitioner had failed to state a cause of action. The RTC had yet to conduct trial, but the CA already determined the factual issue regarding petitioner's acquisition of university status, a determination that is not permitted in certiorari proceedings. The CA ruled that the trial court gravely abused its discretion in denying respondent's Motion to Dismiss on the ground of lack of cause of action because of petitioner's lack of legal authority or right to use the word "university." 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 certiorari is not intended to correct every controversial interlocutory ruling; it is resorted to only to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an 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 not designed to correct erroneous findings and conclusions made by the court. In the case at bar, we find no grave abuse of discretion in the RTC's denial of 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 with the Securities and Exchange Commission as the "Indiana School of Aeronautics, Inc." That name was subsequently changed to "Indiana Aerospace University" after the Department of Education, Culture and Sports had interposed no objection to such change. Respondent issued a formal Cease and Desist Order directing petitioner to stop using the word "university" in its corporate name. The former also published an announcement in an issue of Freeman, a local newspaper in Cebu City, that there was no institution of learning by that name. The counsel of respondent 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, fraud and misrepresentation of itself as a university. Such acts, according to the RTC undermined the public's confidence in petitioner as an educational institution.18 This was a clear statement of a sufficient cause of action. 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 court must pass upon this issue based solely on such allegations, assuming them to be true. For it to do otherwise would be a procedural error and a denial of plaintiff's right to due process. SUMMARY OF OTHER ISSUES: TIMELINESS OF CERTIORARI: Respondent's Petition for Certiorari was seasonably filed. In computing its timeliness, what should have been considered was not the Order of august 14, 1998, but the date when 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 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. MOTION FOR RECON or PETITION FOR CERTIORARI: The general rule is 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) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency is obvious or (4) special circumstances warrant immediate or more direct action.6 It is patently clear that the regulation or administration of educational institutions, especially on the tertiary level, is invested with public interest. Hence, the haste with which the solicitor general raised these issues before the appellate court is understandable. For the reason mentioned, we rule that respondent's Petition for Certiorari did not require prior resort to a motion 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 improvidently been issued. Lina v. Court of Appeals discussed the remedies available to a defendant declared in default, as follows: (1) a motion to set aside the order of default under Section 3(b), Rule 9 of the Rules of Court, if the default was discovered before judgment could be rendered; (2) a motion for new trial under Section 1(a) of Rule 37, if the default was discovered after judgment but while appeal is still available; (3) a petition for relief under Rule 38, if judgment has become final and executory; and (4) an appeal from the judgment under Section 1, Rule 41, even if no petition to set aside the order of default has been resorted to. These remedies, however, are available only to a defendant who has been validly declared in default. Such defendant irreparably loses the right to participate in the trial. On the other hand, a defendant improvidently declared in default may retain and exercise such right after the order of default and the 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 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 event that judgment has been rendered, to have such order and judgment declared void. 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 cause irreparable damage. If, in the course of trial, a judge proceeds without or in excess of jurisdiction, this rule prohibiting an appeal does not leave the aggrieved party without any remedy.8 In a case like this, a special civil action of certiorari is the plain, speedy and adequate remedy. GRAVE ABUSE OF DISCREATION: The trial court gravely abused its discretion when it declared respondent in default despite the latter's filing of an Answer. Placing respondent in default thereafter served no practical purpose.

PRELLIMINARY INJUNCTION: The trial court acted with grave abuse of discretion in issuing the Writ of Preliminary Injunction against respondent. Petitioner failed to establish a clear right to continue representing itself to the 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 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 Manual of Regulations for Private Schools. Section 3, Rule 58 of the Rules of Court, limits the grant of preliminary injunction to cases in which the plaintiff is clearly entitled to the relief prayed for. Gajudo v Traders Royal Bank || Gr no 151098 || 14 March 2008

Note: Petitioners here are the 4 Gajudos and 1 Chua and that the property was owned by them in common. (Thus, I’d refer to them as the Gajudos, Chua, or petitioners (all of them).

Doctrine: The mere fact that a defendant is declared in default does not automatically result in the grant of the prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that would be required if the defendant were still present. A party that defaults is not deprived of its rights, except the right to be heard and to present evidence to the trial court. If the evidence presented does not support a judgment for the plaintiff, the complaint should be dismissed, even if the defendant may not have been heard or allowed to present any countervailing evidence.

Summary: Chua obtained a loan from TRB secured by a Real Estate Mortgage of a property owned in common by Chua and the Gajudos. They failed to settle the loan and thus there was an extrajudicial foreclosure of the property in which the winning bidder was the bank. The petitioners contend that they were allowed by the bank to repurchase the property but it was sold to another. The petitioners state that that said new defendants they included in their amended complaint conspired with the bank in canceling the notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice so now they are 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 damages. The petitioners contend that since the bank was declared in default the pieces of evidence they presented must already be sufficient for them to have a favorable judgment. But evidence presented not sufficient. Hence, doctrine.

Facts:

In mid 1977 Danilo Chua obtained a loan from the Traders Royal Bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land.

The loan was not paid and thus the bank commenced extra-judicial foreclosure proceedings on the property. The auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on Chu’s request, which, however, was made without the knowledge and conformity of the other 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 P24,911.30.

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 education; that, although the period of redemption had long expired, Chua offered to buy back, and bank also agreed to sell back the foreclosed property, on the understanding that Chua would pay the bank the amount of P40,135.53, representing the sum that the bank paid at the auction sale, plus interest and that Chua made an initial payment thereon in the amount of P4,000.00 duly receipted by the bank; that, in a sudden change of position, the bank wrote Chua asking that he could repurchase the property, but based on the current market value thereof; and that sometime later, the bank wrote Chua anew, requiring him to tender a new offer to counter the offer made thereon by another buyer.

The bank, filed its answer with counterclaim, asserting that the foreclosure sale of the mortgaged property was done in accordance with law; and that the bid 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 banking practice and regulations.

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 certificate of title of the foreclosed property, had already been cancelled. Accordingly, with leave of court, the petitioners amended their complaint, but 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 Lorna Roque, and included an additional cause of action, to wit: that said new defendants conspired with the bank in canceling the notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on the bank. Supposing that all the defendants had 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 motion for reconsideration, thereunder alleging that they received by registered mail, on 19 October 1990, a copy of the bank’s answer with counterclaim, dated 04 October 1990, which copy was attached to the motion. The trial Court denied for lack of merit, the motion for reconsideration, therein holding that the answer with counterclaim filed by the bank referred to another civil case pending before Branch 90 of the same Court.

The CA ruled in favor of respondent bank. Even if the CA stated that the erroneous docket number placed on the Answer filed before the trial court was not an excusable negligence by the bank’s counsel and that these were binding on the bank, the petitioners had not convincingly established their right to relief as there was no ground to invalidate the foreclosure sale of the mortgaged property. They stated that an extrajudicial foreclosure sale did not require personal notice to the mortgagor, that there was no allegation or proof of noncompliance with the publication requirement and the public posting of the notice of sale, and that there was no showing of inadequacy of price as no competent evidence was presented to show the real market value of the land 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 Petitioner Chua only showed, at most, that the former had made a proposal for the latter to buy back the property at the current market price.

The petitioners argue that the quantum of evidence for judgments flowing 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)

Issues: Whether or not the CA erred in failing to apply the provisions of Sec 3, Rule 9 ([and in applying instead] the rule on preponderance of evidence under Section 1, Rule 133 of the Rules of Court.) - No

Held: No, the CA did not err. Between the two rules, there is no incompatibility that would preclude the application of either one of them. Section 3 of Rule 9 governs the procedure the trial court is directed to take when a defendant fails to file an answer. According to this provision, the court "shall proceed to render 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 of the relief that may be granted.

Basic is the rule that the party making allegations has the burden of proving them by a preponderance of evidence. Moreover, parties must rely on the strength of their own evidence, not upon the weakness of the defense offered by their opponent. This principle holds true, especially when the latter has had no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that may be 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 resolution upon submission by petitioners of proof of service of the motion on the bank. Upon proof that petitioners had indeed served the bank with a copy of said motion, the Trial Court issued an Order of default against the bank. On petitioners’ motion, they were by the Court allowed to present evidence ex parte. Thereafter, the Trial Court rendered the new questioned partial decision.

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.

Complainants are not automatically entitled to the relief prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has ascertained that the relief is warranted by the evidence offered and the facts proven by the presenting party. Being declared in default does not constitute a waiver of rights except that of being heard and of presenting evidence in the trial court. Although the 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 dismissed.

While petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they were not excused from establishing their claims for damages by the required quantum of proof under Section 1 of Rule 133.

conditional sale over the parcel of land was later issued in favor of sps. Relova. 

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 foreclosure was Addio properties. Of the amount paid by Addio, 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 Branch Clerk of Court.



Monzon argues that she has already fulfilled her obligation to the spouses via dacion en pago evidenced by the Deed of Conditional Sale and the Deed of Absolute Sale.



Due to Monzon and counsel’s absence on said hearing date despite due notice, granted an oral Motion by the respondents by issuing an Order allowing the ex parte presentation of evidence by respondents.



Atty. Luna should deliver the residue to spouses Relova and Perez. At this point in time, Addio properties intervened.

Moreover, the grant of damages was not sufficiently supported by the evidence for the following reasons.

1.

2.

The petitioners were not deprived of their property without cause. There has been no allegation or proof of noncompliance with the requirement of publication and public posting of the notice of sale. Neither has there been competent evidence to show that the price paid at the foreclosure sale was inadequate. Thus, there was no ground to invalidate the sale. The petitioners have not convincingly established their right to damages on the basis of the purported agreement to repurchase. Without reiterating our prior discussion on this point, we stress that entitlement to actual and compensatory damages must be proved even under Section 3 of Rule 9.

In sum, the petitioners have failed to convince this Court of the strength of their position, notwithstanding the advantage they enjoyed in presenting their evidence ex parte. Not in every case of default by the defendant is the complainant entitled to win automatically.

RTC:

CA: Affirmed RTC, denied Monzon’s appeal re : violation of due process since she was not allowed to present in court again after not appearing in first hearing (order of default) Issue : Whether or not there was a cause of action against Atty Luna. – No.

Hence, the petition is denied.

Held.

Case : Monzon v Relova

SC : Reversed and set aside the ruling of the CA. Atty. Luna should not deliver the residue to the spouses since Rule 68 governs judicial foreclosure and the issue at bar is under Act 3135 Extrajudicial Foreclosure.

Doctrine : A cause of action is the act or omission by which a party violates the right of another. A cause of action exists if the elements are present: 1. 2. 3.

Right in favor of plaintiff by whatever means and under whatever law it arises or is created An obligation on the part of the named defendant to respect or not to violate such right An act or omission on the part of such defendant violative of the right of plaintiff or constituting breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages

Fast Recit : Spouses Relova and Perez filed a petition for injunction since Monzon issued promissory notes to the respective spouses with lots as security (2A- Perez, Lot 2B- Relova). Monzon was indebted to Coastal Lending which foreclosed the property due to the non-payment of Monzon’s 3.4 million debt. Addio was the highest bidder in the sale. There was an excess of 1.6 M from Addio’s payment of 5M. The Spouses contend that they should be given the residue as stated in Rule 68, Sec 4. The residue money is with Atty. Luna (clerk of court). However, case at bar involves Extrajudicial Foreclosure (Act 3135) 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 injunction is to be treated as complaint for collection of money.

Also, the SC ruled that the Failure to file a responsive pleading within the reglementary period is the sole ground for an order of default and not the nonappearance during oral motion. The case is remanded back to trial court for respondents to submit a manifestation where the petition for injunction should be treated as complaint for the collection of money. Ratio: Rule 68 governs judicial foreclosure of mortgages. Extrajudicial foreclosure of mortgages which was what transpired in the case at bar is governed by Act 3135. Unlike Rule 68, Act 3135 does not grant to junior encumbrancers the right to receive the balance of the purchase price. The only right given to second mortgagees in said issuances is the right to redeem foreclosed property pursuant to Sec 6 of Act 3135 “any person having lien on the property subsequent to mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one yr from and after date of the sale. A cause of action is the act or omission by which a party violates the right of another. A cause of action exists if the elements are present: 1.

Facts : 



Spouses Relova and Perez filed a petition for Injunction. They allege that Monzon issued a promissory note in favor of sps. Perez. The amount was P600K and secured by Lot2A in Brgy Kaybagal, Tagaytay City with about 300 sqm. A deed of absolute sale over the parcel of land was later executed in favor of the Perez spouses. The same thing happened with sps. Relova wherein a promissory note in the amount of P200k was issued secured by Lot2B with about 200 sqm. There was a 5% interest per month. A deed of

2. 3.

Right in favor of plaintiff by whatever means and under whatever law it arises or is created An obligation on the part of the named defendant to respect or not to violate such right An act or omission on the part of such defendant violative of the right of plaintiff or constituting breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages

In view of the foregoing, the respondent spouses do not have a cause of action 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 manifestation where the petition for injunction should be treated as complaint for the collection of money. If respondents answer in affirmative, case shall proceed with presentation of evidence for defense. If Monzon successful in proving defense of dacion en pago, there would be double sales with Addio. The remedy of respondent is to recover possession. If Addio is entitled to properties, respondents’ remedy is to file action for damages against Monzon.

noted that the second sentence of Section 1 of Rule 9 does not only supply exceptions to the rule that defenses not pleaded either in a motion to dismiss or in the answer are deemed waived, it also allows courts to dismiss cases motu proprio on any of the enumerated grounds. The tenor of the second sentence of the Rule is that the allowance of a motu propio dismissal can proceed only from the exemption from the rule on waiver; which is but logical because there can be no ruling on a waived ground.

If respondents answer in negative, the case shall be dismissed without prejudice to the exercise of respondents’ rights as mortgage creditors. They will be first mortgagor if their mortgage was executed prior to execution of contract with Addio.

A failure to allege earnest but failed efforts at a compromise in a complaint among members of the same family, is not a jurisdictional defect but merely a defect in the statement of a cause of action. 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 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 the failure to comply with a condition precedent was filed in the trial court; neither was such failure assigned as error in the appeal that respondent brought before the Court of Appeals.

CASE DIGEST: HEIRS OF DR. MARIANO FAVIS, SR. v. JUANA GONZALES FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar (Capitolina) with whom he had seven children. When Capitolina died in March 1994. Dr. Favis married Juana Gonzalez (Juana), his common-law wife with 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 Larcelita D. Favis (Larcelita), with whom he has four children. Dr. Favis died intestate on July 29, 1995. On October 16, 1994, prior his death, he allegedly executed a Deed of Donation transferring and conveying properties in favor of his grandchildren with Juana. Claiming the said donation prejudiced their legitime, Dr. Favis children with Capitolina, petitioners herein, filed an action for annulment of the Deed of Donation, inventory, liquidation, liquidation and partition of property before the RTC against Juana, Sps. Mariano and Larcelita and their grandchildren as respondents. RTC nullified the Deed of Donation. The trial court found that Dr. Favis, at the 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 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 complaint. 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

Therefore, the rule on deemed waiver of the non-jurisdictional defense or objection is wholly applicable to respondent. If the respondents as partiesdefendants could not, and did not, after filing their answer to petitioners complaint, invoke the objection of absence of the required allegation on earnest efforts at a compromise, the appellate court unquestionably did not have any authority or basis to motu propio order the dismissal of petitioners complaint. The correctness of the finding was not touched by the Court of Appeals. The respondents opted to rely only on what the appellate court considered, erroneously though, was a procedural infirmity. The trial court's factual finding, therefore, stands unreversed; and respondents did not provide us with any argument to have it reversed. The decision of the Court of Appeals is reversed and set aside and the Judgment of the Regional Trial Court is AFFIRMED. GRANTED.