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FIRST DIVISION

MOMARCO IMPORT G.R. No. 192477

COMPANY, INC.,
Petitioner, Present:

SERENO, C.J,
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
PERLAS-BERNABE, and
CAGUIOA,JJ

Promulgated:
FELICIDAD VILLAMENA, JUL 2 7 201&
.. __.....
Respondent. 5 W?'"
x------------------------------------------------------------~------------------x

DECISION

BERSAMIN, J.:

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.

The Case

Under challenge by the petitioner is the affirmance on January 14,

2010 by the Court of Appeals (CA) 1 of the trial court's default judgment
rendered against it on August 23, 1999 in Civil Case No. C-18066 by the
Regional Trial Court (RTC), Branch 126, in Caloocan City. 2 The defendant
hereby prays that the default judgment be undone, and that the case be
remanded to the RTC for further proceedings, including the reception of its
evidence. 3
1
Rollo, pp. 20-24; penned by Associate Justice Arcangelita Romilla-Lontok (retired), with Associate
Justice Andres B. Reyes, Jr. (now Presiding Justice) and Associate Justice Priscilla J. Baltazar-Padilla
concurring.
2
CArollo, pp. 10-12; penned by Judge Luisito C. Sardillo.
Rollo, p. 16.

p,
 I'
Decision
'!.,
2 G.R. No. 192477
I .

Antecedents

Civil Case No. C-18066 is an action the respondent initiated against

the petitioner for the nullification of a deed of absolute sale involving
registered real property and its improvements situation in Caloocan City as
well as of the transfer certificate of title issued in favor of the latter by virtue
of said deed of absolute sale on the ground of falsification.

The following factual and procedural antecedents are summarized by

the CA in its assailed decision, to wit:

On September 23, 1997, plaintiff filed against defendant a

complaint for "Nullification of Deed of Sale and of the Title Issued"
pursuant thereto alleging that she is the owner of a parcel of land with
improvements located in Caloocan City and covered by Transfer
Certificate of Title No. 204755. A letter from defendant corporation dated
June 12, 1997, informed plaintiff that TCT No. 204755 over aforesaid
property had been cancelled and TCT No. C-319464 was issued in lieu
thereof in favor of defendant corporation on the strength of a purported
Special Power of Attorney executed by Dominador Villamena, her late
husband, appointing her, plaintiff Felicidad Villamena, as his attorney-in-
fact and a deed of absolute sale purportedly executed by her in favor of
defendant corporation on May 21, 1997, the same date as the Special
Power of Attorney. The Special Power of Attorney dated May 21, 1997 is
a forgery. Her husband Dominador died on June 22, 1991. The deed of
sale in favor of defendant corporation was falsified. What plaintiff
executed in favor of Mamarco was a deed of real estate mortgage to secure
a loan oLP.100,000.00 and not a deed of transfer/conveyance.

xx xx

On August 19, 1998, plaintiff filed a motion to declare defendant

corporation in default for failure of aforesaid defendant to file its answer
as of said date despite the filing of an Entry of Appearance by its counsel
~
dated May 4, 1998.

On September 10, 1998 defendant corporation filed its Answer

with Counterclaim which denied the allegations in the complaint; alleged
that plaintiff and her daughter Lolita accompanied by a real estate agent
approached the President of Momarco for a loan of Pl 00,000.00; offered
their house and lot as collateral; and presented a Special Power of
Attorney from her husband. She was granted said loan. Aforesaid loan was
not repaid. Interests accumulated and were added to the principal. Plaintiff
offered to execute a deed of sale over the property on account of her
inability to pay. Plaintiff presented to defendant corporation a deed of sale
and her husband's Special of Power Attorney already signed and
4
notarized.

4
Id. at 21-22.

<;.,


Decision 3 GR. No. 192477

Under the order dated October 15, 1998, the petitioner was declared in
default, and its answer was ordered stricken from the records. Thereafter, the
RTC allowed the respondent to present her evidence ex parte.

On August 23, 1999, the RTC rendered the default judgment

nullifying the assailed deed of absolute sale and the transfer certificate of
title issued pursuant thereto; and ordering the Register of Deeds of Caloocan
City to cancel the petitioner's Transfer Certificate of Title No. C-319464,
and to reinstate the respondent's Transfer Certificate of Title No. 204755. 5 It
concluded that the act of the petitioner's counsel of formally entering an
appearance in the case had mooted the issue of defective service of
summons; and that the respondent had duly established by preponderance of
evidence that the purported special power of attorney was a forgery. 6

The petitioner appealed the default judgment to the CA, arguing that
the RTC had gravely erred in nullifying the questioned deed of absolute sale
and in declaring it in default.

On January 14, 2010, the CA promulgated the assailed decision

affirming the default judgment upon finding that the RTC did not commit
any error in declaring the petitioner in default and in rendering judgment in
favor of the respondent who had successfully established her claim of
forgery by preponderance of evidence. 7

On May 31, 2010, the CA denied the petitioner's motion for

reconsideration. 8

Hence, this appeal by the petitioner.

Issue

The petitioner raises the lone issue of whether or not the CA gravely
erred in upholding the default judgment of the RTC; in ordering its answer
stricken off the records; in allowing the respondent to adduce her evidence
ex parte; and in rendering the default judgment based on such evidence. 9

CA rollo, p. 12.
6
Supra note 2.
Supra note I .
Rollo, pp. 26-29; penned by Presiding Justice Reyes, Jr., with the concurrence of Associate Justice
Baltazar-Padilla and Associate Justice Jane Aurora C. Lantion.
9
Id. at 13.

~
 Decision 4 GR. No. 192477

Ruling of the Court

The appeal lacks merit.

The petitioner claims denial of its right to due process, insisting that
the service of summons and copy of the complaint was defective, as, in fact,
there was no sheriff's return filed; that the service of the alias summons on
January 20, 1998 was also defective; and that, accordingly, its reglementary
period to file the answer did not start to run.

The claim of the petitioner is unfounded. The filing of the formal

entry of appearance on May 5, 1998 indicated that it already became aware
of the complaint filed against it on September 23, 1997. Such act of counsel,
because it was not for the purpose of objecting to the jurisdiction of the trial
court, constituted the petitioner's voluntary appearance in the action, which
was the equivalent of the service of summons. 10 Jurisdiction over the person
of the petitioner as the defendant became thereby vested in the RTC, and
cured any defect in the service of summons. 11

Under Section 3, 12 Rule 9 of the Rules of Court, the three

requirements to be complied with by the claiming party before the defending
party can be declared in default are: ( 1) that the claiming party must file a
~ motion praying that the court declare the defending party in default; (2) the
defending party must be notified of the motion to declare it in default; (3)
the claiming party must prove that the defending party failed to answer the
complaint within the period provided by the rule. 13 It is plain, therefore, that
the default of the defending party cannot be declared motu proprio. 14

Although the respondent filed her motion to declare the petitioner in

default with notice to the petitioner only on August 19, 1998, all the
requisites for properly declaring the latter in default then existed. On
October 15, 1998, therefore, the RTC appropriately directed the answer filed
to be stricken from the records and declared the petitioner in default. It also
received ex parte the respondent's evidence, pursuant to the relevant rule. 15

10
Rule 14, Section 20 of the Rules a/Court provides:
Section. 20. Voluntary appearance. - The defendant's voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.
11
Cezar v. Rica/art-Bautista, G.R. No. 136415, October 31, 2006, 506 SCRA 322, 334.
12
Section. 3. Default; declaration of - If the defending party fails to answer within the time allowed
therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.
13
Delos Santos v. Carpio, G.R. No. 153696, September 11, 2006, 50 I SCRA 390, 398-399.
14
Trajano v. Cruz, No. L-47070, December 29, 1977, 80 SCRA 712, 715.
15
Section 3, Rule 9, Rules of Court.

9'
Decision 5 GR. No. 192477

The petitioner's logical remedy was to have moved for the lifting of
the declaration of its default but despite notice it did not do the same before
the RTC rendered the default judgment on August 23, 1999. Its motion for
that purpose should have been under the oath of one who had knowledge of
the facts, and should show that it had a meritorious defense, 16 and that its
failure to file the answer had been due to fraud, accident, mistake or
excusable negligence. Its urgent purpose to move in the RTC is to avert the
rendition of the default judgment. Instead, it was content to insist in its
comment/opposition vis-a-vis the motion to declare it in default that: (1) it
had already filed its answer; (2) the order of default was generally frowned
upon by the courts; (3) technicalities should not be resorted to; and (4) it had
a meritorious defense. It is notable that it tendered no substantiation of what
was its meritorious defense, and did not specify the circumstances of fraud,
accident, mistake, or excusable negligence that prevented the filing of the
answer before the order of default issued - the crucial elements in asking the
court to consider vacating its own order.

The policy of the law has been to have every litigated case tried on the
merits. As a consequence, the courts have generally looked upon a default
judgment with disfavor because it is in violation of the right of a defending
party to be heard. As the Court has said in Coombs v. Santos: 17 ~-

A default judgment does not pretend to be based upon the merits of

the controversy. Its existence is justified on the ground that it is the one
final expedient to induce defendant to join issue upon the allegations
tendered by the plaintiff, and to do so without unnecessary delay. A
judgment by default may amount to a positive and considerable injustice
to the defendant; and the possibility of such serious consequences
necessitates a careful examination of the grounds upon which the
defendant asks that it be set aside.

In implementation of the policy against defaults, the courts have

admitted answers filed beyond the reglementary periods but before the
declaration of default. 18

Considering that the petitioner was not yet declared in default when it
filed the answer on September 10, 1998, should not its answer have been
admitted?

The petitioner raised this query in its motion for reconsideration in the
CA, pointing out that the RTC could no longer declare it in default and order
its answer stricken from the records after it had filed its answer before such
declaration of default. However, the CA, in denying the motion for
reconsideration, negated the query, stating as follows:
16
Montinola, Jr. v. Republic Planters Bank, No. L -66183, May 4, 1988, 161 SCRA 45, 52.
17
24 Phil. 446, 449-450 (I 913).
18
Cathay Pacific Airways, Ltd v. Romillo, Jr., No. L-64276, March 4, 1986, 141 SCRA 451, 455.

~
'lDecision 6 G.R. No. 192477

Unfortunately, we find the foregoing arguments insufficient to

reverse our earlier ruling. These points do little to detract from the fact that
Defendant-Appellant 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 Plaintiff-Appellee moved to
have it declared in default.

Verily, Defendant-Appellant's temerity for delay is also betrayed

(sic) by the fact that it had waited for a judgment to be rendered by the
court a quo before it challenged the order declaring it in default. If it 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, Defendant-
Appellant instead elected to wager on a favorable judgment. Defeated,
Defendant-Appellant would now have us set aside the Order of Default on
Appeal and remand the case for further proceedings. These we cannot do.

While we are aware that we are vested with some discretion to

condone Defendant-Appellant's 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 Defendant-Appellant 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." To this end, it has been rightly written:

Procedural rules are not to be disregarded as mere

technicalities that may be ignored at will to suit the
convenience of a party. x x x.

It cannot be overemphasized that procedural rules have

their own wholesome rationale in the orderly administration of
justice. Justice has to be administered according to the rules in
order to obviate arbitrariness, caprice and whimsicality. 19

We concur with the CA's justification. The RTC and the CA acted in
accordance with the Rules of Court and the pertinent jurisprudence. The
petitioner was insincere in assailing the default judgment, and its insincerity
became manifest from its failure to move for the lifting of the order of
default prior to the rendition of the default judgment. The CA rightly
observed that the petitioner had apparently forsaken its "expeditious
remedy" of moving soonest for the lifting of the order of default in favor of
"wager[ing]" on obtaining a favorable judgment. The petitioner would not
.;do so unless it intended to unduly cause delay to the detriment and prejudice
of the respondent.

19
Supra note 8, at 27-29.

~
Decision 7 G.R. No. 192477

The sincerity of the petitioner's actions cannot be presumed. Hence, it

behooves it to allege the suitable explanation for the failure or the delay to
file the answer through a motion to lift the order of default before the default
judgment is rendered. This duty to explain is called for by the philosophy
underlying the doctrine of default in civil procedure, which Justice Narvasa
eruditely discoursed on in Gochangco v. CF! Negros Occidental, 20 to wit:

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 plaintiff's 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. 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. 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, a motion for new
trial to set aside the default judgment; 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; a special civil
action for certiorari impugning the court's jurisdiction. 21

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. 22 Conformably with the judicious exercise of such discretion, the
RTC could then have admitted the belated answer of the petitioner 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 the
petitioner, and went on to render the default judgment on August 23, 1999.
Such actions were fully within its discretion. 23 We uphold the default. While

20
No. L-49396, January 15, 1088, 157 SCRA40.
21
Id. at 54-55 (bold underscoring added for emphasis).
22
Malipodv. Tan, No. L-27730, January 21, 1974, 55 SCRA202, 213.
23
Cathay Pac[flc Airways, Ltd. v. Romillo, Jr., supra note 18.

P,
 "

Decision 8 G.R. No. 192477

the courts should avoid orders of default, and should be, as a rule, liberal in
setting aside orders of default, 24 they could not ignore the abuse of
procedural rules by litigants like the petitioner, who only had themselves to
blame.

WHEREFORE, the Court DENIES the petition for review on

certiorari; AFFIRMS the decision of the Court of Appeals promulgated on
January 14, 2010; and ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

WE CONCUR:

MARIA LOURDES P.A. SERENO

Chief Justice

~~h~
TERESITA J. LEONARDO-DE CASTRO ESTELA
JA!), . /{uN'
M.
PERLAS-BERNABE
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

24
Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005, 453 SCRA 548, 563; Montinola, .!1'. v.
Republic Planters Bank, No. L-66183, May 4, 1988, 161 SCRA 45, 54.