4.

Garcia vs. Court of Appeals (G.R. No. 83929, June 11, 1992)

FACTS:
Petitioner Antonio Garcia filed an action for damages against private
respondent spouses, William and Ma. Jajorie Uy, before the RTC of Pasig,
for padlocking the commercial stalls rented by petitioner from private
respondents at Virra Mall Shopping Center, Greenhills, San Juan.For failure
of private respondents to file their answer within the reglementary period,
petitioner moved to declare the former in default and for reception of his
evidence ex-parte. In an order dated 7 July 1987, the trial court granted
petitioner's motion and set the reception of evidence on 9 July 1987. A copy
of the order was served on and received by private respondents on 14 July
1987. On 1 July 1987, private respondents filed an appearance with motion
for extension of time to file answer from said date. The trial court denied the
motion for having been filed out of time.
In the meantime, petitioner presented his evidence ex-parte. On 10
August 1987, the trial court issued a judgment of default against private
respondents, a copy of which was received by them on 18 August 1987. On
11 August 1987, petitioner filed an ex-parte motion for execution pending
appeal which the trial court granted on 21 August 1987 and accordingly
issued the writ upon petitioner's filing of a bond in the amount of
P520,000.00. Whereupon, private respondents appealed to respondent Court
of Appeals, challenging the validity of the writ of execution because it was
granted without proper notice to them and without hearing. On 22 April
1988, respondent Court of Appeals rendered a decision granting private
respondents' petition for certiorari and setting aside the order of the trial
court dated 21 August 1987 granting the writ of execution. A motion to
reconsider the above decision was denied on 16 June 1988. Consequently,
this petition."
Respondent court's decision holding that after the judgment by default
was rendered, the defendants (private respondent herein) automatically
regained their standing and were entitled to notice of proceedings
subsequent to the final judgment by default, is here challenged by petitioner.
Citing Section 2, Rule 18 of the Rules of Court which provides that a party
declared in default is not entitled to notice of subsequent proceedings nor to
take part in the trial, as well as Section 9, Rule 13 which states that the party
in default is entitled to notice only of papers referring to substantially
amended or supplemental pleadings and final orders or judgments, or in
cases where the defaulting party files a motion to set aside the order of
default, petitioner contends that nowhere in the Rules does it appear that a
party who defaults shall automatically regain his lost standing and right to
notice after rendition of a judgment by default.
 Petitioner also assigns as error the finding of the respondent court that
the ex parte motion for execution pending appeal was inappropriate and that
the order granting the same without hearing was rendered without
jurisdiction. Petitioner claims that Section 2, Rule 39 requiring notice to the
adverse party is mandatory only in cases where the defendant has not been
declared in default.

ISSUE:
Whether or not a defendant declared in default regains ipso facto his
standing in court as to be entitled to notice of proceedings subsequent to a
final judgment or order rendered against him. More precisely, is a party who
has been declared in default entitled to notice of a motion for execution
pending appeal of a judgment by default?

RULING:
SC found the petition devoid of merit. The issue at bar was squarely
resolved in the case of S.C. Johnson & Son, Inc. vs. Court of Appeals, et al.
The facts in the aforesaid case are similar to those in the case at bar.
In S.C. Johnson, petitioner therein (S.C. Johnson) was declared in default for
its failure to file a responsive pleading within the reglementary period.
Therein private respondent (as plaintiff) was allowed to present his
evidence ex parte. Thereafter, a judgment by default was rendered by the
trial court in favor of the plaintiff. After the rendition of the judgment, the
plaintiff filed an ex parte motion to execute the judgment pending appeal,
which motion was granted by the trial court. S.C. Johnson questioned before
the Court of Appeals the failure of therein plaintiff to notify him of the
motion for execution pending appeal and the trial court's ex-
parte proceedings in granting said motion.
The Court of Appeals in the S.C. Johnson case, dismissed S.C.
Johnson's petition for lack of merit. Hence, S.C. Johnson appealed to this
Court raising the same issue raised in the instant petition.
This Court in the S.C. Johnson case categorically answered in the
affirmative the question posed at the start of this decision. Thus, "We hold
that a party declared in default is entitled to notice of the motion for
execution pending appeal. This interpretation is consistent with the nature
and effects of being in default as well as with what has been jurispru-
dentially laid down with respect to executions pending appeal."
Petitioner's argument that notice to the adverse party becomes
mandatory only in case the defendant has not been declared in default utterly
fails in the light of the ruling in the above-stated case, which states, "The
remedy of the defaulted party is to file a motion to set aside the order of
default if no judgment has been rendered yet. If there is already judgment,
the defendant's recourse is to file a motion for new trial, or a petition for
relief from judgment, or appeal the judgment, or file a special civil action
for certiorari. This is the reason why a defaulted defendant is entitled to
notice of final orders or judgments.
Consistent with this right to notice of final order or judgment is the
right to notice of the motion for execution pending appeal of the default
judgment. Without such notice, the various recourses available to the
defaulted party after judgment would be rendered illusory. For once a
judgment has been executed, restitution, although provided for in a case of
reversal, is oftentimes incomplete and unsatisfactory as damages may arise
which cannot be fully compensated."
Petitioner's citation of Section 2, Rule 39 of the Rules of Court to
support his aforesaid argument cannot aid his cause. We again cite the
pertinent ruling in the S.C. Johnson case, "Moreover, in the same case of
Aguilos vs. Barrios, this Court held that 'a party has a right to rely upon the
rules of court and to expect that she would be given notice as required
thereby. As being in default does not imply a waiver of rights, as aforesaid,
the defaulted party has the right to expect compliance with the requisites for
executing a judgment pending appeal under Section 2 of Rule 39, thus:
'Sec. 2. Execution pending appeal. On motion of the prevailing party with
notice to the adverse party the court may, in its discretion, order execution to
issue even before the expiration of the time to appeal, upon good reasons to
be stated in a special order. If a record on appeal is filed thereafter, the
motion and the special order shall be included therein.'
More so when we consider that as early as the case of Monteverde vs.
Jaranilla, involving defaulted defendants, this Court has ruled 'that the court
abuses its discretion in ordering the execution of a judgment from which an
appeal is pending, without previous notice to the adverse party and there
being no special ground therefor.' This doctrine was restated in the
subsequent case of Aguilos vs. Barrios where we emphatically said: 'The
requirement about motion by the prevailing party and notice to the adverse
party, which was not complied with in the instant case, is mandatory and is
precisely an innovation introduced in the new rules to remove the doubt
suggested in Gamay vs. Gutierrez David and to restate the doctrine laid
down in Monteverde vs. Jaranilla."
As for private respondents' (defendant's) loss of standing in court, by
reason of having been declared in default, again we rule that a party in
default loses the right to present his defense and examine or cross-examine
witnesses. It does not mean that being declared in default, and thereby losing
one's standing, constitutes a waiver of all rights; what is waived only is the
right to be heard and to present evidence during the trial while default
prevails. A party in default is still entitled to notice of final judgments and
orders and proceedings taken subsequent thereto.