FIRST DIVISION

[ G.R. No. 199539*. August 09, 2023 ]

SIOLAND DEVELOPMENT CORPORATION, AS REPRESENTED BY CEO
ELIZABETH SIO, PETITIONER, VS. FAIR DISTRIBUTION CENTER
CORPORATION, REPRESENTED BY ESTEBAN L. ALBA, JR.,
RESPONDENT.

DECISION

GESMUNDO, C.J.:

This is a Partial Appeal by way of Petition for Review on Certiorari[1] under Rule 45 of
the Rules of Court, filed by Sioland Development Corporation (petitioner), assailing the
May 31, 2011 Decision[2] and the November 24, 2011 Resolution[3] of the Court of
Appeals (CA) in CA-G.R. CV No. 94331. The CA set aside the April 14, 2009
Decision[4] of the Regional Trial Court of San Pablo City, Branch 29 (RTC), for failing to
comply with Section 14,[5] Article VIII of the 1987 Constitution by stating the facts and
law on which the decision is based.

The Antecedents

Fair Distribution Center Corporation (respondent) is a duly registered corporation

engaged in the distribution and sale of Universal Food Corporation (UFC) products,
while petitioner was one of its customers.[6]

Respondent delivered various types of merchandise to petitioner on several occasions

during the months of November and December 2007 as evidenced by charge and sales
invoices.[7]

On September 8, 2008, respondent sent petitioner a Demand Letter[8] for the immediate
payment of P800,894.27 representing its unpaid accounts. Despite the demand, petitioner
failed to pay. Respondent was thus prompted to file a Complaint[9] for Collection of Sum
of Money before the RTC. Petitioner received the Summons[10] on September 29, 2008
through personal service.[11]

On October 14, 2008, petitioner filed a Formal Entry of Appearance with Motion for
Extension of Time to File Responsive Pleading,[12] and prayed for an additional 15 days
or until October 29, 2008 to file its Answer. Counsel for petitioner reasoned that his
recent hiring by petitioner as counsel, as well as his "heavy pressure of work, daily court
appearances, research and preparation of pleadings, memorandum and other documents
for other cases," necessitate his request for additional time. The RTC granted petitioner's
motion in its Order[13] dated October 29, 2008.

On even date, petitioner filed a Second Motion for Extension of Time to File Responsive
Pleading,[14] praying for an additional period of 10 days or until November 8, 2008.
Petitioner's counsel explained that he was "still collating the voluminous documents x x x
in addition to the heavy pressure of work, daily court appearances, research and
preparation of pleadings, memorandum and other documents for other cases."[15] On
November 5, 2008, the RTC granted the motion and gave petitioner an inextendible
period of 10 days or until November 8, 2008 to file its Answer.[16]

Despite the second extension, petitioner still did not file an Answer and instead, filed on
November 10, 2008, through registered mail, its Last Motion for Extension of Time to
File Respon[siv]e Pleading,[17] again citing the collation of "voluminous documents, x x x
heavy pressure of work, daily court appearances, research and preparation of pleadings,
memorandum and other documents for other cases" as reason for its inability. Petitioner
again asked for an additional 10 days from November 8, 2008 or until November 18,
2008 to file its Answer. This time, the RTC issued an Order[18] requiring herein
respondent to file its comment/opposition to petitioner's third motion.

Finally on November 19, 2008, petitioner filed its Answer with Counterclaim[19] through
registered mail, admitting its purchases from respondent but claiming that it had already
paid the same in full. Petitioner averred that under the delivery agreement it entered with
respondent, all outstanding obligations must be paid within twenty-one (21) days from
delivery, otherwise, no further deliveries will be made. It declared having settled all its
monetary obligations with respondent, as shown by the additional and subsequent
deliveries made by the latter.[20]

Noting that petitioner's Answer was filed only on November 19, 2008, respondent moved
to declare petitioner in default.[21] On January 8, 2009, the RTC granted the motion[22] and
declared petitioner in default.[23]

In its Order[24] dated January 14, 2009, the RTC scheduled the ex parte reception of
evidence on January 30, 2009. During the presentation of evidence ex parte, respondent
submitted its sales and charge invoices, demand letter, counter receipts, and inventory
transmittals. Respondent also presented three witnesses, namely: Esteban Alba, Jr.
(Alba), Annie Magsino (Magsino) and Alquin Calabia (Calabia) who testified on the
authenticity and veracity of the documents. Thereafter, respondent formally offered its
evidence,[25] which the court admitted pursuant to its March 23, 2009 Order.[26]

Ruling of the RTC

On April 14, 2009, the RTC rendered a Decision[27] holding petitioner liable for the
principal amount of P800,894.27 plus legal interest, attorney's fees, and costs of suit. The
RTC ruled:
From the evidence adduced by the plaintiff consisting of documentary exhibits presented
and marked in evidence as well as the testimony of plaintiff which remains
uncontroverted, the Court is convinced that plaintiff is entitled to the relief prayed for in
the Complaint.

WHEREFORE, judgment is hereby rendered in favor of the plaintiff Fair Distribution

Center Corporation and against defendant Sioland Development Corporation, ordering
the latter to pay the former the sum of [P]800,894.27 as principal obligation plus legal
interest from the date of demand on September 8, 2008 until fully paid; [P]80,000.00 as
attorney's fees; and costs of suit.

SO ORDERED.[28]
Petitioner filed a Motion for New Trial/Motion for Reconsideration,[29] citing excusable
negligence of its counsel for having belatedly filed its Answer. The RTC denied the
motion in its Order[30] dated October 6, 2009.

Petitioner appealed[31] to the CA and argued that: the trial court failed to cite any law or
jurisprudence upon which its decision was based; petitioner was declared in default
despite the filing of an Answer; and the awards of attorney's fees and costs of suit were
improper.[32]

Ruling of the CA

In the now assailed Decision, the CA agreed with petitioner that the RTC failed to clearly
state the facts and the law upon which its decision was based.[33] Instead of remanding the
case, the CA proceeded with resolving the same to prevent further delay in its disposition.

After reviewing the records, the CA made the following ruling on petitioner's liability:
As plaintiff in the case at bar, plaintiff-appellee had the burden of proof to establish its
case by preponderance of evidence. To prove its claim, plaintiff-appellee presented
Esteban Alba, Jr., its liaison and legal officer. Alba testified to the numerous transactions
between plaintiff-appellee and defendant-appellant, and in connection therewith, he also
identified the sales and charge invoices issued by plaintiff-appellee, as well as the
signature of defendant-appellant's employee on the sales and charge invoices, attesting to
the receipt of the merchandise.

The next witness presented for plaintiff-appellee was Annie Magsino, who was employed
by plaintiff-appellee as a biller-encoder. Magsino testified that as a biller-encoder, it was
her duty to prepare the sales and charge invoices presented to plaintiff-appellee's
customers. Magsino further testified that she personally prepared the sales and charge
invoices delivered to defendant-appellant. Thereafter, Magsino identified the sales and
charge invoices she prepared for delivery to defendant-appellant from October 2007 to
December 2007, as well as the statement of account presented to defendant-appellant.

Plaintiff-appellee's last witness, Alquin Bustamante Calabia, was employed as plaintiff-

appellee's salesman and he testified that he personally received the orders from
defendant-appellant and then tried to collect the outstanding amounts from defendant-
appellant, but to no avail.

In light of the overwhelming evidence, both testimonial and documentary, presented by

plaintiff-appellee, which sufficiently prove the existence of defendant-appellant's
obligation, as well as the non-payment thereof, we hold that plaintiff-appellee's complaint
for collection of sum of money is meritorious and should therefore be upheld.[34]
With respect to the issue on default, the CA found that petitioner's Answer was indeed
filed beyond the reglementary period. It stressed that petitioner was granted two
extensions of time within which to file its Answer, and yet, still sought a third extension
which was rightly denied by the RTC. Clearly, the extended period to file an Answer had
already lapsed thereby rendering immaterial the RTC's denial of petitioner's third motion
for extension.[35]

The CA further reasoned that the RTC cannot be faulted for dismissing petitioner's
motion for new trial or reconsideration as it failed to establish, fraud, accident, mistake or
excusable negligence, and that its motion palpably lacked a meritorious defense.[36]

Nonetheless, the CA agreed with petitioner that the RTC erred in awarding attorney's fees
since it is not to be awarded every time a party wins a suit. The CA observed that
respondent did not present the written contract it entered into with its lawyer, and also
failed to satisfactorily justify its claim for attorney's fees.[37]

The dispositive portion of the CA Decision reads:

WHERFORE, the Decision dated April 14, 2009 rendered by the RTC, Branch 29, of
San Pablo City, in Civil Case No. SP-6522(08) is SET ASIDE. In lieu thereof, a new
judgment is entered, to read, thus:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff Fair Distribution
Center Corporation and against defendant Sioland Development Corporation, ordering
the latter to pay the former the sum of [P]800,894.27 as principal obligation plus legal
interest from the date of demand on September 8, 2008 until fully paid.
SO ORDERED. [38]
Aggrieved, petitioner partially moved for reconsideration,[39] but its motion was denied.
[40]
Hence, the present petition on the ground that the CA erred and gravely abused its
discretion:
 (A)

IN DENYING THE MOTION FOR PARTIAL RECONSIDERATION OF

PETITIONER AND IN NOT SETTING ASIDE ITS PREVIOUS RULING TO ENTER
A NEW JUDGMENT IN LIEU OF THE DECISION DATED APRIL 14, 2009,
RENDERED BY RTC BRANCH 29, SAN PABLO CITY IN CIVIL CASE NO SP-
6522(08);

(B)

IN RENDERING ITS NEW JUDGMENT BY NOT COMPLYING WITH SECTION 14,

ARTICLE VIII OF THE CONSTITUTION AND SECTION 1, RULE 36 OF THE 1997
RULES OF CIVIL PROCEDURE;

(C)

WHEN IT DID NOT REMAND THE INSTANT CASE TO THE COURT OF ORIGIN
FOR FURTHER. PROCEEDINGS AND FOR RECEPTION OF DEFENDANT'S
EVIDENCE.[41]
Petitioner argues in its Memorandum[42] that the CA cannot validate the decision of the
RTC which it declared as void for violating Sec. 14, Art. VIII of the 1987 Constitution
and Sec. 1,[43] Rule 36 of the 1997 Rules of Civil Procedure. It further insists that there
was no decision at all to be cured or validated, and what ought to be done under the
circumstances was to declare the nullity of the RTC decision and remand the case to the
court of origin to rectify its error.[44]

Furthermore, assuming that the CA properly made its factual findings and entered a new
judgment, petitioner opines that the CA Decision is also null and void. The CA did not
cite a single jurisprudence nor provision of law on unpaid indebtedness or obligation, in
violation of the clear mandate of the 1987 Constitution and the Rules of Civil Procedure.
[45]

Finally, petitioner maintains that it should not have been declared in default, and that the
case should have been remanded to the RTC. Even if there was a mistake or inadvertence
on the part of its former counsel in belatedly filing its Answer, petitioner's valid and
meritorious defense must not in any manner be prejudiced. Albeit negligence or oversight
of petitioner's previous counsel de parte, procedural, technicality should be relaxed
where lapses of lawyers deprived clients of their day in court.[46]

For its part, respondent argues that the CA acted within its power when it made the
necessary factual findings based on records, testimonies of witnesses, and documentary
evidence presented and submitted by respondent, in order to avoid further delay in the
disposition of the case.[47]
Respondent likewise maintains that the May 31, 2011 Decision of the CA complied with
the requirements of Sec. 14, Art. VIII of the 1987 Constitution and of Sec. 1, Rule 36 of
the Rules of Civil Procedure because it contained findings of facts and law.[48]

Lastly, respondent stresses that the appeal was filed under Rule 41,[49] of the Rules of
Court, where questions of fact or mixed questions of fact and law are tackled.[50] As the
finding of facts were already made by the CA, there was no need to remand the case to
the lower court for further reception of evidence.[51]

Issues

The main issues for resolution are: 1) whether or not the declaration of default against
petitioner was proper; 2) whether or not remand of the case to the trial court was
necessary; and 3) whether or not the CA decision complied with Sec. 14, Art. VIII of the
1987 Constitution and Sec. 1, Rule 36 of 1997 Rules of Civil Procedure.

Ruling of the Court

The Court denies the petition.

Declaration of default
was proper

Sec. 3, Rule 9 of the 1997 Rules of Civil Procedure provides:

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.
Petitioner insists that it should not have been declared in default. However, the Court is
not convinced.

The Court is not unmindful of the settled rule that an Answer that was belatedly filed, but
before a declaration of default was made, may still be admitted provided that the
defendant has no intention to delay the proceedings. In Sablas v. Sablas,[52] the Court
enunciated that it is within the sound discretion of the trial court to permit the defendant
not only to extend the time to file an Answer, but also to allow the filing of an
Answer and to be heard on the merits even after the reglementary period.[53] Further,
in Vitarich Corporation v. Dagmil,[54] reiterating Hernandez v. Agoncillo,[55] the Court
emphasized that the trial court may permit the filing of an Answer even beyond the
reglementary period, provided that there is justification for the belated action and there is
no showing that the defendant intended to delay the proceedings.[56]

In here, the records clearly show that petitioner failed to timely file an Answer despite the
grant of its two motions for extension. Notable that in granting petitioner's second motion
for extension, the RTC gave petitioner an "unextendible period of another ten (10)
days."[57] Despite this clear Order from the RTC, petitioner still filed its third motion for
extension praying for an additional period of 10 days which fell on November 8, 2008.
However, petitioner belatedly filed its Answer with Counterclaim only on November 19,
2008 through registered mail,[58] or more than 10 days from November 8, 2008.

Furthermore, petitioner did not only fail to sufficiently justify its belated filing of an
Answer, but it also successively filed three motions for extension by using the trite
justification of "heavy workload." It bears emphasizing that heavy workload, standing
alone, is hardly a compelling or meritorious reason to allow extensions of time to file
pleadings.[59] Personal obligations and heavy workload do not excuse a lawyer from
complying with his obligations particularly in timely filing the pleadings required by the
Court. Indeed, if the failure of the petitioner's counsel to cope with his heavy workload
should be considered a valid justification to sidestep the reglementary period, there would
be no end to litigations so long as counsel had not been sufficiently diligent or
experienced.[60]

Hence, the RTC acted well within its discretionary authority when it declared petitioner
in default. Verily, the presentation of evidence ex parte by respondent can solely be
attributed to petitioner's own omission.

In justifying the plea to relax the rules, petitioner argues that the negligence of its lawyer
should not prejudice it and that it has a valid and meritorious defense. These
unsubstantiated claims, however, do not suffice. The general rule is that the negligence of
counsel binds the client, even mistakes in the application of procedural rules.[61] An
exception to this doctrine is when the negligence of counsel is so gross that the due
process rights of the client were violated,[62] which is not present in this case. There was
even no showing that petitioner itself exercised due diligence in monitoring the status of
its case. Petitioner cannot now seek refuge in whatever shortcomings its counsel
purportedly had.

It bears emphasizing that despite being declared in default, petitioner was not left without
any remedy. In Otero v. Tan,[63] the Court enumerated the remedies available to a party
who has been declared in default, to wit:
a) The defendant in default may, at any time after discovery thereof and before judgment,
file a motion, under oath, to set aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable neglect, and that he has
meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default,
but before the same has become final and executory, he may file a motion for new trial
under Section 1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has become final and
executory, he may file a petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the
evidence or to the law, even if no petition to set aside the order of default has been
presented by him. (Sec. 2, Rule 41).[64]
Additionally, the Court, in Gochangco v. The Court of First Instance of Negros
Occidental, Br. IV[65] (Gochangco), listed the special civil action for certiorari impugning
the court's jurisdiction, as another remedy available to a party declared in default.[66]

These remedies are mutually exclusive and cannot be availed of alternatively or

cumulatively. In Lui Enterprises, Inc. v. Zuellig Pharma Corporation,[67] the Court
explained that:
The remedies of the motion to set aside order of default, motion for new trial, and petition
for relief from judgment are mutually exclusive, not alternative or cumulative. This
is to compel defendants to remedy their default at the earliest possible opportunity.
Depending on when the default was discovered and whether a default judgment was
already rendered, a defendant declared in default may avail of only one of the three
remedies.

Thus, if a defendant discovers his or her default before the trial court renders judgment,
he or she shall file a motion to set aside order of default. If this motion to set aside order
of default is denied, the defendant declared in default cannot await the rendition of
judgment, and he or she cannot file a motion for new trial before the judgment becomes
final and executory, or a petition for relief from judgment after the judgment becomes
final and executory.[68] (Emphases supplied; citations omitted)
In this case, petitioner waited until the RTC rendered its judgment on the case and
thereafter opted to file a motion for new trial/reconsideration. Although it insisted in the
said motion that the RTC had improperly issued the order of default, petitioner
nonetheless failed to offer a suitable explanation for its failure to file an Answer within
the required period. The Court's ruling in Gochangco[69] instructs that:
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. x x x 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.[70] (Emphasis supplied; citations omitted)
Petitioner could have complied with Sec. 3(b), Rule 9[71] of the Rules of Court by alleging
a suitable explanation for its delay in filing the Answer through a motion to lift 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 Andres R.
Narvasa eruditely discoursed on in Gochangco.[72] Inauspiciously, as mentioned,
petitioner failed to do so. The Court has observed that in its motion for new
trial/reconsideration, petitioner failed to substantiate its arguments on why it should not
have been declared in default and be given the chance to be heard. Neither did it attach
supporting documents nor specify the circumstances of fraud, accident, mistake, or
excusable negligence that could have warranted the setting aside of the default judgment
to give way to a new trial.

To reiterate, procedural rules ensure an orderly and speedy administration of justice and
thus, resort to a liberal application, or suspension of the application of such rules, must
remain as the exception.[73] The Court is well aware of the judicial mandate that rules
prescribing the time which certain acts must be done, or certain proceedings taken, are
absolutely indispensable to the prevention of needless delays and the orderly and speedy
discharge of judicial business.[74] Although courts are granted the prerogative to relax
compliance with procedural rules of even the most mandatory character in order to fulfill
its duty of reconciling both the need to put an end to litigation speedily and the parties'
right to an opportunity to be heard,[75] the relaxation of rules must be justified by reasons,
such as: (a) matters of life, liberty, honor or property; (b) the existence of special or
compelling circumstances; (c) the merits of the case; (d) a cause not entirely attributable
to the fault or negligence of the party favored by the suspension of the rules; (e) a lack of
any showing that the review sought is merely frivolous and dilatory; and (f) the fact that
the other party will not be unjustly prejudiced thereby.[76] Unfortunately, none of the
above reasons exist in the instant case.

The CA properly proceeded

with the resolution of the case.

While, concededly, a defending party declared in default loses his standing in the trial
court, as well as his right to adduce evidence and to present his defense, this, however,
does not impliedly suggest a loss of all of his/her rights in the stages of the case after the
default judgment.[77]
In Gajudo v. Traders Royal Bank[78] (Gajudo), the Court emphasized that:
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.[79] (Emphasis
supplied)
Also, it was explained in Gajudo that:
[A] defaulted defendant is not actually thrown out of court. While in a sense it may
be said that by defaulting he leaves himself at the mercy of the court, the rules see to
it that any judgment against him must be in accordance with law. The evidence to
support the plaintiffs cause is, of course, presented in his absence, but the court is not
supposed to admit that which is basically incompetent. Although the defendant would not
be in a position to object, elementary justice requires that only legal evidence should be
considered against him. If the evidence presented should not be sufficient to justify a
judgment for the plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be different in kind
from what is prayed for in the complaint.[80] (Emphases supplied)
Thus, even with the declaration of default, the trial court is not given unbridled discretion
to automatically resolve the matter in favor of the non-defaulting party. Although
petitioner, as the party in default, lost its right to present evidence, the trial court remains
duty-bound to squarely render judgment based on respondent's ex parte evidence, such as
in this case.

In rendering a default judgment, trial courts are still bound by Sec. 14, Art. VIII of the
1987 Constitution which mandates that no decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is
based. A similar mandate is also provided under Sec. 1, Rule 36 of the Rules of Court
which states that a judgment or final order determining the merits of the case shall be in
writing personally and directly prepared by the judge, stating clearly and distinctly the
facts and the law on which it is based, signed by him, and filed with the clerk of the court.
Clearly, Sec. 14, Art. VIII of the Constitution, Sec. 1, Rule 36 of the Rules on Civil
Procedure and Sec. 1,[81] Rule 120 of the Rules on Criminal Procedure, and a plethora of
cases[82] provide that court decisions shall clearly and distinctly state its factual and legal
bases.

The rationale for the said constitutional mandate was explained by the Court in Villongco
v. Yabut,[83] in this wise:
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. A decision that does
not clearly and distinctly state the facts and the law on which it is based leaves the parties
in the dark as to how it was reached and is precisely prejudicial to the losing party, who is
unable to pinpoint the possible errors of the court for review by a higher tribunal. More
than that, the requirement is an assurance to the parties that, in arriving at a judgment, the
judge did so through the processes of legal reasoning. It is, thus, a safeguard against the
impetuosity of the judge, preventing him from deciding ipse dixit.[84]
The Constitution and the Rules of Court apparently delineate two main essential parts of
a judgment, namely: the body and the decretal portion. Although the latter is the
controlling part, the importance of the former is not to be lightly regarded because it is
there where the court clearly and distinctly states its findings of fact and of law on which
the decision is based. To state it differently, one without the other is ineffectual and
useless. The omission of either inevitably results in a judgment that violates the letter and
the spirit of the Constitution and the Rules of Court.[85]

A fortiori, the mandate to clearly state the facts and law upon which the decision is based
shall be observed in cases where a defendant loses its opportunity to present its evidence
by reason of default. The mere fact that the defendant was not able to file an Answer does
not automatically mean that the trial court will render a judgment in favor of the plaintiff.
The trial court must still determine whether the plaintiff is entitled to the reliefs prayed
for. Thus, it is incumbent upon the RTC to clearly and distinctly state the facts and the
legal basis on which it based its decision.[86]

In here, the Court agrees with the observation by the CA that the RTC "merely made a
conclusion in one paragraph, without stating the facts and the law upon which its ruling
was based."[87] Indeed, the RTC Decision fell short of the constitutional requirement of
stating clearly and distinctly the factual and legal basis of the decision. Although the trial
court had painstakingly stated the numerous documentary evidence as well as testimonial
evidence, the RTC, regrettably, made a general and sweeping conclusion regarding
petitioner's liability. The RTC decision did not cite any provision of law or jurisprudence
to support its conclusion that respondent was indeed entitled to the reliefs it prayed for.
The CA, thus, correctly set aside the RTC decision for failure to comply with the
fundamental requirements of a valid judicial decision.

However, petitioner strongly argues that in view of the null and void decision of the
RTC, the CA should have remanded the case for further proceedings and reception of its
evidence.

Petitioner is mistaken.

Indeed, remand is necessary only when there has been no trial on the merits.[88] Black's
Law Dictionary defines trial on merits as a trial on the substantive issues of a case, as
opposed to a motion hearing or interlocutory matter.[89] It is a trial where the parties had
the opportunity to present their evidence, which was duly examined and considered by
the court in resolving the issues presented before it.

As a rule, remand is avoided in the following instances: (a) where the ends of justice
would not be subserved by a remand; or (b) where public interest demands an early
disposition of the case; or (c) where the trial court had already received all the evidence
presented by both parties, and the Supreme Court is in a position, based upon said
evidence, to decide the case on its merits.[90] Under these circumstances, remand of the
case to the lower court for further reception of evidence is no longer necessary.

Admittedly, there was no full presentation of evidence by reason of the default of

petitioner. This, however, will not necessarily justify a remand of the case to give
petitioner an opportunity to present its evidence. To do so would certainly defeat the
purpose of the default order. It would amount to indirectly seeking the lifting of the
default order without the appropriate motion being filed. In effect, petitioner would be
rewarded for belatedly filing its Answer.

In Momarco Import Company, Inc. v. Villamena[91] (Momarco), the Court affirmed the
CA's observation that Momarco, the defendant-appellant, had forsaken its "expeditious
remedy" of moving soonest for the lifting of the order of default. Instead, defendant-
appellant chose to wager on obtaining a favorable judgment by waiting on the trial court's
decision, which it would not have done unless it intended to unduly cause delay.
[92]
Hence, the Court held that to remand the case upon the invocation that the courts must
be liberal in setting aside orders of default, would be to reward defendant-appellant with
more delay.

Applying the ruling in Momarco and based on the circumstances obtaining in this case,
the Court denies petitioner's plea of remand.

To reiterate, petitioner's failure to present its own evidence was due to its own omissions.
Remanding the present case would not promote the ends of justice, and is thus, not
necessary. Furthermore, the CA correctly took it upon itself to make the necessary factual
findings, considering that the appeal was filed under Rule 41 of the Rules of Court where
it has the authority to resolve questions of fact or mixed questions of fact and of law, to
prevent further delay in the expeditious resolution of the case. Hence, contrary to
petitioner's submission, the CA was not obligated to remand the case to the RTC.
Relatedly, petitioner cannot also claim that the CA "cured" or "validated" the void RTC
Decision as the CA embarked on its own determination of the merits of respondent's
claims, albeit arriving at the same conclusion as the RTC.

Moreover, petitioner opted to wait for the default judgment and decided to appeal
therefrom. Petitioner can appeal the judgment by default on the ground that respondent
failed to prove the material allegations of the complaint, or that the decision is contrary to
law, even without need of the prior filing of a motion to set aside the order of default.
[93]
Being the party in default, petitioner is proscribed from seeking a modification or
reversal of the assailed decision on the basis of the evidence it submitted in the CA.
Otherwise, it would be permitted to regain its right to adduce evidence which it already
lost in the trial court in view of the order of default, and which it failed to have vacated.
[94]
Hence, there is no merit in petitioner's insistence of remanding the case to the RTC.

However, petitioner maintains that the CA seriously erred in rendering the assailed
decision for noncompliance with Sec. 14, Art. VIII of the Constitution, as well as Sec. 1,
Rule 36 of the 1997 Rules of Civil Procedure.

We find partial merit in petitioner's argument as the CA likewise failed to state the legal
basis for holding petitioner liable for respondent's monetary claims. Lamentably, the CA
repeated the RTC's oversight by ruling in the same manner as the RTC did. The assailed
CA Decision failed to provide sufficient factual and legal basis in arriving at its
conclusion. Given these circumstances, the assailed CA Decision is partly void insofar as
declaring petitioner's liability is concerned. As regards other issues resolved by the CA,
the same are hereby sustained. In order not to delay the resolution of this case, the Court
will proceed in resolving the matter instead of ordering its remand.

Sales invoices and charge invoices

were competent proof of sale
transactions and not of payment.

By defaulting, herein petitioner left itself at the mercy of the court. Nevertheless, the
rules see to it that any judgment against it must be in accordance with the evidence
required by law. The evidence of the plaintiff, presented in the absence of the defaulting
party, cannot be admitted if it is basically incompetent and irrelevant to the issue at hand.
Although the defendant would not be in a position to object, elementary justice requires
that only legal evidence should be considered against it. If the same should prove
insufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And
if a favorable judgment is justifiable, it cannot exceed the' amount or be different in kind
from what is prayed for in the complaint.[95]

In Dra. Dela Llana v. Biong,[96] the Court explained admissibility and weight of evidence:
[A]dmissibility of evidence should not be equated with weight of evidence. The
admissibility of evidence depends on its relevance and competence, while the weight of
evidence pertains to evidence already admitted and its tendency to convince and
persuade. Thus, a particular item of evidence may be admissible, but its evidentiary
weight depends on judicial evaluation within the guidelines provided by the Rules of
Court.[97]
Evidence, to be admissible, must comply with two qualifications: (a) relevance and (b)
competence. Evidence is relevant if it has a relation to the fact in issue as to induce a
belief in its existence or nonexistence. On the other hand, evidence is competent if it is
not excluded by the law or by the Rules of Court.[98] Relatedly, the best evidence rule
(now original document rule) under Sec. 3,[99] Rule 130 of the Rules of Court, is one of
the means in determining the competence of evidence. This rule finds more importance in
cases where a defendant is declared in default and can no longer object to the plaintiff’s
presentation of evidence.

On the other hand, it is settled that commercial documents or papers are used by
merchants to promote or facilitate trade or credit transactions.[100] Business forms such as
sales or charge invoices, are evidence of commercial transactions[101] and serve as proof
that a business transaction has been concluded.[102] Sales and charge invoices substantiate
the existence of sales transactions between buyer and seller because "sales or commercial
invoice" is a written account of goods sold or services rendered indicating the prices
charged therefor or a list by whatever name it is known which is used in the ordinary
course of business evidencing sale and transfer or agreement to sell or transfer goods and
services.[103] As such, sales invoices are the best evidence of a business transaction;
[104]
they are not evidence of payment, but only evidence of receipt of the goods. The best
evidence of payment of the goods delivered is the official receipt.[105]

In here, respondent's documentary evidence consisted of sales and charge invoices,

invoice transmittals, and counter receipts, among others, which were identified and
corroborated by testimonial evidence. Respondent presented as witness its Biller Encoder
Magsino, who was in-charge of the invoices of its customers and testified that she
prepared in her own handwriting, several invoices covering the merchandise delivered to
petitioner for the months of November and December 2007.[106] She likewise explained
that she personally computed the following outstanding obligation as contained in the
Demand Letter[107] sent to petitioner:
DATE INVOICE NO. AMOUNT

December 03, 2007 576972 [P] 20,627.04

576973 21,222.00
576974 18,750.00
68940 3,135.25
68941 840.00
68942 9,012.61
68944 5,805.78
68945 52,468.78
68948 19,690.67
68949 42,904.61
December 05, 2007 68994 82,152.44
68995 42,632.50
68996 1,680.00
 68997 16,597,75
68998 17,923.20
68999 31,450.88
69000 34,360.80
69001 16,497.04
December 18, 2007 69816 1,496.56
69817 5,853.38
69818 22,521.38
69819 21,893.05
69820 37,112.63
69821 10,202.41
69822 1,680.00
69823 13,690.51
December 22, 2007 70041 26,268.53
70042 1,680.00
70043 9,530.09
70044 52,000.18
70047 11,441.48
70048 11,040.55
70040 45,982.93
70045 13,473.98
70046 14,547.02
December 22, 2007 581784 31,005.24
581785 31,723.00
GRAND TOTAL --------------------------------------------- [P] 800,894.27
============
She also prepared the Invoice Transmittals[108] which summarized the sales invoices and
charge invoices that she used as basis in arriving at petitioner's total unpaid obligation.[109]

Respondent also presented its sales agent, Calabia, who narrated that he personally
obtained from petitioner its product orders in the year 2007.[110] During his testimony, he
identified the sales, invoices prepared by Magsino, which were received and signed by
petitioner's employee, thereby indicating receipt of the merchandise delivered to
petitioner.[111] He also testified that he was in-charge of collecting payments from
petitioner, and that the latter had unpaid accounts amounting to P800,894.27.[112] To
further prove the unpaid obligations, he identified the original Counter Receipts[113] which
contained the lists/summary of the invoices that remained unpaid by petitioner.

Respondent likewise submitted the September 8, 2008 letter sent to petitioner, demanding
payment for the unpaid accounts in the sum of P800,894.27. Alba, respondent's Liaison
and Legal Officer, identified the said demand letter and testified that the same has been
delivered to and received by petitioner. He also confirmed that despite receipt of said
demand letter, petitioner failed to pay any sum.[114]

Evidently, the sales invoices, counter receipts, and invoice transmittals established the
transactions between petitioner and respondent, and proved that goods were indeed
delivered to and received by the former. On the other hand, respondent's demand letter
established that petitioner was informed of its unpaid accounts. Taken altogether, these
pieces of evidence preponderantly established petitioner's outstanding obligation in the
amount of P800,894.27, which was exactly the amount prayed for by respondent in its
complaint.[115]

Despite the preponderance of evidence showing its liability for the above stated amount,
petitioner denies being obligated to pay the said sum. In its motion for new
trial/reconsideration filed before the RTC, as well as in its appeal before the CA and even
in the instant petition, petitioner claims that the subject amount had already been paid in
full.

Under the rules of evidence, since petitioner pleads payment, it has the burden of proving
it. Even where the plaintiff must allege non-payment, the general rule is that the burden
rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.[116] The Court has consistently held that the party alleging payment must
necessarily prove his or her claim of payment.[117]

In claiming full payment, petitioner makes reference to the alleged agreement with
respondent that all outstanding obligations must be paid within 21 days, otherwise, no
subsequent deliveries will be made.[118] Thus, petitioner insists that the deliveries it
received in December 2007 were duly paid because respondent continued to deliver
goods for the months of January, February, March, and April 2008. To further prove
payment, petitioner avers that respondent paid them the 1% Target Achievement
Incentive for having achieved the target sales and having duly paid such sales. The
payment of incentive was made by check, covered by a check voucher issued in
petitioner's favor.[119]

Petitioner's claims are empty.

Although petitioner, as the defaulting party, did not have the chance to present its
evidence, it however did not mention any receipt, other than the check voucher for the
Target Achievement Incentive to show payment of the merchandise it purchased from
respondent. The alleged succeeding deliveries made to petitioner do not equate to
payment of previous deliveries. To reiterate, the best evidence to prove payment of the
goods is an official receipt.[120] In Towne & City Development Corporation v. Court of
Appeals,[121] the Court explained that:
In the case at bar, petitioner has relied on vouchers to prove its defense of payment.
However, as correctly pointed out by the trial court which the appellate court
upheld, vouchers are not receipts.

It should be noted that a voucher is not necessarily an evidence of payment. It is merely a

way or method of recording or keeping track of payments made. A procedure adopted by
companies for the orderly and proper accounting of funds disbursed. Unless it is
supported by an actual payment like the issuance of a check which is subsequently
encashed or negotiated, or an actual payment of cash duly receipted for as is customary
among businessmen, a voucher remains a piece of paper having no evidentiary weight.

A receipt is a written and signed acknowledgment that money has been or goods
have been delivered, while a voucher is documentary record of a business
transaction.[122] (Emphases supplied)
Consequently, allegations of payment, without any concrete proof thereof in the form of
receipts, remain to be unsubstantiated claims. It must be emphasized that a voucher is not
necessarily evidence of payment. It is merely a way or method of recording or keeping
track of payments made. It must be supported by an actual payment of cash duly
receipted for as is customary among businessmen or the issuance of a check
subsequently encashed.[123] A "receipt" remains to be the written acknowledgment of the
fact of payment in money or other settlement between seller and buyer of goods, debtor
or creditor, or person rendering services and client or customer.[124]

Indeed, an obligation may be extinguished by payment, however, two requisites must

concur: (1) identity of the prestation, and (2) its integrity. The first means that the very
thing due must be delivered or released; and the second, that the prestation be fulfilled
completely. Here, respondent must "receive and acknowledge full payment" from the
petitioner. No such acknowledgment nor proof of full payment was shown to the
satisfaction of the court. For this reason, claim of payment made by the petitioners must
fail.[125]

The Court, thus, sustains the finding that petitioner is liable for the unpaid obligation in
the sum of P800,894.27, plus legal interest from the date of demand on September 8,
2008. Based on the recent ruling in Lara's Gifts & Decors, Inc. v. Midtown Industrial
Sales, Inc.,[126] and in view of the absence of any stipulation by the parties on the penalty
that may be imposed for nonpayment, the interest shall be fixed at six percent (6%) per
annum from September 8, 2008, the date of extrajudicial demand, until full payment.
Since respondent did not appeal the judgment award, the Court shall withhold imposing
legal interest ("interest on interest") pursuant to Art. 2212[127] of the Civil Code.
[128]
However, the total monetary award shall be subject to 6% interest per annum from
finality of this Resolution until full payment.[129]

Procedures and legal remedies

that could have been beneficial
to the parties and the trial court

As a final note, the Court observes that respondent and even the trial court may have also
contributed to the peculiar complexity of the present case. Under the 1997 Rules of Civil
Procedure (1997 Rules), which is applicable in the present case, the law usually imposes
upon the plaintiff the duty to file the appropriate pleadings or motions that will help
dispose the case in the most efficient way. Relevant here is the matter on declaring the
defendant in default. Sec. 3, Rule 9 of the 1997 Rules provides that the court shall, upon
motion of the claiming party, declare the defendant in default in case of failure to
answer within the allowed time.

Respondent was aware that the RTC granted petitioner's second motion for extension for
an unextendible period of 10 days or until November 8, 2008 within which to file its
Answer. Since no responsive pleading was filed after the said extension, respondent
should have been vigilant and promptly moved to declare defendant in default. However,
respondent only filed its Motion to Declare Defendant in Default on November 25, 2008,
after petitioner had filed its third motion for extension, and eventually, the requisite
responsive pleading.

The promptness in moving to declare defendant in default became crucial because when
the RTC declared petitioner in default in its January 8, 2009 Order, petitioner had already
filed its Answer albeit belatedly. If We were to strictly follow the policy of affording
every party-litigant the amplest, opportunity for the proper and just determination of his
cause, free from the constraints of technicalities,[130] the belated Answer should have been
admitted. Nonetheless, and as earlier explained, the trial court in this case, cannot be
faulted for exercising its judicial discretion in not admitting the Answer. Petitioner's
inexcusable neglect, if not tendency to delay the proceedings, was apparent in its
consistent filing of motions for extension despite the clear directive of the trial court that
the period is unextendible.

Assuming that the circumstances obtaining in this case favored the admission of
petitioner's belatedly filed Answer, respondent should have been guided by Sec. 1, Rule
34 of the 1997 Rules. Accordingly, if the Answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party's pleading, the court may, on motion
of that party, direct judgment on such pleading. This is referred to as "judgment on the
pleadings" – a lawful procedural technique that is activated only upon motion of the
plaintiff. The Answer would fail to tender an issue if it does not comply with the
requirements for a specific denial set out in Sec. 8 or Sec. 10, Rule 8 of the 1997 Rules. It
would admit the material allegations of the adverse party's pleadings not only where it
expressly confesses the truthfulness thereof but also if it omits to deal with them at all.[131]

Notable that petitioner averred in its Answer with Counterclaim[132] that:

xxxx

3. That the above-named defendant admits the allegations in paragraphs three (3) and
four (4), with a [qualification] that said obligations have been already paid and settled;
xxxx

7. That under the terms and conditions of the agreement entered into by the defendant
with the plaintiff, it is crystal clear that all outstanding obligations of the defendant with
the plaintiff must be settled or paid within a period of twenty[-]one (21) days. Otherwise,
no further deliveries shall be made. However, even after the lapse of the said period, the
plaintiff still made additional deliveries to the defendant[.][133]
Apparently, petitioner did not only deny the fact of complete deliveries of merchandise
for the months of November and December 2007, but it effectively admitted the sum
being claimed by respondent. As such, petitioner's Answer failed to tender an issue and
admitted the material allegations of respondent's complaint. If only respondent had been
more vigilant, it could have, filed a motion to render judgment on the pleadings instead of
insisting on petitioner's declaration of default.

Even if respondent failed to promptly move for a judgment on the pleadings, and the last
pleading had been served and filed, the 1997 Rules imposes upon respondent, being the
plaintiff in this case, the duty to promptly move ex parte to set the case for pre-trial. As
pre-trial is mandatory, it is at this stage where the court may consider the propriety of
rendering a judgment on the pleadings, or summary judgment, or of dismissing the action
on valid grounds. Secs. 1 and 2, Rule 18 of the 1997 Rules state:
Section 1. When conducted. — After the last pleading has been served and filed, it shall
be the duty of the plaintiff to promptly move ex parte that the case be set for pre-trial.
(5a, R20)

Section 2. Nature and purpose. — The pre-trial is mandatory. The court shall consider:

xxxx

(g) The propriety of rendering judgment on the pleadings, or summary judgment, or of

dismissing the action should a valid ground therefor be found to exist[.]
In Spouses Pascual v. First Consolidated Rural Bank (Bohol), Inc.,[134] the Court had the
opportunity to explain that the above rule spells out that unless the motion for such
judgment has earlier been filed, the pre-trial may be the occasion in which the court
considers the propriety of rendering judgment on the pleadings or summary judgment. If
no such motion was earlier filed, the pre-trial judge may then indicate to the proper
party to initiate the rendition of such judgment by filing the necessary motion.[135] It
bears emphasis that a motion must be filed. The pre-trial judge cannot motu
proprio render the judgment on the pleadings or summary judgment.[136] This also means
that a motion for judgment on the pleadings may be filed even prior to pre-trial. Judgment
on the pleadings becomes a legal option as long as an Answer was filed. Otherwise, the
rule on default would become proper.

In stark contrast, the 2019 Amendments to the 1997 Rules on Civil Procedure[137] (New
Rules) introduced several provisions authorizing the trial courts to motu proprio render
judgment based on the pleadings. Specifically, Sec. 2 of Rule 34 on judgment on the
pleadings now reads:
Section 2. Action on Motion for Judgment on the Pleadings. — The court may motu
proprio or on motion render judgment on the pleadings if it is apparent that the
answer fails to tender an issue, or otherwise admits the material allegations of the
adverse party's pleadings. Otherwise, the motion shall be subject to the provisions of
Rule 15 of these Rules.
A parallel proviso is likewise found in Sec. 10, Rule 18 of the New Rules which states
that:
Section 10. Judgment after Pre-Trial. — Should there be no more controverted facts, or
no more genuine issue as to any material fact, or an absence of any issue, or should the
answer fail to tender an issue, the court shall, without prejudice to a party moving for
judgment on the pleadings under Rule 34 or summary judgment under Rule 35, motu
proprio include in the pre-trial order that the case be submitted for summary judgment or
judgment on the pleadings, without need of position papers or memoranda. In such cases,
judgment shall be rendered within ninety (90) calendar days from termination of the pre-
trial.

The order of the court to submit the case for judgment pursuant to this Rule shall not be
the subject to appeal or certiorari. (n)
Unmistakably, these amendments to procedural rules were intended to aid the courts and
the parties in resolving cases based on merits in a prompt, effective, and efficient manner.

All told, regardless of whether petitioner should or should not have been declared in
default, the Court is convinced that: (1) respondent had adduced preponderant evidence
to show that petitioner is obligated to pay the sum of P800,897.27; and (2) petitioner
admitted the amount being claimed by respondent, but failed to prove full payment
thereof.

WHEREFORE, the petition is DENIED. The May 31, 2011 Decision and the
November 24, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 94331
are AFFIRMED WITH MODIFICATION. Petitioner Sioland Development
Corporation is hereby ORDERED to PAY Fair Distribution Center Corporation the
amount of P800,894.27 with interest at the rate of six percent (6%) per annum from date
of extrajudicial demand on September 8, 2008 until full payment. The total monetary
awards shall bear legal interest at the rate of 6% per annum from finality of this
Resolution until full payment.

SO ORDERED.