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RULE 9 CA affirmed the RTC’s decision, modifying it

EFFECT OF FAILURE TO PLEAD on the part that the latter held solidary liability of
Gonzales and petitioners. CA held that since
SPOUSES SALVADOR VS SPOUSES RABAJA AND Gonzales did not exceed his authority, he is not
GONZALES solidarily liable with petitioners in the obligation to
(G. R. No. 199990, February 4, 2015) return the purchase price.

FACTS: Petitioners Spouses Salvador sold a parcel of ISSUES:


land located in Mandaluyong City to respondents 1. Whether or not default order must be lifted
Spouses Rabaja, through Rosario Gonzales, the for existence of reasonable grounds to
seller’s agent. justify non-attendance of petitioners.
From 1994-2002, respondents have been 2. Whether or not the receipts given by
renting the property from petitioners. Gonzales, SPA, and contract of sale are valid
When they learned that petitioners were 3. Whether or not the final and executory
looking for a buyer, respondents expressed desire to judgment on the ejectment case which orders the
purchase the land and petitioners introduced garnishment of 593,400 pesos can still be disturbed,
Gonzales to respondents as administrator of the and the garnished amount returned.
land. Petitioners even handed to Gonzales the 4. Whether or not the award of damages in
owner’s duplicate certificate of title on the property. favor of Spouses Rabaja and Gonzales was proper
In 1998, respondents paid 48,000 pesos to absent any legal and factual bases.
Gonzales, who then had an SPA executed by
petitioner-Rolando, in the presence of petitioner- RULING:
Herminia. 1. The failure of Spouses Salvador to
On the same day, the parties executed a attend pre-trial conference warrants the
contract to sell, stipulating the amount of the presentation of evidence ex parte by Spouses
property at 5 million pesos. Rabaja. The Court reiterates the rule that the failure
Respondents made several payments to attend the pre-trial conference does not result in
amounting to 950,000 pesos to Gonzales pursuant to the default of an absent party. Under the 1997 Rules
the SPA provided earlier as evidenced by the check of Civil Procedure, a defendant is only declared in
vouchers signed by Gonzales and the improvised default if he fails to file his Answer within the
receipts signed by Herminia. reglementary period. On the other hand, if a
But in June 1999, petitioners complained defendant fails to attend the pre-trial conference,
that they did not receive any payment from the plaintiff can present his evidence ex parte.
respondents, so respondents suspended further Justice Regalado, in his book, clarified that while the
payment of the purchase price; and as a order of default no longer obtained when a party
consequence, they received a notice to vacate the fails to appear at the pre-trial conference, its effects
subject property from Spouses Salvador for non- were retained. There is no dispute that Spouses
payment of rentals. Salvador and their counsel failed to attend the pre-
An ejectment suit was filed by petitioners trial conference set on February 4, 2005 despite
before the MeTC, while a case for rescission of proper notice. Spouses Salvador aver that their non-
contract was filed by respondents before the RTC. attendance was due to the fault of their counsel as
Petitioners won in the ejectment suit and he forgot to update his calendar. This excuse smacks
were able to garnish 593,400 pesos from of carelessness, and indifference to the pre-trial
respondents’ time deposits representing payment stage. It simply cannot be considered as a justifiable
for the back rentals, as ordered by the trial court in excuse by the Court.
the writ of execution. 2. On the SPA. According to Article
RTC reversed MeTC and ruled that there 1990 of the New Civil Code, insofar as third persons
was no lease agreement between the parties. This are concerned, an act is deemed to have been
prompted petitioners to appeal the case before the performed within the scope of the agent's authority,
CA, which reinstated MeTC’s ruling. This CA decision if such act is within the terms of the power of
became final and executory. attorney, as written. Respondents did not recklessly
Meanwhile, RTC, in the rescission case, enter into a contract to sell with Gonzales. There was
ordered the rescission of the contract. Petitioners a valid SPA so respondents properly made payments
were only able to attend the first of the many pre- to Gonzales, as agent of petitioners; and it was as if
trial conference, leading to the RTC’s issuance of an they paid to the petitioners.
order of default, allowing respondents to present On Gonzales’ receipt of payment. It
evidence ex-parte . The RTC ruled in respondents’ is of no moment, insofar as respondents are
favor and held that t-he contract was one of sale not concerned, whether or not the payments were
a contract to sell, which can appropriately be actually remitted to petitioners. Any internal matter,
rescinded, being a contract with reciprocal arrangement, grievance or strife between the
obligations. In its ruling in favor of respondents, it principal and the agent is theirs alone and should not
ordered the return of the garnished amount and the affect third persons.
950,000 pesos which represents the purchase price. On the contract of sale. The Court
agrees with the courts below in finding that the
contract entered into by the parties was essentially a PCIB then filed a third-party complaint against
contract of sale which could be validly rescinded. Tansipek (as third-party defendant) and prayed for
3. On the decision for garnishment. subrogation and attorney’s fees. Tansipek was given
The amount of P593,400.00 should not be returned time to file his Answer, but was later on declared in
by petitioners. The garnishment stems from an default. He filed a Motion to Reconsider the Default
entirely different case involving an action for Order, but the same was denied. Therefore, he filed
ejectment, and it does not concern the rescission a Petition for Certiorari with the Court of Appeals
case which is on appeal before this Court. The assailing the Default Order and the denial of the
decision on the ejectment case is final and executory Motion for Reconsideration. However, in 1998, the
and an entry of judgment has already been made. CA dismissed the petition for respondent’s failure to
Nothing is more settled in law than that when a final attach the assailed Orders. Tansipek did not appeal
judgment is executory, it thereby becomes this denial.
immutable and unalterable. Respondents must have
instituted their opposition to the execution RTC Ruling:
proceeding in that separate case with they have any The trial on the main case ensued, and judgment
objection on the manner and propriety of the was rendered in favor of JOCI in 2000. The trial court
execution. They can, however, invoke the legal ordered PCIB to pay JOCI the amount in question, as
compensation or set-off under Articles 1278, 1279 well as interest and cost of suit. As to the third-party
and 1270 because the two obligations appear to complaint, Tansipek was ordered to pay PCIB all the
have respectively offset each other. amounts PCIB has to pay to JOCI.
4. On Damages. No award of actual,
moral and exemplary damages can be sustained by CA Ruling:
this Court. The filing alone of a civil action should not Tansipek appealed the 2000 Decision to the CA, and
be a ground for an award of moral damages. Article in 2006, the court remanded the case back to the
2220 of the New Civil Code provides that to award trial court after finding that it was an error on the
moral damages in a breach of contract, the lower court’s part to act on PCIB’s motion to declare
defendant must act fraudulently or in bad faith. In Tansipek in default.
this case, respondents failed to sufficiently show that
petitioners acted in a fraudulent manner or with bad Petitioner Banco de Oro, the successor-in-interest,
faith. Exemplary damages cannot be awarded too filed a Petition for Review before the Supreme Court
since respondents failed to prove moral or assailing the 2006 decision.
compensatory damages as required by Article 2229
of the New Civil Code before exemplary damages can ISSUE:
be awarded. Whether or not the proper remedy was to file a
motion for reconsideration or motion to lift order of
default.
Banco de Oro, EPCI, Inc. (Formerly Equitable PCI
Bank), petitioner, HELD:
v. John Tansipek, respondent
G.R. No. 181235; July 22, 2009 NO. Respondent Tansipek’s remedy against the
Chico-Nazario, J.:p Order of Default was erroneous from the very
beginning. Respondent Tansipek should have filed a
Doctrine: The remedy against an Order of Default is Motion to Lift Order of Default, and not a Motion for
not a Motion for Reconsideration but a Motion to Reconsideration, pursuant to Section 3(b), Rule 9 of
Lift Order of Default under Rule 9, Section 3 of the the Rules of Court:
Rules of Court.
(b) Relief from order of default.—A
FACTS: party declared in default may at
J.O. Construction, Inc. (JOCI) entered into a contract any time after notice thereof and
with Duty Free Phils., Inc. for the construction of a before judgment file a motion
Duty Free shop in Mandaue City. Duty Free made under oath to set aside the order
payments either directly to JOCI or through of default upon proper showing
defendant John Tansipek, its authorized collector. that his failure to answer was due
Initial payments made through Tansipek were to fraud, accident, mistake or
remitted to JOCI, but the last check amounting to excusable negligence and that he
Php 4,050,136.51 was not turned over by the has a meritorious defense. In such
respondent. Apparently, Tansipek deposited the case, the order of default may be
check to his personal account with Equitable PCI set aside on such terms and
Bank (PCIB), and the bank allowed the deposit conditions as the judge may
despite the fact that the check was crossed and impose in the interest of justice.
Tansipek had no authority to endorse the same. PCIB
refused to pay the amount to JOCI; hence, the latter A Motion to Lift Order of Default is different from an
filed a case against the former. ordinary motion in that the Motion should be
verified; and must show fraud, accident, mistake or
excusable neglect, and meritorious defenses. The
allegations of (1) fraud, accident, mistake or ISSUE/S:
excusable neglect, and (2) of meritorious defenses
must concur. Whether or not the Spouses Bitte have already lost
the legal personality to resort to this petition before
Assuming for the sake of argument, however, that this Court, as they were declared in default by the
respondent Tansipek’s Motion for Reconsideration RTC.
may be treated as a Motion to Lift Order of Default,
his Petition for Certiorari on the denial thereof has RULING:
already been dismissed with finality by the Court of
Appeals. Respondent Tansipek did not appeal said NO.
ruling of the Court of Appeals to this Court. The
dismissal of the Petition for Certiorari assailing the Spouses Jonas claim that the door to any reliefs for
denial of respondent Tansipek’s Motion constitutes a Spouses Bitte, be it through motion for
bar to the retrial of the same issue of default under reconsideration or this subject petition, was closed
the doctrine of the law of the case. by the finality and immutability of the RTC
declaration of their default. In other words, it is their
stand that the petitioners do not have the right to
FARIDA YAP BITTE AND HEIRS OF BENJAMIN BITTE obtain recourse from this Court.
vs. SPOUSES FRED AND ROSA ELSA SERRANO JONAS
G.R. No. 212256 dated 09 December 2015 Spouses Jonas are mistaken.
Mendoza, J.:
The rule is that “right to appeal from the judgment
TOPIC: Party declared in default’s right to appeal by default is not lost and can be done on grounds
that the amount of judgment is excessive or is
FACTS: different in kind from that prayed for, or that the
plaintiff failed to prove the material allegations of his
In 1985, Rosa Elsa Jonas authorized her mother complaint, or that the decision is contrary to law”. If
Andrea Serrano thru SPA, to sell a property located in a party who has been declared in default on the
Davao City. The property was mortgaged to basis of the decision having been issued against the
Mindanao Development Bank (MDB). In 1996, evidence or the law, that person cannot be denied
Cipriano Serrano (brother of Elsa Jonas, son of the remedy and opportunity to assail the judgment
Andrea) offered to Spouses Bitte. In the same year, in the appellate court. Despite being burdened by
Jonas revoked the SPA. After the final negotiation, the circumstances of default, the petitioners may still
Elsa Jonas withdrew from the transaction. Spouses use all other remedies available to question not only
Bitte filed a Complaint for Specific Performance the judgment of default but also the judgment on
against Jonas, Andrea and Cirpriano to transfer the appeal before this Court. Those remedies necessarily
title over the property. In 1998, while the case is include an appeal by certiorari under Rule 45 of the
pending, Andrea executed a deed of absolute sale in Rules of Court.
favor of Spouses Bitte. MDB foreclosed the property
for failure to pay the loan. Spouses Bitte were able to
redeem the property, then sold the same to Spouses
Yap. In 1999, Spouses Jonas also filed a complaint
for Annulment of Deed of Absolute Sale against
Spouses Bitte.

The two cases were consolidated in 2001. Spouses


Bitte failed to attend the pre-trial. The counsel for
Spouses Bitte withdrew and a new one entered his
appearance and filed a verified motion for
reconsideration. Spouses Bitte once again failed to
appear in the pre-trial and were, thus, declared non-
suited. Jonas then presented her evidence ex parte.

RTC ruled that the sale was valid and directed the
Spouses Bitte to pay the balance. The CA reversed
the decision, and rendered the deed of sale null and
void.

Spouses Jonas called the attention of the Court and


contended that since the RTC has declared the
Spouses Bitte in default, they have already lost the
legal personality to resort to this petition before this
Court.