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
SPOUSES SALVADOR VS SPOUSES RABAJA AND
GONZALES
(G. R. No. 199990, February 4, 2015)
FACTS: Petitioners Spouses Salvador sold a parcel of
land located in Mandaluyong City to respondents
Spouses Rabaja, through Rosario Gonzales, the
seller’s agent.
From 1994-2002, respondents have been
renting the property from petitioners.
When they learned that petitioners were
looking for a buyer, respondents expressed desire to
purchase the land and petitioners introduced
Gonzales to respondents as administrator of the
land. Petitioners even handed to Gonzales the
owner’s duplicate certificate of title on the property.
In 1998, respondents paid 48,000 pesos to
Gonzales, who then had an SPA executed by
petitioner-Rolando, in the presence of petitioner-
Herminia.
On the same day, the parties executed a
contract to sell, stipulating the amount of the
property at 5 million pesos.
Respondents made several payments
amounting to 950,000 pesos to Gonzales pursuant to
the SPA provided earlier as evidenced by the check
vouchers signed by Gonzales and the improvised
receipts signed by Herminia.
But in June 1999, petitioners complained
that they did not receive any payment from
respondents, so respondents suspended further
payment of the purchase price; and as a
consequence, they received a notice to vacate the
subject property from Spouses Salvador for non-
payment of rentals.
An ejectment suit was filed by petitioners
before the MeTC, while a case for rescission of
contract was filed by respondents before the RTC.
Petitioners won in the ejectment suit and
were able to garnish 593,400 pesos from
respondents’ time deposits representing payment
for the back rentals, as ordered by the trial court in
the writ of execution.
RTC reversed MeTC and ruled that there
was no lease agreement between the parties. This
prompted petitioners to appeal the case before the
CA, which reinstated MeTC’s ruling. This CA decision
became final and executory.
Meanwhile, RTC, in the rescission case,
ordered the rescission of the contract. Petitioners
were only able to attend the first of the many pre-
trial conference, leading to the RTC’s issuance of an
order of default, allowing respondents to present
evidence ex-parte . The RTC ruled in respondents’
favor and held that t-he contract was one of sale not
a contract to sell, which can appropriately be
rescinded, being a contract with reciprocal
obligations. In its ruling in favor of respondents, it
ordered the return of the garnished amount and the
950,000 pesos which represents the purchase price.
Gonzales and petitioners. CA held that since
Gonzales did not exceed his authority, he is not
solidarily liable with petitioners in the obligation to
return the purchase price.
ISSUES:
1. Whether or not default order must be lifted
for existence of reasonable grounds to
justify non-attendance of petitioners.
2. Whether or not the receipts given by
Gonzales, SPA, and contract of sale are valid
3. Whether or not the final and executory
judgment on the ejectment case which orders the
garnishment of 593,400 pesos can still be disturbed,
and the garnished amount returned.
4. Whether or not the award of damages in
favor of Spouses Rabaja and Gonzales was proper
absent any legal and factual bases.
RULING:
1. The failure of Spouses Salvador to
attend pre-trial conference warrants the
presentation of evidence ex parte by Spouses
Rabaja. The Court reiterates the rule that the failure
to attend the pre-trial conference does not result in
the default of an absent party. Under the 1997 Rules
of Civil Procedure, a defendant is only declared in
default if he fails to file his Answer within the
reglementary period. On the other hand, if a
defendant fails to attend the pre-trial conference,
the plaintiff can present his evidence ex parte.
Justice Regalado, in his book, clarified that while the
order of default no longer obtained when a party
fails to appear at the pre-trial conference, its effects
were retained. There is no dispute that Spouses
Salvador and their counsel failed to attend the pre-
trial conference set on February 4, 2005 despite
proper notice. Spouses Salvador aver that their non-
attendance was due to the fault of their counsel as
he forgot to update his calendar. This excuse smacks
of carelessness, and indifference to the pre-trial
stage. It simply cannot be considered as a justifiable
excuse by the Court.
2. On the SPA. According to Article
1990 of the New Civil Code, insofar as third persons
are concerned, an act is deemed to have been
performed within the scope of the agent's authority,
if such act is within the terms of the power of
attorney, as written. Respondents did not recklessly
enter into a contract to sell with Gonzales. There was
a valid SPA so respondents properly made payments
to Gonzales, as agent of petitioners; and it was as if
they paid to the petitioners.
On Gonzales’ receipt of payment. It
is of no moment, insofar as respondents are
concerned, whether or not the payments were
actually remitted to petitioners. Any internal matter,
arrangement, grievance or strife between the
principal and the agent is theirs alone and should not
affect third persons.
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
contract of sale which could be validly rescinded.
3. On the decision for garnishment.
The amount of P593,400.00 should not be returned
by petitioners. The garnishment stems from an
entirely different case involving an action for
ejectment, and it does not concern the rescission
case which is on appeal before this Court. The
decision on the ejectment case is final and executory
and an entry of judgment has already been made.
Nothing is more settled in law than that when a final
judgment is executory, it thereby becomes
immutable and unalterable. Respondents must have
instituted their opposition to the execution
proceeding in that separate case with they have any
objection on the manner and propriety of the
execution. They can, however, invoke the legal
compensation or set-off under Articles 1278, 1279
and 1270 because the two obligations appear to
have respectively offset each other.
4. On Damages. No award of actual,
moral and exemplary damages can be sustained by
this Court. The filing alone of a civil action should not
be a ground for an award of moral damages. Article
2220 of the New Civil Code provides that to award
moral damages in a breach of contract, the
defendant must act fraudulently or in bad faith. In
this case, respondents failed to sufficiently show that
petitioners acted in a fraudulent manner or with bad
faith. Exemplary damages cannot be awarded too
since respondents failed to prove moral or
compensatory damages as required by Article 2229
of the New Civil Code before exemplary damages can
be awarded.
Banco de Oro, EPCI, Inc. (Formerly Equitable PCI
Bank), petitioner,
v. John Tansipek, respondent
G.R. No. 181235; July 22, 2009
Chico-Nazario, J.:p
Doctrine: The remedy against an Order of Default is
not a Motion for Reconsideration but a Motion to
Lift Order of Default under Rule 9, Section 3 of the
Rules of Court.
FACTS:
J.O. Construction, Inc. (JOCI) entered into a contract
with Duty Free Phils., Inc. for the construction of a
Duty Free shop in Mandaue City. Duty Free made
payments either directly to JOCI or through
defendant John Tansipek, its authorized collector.
Initial payments made through Tansipek were
remitted to JOCI, but the last check amounting to
Php 4,050,136.51 was not turned over by the
respondent. Apparently, Tansipek deposited the
check to his personal account with Equitable PCI
Bank (PCIB), and the bank allowed the deposit
despite the fact that the check was crossed and
Tansipek had no authority to endorse the same. PCIB
refused to pay the amount to JOCI; hence, the latter
filed a case against the former.
PCIB then filed a third-party complaint against
Tansipek (as third-party defendant) and prayed for
subrogation and attorney’s fees. Tansipek was given
time to file his Answer, but was later on declared in
default. He filed a Motion to Reconsider the Default
Order, but the same was denied. Therefore, he filed
a Petition for Certiorari with the Court of Appeals
assailing the Default Order and the denial of the
Motion for Reconsideration. However, in 1998, the
CA dismissed the petition for respondent’s failure to
attach the assailed Orders. Tansipek did not appeal
this denial.
RTC Ruling:
The trial on the main case ensued, and judgment
was rendered in favor of JOCI in 2000. The trial court
ordered PCIB to pay JOCI the amount in question, as
well as interest and cost of suit. As to the third-party
complaint, Tansipek was ordered to pay PCIB all the
amounts PCIB has to pay to JOCI.
CA Ruling:
Tansipek appealed the 2000 Decision to the CA, and
in 2006, the court remanded the case back to the
trial court after finding that it was an error on the
lower court’s part to act on PCIB’s motion to declare
Tansipek in default.
Petitioner Banco de Oro, the successor-in-interest,
filed a Petition for Review before the Supreme Court
assailing the 2006 decision.
ISSUE:
Whether or not the proper remedy was to file a
motion for reconsideration or motion to lift order of
default.
HELD:
NO. Respondent Tansipek’s remedy against the
Order of Default was erroneous from the very
beginning. Respondent Tansipek should have filed a
Motion to Lift Order of Default, and not a Motion for
Reconsideration, pursuant to Section 3(b), Rule 9 of
the Rules of Court:
(b) Relief from order of default.—A
party declared in default may at
any time after notice thereof and
before judgment file a motion
under oath to set aside the order
of default upon proper showing
that his failure to answer was due
to fraud, accident, mistake or
excusable negligence and that he
has a meritorious defense. In such
case, the order of default may be
set aside on such terms and
conditions as the judge may
impose in the interest of justice.
A Motion to Lift Order of Default is different from an
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
excusable neglect, and (2) of meritorious defenses
must concur.
Assuming for the sake of argument, however, that
respondent Tansipek’s Motion for Reconsideration
may be treated as a Motion to Lift Order of Default,
his Petition for Certiorari on the denial thereof has
already been dismissed with finality by the Court of
Appeals. Respondent Tansipek did not appeal said
ruling of the Court of Appeals to this Court. The
dismissal of the Petition for Certiorari assailing the
denial of respondent Tansipek’s Motion constitutes a
bar to the retrial of the same issue of default under
the doctrine of the law of the case.
FARIDA YAP BITTE AND HEIRS OF BENJAMIN BITTE
vs. SPOUSES FRED AND ROSA ELSA SERRANO JONAS
G.R. No. 212256 dated 09 December 2015
Mendoza, J.:
TOPIC: Party declared in default’s right to appeal
FACTS:
In 1985, Rosa Elsa Jonas authorized her mother
Andrea Serrano thru SPA, to sell a property located in
Davao City. The property was mortgaged to
Mindanao Development Bank (MDB). In 1996,
Cipriano Serrano (brother of Elsa Jonas, son of
Andrea) offered to Spouses Bitte. In the same year,
Jonas revoked the SPA. After the final negotiation,
Elsa Jonas withdrew from the transaction. Spouses
Bitte filed a Complaint for Specific Performance
against Jonas, Andrea and Cirpriano to transfer the
title over the property. In 1998, while the case is
pending, Andrea executed a deed of absolute sale in
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.
ISSUE/S:
Whether or not the Spouses Bitte have already lost
the legal personality to resort to this petition before
this Court, as they were declared in default by the
RTC.
RULING:
NO.
Spouses Jonas claim that the door to any reliefs for
Spouses Bitte, be it through motion for
reconsideration or this subject petition, was closed
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
obtain recourse from this Court.
Spouses Jonas are mistaken.
The rule is that “right to appeal from the judgment
by default is not lost and can be done on grounds
that the amount of judgment is excessive or is
different in kind from that prayed for, or that the
plaintiff failed to prove the material allegations of his
complaint, or that the decision is contrary to law”. If
a party who has been declared in default on the
basis of the decision having been issued against the
evidence or the law, that person cannot be denied
the remedy and opportunity to assail the judgment
in the appellate court. Despite being burdened by
the circumstances of default, the petitioners may still
use all other remedies available to question not only
the judgment of default but also the judgment on
appeal before this Court. Those remedies necessarily
include an appeal by certiorari under Rule 45 of the
Rules of Court.

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.