183. G.R. No. L-28140 March 19, 1970
PREMISES CONSIDERED, the judgment
CAPITOL MOTORS CORPORATIONS, plaintiff-
appellee, vs. NEMESIO I. YABUT, defendant-
appellant.
FACTS: Capitol Motors Corporations filed a complaint
against Nemesio I. Yabut. It was therein averred that the
defendant executed in favor of the plaintiff a promissory
note (copy of which was attached to the complaint) for
the sum of P30,134.25, payable in eighteen (18) equal
monthly installments with interest at 12% per annum,
the first installment to become due on June 10, 1965,
that it was stipulated in the promissory note that should
the defendant fail to pay two (2) successive installments,
the principal sum remaining unpaid would immediately
become due and demandable and the defendant would,
by way of attorney's fees and costs of collection, be
obligated to the plaintiff for an additional sum equivalent
to 25% of the principal and interest due;
The sum remaining unpaid on the promissory note was
P30,754.79, including accrued interest; that the
defendant defaulted in the payment of two (2) successive
installments, and likewise failed to pay the interest due
on the promissory note; and that in spite of demands by
the plaintiff, the defendant failed and refused to pay the
said principal sum and interest due.
Prayer was made that the defendant be ordered to pay
the plaintiff the sum of P30,754.79, as well as the
interest due thereon from February 23, 1966, and an
additional sum equivalent to 25% of the amount due,
plus costs.
The plaintiff filed a motion for judgment on the
pleadings, on the ground that the defendant, not having
set forth in his answer the substance of the matters relied
upon by him to support his denial, had failed to deny
specifically the material allegations of the complaint,
hence, must be deemed to have admitted them
After hearing on the motion, the court issued an order
granting the said motion and considering the case
submitted for decision on the basis of the pleadings; the
court rendered judgment granting in toto the plaintiff's
prayer in its complaint.
In this appeal, defendant-appellant contends that the
court a quo erred in considering him as having failed to
deny specifically the material allegations of the
complaint, and, consequently, in deciding the case on the
basis of the pleadings.
ISSUE: Whether paragraph 2 of defendant-appellant's
answer constitutes a specific denial under Section 10,
Rule 8
HELD: NO.
appealed from is affirmed.
We do not think so. In Warner Barnes & Co., Ltd. vs.
Reyes, et al, this Court said that the rule authorizing an
answer to the effect that the defendant has no knowledge
or information sufficient to form a belief as to the truth
of an averment and giving such answer the effect of a
denial, does not apply where the fact as to which want of
knowledge is asserted, is so plainly and necessarily
within the defendant's knowledge that his averment of
ignorance must be palpably untrue. In said case the suit
was one for foreclosure of mortgage, and a copy of the
deed of mortgage was attached to the complaint; thus,
according to this Court, it would have been easy for the
defendants to specifically allege in their answer whether
or not they had executed the alleged mortgage. The same
thing can be said in the present case, where a copy of the
promissory note sued upon was attached to the
complaint.
With regard to the plea of lack of knowledge or information
set up in paragraph 3 of the answer, this Court's decision
in Warner Barnes vs. Reyes, 103 Phil. 662, 665, is authority
for the proposition that this form of denial must be availed of
with sincerity and good faith, not for the purpose of
confusing the other party, nor for purposes of delay. Yet, so
lacking in sincerity and good faith is this part of the answer
that defendants-appellants go to the limit of denying
knowledge or information as to whether they (defendants)
were in the premises (Marsman Bldg.) on January 4, 1961, as
averred in paragraph 4 of the complaint. Yet whether such a
fact was or was not true could not be unknown to these
defendants.
It becomes evident from all the above doctrines that a
mere allegation of ignorance of the facts alleged in the
complaint, is insufficient to raise an issue; the defendant
must aver positively or state how it is that he is ignorant
of the facts so alleged.
There are two other reasons why the present appeal must
fail. First. The present action is founded upon a written
instrument attached to the complaint, but defendant-
appellant failed to deny under oath the genuineness and
due execution of the instrument; hence, the same are
deemed admitted. (Section 8, Rule 8 of the Revised
Rules of Court) Second. Defendant-appellant did not
oppose the motion for judgment on the pleadings filed
by plaintiff appellee; neither has he filed a motion for
reconsideration of the order of September 13, 1966,
which deemed the case submitted for decision on the
pleadings, or of the decision rendered on January 9,
1967.
184. ANTAM CONSOLIDATED VS CA
G.R. No. L-61523 July 31, 1986
. On 9 April 1981, Stokely Van Camp. Inc. filed a
complaint against Banahaw Milling Corporation, Antam
Consolidated,Inc., Tambunting Trading Corporation,
Aurora Consolidated Securities and Investment
Corporation, and United CoconutOil Mills, Inc.
(Unicom) for collection of sum of money.
Stokely alleged the following in its complaint that it is a
corporation organized and existing under the laws of
the state of Indiana, U.S.A.
Stokely and Capital City were not engaged in business in
the Philippines prior to the commencement of the suit so
that Stokely is not licensed to do business in this country
and is not required to secure such license;
Capital City and Coconut Oil Manufacturing (Phil.) Inc.
(Comphil) with the latter acting through its broker
Rothschild Brokerage Company, entered into a contract
wherein Comphil undertook to sell and deliver and
Capital City agreed to buy 500 long tons of crude
coconut oil to be delivered but Comphil failed to
deliver the coconut oil so that Capital City covered its
coconut oil needs in the open market at a price
substantially in excess of the contract and sustained a
loss of US$103,600; that to settle Capital City's loss
under the contract, the parties entered into a second
contract wherein Comphil undertook to buy and Capital
City agreed to sell 500 long tons of coconut crude oil
under the same terms and conditions but at an increased
The second contract states that "it is a wash out against
RBS 3655" so that Comphil was supposed to repurchase
the undelivered coconut oil at US $0.3925 from Capital
City by paying the latter the sum of US$103,600.00
which is the same amount of loss that Capital City
sustained under the first contract; that Comphil again
failed to pay said amount, so to settle Capital City's loss,
it entered into a third contract with Comphil wherein
the latter undertook to sell and deliver and Capital City
agreed to buy the same quantity of crude coconut oil to
be delivered in April/May 1979 at the c.i.f. price of
US$0.3425/lb.;
The latter price was 9.25 cents/lb. or US$103,600 for
500 long tons below the then current market price of
43.2 cents/lb.and by delivering said quantity of coconut
oil to Capital City at the discounted price, Comphil was
to have settled itsUS$103,600 liability to Capital City;
Comphil failed to deliver the coconut oil so Capital
City notified the former that it was in default and
Capital City sustained damages in the amount of
US$175,0008. After repeated demands from Comphil
to pay the said amount, the latter still refuses to pay
the same.
Stokely further prayed that a writ of attachment be
issued against any and all the properties of Antam, et al.
in an amountsufficient to satisfy any lien of judgment
that Stokely may obtain in its action.
After demands were made by respondent on Comphil,
the Tambuntings ceased to be directors and officers of
Comphiland were replaced by their five employees, who
were managers of Tambunting's pawnshops and said
employees causedthe name of Comphil to be changed to
"Banahaw Milling Corporation" and authorized one of
the Tambuntings, Antonio P.Tambunting, Jr., who was
at that time neither a director nor officer of Banahaw to
sell its oil mill
Unicom has taken over the entire operations and assets
of Banahaw because the entire and outstanding capital
stock of the latter was sold to the former;
All of the issued and outstanding capital stock of
Comphil are owned by the Tambuntings who were the
directors andofficers of Comphil and who were the ones
who benefited from the sale of Banahaw's assets or
shares to Unicom;
All of the petitioners evaded their obligation to
respondent by the devious scheme of using
Tambunting employees to replace the Tambuntings
in the management of Banahaw and disposing of the
oil mill of Banahaw or their entire interests to
Unicom
Respondent has reasonable cause to believe and does
believe that the coconut oil mill, which is the only
substantial asset of Banahaw is about to be sold or
removed so that unless prevented by the Court there will
probably be no assets of Banahaw to satisfy its claim.
The trial court ordered the issuance of a writ of
attachment in favor of Stokely upon the latter's deposit
of a bond in the amount of P1,285,000.00.Stokely filed a
motion for reconsideration to reduce the attachment
bond.
Antam, et al. filed a motion to dismiss the complaint on
the ground that Stokely, being a foreigncorporation
not licensed to do business in the Philippines, has no
personality to maintain the suit.
Thereafter, the trial courtissued an order, dated 10
August 1981, reducing the attachment bond to
P500,000.00 and denying the motion to dismiss by
Antam, et al. on the ground that the reason cited therein
does not appear to be indubitable. Antam, et al. filed a
petition for certiorari before the Intermediate Appellate
Court. The appellate court dismissed the petition.
Antam, etal. filed a motion for reconsideration but the
same was denied
ISSUE: WON Stokely, being a foreigncorporation
not licensed to do business in the Philippines, has no
personality to maintain the suit.
HELD: NO. As we have held in Eastboard Navigation
Ltd. v. Juan Ysmael and Co., Inc.
(d) While plaintiff is a foreign corporation
without license to transact business in the
Philippines, it does not follow that it has no
capacity to bring the present action. Such license
is ' not necessary because it is not engaged in
business in the Philippines. In fact, the transaction
herein involved is the first business undertaken by
plaintiff in the Philippines, although on a previous
occasion plaintiff's vessel was chartered by the
National Rice and Corn Corporation to carry rice
cargo from abroad to the Philippines. These two
isolated transactions do not constitute engaging in
business in the Philippines within the purview of
Sections 68 and 69 of the Corporation Law so as
to bar plaintiff from seeking redress in our courts
We agree with the respondent that it is a common ploy
of defaulting local companies which are sued by
unlicensed foreign companies not engaged in business in
the Philippines to invoke lack of capacity to sue. The
respondent cites decisions from 1907 to 1957
recognizing and rejecting the improper use of this
procedural tactic. The doctrine of lack of capacity to sue
based on failure to first acquire a local license is based
on considerations of sound public policy. It intended to
favor domestic corporations who enter was never into
solitary transactions with unwary foreign firms and then
repudiate their obligations simply because the latter are
not licensed to do business in this country. The
petitioners in this case are engaged in the exportation of
coconut oil, an export item so vital in our country's
economy. They filed this petition on the ground that
Stokely is an unlicensed foreign corporation without a
bare allegation or showing that their defenses in the
collection case are valid and meritorious. We cannot
fault the two courts below for acting as they did.
185. STEELCASE INC. VS DESIGN
INTERNATIONAL SELECTIONS . G.R. No.
171995. April 18, 2012
FACTS:
Petitioner Steelcase, Inc. ("Steelcase") is a foreign
corporation existing under the laws of Michigan, United
States of America (U.S.A.), and engaged in the
manufacture of office furniture with dealers worldwide.
Respondent Design International Selections, Inc.
("DISI") is a corporation existing under Philippine Laws
and engaged in the furniture business, including the
distribution of furniture.
Sometime in 1986 or 1987, Steelcase and DISI orally
entered into a dealership agreement whereby Steelcase
granted DISI the right to market, sell, distribute, install,
and service its products to end-user customers within the
Philippines. The business relationship continued
smoothly until it was terminated sometime in January
1999 after the agreement was breached with neither
party admitting any fault. Steelcase filed a complaint for
sum of money against DISI alleging, among others, that
DISI had an unpaid account of US$600,000.00.
Steelcase prayed that DISI be ordered to pay actual or
compensatory damages, exemplary damages, attorney’s
fees, and costs of suit. Among the counter-arguments
raised, DISI alleged that the complaint failed to state a
cause of action and to contain the required allegations on
Steelcase’s capacity to sue in the Philippines despite the
fact that Steelcase was doing business in the Philippines
without the required license to do so. Consequently, it
posited that the complaint should be dismissed because
of Steelcase’s lack of legal capacity to sue in Philippine
courts.
The Regional Trial Court (RTC) dismissed the
complaint and granted the temporary restraining order
prayed for by DISI. The RTC stated that in requiring
DISI to meet the Dealer Performance Expectation and in
terminating the dealership agreement with DISI based on
its failure to improve its performance in the areas of
business planning, organizational structure, operational
effectiveness, and efficiency, Steelcase unwittingly
revealed that it participated in the operations of DISI.
Despite a showing that DISI transacted with the local
customers in its own name and for its own account, the
RTC stated that any doubt in the factual environment
should be resolved in favor of a pronouncement that a
foreign corporation was doing business in the
Philippines, considering the twelve-year period that DISI
had been distributing Steelcase products in the
Philippines. The RTC concluded that Steelcase was
"doing business" in the Philippines, as contemplated by
the Foreign Investments Act of 1991, and since it did not
have the license to do business in the country, it was
barred from seeking redress from our courts until it
obtained the requisite license to do so. Steelcase moved
for the reconsideration of the dismissal but the same was
denied.
Aggrieved, Steelcase appealed the case to the Court of
Appeals. The Court of Appeals rendered its Decision
affirming the RTC orders, ruling that Steelcase was a
foreign corporation doing or transacting business in the
Philippines without a license. Steelcase filed a motion
for reconsideration but it was denied by the Court of
Appeals.
Steelcase filed a Petition for Review with the Supreme
Court.
Issue: Whether or not DISI is estopped from
challenging the Steelcases legal capacity to sue.
HELD: YES. DISI is estopped
It cannot be denied that DISI entered into a
dealership agreement with Steelcase and profited from it
for 12 years from 1987 until 1999. DISI admits that it
complied with its obligations under the dealership
agreement by exerting more effort and making
substantial investments in the promotion of Steelcase
products. It also claims that it was able to establish a
very good reputation and goodwill for Steelcase and its
products, resulting in the establishment and development
of a strong market for Steelcase products in
the Philippines. Because of this, DISI was very proud to
be awarded the Steelcase International Performance
Award for meeting sales objectives, satisfying customer
needs, managing an effective company and making a
profit.[21]
Unquestionably, entering into a dealership
agreement with Steelcase charged DISI with the
knowledge that Steelcase was not licensed to engage in
business activities in the Philippines. This Court has
carefully combed the records and found no proof that,
from the inception of the dealership agreement in 1986
until September 1998, DISI even brought to Steelcases
attention that it was improperly doing business in
the Philippines without a license. It was only towards the
latter part of 1998 that DISI deemed it necessary to
inform Steelcase of the impropriety of the conduct of its
business without the requisite Philippine license. It
should, however, be noted that DISI only raised the issue
of the absence of a license with Steelcase after it was
informed that it owed the latter US$600,000.00 for the
sale and delivery of its products under their special credit
arrangement.
By acknowledging the corporate entity of
Steelcase and entering into a dealership agreement with
it and even benefiting from it, DISI is estopped from
questioning Steelcases existence and capacity to sue.
consistent with the Courts ruling in Communication
Materials and Design, Inc. v. Court of Appeals
A foreign corporation doing
business in the Philippines may sue in
Philippine Courts although not authorized to
do business here against a Philippine citizen or
entity who had contracted with and benefited
by said corporation. To put it in another way, a
party is estopped to challenge the personality of
a corporation after having acknowledged the
same by entering into a contract with it. And the
doctrine of estoppel to deny corporate existence
applies to a foreign as well as to domestic
corporations. One who has dealt with a
corporation of foreign origin as a corporate entity
is estopped to deny its corporate existence and
capacity: The principle will be applied to prevent a
person contracting with a foreign corporation from
later taking advantage of its noncompliance with
the statutes chiefly in cases where such person has
received the benefits of the contract.
The rule is deeply rooted in
the time-honored axiom of
Commodum ex injuria sua non
habere debet no person ought to
derive any advantage of his own
wrong. This is as it should be for as
mandated by law, every person must
in the exercise of his rights and in the
performance of his duties, act with
justice, give everyone his due, and
observe honesty and good faith.
Rimbunan Hijau Group of Companies v. Oriental Wood
Processing Corporation
The rule is that a party is estopped to challenge the
personality of a corporation after having
acknowledged the same by entering into a contract
with it. And the doctrine of estoppel to deny
corporate existence applies to foreign as well as to
domestic corporations; one who has dealt with a
corporation of foreign origin as a corporate entity is
estopped to deny its existence and capacity. The
principle will be applied to prevent a person
contracting with a foreign corporation from later
taking advantage of its noncompliance with the
statutes, chiefly in cases where such person has
received the benefits of the contract . . .

186. OTERO VS TAN
G.R. No. 200134. August 15, 2012
FACTS
A Complaint for collection of sum of money and
damages was filed by Roger Tan (Tan) with the
Municipal Trial Court in Cities (MTCC), Cagayan de
Oro City against Roberto Otero (Otero). Tan alleged that
on several occasions, Otero purchased on credit
petroleum products from his Petron outlet in Valencia
City, Bukidnon in the aggregate amount of ₱
270,818.01. Tan further claimed that despite several
verbal demands, Otero failed to settle his obligation.
Despite receipt of the summons and a copy of the said
complaint, which per the records of the case below were
served through his wife Grace R. Otero on August 31,
2005, Otero failed to file his answer with the MTCC.
Tan filed a motion with the MTCC to declare Otero in
default for his failure to file his answer. Otero opposed
Tan’s motion, claiming that he did not receive a copy of
the summons and a copy of Tan’s complaint.
Hearing on the said motion was set on January 25, 2006,
but was later reset to March 8, 2006, Otero manifesting
that he only received the notice therefor on January 23,
2006. The hearing on March 8, 2006 was further reset to
April 26, 2006 since the presiding judge was attending a
convention. Otero failed to appear at the next scheduled
hearing, and the MTCC issued an order declaring him in
default. A copy of the said order was sent to Otero on
May 9, 2006. Tan was then allowed to present his
evidence ex parte.
Tan adduced in evidence the testimonies of Rosemarie
Doblado and Zita Sara, his employees in his Petron
outlet who attended Otero when the latter made
purchases of petroleum products now the subject of the
action below. He likewise presented various statements
of account4 showing the petroleum products which Otero
purchased from his establishment. The said statements of
account were prepared and checked by a certain Lito
Betache (Betache), apparently likewise an employee of
Tan.
The MTCC Decision
the MTCC rendered a Decision directing Otero to pay
Tan his outstanding obligation in the amount of ₱
270,818.01, as well as attorney’s fees and litigation
expenses and costs in the amounts of ₱ 15,000.00 and ₱
3,350.00, respectively. The MTCC opined that Otero’s
failure to file an answer despite notice is a tacit
admission of Tan’s claim.
The RTC Decision
the RTC rendered a Judgment affirming the MTCC
Decision dated February 14, 2007.
Otero then filed a petition for review with the CA
asserting that both the RTC and the MTCC erred in
giving credence to the pieces of evidence presented by
Tan in support of his complaint. Otero explained that the
statements of account, which Tan adduced during the ex
parte presentation of his evidence, were prepared by a
certain Betache who was not presented as a witness by
Tan. Otero avers that the genuineness and due execution
of the said statements of account, being private
documents, must first be established lest the said
documents be rendered inadmissible in evidence. Thus,
Otero asserts, the MTCC and the RTC should not have
admitted in evidence the said statements of account as
Tan failed to establish the genuineness and due
execution of the same.
The CA Decision
the CA rendered the assailed Decision which denied the
petition for review filed by Otero. In rejecting Otero’s
allegation with regard to the genuineness and due
execution of the statements of account presented by Tan,
the CA held that any defense which Otero may have
against Tan’s claim is already deemed waived due to
Otero’s failure to file his answer.
Due to Otero’s failure to file his Answer despite being
duly served with summons coupled with his voluntary
appearance in court, he is deemed to have waived
whatever defenses he has against Tan’s claim.
Apparently, Otero is employing dilatory moves to defer
the payment of his obligation which he never denied.
ISSUE: Whether Otero, having been declared in default
by the MTCC, may, in the appellate proceedings, still
raise the failure of Tan to authenticate the statements of
account which he adduced in evidence
HELD: NO. The petition is denied.
A defendant who fails to file an
answer loses his standing in court.
The effect of a defendant’s failure to file an answer
within the time allowed therefor is primarily governed
by Section 3, Rule 9 of the Rules of Court, viz:
Sec. 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. x x x (Emphasis ours)
A defendant who fails to file an answer may, upon
motion, be declared by the court in default. Loss of
standing in court, the forfeiture of one’s right as a party
litigant, contestant or legal adversary, is the consequence
of an order of default. A party in default loses his right
to present his defense, control the proceedings, and
examine or cross-examine witnesses. He has no right to
expect that his pleadings would be acted upon by the
court nor may be object to or refute evidence or motions
filed against him.14
Indeed, a defending party declared in default retains the
right to appeal from the judgment by default. However,
the grounds that may be raised in such an appeal are
restricted to any of the following: first, the failure of the
plaintiff to prove the material allegations of the
complaint; second, the decision is contrary to law; and
third, the amount of judgment is excessive or different in
kind from that prayed for.17 In these cases, the appellate
tribunal should only consider the pieces of evidence that
were presented by the plaintiff during the ex parte
presentation of his evidence.
A defendant who has been declared in default is
precluded from raising any other ground in his appeal
from the judgment by default since, otherwise, he would
then be allowed to adduce evidence in his defense,
which right he had lost after he was declared in
default.18 Indeed, he is proscribed in the appellate
tribunal from adducing any evidence to bolster his
defense against the plaintiff’s claim

A defendant who was declared in

default may nevertheless appeal
from the judgment by default,
albeit on limited grounds.

Nonetheless, the fact that a defendant has lost his

standing in court for having been declared in default
does not mean that he is left sans any recourse
whatsoever. In Lina v. CA, et al.,15 this Court enumerated
the remedies available to 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)16(Emphasis
ours)
187. DULOS VS CA, 188 SCRA 413 (1990)
FACTS
The spouses Dulos were sued for forcible entry by the
spouses Mariano and Anacoreta Nocom, private
respondents herein, in the Metropolitan Trial Court of
Las Piñas. The case was set for a pre-trial conference on
August 18, 1988, with due notice to both parties.
Earlier, on August 16, 1988, the petitioners had filed a
complaint against the private respondents for annulment
of sale, reconveyance of title, and various other reliefs
plus a writ of preliminary injunction. This was docketed
as Civil Case No. 881663 in the Regional Trial Court of
Makati.
On August 17, 1988, the petitioners filed a motion for
the suspension of the proceedings in the forcible entry
case on the ground that there was a prejudicial question
of ownership involved in the annulment case. The
petitioners' counsel, Atty. Pedro S. Ravelo, set August
18, 1988, for the hearing of the motion at the pre-trial
conference scheduled on the same date.
Neither petitioners nor their counsel appeared on that
date. However, one Ananita Rectra manifested at the
hearing that she was duly authorized by virtue of a
special power of attorney to represent petitioner Juan
Dulos, her brother, who was then confined at the Manila
Doctors Hospital after having undergone a femur
operation. The petitioners were nonetheless declared in
default. The evidence of the private respondents was
subsequently received in the absence of the petitioners.
On October 4, 1988, judgment was rendered in favor of
the private respondents,
The petitioners received a copy of this decision on
October 10, 1988. They filed a motion for
reconsideration which was denied. Instead of taking an
appeal, the petitioners filed a special civil action
for certiorari and prohibition with preliminary
injunction with the Regional Trial Court of Makati
praying for the nullification of the said judgment and the
earlier order declaring them in default.
While that case was pending, the private respondents
moved for the immediate execution of the judgment of
the Metropolitan Trial Court on the ground that no
appeal had been filed with the proper court and the
decision had become final and executory. The motion
was granted, and the writ of execution was issued.
The petition for certiorari, etc. was dismissed. On
motion of the private respondents, the Metropolitan Trial
Court issued a writ of demolition.
The petitioners then elevated the matter to the Court of
Appeals in a petition for certiorari and prohibition with
preliminary injunction. The respondent court denied the
application for preliminary injunction, prompting the
petitioners to come to this Court on certiorari.
ISSUE: WON the MTC erred in declaring petitioners in
default during the pre-trial hearing.
HELD: NO.
First of all, it is clear that a case may be dismissed for
failure of a party to appear at the pre-trial conference, as
authorized by Rule 20, Section 2, of the Rules of Court,
thus:
Sec. 2. A party who fails to appear at a
pre-trial conference may be non-suited
or considered as in default.
Rectra did appear at the scheduled hearing but did not
present to the court her power of attorney to represent
Juan Dulos or even the medical certificate of his
operation. In their memorandum, the petitioners say
Maria Dulos did not appear for herself because the
spouses Dulos had long been separated. However, the
Dulos lawyer did not show up either although it was he
who had asked that his motion to suspend proceedings
be set on the date of the pre-trial conference. The
averment that Atty. Ravelo was already 73 years old at
the time is a flimsy excuse for carelessness nor do we
accept the explanation that he was then attending to
several detention prisoners. At any rate, the petitioners
could have availed themselves of other counsel if their
counsel then was unable to represent them at the
conference.
Secondly, the denial of the application for preliminary
injunction was justified because the petitioners did not
employ the proper remedy prescribed by the Rules of
Court. As enumerated in Lina v. Court of Appeals, 3 the
remedies available to a defendant declared in default are:
1. 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 was failure to answer or appear on the date set for
pre-trial was due to fraud, accident, mistake or excusable
negligence, and that he has a meritorious defense;
2. 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 petition
for new trial under Sec. 1(a) of Rule 37;
3. If the defendant discovered the default after the
judgment has become final and executory, he may file a
petition for relief under Sec. 2, Rule 38; and
4. He may also appeal from the judgment rendered
against him as contrary to the evidence or the law, even
if no petition to set aside the order of default has been
presented by him.
may at any time after discovery 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 neglect 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.

The petitioners did not avail themselves of any of the

above remedies. Instead, after taking no action
whatsoever for all of sixty days, they filed a motion for
reconsideration of the decision dated October 4, 1988,
and, when this was denied, went to the Regional Trial
Court on certiorari and prohibition. As we held in the
Lina case:

... where the judgment rendered by the

respondent court is the one sought to be
annulled, a petition for relief, under
Rule 38, which is a remedy in the
ordinary course of law, could have been
just as plain, adequate and speedy
as certiorari ..

It is obvious the petitioners have failed to take into

account the following pertinent provisions of the Rules
of Court concerning notices in case a party is declared in
default:

Rule 18, Sec. 2. Effect of order of

default. — Except as provided in Section
9 of Rule 13, a party declared in default
shall not be entitled to notice of
subsequent proceedings, nor to take part
in the trial.

Rule 13, Sec. 9. Service upon party in

default. — No service of papers other
than substantially amended or
supplemental pleadings and final orders
or judgments shall be necessary on a
party in default unless he files a motion
to set aside the order of default in which
event he shall be entitled to notice of all
further processings regardless of
whether the order of default is set aside
or not.

Rule 18, Sec. 3. Relief from order of

default. — A party declared in default