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Dismissal of Actions Rule 17 By Plaintiff Through choice, Rule 17, Sec. 1 Section 1. Dismissal upon notice by plaintiff.

A complaint may be dismissed by the plaintiff by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim. International Container Terminal Services v. C.A., 214 SCRA 456 (1992) What is the effect of the dismissal of a complaint ordered at the instance of the defendant upon a compulsory counterclaim duly raised in its answer? FACTS -Private respondent SHARP filed a complaint for prohibition with prayer for preliminary injunction vs. Sec of Transportation and Communications, PPA, E. Razon Inc., and ICTS -tc:vissued WPI after SHARP issued a bond -ANSWER + COMPULSORY COUNTERCLAIM for unfounded and frivolous action -WPI nullified. SHARP WAS NOT A PROPER PARTY TO STOP THE NEGOTIATION AND AWARDING OF THE CONTRACT FOR THE DEVELOPMENT, MANAGEMENT AND OPERATION OF THE CONTAINER TERMINAL AT MANILA PORT + premature: Sharp has not exhausted admin remedies -PPA filed MTD based on NOT A PROPER PARTY + FAILURE TO EXHAUST ADMIN REMEDIES, MTD adopted by CCTSI -TC: DISMISSED complaint + counterclaim -CCTSI filed MFR for dismissal of counterclaim. DENIED. Compulsory counterclaim so dismissal of the 1st case, the subject matter of which gives rise to the compulsory counterclaim, should also be dismissed. -CCTSI appealed. (1) actual damages claimed in CCounterclaim ARE NOT RECOVERABLE vs bond; (2) manifestation adopting PPAs MTD did not contain any reservation; (3) R57.20.. H: DENY PETITION Ratio. We have consistently held that a counterclaim is compulsory where: (1) it arises out of, or is necessarily connected with, the transaction or occurrence that is the subject matter of the opposing party's claim; (2) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (3) the court has jurisdiction to entertain the claim. *The counterclaim was not permissive. A counterclaim is permissive if it does not arise out of nor is it necessarily connected with the subject matter of the opposing party's claim. It is not barred even if not set up in the action. 3 The petitioner's counterclaim was within the jurisdiction of the trial court. Most importantly, it had no independent existence, being merely ancillary to the main action. 4 The petitioner knew all this and did not object to the dismissal of the complaint. On the contrary, it actually moved to dismiss that main action, and in so doing also moved, in effect, for the dismissal of its counterclaim.

Reasoning. Tested by these requirements, the petitioner's counterclaim was clearly compulsory. The petitioner itself so denominated it. There is no doubt that the same evidence needed to sustain it would also refute the cause of action alleged in the private respondent's complaint; in other words, the counterclaim would succeed only if the complaint did not. It is obvious from the very nature of the counterclaim that it could not remain pending for independent adjudication, that is, without adjudication by the court of the complaint itself on which the counterclaim was based. Rule 17. Sec. 2 Sec. 2. Dismissal by order of the court. Except as provided in the preceding section, an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court may deem proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice. The Court notes that, to begin with, the petitioner itself joined the PPA in moving for the dismissal of the complaint; or put passively, it did not object to the dismissal of the private respondent's complaint. Secondly, the compulsory counterclaim was so interwined with the complaint that it could not remain pending for independent adjudication by the court after the dismissal of the complaint which had provoked the counterclaim in the first place. As a consequence, the dismissal of the complaint (on the petitioner's own motion) operated to also dismiss the counterclaim questioning that complaint. The petitioner is correct in contending that the claim for damages caused by the wrongful issuance of a preliminary injunction can be made in the form of a counterclaim. However, it was the petitioner itself which caused the dismissal of its counterclaim WHEN IT DID NOT OBJECT TO (AND ACTUALLY MOVED FOR) THE DISMISSAL OF THE COMPLAINT.

Failure to prosecute (non-suited), Rule 17, Sec. 3; Rule 18, Sec. 5 Sec. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.

CONRADO CALALANG v. CA [FILIPINAS MANUFACTURERS BANK] G.R. No. 103185 CAMPOS, JR; January 22, 1993 NATURE: Certiorari FACTS - On April 29, 1980, FM Bank filed a complaint for collection of a sum of money against Conrado Calalang, Hugo M. Arca, Rio Arturo Salceda and the Acropolis Trading Corporation with the CFI of Rizal, 7th Judicial District, Branch 36, Makati under Judge Segundo M. Zosa. - Calalang, after having been served with summons on May 19, 1980, filed a MTD on June 2, 1980. The other summoned defendant, Hugo M. Arca, filed a Motion for Bill of Particulars on June 5, 1980. The two other defendants namely, the Acropolis Trading Corporation and Rio Arturo Salceda were also summoned but only a clerkemployee of the Acropolis Trading Corporation received the summons while Arturo R. Salceda was no longer residing at his given address. - Over a year after, the Motion for Bill of Particulars was granted on August 24, 1981 by Judge Zosa. Meanwhile, the MTD filed by Calalang was left unresolved. The last pleading filed regarding the MTD was the reply of Calalang to the opposition to the MTD by FM Bank which was filed on August 5, 1980. - BP Blg. 129 was passed and subsequently approved by then Pres. Marcos. - November 27, 1981, Arca filed a MTD which necessitated the filing of various pleadings in relation thereto by FM Bank, and Arca. - May 25, 1983, a hearing was scheduled under Judge Dela Pea of the Makati RTC, Br. 134. But then, the case was transferred to the Makati RTC Br. 150, presided over by Judge Puno who DENIED the motions for lack of merit and ordered the movants to file their answers to the Complaint within the reglementary period. - On October 3, 1986, Alcala and Associates entered its appearance as counsel for FM bank. - On October 30, 1985, Arca filed his answer with compulsory counterclaim to the complaint which was received by FM bank's former counsel, Emerito M. Salva and Associates on November 4, 1985. - It appears that this case has been set several times for pre-trial (November 29, 1985, January 29, 1986, May 12,1986, November 19, 1986, January 14, 1987 and February 27, 1987): * For the first two scheduled hearings, respondent bank's counsel failed to appear causing the dismissal without prejudice of the case (set aside upon respondent bank's motion for reconsideration of the dismissal) * The November 19, 1986 hearing was transferred to January 14, 1987 upon agreement by both counsels. * For the last two scheduled dates counsel for the defendant Hugo Arca failed to appear. - J. Puno was replaced by J. Alikpala, Jr. as the presiding judge of the Makati RTC, issued an Order: 1. Informing the plaintiff that it shall not consider Acropolis Trading Corporation as having been properly brought under the jurisdiction of this Court in view of the improper service of summons on said corporation. 2. Directing the plaintiff to inform the Court, within 10 days from its receipt hereof, what steps plaintiff intends to take with respect to the said two defendants so that the Court will know whether plaintiff is still interested in the prosecution and/or outcome of this case. 3. To send a copy of the Order dated August 8, 1985 (denying MTD) to defendant Conrado T. Calalang through his counsel of record. 4. The pre-trial conference was cancelled until further assignment or until any of the parties shall make the appropriate steps in connection therewith.

- The Order was received by petitioner's counsel on March 13, 1987. - On March 17, 1987, FM bank, in response to that Order filed a manifestation stating that: 1. It is very much interested in prosecuting the complaint against the defendants Acropolis Trading and Salcedo; 2. Pursuant to this, counsel has requested the Credit Investigation Department of plaintiff to verify the correct address of said defendants including all necessary facts for the proper service of summons on them; 3. Upon verification, plaintiff will then move for the issuance of Alias Summons on the said defendants. - Thereafter, Calalang MTD the complaint on the ground that respondent bank failed to prosecute the case for an unreasonable length of time. - RTC issued another Order stating that if plaintiff shall still be unable to cause service of alias summons on the said defendants within thirty (30) days from plaintiff's receipts hereof, then this Court will dismiss the complaint as against said defendants and proceedings herein shall be limited to the defendants on whom summons had been served as of the lapse of said 30-days' period. - Thereafter, on May 8, 1987, respondent bank moved for the issuance of alias summons on defendant Acropolis Trading Corporation through its President/Director Conrado T. Calalang or through its director Hugo M. Arca. - J. Angeles of the Makati RTC, Branch 58, to whom the case was assigned after J. Alikpala, Jr., then issued an Order, dated July 16, 1987, denying the MTD filed by petitioner for lack of merit. The motion for alias summons was granted. Entry of appearance of Atty. Crisostomo J. Danguilan as counsel for respondent bank was noted in the same order. - Petitioner then filed his answer only on November 10, 1987. - RTC issued an Order setting the pre-trial of the case for January 7, 1988 at 8:30 a.m. - At the pre-trial conference, FM bank's counsel arrived 15 minutes late or at 8:45 a.m. The case had already been dismissed. Thus, in the Order of January 7, 1988, the court declared that for failure of plaintiff's counsel to appear inspite of notice and considering that this case has been pending for 7 years, without plaintiff having taken positive steps to prosecute the same, it is hereby DISMISSED pursuant to R.17.3, RoC. Defendants' counterclaim is likewise dismissed. - On January 12, 1988, counsel for the FM bank filed a MFR of the order of dismissal citing as reason for his late arrival "the unusually heavy traffic he encountered along Kamias Road in Quezon City, which was caused by a stalled jeepney along the main thoroughfare." w/c was denied. The respondent bank appealed the dismissal. -On October 25, 1991, the CA set aside the Order of the RTC dated January 9, 1988 dismissing this case and its Order dated January 26, 1988 denying reconsideration of the first order and ordered the case remanded to the court of origin for further proceedings. - CA denied the petitioners MFR. ISSUES 1. WON the Court erred in declaring the January 7, 1988 pre-trial as premature 2. WON the Court erred in absolving the respondent bank for failing to prosecute HELD 1.A pre-trial cannot validly be held until the last pleading has been filed, which last pleading may be the plaintiff's reply, except where the period to file the last pleading has lapsed. The pre-trial conference scheduled for January 8, 1987 was not premature. The period to appear and file the necessary pleading having expired on the Acropolis Trading Corporation, the lower court can direct that a pre-trial conference be held among the answering defendants. However, though it is within the discretion of the

trial court to declare a party non-suited for non-appearance in the pre-trial conference, such discretion must not be abused. The precipitate haste of the lower court in declaring the respondent bank non-suited was uncalled for and deserved a second look. Considering the fact that the counsel for the plaintiff/respondent bank did arrive for the pre-trial conference, though a bit late and that counsel for the defendant was himself also late, the trial court should have called the case again. An admonition to both counsels to be more prompt in appearing before the Court as scheduled would have sufficed, instead of having dismissed the complaint outright. Unless a party's conduct is so negligent, irresponsible, contumacious, or dilatory as to provide substantial grounds for dismissal for non-appearance, the courts should consider lesser sanctions which would still amount into achieving the desired end. Inconsiderate dismissals, even if without prejudice, do not constitute a panacea nor a solution to the congestion of court dockets; while they lend a deceptive aura of efficiency to records of individual judges, they merely postpone the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to delay, justice is better served by a brief continuance, trial on the merits, and final disposition of the cases before the court. And there is authority that an order dismissing a plaintiff's complaint without prejudice for failure of his counsel to appear at a pre-trial conference must be reversed as too severe a sanction to visit on a litigant where the record is devoid of evidence reflecting the litigant's willful or flagrant disregard for the Court's authority. 2. The seven-year delay is not attributable to the respondent bank alone but to circumstances beyond its control. The acts of the respondent bank do not manifest lack of interest to prosecute, in the absence of proof that it indeed abandoned or intended to abandon its case against petitioner and the other defendants. Admittedly there was delay in this case, but such delay is not the delay warranting dismissal. To be a sufficient ground for dismissal, delay must not only be lengthy but also unnecessary and dilatory resulting in the trifling of judicial processes. Citing Marahay vs. Melicor [test for dismissal of a case due to failure to prosecute] to wit: While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of such power is whether, under the circumstances, plaintiff is chargeable with want of due diligence in failing to proceed with reasonable promptitude. In the absence of a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense with rather than wield their authority to dismiss. Dismissal of a case for failure to prosecute is a matter addressed to the sound discretion of the court. That discretion, however, must not be abused. Thus, courts may not enter a dismissal which is not warranted by the circumstances of the case. The availability of this recourse must be determined according to each case's procedural history, situation at the time of the dismissal and whether, and under the circumstances of the particular case, the plaintiff is chargeable with want of due diligence in failing to proceed with reasonable promptitude. Dispositive: Petition is DISMISSED. CAs decision and Resolution are both AFFIRMED. By Court, Rule 17, Sec. 2 Sec. 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint shall not be dismissed at the plaintiff's instance save upon approval of the court

and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion for dismissal, the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the right of the defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of the motion he manifests his preference to have his counterclaim resolved in the same action. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the approval of the court. Dismissal of Counterclaims et.al., Rule 17, Sec. 4 Sec. 4. Dismissal of counterclaim, cross-claim, or third-party complaint. The provisions of this Rule shall apply to the dismissal of any counterclaim, cross-claim, or third-party complaint. A voluntary dismissal by the claimant by notice as in section 1 of this Rule, shall be made before a responsive pleading or a motion for summary judgment is served or, if there is none, before the introduction of evidence at the trial or hearing. Effect of Dismissal Meliton v. C.A. (ZIGA), 216 SCRA 485 (1992) G.R. No. 101883 REGALADO; December 11, 1992 NATURE Appeal by Certiorari FACTS - 1ST CASE, June 22, 1988: private respondent Nelia Ziga (ZIGA) filed a complaint with the RTC of Naga City against herein petitioner Lydia Meliton (MELITON) for rescission of a contract of lease over a parcel of land situated at Elias Angeles Street, Naga City, on the following grounds: MELITONs failure, as lessee, to deposit the one month rental and to pay the monthly rentals due; her construction of a concrete wall and roof on the site of a demolished house on the leased premises without the lessor's written consent; and her unauthorized sublease of the leased property to a third party. - COUNTERCLAIM, July 29, 1988: MELITON filed an answer to the complaint denying the material averments thereof and setting up three counterclaims for recovery of the following values: - demolished kitchenette: P 34,000; improvements: P 10,000; furniture and fixtures: P 23,000; Moral damages: P 20,000; Attorneys fees: P 5,000 (plus P250/ appearance); Litigation costs: P1,000. - May 29, 1989: RTC dismissed the complaint, on motion of respondent ZIGA contending that her cause of action had already become moot and academic by the expiration of the lease contract on February 7, 1989. - MELITONs counterclaims were also dismissed for non-payment of docket fees, the RTC holding they did not acquire jurisdiction over them. - 2ND CASE, December 6, 1989: MELITON filed a complaint in the RTC against ZIGA for recovery of the same amounts involved and alleged in their counterclaims in the previous case.

- ZIGA filed a motion to dismiss the complaint on the ground that the cause of action therein was barred by prior judgment in the first case, the order of dismissal wherein was rendered on May 29, 1989. - RTC denied the ground that the dismissal of the petitioner's counterclaims in not an adjudication on the merits as the court did not acquire jurisdiction over the counterclaims for failure of MELITON to pay the docket fees, hence the said dismissal does not constitute a bar to the filing of the later complaint. - ZIGAs MFR was denied, hence this appeal on Certiorari. ISSUE(S) 1. WON the counterclaims of petitioners are compulsory in nature; 2. WON petitioners, having failed to seek reconsideration of or to take an appeal from the order of dismissal of their counterclaims, are already barred from asserting the same in another action. HELD 1. YES Ratio Where multiple claims involve many of the same factual issues, or where they are offshoots of the same basic controversy between the parties, fairness and considerations of convenience and of economy require that the counterclaimant be permitted to maintain his cause of action. Reasoning - A counterclaim is compulsory if: (a) It arises out of, or is necessarily connected with, the transaction or occurrence which is the subject matter of the opposing party's claim; (b) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (c) the court has jurisdiction to entertain the claim. - The one compelling test to determine if a counterclaim is compulsory or not is the logical relationship between the claim alleged in the complaint and that in the counterclaim, that is, where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time, as where they involve many of the same factual and/or legal issues. - A counterclaim is logically related to the opposing party's claim where, as already stated, separate trials of each of their respective claims would involve a substantial duplication of effort and time by the parties and the courts. - In the first case, all the requisites of a compulsory counterclaim are present. The counterclaims, as this term is now broadly defined, are logically related to the complaint. - ZIGAs complaint was for rescission of the contract of lease due to petitioner MELITONs breach of her obligations under the said contract. On the other hand, petitioner's counterclaims were for damages for unlawful demolition of the improvements she introduced pursuant to her leasehold occupancy of the premises, as well as for the filing of that civil suit which is contended to be clearly unfounded. - Both the claims therein of petitioners and private respondent arose from the same contract of lease. The rights and obligations of the parties, as well as their potential liability for damages, emanated from the same contractual relation. The two actions are but the consequences of the reciprocal obligations imposed by law upon and assumed by the parties under their aforesaid lease contract. That contract of lease pleaded by private respondent constitutes the foundation and basis relied on by both parties for recovery of their respective claims. NOTE: - In actions for ejectment or for recovery of possession of real property, it is well settled that the defendant's claims for the value of the improvements on the property or necessary expenses for its preservation are required to be interposed in the same action as compulsory couterclaims.

2. NO, petitioners are not barred. Ratio Reasoning - Section 4, Rule 9 of the Rules of Court does not apply to the case at bar. - MELITONs claims were duly set up as counterclaims in the prior case but the same were dismissed by reason of non-payment of docket fees. - Where a compulsory counterclaim is made the subject of a separate suit, it may be abated upon a plea of auter action pendant or litis pendentia and/or dismissed on the ground of res judicata, depending on the stage or status of the other suit. NOT LITIS PENDENTIA - There is no other pending case between the same parties for the same cause. NOT RES JUDICATA - The first case was dismissed upon motion of ZIGA, under Section 2 of Rule 17. Dismissal thereunder is without prejudice, except when otherwise stated in the motion to dismiss or when stated to be with prejudice in the order of the court. The order of dismissal of the first case was unqualified, hence without prejudice and, therefore, does not have the effect of an adjudication on the merits. - In the same order of dismissal of the complaint, the counterclaims of MELITON were dismissed by reason of the fact the court a quo had not acquired jurisdiction over the same for non-payment of the docket fees. On that score, the said dismissal was also without prejudice. - Secondly, a reading of the order of dismissal will show that the trial court, in dismissing the complaint of private respondent, did not intend to prejudice the claims of petitioners by barring the subsequent judicial enforcement thereof. As stated therein, "(t)he court in dismissing the counterclaim(s) has taken into account the fact that a counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiffs." - In dismissing private respondent's complaint, the trial court could not but have reserved to petitioners, as a condition for such dismissal, the right to maintain a separate action for damages. - The act of ZIGA in demolishing the structures introduced by petitioners on the property leased and the improvements therein during the existence of the lease contract is a clear violation by her, as lessor, of her obligation mandated by paragraph 3, Article 1654 of the Civil Code. The said violation gave rise to a cause of action for damages in favor of MELITON. - Even assuming arguendo that the bar under the rule on compulsory counterclaims may be invoked, the peculiar circumstances of this case irresistibly and justifiedly warrant the relaxation of such rule. - The failure of petitioners to seek reconsideration of or to take an appeal from the order of dismissal of the counterclaim should not prejudice their right to file their claims in a separate action because they were thereby made to understand and believe that their counterclaims were merely permissive and could be the subject of a separate and independent action. Under the Rules, there is no need to pay docket fees for a compulsory counterclaim. The ruling in Manchester applies specifically to permissive counterclaims only, thereby excluding compulsory counterclaims from its purview. - This is one case where it is necessary to heed the injunction that the rules of procedure are not to be applied in a rigid and technical sense. After all, rules of procedure are used only to help secure substantial justice. DISPOSITIVE Judgment of the CA is reversed and set aside. The civil case is reinstated and the RTC is ordered to proceed with deliberate dispatch to adjudicate.

NATURE Special Civil Action for Certiorari

DBP v. Pundagor 218 SCRA 118 (1993) Romero, 1993

FACTS -1955, RA 1396 was enacted authorizing National Shipyards and Steel Corporation (NASSCO) to establish a pig-iron smelting plant. NASSCO negotiated with US EXIMBANK for a $62.3 M Loan and the latter suggested that the management of the project be placed in the hands of the private sector. After a public bidding, JACINTO STEEL, INC (JSI) was entrusted the implementation of the project. ILIGAN STEEL MILLS, INC (IISMI) was incorporated with the Jacintos and the Government (through GSIS, SSS, and NASSCO). -RP, IISMI and EXIMBANK entered into an agreement whereby EXIMBANK would provide funds, then IISMI and RP entered into a collateral agreement whereby RP committed to extend equity and non-equity funds to IISMI during the construction period, including P34M. pursuant to a 2ND COLLATERAL AGREEMENT, DBP granted IISMI additional loans which were secured by real and chattel mortgages over IISMIs assets. IISMI DEFAULTED IN THEIR LOANS. -(1st case: Civil Case 1701) To forestall foreclosure, IISMI instituted an injunction suit vs. RP, DBP, CB, BOI, and the Sheriff of Lanao del Norte and Iligan City, alleging that its inability to meet its obligations was due to RPs violations of its commitments to the Integrated Steel Project which were all done to take over the management and ownership of IISMI or its properties, plants, or mills. -PI was issued. DBP questioned PI. MTD of RP and BOI (improper venue + nonsuability of the State) denied so they also questioned denial of MTD. Court consolidated. -pending these cases, Marcos issued Proclamation 1801 DECLARING MARTIAL LAW. He issued 4 letters of instructions directing the Secretary of National Defense to take over and control the operation of IISMI and other Jacinto-held companies: acts of IISMI management indicated that IISMI disposed of property by fraudulent means and that the funds or money earned was not properly accounted for(IISMI ALLEGEDLY USED THE FUNDS LOANED TO IT THROUGH THE GOVERNMENT TO SUPPORT THE OTHER JACINTO BUSINESSES) -Court ordered the proceedings to proceed in the 1st case. LC: Lower court then ordered the WPI to be dissolved: 1. HELD THERE WAS MISMANAGEMENT: IISMI officials diverted its profits to other Jacinto-controlled corporations especially to FERRO PRODUCTS INC (FERRO), its known marketing instrumentality and biggest single buyer, which led to its failure to meet its different due and demandable obligations to DBP. HOW MISMANAGEMENT: (1) unrealistic pricing scheme: while floating exchange rate jacked up the cost of materials by 50%, selling price of goods sold to FERRO only 25%, FERRO resold goods at prices higher than 30% = additional gross profits of 5%; (2) gave FERRO extraordinarily long credit terms; (3) unduly postponing FERROs payments 2. there were attempts to hide these corporate malpractices by WINDOW DRESSING of the financial statements and records of IISMI and the Jacintocontrolled corporations: understating profits to create impression of losses, painting favorable but unreal cash position on the part of IISMI, creating ostensibly favorable asset position 3. Rejected claim of IISMI that its failure was due to the floating exchange rate: IISMI could only claim a loss of P51.9M due to floating rate (ONLY BEFORE FEB 1970): after June 1970, price adjustments could and should have been instituted by IISMI and IISMI failed to use the proceeds of disposition of processed raw materials to

liquidate its accounts which had ballooned to P40.7M. Since DBP is the guarantor, it assumed payments due to IISMI creditors! 4. IISMI cannot pin the blame for delay in payments on alleged delay in the release of DBP, SSS and GSIS funds as IISMIs obligations arose from subsequent raw material importations guaranteed by DBP INCURRED BY IISMI AFTER DBP, SSS, AND GSIS HAD RELEASED THEIR RESPECTIVE FUNDS TO IISMI. -after finality of ORDER, DBP filed an application for extra-judicial foreclosure of IISMI mortgages. Public sale of IISMI plant and assets done, DBP highest bidder. No redemption so DBP consolidated ownership. -(2nd Case) 14 YEARS FROM CONSOLIDATION OF OWNERSHIP, IISMI, Fernando Jacinto and Jacinto Steel Inc filed a COMPLAINT VS. DBP, NDC, DSC praying for the nullification of the extra-judicial foreclosure in favor of DBP + notice of lis pendens -DBP et al filed MTDs: (1) lack of jurisdiction, (2) failure to state a COA, (3) prescription; (4) res judicata -IISMI filed AMENDED COMPLAINT; MTDs adopted. NSC filed MOTION TO CANCEL NOTICE OF LIS PENDENS opposed by IISMI LC: DENIED MTDS. MFRs denied. I. Procedural Ground: Propriety of Petition for Certiorari for assailing INTERLOCUTORY ORDERS IISMI: proper remedy is to file in the lower court an ANSWER interposing as defenses the objections raised in the MTD >>> proceed to trial >>>adverse action: Elevate by appeal DBP et al: EXCEPTION TO THE RULE: no appeal nor any other plain, speedy and adequate remedy *H: For DBP: AN EXCEPTION: certiorari becomes available in order to relieve the defendant of the trouble of undergoing the ordeal and expense of a useless trial. Rghtfully entitled to recourse as it is part of the supervisory authority of the Court to correct the error committed. + Order denying MTDs coated the Jacinto claim with a misleading veneer of plausibility which is obstructing and causing inevitable delays in (i) the government's and NDC's plans to privatize NSC at the earliest possible time and under optional conditions generating the maximum returns for NDC, the country and the Filipino people; (ii) NSC's Integrated Steel Mill Project and (iii) the development of the nation's steel industry as well as the country's industrialization both of which have already suffered an incalculable fall due to IISMI's ruin masterminded and engineered by Jacinto and his family II. Substantive Grounds A. Res Judicata DBP: Final Orders in 1st case (Civil Case for injunction) bar 2nd case (nullification of extra-judicial foreclosure) which questions the same DBP foreclosure upon the very same claim that FORECLOSURE WAS FRAUDULENT: IISMI DEFAULTED ON ITS LOANS DUE TO GSIS-SSS-DBP-CB CONSPIRACY. Only differentiated in relief: PROSPECTIVE (threatened DBP foreclosure) vs. RETROSPECTIVE (foreclosure be annulled) IISMI: NO RES JUDICATA: NO JUDGMENTS ON THE MERITS, NO IDENTITY OF COA *H: THERE IS RES JUDICATA ELEMENTS: a) the former judgment must be final: contested orders ARE FINAL, no MFR nor APPEAL b) the court which rendered it had jurisdiction over the subject matter and the parties: CFI Lanao del Norte had jurisdiction over injunction case as subject property is located w/n its territorial jurisdiction. c) it must be a judgment on the merits: considered not only evidence for preliminary injunction but also additional evidence presented to prove mismanagement;

DISMISSAL OF COMPLAINT W/PREJUDICE for failure to appear during the pre-trial despite due notice (had effect of adjudication upon the merits) d) there must be, between the first and second actions, identity of parties, subject matter and causes of action: 1st case filed by IISMI vs. RP, BOI, CB, and DBP. 2nd case filed by IISMI, Fernando Jacinto and JSI vs. DBP, NDC, NSC. For res judicata to apply, absolute identity of parties IDENTITY OF PARTIES: 1st case: complaint was filed by IISMI vs. RP, BOI, CB and DBP; 2nd Case: IISMI, Fernnado Jacinto and JSI vs. DBP, NDC, NSC (for res judicata to apply, absolute identity of parties is not required because substantial identity of parties is sufficient. Inclusion of additional parties will not affect the application of the principle of res judicata. SUBJECT MATTER: both IISMI COA: test of identity of causes of action lies, not in the form of the action, but on whether the same evidence would support and establish the former and the present causes of action. 1st case: for injunction vs. 2nd case: for nullification of foreclosure proceedings (which was sought to have been prevented in the 1st case. Theory of IISMI is that foreclosure should be prevented (and now annulled) as DB P has violated its financial commitments to IISMI and that it conspired with other agencies of the government to cause the latters financial ruin. So same evidence to prove this allegation, which is the basis of both actions. -as to claim of IISMI that amended complaint added several allegations which were not present in the complaint for injunction: the additional allegations may be categorized into 3: those after filing of 1st case (declaration of Martial Law, of LOI 27, detention of some of the officers, the cancellation of Jacinto Familys passports, withdrawal of IISMI counsel; 2nd as re: foreclosure; 3rd developments after EDSA revolution. CFI, when it resumed hearing, was expected to settle not only allegations in the complaint, but even those that developed during the pendency of the 3 petitions. 1ST CASE DISMISSED FOR FAILURE TO PROSECUTE AND JUDGMENT IS NOT LIMITED ONLY TO THE ALLEGATIONS OF THE COMPLAINT! Additional allegations can no longer be raised for the 2nd time as res judicata now operates. R39.49: IN OTHER CASES THE JUDGMENT/ORDER IS, W/RESPECT TO THE MATTER DIRECTLY ADJUDICATED OR AS TO ANY OTHER MATTER THAT COULD HAVE BEEN RAISED IN RELATION THERETO, CONCLUSIVE BETWEEN THE PARTIES AND THEIR SUCCESSORS IN INTEREST BY THE SUBSEQUENT COMMENCEMENT OF THE ACTION OR SPECIAL PROCEEDING, LITIGATING FOR THE SAME THING AND UNDER THE SAME TITLE AND IN THE SAME CAPACITY. B. JURISDICTION DBP: LC has no jurisdiction to annul ORDERS of same level court (annulment not in the prayer but implicitly, this would be the effect) IISMI: LC has jurisdiction as this involves reconveyance of real property *H: NO JURISDICTION! If the prayers would be granted, the resultant effect would be to annul the findings of mismanagement made in the CFIs Order and to re-litigate the same claims which has been earlier dismissed with prejudice. Reconveyance is but the inevitable consequence once the Orders are annulled. C. PRESCRIPTION DBP: 14 y has passed from Order sought to be annulled: 4 yrs if based on Tort, 10y if based on constructive trust. BOTH LAPSED IISMI: prescriptive period SUSPENDED BY MARTIAL LAW = force majeure. Prescriptive period should only begin to run February 25, 1986. + Action seeks to recover immovable property so 30y prescriptive period. Jacinto Familys passports were cancelled (while they were in abroad so they cannot go back), all their resources were taken by Govt; lawyers constrained to withdraw their appearances; incarceration of executives of IISMI

*H: TAN v. CA, NDC v. CA: martial law is not force majeure: sweeping statement, should be case to case -ruling that martial law prevented Jacintos from pursuing their case would have the effect of removing from Jacintos the burden of proving why they were unable to present their case/prosecute Jacintos were not able to prove REFUGEE STATUS ON DISSENTING OPINION: Presumes that GOVT acted in arbitrary and unfair manner when it is not proven yet: centered on DUE PROCESS -Jacintos already ABROAD even before Martial Law: they had opportunity to be heard through their lawyers (they filed 1st case through their lawyers). HOWEVER, lawyers manifested for leave to withdraw from representation because THEY HAVE LOST CONTACT WITH THEIR CLIENTS. They cannot continue their services when their client, who has all the resources to continue the case, is not contacting them. -Jacintos had it in their power to remedy the situation! AFTER THEIR COUNSELS HAD WITHDREW, THEY SHOULD HAVE ENGAGED THE SERVICES OF OTHER LAWYERS TO REPRESENT THEM before the CFI case. -as to the cancellation of their passports, etc., it was dismissed in the earlier case so it cannot be raised again. -on CONSTRUCTIVE TRUST: constructive trust only when the property is acquired through mistake or fraud. BUT NO MISTAKE OR FRAUD ON PART OF DBP: IISMI failed to pay DBP so DBP foreclosed the assets mortgaged to it. D. FAILURE TO STATE A COA DBP: no COA as Jacintos and JSI were mere stockholders of IISMI, which, as a corporation having a personality distinct and separate from its stockholders, is the proper party to institute the same IISMI: derivative suit on behalf of IISMI. *H: THERES A COA! Before a derivative suit can be filed, the stockholder or member bringing the suit must first exhaust his remedies within the corporation, i.e., he must have made a demand on the directors or trustees to sue and the latter must have either failed or refused to do so. This demand, however, is not necessary where it would be futile to make it. No demand on the board of directors here BECAUSE THE BOARD OF DIRECTORS WAS ALREADY DISSOLVED AND NO ELECTIONS FOR IT WAS HELD. ****However, a finding that a complaint states a cause of action does not imply that the complainant is assured of a ruling in his favor. While a motion to dismiss based on failure of the complainant to state a cause of action necessarily carries with it the admission, for purposes of the motion, of the truth of all material facts pleaded in the complaint, 56 what is submitted for determination therein is the sufficiency of the allegations in the complaint. 57 Corollarily, the denial of a motion to dismiss does not necessarily resolve the issues raised in the complaint in favor of the complainant inasmuch as, after the trial, the defendant might prove to have a better right to the subject matter in litigation. Moreover, a motion to dismiss may be based on only one of the grounds enumerated in Sec. 1, Rule 16 of the Rules of Court. That the petitioners were able to prove the presence of three of the four grounds they raised, viz., res judicata, lack of jurisdiction and prescription, more than warrants the reversal of the Order below denying the petitioners' motion to dismiss. III. INCIDENTAL ISSUES: A. TERMINATION OF COUNSEL OF DBP -OSGs services was terminated by DBP after OSG agreed that takeover and sale was LEGALLY FLAWED! So ok lang daw sabi ng court B. TRO

IISMI claims 51% of IISMIs assets theirs but was unable to substantiate claim. DBP alleged it was only 1.1% of the shares. TRO should be lifted

Vallanga v. C.A., 173 SCRA 42 (1989) Involved in this appeal by certiorari from a decision ** of the Court of Appeals, is a controversy over possession of a parcel of land, the proper resolution of which calls for a determination of the ownership thereof. The more than eleven (11) hectares of agricultural land in dispute is located in Buguey, Cagayan, originally registered on 28 December 1936 in the name of "Heirs of Esteban Billena", and covered by Original Certificate of Title (OCT) No. 1648. In 1940, said certificate of title was cancelled and, in lieu thereof, Transfer Certificate of Title (TCT) No. 1005 was issued in the name of Maximiniana Crisostomo and Ana Billena, wife and daughter, respectively of the deceased Esteban Billena. Each of the then new owners owned an undivided one-half (1/2) portion of, or interest in the land. Maximiniana Crisostomo died during the Japanese occupation, leaving behind her only child Ana Billena, then married to Fortunato Vallangca with whom she had three (3) children, namely, Benjamin, Rodolfo and Alfredo, all surnamed Vallangca who are the petitioners herein. According to the petition at bar, the following events led to the present controversy: Upon Fortunato Vallangca's death in 1944, his widow Ana Billena, together with her eldest son Benjamin, went to Centro, Buguey, Cagayan and mortgaged the land in dispute to her cousin Nazario Rabanes (private respondent herein) for Eight Hundred Pesos (P800.00) in Japanese war notes, to cover the burial expenses of her deceased husband Fortunato Vallangca. There being no notary public in the place at the time, the agreement was not reduced to writing. At the time of said mortgage of the land to Nazario Rabanes, the land was already mortgaged to the Philippine National Bank (PNB), said first mortgage having been executed on 16 November 1940, and annotated on said TCT No. 1005. After the Pacific war, Nazario Rabanes went to the residence of Ana Billena on 2 February 1946 and made the latter sign a document which Rabanes represented to Ana Billena as a mortgage contract written in the Ilocano dialect. Billena, being an illiterate and trusting in her cousin (Rabanes), affixed her signature on the document in the space indicated to her. In that same year, 1946, Billena was informed by a cousin of Rabanes and another witness to the document that the alleged mortgage contract which she had signed was actually a deed of absolute sale to Rabanes of the land covered by TCT No. 1005. Ana Billena and her son Benjamin, thereupon, went to Rabanes' place for the purpose of redeeming the land and actually tendered to him the loan amount of P800.00, this time, in genuine and legal Philippine currency. However, Rabanes told them that the land could no longer be redeemed and he drove them out of his house. Since Ana Billena and her three (3) sons were in possession and actual cultivation of the land in question, Rabanes filed against them on 7 July 1971 an injunction suit

before the Court of First Instance of Cagayan (Civil Case No. II-14). 1 At the pre-trial of said injunction suit, plaintiff Rabanes was advised by the trial court that injunction was not the proper cause of action, because injunction was merely an ancillary or provisional remedy to a main action. On 11 September 1972, another complaint entitled "Recovery of Possession" (Civil Case No. II-39) 2 was lodged by Rabanes before the same court against the same defendants in the action for injunction. Two (2) days later, or on 13 September 1972, the action for injunction was ordered dismissed by the trial court. The order of dismissal reads as follows: "O R D E R "As prayed for, the above-entitled case is hereby dismissed. "SO ORDERED." 3 Respondent Nazario Rabanes (later substituted by his heirs) had another version of the events. According to him, Ana Billena knowingly signed a deed of absolute sale in his favor on 2 February 1946 as she had actually sold and not merely mortgaged the land in controversy for P800.00. Rabanes alleged that from then on, his tenants, Serapio dela Cruz and Fernando Gagmante, cultivated the land, until they were driven out by the three (3) sons of Ana Billena sometime in 1962. After trial in the second action involving recovery of possession, the Court of First Instance of Cagayan, on 24 September 1976, rendered judgment declaring plaintiff Rabanes (herein respondent) as the rightful owner of the land and ordered the defendants (herein petitioners) to vacate the same. 4 The trial court reasoned thus ". . . . The only witness of the defendants to prove this vital point is their codefendant Benjamin Vallangca who is a son of Ana Villena [sic]. He testified that he was only 14 years old when his mother signed the document under the alleged influence of the plaintiff. He also signed it as a witness. With that tender age, we doubt if he understood the meaning or difference between a mortgage and a sale of real property, so how can he say now that his mother was influenced into signing Exhibit 'F'. He did not say how Nazario Rabanes influenced his mother. He merely stated that Nazano Rabanes was his uncle, being the cousin of his mother. They were not living in the same house and there is no evidence that he was giving them money, food or in any manner supporting them so as to exercise influence over her. He did not state the nature of the influence exerted over his mother, whether it was moral, physical, spiritual or religious. So the court is at a loss to see how this undue influence over his mother existed. xxx xxx xxx

". . . . The testimonies of Serapio de la Cruz and Fernando Dagmante are stronger and more convincing than the lone testimony of Benjamin Vallangca. . . . ." The decretal part of the judgment reads "WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants and ordering the defendants to leave the land in question, referring to the parcel of land described in paragraph 2 of the complaint and declaring herein the plaintiff as the rightful owner of said parcel of land; 2) Ordering the defendants to pay the plaintiff the amount of P640.00 corresponding to the value of the owner's share of the land for four (4) years and to pay the costs."

From the above judgment, the defendants appealed to the Court of Appeals 5 where the appeal was docketed as CA-G.R. No. 61133-R. On 18 September 1980, the appellate court rendered judgment, affirming in toto the trial court's judgment, after finding no reversible error therein. Hence this petition. 6 Petitioners, invoking the rule on "res judicata," contend that the dismissal of the "Injunction" case filed on 7 July 1971 by Rabanes against them, barred the filing by Rabanes against them of the second action for "Recovery of Possession." Petitioners maintain that the first suit, although styled as for "Injunction", had for its actual primary purpose the recovery of the land in dispute and, therefore, after its dismissal, no other action for recovery of possession of the same land and against the same parties (herein petitioners) could be pursued by the same complainant (Rabanes). In this connection, petitioners would stress the fact that the dismissal of the suit for injunction was not made without prejudice. It is also petitioners' contention that the respondent's complaint for injunction had already prescribed, before its filing on 7 July 1971, under Section 40 of Act 190, which provides that: "Sec. 40. Period of Prescription as to real estate ---- An action for recovery of title to, or possession of real property, or an interest therein, can only be brought within 10 years after the cause of such action accrues." According to petitioners, from the date private respondent claims to have bought the land, that is, 2 February 1946, more than ten (10) years had elapsed when Rabanes filed on 7 July 1971 his action for injunction which, in effect, was an action for recovery of possession of the disputed land. Hence, the action was barred by prescription. It is further urged by petitioners that it was not likely that their mother Ana Billena would consent to sell the land to Rabanes for only Eight Hundred (P800.00) Pesos, for the entire eleven (11) hectares, forty one (41) areas and thirty three (33) centares comprising its total area, considering that the land was then assessed already at Two Thousand Six Hundred Twenty (P2,620.00) Pesos as indicated in Tax Declaration No. 7957. 7 And, even assuming arguendo that there was indeed a sale, petitioners postulate that since the land is registered in the name of both Maximiniana Crisostomo and Ana Billena, the latter could not outrightly dispose of the undivided one-half share of the former (Crisostomo), without first accomplishing an affidavit of adjudication of Crisostomo's interest or share, and registering said affidavit of adjudication. During this appeal before the Court, Nazario Rabanes died in 1982. An order for his substitution by his legal heirs was issued. The heirs of private respondent Rabanes in turn aver, among others, that the Court of Appeals was correct in finding petitioners' reliance on res judicata as untenable. We sustain the Rabanes heirs on this point. In an impressive line of cases, 8 the requisites for res judicata have long been established. They are: (a) that there be an earlier final judgment; (b) that the court which rendered it had jurisdiction over the subject matter and the parties; (c) that it is a judgment on the merits; and (d) that there is between the first and the second actions, identity of parties, subject matter and causes of action.

When the issue of res judicata is raised, at least two (2) actions before a competent court are necessarily involved; one, still pending and the other, already decided with finality. It is the final judgment that ends the controversy and precludes a relitigation of the same causes of action. Coming to the case at bar, it is to be noted that the first action for injunction was filed on 7 July 1971, while the second action for recovery of possession was filed on 11 September 1972. The order of dismissal of the injunction suit was issued on 13 September 1972. The defense of res judicata was invoked by herein petitioners (as defendants) in their "Answer" dated 6 November 1972 in the action for Recovery of Possession. 9 Given the abovementioned dates, it is clear that, while the Injunction suit had not yet been disposed of with finality when the second action was filed, yet, at the time the defendants interposed res judicata as an affirmative defense in their "Answer" in the second action, the order of dismissal in the injunction case had already become final. The dismissal order assumed the character of finality, there being no showing that there was an appeal of the order when the "Answer" in the second action was filed on 6 November 1972. The Court of Appeals in holding that the date of the filing of the second complaint determines whether or not there existed at that time a prior final judgment, overlooked the date when res judicata was actually set up as a defense in the second action. The latter date may also be a proper determining point. In other words, when the law says that a prior final judgment is a requisite for res judicata to validly apply as a defense, it may refer to a judgment that has become final and executory before the second action is instituted or to a judgment that has become final and executory only after the second action is filed but before the defense is actually set up in the Answer. Despite the above oversight, the ruling of the Court of Appeals is nonetheless correct when it held that the defense of res judicata was unavailing to the petitioners, because the prior injunction suit against them, which was dismissed, was merely an ancillary and not a main action. Sections 1 & 3, Rule 58 of the Rules of Court, provide: "Sec. 1. Preliminary Injunction defined; classes. A preliminary injunction is an order granted at any stage of an action prior to the final judgment, . . ." "Sec. 3. Grounds for issuance of preliminary injunction ---- A preliminary injunction may be granted at any time after the commencement of the action and before judgment, when it is established: "xxx xxx xxx"

From the above provisions, it can be clearly deduced that a writ of injunction presupposes the pendency of a principal or main action. There being no main action when the 7 July 1971 suit for injunction was filed, the latter was correctly dismissed. Accordingly, there could be no prior judgment on the merits to speak of that resulted in res judicata, from such dismissal of the injunction suit on 13 September 1972. Petitioners would also like to impress that the dismissal order of 13 September 1972, in the injunction suit, not having been made without prejudice, bars the second action for recovery of possession. Under Sec. 2, Rule 17 of the Rules of Court which provides:

"Sec. 2. Dismissal by order of the court. Except as provided in the preceding section, an action shall not be dismissed at the plaintiffs instance save upon order of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice." a dismissal order is generally deemed to be without prejudice to the filing of another action. The only instance when dismissal of an action is with prejudice is, when the order itself so states. Stated differently, when the court issues, upon the plaintiff's instance, a dismissal order that is silent as to whether it is with or without prejudice, such as in the case at bar, the presumption is, that it is without prejudice. The cases cited 10 by petitioners to support their contention cannot be made to apply here as they deal with dismissal orders issued as a result of plaintiff's failure to prosecute, and are covered by Section 3, and not Section 2, Rule 17 which provides: "Sec. 3. Failure to prosecute. If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court." Dismissals of actions (under Section 3) which do not expressly state whether they are with or without prejudice are held to be with prejudice or on the merits. Next, the respondent Court of Appeals was correct in holding that the action for recovery of possession of the land in question was timely filed, citing Art. 1141 of the Civil Code which provides that real actions over immovables prescribe after thirty (30) years. Here, the Court of Appeals found that Rabanes was dispossessed by the petitioners in 1962, and the action for recovery of possession was filed on 11 September 1972, or more or less ten (10) years after dispossession. 11 Coming now to the main issue as to who is the rightful owner of the property in question, the parties to this case have presented two (2) entirely different versions of the antecedents. We will not weigh all over again the entire evidence, because in a petition for review, such as the case at bar, generally, this Court's duty is to accept the findings of fact of the Court of Appeals and pass only on questions of law. The trial court and the Court of Appeals arrived at the conclusion that the deed of sale of 2 February 1946 was indeed one of sale and not of mortgage. We, however, conclude differently. Under Art. 1602 and Art. 1604 of the Civil Code, a contract shall be presumed to be an equitable mortgage in any of the following cases: "Art. 1602 1) When the price of a sale with right to repurchase is unusually inadequate; 2) When the vendor remains in possession as lessee or otherwise; xxx xxx xxx

These articles embody decisional rules laid down even before the effectivity of the Civil Code (30 August 1950) so that it is of no moment that the 2 February 1946 deed of sale was executed before the effectivity of the Civil Code. 12 There was gross inadequacy of price, because the land was sold for P800.00 in Japanese war notes at that, or for barely thirty percent (30%) of its total assessed value of P2,620.00. The Court can take judicial notice of the fact that real estate, including agricultural land, usually commands a market value much higher than assessed value. The other factor to consider is the continuous physical possession by the petitioners of the property for almost nine (9) long years, or from 1962 to the filing of the injunction case by respondent Rabanes in 1971. Even assuming for the sake of argument, as the Court of Appeals believed, that Rabanes acquired possession of the land thru his tenants in 1946 and continued such possession till 1962, when they were allegedly dispossessed by the petitioners, one nevertheless can not ignore the unrefuted fact that, from 1962 until the filing of said injunction case in 1971, it was the petitioners Vallangcas who were in actual and physical possession of the property. Why did it take Rabanes nine (9) years more or less to take action to recover possession of the property he claimed to have been forcibly and unlawfully taken from his tenants? Apart from the foregoing considerations is still one fact that the trial court and the Court of Appeals failed to appreciate. We refer to the fact that the land in dispute was acquired under a free patent in the year 1936 as shown on Transfer Certificate of Title No. 1005, its covering title, which states "It is further certified that said land was originally registered on 28th day of December, in the year nineteen hundred and thirty-six, in Registration Book No. 1-7, page 55, of the Province of Cagayan, pursuant to a Free patent granted by the President of the Philippines, on the 5th day of December, in the year nineteen hundred and thirty-six, under Act Nos. 2874 & 496." 13 Consequently, not to be ignored are the provisions of Act No. 2874 (an Act to amend and compile the laws relative to lands of the public domain) and Act No. 496 (The Land Registration Act), which govern the said free patent. Sections 116 and 117 of Act No. 2874 provide: "Section 116. Lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; . . ." 14 "Section 117. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow or legal heirs, for a period of five years from the date of the conveyance." 15 Restrictions are thus imposed on the conveyance of patented lands within five (5) years from the date of the issuance of the free patent; the owner of the land is precluded from subjecting the same to any encumbrance or alienation. After the lapse of five (5) years, such prohibition is lifted, but the owner-vendor is entitled to repurchase the property from the vendee within five (5) years from the date of the execution of the deed of sale or conveyance.

"Art. 1604. The provisions of Art. 1602 shall also apply to a contract purporting to be an absolute sale."

Applying the foregoing rules in the instant case, it is to be noted that the free patent was issued to the heirs of Esteban Billena on 5 December 1936. From this date and until 5 December 1941, any transfer, conveyance or alienation of the property covered by TCT 1005 was not allowed. Assuming then that what Ana Billena and Nazario Rabanes actually agreed upon in 1944 was indeed a sale of the land, which transaction was formally put in writing on 2 February 1946, the said sale, while valid ---- because it occurred after the period of five (5) years when sale was prohibited ---- yet, the sale was subject to Billena's light to repurchase within five (5) years from 2 February 1946. For, notwithstanding the absence of any stipulation in the deed of sale of the vendor's right to repurchase the land, Billena or her heirs are granted such right by operation of law. The restrictions and qualifications attached to every alienation of these lands are mandatory, with the primordial aim to preserve land grants to the family of the applicant for free patent. 16 Now, did Ana Billena repurchase in time the land in dispute? It is worth noting that private respondents did not refute petitioners' averment that Billena, together with her son Benjamin, went to Rabanes' residence in 1946 to redeem the property and tendered to him (Rabanes) the amount of P800.00 in Philippine currency, but the latter made a statement that the land could no longer be redeemed. By Ana Billena's act of tendering to Rabanes the P800.00, she had in effect exercised her right to repurchase. In fact, in Peralta, et al. vs. Alipio, 17 it was held that since the Public Land Law is silent as to the form and manner in which the right to repurchase a homestead or land acquired under a free patent may be exercised, any act which amounts to a demand for reconveyance should be sufficient. In effect, if the 2 February 1946 deed was actually intended to evidence a sale of the disputed land, made by Ana Billena to Nazario Rabanes, as found by the trial court and the Court of Appeals, it was a sale with pacto de retro wherein title of the vendees-Rabanes to the property was to become absolute and irrevocable only upon the failure of Billena or her heirs to repurchase the same within five (5) years from 2 February 1946. As earlier stated, Billena exercised her right to repurchase the land, also in 1946, and her heirs are up to the present time in actual and physical possession of the land. With these as premises, it can be said that Rabanes' title to the property remains to this date revocable and unconsolidated. WHEREFORE, the appealed decision of the Court of Appeals in CA-G.R. No. 61133-R is REVERSED and SET ASIDE. Petitioners may redeem the property covered by TCT No. 1005 upon the return of the amount of Eight Hundred Pesos (P800.00) to private respondents, with interest at the rate of twelve percent (12%) per annum from 1 January 1962 until fully paid. SO ORDERED. Defaults Rule 9, Sec. 3 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. (a) Effect of order of default. - A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial.

(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. (c) Effect of partial default. - When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded. - A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. (e) Where no defaults allowed. - If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or not a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated.

Nature in General, Rule 9, Sec. 3, first par Lim Tanhu v. Ramolete, 66 SCRA 425 (1975) See previous notes under COMPULSORY JOINDER OF PARTIES

When allowed, Rule 9, Sec. 3 first par. Failure to answer Pre Trial, Rule 18, Sec. 5, failure to appear Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.

Bayog v. Natino 258 SCRA 378 DAVIDE, July 5, 1996 NATURE Rule 65 Petition for Certiorari FACTS -Bayog and Magdato entered into an AGRICULTURAL LEASEHOLD CONTRACT: Bayog as Landowner-Lessor and Magdato as Tenant. The contract commenced with crop year 1975-1976. It expressly provided that matters NOT STIPULATED THEREIN would be governed by RA 3844 -1983: Marcos, pursuant to PD 27 and RA 3844 and PD 1425, issued a Certificate of Agricultural Leasehold to Magdato, declaring the latter had complied with all the requirements to become the agricultural lessee. The Certificate provided that he shall not be ejected from his farmholding EXCEPT when his disposition has been

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authorized by the proper court, that he shall have the right to peaceful possession of the farmholding, and shall have the right against conversion of the farmholding into any non-agricultural use by the landowner. -1990: Bayog executed a DEED OF EQUITABLE MORTGAGE in favor of Pesayco, with right of redemption w/n 5yrs over 4 parcels of the land. -1992: Bayog wrote to Magdato, asking him to remove his house from the land as it was said to be an obstacle to the cultivation of the land by the brother of the Mortgagee Pesayco. As Magdato did not comply, Bayog and Pesayco filed with MCTC a COMPLAINT FOR EJECTMENT AND ABATEMENT OF NUISANCE WITH PRAYER FOR DEMOLITION. MCTC declared case to be under Rules on Summary Procedure and directed issuance of summons. Summons + Complaint served on Magdato on Jan 11, 1993 -Magdato had only until Jan22 to file his answer (10d) BUT filed his answer only on the 25th, admitting Bayogs ownership but asserting that he was the agricultural lessee as evidenced by the Agricultural Leasehold Contact. Magdato also alleged as defenses that court had no jurisdiction (agrarian dispute) and he had not been able to cultivate the land because of Pesaycaos threats to shoot anyone who did so. -MCTC: Magdatos Answer was filed LATE. Allegedly under Section 5 of the Rule on Summary Procedure, the court rendered judgment in favor of Bayog, needless to resolve all pleadings subsequently filed. Order of Execution issued, commanding Provincial Sheriff to eject Magdato from parcel of land and to demolish and destroy Magdatos house. -Sheriffs Return of Service reported that Magdato was ejected, his house was demolished but monetary judgment not satisfied: Magdato refused to give the amount nor has he any real/personal property to be levied on -Magdato filed a PETITION FOR RELIEF FROM JUDGMENT WITH INJUNCTION + prayer to litigate as a pauper w/ RTC, alleging: (1) late filing was due to mistake or excusable neglect (had pulmonary TB, illiteracy limited understanding of English so unaware of unextendible 10d period); (2) had good, valid and strong evidence to counteract Bayogs claim if given a chance to be heard; (3) As MCTC judgment partly executed, he was bereft other avenues to protect his rights -Bayog filed a MTD: (a) lack of jurisdiction on the part of the RTC (prohibited pleading under Rules on Summary Procedure + no affidavit of merit); (b) failure of the petition to state a cause of action (no statement of facts constituting FAMEN); and (c) prescription and/or laches (petition for relief from judgment should be filed w/n 60d after the petitioner learns of the judgment, and not more than 6m after such judgment was entered). Magdato filed OPPOSITION TO MTD -Bayog filed another MTD: not with CNFS Magdato filed his Comment, Bayog filed Reply to comment -RTC: denied ALL of Bayogs MTDs: (1) petition for relief from judgment nor prohibited pleading under Rule of Summary Procedure (Jakihaca v. Aquino); theres a COA (tenant farmer entitled to protection against ejectment); (3) issue of prescription must yield to the fact that there was violation of law; (4) Bayog and Pesayco did not come to court with clean hands (did not reveal that Magdato is a holder of a certificate of agricultural leasehold; (5) MCTC should not have disregarded Magdatos answer contesting MCTCs jurisdiction (6)Admin Circular 0494 took effect before the filing of petition for relief from judgment so should not be given retroactive effect. Bayogs MR DENIED ISSUES 1. WON the Answer belatedly filed by Magdato should have been given due course by the MCTC 2. WON the Petition for relief from judgment is not a prohibited ruling under Revised Rule on Summary Procedure (Jakihaca Ruling)

3. OBITER (not raised by Bayog) WON the RTC properly denied MTD then remanded the case HELD 1. YES -Magdatos Answer, which asserts the lack of jurisdiction of the MCTC, though did not automatically divest MCTC of jurisdiction, should still have been heard and received TO DETERMINE WON MCTC DID HAD JURISDICTION OVER THE CASE. And upon such hearing, if tenancy was shown to be at issue, the MCTC should have dismissed the case for lack of jurisdiction. 38 Verily, if indeed MAGDATO were an agricultural lessee under agrarian law, then the MCTC was devoid of jurisdiction over the ejectment case. -There is nothing in BP 129, nor in the Revised Rule on Summary Procedure, that provides that an answer filed after the reglementary period should be expunged from the records. As a matter of fact, there is no provision for an entry of default if a defendant fails to file his answer. It must likewise be pointed out that MAGDATO's defense of lack of jurisdiction may have even be raised in a motion to dismiss as an exception to the rule on prohibited pleadings in the Revised Rule on Summary Procedure. -Order of MCTC to remove Magdatos house before judgment becomes final and executory was obviously intended to render futile any appeal which Magdato could interpose pursuant to Section 21 of Revised Rule on Summary Procedure; Order was a clear abuse of authority or misuse of the strong arm of the law. No demolition of MAGDATO's house could have been validly effected on the day of service of the order of execution. MAGDATO should have been afforded a reasonable period of the time to remove his house, and only after he failed to comply within the given period could a demolition order have been issued by the court, pursuant to Section 14, Rule 39 of the Rules of Court. 2. No. Petition for Relief IS PROHIBITED (Section 19). But in this case, Petition for Relief should be allowed as an exception to the rule -Why prohibit: These petitions are cognizable by RTC AND NOT BY MTC, MTC OR MCTC. No petition for relief from judgment nor a special civil action of certiorari, prohibition, or mandamus arising from cases covered by the Revised Rule on Summary Procedure may be filed with a superior court. This is but consistent with the mandate of Section 36 of B.P. Blg. 129 to achieve an expeditious and inexpensive determination of the cases subject of summary procedure. - in view of the unusual and peculiar circumstances of this case, unless some form of relief is made available to MAGDATO, the grave injustice and irreparable injury that visited him through no fault or negligence on his part will only be perpetuated. Thus, the petition for relief from judgment which he filed may be allowed or treated, pro hac vice, either as an exception to the rule, or a regular appeal to the RTC, or even an action to annul the order (decision) of the MCTC -Also, Petition for Relief filed on time. Magdato ONLY learned of the Order January 24, 1994 then filed petition for relief on February 9 the same year (15d from time he learned of judgment). Magdatos lawyer received the notice on October 1, 1993 BUT DID NOT ACT ON IT so under what can be considered as the unusual and peculiar circumstances of the case, Magdatos, notice to the irresponsible lawyer is not considered notice to his clients. Moreover, the petition for relief from judgment under consideration, may even be considered as one for relief from the order of execution, which was filed within the reglementary period, inasmuch as Section 2 of Rule 88, Revised Rules, does not only refer to judgments, but also to orders, or any other proceedings. -on 6m period: it had not even begun to run as the records do not disclose that the MCTC Order had been entered. R38.3 speaks of ENTRY of Judgment, not rendition nor finality.

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-on absence of affidavit of merit: NOT FATAL, petition itself, under oath, recites the circumstances or facts which constitute the grounds for the petition. Such being the case, a separate affidavit reiterating the grounds already laid bare in the petition would be superfluous. Elsewise stated, the absence of the affidavit is of de minimis importance, as the oath elevates the petition to the same category as the affidavit. The petition may even be considered as Magdatos APPEAL -HOW TO SET ASIDE A FINAL AND EXECUTORY JUDGMENT: (1) by a petition for relief from judgment under Rule 38; (2) when the judgment is void for want of jurisdiction, by direct action, as certiorari, or by collateral attack; and (3) when the judgment was obtained by fraud and Rule 38 cannot be applied, by civil action under Article 1114 of the Civil Code. The fraud must be extrinsic or collateral. In the instant case, the unconscionable failure of MAGDATO's lawyer to inform MAGDATO of his receipt of the Order of 20 September 1993 and the motion for execution and to take the appropriate action against either or both to protect MAGDATO's rights amounted to connivance with the prevailing party for MAGDATO's defeat, which constituted extrinsic fraud. 3. Should have DENIED MTD BUT should not have remanded the case. But since following the proper proceedings would unduly delay the resolution of the issue, ok lang. -RTC should have SIMPLY DENIED MTD, then Bayog would just have filed his answer within the period prescribed by Rule 11, computed from the time he received notice of the denial or deferment, unless court provides different period. -NO NEED TO REMAND: there is nothing more the parties can offer on the issue of the jurisdiction of the MCTC. There is then absolutely no acceptable reason to await the end of the tedious procedural rituals above indicated since that issue can now be resolved in view of the foregoing considerations. It serves no useful purpose to withhold our verdict and remand this case to the MCTC, only for it to order the dismissal of the ejectment case. The resultant further delay which may accompany a likely appeal therefrom by BAYOG and Pesayco must be forestalled to serve the ends of justice. 54 Plainly, the greater interest of justice, especially to MAGDATO, whose rights as an agricultural leaseholder were trampled upon, demands that we dispose of the issue of the MCTC's jurisdiction over the ejectment case. Disposition. WHEREFORE, in view of the foregoing, the instant petition is DISMISSED for want of merit. That part of the dispositive portion of the Order of 18 October 1994 of the Regional Trial Court of Antique, Branch 12, in Civil Case No. 2708 setting aside the Order of 20 September 1993 of the Third Municipal Circuit Trial Court of Patnongon-Bugasong-Valderama, Antique, in Civil Case No. 262 is AFFIRMED, and the Order of Execution of 16 December 1993 in Civil Case No. 262 is ANNULLED and SET ASIDE and the said case is ordered DISMISSED. Furthermore, Honorable Judge DEOGRACIAS K. DEL ROSARIO of the Third Municipal Circuit Trial Court of Patnongon-Bugasong-Valderama, Antique, and Atty. MARCELO C. JOSUE are directed TO SHOW CAUSE, within ten (10) days from receipt of a copy of this Decision, why they should not be disciplinarily dealt with for gross ignorance of law and violation of Canon 18 of the Code of Professional Responsibility, respectively. Let copies of this Decision be furnished Judge Deogracias K. del Rosario and Atty. Marcelo C. Josue. Costs against the petitioners. SO ORDERED. Malanyaon v. Sunga 208 SCRA 436 NOCON; May 7, 1992 NATURE

- On March 15, 1977, private respondents (Bona, Garchitorena, Alferez, Sierra, Lima, Bulao, Tesorero, Malang, Alepante and Caubang), who are members of the Camarines Sur I Teachers Association (CASTEA I) and Camarines Sur II Public School Teachers Association (CASTEA II), filed a Petition for Annulment of Proceedings, Injunction with Application for Preliminary Injunctions and Restraining Order with the CFI in Civil Case No. 164 against petitioner Malanyaon. On that same afternoon, about 35 minutes after filing said petition, respondent Judge Sunga issued the corresponding restraining order against Malanyaon. Malanyaon then filed an urgent motion to disqualify Judge Sunga from further sitting in judgment over the Civil Case No. 164 alleging that there is a client-lawyer relationship between said judge and private respondent's counsel Atty. Vicente de Lima. Judge Sunga denied the motion. - On October 5, 1978, Malanyaon was personally served in his office a notice of hearing on the pre-trial and contempt proceedings set on October 9, 1978 at 8:30 A.M. However, at around 8:10 A.M. of October 9, Malanyaon felt chilly and went to see his doctor who ordered him to stay in bed for a couple of days. Malanyaon immediately sent a letter to Judge Sunga requesting for the deferment of his appearance on the scheduled hearing. But the said letter was only filed at 10:05 A.M. of that same morning due to the stormy weather. Consequently, upon his failure to appear at the scheduled hearing, he was declared in default and ordered arrested. In the afternoon of the same day, Malanyaon's counsel filed a motion to lift the Order of Arrest. But the motion was denied. - On October 18, 1978, petitioner was airlifted and confined at the Veterans Memorial Medical Center in Quezon City where he was operated for a gall bladder dysfunction. - On November 17, 1978, Malanyaon filed an Omnibus Motion to Lift his Order of Arrest, to set aside the order of default and to reset the hearingon account of his illness and subsequent surgical operation. Judge Sunga, acting on the motion, lifted the order of arrest but denied the motion to set aside the order of default and the resetting of the scheduled hearing. Malanyaon filed a MFR but it was denied as well. Hence, this petition alleging grave abuse of discretion on the part of the respondent judge in denying his motion to lift the order of default ISSUE WON Judge Sunga acted in grave abuse of discretion in denying to set aside the order of default in spite of the fact that he had already lifted the order of arrest against petitioner after finding that his absence was excusable due to the severity of his illness. HELD: Yes.

To begin with, the respondent court's act of ordering petitioner's arrest is patently illegal. There is nothing in the Rules which authorizes the trial court to order the arrest of the party in default. A party declared in default merely loses the right to be notified of subsequent proceedings and the right to take part in the trial, until the order of default is lifted. With regard to the lifting of the order of default, Section 3, Rule 18 of the Revised Rules of Court provides that: A party declared in default may at any time after discovery thereof and before judgement filed 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.

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Where the failure to appear at the pre-trial hearing was uncontrovertedly due to illness, the default order may be set aside on the ground of accident over which petitioner had no control as in the case at bar. Inasmuch as the respondent judge had already lifted the order of arrest after finding petitioner's absence excusable, it therefore follows that said judge should have also set aside the order of default. Thus, the basis for lifting petitioner's order of arrest should also apply to the order of default since both orders were issued on petitioner's non-appearance on October 9, 1978. DISPOSITIVE WHEREFORE, the petition for certiorari is hereby GRANTED and the order of default is hereby annulled and lifted. The respondent court is ordered to set Civil Case No. 164 for pre-trial and trial with notice to petitioner.

Trial Court, Manila, Branch III for further proceedings and reception of the evidence of the parties as provided in the Rule on Summary Procedure. (p. 21, Rollo.) Hence, the present petition for review alleging that the Court of Appeals erred: 1. when it ruled that the only instance (when) Section 5 of the Summary Rule can be applied is when the defendant fails to answer. 2. when it ruled that should a party fail to attend/comply with the preliminary conference mandated under Section 6 of the Summary Rule, the court below is powerless and has no discretion but to still proceed under Section 6 of same rule to issue an order clarifying and defining the issues of the case and to proceed under Section 7 of same Rule for submission of affidavit of parties. 3. when it ruled that "as in default" declaration is prohibited by the Rule on Summary Procedure. HELD: We find no merit in the petition for review. Section 6 of the Rule on Summary Procedure provides: Sec. 6. Preliminary conference Not later than thirty (30) days after the last answer is filed, the case shall be calendared for a preliminary conference. Among other matters, should the parties fail to arrive at an amicable settlement, the court must clarify and define the issues of the case, which must be clearly and distinctly set forth in the order to be issued immediately after such preliminary conference together with the other matters taken up during the same. As found by the Court of Appeals, when the private respondent (the defendant) and his counsel failed to appear at the pre-trial conference and no compromise agreement was reached by the parties despite the opportunity given them by the court, the situation similar to that provided in Section 6 of the Summary Rule above quoted. The Court should have issued a "preliminary conference order" defining the issues in the case as provided in Section 6. Thereafter the parties should have submitted their affidavits and other evidence as provided in Section 7 of the Rule on Summary Procedure, to wit: Sec. 7. Submission of affidavits. Within ten (10) days from receipt of the order mentioned in the next preceding section, the parties shall submit the affidavits of witnesses and other evidence on the factual issues defined therein, together with a brief statement of their positions setting forth the law and the facts relied upon by them. Only when the defendant failed to answer the complaint may the Court proceed to judgment. Thus does Section 5 provide: Sec. 5. Effect of failure to answer. Should the defendant fail to answer complaint, crossclaim or permissive counterclaim within the reglementary 10-day period herein provided, the court motu proprio, or on motion of the plaintiff, shall render judgment as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein except as to the amount of damages which the Court may reduce in its discretion. In this case, since Ravelo did file an answer to the complaint, the trial court may not declare him as in default (despite his absence and that of his counsel at the pre-trial conference on May 3, 1990) because a motion to declare the defendant in default is a prohibited pleading under Section 15 (h) of the Rule on Summary Procedure. It is the policy of the law to have every litigated case tried on the merits. It is for this reason that judgment by defaults are generally looked upon with disfavor. As this Court observed in the "case of Coombs vs. Santos, 24 Phil. 446: a default judgment does not pretend to be based upon the merits of the controversy. Its existence is justified on the ground that it is the one final expedient to induce the defendant to

Lesaca v. C.A. 215 SCRA 17 (1992) GRIO-AQUINO, J.: NATURE This is an appeal by certiorari, under Rule 45 of the Revised Rules of Court, from the decision dated November 29, 1990 of the Court of Appeals which sets aside the decisions of the Metropolitan Trial Court (MeTC) and the Regional Trial Court (RTC) of Manila, Branch III, and remands the case to the MeTC for further proceedings and reception of the parties' evidence as provided in the Summary Procedure. FACTS On February 23, 1990, the petitioner, as plaintiff, filed in the Metropolitan Trial Court of Manila (MeTC) a complaint for ejectment against the private respondent, Alfredo Ravelo, to oust him from the commercial premises located at 671 Sales Street, Sta. Cruz, Manila, on the grounds of: (1) expiration of the month-to-month lease contract between the parties; and (2) non-payment of rentals. Ravelo filed an answer to the complaint. During the first preliminary conference on April 19, 1990, all the parties were present and duly represented by their respective counsel. However, the preliminary conference was reset to May 3, 1990, upon request of both parties, to give them time to explore the possibility of an amicable settlement and submit a compromise agreement. On the scheduled date of the next conference, May 3, 1990, only the plaintiff (now petitioner) appeared. On motion of plaintiff's counsel, the MeTC declared defendant Ravelo "as in default" for failure to appear at the preliminary conference despite previous notice. The court considered the case submitted for decision "as warranted by the facts alleged in the complaint." (p. 35 Rollo). On May 23, 1990, the MeTC rendered a decision ordering the defendant, Ravelo, to vacate the premises in question. Said defendant appealed to the Regional Trial Court (RTC) of Manila. After the submission of the parties' respective memoranda, the RTC promulgated a decision affirming in toto the decision of the MeTC. Ravelo filed a petition in the court of Appeals for annulment of the decision of the MeTC and RTC and to remand the case to the MeTC for reception of evidence. On November 29, 1990, the Court of Appeals rendered a decision, the dispositive portion of which reads as follows: PREMISES CONSIDERED, the Metropolitan Trial Court decision and the respondents court's decision are hereby SET ASIDE. The case is remanded to the Metropolitan

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join issue upon the allegations tendered by the plaintiff, and to do so without unnecessary delay. A judgment by default may amount to a positive and considerable injustice to the defendant; and the possibility of such serious consequence necessitates a careful examination of the grounds upon which the defendant asks that it be set aside." (Trajano vs. Cruz, 80, SCRA 712, 713.) The same doctrine was laid down by this court in Rosario vs. Alonzo, 8 SCRA 397 where we ruled that " the defendants could not be in default after they had answered the complaint." WHEREFORE, the decision dated November 29, 1990 of the Court of Appeals in CAG.R. No. 22801 is hereby AFFIRMED. Let the record of this case be remanded to the MeTC of Manila for further proceedings and reception of evidence in accordance with the Rule on Summary Procedure. SO ORDERED.

the sister of Juan Dulos and who claimed that she has a special power of attorney. - Spouses Dulos were declared in default. Their motion for suspension was denied Evidence of the Nocom couple was received and judgment rendered in their favor. Motion for reconsideration was denied on November 17, 1988. - Instead of taking an appeal, Dulos filed with the RTC Makati. RTC Makati - A special civil action for certiorari and prohibition with preliminary injunction was filed. The couple prayed for the nullification of the MTC judgment and the earlier order. - This was dismissed on the following grounds: (1) the petitioners had been properly declared in default for failure to appear at the scheduled hearing; (2) the filing of the action for nullification in the Regional Trial Court was not a valid reason for the suspension of the hearing in the Metropolitan Trial Court; (3) the motion for reconsideration was fatally defective because it was not verified and accompanied by an affidavit of merit; and (4) the grant of the motion for suspension or postponement was discretionary upon the court. - Spouses Dulos filed a petition for certiorari with the CA CA - Petition for certiorari denied by the CA. Hence this action in the SC. ISSUE/S 1. WON the MTC properly declared default 2. WON certiorari can be a substitute for the lost right of appeal HELD 1. YES, 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. 2. NO. ... 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 ... No less significant is the fact that the judgment of the metropolitan trial court had already become final and executory because of the petitioners' failure to appeal therefrom on time. They were served with notice of the judgment on October 10, 1988, and filed a motion for reconsideration on October 18, 1988, which was denied on November 17, 1988. They therefore had until December 10, 1988, within which to perfect their appeal. They did not. - 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:

Effect, Rule 9, Sec. 3 (a), (c) 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. (a) Effect of order of default. - A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (c) Effect of partial default. - When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.

Dulos v. C.A. 188 SCRA 413 (1990) Cruz, J.; August 7, 1990 NATURE Special civil action of certiorari & prohibition FACTS MTC of Las Pinas - Spouses Dulos were sued for forcible entry by spouses Nocom. Pre-trial conference was set for August 18, 1988 with notice to both parties. - Prior to the scheduled MTC hearing, the spouses Dulos filed a complaint against the spouses Nocom for the annulment of sale, reconveyance of title, and various reliefs plus a writ of preliminary injunction at the RTC of Makati. - Spouses Dulos, through counsel, filed a motion for the suspension of the proceedings in the MTC on the ground that there was a prejudicial question of ownership filed in the RTC Makati. Hearing on this was also scheduled for the same date as originally set by the MTC. - On the scheduled date of August 18, 1988, neither the spouses Dulos nor their counsel appeared. They were represented by one Ananita Rectra who was allegedly

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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 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 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. DISPOSITIVE Petition is dismissed.

-Supplemental motion to dismiss alleging as ground therefore the pendency of another case in the RTC of Quezon City. -Second supplemental motion to dismiss on the ground of lis pendens and reply to the opposition to the first supplemental motion to dismiss. (both motions Denied) -private respondents filed an urgent motion to reconsider said order (denied) -still no answer to the complaint. -Consequently petitioner filed a motion to declare defendants in default and to be allowed to present evidence ex-parte(granted) -petitioner presented his evidence ex-parte. -defendant filed a motion to set aside the order of default and to hold in abeyance further proceedings on the ground that they had filed with the then Intermediate Appellate Court on 12 July 1984 a petition for certiorari raising the issues of improper venue, lack of jurisdiction and litis pendencia(AC-G.R. No. 03742). -in view of the absence of a restraining order from the Intermediate Appellate Court enjoining the trial court from proceeding with the case RTC issued an order denying the defendants' motion to set aside the order of default. -RTC rendered a decision in favor of the petitioner based on the evidence submitted ex-parte; Ordering defendants to pay, jointly and severally, the plaintiff the sum of P600,000.00 plus interest and the additional amount of P50,000.00 as moral damages; another P10,000.00 as exemplary damages; and the amount of P100,000.00 as attorney's fees. - private respondents interposed an appeal before the Intermediate Appellate Court. -During the pendency of the appeal CA dismissed the petition of private respondents in AC-G.R. No. 03742. Their subsequent petition for review under Rule 45 of the Rules of Court to set aside the dismissal was denied by this Court; the motion to reconsider the same was likewise denied CA: Jan 30 1989 decision: Affirmed in toto -motion for reconsideration: granted. Remanded. SC: Rule 45 of the Rules of Court. ISSUE(S) 1 WON CA erred in finding that herein respondents have a valid and good defense. 2. WON the awards made by RTC were proper HELD 1 In order to set aside an order of default, Section 3, Rule 18 of the Rules of Court must be complied with. Sec. 3 Relief from order of default. A party declared in default 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, 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. Private respondents cannot take refuge under the allegations of fraud, accident, mistake or excusable neglect to justify their failure to file the answer because such inaction was due to their obstinate refusal to comply with the mandated procedural requirements. Whether private respondents had a valid or good defense is entirely irrelevant considering the circumstances obtaining. The public respondent, therefore, gravely erred in "reversing" its decision of 30 January 1989 on the basis of respondents "good and valid defenses". We are thus unable to see how further proceedings by the trial court could produce a result consistent with the theory of private respondents. Besides, the interpretation of the Compromise Agreement involves a question of law; the remand of the case would thus serve no useful purpose. The granting then of the petition and the reinstatement of the public respondent's 30 January 1989 decision are in order,

Order of Default When some answer and other default, Rule 9, Sec. 3 c (c) Effect of partial default. - When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. Extent of relief to be awarded, Rule 9, Sec. 3d (d) Extent of relief to be awarded. - A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. Datu Samad Mangelen v. C.A. 215 SCRA 230 (1992) DAVIDE: October 29, 1992 FACTS: Trial Court: Civil Case No. 84-22306 involved an action for the recovery of the amount of P600,000.00 which defendant, now private respondent Habaluyas Enterprises, Inc., represented by its President, private respondent Pedro Habaluyas, bound itself to pay Datu Hamad Mangelen by virtue of a Compromise Agreement. -Instead of filing an Answer within private respondents submitted a motion to dismiss the case on the ground of improper venue. (TC Denied)

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2. As to Moral and Exemplary Damages. No.Their respective statements of the case reveal nothing about an allegation and prayer in the complaint for the specific amount of moral and exemplary damages sought. Neither do they disclose that the petitioner testified on, and therefore proved, a specific amount. Such non-disclosure constitutes ample proof that indeed, the complaint did not specify, much less pray, for a specified sum to be awarded as moral damages.Moreover, the idea of exemplary damages was broached for the first time only in the dispositive position of the trial court's decision. Section 5, Rule 18 of the Rules of Court provides that judgment entered against a party in default, as in the case of the private respondents, shall not exceed the amount or be different in kind from that prayed for. Consequently, an award of exemplary damages should not have been made since it was not even prayed for. Also, since no specific amount of moral damages was prayed for, the maximum limit provided for in said Section 5 can in no case be fixed. It may be pointed out that there is a difference between a judgment against a defendant based on evidence presented ex-parte pursuant to a default order and one based on evidence presented ex-parte and against a defendant who had filed an answer but who failed to appear at the hearing. In the former, section 5 of Rule 18 provides that the judgment against the defendant should not exceed the amount or to be different in kind from that prayed for. In the latter, however, the award may exceed the amount or be different in kind from the prayed for.

which caused the accident. - September 22, 1992 - The trial court set the case for pre-trial. Counsels were told to notify their clients and to file their pre-trial briefs at least three days before the pre-trial. Notice was sent to Five Stars counsel Atty. Naidas. - October 15, 1992 - On the day of the pre-trial, Five Star and their counsel failed to appear and they also failed to file a pre-trial brief. On motion of the Sps. Santos, Five Star was declared in default. Reception of evidence for Sps. Santos was scheduled. Lydia Santos and another co-passenger testified and presented documents to support such testimony. - November 4, 1992 - The RTC rendered a decision in favor of Sps. Santos. It ordered Five Star to pay them compensatory damages worth P50,000, P12,000 for funeral expenses and attorneys fees. - On the day of promulgation, the law firm of Vivar, Lopez and Associates entered its appearance as counsel for Five Star. - November 10, 1992 - A motion to set aside the order of default of October 15, 1992 was filed by Atty. Naidas (former counsel of Five Star). Nadias had resigned as counsel for Five Star on November 30. Records were delivered to the office of Vivar only on October 28, 1992. - Five Star filed a petition for motion of reconsideration of the RTC decision. - The RTC denied the motion for reconsideration and the motion for default. - Five Star appealed to the CA and the CA affirmed the award of damages. The CA also awarded moral damages. ISSUE WON the declaration of default was correct HELD YES Reasoning - When the court schedules a case for pre-trial, notices must be served on the party separately from his counsel which may be made directly to both party and counsel. It is preferred, however, that service of such notice on a party be made through or care of his counsel at counsel's address "with the express imposition upon counsel of the obligation of notifying the party of the date, time and place of pre-trial conference." - In the instant case, the notice of pre-trial was sent to the counsels of both parties with the express instruction that they notify their respective clients of the conference. Atty. Naidas received the notice on September 28, 1992, i.e., 17 days before the scheduled conference and 2 days before his resignation as house counsel of petitioner Five Star. He had ample time to notify petitioners of the pre-trial conference. - Atty. Naidas may have already resigned on the day of the pre-trial, but as far as the trial court was concerned, he continued to be petitioners' counsel of record since no withdrawal of appearance had been filed by him. having duly notified them of the pre-trial, the trial court did not err in declaring petitioners as in default. They were bound by the negligence of their counsel. - After declaring a party as in default or non-suited, the trial court is not duty-bound to receive evidence ex-parte on the very same day it issued the default or non-suit order. The hearing that petitioners failed to attend was a pre-trial; pre-trial and trial on the merits are usually held on separate days to enable the parties to prepare for trail. - However, the CA should not have awarded the additional moral damages because it was not Sps. Santos who appealed the case. DISPOSITIVE Decision affirmed with modification.

Where not allowed, Rule 9, Sec. 3 (e) (e) Where no defaults allowed. - If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or not a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated. Procedure after Order of Default, Rule 9, Sec. 3 first par 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. Five Star Bus Co., Inc. v. Court of Appeals 259 SCRA 120 PUNO; July 17, 1996 NATURE Petition for review on by certiorari FACTS - Sps. Santos file a civil case for breach of contract and damages against Five Star Bus Co. in connection with the death of their son Joey in the Caloocan RTC. Joey was a passenger in one of the buses owned by Five Star which was driven by Salonga. The bus collided with a trailer truck in Urdaneta, Pangasinan. Five Star refused to pay damages. - Five Star posited the defense that it was the negligence of the trailer trucks driver

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Monserrate v. C.A. 178 SCRA 153 Remedies Liberality Gerales v. C.A. 218 SCRA 638 (1993) BIDIN; February 9, 1993 F: Car owned by Gerales hit by car owned by Fideldia and Driven by Pimentel. Civil Case for damages filed before MTC San Fernando then Criminal Case v. Pimentel filed before RTC Bataan. Amicable Settlement reached in Criminal Case so Criminal Case dismissed. Summons served on Civil Case, Pimentel sent a LETTER to RTC Bataan COC alleging the mutual settlement of the Criminal Case but he was still required to file answer. Pimentel declared in default. RTC for Gerales but CA reversed. H: Letter by Pimentel should be considered a responsive pleading as the allegations in it, if proven, would constitute an affirmative defense that would extinguish Gerales claim. Pleadings, as well as REMEDIAL LAWS, should be liberally construed in order that the litigant may have ample opportunity to prove their respective claims and possible denial substantial justice, due to technicalities, may be avoided. ROMERO, Dissenting and Concurring - The letter should be treated as a Motion for Judgment on Compromise, which if approved by the court, will serve as a judgment on the merits and will have the effect of res judicata among the parties as to the subject matter of the complaint. If treated as such Motion, a hearing on the same is necessary, therefore the case should be remanded to the trial court. Modes Motion to set aside, Rule 9, Sec. 3 (b) (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. Motion for New Trial, Rule 37, Sec. 1 Section 1. Grounds of and period for filing motion for new trial or reconsideration. Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or (b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result. Within the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded are

excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary to law. Petition for Relief from Order, Rule 38, Sec. 1, 2 Section 1. Petition for relief from judgment, order, or other proceedings. When a judgment or final order is entered, or any other proceeding is thereafter taken against a party in any court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside. Sec. 2. Petition for relief from denial of appeal. When a judgment or final order is rendered by any court in a case, and a party thereto, by fraud, accident, mistake, or excusable negligence, has been prevented from taking an appeal, he may file a petition in such court and in the same case praying that the appeal be given due course. Appeal, Rule 41, Sec. 1 Section 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. chanroblesvirtuallawlibrary No appeal may be taken from: 1. An order denying a petition for relief or any similar motion seeking relief from judgment; 2. An interlocutory order; 3. An order disallowing or dismissing an appeal; 4. An order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; 5. An order of execution; 6. A judgment or final order for or against one or more of several parties or in separate claims, counterclaims, cross-claims and thirdparty complaints, while the main case is pending, unless the court allows an appeal therefrom; and chanroblesvirtuallawlibrary 7. An order dismissing an action without prejudice. In any of the foregoing circumstances, the aggrieved party may file an appropriate special civil action as provided in Rule 65. Tan v. Court of Appeals 275 SCRA 568 (1997) FRANCISCO, J.: Petitioner Antonio P. Tan was the lessee of a piece of property located at 3658 Ramon Magsaysay Boulevard, Sampaloc, Manila when on April 21, 1986, respondent DPG Development and Management Corporation (DPG for brevity) acquired ownership thereof by purchase from one Manuel J. Gonzales. Subsequently, DPG filed with the Metropolitan Trial Court of Manila on April 13, 1989 an ejectment suit for nonpayment of rentals against Vermont Packaging, Inc. which was managed by petitioner. During the pendency of said suit, petitioner, on January 24, 1990, filed Civil Case No. 90-51767 against the Register of Deeds of Manila and DPG for cancellation/annulment of TCT No. 169146 issued in the name of DPG. In a nutshell,

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this complaint challenges the validity of TCT No. 169146 which, according to petitioner, emanated from TCT No. 165501 that covered parcels of land outside of Manila. DPG received summons and the copy of the complaint on February 6, 1990. More than a month later or on March 22, 1990, DPG's then counsel, Atty. Abundio Bello, filed a motion for extension of time to file its answer to the complaint. The motion was granted. However, instead of filing the answer within the extended period, Atty. Bello filed a second motion for more time to file answer. The court granted the motion but only for fifteen (15) days from April 25, 1990. As DPG still failed to file its answer, petitioner filed a motion to declare the former in default. On May 22, 1990, the trial court granted the motion and accordingly declared DPG in default. Petitioner thereafter presented evidence. On October 5, 1990, the trial court rendered a decision in Civil Case No. 90-51767 favoring petitioner, the dispositive portion of which reads: WHEREFORE, it is hereby ordered that TCT No. 169146 registered in the name of defendant DPG Development & Management Corporation be cancelled with the consequential effect that the land reverts to the government disposable to qualified applicants. It is further ordered that the Bureau of Lands consider the application of the plaintiff for the purchase of the area occupied by him pursuant to the recommendation of the land investigator on the matter. Attorney's fees in the amount of P5,000.00. Cost of suit. 1 DPG received a copy of the trial court's decision on October 25, 1990. Nine (9) days later or on November 3, 1990, Atty. Benjamin S. Formoso filed a notice of appearance as new counsel for DPG. On the same day, said counsel filed a motion for new trial and to admit answer with counterclaim. Petitioner filed a comment thereon with an omnibus motion to strike out DPG's motion for new trial, coupled with a prayer for the issuance of a writ of execution. On November 23, 1990, the trial court issued an Order denying, in effect, the motion for new trial, the entirety of which reads: ORDER Today is the consideration of the Motion for New Trial and Motion to Admit Answer of DPG Dev. & Mgt. Corp. filed by Atty. Benjamin Formoso. The plaintiff opposed the Motion for New Trial on the following grounds: 1) Defendant is represented by counsel of record in the person of Atty. Abundio Bello and that there is no substitution of counsel by the mere filing of Notice of Appearance by Atty. Benjamin Formoso; 2) Defendant did not even file the requisite motion to lift order of default to regain its standing or personality before the Court and that the mere filing of motion by the alleged new counsel did not automatically suspend the running of the period; and 3) That the decision in the above-entitled case had not become final and executory.

The records will show that Atty. Abundio Bello filed a Withdrawal of Apperance (sic) on November 5, 1990 after the defendant DPG Dev. & Mgt. Corp. had already been furnished with a copy of the decision by this Court, and that the Notice of Appearance of Atty. Benjamin Formoso on November 2, 1990 was actually ahead of the withdrawal of appearance by Atty. Abundio Bello on November 5, 1990. Such being the case, the appearance of new counsel Atty. Benjamin Formoso, granting that he is the authorized counsel for the defendant, did not actually stop the running of the period within which to appeal the adverse decision of the court. The Decision of the Court dated October 5, 1990 had already become final and executory, and the Motion for New Trial need not be acted upon by the Court. WHEREFORE, let there be issued a Writ og (sic) Execution in the above-entitled case, the same to be implemented by Branch Sheriff Ramon G. Enriquez of this Court. SO ORDERED. DPG questioned this Order through a petition for certiorari before public respondent Court of Appeals (CA) claiming that the trial court gravely abused its discretion and exceeded its jurisdiction in failing to take action on and/or in denying its motion for new trial and to admit answer, and in granting petitioner's omnibus motion to strike out said motion for new trial and prayer for the issuance of a writ of execution. In its Decision of October 23, 1992 disposing of DPG's petition for certiorari, 2 the CA ruled for DPG, the dispositive portion of which reads: WHEREFORE, the petition is hereby GRANTED. As prayed for, the ORDER of the respondent judge issued on November 23, 1990, is hereby ANNULLED and SET ASIDE. As a consequence, (1) The writ of execution and alias writ of execution that have been issued are likewise declared null and void; (2) Petitioner's motion for new trial and for admission of answer that the order of November 23, 1990 has, in effect, denied is considered GRANTED; (3) Petitioner's Answer to the private respondent's complaint in Civil Case No. 90-51767 is, accordingly, considered ADMITTED; and (4) The DECISION of respondent judge in said case is hereby VACATED, and respondent judge is hereby ordered to conduct a new trial in said civil case. Conformably to Section 5 of Rule 37 however, the recorded evidence taken upon the former trial so far as the same is material and competent to establish the issues, shall be used at the new trial without retaking the same. SO ORDERED. Hence, this petition, with the following principal arguments raised by petitioner in support thereof:

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1) the CA should not have entertained DPG's petition for certiorari considering that no motion for reconsideration of the trial court's October 5, 1990 Decision was first filed by DPG and that the proper remedy is an appeal; 2) the filing of the motion for new trial did not interrupt the finality of the trial court's Decision inasmuch as there was no valid substitution between DPG's previous counsel on record Atty. Bello and new counsel Atty. Formoso who filed the said motion for new trial. The petition must fail. On the first argument, as a rule, the special civil action of certiorari will not lie unless a motion for reconsideration is first filed before the respondent court to allow it an opportunity to correct its errors. 3 However, this rule admits of certain recognized exceptions such as (a) where the order is a patent nullity, 4 as where the Court a quo had no jurisdiction; 5 (b) where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, 6 or are the same as those raised and passed upon in the lower court; 7 (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government 8 or of the petitioner 9 or the subject matter of the action is perishable; 10 (d) where, under the circumstances, a motion for reconsideration would be useless; 11 (e) where petitioner was deprived of due process and there is extreme urgency for relief; 12 (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial Court is improbable; 13 (g) where the proceedings in the lower court are a nullity for lack of due process; 14 (h) where the proceedings was ex parte or in which the petitioner had no opportunity to object; 15 and (i) where the issue raised is one purely of law or where public interest is involved. 16 It is exceptive circumstance (b) that justified DPG's non-filing of a motion for reconsideration, inasmuch as DPG's petition for certiorari before the CA involved a similar issue or question passed upon by the trial court in its November 23, 1990 Order, i.e., the propriety of the motion for new trial filed by DPG's new counsel (Atty. Formoso). It must also be stressed that what is determinative of the propriety of certiorari is the danger of failure of justice without the writ, not the mere absence of all other legal remedies. 17 Thus, even when appeal is available and is the proper remedy, a writ of certiorari has been allowed when the orders of the lower court were issued either in excess of or without jurisdiction. 18 Certiorari may also be availed of where an appeal would be slow, inadequate and insufficient 19 and that to strictly observe the general rule would result in a miscarriage of justice. 20 This is especially true when the petition, such as DPG's certiorari petition before the CA, appears to be meritorious and the trial judge indeed seems to have committed grave abuse of discretion. This brings us to the second argument which touches on the heart of the matter. There is no question that the remedy against a judgment by default is a motion for new trial under Rule 37 of the Rules of Court which should be filed within the period for perfecting an appeal, and that the timely filing thereof interrupts the 15-day reglementary period. The CA has thus correctly observed that: It is settled in Our jurisprudence that a motion for new trial is the appropriate remedy when the defendant discovers that he has been declared in default and that a judgment has already been rendered, which has not, however, become final and executory as yet. (Leyte vs. Cusi, Jr., 152 SCRA 496; Tiburcio vs. Castro, 161 SCRA 583; Dolos vs. Court of Appeals, 188 SCRA 413; Circle Finance Corp vs. Court of

Appeals, 196 SCRA 166). It is not required that the defendant file first a motion to file the order of default "to regain his standing." The filing of a motion for new trial suspends the reglementary period for the attainment by the decision of finality. (Rule 41, Section 3; PCIBank vs. Ortiz, 150 SCRA 383) for If a new trial be granted, . . . the judgment shall be vacated, and the action shall stand for trial de novo, . . . (Rule 37, Section5) 21 There is also no dispute that a motion for new trial (and to admit answer with counterclaim) was filed on behalf of DPG within the 15-day appeal period, i.e., on November 3, 1990 or just nine (9) days from DPG's receipt (on October 25, 1990) of a copy of the trial court's October 5, 1990 Decision. Petitioner insists on the correctness of the trial court's finding (contained in its November 23, 1990 Order earlier quoted in this Decision) that the motion for new trial filed by DPG's new counsel Atty. Formoso did not interrupt the finality of the trial court's October 5, 1990 Decision since there was no proper substitution of DPG's original counsel of record Atty. Bello by Atty. Formoso, it appearing that Atty. Formoso's notice of appearance did not contain Atty. Bello's written consent to the substitution and that said notice of appearance even preceded Atty. Bello's notice of withdrawal as DPG's counsel. And so petitioner argues that the CA erred in reversing the trial court and in allowing a new trial to be conducted. Petitioner's and the trial court's position, indeed, cannot be sustained. Atty. Formoso's appearance as second attorney, which bears the conformity of DPG, does not authorize the presumption that the authority of the first attorney (Atty. Bello) has been withdrawn, because a party may have two or more lawyers working in collaboration as his counsel in a given litigation. 22 Certainly, DPG cannot be denied the prerogative to employ additional counsel to protect his rights. Even granting that Atty. Formoso's appearance was really intended to be a substitution and that there was lack of strict observance of the requisites thereof, to wit: a) upon written application; b) upon written consent of the client; c) upon written consent of the attorney to be substituted; and d) in case the consent of attorney to be substituted cannot be obtained, there must be at least a proof of notice that the motion for substitution has been served upon him in the manner prescribed by the rules (Section 26, Rule 138, Rules of Court), 23 the attendant circumstances here are compelling enough to validate the substitution. Note that DPG was declared in default (and was thus denied opportunity to present evidence and participate in the trial) by reason of Atty. Bello's negligence. Said counsel failed to file an answer despite being given by the trial court two (2) extensions of time to file it. True, the general rule is that the client is bound by the mistakes of counsel. But this is not a hard and fast rule. In "De Guzman v. Sandiganbayan" 24 for instance, this Court, even mindful of the supremacy of substantive rights over technicalities and invoking its power to suspend the rules, relieved petitioner De Guzman from the "costly importunings" of his previous lawyers who filed a demurrer to evidence despite leave for that purpose having been denied by the trial court. We thus said:

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. . . . Under the circumstances, higher interests of justice and equity demand that petitioner be not penalized for the costly importunings of his previous lawyers based on the same principles why this Court had, on many occasions where it granted new trial, excused parties from the negligence or mistakes of counsel. To cling to the general rule in this case is only to condone rather than rectify a serious injustice to petitioners whose only fault was to repose his faith and entrust his innocence to his previous lawyers. Xxx xxx xxx

MERALCO v. La Campana 247 SCRA 77 (1996) ROMERO;August 4, 1995 NATURE: Petition for Certiorari and Prohibition FACTS A complaint was filed on August 21, 1990, by private respondent La Campana Food Products, Inc. (La Campana) against petitioner Manila Electric Company (Meralco) for recovery of a sum of money with preliminary injunction after it was served a notice of disconnection by the latter for alleged non-payment of the following billings: (a) the differential billing in the sum of P65,619.26, representing the value of electric energy used but not registered in the meter due to alleged tampering of the metering installation discovered on September 22, 1986; and (b) the underbilling in the sum of P169,941.29 (with a balance of P28,323.55) rendered from January 16, 1987, to December 16, 1987, due to meter multiplier failure. The case was initially assigned on August 21, 1990 to Branch 78 of the Regional Trial Court of Quezon City presided over by Judge Percival M. Lopez, but was re-raffled on September 25, 1990 to Branch 80, presided over by public respondent Judge Benigno T. Dayaw, after Judge Lopez inhibited himself from hearing the case upon Meralco's oral motion. On September 7, 1990, Meralco filed a motion for extension of time of fifteen days from said date within which to file an answer to the complaint at the Office of the Clerk of Court after the clerk of Branch 78 allegedly refused to receive the same because the case had already been re-raffled. The motion was not acted upon because it did not contain a notice of hearing as required by Sections 4 and 5, Rule 15 of the Rules of Court. Meralco's "Answer With Counterclaim" was actually received at Branch 78 only on September 21, 1990 which is beyond the period to answer but within the requested extension. On account of Meralco's failure to file an answer to the complaint within the reglementary period which expired on September 7, 1990, La Campana filed on September 28, 1990 an "Ex-Parte Motion, to Declare Defendant in Default," which Judge Dayaw granted in an order of default dated October 8, 1990. After hearing and receiving La Campana's evidence ex parte, the court a quo rendered a decision dated November 20, 1990 finding for La Campana Instead of appealing the said decision to the Court of Appeals under Section 2, Rule 41 of the Rules of Court, Meralco filed on December 3, 1990, a "Motion to Set Aside Judgment by Default and/or for New Trial" on the ground that it filed an answer to the complaint and that the judgment by default was obtained by fraud. Judge Dayaw denied the said motion opining that Meralco cannot presume that its motion for extension will be granted by the court, especially in this case where its motion for extension was defective in that it did not contain any notice of date and place of hearing. He also stated that the motion to set aside judgment by default and/or for new trial was a pro forma motion because it did not set forth the facts and circumstances which allegedly constituted the fraud upon which the motion was grounded. On January 28, 1991, Meralco filed a notice of appeal. This was opposed by La Campana. The trial court, in an order dated February 22, 1991, denied Meralco's notice of appeal and granted the motion for execution earlier filed by La Campana.

Let us not forget that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. Even the Rules of Court envision this liberality. Xxx xxx xxx -

The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in rendering real justice have always been, as they in fact ought to be, conscientiously guided by the norm that when on the balance, technicalities take a backseat against substantive rights, and not the other way around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give way to the realities of the situation. 25 Being similarly situated, DPG should also benefit from the liberal application of the rules specifically pertaining to substitution of counsels. Of course, it would have been different if the appearance of a new counsel was, for instance, occasioned by the death of the original counsel of record. In which case, all the requirements of a proper substitution must be met, one of which is a verified proof of the death of such attorney. The party seeking substitution, therefore, cannot escape the effects of new counsel's error in failing to furnish the required proof of death, as such negligence does not result in deprivation of due process to said party. Finally, and as correctly ruled by the CA, DPG is entitled to a new trial it prays for inasmuch as negligence or incompetency of counsel is a well-recognized ground for new trial. 26 This would rectify the serious error committed by DPG's former counsel Atty. Bello, give the DPG the opportunity to present its evidence with the assistance of a hopefully more vigilant counsel (Atty. Formoso), and thus level the playing field. WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals dated October 23, 1992 is AFFIRMED in toto. Let this case be REMANDED to the court of origin for further proceedings. SO ORDERED. Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.

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ISSUE WON the Court erred in finding Meralco in default HELD NO As the Court declared in the case of Gozon, et al. v. Court of Appeals: It is well-entrenched in this jurisdiction that a motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper which the clerk has no right to receive and the court has no authority to act upon. - La Campana correctly citing the early case of Pielago v. Generosa where the Court, in applying Section 9, Rule 27 of the old Rules of Court (now covered by Section 9 of Rule 13), laid down the doctrine that a defendant who fails to file an answer within the time provided by the Rules of Court is already in default and is no longer entitled to notice of the motion to declare him in default. Thus, when it filed in Branch 78 its answer with counterclaim on September 21, 1990, fourteen days after the expiration of the period within which to file an answer, Meralco was already in default and, naturally, it had to bear all the legal consequences of being in default It must be clarified that under the Rules, what an aggrieved party seeks to set aside is the order of default, an interlocutory order which is, therefore, not appealable, and not the judgment by default, which is a final disposition of the case and appealable to the Court of Appeals. The Rules expressly state that what may be set aside is the order of default, while the judgment itself may be appealed to a higher court: Sec. 3. Relief from order of default. A party declared in default 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. [Rule 18] 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 proceedings regardless of whether the order of default is set aside or not. [Rule 13] Sec. 2. Judgments or orders subject to appeal. xxx xxx xxx A party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38. [Rule 41] Granting arguendo that the motion to set aside judgment by default was proper, it was still correctly denied by respondent Judge for failure to show that Meralco's omission to answer was due to any of the causes mentioned in Section 3 of Rule 18. At best, the motion only stressed that it was filed on September 21, 1990, within the requested period of extension, which, as earlier discussed, cannot be presumed to be granted. DISPOSITIVE: Petition for certiorari and prohibition is DISMISSED

Oriental Media Inc. v. Court of Appeals 250 SCRA 647 MELO; December 6, 1995 FACTS -Votra filed a complaint against Oriental Media before Pasig RTC. Summons in said case was served upon Marlyn Lasaya, the Personnel Assistant-Receptionist of the Evening Post who refused to receive or sign for the summons. The RTC, it appearing that Oriental had failed to file any responsive pleading, entered an order of default and authorized the Acting Branch Clerk of Court to receive Votra's evidence. -RTC rendered a decision against Oriental: Judgment is hereby rendered in favor of plaintiff and against the defendant, ordering Defendant to pay plaintiff the sum of P38,412.19, with interest of 20% per annum until fully paid. A copy of which was received by Oriental on July 25, 1986. -On Aug 1, 1986, Oriental filed a motion praying that the order of default and the decision be reconsidered and set aside and that Oriental be allowed to file its answer, and alleging, among other things, that it had already actually paid its obligation to Votra. Said MFR was denied by the trial court on Oct 9, 1986, with Oriental receiving a copy of the denial order on October 27, 1986. -On Nov 4, 1986, Oriental filed a "Petition for Relief from Judgment", which was dismissed by the trial court for being premature, in its order dated Feb 24, 1987. A copy of this order was received by Oriental on March 7, 1987. -On Mar 10, 1987, Votra filed a motion for execution of judgment which was opposed by Oriental. Nonetheless, on May 13, 1987, the trial court issued an order granting the motion for execution. -On May 27, 1987, 81 days after receipt of the order dismissing its petition for relief from judgment, Oriental filed before this Court a petition for certiorari asserting that: A) Respondent Judge did not acquire jurisdiction over petitioner. Petitioner, being a private domestic corporation, the service of summons upon Marlyn Lasaya, a Personnel Assistant-Receptionist of the Evening Post, who is not among the persons to be served with summons mentioned in Section 13, Rule 14 of the ROC, was insufficient. For this reason, the Orders by the RTC are all null and void; B) The order granting the motion for execution is premature, because the decision complained of did not become final and executory at the time the motion for execution was filed by reason of the non-finality of the order denying the Petition for Relief from Judgment; C) Respondent Judge should not have dismissed the Petition for Relief from Judgment but should have considered it, by its nature, as a motion for new trial under Rule 37 of the Rules of Court since pleadings should be liberally construed, and that a possible denial of substantive justice due to technicalities of form should have been avoided; D) Petitioner was denied due process; E) A void decision cannot be executed; and F) A void decision can be attacked collaterally. -On Sept 28, 1987, the CA, following the referral of the petition to it for proper action, promulgated its decision dismissing the petition for certiorari on the ground that since Oriental's MFR filed in Civil Case No. 53267 not only questioned the jurisdiction of the court over its person as defendant but also prayed that the order of, and decision by, default be set aside and that it be allowed to file its answer, Oriental must be held to have thereby voluntarily submitted itself to the jurisdiction of the trial court. The motion stated that Oriental had a meritorious defense, i.e., payment of the obligation. Thus, the present petition. ISSUE WON Orientals petition for certiorari should be granted

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HELD NO The proper procedure that Oriental should have taken was an appeal from the decision of the trial court after Oriental's motion for reconsideration of the default judgment was denied. The Rules of Court expressly provide that a party who has been declared in default may appeal from the judgment rendered against him. (Section 2, Rule 41, Rules of Court). -Petitioners would seem to be under the impression that a judgment rendered in default is immediately executory. This is not true for, said judgment is appealable, although a motion to set aside the order of default, upon the ground of fraud, accident, error, or excusable neglect, was necessary prior to 1964. Respondents' petition for relief from judgment, dated Aug 28, 1964, was to that effect. Since January 1, 1964, when the present Rules of Court became effective, even said motion to set aside the order of default has been dispensed with, by explicit provision of the last paragraph of Section 2, Rule 41, of said Rules. -Under Rule 41, section 2, paragraph 3, a party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38. -The judgment by default being appealable, Oriental should have perfected its appeal within 15 days from receipt of copy of the order denying its MR of the default judgment (Sec. 29, B.P. Blg. 129; Sec. 19(a), Interim Rules of Court), minus, of course the period expended from receipt of the decision to the filing of the motion for reconsideration. Reasoning Petitioner received a copy of the decision on July 25, 1986, but filed on August 1, 1986, or 7 days thereafter, a motion for reconsideration. The motion was denied in an order dated Oct 9, 1986, a copy of which was received by petitioner on Oct 27, 1986. Petitioner, therefore, had until Nov 5, 1986 within which to perfect an appeal. However, instead of appealing, petitioner filed a petition for relief from judgment on Nov 4, 1986, which is within the period for appealing. Said petition, as the trial court found, was clearly premature for which reason it was properly dismissed. But more importantly, said petition being the wrong remedial recourse at the time it was filed, did not interrupt the running of the period for appealing. Inevitably, therefore, the judgment by default became final and executory on Nov 6, 1986. -After the rejection of its petition for relief from judgment, Oriental should have appealed the order of dismissal. Despite, however, Oriental's receipt of the order of dismissal on Mar 7, 1987, with the period for appealing thus expiring on Mar 22, 1987, Oriental chose to remain immobile. Oriental began to stir only 81 days after receipt of the order of dismissal of its petition for relief, when petitioner filed the instant petition. -Certiorari is not a substitute for appeal, especially a lost appeal. Certiorari should not be allowed where the petitioner has or had other remedies available (Yap vs. Intermediate Appellate Court). The remedies of appeal and certiorari are mutually exclusive and not alternative or successive (Federation of Free Workers vs. Inciong). Petitioner's resort to the instant petition for certiorari, instead of an appeal, is clearly of its own volition and resolution. There is nothing in the record to show that private respondent misled, prevented, or obstructed petitioner from pursuing an appeal. -Surely, there are cases, while certiorari was allowed although appeal was the proper remedy. The Court has in a number of cases given due course to a petition for certiorari although the proper remedy is appeal especially where the equities warrant such recourse and considering that dismissals on technicalities are viewed with disapproval.

-In the case at bar, there was no urgency or need for Oriental to resort to the extraordinary remedy of certiorari for when it learned of the case and the judgment against it on July 25, 1986, due to its receipt of a copy of the decision by default; no execution had as yet been ordered by the trial court. Oriental should have followed the procedure set forth in the Rules of Court for Rules of procedure are intended to ensure the orderly administration of justice and the protection of substantive rights in judicial and extrajudicial proceedings. Observance of both substantive rights is equally guaranteed by due process whatever the source of such rights, be it the Constitution itself or only a statute or a rule of court. -We cannot overstress the fact that by filing a MFR of the decision of default, yes, by questioning the trial court's jurisdiction, but fatally, by praying for affirmative reliefs and by putting up defenses against the claim of Votra, specifically the payment of its obligation to Votra, and after the denial of the motion, by filing a petition for relief from judgment, petitioner waived the defense of lack of jurisdiction. -When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person, it must be for the sole and separate purpose of objecting to said jurisdiction. If the appearance is for any other purpose, the defendant is deemed to have submitted himself to the jurisdiction of the court. Such an appearance gives the court jurisdiction over the person. -It should be noted that even if it was held in La Naval that the assertion of affirmative defenses (in a motion to dismiss or in an answer not in a motion for reconsideration as what happened herein) shall not be construed as an estoppel or as a waiver of want of jurisdiction over the person of the defendant, there was the last intimation that a special appearance questioning jurisdiction may now be dispensed with. Stated otherwise, I understand La Naval as holding that a defendant may raise the issue of want of jurisdiction over his person together with affirmative defenses and a prayer for affirmative reliefs, as long as this done; as held in numerous previous cases, in a special appearance. Regretably, however, for petitioner, it did not file a special appearance, but filed instead a motion for reconsideration of the default decision against him. Disposition Petition is hereby DENIED. SEPARATE OPINION VITUG [dissent] -Jurisdiction over the person of the defendant in civil cases is acquired (1) by his voluntary appearance or submission to the court's jurisdiction or (2) by the coercive process issued by the court by, ordinarily, the service of summons. In the latter case, Section 13, Rule 14, of the Revised Rules of Court states: If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent or any of its directors. -The service on persons other than those mentioned in the above rule would ostensibly be improper; through the years, it appears, jurisprudence has somewhat liberalized the rule. Hence, service has been held to be valid when made to persons who are shown to be responsible enough and could be expected to remit the papers to the right party. Included among such persons, and rationalized as "agents" in contemplation of the rule, are ordinary clerks, private secretaries of corporate executives, retained counsel, and, generally, officials who have charge or control of the operations of the corporation like, for instance, an assistant general manager, a chief of finance or an administrative officer. -In the case at bench, the summons intended for Oriental was served on a total stranger, Marlyn Lasaya, the Personnel Assistant-Receptionist of the Evening Post, who refused to receive or sign for it. Oriental remained uninformed about the summons that eventually led to its being declared in default. It should be clear enough that summons was improperly served.

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-Respondents would insist, however, that jurisdiction over petitioner was deemed acquired by the trial court when Oriental had filed a motion for reconsideration of the judgment by default which was not merely confined to questioning the court's lack of jurisdiction but likewise extended to stating affirmative defenses, in particular to the payment of the obligation in favor of Votra. -It might be stressed that Oriental apparently was not informed of the case until 25 July 1986 when it received the default judgment. Forthwith, it filed a motion for the reconsideration of the decision assailing the court's jurisdiction. All that was, in main, being asked by petitioner was that it be given an opportunity to file its ANSWER and to prove that it had meritorious defenses. -A petition for certiorari under Rule 65 of the Rules of Court, although not a substitute for an available or lost appeal, may be invoked when the orders of the lower court are issued without or in excess of jurisdiction. I here take note that the trial court has already granted the motion for execution of the judgment by default against Oriental which is yet to be given an opportunity to adduce evidence in its defense and to controvert the evidence presented by Votra in the ex-parte reception thereof by the trial court. An appeal "would have been futile as far as petitioner (is) concerned since its evidence would not form part of the records to be reviewed by the court." The technical rules of procedure are intended to attain, not to defeat, the ends of justice.

WON a petition for certiorari is the proper remedy to question the decision not to lift the order of default HELD NO. Should have filed ORDINARY APPEAL Ratio. A party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38. Reasoning. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default (R20.2, old ROC [NOTE: PROVISIONS CITED HERE ARE ALL BASED ON OLD ROC]). -Remedies available to defendant declared in default (LINA v CA): 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 a meritorious defense; (Sec. 3, Rule 18): here, they failed to show any medical certificate to prove that because of the wifes deteriorating health, they had to go abroad. Husband did not submit any other plausible explanation for his absence in the pre-trial - A satisfactory showing by the movant of the existence of fraud, accident, mistake or excusable neglect is an indispensable requirement for the setting aside of a judgment of default or the order of default. -the alleged meritorious defense, as alleged in the counterclaim, is not sufficient to justify the lifting of the order of default. A meritorious defense is only one of the two conditions. It must concur with the satisfactory reason for the non-appearance of the defaulted party. 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 not availed of 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 not availed of 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) not availed of, BUT SHOULD HAVE BEEN AVAILED OF -Pioneer Insurance and Surety Corporation v. Hontanosas (Court sustained the challenge to an order of default in a petition for certiorari rather than in an ordinary appeal, which was held as not an adequate remedy) NOT APPLICABLE: Certiorari was allowed in that case because the petitioner was illegally declared in default. The Court held that, first, the petitioner could not be compelled to attend an unnecessary second pre-trial after it had indicated at the earlier pre-trial that there was no possibility of an amicable settlement; second, the pre-trial was premature because the last pleading had not yet been filed at the time; and third, there was insufficient notice of the pre-trial to the petitioner. In the case at bar, no such irregularities in the pre-trial have been alleged by the petitioner. -on Certiorari: the special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. The reason for the rule is simple. When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed. If it did, every error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed. The administration of justice would not survive such a rule. Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction is not correctible through the original civil action of certiorari. but even

Ramnani v. C.A. 221 SCRA 582 (1993) CRUZ; April 28, 1993 NATURE Petition for Certiorari contesting CA deci FACTS -Juliette and Cenen Dizon filed a COMPLAINT FOR COLLECTION OF A SUM OF MONEY in RTC Makati vs. Sps Ramnani for the value of the jewelry received by the latter on consignment basis -Ramnani submitted ANSWER w/COUNTERCLAIM: (1) she did receive the jewelry worth P934,347 BUT Dizon likewise received from her jewelry worth P1,671,842,00, including cash and unpaid checks in the amount of P159,742.50; (2) she paid DIZON P50k; and (3) Dizon still owes her P787,495 -PRE-TRIAL: Ramnanis DID NOT APPEAR were DECLARED IN DEFAULT; -Ramnanis filed MOTION TO LIFT ORDER OF DEFAULT DENIED -evidence of Dizon received ex parte (delegated to Clerk of Court) -RTC: judgment vs. Ramnanis for P884,347.00, representing the principal obligation plus legal interest thereon from March 13, 1990, until fully paid; P100,000.00 as moral damages; and P20,000.00 as exemplary damages. They were also required to pay P50,000.00 as attorney's fees, and the costs of the suit. -Ramnanis filed MFR: Personal obligation contracted by wife w/o consent of husband was being made enforceable against spouses conjugal partnership despite absence of any allegation and proof that the same redounded to the benefit of the family as required by Article 121 of the Family Code - DENIED -Ramnani filed PETITION FOR CERTIORARI before CA -CA: DISMISS PETITION: certiorari not proper remedy, SHOULD HAVE FILED ORDINARY APPEAL as it involves NOT errors of jurisdiction NOR GADALEJ but mere error of judgment. ISSUE

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if allowed, NO SHOWING THAT THERE WAS GADALEJ in refusal to set aside the default order and default judgment - It is within the sound discretion of the court to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. In motions for reconsideration of an order of default, the moving party has the burden of showing such diligence as would justify his being excused from not filing the answer within the reglementary period as provided by the Rules of Court, otherwise, these guidelines for an orderly and expeditious procedure would be rendered meaningless. Unless it is shown clearly that a party has justifiable reason for the delay the court will not ordinarily exercise its discretion in his favor. DISPOSITIVE WHEREFORE, the challenged decision is AFFIRMED as above modified, with costs against the petitioner. It is so ordered.

- Instead of taking an appeal, Dulos filed with the RTC Makati. RTC Makati - A special civil action for certiorari and prohibition with preliminary injunction was filed. The couple prayed for the nullification of the MTC judgment and the earlier order. - This was dismissed on the following grounds: (1) the petitioners had been properly declared in default for failure to appear at the scheduled hearing; (2) the filing of the action for nullification in the Regional Trial Court was not a valid reason for the suspension of the hearing in the Metropolitan Trial Court; (3) the motion for reconsideration was fatally defective because it was not verified and accompanied by an affidavit of merit; and (4) the grant of the motion for suspension or postponement was discretionary upon the court. - Spouses Dulos filed a petition for certiorari with the CA CA - Petition for certiorari denied by the CA. Hence this action in the SC. ISSUE/S 1. WON the MTC properly declared default 2. WON certiorari can be a substitute for the lost right of appeal HELD 1. YES, 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. 2. NO. ... 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 ... No less significant is the fact that the judgment of the metropolitan trial court had already become final and executory because of the petitioners' failure to appeal therefrom on time. They were served with notice of the judgment on October 10, 1988, and filed a motion for reconsideration on October 18, 1988, which was denied on November 17, 1988. They therefore had until December 10, 1988, within which to perfect their appeal. They did not. - 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

ON REMEDIES 4 remedies, citing Lina v. CA 1. at any time after being declared in default and BEFORE JUDGMENT: MOTION TO SET ASIDE ORDER OF DEFAULT: FAMEN and Meritorious defense 2. JUDGMENT RENDERED + B4 FINAL AND EXECUTORY: MNT under R37.1[a] 3. discovered that declared in default AFTER JUDGMENT FINAL AND EXECUTORY: PETITION FOR RELIEF under R38.2 4. Appeal from judgment even if no petition to set aside the order of default

Laus v. C.A. 219 SCRA 693

Dulos v. C.A. 188 SCRA 413 (1990) Cruz, J.; August 7, 1990 NATURE Special civil action of certiorari & prohibition FACTS MTC of Las Pinas - Spouses Dulos were sued for forcible entry by spouses Nocom. Pre-trial conference was set for August 18, 1988 with notice to both parties. - Prior to the scheduled MTC hearing, the spouses Dulos filed a complaint against the spouses Nocom for the annulment of sale, reconveyance of title, and various reliefs plus a writ of preliminary injunction at the RTC of Makati. - Spouses Dulos, through counsel, filed a motion for the suspension of the proceedings in the MTC on the ground that there was a prejudicial question of ownership filed in the RTC Makati. Hearing on this was also scheduled for the same date as originally set by the MTC. - On the scheduled date of August 18, 1988, neither the spouses Dulos nor their counsel appeared. They were represented by one Ananita Rectra who was allegedly the sister of Juan Dulos and who claimed that she has a special power of attorney. - Spouses Dulos were declared in default. Their motion for suspension was denied Evidence of the Nocom couple was received and judgment rendered in their favor. Motion for reconsideration was denied on November 17, 1988.

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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 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 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. DISPOSITIVE Petition is dismissed. Boticano v. Chu 148 SCRA PARAS; March 16, 1987 F: for the facts, refer to digest under MTD Reasoning - Chu could have questioned the jurisdiction of the lower court but he did not. - It can of course be argued that the failure to question the lower court's jurisdiction cannot be accounted against Chu for his having been declared in default gave him no chance to participate in the court deliberations and therefore no chance to raise the jurisdictional issue, but then, he could have done so, in the subsequent pleadings he filed. Even assuming that such failure cannot be taken against him, the fact is he had VOLUNTARILY submitted himself to the court's jurisdiction. - CHU voluntarily appeared thru counsel in the trial court. He filed a Notice of Appeal, Appeal Bond, Motion for Extension of Time to File Record on Appeal, Record on Appeal, Motion for Withdrawal of Appearance, Notice of Appearance and Opposition to Plaintiff's Motion to Dismiss Appeal and for Issuance of a Writ of Execution. Not only did he submit pleadings and motions, but he likewise appeared in person, thru counsel in the hearing held on May 14, 1979 at 8:30 a.m. and orally argued in open court on the pending incident. - Under Section 23, Rule 14 of the Rules of Court, the defendant's voluntary appearance in the action shall be equivalent to service. Thus, under this principle, it has been consistently held by the Supreme Court that the defect of summons is cured by the voluntary appearance of the defendant. - If the defendant in the Regional Trial Court (RTC) has been declared in default, may he appeal the default judgment that may subsequently be rendered even if he has

not asked the RTC to set aside the declaration of default? The answer is in the affirmative. However a distinction must be made as to the effects of such appeal. (a) If an appeal is made without first asking the RTC to set aside the declaration of default, and the CA sets aside on said declaration, all he can get is a review of the RTC's default judgment without the opportunity of having the higher court consider defense evidence (for the simple reason that no evidence was even adduced by him in the RTC). (b) If the defendant first asks the RTC to set aside the declaration of default (See Rule 18, secs. 2 and 3, Rules of Court), and he is able to prevail, the declaration will be set aside, and he will now have the opportunity to present his evidence in the RTC. Thus, even if he finally loses in the RTC's subsequent decision, his defense can be considered, when appeal is made to the appellate tribunal. Of course, even if the default declaration is not set aside despite his motion for the setting aside, he will be entitled to all notices in the court proceedings, and can file any pleading he may wish to file, including the notice of appeal. (See Rule 13, sec. 9, Rules of Court). - In the case at bar, there is no question that summons was timely issued and received by private respondent. In fact, he never denied actual receipt of such summons but confined himself to the argument that the Sheriff should prove that personal service was first made before resorting to substituted service. - Indeed, such construction is but fair, and in accord with substantial justice. The burden on a plaintiff is not to be enlarged with a restrictive construction desired by the defendant. (Ibid., p. 1078). - In a last ditch effort, CHU insists that there was no valid service of summons because private respondent is a partner and general manager in San Pedro Sawmill. Consequently the wife of private respondent to whom summons and complaint were allegedly served not being partnership, cannot receive the same under Section 13 of Rule 14 of the Rules of Court. - It has however been settled that actions must be brought by the real parties in interest and against the persons who are bound by the judgment obtained therein. - The title of the case both in the trial court, in the Court of Appeals and in this Court shows that the partnership is not a party. On the contrary, as previously stated private respondent himself assumed the responsibility of the accident and is now estopped to disclaim the liabilities pertaining thereto. DISPOSITIVE Decision of the CA is reversed and set aside, and the decision of the CFI is reinstated.

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