RAUL A. JOROLAN, PETITIONER, VS. HON. SELMA PALACIO ALARAS, IN HER CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF MAKATI CITY, BRANCH 62 AND AIDA MIRANDA, RESPONDENTS.
CRUZ, R.A. J.:
THE CASE
The dispositive portion of the Order[1] dated March 6, 2013 reads as follows:
x x x
“WHEREFORE, defendant Raul J. Jordan’s Verified Motion (to Lift Order of Default) is DENIED for lack of merit.
“This case shall be considered submitted for decision.
“SO ORDERED.”
x x x
On the other hand, the dispositive portion of the Order[2] dated August 7, 2013 reads as follows:
x x x
“WHEREFORE, defendant’s Motion for Reconsideration is DENIED for lack of sufficient merit.
“SO ORDERED.”
x x x
THE ANTECEDENTS
Petitioner Raul A. Jorolan is the defendant in Civil Case No. 12-835 which is a civil case for collection of sum of money filed against him by Private Respondent Aida Miranda as plaintiff. The Complaint alleges that plaintiff loaned defendant several amounts over a period of time from August to December 2005, subject to a monthly interest of 1.2%, with a total principal amount of Php1,970,000.00. He did not make a single payment on the principal loans or their interest such that the loan obligation reached Php3,172,880.00, inclusive of interest. Defendant offered his property at Stonecrest Subdivision, San Pedro, Laguna to plaintiff as payment of his loan obligation. He also requested plaintiff to advance the payment of taxes and fees necessary for the sale and transfer and that he will just reimburse plaintiff after. Pursuant thereto, plaintiff paid the remaining unpaid real estate property tax over the Stonecrest Property in the amount of Php13,000.00, capital gains tax, transfer fee and documentary stamp tax pertaining to the sale of the Stonecrest Property in the total amount of Php100,199.95, and services rendered in facilitating the sale and transfer of title of the Stonecrest Property from defendant to plaintiff in the amount of Php28,000.00 which pertains to the share of defendant. Plaintiff later learned that the property has outstanding subdivision association dues amounting to Php112,672.56.
Sometime in August 2006, defendant offered for sale to plaintiff his Eurovilla Townhouse located in Sta. Mesa, Manila. Plaintiff gave defendant a total amount of $90,000.00, equivalent to Php4,500,000.00 based on the exchange rate at that time of Php50.00 to a U.S. Dollar, to settle the arrears with Union Bank in connection with the said Eurovilla Property, with the agreement that the amount would constitute part of the purchase price of the property. When Union Bank continued to hold the title to the Eurovilla Property because defendant still had an outstanding car loan with the bank, plaintiff backed out of the sale. Defendant promised her that she will get her money back as soon as he was able to sell the property. Sometime in August 2008, defendant had finally sold Eurovilla Townhouse and initially paid plaintiff Php2,000,000.00. He executed a promissory note dated July 3, 2009 for the balance in the amount of Php2,500,00.00 payable monthly in the amount of Php25,000.00. Plaintiff failed to pay each and every amortization. The Complaint then prays that defendant be ordered to pay Php2,753,872.51 which he owes plaintiff with interest thereon computed at the legal rate and reckoned from the time of filing of the suit until fully paid, Php100,000.00 as moral damages, Php100,000.00 as exemplary damages and P100,000.00 as attorney’s fees.
Records show that defendant, Our petitioner in this case, was duly served with Summons on September 26, 2012, giving him until October 11, 2012 to file his responsive pleading. Petitioner was not able to secure the services of a counsel to file his Answer on time, prompting plaintiff, Our private respondent in this case, to file a Motion to Declare Defendant in Default which was set to be heard on November 9, 2012.
Petitioner finally secured the services of a counsel who filed a Comment/Opposition dated November 6, 2012 in response to the Motion to Declare in Default.
In an Order dated November 14, 2012, Respondent Judge declared petitioner in default, finding as follows:
x x x
“After carefully examining the record, it is revealed that defendant has, to date never filed any motion asking for leave to file and admit his responsive pleading. Which recourse could have easily convinced the Court to deny plaintiff’s motion pursuant to Sec. 11, Rule 11 which grants discretion to the trial court to allow an answer or other pleading to be filed after the reglementary period, upon motion and on such terms as may be just. Unfortunately, this was not taken by the appearing counsel and the lapse shall therefore bind the defendant.”
x x x
Petitioner was able to file his verified Answer with Compulsory Counterclaim only on November 29, 2012.
He subsequently filed, on December 5, 2012, a verified Motion (to Lift Order of Default) invoking the court’s liberality in setting aside orders of default. Attached to his motion is an affidavit of merit detailing why he was not able to file his Answer on time, blaming it on a serious miscommunication between his consultant Joey Romblon and his lawyer Atty. George Coronacion and his financial difficulties disallowing him from hiring another lawyer. He included a statement that he repleads and incorporates the specific denials, affirmative and special defenses raised in his Answer as part of the affidavit as proof of his meritorious defense.
He also filed, on the same date, an Opposition to private respondent’s prayer for attachment.
Public respondent, in her Order dated March 16, 2012, found petitioner’s motion insufficient to give him back his standing in the case, viz.:
x x x
“Defendant sweepingly stated that declarations of default are frowned upon, that he should be given the opportunity to present evidence in the interest of substantial justice, he is a victim of circumstance, and that he did not intend to violate the rule or the order of this Court. Unfortunately, there was complete absence of an allegation from the verified motion as well as in his affidavit of merit that he has meritorious defense. Worse, there is no mention of what evidence he intends to present if his motion is granted. If defendant is truly possessed of meritorious defense, he should have so stated what kind of evidence he has to resist plaintiff’s complaint. Leaning a little back towards defendant’s answer, which in legal contemplation does not exist, there is dearth of evidence attached to support the allegations therein stated from which this Court could have derived sound judgment.”
x x x
Petitioner filed a Motion for Reconsideration on the ground that a perusal of his Motion to Lift Order of Default and Affidavit of Merit shows that he has a meritorious defense. He submitted anew an affidavit of merit attached to the Motion for Reconsideration which states that:
x x x
“4. Hereunder are said defenses and my comments on why, with all due respect to the RTC, my affidavit of merit in repleading my Answer is sufficient compliance with the Rules and the requirement of a statement of evidence as being required by the RTC:
- The Complaint failed to state a cause of action.
In my view, the ground of failure to state a cause of action as my defense in order to defeat the claim of the plaintiff does not need the presentation of evidence. I was advised by my counsel that this is determined by the sufficiency of the allegations of the Complaint and not by presentation of evidence.
- It must be recalled that Article 1197 of the Civil Code involves a two-step process. Courts must first determine that “the obligation does not fix a period” (or that the period is made to depend upon the will of the debtor), “but from the nature and the circumstances it can be inferred that a period was intended” (Art. 1197, pars. 1 and 2). Thereafter, courts must then proceed to the second step, and decide that period was “probably contemplated by the parties” (Do., par. 3). So that, ultimately, the Courts cannot fix a period merely because in its opinion it is or should be reasonable, but must set the time that the parties are shown to have intended.
As advised by my counsel, Article 1197 is a defense to support the dismissal of the complaint on the ground of prematurity. My counsel explained that in invoking the legal provision of the Civil Code on Article 1197, I do not need to present evidence since it is the application o the law on the particular set of facts pleaded in the complaint.
- Under Article 1193 of the Civil Code, obligations for whose fulfillment a day certain has been fixed shall be demandable only when that day comes. However, no such day certain was fixed in the promissory note. Plaintiff, therefore, cannot demand performance since no period was contemplated. Since the promissory note does not specify a period for payment, plaintiff should have petitioned the courts to fix the period in accordance with Article 1197 of the Civil Code. As no such action was filed by plaintiff aside from this rescission under Article 1191, the complaint was premature, the obligation not being demandable at this point.
As advised by my counsel, Article 1193 like Article 1197 is a defense to support the dismissal of the complaint on the ground of prematurity. My counsel explained that in invoking the legal provision of the Civil Code on Article 1193, in the same vein, I do not need to present evidence since it is the application of the law on the particular set of facts pleaded and admitted by plaintiff in the complaint.
- The alleged obligations mentioned in paragraphs 2.06 to 2.09.5 are unenforceable as they are not in writing.
As advised by my counsel, an obligation is unenforceable if not in writing. Again, this is a legal provision; hence, there is, with all due respect, no need for evidence.
- The First Cause of Action has been fully paid.
With respect to the defense of payment, it is obvious that my testimony will contradict the alleged verbal agreements to pay certain amounts. I will testify that our agreement was limited to what has been admitted to have been paid and no more. My testimony consistent with the legal position stated in my Answer is, according to my counsel, evidence in testimonial form.”
x x x
Public respondent denied the motion, hence, this petition.
During the pendency of this petition, the RTC rendered a Decision dated November 19, 2013, the dispositive portion of which reads:
x x x
“WHEREFORE, judgment by default is hereby rendered in favor of plaintiff AIDA MIRANDA against defendant RAUL A. JOROLAN as follows:
- for the first cause of action, defendant to pay plaintiff the sum of one hundred forty one thousand one hundred nine nine & 95/100 (P141,199.95) Philippine currency plus interest at the legal rate of 12% per annum reckoned from filing on September 10, 2012 until fully paid:
- for the second cause of action, the Promissory Note dated July 3, 2009 is hereby RESCINDED and defendant is ordered to return the sum of two million five hundred thousand (Php2,500,000.00) plus interest at the legal rate of 12% per annum reckoned from filing on September 10, 2012 until fully paid to herein plaintiff;
Further, defendant is ordered to pay plaintiff the following:
- the sum of one hundred thousand (Php100,000.00) Philippine currency as moral damages.
- The sum of one hundred thousand (Php100,000.00) Philippine currency as and by way of exemplary damages.
- Attorneys’ fees of twenty thousand (Php20,000.00) Philippine currency and costs of suit.
“SO ORDERED.”
x x x
THE ISSUES BEFORE US
I
WHETHER OR NOT RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN ISSUING THE ORDER DATED MARCH 6, 2013, WHICH DENIED PETITIONER’S VERIFIED MOTION TO LIFT ORDER OF DEFAULT ON THE GROUND THAT THERE IS NO ALLEGATION OF A MERITORIOUS DEFENSE SINCE PETITIONER’S MOTION TO LIFT AND AFFIDAVIT OF MERIT CLEARLY ALLEGED THAT HE HAS A MERITORIOUS DEFENSE.
II
WHETHER OR NOT THE ISSUANCE OF THE ORDER DATED AUGUST 07, 2013 IS ALSO TAINTED WITH GRAVE ABUSE OF DISCRETION AS SAID ORDER DID NOT EVEN BOTHER TO DISCUSS THE ARGUMENTS RAISED IN PETITIONER’S MOTION FOR RECONSIDERATION PERFUNCTORILY DECLARING THAT SAID ARGUMENTS HAVE BEEN PASSED UPON IN THE MARCH 06, 2013 ORDER WHICH DECLARATION IS NOT SUPPORTED ON RECORD.
Being interrelated, both issues shall be discussed jointly.
OUR RULING
The petition must fail.
One of the remedies of a party declared in default is by filing a Petition for Certiorari under Rule 65 of the Rules of Court assailing the Order of Default within 60 days from notice of the judgment.
Petitioner assails Respondent Judge’s denial of his motion to lift order of default on the sole ground that there was “complete absence” in the motion to lift or in his affidavit of merit of an “allegation” that he has a “meritorious defense”. He alleges that such declaration is contrary to jurisprudence and the records of the case, thus constituting grave abuse of discretion.
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or in other words, where the power is exercised in an arbitrary manner by reason of passion or personal hostility, and it must be so patent or gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[3]
We find no grave abuse of discretion on the part of the Respondent Judge that would warrant the issuance of a writ of certiorari.
Petitioner admitted to having been served with summons and a copy of the complaint on September 26, 2012, giving him until October 11, 2012 to file his responsive pleading. No such pleading was filed before the expiration of that period. Consequently, private respondent was not wrong to file a motion to declare petitioner in default.
Section 3, Rule 9 of the Rules of Court provides:
x x x
“Sec. 3. Default; declaration of – If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.”
x x x
After being apprised of the motion to declare him in default, he filed a comment/opposition thereto proffering mistake and excusable negligence as reasons why he should not be declared in default when what he should have done to avoid being declared in default was to file his responsive pleading even beyond the reglementary period but before he could be declared in default. In such a case, it will serve no practical purpose to declare him in default when he has already filed his Answer even beyond the reglementary period but before he was declared as such.[4]
Unfortunately, petitioner filed his Answer not only beyond the reglementary period provided by the Rules of Court within which to file a responsive pleading, but also after he has already been declared in default by Respondent Judge through the Order dated November 14, 2012.
A party declared in default is deprived of the right to take part in the trial and forfeits his rights as a party litigant except the right to receive notice of subsequent proceedings.[5] To obtain relief from an order of default, the said party may at any time after notice thereof and before judgment file a motion under oath to set aside 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.[6] Appended thereto should be an affidavit showing the invoked ground, and another, denominated affidavit of merit, setting forth facts constituting the party’s meritorious defense or defenses.[7]
The motion to lift order of default must show that the defendant has a meritorious defense or that something would be gained by having the order of default set aside.[8] Otherwise, the grant of his motion will prove to be a useless exercise. Thus, his motion must be accompanied by a statement of the evidence which he intends to present if the motion is granted and which is such as to warrant a reasonable belief that the result of the case would probably be otherwise if a new trial is granted.[9] If the motion is not accompanied by affidavits of merits, it may properly be denied.[10]
The term meritorious defense may imply that the applicant has the burden of proving such a defense in order to have the judgment set aside. The cases usually do not require such a strong showing. The test employed appears to be essentially the same as used in considering summary judgment, i.e., whether there is enough evidence to present an issue for submission to the trier of fact, or a showing that on the undisputed facts it is not clear that the judgment is warranted as a matter of law.[11]
A perusal of petitioner’s Motion to Lift Order of Default and the accompanying affidavit of merit did not elicit a statement of evidence which would convince the Court of his meritorious defense. True, he included a paragraph in his Affidavit of Merit stating that:
x x x
“2. I hereby replead and incorporate the specific denials, affirmative an special defenses raised in my Answer as part of this Affidavit as proof of my meritorious defense;”
x x x
To Our mind, a reference to his Answer is not sufficient compliance of the requirement that he should make a recital of facts that would constitute his meritorious defense.
Technically, in legal contemplation, his Answer does not exist. Not only was it filed after he has been declared in default, it was also not accompanied by a motion for leave to file the same and for it to be admitted. It is the court’s discretion whether to allow an answer or other pleading to be filed after the time fixed by the Rules, following Section 11, Rule 11 of the Rules of Court. Petitioner cannot simply file his late Answer and expect the same to form part of the Records as though it were timely filed.
Nevertheless, he attached a copy of his Answer to his Motion to Lift Order of Default and made it an integral part thereof. Since his Answer is verified, as well as his motion to lift Order of Default and his Affidavit of Merit, We consider his Answer as part of such motion. Still, attaching his Answer did not allow the Court to evaluate whether he has a meritorious defense. As pointed out by the Respondent Judge in the Order dated March 6, 2013:
x x x
“x x x Leaning a little back towards defendant’s answer, which in legal contemplation does not exist, there is dearth of evidence attached to support the allegations therein stated from which this Court could have derived sound judgment.”
x x x
Petitioner submitted a new affidavit of merit alongside his motion for reconsideration to the Order dated March 6, 2013, this time, explicitly quoting therein his affirmative and special defenses embodied in his Answer. Respondent Judge refused to reconsider her Order on the ground that the arguments he had raised in his motion for reconsideration had already been amply treated, discussed and passed upon in the Order sought to be reconsidered. Petitioner insists that there was no discussion of the matters he raised in his motion for reconsideration such as:
x x x
“40.1. the ruling of the High Court in Consul wherein a motion to lift was declared proper since the Answer was attached to the motion and which contains the meritorious defense;
“40.2. whether the explanation of petitioner on his meritorious defense is proper (is there a need for (a) statement of evidence if the defense is a legal defense);”
x x x
The Respondent Judge had already made a declaration that, even considering his Answer, there is still dearth of evidence to support his allegation of a meritorious defense. The basic issue of sufficiency of the Answer to show his meritorious defense has, indeed, already been passed upon and there is no more reason for Respondent Judge to discuss anew and reiterate what she had already discussed in her previous Order.
We examine his affirmative defenses. First, he alleged that the Complaint failed to state a cause of action, but did not expound further. Then, he invoked Articles 1197 and 1193 of the Civil Code and the unenforceability of the obligations mentioned in paragraphs 2.06 to 2.09.5 of the complaint. As pointed out by the petitioner himself, these defenses involve the application of law on a particular set of facts pleaded and admitted by plaintiff in the complaint. These are conclusions of law that the trial court may make based on the complaint even without the participation of the petitioner. Lastly, he alleged that the first cause of action has been fully paid, again without further expounding. Merely stating that the obligation has already been paid is a conclusion rather than a statement of facts. The affidavit must controvert the facts alleged by the complaint.[12] In his second affidavit of merit, he explained that:
x x x
“With respect to the defense of payment, it is obvious that my testimony will contradict the alleged verbal agreements to pay certain amounts. I will testify that our agreement was limited to what has been admitted to have been paid and no more. My testimony consistent with the legal position stated in my Answer is, according to my counsel, evidence in testimonial form.”
x x x
Again, it was not enough. Merely stating that he will contradict the alleged verbal agreements to pay certain amounts without specifying what these contradictions are, when he can very well demonstrate so in his affidavit of merit, certainly does not justify that he has a meritorious defense. As espoused in the case Consul v. Consul[13] cited by petitioner, the purpose of affidavits of merits is so that Courts and parties should not require the machinery of justice to grind anew if the prospects of a different conclusion cannot be reasonably reached.
It is certainly not a grave abuse of discretion on the part of the Respondent Judge when she found a glaring deficiency of a statement of evidence to warrant the liberal application of the rules and allow petitioner to participate as defendant in the case.
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
SO ORDERED.
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
Abdulwahid, H.S., Chairperson, and [**]Inting, S.B., JJ., concur.
[*] Acting Senior Member per Office Order No. 238-14-ABR dated May 23, 2014.
[**] Acting Junior Member per Office Order No. 238-14-ABR dated May 23, 2014.
[1] Rollo, pp. 27-29.
[2] Id., pp. 30-31.
[3] De Baron v. Court of Appeals, G.R. No. 140719, October 26, 2001.
[4] See Oaminal v. Castillo, et al., G.R. No. 152776, October 8, 2003; Indiana Aerospace University v. CHED, G.R. No. 139371, April 4, 2001.
[5] Rule 9, Section 3(a) of the Rules of Court.
[6] Rule 9, Section 3(b) of the Rules of Court.
[7] Agravante v. Patriarca, G.R. No. 48324, March 14, 1990.
[8] Villareal, etc. v. Court of Appeals, G.R. No. 107314, September 17, 1998, citing Carandang v. Cabatuando, 53 SCRA 383 (1973).
[9] Id., citing Group Developers & Financiers v. Lumen Policarpio, 168 SCRA 154 (1988).
[10] Id., citing Phil. British Co., Inc. v. delos Angeles, 63 SCRA 50 (1975).
[11] Id., citing RESTATEMENT OF THE LAW, 2d, ON JUDGMENTS, §67, Comment.
[12] Id.
[13] G.R. No. L-22713, July 26, 1966.