JUAN A. GOCHANGCO, HON. FELINO GARCIA, AS PRESIDING JUDGE OF THE CITY COURT OF BACOLOD, BRANCH I, AND DEPUTY PROVINCIAL SHERIFF JOSUE DE JOSE, PETITIONERS, VS. THE COURT OF FIRS…

Gochangco versus Garcia

The Case

This is a petition for review by certiorari brought by Juan A. Gochangco, together with the presiding judge of the City Court of Bacolod and its deputy provincial sheriff, against the Court of First Instance of Negros Occidental. The question is whether that court correctly annulled, on a petition for certiorari and prohibition, the entire proceedings in an unlawful detainer case — the declaration of default, the substitution of parties, the judgment on the pleadings, the reception of evidence before a deputy clerk, and the immediate execution pending appeal. The case matters because it gathers in one decision the elementary rules on jurisdiction over the person of a defendant, the philosophy of default, substitution of parties plaintiff, judgment on the pleadings, and execution pending appeal in ejectment — the everyday machinery of summary procedure.

Procedural History

The action began as an unlawful detainer suit filed by C.N. Hodges in the City Court of Bacolod, Branch I, against several occupants of his titled lots. After the original plaintiff died, the administrator of his estate was substituted, and later Gochangco, who bought the lots, replaced the administrator. The City Court declared Sy Ho in default, rendered judgment on the pleadings against Minoria, and after trial ordered both to vacate and to pay rentals. It later granted execution pending appeal.

Sy Ho and Minoria then filed a joint petition for certiorari and prohibition with the Court of First Instance of Negros Occidental, imputing grave abuse of discretion to the City Court. The Court of First Instance granted the writ and annulled all the proceedings, holding that there had been no proper service of summons on Sy Ho, that the default was void, and that a clerk of court could not receive evidence ex parte. Gochangco elevated the matter to the Supreme Court by petition for review by certiorari.

Facts

Hodges sued several persons for ejectment from parcels of land in Bacolod City titled in his name. Summons was served on Macanan, Nolan, and Santiago; Macanan died and the case against him was dismissed, while Santiago and Nolan voluntarily vacated. Summons was served on Minoria, who refused to acknowledge it but later filed an answer through counsel. Summons was also served on Sy Ho, evidenced by the sheriff's return, though Sy Ho would later deny it — apparently the summons was left at the place where he kept his scrap iron business, not his residence.

Hodges died during the pendency of the suit, and the administrator of his estate, the Philippine Commercial and Industrial Bank, was substituted as party-plaintiff. The bank moved to declare Sy Ho in default for failure to answer, and the City Court granted the motion. Sy Ho's opposition, claiming he never received summons, was overruled. Proceedings were then largely suspended for years by controversies over the Hodges estate, until the Supreme Court directed the heirs to sell the estate properties. The lots in question were sold to Gochangco, who obtained titles in his name, demanded that Minoria and Sy Ho vacate, and moved to be substituted as plaintiff.

Gochangco presented evidence ex parte against Sy Ho, who was in default, and moved for judgment on the pleadings against Minoria, whose answer he said admitted the material allegations of the complaint. Sy Ho moved to set aside the default, blaming his lawyer's failure to follow up the case, and later filed a motion to dismiss. The City Court rendered judgment ordering both to vacate and to pay rentals, denied reconsideration, and granted execution pending appeal. The Court of First Instance then annulled all the proceedings, and Gochangco brought the matter to the Supreme Court.

Issues

• Whether or not the City Court acquired jurisdiction over the person of Sy Ho despite the alleged defect in the service of summons.
• Whether or not Sy Ho was correctly declared in default and whether the default should be set aside.
• Whether or not the substitution of the administrator, and later of Gochangco, as party-plaintiff was proper.
• Whether or not judgment on the pleadings against Minoria was proper.
• Whether or not execution pending appeal was validly ordered in the ejectment case.
• Whether or not a clerk of court may receive evidence ex parte in a default case.

Applicable Provisions

Section 8 of Rule 70 of the Rules of Court, on immediate execution in ejectment, provides:

If judgment is rendered against the defendant, execution shall issue immediately, unless an appeal has been perfected and the defendant, to stay execution, files a sufficient bond approved by the justice of the peace or municipal court and executed to the plaintiff to enter the action in the Court of First Instance and to pay the rents, damages, and costs accruing down to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under the contract, if any, as found by the judgment of the justice of the peace or municipal court to exist.

This provision is the basis for holding that execution pending appeal was properly ordered against Sy Ho, who took none of the steps required to stay it.

Section 1 of Rule 19 of the Rules of Court, on judgment on the pleadings, provides:

Where an answer fails to tender an issue or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading.

This provision justified the judgment on the pleadings against Minoria, whose answer tendered no issue.

Section 2 of Rule 3 of the Rules of Court, on the real party in interest, provides that a party-plaintiff is one:

having an interest in the subject of the action and in obtaining the relief demanded.

This provision supported Gochangco's substitution as plaintiff after he bought the lots.

Section 20 of Rule 3 of the Rules of Court, on transfer of interest, provides:

In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.

This provision likewise authorized Gochangco's substitution in place of the administrator.

Ruling

On the first issue, the Court held that whatever defect existed in the service of summons was rendered inconsequential by Sy Ho's voluntary submission to the City Court's jurisdiction. Even if the summons was left at his place of business rather than his residence, this was valid substituted service, expressly authorized by the Rules, and it was not necessary that the person in charge be specially authorized to receive it — it is enough that he appears to be in charge. Sy Ho's submission was inferred from his request for leave to file an answer, his compliance with the order to pay rentals, his various motions and pleadings, and his counsel's admission at pre-trial that he had voluntarily appeared.

On the second issue, the Court held that Sy Ho was correctly declared in default. He failed to answer within the reglementary period, and his own affidavit of merits blamed his lawyer's negligence — an implied admission that the failure was not due to defective service. No fraud, accident, or mistake was shown to warrant setting aside the default. In any event, the prejudice to him was nominal, since he fully presented his defenses through a motion to dismiss and two motions for reconsideration, all of which were considered and found unmeritorious.

On the third issue, the Court held that both substitutions were proper. The administrator replaced the deceased plaintiff as mandated by the Rules, and Gochangco, having purchased the property, became the real party in interest and properly replaced the administrator.

On the fourth issue, the Court held that judgment on the pleadings against Minoria was correct, since her answer admitted the material averments of the complaint and failed to establish her claimed right as caretaker.

On the fifth issue, the Court held that execution pending appeal was squarely within Section 8 of Rule 70, and Sy Ho had taken no steps to stay it.

On the sixth issue, the Court held that there is nothing intrinsically wrong in receiving evidence ex parte before a clerk of court, a task that is ministerial, since the judge retains the duty to render judgment on the merits. The Court also explained the philosophy of default: a defendant's failure to answer is attributable either to his realization that he has no defenses, or to fraud, accident, mistake, or excusable negligence, and in the latter case the law grants him relief.

Doctrine

A defendant's voluntary appearance — by seeking leave to answer, complying with court orders, and filing motions and pleadings — cures any defect in the service of summons and confers jurisdiction over his person. Substituted service at the defendant's office or regular place of business is valid, and the person in charge need not be specially authorized to receive it.

Default is proper where the defendant fails to answer within the reglementary period and shows no fraud, accident, mistake, or excusable negligence. The prejudice from default is nominal where the defendant was in fact able to present his defenses, which were duly considered.

Substitution of a party-plaintiff is proper where the original plaintiff dies and is replaced by the administrator of his estate, and where the property is later sold and the buyer, as real party in interest under Section 2 of Rule 3, replaces the administrator under Section 20 of the same rule.

Judgment on the pleadings lies where the answer fails to tender an issue or admits the material allegations of the complaint, as provided in Section 1 of Rule 19. Execution pending appeal in ejectment issues immediately under Section 8 of Rule 70 unless the defendant perfects an appeal, files a sufficient bond, and deposits the rents due.

A clerk of court may receive evidence ex parte in a default case, since the task is ministerial and the judge retains the duty to pass upon the evidence and render judgment.

Disposition

The Supreme Court granted Gochangco's petition, set aside the judgment of the Court of First Instance, and upheld the proceedings and judgment of the City Court of Bacolod.

Remember This

Memorize this line: voluntary appearance cures defective service of summons, and default is proper where no fraud, accident, mistake, or excusable negligence is shown. Examiners use this case on jurisdiction over the person, the philosophy of default, judgment on the pleadings, and immediate execution in ejectment under Section 8 of Rule 70.