AMPARO SANTOS, PETITIONER, VS. HON. FELISA DE LA FUENTE SAMSON, JUDGE OF THE COURT OF FIRST INSTANCE OF PAM­PANGA AND ANGELES CITY, FIFTH JUDICIAL DISTRICT, BRANCH IV, AND ANGEL…

Santos versus De la Fuente Samson

The Case

This is a special civil action of certiorari and prohibition with preliminary injunction, brought by Amparo Santos against the Judge of the Court of First Instance of Pampanga and Angeles City, Fifth Judicial District, Branch Four, and against Angel A. Reyes, Incorporated. The petitioner asks the Supreme Court to annul the order denying her motion to dismiss the complaint in the unlawful detainer case filed against her, as well as the order declaring her in default, and to restrain the respondent Judge from further trying the case. The case matters because it fixes two working rules every litigator must know: a party declared in default loses standing in court until the default order is set aside, and yet courts must be liberal in lifting a default where the failure to answer is excusable and a meritorious defense exists.

Procedural History

Angel A. Reyes, Incorporated filed a complaint for unlawful detainer against Amparo Santos with the Court of First Instance of Pampanga. Summons and a copy of the complaint were served on her, but she filed no answer within the reglementary period. Upon motion of the plaintiff, the trial court declared her in default and directed the plaintiff to present its evidence. Receiving that order, she filed a motion to dismiss the complaint on the ground that the Court of First Instance had no jurisdiction over an action for unlawful detainer, which belongs to the municipal court. The respondent Judge denied the motion to dismiss, holding that the case was principally one for annulment or cancellation of a contract of sale of real property. She then filed a motion to lift the order of default, which the respondent Judge also denied. From these denials she came to the Supreme Court by petition for certiorari and prohibition, and the Court issued a temporary restraining order against further proceedings below.

Facts

On January 17, 1976, Angel A. Reyes, Incorporated, a domestic corporation, filed a complaint for unlawful detainer against Amparo Santos with the Court of First Instance of Pampanga. Summons and a copy of the complaint were served upon her on August 16, 1976, but she failed to file the required answer within the reglementary period. Upon the plaintiff's motion, she was declared in default on January 12, 1977, and the plaintiff was directed to present its evidence.

Upon receipt of the order of default, Amparo Santos filed a motion to dismiss the complaint, arguing that the Court of First Instance had no jurisdiction over an action for unlawful detainer, which is within the competence of the municipal court. The plaintiff opposed, claiming that she had lost her personality to ask for dismissal because she had been declared in default, and that in any event the complaint, though entitled unlawful detainer, was really for cancellation and annulment of a contract of sale of real property, which is within the jurisdiction of the court of first instance. The respondent Judge denied the motion to dismiss for lack of merit.

Amparo Santos then filed a motion to lift the order of default, alleging fraud, mistake, or excusable negligence. She said that after receiving the summons she went to see Angel A. Reyes at his office to confer about the case; that he assured her that if she updated her accounts on the lots he would not pursue the case; that relying on this, she continued to make payments, which the plaintiff received; and that she believed no answer was necessary until she received the order of default. She claimed a good and meritorious defense: she had been faithfully paying her monthly installments for more than twelve years and had already paid 96,000 pesos although the contract price was only 57,500 pesos, and the unilateral cancellation of the contracts, the forfeiture of payments, and the filing of the complaint were repugnant to public policy. The respondent Judge denied the motion, holding that her negligence was not excusable since the motion was filed four months after she received the order of default, and that she had wantonly disregarded established procedure.

Issues

• Whether or not the respondent Judge abused her discretion in denying the petitioner's motion to dismiss the complaint, considering that the petitioner had already been declared in default.
• Whether or not the respondent Judge erred in denying the petitioner's motion to lift the order of default.

Applicable Provisions

Section 3, Rule 18 of the Rules of Court provides:

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.

This is the provision the Court applies in deciding whether the motion to lift the order of default was timely and sufficient.

Ruling

On the first issue, the Court held that the respondent Judge did not abuse her discretion in denying the motion to dismiss. The record showed that the petitioner filed the motion to dismiss immediately after receiving the order of default, without first filing a motion to set aside that order. The Court stated the rule plainly: a party declared in default loses his standing in court and is not entitled to any notice of subsequent proceeding nor to take part in the trial until he files a motion to set aside the default order. The petitioner therefore had no right to file the motion to dismiss. Consequently, the question of whether the action was purely possessory and thus within the exclusive jurisdiction of the Angeles City Court, not having been properly raised below, became academic.

On the second issue, however, the Court found that the respondent Judge erred in denying the motion to lift the order of default. Upon receipt of the summons, the petitioner immediately went to see Angel A. Reyes, president and executive officer of the respondent corporation, who assured her that if she updated her accounts he would not pursue the case. She paid her accrued obligations and filed no answer, and was surprised to receive the order of default, after which she immediately took steps to vacate it. Under these circumstances, her failure to answer within the reglementary period was excusable. She also appeared to have a good and meritorious defense, having religiously paid her account for twelve years and paid 96,000 pesos although the total contract price for the two lots was only 57,500 pesos, which, if proven, may defeat the plaintiff's claim. And while the motion was filed four months after the declaration of default, no judgment had yet been rendered, so the motion was filed within the period prescribed by the Rules. The Court held that the respondent Judge should have applied the Rules liberally and set aside the order of default, because a default judgment is frowned upon, and unless it clearly appears that reopening the case is intended for delay, trial courts should give both parties every chance to fight their case fairly and in the open, without resort to technicality.

Doctrine

First, a party declared in default loses standing in court and is not entitled to notice of subsequent proceedings nor to take part in the trial until he files a motion to set aside the order of default; any motion to dismiss filed before that is improperly filed, and the jurisdictional question raised therein becomes academic.

Second, under Section 3, Rule 18 of the Rules of Court, a party declared in default may, at any time after discovery of the default and before judgment, file a motion under oath to set aside the order upon a proper showing that the failure to answer was due to fraud, accident, mistake, or excusable neglect, and that he has a meritorious defense. Both elements must appear, and the motion is timely so long as no judgment has been rendered.

Third, courts should be liberal in setting aside orders of default, for a default judgment is frowned upon; unless it clearly appears that reopening the case is intended for delay, trial courts should give both parties every chance to fight their case fairly and in the open, without resort to technicality.

Disposition

The Court granted the writ, annulled and set aside the order of default and all proceedings subsequent thereto, and directed Amparo Santos to file an answer to the complaint within fifteen days from notice, with costs against Angel A. Reyes, Incorporated.

Remember This

Memorize this line: a party declared in default loses standing in court until the default order is set aside, but courts must be liberal in lifting a default where the failure to answer is excusable and a meritorious defense is shown. Examiners use this case on default procedure, on the requisites for lifting an order of default under Rule 18, and on the policy against default judgments and technicality.