BHAGWAN RAMNANI, PETITIONER, VS. COURT OF APPEALS, HON. BUENAVENTURA J. GUERRERO, AS REGIONAL TRIAL COURT JUDGE OF MAKATI, METRO MANILA, BRANCH 133, SPOUSES CENON G. DIZON AND J…

On March 13, 1990, the spouses Juliette Dizon and Cenen Dizon
filed a complaint in the Regional Trial Court of Makati against the spouses
Josephine Anne Ramnani and Bhagwan Ramnani for the collection of a sum of money representing the
alleged unremitted value of jewelry received by Josephine from Juliette on
consignment basis.^[1]

Josephine Ramnani submitted an answer with counterclaim^[2]
in which she alleged inter alia:

(a) That although she did
receive pieces of jewelry worth P934,347.00 from Dizon, the latter had
likewise received from her jewelries worth P1,671,842.00, including cash and unpaid checks in the
amount of P159,742.50;

(b) That she paid Dizon P50,000; and

(c) That Dizon still owes her P787,495.00;

The trial court set the case for pre-trial on August 14, 1990,^[3]
but the Ramnanis did not appear. Consequently, they were declared in default.^[4] On
September 12, 1990, they filed a motion to lift the order of default, but this
was denied on November 20, 1990.^[5]

On October 26, 1990, conformably to the default order, evidence
of the Dizon spouses was received ex parte. On January 28, 1991, Judge Buenaventura J.
Guerrero rendered judgment against the Ramnanis, holding them liable to the
plaintiffs in the amounts of 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.^[6]

The Ramnanis filed a motion
for reconsideration on the ground that a
“personal obligation contracted by the wife without the consent of
the husband (was) being made enforceable against the 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.”^[7]
The motion was denied on April 11, 1991.^[8]

On April 29, 1991, Bhagwan Ramnani filed a petition for certiorari
before the respondent Court of Appeals imputing error to the trial court:

(1) in denying the motion
to lift order declaring petitioner as in default despite a clear showing of a
meritorious defense;

(2) in not considering
petitioner’s reason for failure to attend pre-trial as excusable neglect.

In a decision
dated May 10, 1991, the Court of Appeals dismissed the petition, holding that certiorari
was not the proper remedy.^[9]

The respondent court said:

Petitioners alleged that the respondent court erred and committed
grave abuse of discretion and/or acted in excess of jurisdiction in assigning
its Branch Clerk of Court as the hearing commissioner for the purpose of the ex
parte reception of plaintiffs’ evidence (par. 19, Petition); that the
questioned Decision failed to specify whether defendants are solidarily or only
jointly liable (par. 20, Petition); and that petitioner had a valid and
meritorious defense (par. 21, Petition). These are matters that could very well be ventilated in an ordinary
appeal. It should be stressed that the
writ of certiorari issues for the correction of errors of
jurisdiction only or grave abuse of discretion amounting to lack or excess of
jurisdiction. It cannot be legally used
for any other purpose (Silverio vs. Court of Appeals, 141 SCRA 527). Mere error of judgment cannot be a proper
subject of the special civil action for certiorari (Zapata vs.
NLRC, 175 SCRA 56). Further, it is a
settled rule that certiorari cannot be made a substitute for and
perform the function of an appeal (People vs. Cuaresma, 172 SCRA 415).

The petitioner has come to this Court to challenge that
decision. He avers that the Court of Appeals erred in upholding the
refusal of the trial court to set aside the order of default and the default
judgment thereafter issued.

The basic rule is found in Section 2, Rule 20, viz:
“A party who fails to appear at a pre-trial conference may be non-suited
or considered as in default.”

As held in Lina v. Court of Appeals,^[10]
the remedies available to a defendant in the regional trial court who has been
declared in default are:

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)

b) If the judgment has
already been rendered when the defendant discovered the default, but before the
same has become final and executory, he may file a motion for new trial under
Section 1(a) of Rule 37;

c) If the defendant
discovered the default after the judgment has become final and executory, he
may file a petition for relief
under Section 2 of Rule 38; and

d) He may also appeal from
the judgment rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been presented by
him. (Sec. 2, Rule 41)

The first remedy was adopted by the petitioner but his motion to
lift the order of default was denied. According to the trial court:

Defendants’ non-appearance is in­excusable. It is unbelievable their former lawyer did
not explain to them the mandatory character of their appearance. Their invocation of the deteriorating health
of defendant Josephine necessitating her trip abroad for appropriate medical
treatment, is unavailing. There is no
medical certificate to attest such illness. Besides, at the time of the hearing of the motion on October 19, 1990,
counsel for the defendants admitted that Josephine had not yet arrived from the
States, despite their averment in their motion she would “only be back
late September or early October of this year.” This only indicates her
light regard of her duty to appear in court. Moreover, the other defendant Bhagwan Ramnani 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. After going over the pleadings of the
parties and the decision of the respondent court, we find that the motion to
lift the order of default was properly denied for non-compliance with this
requirement.

The defendants were less than conscientious in defending
themselves and protecting their rights before the trial court. They did not pay proper attention and
respect to its directive. The
petitioner has not shown that his and his wife’s failure to attend the
pre-trial hearing as required was due to excusable neglect, much less to fraud,
accident or mistake.

The petitioner insists, however, that they had a meritorious
defense which the trial court should not have disregarded. A meritorious defense is only one of the two
conditions. Even if it be assumed for
the sake of argument that the private respondents did owe Josephine Ramnani
P900,000, as alleged in the counterclaim, that circumstance alone is not
sufficient to justify the lifting of the order of default and the default judgment. The obvious reason is that a meritorious
defense must concur with the satisfactory reason for the non-appearance
of the defaulted party. There is no
such reason in this case.

The appropriate remedy is an ordinary appeal under Section 2 of
Rule 41 of the Rules of Court providing in part as follows:

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.

In questioning the dismissal of its petition by the respondent
court, the petitioner invokes the case of Pioneer Insurance and Surety
Corporation v. Hontanosas,^[11]
where the 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.

That case is not  applicable
to the present petition. 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.

As we held in Pure Foods Corporation v. NLRC:^[12]

It must emphatically be reiterated, since so often is it
overlooked, that 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.

Even on the supposition that certiorari was an
appropriate remedy, the petition would still fail because it has not been
clearly shown that the trial court committed grave abuse of discretion in
refusing to set aside the default order and the default judgment. We have held in many cases, including
Pahilanga v. Luna,^[13]
that:

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.

The above doctrine is applicable to the inexcusable neglect of
the herein petitioner and his wife to appear at the pre-trial hearing duly
scheduled and of which they were properly notified.

We must, however, moderate the award of damages by the trial
court as we feel it is rather
harsh upon the petitioner. In the
exercise of our discretion, we hereby reduce the moral damages to P20,000.00
and the attorney’s fees to P10,000.00, and
disallow the exemplary damages. The
rest of the award is approved.

WHEREFORE, the challenged decision is AFFIRMED as above
modified, with costs against the petitioner. It is so ordered.

SO ORDERED.

Griño-Aquino, Bellosillo, and Quiason,
JJ., concur.

^[1]
Rollo, p. 25.

^[2]
Ibid., pp. 8-9.

^[3]
Id., p. 26.

^[4]
id.

^[5]
id.

^[6]
id., p. 27.

^[7]
id., p. 11.

^[8]
id.

^[9]
id., pp. 24-29; Ordoñez-Benitez, J., ponente, with
Melo and Cui, JJ., concurring.

^[10]
135 SCRA 637.

^[11]
78 SCRA 447.

^[12]
171 SCRA 415.

^[13]
164 SCRA 725.