CONSTRUCTION SERVICES OF AUSTRALIA-PHILIPPINES, INC., MELCHOR D. ELEGADO, ISIDRO D. CARINO AND GERRY DE VERA, PETITIONERS, VS. AMADO P. PERALTA, RESPONDENT.

This is a petition for review on certiorari under Rule 45
seeking to set aside the decision of the Court of Appeals* in CA-G.R.
CV No. 04844 entitled Amado P. Peralta vs.
Construction Services of Australia-Philippines, Inc. and Melchor
D. Elegado which affirmed in toto the decision of the Regional Trial Court, Alaminos, Pangasinan, Branch 54**
in Civil Case No. A-1439 entitled “Amado P. Peralta
vs. Construction Services of Australia-Philippines, Inc. et al.” for collection
of a sum of money and damages
with prayer for preliminary injunction.

The undisputed facts are as follows:

On August 2, 1983,
private respondent Amado P. Peralta filed a complaint
for collection of a sum of money and damages with prayer for preliminary
injunction alleging, among others, that petitioner Construction Services of
Australia-Philippines, Inc. (Consaphil for brevity)
undertook the construction of the Bolinao Dendro Thermal Project in Bolinao,
Pangasinan. 
Said Consaphil through Melchor
D. Elegado, Ely Conde and
Gerry Y. de Vera purchased on account, from Bolinao
Construction Supply, owned and managed by private respondent, various
construction materials and supplies amounting to P252,520.39.  Upon completion of the project, the said account was left unsettled.  Repeated demands for payment were made by
private respondent upon petitioner Consaphil but to
no avail.  Consaphil
through its Assistant Treasurer wrote private respondent confirming and
assuring payment of its account. 
Subsequently, Consaphil paid only the sum of
P50,504.08 and left the balance unpaid.  Private respondent still made repeated
demands for payment of the remaining account but petitioner Consaphil
failed to pay the same.

Summonses were served to petitioners Consaphil,
Melchor Elegado, Isidro D. Carino and Gerry de Vera but not at first, on Ely Conde who was no longer connected with petitioner
corporation.

On October
4, 1983 an alias
summons was served upon Ely Conde, who thereafter,
filed his answer with the trial court.

On November
11, 1983, private
respondent filed a motion to declare petitioners in default for failure to file
their answer.

On January
12, 1984, Ely Conde filed a motion to dismiss the complaint, insofar as he was concerned, on the ground that he has
resigned from petitioner corporation and that the
account due to the private respondent is a corporate obligation for which Ely Conde may
not be held liable as he was no longer
connected with petitioner corporation.

On January 17, 1984, the
trial court issued an order dismissing the complaint insofar as Ely Conde was
concerned since no objection was filed by private respondent and further
declaring petitioner Consaphil, Isidro D. Carino, Melchor D. Elegado, and Gerry de Vera in default and allowing private
respondent to present his evidence ex-parte, on
January 23, 1984, with which order the latter complied (CA decision, pp. 21-22,
Rollo)

On February
9, 1984, counsel for
petitioners entered its formal appearance.

On February
15, 1984,
petitioners filed a motion to dismiss
grounded on lack of jurisdiction over their persons, the summons not having
been served upon them validly.  (p. 82, Ibid.)

On February
28, 1984, the trial
court issued an order stating that it could not entertain the motion to dismiss
filed by petitioners for they no longer had any personality before the trial
court, having been declared in default and having failed to file a motion to
set aside the order of default.

Petitioners filed a
motion for reconsideration of the said order but the same was likewise denied
on May 9, 1984.  (p. 22, Ibid.)

On July 11,
1984, the court a
quo rendered a decision in favor of private respondent, the decretal portion of which reads:

“WHEREFORE, in view of all the foregoing, judgment by Default is
hereby rendered in favor of plaintiff and against defendants Construction
Services of Australia-Philippines, Inc. (Consaphil),
Isidro D. Carino, Melchor D. Elegado and Gerry de Vera, as follows:

1.  Ordering defendants Construction Services of
Australia-Philippines, Inc. (Consaphil), Isidro D. Carino, Melchor D. Elegado and Gerry de Vera, jointly and severally to pay the
plaintiff Amado P. Peralta the amount of
P202,916.31 plus interest computed at 12% per annum from the time of demand of
December 20, 1982 till it is fully paid;

2.  Ordering defendants Consaphil
Isidro D. Carino, Melchor
D. Elegado and Gerry de Vera jointly and severally to
pay plaintiff reasonable attorney’s fees of P5,000.00;
and

3.  Ordering defendants Consaphil
Isidro D. Carino, Melchor
D. Elegado and Gerry de Vera to jointly and severally
pay to plaintiff litigation expenses of P5,000.00
and to pay the costs.

SO ORDERED.” (pp. 20-21, Ibid.)

On appeal, the Court of
Appeals affirmed the trial court’s decision in toto on January 20, 1988.  A
motion to reconsider the same was denied on March 8, 1988.  (pp. 26-29, Ibid.)

Hence,
the instant petition.

Private respondent filed
his comment on the petition on June 8, 1988 (p. 39, Ibid.) in compliance with the
resolution of April 18, 1988 (p. 38, Ibid.).  Petitioners filed a reply to said comment on August
15, 1988 (p. 43, Ibid.)
in compliance with the resolution of July 6, 1988 (p. 42, Ibid.).  In the resolution of August
31, 1988 the Court
gave due course to the petition and required both parties to submit
simultaneous memoranda within thirty (30) days from notice (p. 50, Ibid.).  Private respondent filed his memorandum on December
19, 1988 (p. 60, Ibid.)
while petitioners filed their memorandum on January 10, 1989 (p. 77, Ibid.)

Petitioners raise the
following assignments of errors:

1.  The lower court erred
in not entertaining the motion to dismiss the complaint alleging lack of
jurisdiction of the lower court over the persons of the defendant-appellants
which motion was supported by affidavits and in requiring the
defendant-appellants to lift the order of default entered against them first
before the lower court entertains and rules on the motion to dismiss the
complaint.

2.  The lower court erred
in making the finding of fact that the defendant-appellants
ordered/requisitioned and received the goods described in the sales invoices of
the plaintiff-appellee marked as Exhibits
“A-1” up to “A-12” wherein no signature of any of the
defendants or their respective representatives appear on any of the sales
invoices either in agreement thereto or in receipt thereof and despite the
failure of plaintiff-appellee to produce a single
purchase order or an acknowledgment receipt thereof of the
defendant-appellants.

3.  The lower court erred
in making a finding of fact that the assistant treasurer of the
defendant-appellant Consaphil acknowledged and
assumed payment for defendant-appellant Consaphil of
the purchase and receipt of the goods described in the sales invoices marked as
Exhibits “A”, “A-1″ to “A-12”, notwithstanding the
letter of the defendant-appellant’s assistant treasurer was premised on
defendant-appellant Consaphil’s verification and
express acknowledgment of the plaintiff-appellee’s
claim.

4.  The lower court awards
of litigation expenses and attorney’s fees in favor of the plaintiff-appellee are not supported by fact and by law.  (pp. 7-8, Ibid.)

The petition is devoid of
merit and deserves scant consideration of the Court.

Petitioners were declared
in default for failure to file their answer within the period provided by the
Rules.  Under the Rules of Court there
are several remedies available to a defaulted party, namely:  (a) The defendant in default may, at anytime
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, Rule 38; and (d) He may also
appeal provided the decision is not yet final, from the judgment rendered
against him as contrary to the evidence or to the law, even if no motion to set
aside the order of default had been presented by him (Tiburcio
vs. Judge Castro G.R. No. L-58997, May
28, 1988).

Since petitioners failed
to file a motion to set aside the order of default prior to rendition of the
judgment and instead they opted to file a motion to dismiss which is not the
proper pleading, respondent court correctly ruled that “petitioners have
lost their standing in court or considered out of court and consequently cannot
appear in court” (p. 23, Rollo) and had no right
to expect that said motion would be acted upon by the court.  Loss of standing in court is the consequence
of an order of default.  Thus, a party declared in default is considered out of court and cannot appear
therein, adduce evidence, and be heard and for that reason he is not entitled
to notice (Rule 18, section 2).  However,
“loss of standing” must be understood to mean only the forfeiture of
one’s rights as a party litigant, contestant, or legal
adversary.  A party in default loses his right
to present his defense, control the proceedings, and examine or cross examine
witnesses.  He has no right to expect
that his pleadings would be acted upon by the court
nor may he object to or refute evidence or motions filed against him.  (Cavili
vs. Florendo, 154 SCRA 616 [1987]).

Where summons was in fact
received by the petitioners, their argument that the sheriff should have tried
first to serve summons to each of them individually by personal service
before resorting to substituted service of summons at petitioner corporation’s
office is not meritorious (Boticano vs. Chu, Jr., supra).

Petitioners’ Assistant Treasurer made representations admitting
the corporation’s liability and confirming a payment schedule by which it could
pay-off Consaphil’s obligation to private respondent
(pp. 24-25, Rollo), in response to the latter’s
letters of demand.  Petitioners cannot
now make a turn
around and deny having ordered/requisitioned and received the goods the price
of which it had already acknowledged to pay, and in fact the first payment in the sum of P50,504.08 was given on April
13, 1983 (p. 25, Rollo).

By petitioners’ conduct, admissions and representations, they are
deemed estopped to question any further the contract
of sale entered into between them and from which they benefited.  A party will not be allowed to make a mockery
of justice by taking inconsistent positions. 
Doctrine of estoppel bars a party
from trifling with the courts (Depositario vs. Hervias, 121 SCRA 756 [1983]).  Through estoppel an
admission or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying thereon
(Article 1431, Civil Code).

The manifestly grave and evident bad faith displayed by
petitioners in refusing to satisfy private respondent’s plainly valid, just and
demandable claim justifies the award of attorney’s
fees and litigation expenses under Article 2208 (5) Civil Code.

PREMISES CONSIDERED, the petition is DENIED for lack of merit, and the decision appealed from is AFFIRMED.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, and Regalado,
JJ., concur.

Sarmiento, J., on leave.

* Penned by
Justice Venancio D. Aldecoa,
Jr., with the concurrence of Justices Oscar R. Victoriano
and Ricardo P. Tensuan.

** Penned by
Judge Ruben Ayson.