ANTONIO GARCIA, PETITIONER, VS. THE COURT OF APPEALS (FIFTH DIVISION) AND SPS. WILLIAM UY AND MA. JAJORIE UY, RESPONDENTS.

The issue raised in this petition for review on certiorari
is not new. It is whether or not a
defendant declared in default regains ipso facto his standing in
court as to be entitled to notice of proceedings subsequent to a final judgment
or order rendered against him. More
precisely, is a party who has been declared in default entitled to notice of a
motion for execution pending appeal of a judgment by default?

The undisputed facts, as culled from the decision of respondent
court in CA-G.R. No. 12665, dated April 22, 1988,^[1] are
as follows:

“In May 1987, petitioner Antonio Garcia filed an action for
damages against private respondent spouses, William and Ma. Jajorie Uy, before
the RTC of Pasig, for padlocking the commercial stalls rented by petitioner
from private respondents at Virra Mall Shopping Center, Greenhills, San Juan.

For failure of private respondents to file their answer within the
reglementary period, petitioner moved to declare the former in default and for
reception of his evidence ex-parte. In
an order dated 7 July 1987, the trial court granted petitioner’s motion and set
the reception of evidence on 9 July 1987. A copy of the order was served on and received by private respondents on
14 July 1987.

On 1 July 1987, private respondents filed an appearance with motion
for extension of time to file answer from said date. The trial court denied the motion for having been filed out of
time.

In the meantime, petitioner presented his evidence ex-parte. On 10 August 1987, the trial court issued a
judgment of default against private respondents, a copy of which was received
by them on 18 August 1987. On 11 August
1987, petitioner filed an ex-parte motion for execution pending appeal which
the trial court granted on 21 August 1987 and accordingly issued the writ upon
petitioner’s filing of a bond in the amount of P520,000.00.

Whereupon, private respondents appealed to respondent Court of
Appeals, challenging the validity of the writ of execution because it was
granted without proper notice to them and without hearing.

On 22 April 1988, respondent Court of Appeals rendered a decision
granting private respondents’ petition for certiorari and setting aside
the order of the trial court dated 21 August 1987 granting the writ of
execution. A motion to reconsider the
above decision was denied on 16 June 1988. Consequently, this petition.”

Respondent court’s decision holding that after the judgment by
default was rendered, the defendants (private respondent herein) automatically
regained their standing and were entitled to notice of proceedings subsequent to
the final judgment by default, is here challenged by petitioner. Citing Section 2, Rule 18 of the Rules of
Court which provides that a party declared in default is not entitled to notice
of subsequent proceedings nor to take part in the trial, as well as Section 9,
Rule 13 which states that the party in default is entitled to notice only of
papers referring to substantially amended or supplemental pleadings and final
orders or judgments, or in cases where the defaulting party files a motion to
set aside the order of default, petitioner contends that nowhere in the Rules
does it appear that a party who defaults shall automatically regain his lost
standing and right to notice after rendition of a judgment by default.

Petitioner also assigns as error the finding of the respondent
court that the ex parte motion for execution pending appeal was
inappropriate and that the order granting the same without hearing was rendered
without jurisdiction. Petitioner claims
that Section 2, Rule 39 requiring notice to the adverse party is mandatory only
in cases where the defendant has not been declared in default.

We find the petition devoid of merit.

The issue at bar was squarely resolved in the case of S.C.
Johnson & Son, Inc. vs. Court of Appeals, et al.^[2]

The facts in the aforesaid case are similar to those in the case
at bar. In S.C. Johnson,
petitioner therein (S.C. Johnson) was declared in default for its failure to
file a responsive pleading within the reglementary period. Therein private respondent (as plaintiff)
was allowed to present his evidence ex parte. Thereafter, a judgment by default was
rendered by the trial court in favor of the plaintiff. After the rendition of the judgment, the
plaintiff filed an ex parte motion to execute the
judgment pending appeal, which motion was granted by the trial court. S.C. Johnson questioned before the Court of
Appeals the failure of therein plaintiff to notify him of the motion for
execution pending appeal and the trial court’s ex–parte
proceedings in granting said motion.

The Court of Appeals in the S.C. Johnson case, dismissed
S.C. Johnson’s petition for lack of merit. Hence, S.C. Johnson appealed to this Court raising the same issue raised
in the instant petition.

This Court in the S.C. Johnson case categorically answered
in the affirmative the question posed at the start of this decision. Thus:

“We hold that a party declared in default is entitled to
notice of the motion for execution pending appeal. This interpretation is consistent with the nature and effects of
being in default as well as with what has been jurispru­dentially laid down
with respect to executions pending appeal.”^[3]

Petitioner’s argument that notice to the adverse party becomes
mandatory only in case the defendant has not been declared in default utterly
fails in the light of the ruling in the above-stated case, which states:

“The remedy of the defaulted party is to file a motion to set
aside the order of default if no judgment has been rendered yet. If there is already judgment, the
defendant’s recourse is to file a motion for new trial, or a petition for
relief from judgment, or appeal the judgment, or file a special civil action
for certiorari. This is the
reason why a defaulted defendant is entitled to notice of final orders or
judgments.

Consistent with this right to notice of final order or judgment is
the right to notice of the motion for execution pending appeal of the default
judgment. Without such notice, the
various recourses available to the defaulted party after judgment would be
rendered illusory. For once a judgment
has been executed, restitution, although provided for in a case of reversal, is
oftentimes incomplete and unsatisfactory as damages may arise which cannot be
fully compensated.”^[4]

Petitioner’s citation of Section 2, Rule 39 of the Rules of Court
to support his aforesaid argument cannot aid his cause. We again cite the pertinent ruling in the S.C.
Johnson case:

“Moreover, in the same case of Aguilos vs. Barrios, this Court
held that ‘a party has a right to rely upon the rules of court and to expect
that she would be given notice as required thereby. As being in default does not imply a waiver of rights, as
aforesaid, the defaulted party has the right to expect compliance with the
requisites for executing a judgment pending appeal under Section 2 of Rule 39,
thus:

‘Sec. 2. Execution pending
appeal. – On motion of the prevailing party with notice to the adverse party
the court may, in its discretion, order execution to issue even before the
expiration of the time to appeal, upon good reasons to be stated in a special
order. If a record on appeal is filed
thereafter, the motion and the special order shall be included therein.’

More so when we consider that as early as the case of Monteverde
vs. Jaranilla, involving defaulted defendants, this Court has ruled ‘that the
court abuses its discretion in ordering the execution of a judgment from which
an appeal is pending, without previous notice to the adverse party and there
being no special ground therefor.’ This doctrine was restated in the subsequent
case of Aguilos vs. Barrios where we emphatically said: ‘The requirement about motion by the
prevailing party and notice to the adverse party, which was not complied with
in the instant case, is mandatory and is precisely an innovation introduced in
the new rules to remove the doubt suggested in Gamay vs. Gutierrez David and to
restate the doctrine laid down in Monteverde vs. Jaranilla.”^[5]

As for private respondents’ (defendant’s) loss of standing in
court, by reason of having been declared in default, again we rule that a party
in default loses the right to present his defense and examine or cross-examine
witnesses. It does not mean that being
declared in default, and thereby losing one’s standing, constitutes a waiver of
all rights; what is waived only is the right to be heard and to present
evidence during the trial while default prevails. A party in default is still entitled to notice of final judgments
and orders and proceedings taken subsequent thereto.

WHEREFORE, the petition is DENIED. The decision appealed from is hereby
AFFIRMED with costs against the petitioner.

SO ORDERED.

Narvasa, C.J., (Chairman), and
Regalado, JJ., concur.

Paras, J., No part. Wife
participated in CA dec.

Nocon, J., on leave.

^[1]
Penned by Justice Conrado T. Limcaoco, with Justices Vicente V. Mendoza and
Gloria C. Paras concurring.

^[2]
G.R. No. 54040, August 14, 1990, 188 SCRA 579.

^[3]
p. 582, ibid.

^[4]
pp. 583-584, ibid.

^[5]
pp. 584-585, ibid.