Barraza v. Campos
REITERATIONFacts
The Antecedents: Petitioners, Spouses George Barraza and Yolanda Gatchalian-Barraza, were sued by private respondent Renato Gatchalian for damages and injunction based on the alleged use of the trade name "Gatchalian—The House of Native Lechon and Restaurant." Summons and complaint were served on October 17, 1978. Procedural History: On October 30, 1978, petitioners filed an Urgent Ex-Parte Motion for a 15-day extension to file an Answer, which the Court granted in an Order dated November 2, 1978, extending the period until November 18, 1978. Instead of filing an Answer, petitioners filed a "Motion to Dismiss Complaint Together With Prayer for Preliminary Injunction" on November 17, 1978, citing lack of cause of action, improper venue, and pendency of another action. On November 29, 1978, private respondent filed an "Ex-Parte Motion to Declare Defendants in Default" for failure to file an Answer. On December 1, 1978, the Court declared petitioners in default and allowed the plaintiff to present evidence ex-parte. A decision was rendered on January 29, 1979, in favor of the plaintiff, ordering petitioners to desist from using the business name, and awarding damages and attorney's fees. Petitioners' motion for reconsideration was denied on March 9, 1979. A writ of execution was issued on April 2, 1979. Petitioners' subsequent "Urgent Omnibus Motion" to set aside the default order, proceedings, and decision was denied on April 25, 1979. The Petition: Petitioners filed a Petition for certiorari with a prayer for a writ of preliminary injunction to restrain the execution of the decision, seeking to annul all proceedings from the declaration of default and to have their motion to dismiss resolved or to be allowed to file their answer.
Issue(s)
Whether the Order of respondent Judge dated December 1, 1978, declaring petitioners in default, was issued without or in excess of jurisdiction and with grave abuse of discretion. Whether petitioners were denied procedural due process and their day in court.
Ruling
The Supreme Court granted the petition, reversed and set aside the order of default dated December 1, 1978, and the judgment of default rendered January 29, 1979, including the writ of execution and levy on the properties of petitioners. The records were ordered remanded to the lower court for the resolution of petitioners' Motion to Dismiss the Complaint.
Ratio Decidendi
On the issue of default and grave abuse of discretion: The Court held that the respondent judge acted without or in excess of jurisdiction and with grave abuse of discretion in declaring the petitioners in default. The petitioners were granted an extension of fifteen (15) days to file their answer, which extended the period to November 18, 1978. Instead of filing an answer, they filed a Motion to Dismiss on November 17, 1978, one day before the extended deadline. Filing a motion to dismiss within the time for pleading is a proper and ordinary method of testing the legal sufficiency of a complaint, as allowed under Section 1, Rule 16 of the Rules of Court. The Court emphasized that a motion to dismiss interrupts the period within which to file an answer, and this interruption applies to the extended period granted by the court, not just the original period. Therefore, the petitioners had not yet failed to file their answer within the reglementary period when they filed their motion to dismiss. On the denial of due process and day in court: The Court found that petitioners were denied their day in court and lacked procedural due process. The Rules of Court mandate that a motion to dismiss must be resolved before a defendant can be required to answer, or the period to answer is computed from the notice of denial or deferment of the motion. By declaring the petitioners in default without resolving their Motion to Dismiss, the respondent judge contravened these rules. This action prevented the petitioners from presenting their defenses and having their case heard on the merits. The Court cited Simeon Mandae v. Eustaquio Gumarad and Epang v. Ortin de Layco to support the principle that a motion to dismiss filed within the extended period for answer, if not resolved, renders a subsequent declaration of default and judgment thereon invalid for lack of due process.
Main Doctrine
A motion to dismiss, filed within the extended period granted by the court to file an answer, interrupts the period to plead, and a declaration of default without resolving the motion to dismiss constitutes grave abuse of discretion and a denial of due process.