Spouses Ampeloquio v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The underlying dispute originated from a loan obtained by Spouses Rudy S. Ampeloquio, Sr. and Lagrimas Obnamia from Philippine National Bank (PNB). Allegedly due to non-payment, PNB initiated an extrajudicial foreclosure proceeding on two parcels of land owned by the petitioners, which served as collateral for the loan. PNB emerged as the highest bidder at the auction sale, and upon expiration of the redemption period, the titles to the properties were transferred to PNB. 2. Procedural History: The petitioners filed a complaint with the Regional Trial Court (RTC) of Lucena City, Branch 57, seeking the annulment of the mortgage contract, the extrajudicial foreclosure, and the cancellation of the Transfer Certificates of Title issued to PNB. PNB filed a motion to dismiss, which the RTC denied. PNB subsequently failed to file an answer within the reglementary period. The petitioners moved to declare PNB in default, but the RTC denied this motion, citing the need for a full-blown trial and a liberal application of the rules. The petitioners' motion for reconsideration was also denied. They then elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65. The CA dismissed the petition, affirming the RTC's decision. 3. The Petition: The petitioners are now before the Supreme Court on a petition for certiorari under Rule 65 of the Rules of Court, seeking to set aside the decision of the Court of Appeals. They argue that the CA erred in affirming the RTC's decision and in not finding PNB in default, given PNB's failure to file an answer within the prescribed period. The petitioners contend that PNB's reasons for the delay were inexcusable and that the liberal construction of the rules does not permit such non-compliance. They assert that PNB had no meritorious defense and that the RTC should have declared PNB in default. The core issue is whether the appellate court committed a grave abuse of discretion in upholding the trial court's denial of the motion to declare PNB in default.
Issue(s)
Whether the respondent Court of Appeals erred in affirming the decision of the trial court and not finding the respondent in default despite its failure to file an answer within the reglementary period provided by law. Whether the trial court committed a grave abuse of discretion in denying the motion to declare respondent PNB in default, and the procedural propriety of the petition for certiorari.
Ruling
The petition is DENIED for lack of merit. The Resolution of the Court of Appeals dated February 14, 1996, and its Resolution dated March 14, 1996, are affirmed.
Ratio Decidendi
On the issue of whether the respondent Court of Appeals erred in affirming the decision of the trial court and not finding the respondent in default despite its failure to file an answer within the reglementary period provided by law: The Supreme Court held that judgments by default are generally looked upon with disfavor because they do not pretend to be based upon the merits of the controversy and may amount to serious injustice. The Court emphasized that a liberal construction of the Rules of Court is allowed to promote speedy, just, and inexpensive determination of every action. The trial court has the discretion to permit the filing of an answer even beyond the reglementary period, provided there is justification and no intent to delay the case. In this instance, the trial court found that PNB had a meritorious defense and that the case required a full-blown trial, thus warranting the denial of the motion to declare PNB in default. The Court found the failure to plead on time to be excusable, noting that the counsel who was served the order had limited participation and another counsel was handling the case. The appellate court did not err in upholding this discretion. On the issue of whether the trial court committed a grave abuse of discretion in denying the motion to declare respondent PNB in default, and the procedural propriety of the petition for certiorari: The Supreme Court reiterated that a petition for certiorari under Rule 65 is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. It is not a substitute for appeal. Any error imputable to the trial court in not declaring a defendant in default can be reviewed in an appeal from the final decision on the merits of the case. Allowing every error of the trial court to be a subject of certiorari would lead to endless litigation and clog appellate dockets. The Court found that the petitioners questioned an interlocutory order, which is generally not reviewable by certiorari, especially when the proper remedy of appeal from the final judgment is available. Therefore, the Court of Appeals did not err in dismissing the petition.
Main Doctrine
A petition for certiorari under Rule 65 is not a substitute for appeal and is designed for the correction of errors of jurisdiction, not errors of judgment. Errors imputable to the trial court in not declaring a defendant in default can be reviewed in an appeal from the final decision on the merits.