Republic v. Hidalgo
REITERATIONFacts
The Antecedents: Tarcila Laperal Mendoza (Mendoza) filed a suit for reconveyance and declaration of nullity of a deed of sale and title against the Republic of the Philippines, the Register of Deeds of Manila, and Atty. Fidel Vivar, concerning a 4,924.60-square meter lot (Arlegui property) located in San Miguel, Manila. Mendoza alleged that she was the owner of the property, which was forcibly dispossessed by armed men representing themselves as members of the Presidential Security Group (PSG) during the first week of July 1975. She claimed to have been compelled to surrender her owner's duplicate copy of TCT No. 118527, and that the Republic subsequently issued TCT No. 118911 based on a fictitious deed of sale dated July 15, 1975. Mendoza sought the cancellation of TCT No. 118911, reinstatement of her TCT No. 118527, and payment of monthly compensation for the use and occupancy of the property, attorney's fees, and other equitable reliefs. Procedural History: The initial complaint was dismissed by the RTC, Branch 35, but the Court of Appeals (CA) reversed this dismissal. The Supreme Court sustained the CA's reversal. The case was re-raffled to RTC, Branch 37, presided by respondent Judge Hidalgo. Mendoza filed a third amended complaint, which the RTC admitted. The Republic was ordered to file an answer within five days. The Republic sought extensions to file its answer, but these were denied. On July 7, 2003, the RTC declared the Republic in default and allowed Mendoza to present evidence ex-parte. The RTC rendered a judgment by default on August 27, 2003, ordering the Republic to pay Mendoza P143,600,000.00 as just compensation, P1,480,627,688.00 as rental for the use of the property, and attorney's fees. The RTC denied the Republic's motion for new trial and motion for reconsideration. Subsequently, the RTC issued a certificate of finality, denied the Republic's notice of appeal, and granted Mendoza's motion for execution, leading to the issuance of a writ of execution. The Petition: The Republic filed a petition for certiorari and prohibition, seeking to nullify the RTC's order declaring it in default, the judgment by default, and subsequent orders and processes, alleging grave abuse of discretion amounting to lack or excess of jurisdiction. The Republic argued that it was denied procedural due process and that the judgment awarded a staggering amount without its defense being heard. The Republic also questioned the denial of its motion for new trial and the denial of its appeal.
Issue(s)
Whether the respondent judge committed grave abuse of discretion amounting to lack or excess of jurisdiction in declaring the Republic in default and rendering a judgment by default. Whether the respondent judge committed grave abuse of discretion in denying the Republic's motion for new trial and motion for reconsideration. Whether the respondent judge committed grave abuse of discretion in denying the Republic's notice of appeal and issuing a writ of execution. Whether the monetary awards granted in the default judgment were excessive and beyond what was alleged and proved in the complaint.
Ruling
The Supreme Court issued a writ of certiorari, nullifying portions of the RTC's decision and subsequent orders. The Court affirmed the declaration of the deed of sale as fictitious and void, the nullification of TCT No. 118911, and the order to reinstate Mendoza's TCT No. 118527. However, the Court modified the monetary awards, reducing the rental compensation and nullifying the excessive award for rental use, interest, and opportunity cost. The Court also nullified the award of costs of suit against the Republic and the writ of execution against government funds. The Republic, through the Office of the President, was strongly enjoined to make appropriate budgetary arrangements to pay Mendoza the amount adjudged due.
Ratio Decidendi
On the declaration of default and judgment by default: The Court held that the respondent judge did not commit grave abuse of discretion in declaring the Republic in default and rendering a judgment by default. Section 3, Rule 9 of the Rules of Court allows the court to declare a defending party in default upon motion of the claiming party and proof of failure to answer within the time allowed. While the policy is to try cases on their merits, the act of rendering a default judgment after a proper order of default is within the court's jurisdiction. The defaulting defendant is deemed to have waived their right to be heard, and the failure to present a defense is a penalty for not joining issue without justification. The Court emphasized that "grave abuse of discretion" connotes capricious, despotic, oppressive, or whimsical exercise of judgment equivalent to lack of jurisdiction, which was not present here. On the denial of the motion for new trial and reconsideration: The Court found no merit in the Republic's contention that the denial of its motion for new trial constituted grave abuse of discretion. The grounds cited by the Republic, such as the negligence of a former handling solicitor and the meritorious nature of the defense, are not recognized grounds for a new trial under Section 1, Rule 37 of the Rules of Court. The Court noted the trial court's observation that multiple signatures on the pleadings indicated accountability extended to higher officials. Therefore, there was no cogent reason to disturb the trial court's denial of these motions. On the denial of the notice of appeal and issuance of the writ of execution: The Court found no arbitrariness in the denial of the Republic's notice of appeal. The Republic received the RTC decision on August 29, 2003, giving it until September 13, 2003, to appeal. Its motion for new trial was filed on September 15, 2003, and denied on October 7, 2003. The Republic received the denial order on October 9, 2003, leaving it with only one day to file an appeal. Instead, it filed a motion for reconsideration, which was deemed a "pro forma motion" and did not interrupt the reglementary period. Consequently, the notice of appeal filed on November 27, 2003, was filed out of time, rendering the judgment final and executory. The issuance of the writ of execution was a logical consequence of the finality of the judgment. On the monetary awards: The Court found the monetary awards to be erroneous and constituting grave abuse of discretion. While the Republic was liable for just compensation and rental use, the trial court awarded amounts far exceeding what was alleged and proved. The complaint prayed for P500,000.00 per month as rental, but the trial court awarded over P1.48 billion for rental, interest, and opportunity cost, on top of P143.6 million for acquisition cost. This award was deemed excessive and beyond the scope of Rule 9, Section 3(d) of the Rules of Court, which limits relief in default judgments to what is alleged and proved. The Court reduced the monthly rental to P20,000.00, considering the property's size, assessed value, and the circumstances during the martial law years. The award of attorney's fees was affirmed but based on the reduced amount. The assessment of costs of suit against the Republic was nullified, as costs are generally not awarded against the State unless provided by law. The writ of execution against government funds was also nullified, as government funds and properties cannot be garnished or seized to satisfy judgments.
Main Doctrine
A writ of certiorari may be issued to nullify a judgment by default if it was rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. However, the mere issuance of a default order and judgment, when the defendant fails to file a responsive pleading within the reglementary period, does not automatically constitute grave abuse of discretion, as the defaulting defendant is deemed to have waived their right to be heard. The award of damages in a default judgment must still be in accordance with the allegations and proofs presented, and cannot exceed what is prayed for in the complaint.