Momarco Import v. Villamena
REITERATIONFacts
The Antecedents: Respondent Felicidad Villamena filed an action against petitioner Momarco Import Company, Inc. for the nullification of a deed of absolute sale and the transfer certificate of title issued in favor of Momarco, alleging falsification. Villamena claimed she is the owner of the property and that the Special Power of Attorney (SPA) purportedly executed by her deceased husband and the deed of absolute sale were forgeries. She asserted that she only executed a deed of real estate mortgage to secure a loan. Procedural History: Momarco failed to file an answer within the reglementary period. Villamena filed a motion to declare Momarco in default. Momarco filed its Answer with Counterclaim after the motion to declare it in default was filed. The Regional Trial Court (RTC) declared Momarco in default, struck its answer from the records, and allowed Villamena to present evidence ex parte. The RTC rendered a default judgment nullifying the deed of sale and title, and ordering the cancellation of Momarco's title and reinstatement of Villamena's title. Momarco appealed to the Court of Appeals (CA), arguing grave error in nullifying the deed and declaring it in default. The CA affirmed the RTC's decision. Momarco's motion for reconsideration was denied. Hence, this appeal. The Petition: Momarco assails the CA's affirmation of the default judgment, arguing that the RTC erred in ordering its answer stricken off, allowing ex parte reception of evidence, and rendering the default judgment.
Issue(s)
Whether the Court of Appeals gravely erred in upholding the default judgment of the RTC, and whether the RTC erred in ordering Momarco's answer stricken off the records. Whether the RTC erred in allowing the respondent to adduce her evidence ex parte. Whether the RTC erred in rendering the default judgment based on such evidence, considering the policy against default judgments and the petitioner's failure to seek timely relief.
Ruling
The appeal is denied. The decision of the Court of Appeals affirming the default judgment is affirmed. Momarco is ordered to pay the costs of suit.
Ratio Decidendi
On the propriety of the default judgment and the striking of the answer: The Court held that Momarco's claim of defective service of summons was unfounded because its counsel's formal entry of appearance constituted voluntary appearance, which is equivalent to service of summons and vests jurisdiction in the RTC. This voluntary appearance cured any defect in the original service. The Court reiterated that for a party to be declared in default, the claiming party must file a motion, the defending party must be notified, and proof of failure to answer must be presented. Momarco was declared in default after these requisites were met. The RTC appropriately struck Momarco's answer and declared it in default. The Court emphasized that Momarco's logical remedy was to move for the lifting of the default order before judgment, which it failed to do. Instead, Momarco insisted on its opposition to the motion to declare it in default, without substantiating its meritorious defense or explaining the circumstances preventing timely filing. The Court found Momarco's actions insincere and indicative of an intent to cause undue delay. On the reception of evidence ex parte: The Court found no error in the RTC allowing the respondent to present her evidence ex parte after Momarco was declared in default. This is a standard procedure under Section 3, Rule 9 of the Rules of Court. The RTC's decision to proceed with the reception of evidence ex parte was a consequence of Momarco's failure to timely file its answer and its subsequent failure to move for the lifting of the default order before judgment was rendered. The CA correctly noted that Momarco waited for a judgment to be rendered before challenging the default order, which was not the expeditious remedy available. On the policy against default judgments and the petitioner's failure to seek timely relief: While acknowledging the policy of the law to hear cases on the merits and that default judgments are generally disfavored, the Court stressed that this policy is not absolute. The Court cited Coombs v. Santos for the principle that default judgments are justified to induce defendants to join issue without unnecessary delay, and that a careful examination of grounds is necessary when a defendant asks for it to be set aside. The Court noted that Momarco failed to move for the lifting of the default order before judgment, which was the most expeditious remedy. Its failure to do so, coupled with its failure to substantiate its meritorious defense or explain the delay, demonstrated insincerity and a potential abuse of procedural rules. The Court concluded that Momarco had only itself to blame for the consequences of the default judgment.
Main Doctrine
A default judgment, while generally disfavored due to the policy of hearing cases on the merits, will not be vacated unless the defendant satisfactorily explains the failure to file an answer and demonstrates a meritorious defense. Voluntary appearance, even with defective summons, cures jurisdictional defects. The failure to move for the lifting of a default order before judgment is rendered indicates insincerity and a potential abuse of procedural rules.