GAJUDO v. TRADERS ROYAL BANK G.R. No. 151098 March 21, 2006 (Digested)

GAJUDO v. TRADERS ROYAL BANKG.R. No. 151098 March 21, 2006PANGANIBAN, CJ:
Civil Procedure: Effect of Failure to Plead

The mere fact that a defendant is declared in default does not automatically result in the grant of the prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that would be required if the defendant were still present. A party that defaults is not deprived of its rights, except the right to be heard and to present evidence to the trial court. If the evidence presented does not support a judgment for the plaintiff, the complaint should be dismissed, even if the defendant may not have been heard or allowed to present any countervailing evidence.

Facts:

  

Petitioners filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of Quezon City. The complaint sought the annulment of the extra-judicial foreclosure and auction sale made by the]city sheriff of Quezon City of a parcel of land covered by TCT No. 16711 of the Register of Deeds of Quezon City, the conventional redemption thereof, and prayed for damages and the issuance of a writ of preliminary injunction.

On 11 June 1990, petitioners re-filed the complaint with the same Court the amended complaint substantially reproduced the allegations of the original complaint

Summons was served on respondent bank. Supposing that all the defendants had filed their answer, a motion to set case for pre-trial, which motion was, however, denied by the Trial Court in its Order on the ground that respondent bank has not yet filed its answer. Petitioners filed a motion for reconsideration, thereunder alleging that they received by registered mail, on 19 October 1990, a copy of [respondent] banks answer with counterclaim, dated 04 October 1990, which copy was attached to the motion. In its Order of 14 November 1991, the trial Court denied for lack of merit, the motion for reconsideration, therein holding that the answer with counterclaim filed by [respondent] bank referred to another civil case pending before Branch 90 of the same Court.

For this reason, petitioner a motion to declare respondent bank in default, thereunder alleging that no answer has been filed despite the service of summons.

 Issue:

Whether or not the Respondent Court of Appeals erred in failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on preponderance of evidence under Section 1, Rule 133 of the Rules of Court.

Held: 

The Petition has no merit.

Between the two rules, there is no incompatibility that would preclude the application of either one of them. To begin with, Section 3 of Rule 9 governs the procedure which the trial court is directed to take when a defendant fails to file an answer. According to this provision, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, subject to the courts discretion on whether to require the presentation of evidence ex parte. The same provision also sets down guidelines on the nature and extent of the relief that may be granted. In particular, the courts judgment shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages.

X             X            X            

Regarding judgments by default, it was explained in Pascua v. Florendothat complainants are not automatically entitled to the relief prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has ascertained that the relief is warranted by the evidence offered and the facts proven by the presenting party. In Pascua, this Court ruled that x x x it would be meaningless to require presentation of evidence if every time the other party is declared in default, a decision would automatically be rendered in favor of the non-defaulting party and exactly according to the tenor of his prayer. This is not contemplated by the Rules nor is it sanctioned by the due process clause.

X             X             X

In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they were not excused from establishing their claims for damages by the required quantum of proof under Section 1 of Rule 133. Stated differently, any advantage they may have gained from the ex parte presentation of evidence does not lower the degree of proof required. Clearly then, there is no incompatibility between the two rules.