Parte experimental

ARTURO D. BRION Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

Partial default in a case with multiple defendants

Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines

What if, in a case filed against multiple defendants, one defendant does not file his Answer but his co-defendants file theirs?

Can a defendant who failed to file his own Answer be declared in default even if Answers were filed by his co-defendants?

Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court.

At the outset, it must be seen that the rules on Default in Section 3 of Rule 9 provide for two distinct and discrete stages of action.

The first stage of action pertains to the finding that a defendant is in default and the consequent declaration by the Court. With regard to this stage, the first paragraph of Section 3, Rule 9, provides thus:

“Sec. 3. Default; declaration of. — If the defending party fails to answer within the time allowed therefore, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default.”

The first stage thus concludes with the declaration that a defending party is in default.

The second stage of action pertains to the conduct of the case after the declaration in default. The ordinary consequence upon a defendant after he is found in default is provided in paragraph (a) of Section 3, Rule 9, thus:

“(a) Effect of order of default. – A party in default is entitled to notice of subsequent proceedings, but not to take part in the trial.”

There is a critical distinction between the first stage of action, a defendant’s being declared in default, and the second stage of action, the consequences thereof, i.e. the conduct of the case after such a declaration. While both pertain to default, they are not identical.

“(c) Effect of partial default. — When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.”

Paragraph (c) only provides for the manner in which the trial will be conducted in a case where a defendant filed no Answer although his co-defendants did. The paragraph provides only that the case will be tried upon the Answers filed by the responsive defendants. Nowhere does it state that the Rule on default does not apply. It is not an exception to a defendant being declared in default.

The defendant who does not file an Answer is to be declared in default. This is the Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in fact, recognizes a situation where one defendant among several is in default. This is clear from paragraph (c)’s own heading, “Effect of partial default”. That very heading recognizes that default exists within the set. This recognition can only be upon the Court’s declaration of default pursuant to the first paragraph of Section 3 of Rule 9.

Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trial’s

conduct in a situation where one party among several, but not all, were declared in default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the existence of default in one of the defendants. It is, therefore, not an exception to the rule on default, but a consequence.

A contrary interpretation would allow a defendant in willful default to nevertheless present evidence contrary to the Rules’ explicit provision. This would render in vain the provisions for the Rule on Default and defeat the Rules of Court’s

objective of securing a just, speedy and inexpensive disposition of every action and proceeding.[1]

Jurisprudence is in full support of this view. The Supreme Court has ruled upon Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF

APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court

affirmed that when a party does not file an Answer, although his co-defendants do so, default is availing against the former. The Supreme Court ruled:

“(c) Effect of partial default. — When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.”

In fact, the court a quo enumerated in the Partial Decision those who filed responsive pleadings. Considering that petitioners in their complaint stated a common cause of action against all the named respondents, the court a quo should have heard the case as against all respondents, the defaulted respondents included. However, the trial court, unmindful of the above-quoted rule, proceeded to receive evidence ex parte only against the defaulted respondents. The trial court’s

disposition is not only violative of the rules but also a clear negation of the defaulted respondents’ limited rights.

Whatever defense and evidence the non-defaulted respondents may present which would be applicable to the situation of the defaulted respondents should inure to the benefit of the latter. The nullification of OCT 614 adversely affected the answering respondents for they all share the same mother title. In effect, the court a quo pre-judged the case even against the answering respondents, for how could OCT 614, the mother title, be valid for one set of respondents and null and void for the other respondents? In fine, the Partial Decision was procedurally flawed. [Boldfacing supplied]

Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order in these cicumstances. For, under Pinlac, that a Complaint states a common cause of action against all the named defendants means only that the Honorable Court should hear the case and receive evidence against all defendants, the defaulted defendant included.

But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not mean that a delinquent defendant — whose co-defendants did file their

Answers — cannot be declared in default. He still should be declared in default for having failed to file an Answer within the time given by the Rules. He does remain entitled to the limited rights of a defendant in default, but to no more than those. Although such defenses and evidence as the non-defaulted co-defendant may present which would be applicable to the situation of the defaulted defendant could inure to his benefit, being in default, the latter should be so declared. And so the defaulted defendant shall remain entitled to notice of subsequent proceedings, but he cannot take part in the trial.[2]

The Supreme Court again explained in depth the governing rules in a situation of partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA

ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September

Stated differently, in all instances where a common cause of action is alleged against several defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the homogeneity and indivisibility of justice itself. Indeed, since the singleness of the cause of action also inevitably implies that all the defendants are indispensable parties, the court’s power to act is integral and cannot be split such that it cannot relieve any of them and at the same time render judgment against the rest.

Considering the tenor of the section in question, it is to be assumed that when any defendant allows himself to be declared in default knowing that his co-defendant has already answered, he does so trusting in the assurance implicit in the rule that his default is in essence a mere formality that deprives him of no more than the right to take part in the trial and that the court would deem anything done by or for the answering defendant as done by or for him. The presumption is that otherwise he would not have seen to it that he would not be in default. Of course, he has to suffer the consequences of whatever the answering defendant may do or fail to do, regardless of possible adverse consequences, but if the complaint has to be

dismissed in so far as the answering defendant is concerned, it becomes his inalienable right that the same be dismissed also as to him. It does not matter that the dismissal is upon the evidence presented by the plaintiff or upon the latter’s mere desistance, for in both contingencies, the lack of sufficient legal basis must be the cause. x x x.

The primary question which a Motion To Declare Defendant In Default hinges on is whether or not the defendant failed to Answer within the time given him.

The question of whether or not his co-defendant had filed an Answer is relevant only as to the second stage, the manner of how trial will subsequently be

conducted. It has no bearing on the first stage, the declaration of the delinquent party’s default.

The application of the Rules in such a case are therefore clear. The Rules on partial default are as they were laid out in the same case of Grageda vs. Hon. Gomez: The effects, therefore, of a failure to file a separate Answer when other co- defendants (against whom a common cause of action was alleged) had already filed theirs, are limited to the following:

1. While the non-answering defendants may be declared in default, the court would still try the case against them on the assumption that they are deemed to have adopted the Answer of the answering defendants; and

2. If declared in default, the defaulting party is deprived of no more than the right to take part in the trial. Consequently, the result of the litigation, whether favorable or unfavorable, shall affect and bind the defaulting party and the answering defendant with equal force and effect.

[1] Section 6, Rule 1 of the Rules of Court.

(Motion to Declare Defendant in Default) (CAPTION)

MOTION

(TO DECLARE DEFENDANT IN DEFAULT)

Plaintiff, by counsel and unto this Honorable Court, respectfully states

1.The records of the Honorable Court show that Defendant was served with copy of the summons and of the complaint, together with annexes thereto on

_____________;

2.Upon verification however, the records show that Defendant _____________ has failed to file his Answer within the reglementary period specified by the Rules of Court despite the service of the summons and the complaint;

3.As such, it is respectfully prayed that Defendant _____________ be declared in default pursuant to the Rules of Court and that the Honorable Court proceed to render judgment as the complaint may warrant.

P R A Y E R

WHEREFORE, it is respectfully prayed that Defendant _____________ be declared in default pursuant to the Rules of Court and that the Honorable Court proceed to render judgment as the complaint may warrant.

Other relief just and equitable are likewise prayed for.

_____________, Philippines, __Date__. (COUNSEL)

(NOTICE OF HEARING) (EXPLANATION) COPY FURNISHED:

FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098 GAJUDO, JR., ESTELITA GAJUDO,

BALTAZAR GAJUDO and DANILO Present: ARAHAN CHUA, Petitioners, Panganiban, CJ, Chairman, Ynares-Santiago, - versus - Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ Promulgated: TRADERS ROYAL BANK,[1]

Respondent. March 21, 2006

x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x DECISION

PANGANIBAN, CJ:

he 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 T

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.

The Case

Before us is a Petition for Review[2] _{under Rule 45 of the Rules of Court,} assailing the June 29, 2001 Decision[3] _{and December 6, 2001 Resolution}[4] _{of the} Court of Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the partial judgment appealed from, must be, as it hereby is, VACATED and SET ASIDE, and another one entered DISMISSING the complaint at bench. Without costs.[5]

The assailed Resolution denied petitioners Motion for Reconsideration[6] _for lack of merit.

The Facts The CA narrated the facts as follows:

[Petitioners] filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against [respondent] Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of Quezon City. Docketed thereat as Civil Case No. Q-41203, 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.

The complaint alleged that in mid 1977[, Petitioner] Danilo Chua obtained a loan from [respondent] bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land covered by TCT No. 16711, and owned in common by the [petitioners]; that when the loan was not paid, [respondent] bank commenced extra-judicial foreclosure proceedings on the property; that the auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on [Petitioner Chuas] request, which, however, was made without the knowledge and conformity of the other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff of Quezon City sold the property to the [respondent] bank, the highest bidder therein, for the sum of P24,911.30; that the auction sale was tainted with irregularity because, amongst others, the bid price was shockingly or unconscionably, low; that the other [petitioners] failed to redeem the property due to their lack of knowledge of their right of redemption, and want of sufficient education; that, although the period of redemption had long expired, [Petitioner] Chua offered to buy back, and [respondent] bank also agreed to sell back, the foreclosed property, on the understanding that Chua would pay [respondent] bank the amount of P40,135.53, representing the sum that the bank paid at the auction sale, plus interest; that [Petitioner] Chua made an initial payment thereon in the amount of P4,000.00, covered by Interbank Check No. 09173938, dated 16 February 1984, duly receipted by [respondent] bank; that, in a sudden change of position, [respondent] bank wrote Chua, on 20 February 1984, asking that he could repurchase the property, but based on the current market value thereof; and that sometime later, or on 22 March 1984, [respondent] bank wrote Chua anew, requiring him to tender a new offer to counter the offer made thereon by another buyer.

Traversing [petitioners] complaint, [respondent] bank, upon 05 July 1984, filed its answer with counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done in accordance with law; and that the bid price was neither unconscionable, nor shockingly low; that [petitioners] slept on their

rights when they failed to redeem the property within the one year statutory period; and that [respondent] bank, in offering to sell the property to [Petitioner] Chua on the basis of its current market price, was acting conformably with law, and with legitimate banking practice and regulations.

Pre-trial having been concluded, the parties entered upon trial, which dragged/lengthened to several months due to postponements. Upon 11 June 1988, however, a big conflagration hit the City Hall of Quezon City, which destroyed, amongst other things, the records of the case. After the records were reconstituted, [petitioners] discovered that the foreclosed property was sold by [respondent] bank to the Ceroferr Realty Corporation, and that the notice of lis pendens annotated on the certificate of title of the foreclosed property, had already been cancelled. Accordingly, [petitioners], with leave of court, amended their complaint, but the Trial Court dismissed the case without prejudice due to [petitioners] failure to pay additional filing fees.

So, upon 11 June 1990, [petitioners] re-filed the complaint with the same Court, whereat it was docketed as Civil Case No. 90-5749, and assigned to Branch 98: the amended complaint substantially reproduced the allegations of the original complaint. But [petitioners] this time impleaded as additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Lorna Roque, and included an additional cause of action, to wit: that said new defendants conspired with [respondent] bank in [canceling] the notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on [respondent] bank on 26 September 1990, per Sheriffs Return dated 08 October 1990. Supposing that all the defendants had filed their answer, [petitioners] filed, on 23 October 1991, a motion to set case for pre-trial, which motion was, however, denied by the Trial Court in its Order of25 October 1991, on the ground that [respondent] bank has not yet filed its answer. On 13 November 1991[, 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, [petitioners] filed on 02 December 1991 a motion to declare [respondent] bank in default, thereunder alleging that no answer has been filed despite the service of summons on it on 26 September 1990.

On 13 December 1991, the Trial Court declared the motion submitted for resolution upon submission by [petitioners] of proof of service of the motion on [respondent] bank.

Thus, on 16 January 1992, upon proof that [petitioners] had indeed served [respondent] bank with a copy of said motion, the Trial Court issued an Order of default against [respondent] bank.

Upon 01 December 1992, on [petitioners] motion, they were by the Court allowed to present evidence ex parte on 07 January 1993, insofar as [respondent] bank was concerned.

Thereafter, or on 08 February 1993, the Trial Court rendered the new questioned partial decision.[7]

Aggrieved, [respondent] bank filed a motion to set aside [the] partial decision by default against Traders Royal Bank and admit [respondent] Traders Royal Banks x x x Answer with counterclaim: thereunder it averred, amongst others, that the erroneous filing of said