Default order

"xxx.

In a nutshell, the ultimate issue is: Did the court commit grave abuse of discretion amounting to lack or excess of jurisdiction in granting respondent's motion for a bill of particulars as executor of former President Marcos' estates considering that the deceased defendant was then a defaulting defendant when the motion was filed?

We rule in the negative, and dismiss the instant petition for utter lack of merit.

Under the Rules of Court, a defending party may be declared in default, upon motion and notice, for failure to file an answer within the allowable period. As a result, the defaulting party cannot take part in the trial albeit he is entitled to notice of subsequent proceedings.33

The remedies against a default order are: (1) a motion to set aside the order of default at any time after discovery thereof and before judgment on the ground that the defendant's failure to file an answer was due to fraud, accident, mistake or excusable neglect and that the defendant has a meritorious defense; (2) a motion for new trial within 15 days from receipt of judgment by default, if judgment had already been rendered before the defendant discovered the default, but before said judgment has become final and executory; (3) an appeal within 15 days from receipt of judgment by default; (4) a petition for relief from judgment within 60 days from notice of judgment and within 6 months from entry thereof; and (5) a petition for certiorari in exceptional circumstances.34

In this case, former President Marcos was declared in default for failure to file an answer. He died in Hawaii as an exile while this case was pending, since he and his family fled to Hawaii in February 1986 during a people-power revolt in Metro Manila. His representatives failed to file a motion to lift the order of default. Nevertheless, respondent, as executor of his father's estate, filed a motion for leave to file a responsive pleading, three motions for extensions to file an answer, and a motion for bill of particulars all of which were granted by the anti-graft court.

Given the existence of the default order then, what is the legal effect of the granting of the motions to file a responsive pleading and bill of particulars? In our view, the effect is that the default order against the former president is deemed lifted.

Considering that a motion for extension of time to plead is not a litigated motion but an ex parte one, the granting of which is a matter addressed to the sound discretion of the court; that in some cases we have allowed defendants to file their answers even after the time fixed for their presentation; that we have set aside orders of default where defendants' failure to answer on time was excusable; that the pendency of the motion for a bill of particulars interrupts the period to file a responsive pleading; and considering that no real injury would result to the interests of petitioner with the granting of the motion for a bill of particulars, the three motions for extensions of time to file an answer, and the motion with leave to file a responsive pleading, the anti-graft court has validly clothed respondent with the authority to represent his deceased father. The only objection to the action of said court would be on a technicality. But on such flimsy foundation, it would be erroneous to sacrifice the substantial rights of a litigant. Rules of procedure should be liberally construed to promote their objective in assisting the parties obtain a just, speedy and inexpensive determination of their case.35

While it is true that there was no positive act on the part of the court to lift the default order because there was no motion nor order to that effect, the anti-graft court's act of granting respondent the opportunity to file a responsive pleading meant the lifting of the default order on terms the court deemed proper in the interest of justice. It was the operative act lifting the default order and thereby reinstating the position of the original defendant whom respondent is representing, founded on the court's discretionary power to set aside orders of default.

It is noteworthy that a motion to lift a default order requires no hearing; it need be under oath only and accompanied by an affidavit of merits showing a meritorious defense.36 And it can be filed "at any time after notice thereof and before judgment." Thus, the act of the court in entertaining the motions to file a responsive pleading during the pre-trial stage of the proceedings effectively meant that respondent has acquired a locus standi in this case. That he filed a motion for a bill of particulars instead of an answer does not pose an issue because he, as party defendant representing the estate, is allowed to do so under the Rules of Court to be able to file an intelligent answer. It follows that petitioner's filing of a bill of particulars in this case is merely a condition precedent to the filing of an answer.

Indeed, failure to file a motion to lift a default order is not procedurally fatal as a defaulted party can even avail of other remedies mentioned above.

As default judgments are frowned upon, we have been advising the courts below to be liberal in setting aside default orders to give both parties every chance to present their case fairly without resort to technicality.37 Judicial experience shows, however, that resort to motions for bills of particulars is sometimes intended for delay or, even if not so intended, actually result in delay since the reglementary period for filing a responsive pleading is suspended and the subsequent proceedings are likewise set back in the meantime. As understood under Section 1 of Rule 12, mentioned above, a motion for a bill of particulars must be filed within the reglementary period for the filing of a responsive pleading to the pleading sought to be clarified. This contemplates pleadings which are required by the Rules to be answered under pain of procedural sanctions, such as default or implied admission of the facts not responded to.38

But as defaulted defendants are not actually thrown out of court because the Rules see to it that judgments against them must be in accordance with the law and competent evidence, this Court prefers that the lifting of default orders be effected before trial courts could receive plaintiffs' evidence and render judgments. This is so since judgments by default may result in considerable injustice to defendants, necessitating careful and liberal examination of the grounds in motions seeking to set them aside. The inconvenience and complications associated with rectifying resultant errors, if defendant justifies his omission to seasonably answer, far outweigh the gain in time and dispatch of immediately trying the case.39 The fact that former President Marcos was in exile when he was declared in default, and that he later died still in exile, makes the belated filing of his answer in this case understandably excusable.

The anti-graft court required the Marcos siblings through its January 11, 1999 Order40 to substitute for their father without informing them that the latter was already declared in default. They were unaware, therefore, that they had to immediately tackle the matter of default. Respondent, who stands as the executor of their father's estate, could assume that everything was in order as far as his standing in court was concerned. That his motion for leave to file a responsive pleading was granted by the court gave him credible reason not to doubt the validity of his legal participation in this case. Coupled with his intent to file an answer, once his motion for a bill of particulars is sufficiently answered by petitioner, the circumstances abovementioned warrant the affirmation of the anti-graft court's actions now being assailed.

Xxx."

SECOND DIVISION

G.R. No. 148154, December 17, 2007

REPUBLIC OF THE PHILIPPINES, represented by the Presidential Commission on Good Government (PCGG), petitioner,

vs.

SANDIGANBAYAN (Second Division) and FERDINAND R. MARCOS, JR. (as executor of the estate of FERDINAND E. MARCOS), respondents.

https://lawphil.net/judjuris/juri2007/dec2007/gr_148154_2007.html

SECOND DIVISION

G.R. No. 148154, December 17, 2007




REPUBLIC OF THE PHILIPPINES, represented by the Presidential Commission on Good Government (PCGG), petitioner,

vs.

SANDIGANBAYAN (Second Division) and FERDINAND R. MARCOS, JR. (as executor of the estate of FERDINAND E. MARCOS), respondents.




https://lawphil.net/judjuris/juri2007/dec2007/gr_148154_2007.html

Ratification of contract of sale

"xxx.

In the light of the foregoing disquisition, the question of whether or not petitioner’s undisputed utilization of the proceeds of the sale constitutes, within the purview of Article 1393 of the Civil Code,33 implied ratification of the contracts of sale need not detain us long. Suffice it to state in this regard that the ruling of the Court of Appeals on the matter is well-taken. Wrote the appellate court: 34

In the case at bench, Free Press’s own witnesses admitted that the proceeds of the 1973 sale were used to settle the claims of its employees, redeem the shares of its stockholders and finance the company’s entry into money-market shareholdings and fishpond business activities (TSN, 2 May 1988, pp. 16, 42-45). It need not be overemphasized that by using the proceeds in this manner, Free Press only too clearly confirmed the voluntaries of its consent and ratified the sale. Needless to state, such ratification cleanses the assailed contract from any alleged defects from the moment it was constituted (Art. 1396, Civil Code).

Petitioner’s posture that its use of the proceeds of the sale does not translate to tacit ratification of what it viewed as voidable contracts of sale, such use being a "matter of [its financial] survival",35 is untenable. As couched, Article 1393 of the Civil Code is concerned only with the act which passes for ratification of contract, not the reason which actuated the ratifying person to act the way he did. "Ubi lex non distinguit nec nos distinguere debemus. When the law does not distinguish, neither should we". 36

Finally, petitioner would fault the Court of Appeals for excluding Exhibits "X-6" to "X-7" and "Y-3" (proffer). These excluded documents which were apparently found in the presidential palace or turned over by the US Government to the PCGG, consist of, among others, what appears to be private respondent’s Certificate of Stock for 24,502 shares in the name of Gen. Menzi, but endorsed in blank. The proffer was evidently intended to show that then President Marcos owned private respondent, Liwayway Publishing Inc. Said exhibits are of little relevance to the resolution of the main issue tendered in this case. Whether or not the contracts of sale in question are voidable is the issue, not the ownership of Liwayway Publishing, Inc.

Xxx."

THIRD DIVISION
G.R. No. 132864 October 24, 2005

PHILIPPINE FREE PRESS, INC., Petitioner,
vs.
COURT OF APPEALS (12th Division) and LIWAYWAY PUBLISHING, INC., Respondents.

https://lawphil.net/judjuris/juri2005/oct2005/gr_132864_2005.html

The novel provisions of the Charter prescribing private sector participation, especially in the field of economic activity, come, indeed, no more as responses to State monopoly of economic forces which has unfairly kept individual initiative from the economic processes and has held back competitiveness in the market. The Constitution does not bar, however, the Government from undertaking its own initiatives, especially in the domain of public service, and neither does it repudiate its primacy as chief economic caretaker of the nation.

"xxx.

There is no merit in this petition.

The duty of the State is preeminently "to serve . . . the people, 9 and so also, to "promote a just and dynamic social order . . . through policies that provide adequate social services. . . . and an improved quality of life for all. 10

The objectives of government, as expressed in the Charter, are, among other things, "a more equitable distribution of opportunities, income, and wealth . . . [and] a sustained increase in the amount of goods and services produced by the nation for the benefit of the people . . . "11 With respect in particular to property, the Constitution decrees:

Sec. 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. 12

There can hardly be any valid argument against providing for public corresponding, free of charge. It is compatible with State aims to serve the people under the Constitution, and certainly, amid these hard times, the State can do no less.

The petitioners can not legitimately rely on the provisions of Section 20, of Article II, of the Constitution, to defeat the act complained of. The mandate "recogni[zing] the indispensable role of the private sector" is no more than an acknowledgment of the importance of private initiative in building the nation. However, it is not a call for official abdication of duty to citizenry.

The novel provisions of the Charter prescribing private sector participation, especially in the field of economic activity, 13 come, indeed, no more as responses to State monopoly of economic forces which has unfairly kept individual initiative from the economic processes and has held back competitiveness in the market. The Constitution does not bar, however, the Government from undertaking its own initiatives, especially in the domain of public service, and neither does it repudiate its primacy as chief economic caretaker of the nation.

The principle of laissez faire has long been denied validity in this jurisdiction. In 1969, the Court promulgated Agricultural Credit and Cooperative Financing Administration v. Confederation of Unions in Government Corporations and offices, 14 where it was held:

x x x x x x x x x

... The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally and only because it was better equipped to administer for the public welfare than in any private individual or group of individuals," continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of economic forces. Here of course this development was envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of principle concerning the promotion of social justice. 15

The requirements of social justice and the necessity for a redistribution of the national wealth and economic opportunity find in fact a greater emphasis in the 1987 Constitution, notwithstanding the novel concepts inscribed there. 16 And two decades after this Court wrote it, ACCFAs message remains the same and its lesson holds true as ever.

The Court is not of the thinking that the act complained of is equivalent to a taking without just compensation. Albeit we have held that "[w]here the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is taking within the constitutional sense, 17 it does not seem to us that the Department of Transportation and Communication, by providing for free public correspondence, is guilty of an uncompensated taking. Rather, the Government merely built a bridge that made the boat obsolete, although not entirely useless. Certainly, the owner of the boat can not charge the builder of the bridge for lost income. And certainly, the Government has all the right to build the bridge.

Xxx."


EN BANC
G.R. No. 86953, November 6, 1990.

MARINE RADIO COMMUNICATIONS ASSOCIATION OF THE PHILIPPINES, INC. (MARCAPI), ROBERTO GAYA, DAVID ZAFRA and SEGUNDO P. LUSTRE, JR., petitioners,

vs.

HON. RAINERIO O. REYES, in his capacity as Secretary of the Department of Transportation and Communications (DOTC), HON. JOSE LUIS ALCUAZ, as Commissioner of the National Telecommunications Commission (NTC), and HON. ROSAURO SIBAL, as Chief of the Telecommunications Office (TELOF) of DOTC, respondents.

https://lawphil.net/judjuris/juri1990/nov1990/gr_86953_1990.html