G.R. No. L-19356; November 30, 1962
CONSUELO V. CALO, doing business under the name and style CVC LUMBER INDUSTRIES assisted by her husband, MARCOS M. CALO, petitioners, vs. CRISANTO ARAGON, Municipal Judge, Branch IV, City of Manila, BENJAMIN B. PINEDA and ADOLFO B. BENAVIDES, respondents.

FACTS

Respondent Adolfo Benavides, as assignee, filed a collection suit against petitioners Consuelo V. Calo and Marcos M. Calo in the Municipal Court of Manila for an unpaid merchandise debt. The summons and complaint were allegedly served on December 4, 1961, at a Quezon City address through a person claimed to be petitioners’ niece. Petitioners failed to answer or appear at the December 12 hearing, prompting the court to render a judgment by default on December 13, 1961, ordering payment of the debt with interest and attorney’s fees.
Petitioners received the default judgment on January 2, 1962. On January 5, they seasonably filed a verified petition for relief, asserting the court never acquired jurisdiction over them due to invalid substituted service, as they were residents of Butuan City and the alleged recipient was not their niece. They also alleged a meritorious defense of offsetting claims and incomplete delivery of goods. Despite this pending petition, the court issued a writ of execution on December 26, 1961. On January 11, 1962, the sheriff seized petitioners’ car and set it for auction.

ISSUE

Whether the trial court committed a grave abuse of discretion, amounting to lack of jurisdiction, in ordering the execution of a default judgment while a timely and meritorious petition for relief from that judgment was pending and unresolved.

RULING

Yes, the trial court committed a grave abuse of discretion. The Supreme Court granted the writs of certiorari and prohibition. The legal logic is anchored on fundamental due process. Upon receiving the default judgment on January 2, petitioners had a 30-day period to appeal. Instead, they availed themselves of the correct remedy by filing a verified petition for relief under Rule 38 on January 5, well within the reglementary period, accompanied by an affidavit of merit detailing lack of valid service and a substantial defense. This filing effectively suspended the finality of the default judgment. The trial court was therefore mandated to first resolve the petition for relief, which challenged the very foundation of its jurisdiction (the validity of service of summons) and the merits of the case. By ignoring this pending petition and proceeding with execution, the court deprived petitioners of their right to be heard and to present their defenses. This arbitrary disregard of a properly filed pleading seeking to set aside a judgment is a denial of due process, constituting an abuse of discretion so grave as to equate to an excess of jurisdiction. Consequently, the execution and the underlying default judgment were annulled, and the case was remanded for proper proceedings on the petition for relief.