GR 172238; (September, 2008) (Digest)
G.R. No. 172238 . September 17, 2008.
MA. LIZA FRANCO-CRUZ, Petitioner, versus THE COURT OF APPEALS, VICTORY LINER, INC., MARITES M. GANELO, CATHERINE C. SANTOS, and MA. THERESA Q. FABIAN, Respondents.
FACTS
On January 4, 1998, a Franco Transit bus collided with stalled vehicles owned by respondent Victory Liner, resulting in deaths and property damage. Respondents, including the victims’ surviving spouses, filed a complaint for damages against petitioner Ma. Liza Franco-Cruz, alleging she was the registered owner and operator of Franco Transit and failed to exercise due diligence in selecting and supervising the driver. In her Answer, petitioner denied being the real party-in-interest, claiming the bus was registered to another person, Felicisima R. Franco.
Petitioner and her counsel failed to appear at the pre-trial despite a motion for postponement, leading the trial court to declare her in default and allowing respondents to present evidence ex-parte. Petitioner filed a motion for reconsideration, attaching a Certificate of Registration to support her claim of not being the owner, but it was denied for lacking an affidavit of merit and verification. The trial court subsequently rendered a decision against petitioner, finding negligence based on respondents’ unrebutted evidence.
ISSUE
Whether the Court of Appeals erred in dismissing petitioner’s appeal and upholding the trial court’s decision which had become final and executory due to the alleged late filing of her motion for reconsideration.
RULING
The Supreme Court granted the petition, reversing the Court of Appeals. The Court held that the trial court’s declaration of default was improper. Under the 1997 Rules of Civil Procedure, failure to appear at pre-trial does not result in a default judgment; the court may instead allow the presentation of ex-parte evidence, but the defendant is not barred from participating in subsequent proceedings. Therefore, petitioner was not in default and retained the right to present evidence on her defenses, including her crucial claim of not being the real party-in-interest as the registered owner.
The Court further ruled that the trial court’s denial of her motion for reconsideration of the default order for procedural lapses (lack of affidavit of merit and verification) was a grave abuse of discretion. Given the substantive merit of her defense—supported by a Certificate of Registration—technicalities should not have barred a hearing on the merits. Consequently, the trial court’s judgment, based solely on ex-parte evidence, was invalid. The case was remanded to the trial court to allow petitioner to present her evidence and for respondents to submit additional evidence if necessary, ensuring a full and fair adjudication of the substantive issues of ownership and negligence.