GR 161657; (October, 2007) (Digest)
G.R. No. 161657 ; October 4, 2007
Republic of the Philippines, Petitioner, vs. Hon. Vicente A. Hidalgo, in his capacity as Presiding Judge of the Regional Trial Court of Manila, Branch 37, Carmelo V. Cachero, in his capacity as Sheriff IV, Regional Trial Court of Manila, and Tarcila Laperal Mendoza, Respondents.
FACTS
Private respondent Tarcila Laperal Mendoza filed a complaint for reconveyance and annulment of title over a prime 4,924.60-square meter property in Manila, now the Presidential Guest House. She alleged the Republic forcibly dispossessed her in July 1975 through a fictitious deed of sale. After procedural delays and remands, the case reached RTC Branch 37. The court admitted Mendoza’s Third Amended Complaint, which included a prayer for monthly rental compensation of P500,000 from July 1975. The Republic failed to file an answer within the granted period. Consequently, the RTC declared the Republic in default and, after an ex-parte hearing, rendered a decision ordering the reconveyance of the property and awarding Mendoza over P2 billion in accrued rentals and attorney’s fees.
ISSUE
Whether the Regional Trial Court committed grave abuse of discretion in rendering the default judgment, particularly in awarding unliquidated damages exceeding the amount specifically prayed for in the complaint.
RULING
Yes, the RTC committed grave abuse of discretion. The Supreme Court granted the petition, nullifying the RTC’s decision and orders. The legal logic is anchored on procedural and substantive grounds. Procedurally, a judgment by default cannot award damages not specifically prayed for or which are unliquidated. Mendoza’s complaint prayed for “reasonable compensation or rental” of P500,000 monthly “beginning July 1975 until it finally vacates.” The RTC’s computation, which fixed a lump sum exceeding P2 billion for past rentals, constituted an award of unliquidated damages expressly prohibited under Section 3(d), Rule 9 of the Rules of Court. The court could only have properly awarded the P500,000 monthly rate prospectively from the filing of the amended complaint, not retroactively as a colossal sum.
Substantively, the Court found the award grossly excessive and unconscionable, violating fundamental principles of justice. The property’s value for compensation purposes, even in expropriation, is its value at the time of taking, not an accumulating rental based on a current market rate applied retroactively over decades. The RTC’s disregard of these clear legal constraints and its award of attorney’s fees equivalent to 25% of the property’s value, also unsupported by evidence, constituted a capricious and whimsical exercise of judgment equivalent to grave abuse of discretion. The case was remanded for proper proceedings.