GR 124243; (June, 2000) (Digest)
G.R. No. 124243; June 15, 2000
SPOUSES RUDY S. AMPELOQUIO, SR. AND LAGRIMAS OBNAMIA, petitioners, vs. COURT OF APPEALS, HON. FEDERICO A. TAĂ‘ADA, PHILIPPINE NATIONAL BANK, respondents.
FACTS
Petitioners filed a complaint for annulment of mortgage and extrajudicial foreclosure against respondent Philippine National Bank (PNB). After the trial court denied PNB’s motion to dismiss, the order was sent via registered mail to Atty. Giovanni Manzala at PNB’s Escolta address. PNB claimed non-receipt, as Atty. Manzala, who had only prepared the initial motion for extension, no longer held office there, and the case had been transferred to Atty. Rolando Torres. Due to this alleged non-receipt, PNB failed to file its answer within the reglementary period.
Petitioners moved to declare PNB in default. PNB opposed, attaching its answer with counterclaim. The trial court denied the motion to declare default, finding a need for a full-blown trial. The Court of Appeals affirmed this denial. Petitioners elevated the case via certiorari, arguing the trial court should have declared default as PNB’s failure was inexcusable.
ISSUE
Whether the Court of Appeals erred in affirming the trial court’s denial of the motion to declare respondent PNB in default.
RULING
The Supreme Court denied the petition, upholding the appellate court’s decision. The ruling emphasized the trial court’s discretionary authority under Section 11, Rule 11 of the Rules of Court to permit the filing of an answer beyond the reglementary period. The Court found justification for PNB’s delay, noting that the denial order was sent to an attorney who was not the active handling counsel, constituting excusable neglect. More critically, the trial court correctly determined that PNB presented a meritorious defense and that the case required a full trial on the merits.
The Court reiterated that judgments by default are disfavored, as they do not adjudicate based on the merits and can cause considerable injustice. Technicalities must yield to the broader interest of substantial justice, allowing parties their day in court. Furthermore, the Court clarified that certiorari under Rule 65 is not the proper remedy to challenge an interlocutory order denying a motion to declare a party in default. Such an alleged error is one of judgment, not jurisdiction, and should be reviewed on appeal from a final judgment, not through a special civil action. The trial court committed no grave abuse of discretion warranting certiorari.