G.R. No. 213893 , September 25, 2019
National Power Corporation and National Power Board, Petitioners, vs. Emma Y. Baysic and Narcisa G. Santiago, Respondents.

FACTS

On July 12, 2007, respondents Emma Y. Baysic and Narcisa G. Santiago, representing 488 retirees of the National Power Corporation (NPC), filed a Petition for Mandamus with Prayer for Accounting and Motion for Evidentiary Hearing before the Regional Trial Court (RTC) of Quezon City, Branch 83, concerning alleged gratuity pay and financial assistance. Petitioners NPC and National Power Board filed an Answer dated October 17, 2008, contending their obligation for benefits applied only to personnel employed at the enactment of the EPIRA law. Respondents moved to strike out the Answer for improper verification, alleging no proof of authorization for the lawyer who verified it and non-compliance with the Rules of Court. The RTC, by Order dated January 30, 2009, expunged the Answer as a “mere scrap of paper.” Subsequently, by Order dated November 5, 2009, the RTC declared petitioners in default. Petitioners’ motion to lift the order of default and admit their Answer was denied on May 18, 2010. Petitioners then filed a Petition for Certiorari and Prohibition before the Court of Appeals (CA). Meanwhile, the RTC rendered a default judgment. Petitioners amended their CA petition to include the default judgment. Respondents filed an Ex Abundanti Cautela Motion to Strike Out Petition, arguing certiorari was improper since appeal was available. The CA, by Resolution dated March 4, 2014, granted the motion and dismissed the Amended Petition, ruling that petitioners improperly availed of certiorari because a party declared in default retains the right to appeal the default judgment. The CA denied petitioners’ motion for reconsideration on August 11, 2014.

ISSUE

Whether the Court of Appeals erred in dismissing the Amended Petition for Certiorari and Prohibition on the ground that it was an improper remedy, and whether a petition for certiorari under Rule 65 is a proper remedy to assail a default judgment when grave abuse of discretion by the trial court is alleged.

RULING

Yes. The Supreme Court granted the petition, reversed and set aside the CA Resolutions, and directed the CA to resolve the Amended Petition on the merits. The Court ruled that while appeal is generally the remedy for a party declared in default, a petition for certiorari under Rule 65 is proper when the party charges the trial court with grave abuse of discretion amounting to excess or lack of jurisdiction in declaring the default and rendering the default judgment. Citing David v. Judge Gutierrez-Fruelda and Martinez v. Republic of the Philippines, the Court held that a party improvidently declared in default may either perfect an appeal or file a petition for certiorari to nullify the order of default and the default judgment. The Court found that the CA erred in ruling petitioners availed of the wrong remedy, as appeal was not a plain, speedy, and adequate remedy given petitioners’ assertion of grave abuse of discretion. The Court also noted petitioners were interposing a prima facie meritorious defense involving the disbursement of public funds, warranting that they be given their day in court in the interest of substantial justice.