Here is a formal digest of the provided case:

G.R. No. 2995
EN BANC

VICTORIANO SALAZAR, Plaintiff,
vs.
CAYETANA SALAZAR, Defendant.

FACTS:
Cayetano Salazar filed an action for losses and damages against Victoriano Salazar in the Court of First Instance of Mindoro. On October 2, 1905, judgment was rendered against Victoriano Salazar by default, ordering him to pay P6,000.00 and costs. Victoriano Salazar then filed a complaint in the Supreme Court, alleging he was unjustly deprived of his right to defense, and requesting the annulment of the judgment and a new trial under Section 513 of the Code of Civil Procedure.

The facts presented indicated that Victoriano Salazar was ordered to appear with his witnesses on March 13, 1905, but the sheriff could not personally serve the subpoena as Victoriano Salazar could not be found, having reportedly gone to Batangas. Despite this, the court declared Victoriano Salazar in default on March 14, 1905, for failure to appear and answer. Subsequently, judgment by default was rendered against him on October 2, 1905.

However, the record also showed that on March 29, 1904, Victoriano Salazar, through his attorney, had filed a pleading seeking permission to file an answer to the complaint, indicating he had been previously served. This privilege was granted, and a time was fixed for him to file his answer. It was noted that despite this, it was over a year later when he was adjudged in default, and a citation was issued for him to appear on March 13, 1905, which he failed to do.

Victoriano Salazar argued that he did not answer the complaint because:
1. A transaction or compromise had been executed before a notary on June 25, 1903, between Cayetano Salazar’s attorney and Victoriano Salazar and Paulino Villarosa, terminating the litigation.
2. He engaged an attorney in March 1904 to present this compromise to the court.
3. His attorney filed a motion for dismissal based on the compromise in September 1904, and Victoriano Salazar believed the case was terminated, thus paying no further attention.

Evidence presented, including a notarial instrument of compromise and a pleading filed by Cayetano Salazar referencing this compromise, supported Victoriano Salazar’s claims. The Supreme Court also addressed Cayetano Salazar’s contention that the judgment was rendered in her favor as administratrix, while the original action was filed in her personal name, noting that she obtained her letters of administration on the same day the judgment was rendered, thus she could not have initiated the action as administratrix.

ISSUE:
Whether the judgment by default rendered against Victoriano Salazar should be annulled and a new trial granted due to his deprivation of the right to defense, considering the existence of a prior compromise and the circumstances surrounding his alleged non-appearance.

RULING:
The Supreme Court annulled the judgment rendered by the Court of First Instance on October 2, 1905, and granted a new trial. The Court reasoned that the evidence, particularly the compromise agreement and Cayetano Salazar’s own pleading referencing it, sufficiently demonstrated that Victoriano Salazar’s failure to appear or answer was due to a reasonable belief that the case had been settled. The Court found that Victoriano Salazar had established grounds for relief under Section 513 of the Code of Civil Procedure, as he was deprived of his day in court due to circumstances that were not entirely his fault. Victoriano Salazar was permitted to answer the complaint within the time fixed by rule.