G.R. No. 78885 February 26, 1990
FILINVEST LAND, INC., petitioner, vs. THE HON. COURT OF APPEALS and PHILIPPINE UNDERWRITERS FINANCE CORPORATION, respondents.

FACTS

Filinvest Land, Inc. filed a complaint for recovery of possession of a parcel of land and building against Philippine Underwriters Finance Corporation (Philfinance) before the Regional Trial Court of Makati. Summons was served on October 13, 1983. Philfinance, through various counsel, filed five successive motions for extension of time to file an answer, all of which were granted by the trial court, extending the period up to January 9, 1984. A sixth motion for a final extension of ten days, citing counsel’s illness, was filed but was denied by the court on January 9, 1984. On January 10, 1984, Filinvest moved to declare Philfinance in default. The trial court granted the motion on the same day, declared Philfinance in default, allowed Filinvest to present evidence ex-parte, and rendered a decision in favor of Filinvest on January 11, 1984. Philfinance filed its verified Answer with Counterclaim and a Third-Party Complaint against the Aboitiz Group on January 12, 1984. The trial court denied Philfinance’s subsequent motion to lift the order of default. The Court of Appeals reversed the trial court, nullified the default order and decision, admitted the answer and third-party complaint, and remanded the case for further proceedings.

ISSUE

Whether the Court of Appeals erred in reversing the trial court’s order declaring Philfinance in default and in subsequently admitting its answer and third-party complaint.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s resolution denying the motion to lift the order of default. The legal logic is anchored on the principle that a motion for extension is not a matter of right but of judicial discretion, and the grant of five extensions constituted more than reasonable accommodation. The sixth motion, filed after the expiration of a generously extended period, was properly denied. The trial court did not abuse its discretion. More critically, the Court examined the substantive merit of the proffered defense. Philfinance’s answer essentially challenged the validity of the title held by Filinvest, alleging the underlying transactions with the Aboitiz Group were void. The Court found this defense unavailing against Filinvest, an innocent purchaser for value relying on a Torrens title, whose indefeasibility is guaranteed. Furthermore, the third-party complaint against Aboitiz was inadmissible as it involved separate transactions irrelevant to Filinvest’s possessory claim. Since Philfinance failed to establish a valid and meritorious defense, lifting the default order would be a futile exercise. The Court emphasized the need to curb delays in the judicial process and sustain trial courts when they act against litigants who abuse procedural leniency.