G.R. No. L-19546 April 30, 1968
FRANCISCO CELESTIAL, MARTINA MORA, ET AL., plaintiffs-appellees, vs. JOSE L. GESTOSO and ESTRELLA TAJO, defendants-appellants.

FACTS

Enrique Celestial and Martina Mora obtained a homestead patent over a parcel of land in Davao City. On September 25, 1955, they sold the property to defendants Jose L. Gestoso and Estrella Tajo for P6,000.00. After Enrique’s death, his widow and children notified the Gestosos on July 13, 1959, of their desire to redeem the land under Section 119 of the Public Land Act. Upon refusal, they filed an action for reconveyance on October 17, 1959. Defendants Gestoso filed a motion to dismiss, which was denied on December 21, 1959. They filed a motion for reconsideration on January 12, 1960. On February 11, 1960, the court issued two orders: one denying plaintiffs’ motion to declare defendants in default, and another denying defendants’ motion for reconsideration. Due to inadvertence and honest mistake by a court clerk, defendants’ counsel received only the order denying the motion for default and not the order denying the motion for reconsideration. Believing the period to answer was still interrupted, defendants did not file an answer. On April 28, 1960, the court, upon an ex parte motion, declared defendants in default and subsequently rendered a decision on July 25, 1960, ordering reconveyance upon payment of P6,000.00. Upon learning of the default judgment on August 12, 1960, defendants immediately filed a motion to set aside the order of default and the decision, alleging they had meritorious defenses including that the actual redemption price was P7,800.00 (including a P1,800.00 mortgage payment), that they had already sold the property to third parties before the complaint was filed, and that the other plaintiffs had waived their right to redeem. The lower court denied the motion and the subsequent motion for reconsideration.

ISSUE

Whether the lower court erred in refusing to set aside the order of default and the judgment by default, or in denying defendants-appellants’ petition for relief from the judgment by default.

RULING

Yes. The Supreme Court set aside the orders of the lower court, as well as the order of default and the judgment by default. The Court found that the defendants were declared in default through no fault of their own but due to the inadvertence, mistake, and negligence of a court employee who failed to send them the order denying their motion for reconsideration. This failure led defendants to believe the period to answer was still interrupted. Upon discovery, they acted promptly. Furthermore, the defendants alleged meritorious defenses which they should be given an opportunity to prove. Justice and equity demand that relief from the judgment by default be granted. The case was remanded to the lower court for further proceedings.