G.R. No. L-21766 September 30, 1966
FELICISIMA BALLECER and JOSE S. AGAWIN, petitioners, vs. JOSE BERNARDO, The Hon. JESUS P. MORFE, Presiding Judge, Branch XIII of the Court of First Instance of Manila, and the Sheriff of Manila, respondents.

FACTS

Petitioners Felicisima Ballecer and Jose S. Agawin (spouses) filed Civil Case No. 43073 against respondent Jose Bernardo to recover damages and possession of a 0.80-square-meter portion of their lot allegedly encroached upon by Bernardo after he demolished a common wall. Bernardo, in his answer, denied the allegations and filed a counterclaim asserting that it was the petitioners who had encroached upon about 3.70 square meters of his property. He prayed for the recovery of possession and damages. On the last day to answer the counterclaim, petitioners filed an ex parte urgent motion for extension of time, citing a typhoon and floods in Manila as reasons for their inability to contact counsel. The lower court denied the motion, declared petitioners in default on the counterclaim, allowed Bernardo to present evidence ex parte, and subsequently rendered a default judgment against petitioners on the counterclaim, ordering them to vacate the 3.7-square-meter area and pay various damages. Petitioners’ motions for reconsideration and for relief from judgment were denied. The lower court later issued orders for the execution of the judgment, leading to an alias writ of execution and a notice of sale of petitioners’ property. Petitioners then filed this original action to annul the lower court’s orders and the writs of execution.

ISSUE

Whether the lower court gravely abused its discretion in declaring the petitioners in default and rendering a default judgment on Bernardo’s counterclaim.

RULING

Yes, the lower court committed a grave abuse of discretion amounting to excess of jurisdiction. First, the motion for extension of time to answer the counterclaim, filed within the reglementary period and based on plausible reasons (typhoon and floods), was one that could be heard ex parte, as established in Moya v. Barton. Second, and more importantly, the issues raised in Bernardo’s counterclaim were inseparable from and directly inconsistent with the allegations in the petitioners’ complaint. The counterclaim essentially denied the complaint’s material allegations and asserted the opposite factual scenario. Under prevailing jurisprudence, where the counterclaim’s issues are so intertwined with those of the complaint and answer, answering the counterclaim becomes unnecessary as the facts are deemed controverted. Petitioners retained the right to prove their complaint’s allegations, which would simultaneously disprove the counterclaim. Therefore, there was no legal basis to declare petitioners in default on the counterclaim. Consequently, the default judgment, the orders for execution, the alias writ of execution, and the notice of sale are null and void. The Supreme Court annulled and set aside these orders and writs and made the preliminary injunction permanent.