G.R. No. L-39452 October 31, 1974
FEDERICO DIONISIO, plaintiff-appellee, vs. ESPERANZA SIOSON PUERTO, ET AL., defendants-appellants.

FACTS

The case originated from a complaint filed by Federico Dionisio for the recovery of a sum of money based on a negotiable promissory note executed by the defendants, Esperanza Sioson Puerto, et al. The complaint sought to recover the principal of P6,000, collection expenses, attorney’s fees, and moral damages, totaling P11,000. In their answer, the defendants admitted the indebtedness but raised an affirmative defense of usury, alleging they only received P5,500 from the loan, with the P500 difference representing usurious interest. The plaintiff filed a reply denying the usury allegation, but this denial was not made under oath.
The case was set for pre-trial. On the day before the scheduled pre-trial conference, the defendants filed a Manifestation and Motion, requesting a postponement and asking the court to conduct a preliminary hearing on their affirmative defense of usury as if it were a motion to dismiss. Despite due notice, the defendants and their counsel failed to appear at the pre-trial conference the following day. Consequently, upon the plaintiff’s motion, the trial court declared the defendants in default and proceeded to receive the plaintiff’s evidence ex parte. A decision was subsequently rendered in favor of the plaintiff, awarding a total of P8,000 after disallowing the claim for moral damages due to lack of proof.

ISSUE

The core issues raised by the defendants on appeal were: (1) whether the trial court properly declared them in default for non-appearance at the pre-trial; (2) whether the case should have been dismissed outright because the plaintiff’s reply to the usury charge was not under oath; and (3) whether the trial court lost jurisdiction because the final award of P8,000 was below its jurisdictional amount.

RULING

The Supreme Court affirmed the trial court’s decision, rejecting all three assignments of error. On the first issue, the Court held that the declaration of default was proper under Rule 20, Section 2 of the Rules of Court, which explicitly authorizes such action against a party who fails to appear at a pre-trial conference despite due notice. The defendants’ last-minute motion for postponement did not excuse their absence, and their failure to submit an affidavit of merits in their motion for reconsideration was fatal, as it did not demonstrate a valid defense that could be proven if a new trial were granted.
On the second issue, the Court ruled that the procedural rule requiring a denial of a usury allegation to be under oath is subject to waiver. The defect in the plaintiff’s unverified reply was waived when the defendants were declared in default, thereby losing their right to object to the reception of the plaintiff’s evidence, which established his cause of action and negated the usury charge. The Court also found the usury claim dubious on its face.
On the third issue, the Court reiterated the well-settled principle that jurisdiction is determined by the allegations in the complaint, not by the amount ultimately awarded. Since the complaint originally sought P11,000, the Court of First Instance had jurisdiction. The reduction of the award to P8,000 due to the plaintiff’s failure to prove moral damages did not divest the trial court of its jurisdiction.