G.R. No. L-466; June 30, 1947
Damian Ignacio, plaintiff-appellee, vs. Pelagio Racho and Hilaria Dolores, defendants-appellants.

FACTS

On May 30, 1944, plaintiff Damian Ignacio filed a complaint in the Court of First Instance of Pangasinan against defendants Pelagio Racho and Hilaria Dolores. Ignacio sought the annulment of a deed of sale (Exhibit B) dated June 27, 1938, which purported to convey a parcel of land to the defendants. He alleged the transaction was merely a loan security for P1,300, with the land’s products to be applied to the principal, and that the sale was prohibited by Section 118 of Commonwealth Act No. 141 . The defendants, in their answer, claimed the transaction was an absolute sale and argued the cited prohibition applied only to homestead or free patent lands, not to lands sold from the public domain.
The case was set for trial on September 6, 1944. On August 29, 1944, one defendant filed a motion for postponement, supported by an affidavit of merit, stating their attorney had business in Manila and transportation to Lingayen was uncertain. On September 5, 1944, the defendants’ attorney, upon learning of the trial date, sent a telegram to the judge requesting postponement “for reasons endangering his life.” The court denied the motion for defective procedure (failure to set a hearing time/place) and proceeded with the trial on September 6, 1944, in the absence of the defendants and their counsel. Judgment was rendered on September 8, 1944, in favor of the plaintiff.
Notice of the decision was sent by registered mail to the attorneys on October 27, 1944. The defendants’ attorney did not actually receive this notice until November 16, 1945, as confirmed by an affidavit from the Postmaster of Manaoag (Exhibit E), who stated no notice of the registered mail was sent to the attorney. On November 14, 1945, after learning of the judgment from the plaintiff’s attorney’s letter requesting execution, the defendants filed a verified petition (amended on November 19, 1945) under Rule 38 to set aside the judgment, alleging fraud, accident, mistake, excusable negligence, deprivation of due process, and a meritorious defense. The trial court denied the petition on December 5, 1945, ruling it was filed more than six months after the entry of judgment, though within 60 days of the defendants learning of it. The defendants appealed.

ISSUE

Whether the trial court erred in denying the defendants’ petition to set aside the judgment rendered in their absence.

RULING

Yes. The Supreme Court reversed the trial court’s order and set aside the judgment.
The Court held that the defendants, having filed their answer timely, were not in default and were entitled to notice of the judgment. Service of the notice of judgment by registered mail was not completed until actual receipt by the addressee. Since the postmaster failed to send a notice of the registered mail to the defendants’ attorney, the service was only completed upon actual delivery on November 16, 1945. Consequently, the judgment could not have been entered earlier, as the 30-day period for filing a motion for new trial or appeal had not yet lapsed. Therefore, the judgment was not final and executory when the petition to set it aside was filed on November 19, 1945.
Furthermore, the defendants had a meritorious defense as pleaded in their answer, and they were deprived of their day in court. The trial court should have exercised its discretion under Rule 31, Section 4, to postpone the trial, considering the defective motion for postponement, the attorney’s telegram citing danger to his life, and the turbulent conditions prevailing at the time. The defendants were entitled to cross-examine witnesses, object to evidence, and present their defense.
The Supreme Court ordered the trial court to conduct a new trial on the merits with due notice to both parties. No costs were awarded.