MODULE 7

EFFECT OF FAILURE TO PLEAD (RULE 9)

(One Hour)

Lesson Outline:

1) What is the rule on waiver of defenses? What are the exceptions?

Section 1. Defenses and objections not pleaded. — Defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between the same parties
for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim.

2) When may a defendant be declared in default?

Section 3. Default; declaration of. — If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with notice to
the defending party, and proof of such failure, declare the defending party in default.

3) May the court, on its own, declare the defendant in default?

YES, the court shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the claimant to submit
evidence. Such reception of evidence may be delegated to the clerk of court.

4) What are the remedies of a defendant declared in default, and within what
period may the defendant avail himself of such remedies? See reviewer.

Readings:

a) Mariano Favis Sr. v. Juana Gonzales, G.R. No. 185922, Jan. 15, 2014

FACTS:

Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar (Capitolina) with
whom he had seven children. When Capitolina died in March 1994. Dr. Favis married
Juana Gonzalez (Juana), his common-law wife with whom he sired one child, Mariano G.
Favis (Mariano), he executed an affidavit acknowledging Mariano as one of his
legitimate children. Mariano is married to Larcelita D. Favis (Larcelita), with whom he
has four children. Dr. Favis died intestate on July 29, 1995. On October 16, 1994, prior
his death, he allegedly executed a Deed of Donation transferring and conveying
properties in favor of his grandchildren with Juana. Claiming the said donation
prejudiced their legitime, Dr. Favis children with Capitolina, petitioners herein, filed an
action for annulment of the Deed of Donation, inventory, liquidation, liquidation and
partition of property before the RTC against Juana, Sps. Mariano and Larcelita and their
grandchildren as respondents. RTC nullified the Deed of Donation. The trial court found
that Dr. Favis, at the age of 92 and plagued with illnesses, could not have had full
control of his mental capacities to execute a valid Deed of Donation.

The Court of Appeals ordered the dismissal of the petitioners nullification case. The CA
ordered the dismissal of the complaint for failure of petitioners to make an averment
that earnest efforts toward a compromise have been made, as mandated by Article 151
of the Family Court.

ISSUE:

May the appellate court dismiss the order of dismissal of the complaint for failure to
allege therein that earnest efforts towards a compromise have been made?

HELD:

The appellate court committed egregious error in dismissing the complaint.

The appellate court committed egregious error in dismissing the complaint. The
appellate courts decision hinged on Article 151 of the Family Code, Art.151.No suit
between members of the same family shall prosper unless it should appear from the
verified complaint or petition that earnest efforts toward a compromise have been
made, but that the same have failed. If it is shown that no such efforts were in fact
made, the case must be dismissed.

The appellate court correlated this provision with Section 1, par. (j), Rule 16 of the 1997
Rules of Civil Procedure, which provides: Section 1. Grounds. – Within the time for but
before filing the answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:(j) That a condition precedent for
filing the claim has not been complied with.

The appellate courts reliance on this provision is misplaced. Rule 16 treats of the
grounds for a motion to dismiss the complaint. It must be distinguished from the
grounds provided under Section 1, Rule 9 which specifically deals with dismissal of the
claim by the court motu proprio. Section 1, Rule 9 of the 1997 Rules of Civil Procedure.
Section 1, Rule 9 provides for only four instances when the court may motu proprio
dismiss the claim, namely: (a) lack of jurisdiction over the subject matter; (b) litis
pendentia; (c) res judicata; and (d) prescription of action.

It was in Heirs of Domingo Valientes v. Ramas cited in P.L. Uy Realty Corporation v. ALS
Management and Development Corporation where we noted that the second sentence
of Section 1 of Rule 9 does not only supply exceptions to the rule that defenses not
pleaded either in a motion to dismiss or in the answer are deemed waived, it also allows
courts to dismiss cases on any of the enumerated grounds. The tenor of the second
sentence of the Rule is that the allowance of a motu propio dismissal can proceed only
from the exemption from the rule on waiver; which is but logical because there can be
no ruling on a waived ground.

A failure to allege earnest but failed efforts at a compromise in a complaint among

members of the same family, is not a jurisdictional defect but merely a defect in the
statement of a cause of action.

In the case at hand, the proceedings before the trial court ran the full course. The
complaint of petitioners was answered by respondents without a prior motion to dismiss
having been filed. The decision in favor of the petitioners was appealed by respondents
on the basis of the alleged error in the ruling on the merits, no mention having been
made about any defect in the statement of a cause of action. In other words, no motion
to dismiss the complaint based on the failure to comply with a condition precedent was
filed in the trial court; neither was such failure assigned as error in the appeal that
respondent brought before the Court of Appeals.

Therefore, the rule on deemed waiver of the non-jurisdictional defense or objection is

wholly applicable to respondent. If the respondents as parties-defendants could not, and
did not, after filing their answer to petitioners complaint, invoke the objection of
absence of the required allegation on earnest efforts at a compromise, the appellate
court unquestionably did not have any authority or basis to motu propio order the
dismissal of petitioners complaint.

The correctness of the finding was not touched by the Court of Appeals. The
respondents opted to rely only on what the appellate court considered, erroneously
though, was a procedural infirmity. The trial court’s factual finding, therefore, stands
unreversed; and respondents did not provide us with any argument to have it reversed.

The decision of the Court of Appeals is reversed and set aside and the Judgment of the
Regional Trial Court is AFFIRMED.

b) Sablas v. Sablas, G.R. No. 144568, July 3, 2007

FACTS:

Petitioner spouses were served with summons and a copy of the complaint, they filed a
motion for extension of time requesting an additional period of 15 days, or until
November 5, 1999, to file their answer. However, they were able to file it only on
November 8, 1999. While the trial court observed that the answer was filed out of time,
it admitted the pleading because no motion to declare petitioner spouses in default was
filed.

The following day, respondents filed a motion to declare petitioner spouses in default. It
was denied by the trial court. Respondents moved for reconsideration but it was also
denied. Thereafter, they challenged the order in the Court of Appeals in a petition for
certiorari alleging that the admission of the answer by the trial court was contrary to the
rules of procedure and constituted grave abuse of discretion amounting to lack of
jurisdiction.
The appellate court ruled that the trial court committed grave abuse of discretion
because, pursuant to Section 3, Rule 9 of the Rules of Court, the trial court had no
recourse but to declare petitioner spouses in default when they failed to file their answer
on or before November 5, 1999. Thus, the Court of Appeals granted the petition,
vacated the December 6, 1999 order and remanded the case to the trial court for
reception of plaintiffs’ evidence.

Aggrieved, petitioner spouses now assail the decision of the Court of Appeals in this
petition for review on certiorari.

ISSUE:

Whether there was a valid declaration of default?

HELD:

No, Where There Is No Motion, There Can Be No Declaration of Default, The elements
of a valid declaration of default are:

1. the court has validly acquired jurisdiction over the person of the defending party
either by service of summons or voluntary appearance;

2. the defending party failed to file the answer within the time allowed therefor and

3. a motion to declare the defending party in default has been filed by the claiming
party with notice to the defending party.

An order of default can be made only upon motion of the claiming party. It can be
properly issued against the defending party who failed to file the answer within the
prescribed period only if the claiming party files a motion to that effect with notice to
the defending party.

It is within the sound discretion of the trial court to permit the defendant to file his
answer and to be heard on the merits even after the reglementary period for filing the
answer expires. The Rules of Court provides for discretion on the part of the trial court
not only to extend the time for filing an answer but also to allow an answer to be filed
after the reglementary period.

c) Heirs of Mamerto Manguiat v. CA, G.R. No. 150768, Aug. 20, 2008
We rule in favor of respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz.

Summons must be served upon a party for valid judgment to be rendered against him.
This not only comports with basic procedural law but the constitutional postulate of due
process. The disputable presumption that an official duty has been regularly performed
will not apply where it is patent from the sheriff's or server's return that it is defective.
[22]

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

SECTION 13. Service upon public corporations. -- When the defendant is the Republic of
the Philippines, service may be effected on the Solicitor General; in case of a province,
city or municipality, or like public corporations, service may be effected on its executive
head, or on such other officer or officers as the law or the court may direct.[23]

It is clear under the Rules that where the defendant is the Republic of the Philippines,
service of summons must be made on the Solicitor General. The BUTEL is an agency
attached to the Department of Transportation and Communications created under E.O.
No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities,
including telephone systems to government offices. It also provides its services to
augment limited or inadequate existing similar private communication facilities. It
extends its services to areas where no communication facilities exist yet; and assists the
private sector engaged in telecommunication services by providing and maintaining
backbone telecommunication network.[24] It is indisputably part of the Republic, and
summons should have been served on the Solicitor General.

We now turn to the question of whether summons was properly served according to the
Rules of Court. Petitioners rely solely on the sheriff's return to prove that summons was
properly served. We quote its contents, viz.:

THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the
service of Summons and Complaint upon defendant J.A. Development Corporation at the
address indicated in the summons, the same having been received by a certain
Jacqueline delos Santos, a person employed thereat, of sufficient age and discretion to
receive such process, who signed on the lower portion of the Summons to acknowledge
receipt thereof.

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of
Telecommunications at the address indicated in the Summons, a copy of the same was
received by a certain Cholito Anitola, a person employed thereat, who signed on the
lower portion of the Summons to acknowledge receipt thereof.[25] (Emphasis supplied)

It is incumbent upon the party alleging that summons was validly served to prove that
all requirements were met in the service thereof. We find that this burden was not
discharged by the petitioners. The records show that the sheriff served summons on an
ordinary employee and not on the Solicitor General. Consequently, the trial court
acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.

Further, we likewise affirm the decision of the Court of Appeals in CA-G.R. SP No.
60770, setting aside the partial decision of the trial court for having been issued with
grave abuse of discretion. It ruled that when the trial court declared the BUTEL in
default, allowed petitioners to present their evidence ex parte and rendered a partial
decision holding that petitioners are the owners of the subject property, such was
tantamount to prejudging the case against respondent JDC. The trial court ruled that
petitioners validly acquired the subject parcel of land without any consideration of the
evidence that respondent JDC may present to substantiate its claim of ownership over
its aliquot part of the subject property. The trial court should have followed the Rules of
Court in this situation. Sec. 3(c) of Rule 9 states that "when a pleading asserting a claim
states a common cause of action against several defending parties, some of whom
answer and the others fail to do so, the court shall try the case against all upon the
answers thus filed and render judgment upon the evidence presented." Therefore, the
answer filed by a defendant inure to the benefit of all the defendants, defaulted or not,
and all of them share a common fate in the action. It is not within the authority of the
trial court to divide the case before it by first hearing it ex parte as against the defaulted
defendant and rendering a default judgment (in the instant case, partial decision)
against it, then proceeding to hear the case, as to the non-defaulted defendant. This
deprives the defaulted defendant of due process as it is denied the benefit of the
answer and the evidence which could have been presented by its non-defaulted co-
defendant.

d) Rural Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines, G.R. No.
148019, July 28, 2004

FACTS:

Land Bank of the Philippines filed a complaint against, Sta. Catalina Rural Bank, Inc., in
the Regional Trial Court for the collection of the sum of P2,809,280.25, capitalized and
accrued interests, penalties and surcharges, and for such other equitable reliefs. For its
failure to file its answer to the complaint, the trial court declared the petitioner bank in
default. Despite its receipt of the copy of the said order, the petitioner bank failed to file
a motion to set aside the order of default.

In the meantime, the Monetary Board approved the placement of the petitioner bank’s
assets under receivership. The Philippine Deposit Insurance Corporation (PDIC) was
designated as receiver (conservator) of the petitioner, and the latter was prohibited
from doing business in the Philippines. Unaware of the action of the CB, the trial court
rendered judgment by default against the petitioner bank ordering the bank to pay its
obligation to respondent LBP plus interests and damages. The petitioner, through the
PDIC, appealed the decision to the Court of Appeals. The petitioner bank claim that
since it was placed under receivership and prohibited from doing business in the
Philippines it should no longer be held liable for interests and penalties on its account to
the respondent bank. However, CA rendered judgment affirming the decision of the
RTC.

ISSUE:

Whether or not an insolvent bank placed under receivership and prohibited from doing
business in the Philippines may be held liable to pay interests and penalties after being
declared in default.

HELD:

Such party declared in default is proscribed from seeking a modification or reversal of

the assailed decision on the basis of the evidence submitted by him in the Court of
Appeals, for if it were otherwise, he would thereby be allowed to regain his right to
adduce evidence, a right which he lost in the trial court when he was declared in
default, and which he failed to have vacated. In this case, the petitioner sought the
modification of the decision of the trial court based on the evidence submitted by it only
in the Court of Appeals.

Petitioner was served with a copy of summons and the complaint, but failed to file its
answer thereto. It also failed to file a verified motion to set aside the order of default
despite its receipt of a copy thereof. We note that the trial court rendered judgment only
on April 7, 1998 or more than a year after the issuance of the default order; yet, the
petitioner failed to file any verified motion to set aside the said order before the
rendition of the judgment of default. The PDIC was designated by the Central Bank of
the Philippines as receiver (conservator) as early as January 14, 1998, and in the course
of its management of the petitioner bank’s affairs, it should have known of the
pendency of the case against the latter in the trial court. Moreover, the petitioner,
through the PDIC, received a copy of the decision of the trial court but did not bother
filing a motion for partial reconsideration appending thereto the orders of the Monetary
Board or a motion to set aside the order of default. Instead, the petitioner appealed the
decision, and even failed to assign as an error the default order of the trial court. The
petitioner is, thus, barred from relying on the orders of the Monetary Board of the
Central Bank of the Philippines placing its assets and affairs under receivership and
ordering its liquidation.