Dael vs.

Beltran Facts: Frederick Dael filed before the RTC, Branch 34, Negros Oriental, a Complaint[3] for breach of contract and damages against respondent-spouses Benedicto and Vilma Beltran. In his complaint, petitioner alleged that respondents sold him a parcel of land covering three hectares located at Palayuhan, Siaton, Negros Oriental. Petitioner alleged that respondents did not disclose that the land was previously mortgaged. Petitioner further alleged that it was only on August 6, 2001 when he discovered that an extrajudicial foreclosure over the property had already been instituted, and that he was constrained to bid in the extrajudicial sale of the land conducted on August 29, 2001. Possession and ownership of the property was delivered to him when he paid the bid price of P775,100. Petitioner argued that respondents non-disclosure of the extrajudicial foreclosure constituted breach of contract on the implied warranties in a sale of property as provided under Article 1547[4] of the New Civil Code. He likewise claimed that he was entitled to damages because he had to pay for the property twice. On January 10, 2002, respondents filed a Motion to Dismiss[5] on the ground that petitioner had no cause of action since the contract to sell stated that the vendor was Benedicto Beltran and the vendee was Frederick George Ghent Dael, not the petitioner. On February 12, 2002, in a hearing on the motion, Atty. Dirkie Y. Palma, petitioners counsel, disclosed that petitioner is the father of Frederick George Ghent Dael whose name appears as the contracting party in the Contract to Sell dated July 28, 2000. Atty. Palma moved to reset the hearing to enable the petitioner to withdraw and have the complaint dismissed, amended, or to enter into a compromise agreement with respondents. The RTC on the same day ordered petitioner to clarify whether or not he and Frederick George Ghent Dael were one and the same person; whether or not they were Filipinos and residents of Dumaguete City; and whether or not Frederick George Ghent Dael was of legal age, and married, as stated in the Contract to Sell.[6] Petitioner did not comply. Instead, he filed a Notice of Dismissal on February 20, 2002. The RTC dismissed the complaint with prejudice. Issue: WHETHER OR NOT THE REGIONAL TRIAL COURT IS CORRECT IN DISMISSING THE CASE WITH PREJUDICE Held: As to the propriety of dismissal of the complaint with prejudice, Section 1, Rule 17 of the 1997 Rules of Civil Procedure provides: SECTION 1. Dismissal upon notice by plaintiff. A complaint may be dismissed by the plaintiff by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim. [Emphasis supplied.] Under this provision, it is mandatory that the trial court issue an order confirming such dismissal and, unless otherwise stated in the notice, the dismissal is without prejudice and could be accomplished by the plaintiff through mere notice of dismissal, and not through motion subject to approval by the court. Dismissal is ipso facto upon notice, and without prejudice unless otherwise stated in the notice.[16] The trial court has no choice but to consider the complaint as dismissed, since the plaintiff may opt for such dismissal as a matter of right, regardless of the ground.[17] Respondents argue that the Motion to Dismiss they filed precedes the Notice of Dismissal filed by petitioner and hence, the trial court correctly gave it precedence and ruled based on the motion. This argument is erroneous. Section 1 of Rule 17 does not encompass a Motion to Dismiss. The provision specifically provides that a plaintiff may file a notice of dismissal before service of the answer or a motion for summary judgment. Thus, upon the filing of the Notice of Dismissal by the plaintiff, the Motion to Dismiss filed by respondents became moot and academic and the trial court should have dismissed the case without prejudice based on the Notice of Dismissal filed by the petitioner.

Pinga v. Heirs of Santiago

The Heirs of Santiago filed an injunction against Pinga alleging that Pinga had been unlawfully entering the coco lands of the respondent cutting wood and bamboos and harvesting the fruits of the coconut trees. As a counterclaim, Pinga contests the ownership of the lands to which Pinga was harvesting the fruits. However, due to failures of Heirs of Santiago to attend the hearings, the court ordered the dismissal of said case. Respondents thus filed an MR not to reinstate the case but to ask for the entire action to be dismissed and not to allow petitioner to present evidence ex parte, RTC granted it, hence the counterclaim was dismissed. RTC ruled that compulsory counterclaims cannot be adjudicated independently of plaintiffs cause of action vis a vis the dismissal of the complaint carries with it the dismissal of the counterclaim Petitioner then elevates it to the SC by way of Rule 45 on pure questions of law (Santiagos motive: They just asked for the dismissal of their entire case so that their ownership wouldnt be put in controversy in the counterclaim) Issue: W/N dismissal of original complaint affects that of the compulsory counter claims? NO the counterclaims, in this case, can stand on its own

Ratio: The dismissal of the complaint does not carry with the dismissal of the counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice to the right of defendants to prosecute his counterclaim Section 3 contemplates a dismissal not procured by plaintiff, albeit justified by causes imputable to him and which, in the present case, was petitioner's failure to appear at the pre-trial. This situation is also covered by Section 3, as extended by judicial interpretation, and is ordered upon motion of defendant or motu proprio by the court. Here, the issue of whether defendant has a pending counterclaim, permissive or compulsory, is not of determinative significance. The dismissal of plaintiff's complaint is evidently a confirmation of the failure of evidence to prove his cause of action outlined therein, hence the dismissal is considered, as a matter of evidence, an adjudication on the merits. This does not, however, mean that there is likewise such absence of evidence to prove defendant's counterclaim although the same arises out of the subject matter of the complaint which was merely terminated for lack of proof. To hold otherwise would not only work injustice to defendant but would be reading a further provision into Section 3 and wresting a meaning therefrom although neither exists even by mere implication. Thus understood, the complaint can accordingly be dismissed, but relief can nevertheless be granted as a matter of course to defendant on his counterclaim as alleged and proved, with or without any reservation therefor on his part, unless from his conduct, express or implied, he has virtually consented to the concomitant dismissal of his counterclaim The present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint. Rule 17 Sec 3 provides: If for any cause, the plaintiff fails to appear on the date of his presentation of his evidence x x x the complaint may be dismissed upon motion of the defendant or upon the courts own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action Petitioner wins, the counterclaim should proceed.

PAREDES V VERANO

G.R. No.164375 TINGA; October 12, 2006

FACTS - A complaint for the establishment of a right of way was filed at RTC Maasin by Paredes, Alago and Baybay (plaintiffs-petitioners) against Verano and Hinunangan (defendants-respondents). It culminated in a judgment by compromise. In the Compromise Agreement, Hinunangan granted a 2- meter-wide right of way in favor of Paredes for a consideration of P6K. - Alleging that petitioners had blocked the passage way in violation of the Compromise Agreement, respondents filed a complaint for specific performance with damages against petitioners. Petitioners answered, denied having violated the Compromise Agreement. They alleged that like them, respondents were not actual residents of Brgy Tagnipa where the "road right of way" was established and that respondent Hinunangan had already sold his only remaining lot in the vicinity to petitioner Paredes - Petitioners next filed MTD for lack of cause of action, which was denied by RTC. Petitioners elevated case to CA and SC but to no avail. Petitioners asked Judge Kapili to inhibit himself from the case. The judge denied the motion - Pre-trial was initially set and reset and reset again. In the pre-trial, Baybay's counsel moved to reset it to another date on account of a conflicting hearing. However, petitioner Baybay, who is the father of the counsel for petitioners, was present in court along with the other defendants. RTC was informed of a proposed settlement between the parties, although respondent Baybay qualified his reaction by telling the court that he would first have to inform his lawyer and the co-defendants of the said proposal. The RTC then commented unfavorably on the absence of petitioners' counsel, expressing disappointment towards his attitude, even making note of the fact that not once had the counsel appeared before the RTC, even though the case had already reached SC over the denial of MTD. RTC again reset the pre-trial date. - Before the new pre-trial date, counsel for petitioners filed a Manifestation of Willingness to Settle With Request for Cancellation. Apart from manifesting his willingness to settle the complaint, petitioners' counsel suggested to the opposing counsel that he be informed of the terms of the proposed settlement. So, petitioners' counsel requested the cancellation of the 23 Jan 2004 hearing. - But the hearing pushed through on 23 Jan 2004. Private respondents and their counsel were present. So were Baybay and Paredes, and co-defendant Alago, but not their counsel. The RTC allowed respondents to present their evidence ex parte, "for failure of the defendants counsel to appear before RTC. Petitioners filed MFR, but was denied - So, petitioners filed a petition for certiorari with CA. CA dismissed it for failure to attach duplicate original copies of the annexes to the petition other than the RTC Orders and for failure to submit such other pleadings relevant and pertinent to the petition. Petitioners filed MFR with Motion to Admit Additional Exhibits, adverting to the documents previously missing from the petition but attached to the motion. - MFR dismissed. CA resolved on the merits, ruling that under Sec 5, Rule 18 ROC, it is the failure of the defendant, and not defendant's counsel, to appear at the pre-trial that would serve cause to allow plaintiff to present evidence ex parte. CA noted that Baybay had made it clear that he would never enter into any amicable settlement without the advice of his counsel.

ISSUE WON the absence of the counsel for defendants at the pre-trial, with all defendants themselves present, is a ground to declare defendants in default and to authorize plaintiffs to present evidence ex parte. HELD NO Ratio The absence of counsel for defendants at pre-trial does not ipso facto authorize the judge to declare the defendant as in default and order the presentation of evidence ex parte. It bears stressing that nothing in the Rules of Court sanctions the presentation of evidence ex parte upon instances when counsel for defendant is absent during pre-trial. The Rules do not countenance stringent construction at the expense of justice and equity Reasoning - The order of RTC allowing respondents to present evidence ex parte was undoubtedly to the detriment of petitioners. Since the RTC would only consider the evidence presented by respondents, and not that of petitioners, the order strikes at the heart of the case, disallowing as it does any meaningful defense petitioners could have posed. A judgment of default against a defendant who failed to attend pre-trial, or even any defendant who failed to file an answer, implies a waiver only of their right to be heard and to present evidence to support their allegations but not all their other rights. - Nothing in the ROC authorizes a trial judge to allow the plaintiff to present evidence ex parte on account of the absence during pretrial of the counsel for defendant. In Rule 18, Sect. 4 imposes the duty on litigating parties and their respective counsel during pretrial. The provision also provides for the instances where the non-appearance of a party may be excused. Nothing, however, in Sec. 4 provides for a sanction should the parties or their respective counsel be absent during pre-trial. Instead, the penalty is provided for in Sec. 5. Notably, what Section 5 penalizes is the failure to appear of either the plaintiff or the defendant, and not their respective counsel. -The Court also cited cases and discussed why although they have similar facts are inapplicable or do not constitute a precedent to the instant case. These cases are: UCPB v. Magpay, Jonathan Landoil International Co. v. Mangudadat, SSS v. Chaves, Africa v. IAC. (See original) - Due process dictates that petitioners be deprived of their right to be heard and to present evidence to support their allegations if, and only if, there exists sufficient basis in fact and in law to do so. There being a manifest lack of such basis in this case, petitioners would be unjustly denied of the opportunity to fully defend themselves should the Court affirm the questioned orders which were evidently issued by the RTC with grave abuse of discretion. The better and certainly more prudent course of action in every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a case on technicalities - While counsel is somewhat to blame for his non-attendance at pre-trial, incidentally the operative act which gave birth to the controversy at bar, it would be most unfair to penalize petitioners for what may be the deficiency of their lawyer when the consequent penalty has no basis in law.

Circle financing vs CA

Facts: Roberto Jurado and Fortunata Jurado executed a deed of mortgage over real property belonging to them in favor of Tacing Regoso as security for a loan obtained from the latter in the sum of P40,150.65. The promissory note evidencing the obligation stipulated payment thereof by the Jurados in eighteen (18) monthly installments. Two days afterwards, with the spouses' consent, Tacing Regoso assigned all his rights and interests over the promissory note and the deed of mortgage in favor of Circle Financial Corporation. Some nineteen (19) months later, or on April 12, 1984, Circle Financial Corporation (hereafter, simply Circle) sent a letter to the Jurado spouses, together with a statement of account, demanding payment of P12,186.00, alleged to be the balance of their obligation. A subsequent letter, from Circle's attorney, also demanded payment in the amount of P11,752.90. The letters having gone unheeded, Circle requested the Provincial Sheriff of Bulacan to extrajudicially foreclose the mortgage constituted over the Jurado's land. The Sheriff scheduled the auction sale on July 10, 1984 at 10:00 in the morning. Notice of the sale was received by the Jurados on July 2, 1984. On the same day the spouses sent a letter to the Provincial Sheriff, Victorino Evangelista, and his deputy, Benjamin Hao, advising them that the loan secured by the mortgage had already been paid. A copy of the letter was given to Circle. The extrajudicial foreclosure sale nevertheless proceeded as scheduled, and the property was awarded to Circle as the lone bidder at its proffered price of P24,484.60. Circle filed an answer with counter claim. On the day appointed for the pre-trial, there was no appearance by Circle or its co-defendants or any of their counsel. Consequently, they were declared in default and evidence of the Jurado spouses were received ex parteon the same day, December 20, 1984. On May 13, 1985, the Trial Court rendered judgment against all the defendants, the dispositive portion of which reads as follows. Circle appealed to the Court of Appeals. In that Court it imputed to the Trial Court two errors, to wit: 1) in not notifying it of the order of default and hastily receiving plaintiffs' evidence ex parte on the same date as the pre-trial; and 2) in denying its verified motion to set aside the default order and judgment. ISSUE: whether or not the Court of Appeals erred in upholding the Trial Court's refusal to set aside the declaration of default entered against Circle and the default judgment thereafter rendered. HELD:

The order of default was correctly handed down must be conceded. It is explicitly warranted by Section 2, Rule 20 of the Rules of Court, viz.: "A party who fails to appear at a pre-trial conference may be non-suited or considered as in default." So, too, the reception of the plaintiffs' evidence ex parte and the rendition of judgment on the basis thereof, must be considered proper, being justified by Section 1, Rule 18 of the Rules of Court, in relation to Section 2, Rule 20, just mentioned. The remedy against an order of default is that provided for by Section 3, Rule 18, i.e., the filing by the party of "a motion under oath to set aside the order . . . upon proper showing that his failure to answer (or appear at the pre-trial) was due to fraud, accident, mistake or excusable neglect and that he has a meritorious defense." On the other hand, the remedy against a judgment by default is a motion for new trial under Rule 37 filed "(w)ithin the period for perfecting appeal" 4 in relation to the third paragraph of Section 2, Rule 41, 5 of the Rules of Court. This was the remedy availed of by Circle, a motion evidently grounded, more particularly, on Section 1 (a) of Rule 37, i.e., "fraud, accident, mistake or excusable negligence against which ordinary prudence could not have guarded and by which the movant has probably been substantially prejudiced in his substantial rights."