Banco de Oro, EPCI, Inc.

(Formerly Equitable PCI Bank), petitioner,

v. John Tansipek, respondent
G.R. No. 181235; July 22, 2009
Chico-Nazario, J.:p

Doctrine: The remedy against an Order of Default is not a Motion for Reconsideration but
a Motion to Lift Order of Default under Rule 9, Section 3 of the Rules of Court.

FACTS:
J.O. Construction, Inc. (JOCI) entered into a contract with Duty Free Phils., Inc. for the
construction of a Duty Free shop in Mandaue City. Duty Free made payments either directly to
JOCI or through defendant John Tansipek, its authorized collector. Initial payments made
through Tansipek were remitted to JOCI, but the last check amounting to Php 4,050,136.51 was
not turned over by the respondent. Apparently, Tansipek deposited the check to his personal
account with Equitable PCI Bank (PCIB), and the bank allowed the deposit despite the fact that
the check was crossed and Tansipek had no authority to endorse the same. PCIB refused to
pay the amount to JOCI; hence, the latter filed a case against the former.

PCIB then filed a third-party complaint against Tansipek (as third-party defendant) and prayed
for subrogation and attorneys fees. Tansipek was given time to file his Answer, but was later on
declared in default. He filed a Motion to Reconsider the Default Order, but the same was denied.
Therefore, he filed a Petition for Certiorari with the Court of Appeals assailing the Default Order
and the denial of the Motion for Reconsideration. However, in 1998, the CA dismissed the
petition for respondents failure to attach the assailed Orders. Tansipek did not appeal this
denial.

RTC Ruling:
The trial on the main case ensued, and judgment was rendered in favor of JOCI in 2000. The
trial court ordered PCIB to pay JOCI the amount in question, as well as interest and cost of suit.
As to the third-party complaint, Tansipek was ordered to pay PCIB all the amounts PCIB has to
pay to JOCI.

CA Ruling:
Tansipek appealed the 2000 Decision to the CA, and in 2006, the court remanded the case back
to the trial court after finding that it was an error on the lower courts part to act on PCIBs
motion to declare Tansipek in default.

Petitioner Banco de Oro, the successor-in-interest, filed a Petition for Review before the
Supreme Court assailing the 2006 decision.

ISSUE:
Whether or not the proper remedy was to file a motion for reconsideration or motion to lift order
of default.
HELD:
NO. Respondent Tansipeks remedy against the Order of Default was erroneous from the very
beginning. Respondent Tansipek should have filed a Motion to Lift Order of Default, and not a
Motion for Reconsideration, pursuant to Section 3(b), Rule 9 of the Rules of Court:

(b) Relief from order of default.A party declared in default may at any time after
notice thereof and before judgment file a motion under oath to set aside the order
of default upon proper showing that his failure to answer was due to fraud,
accident, mistake or excusable negligence and that he has a meritorious
defense. In such case, the order of default may be set aside on such terms and
conditions as the judge may impose in the interest of justice.

A Motion to Lift Order of Default is different from an ordinary motion in that the Motion should be
verified; and must show fraud, accident, mistake or excusable neglect, and meritorious
defenses. The allegations of (1) fraud, accident, mistake or excusable neglect, and (2) of
meritorious defenses must concur.

Assuming for the sake of argument, however, that respondent Tansipeks Motion for
Reconsideration may be treated as a Motion to Lift Order of Default, his Petition for Certiorari on
the denial thereof has already been dismissed with finality by the Court of Appeals. Respondent
Tansipek did not appeal said ruling of the Court of Appeals to this Court. The dismissal of the
Petition for Certiorari assailing the denial of respondent Tansipeks Motion constitutes a bar to
the retrial of the same issue of default under the doctrine of the law of the case.