3.

Gajudo vs. Traders Royal Bank, G.R. No. 151098, March 21, 2006

Facts:

Chua obtained a loan from Traders Royal Bank secured by a Real

Estate Mortgage of a property owned in common by Chua and the Gajudos.
They failed to settle the loan and thus there was an extrajudicial
foreclosure of the property in which the winning bidder was the bank. The
petitioners contend that they were allowed by the bank to repurchase the
property but it was sold to another. The petitioners state that the said new
defendants they included in their amended complaint conspired with the
bank in cancelling the notice of lis pendens by falsifying a letter sent to and
filed with the Office of the Register of Deeds of Quezon City, purportedly
for the cancellation of said notice so now they are claiming for damages.
Summons were served on the bank but they failed to file their answer.
Thus, the petitioners were allowed to present ex parte to claim for
damages. Thereafter, the Trial Court rendered the new questioned partial
decision.

Aggrieved, the bank filed a motion to set aside the a partial decision
by default and admitted their answer with counterclaim: thereunder it
averred, among others, that the erroneous filing of said answer was due to
an honest mistake of the typist and inadvertence of its counsel. The Trial
Court thumbed down the motion in its Order of 26 July 1993.

The bank appealed the partial decision to the CA. The CA ruled in
favor of respondent bank for the petitioners had not convincingly
established their right to relief as there was no ground to invalidate the
foreclosure sale of the mortgaged property.

The petitioners argue that the quantum of evidence for judgments

flowing from a default order under Section 3 of Rule 9 is not the same as
that provided for in Section 1 of Rule 133 (Preponderance of Evidence Rule)

Issue:

Whether or not the Respondent Court of Appeals erred in failing to

apply the provisions of Section 3, Rule 9 of the 1997 Rules of Civil
Procedure [and in applying instead] the rule on preponderance of evidence
under Section 1, Rule 133 of the Rules of Court.

Ruling:
 No, the CA did not err. Between the two Rules, there is no
incompatibility that would preclude the application of either one of them.
Section 3 of Rule 9 governs the procedure the Trial Court is directed to take
when a defendant fails to file an answer. According to the provision, the
court “shall proceed to render judgment granting the claimant such relief
as his pleading may warrant,” subject to the courts discretion on whether
to require the presentation of evidence ex parte. The same provision also
sets down guidelines on the nature and extent of the relief that may be
granted. Basic is the rule that the party making allegations has the burden
of proving them by a preponderance of evidence. Moreover, parties must
rely on the strength of their own evidence, not upon the weakness of the
defense offered by their opponent. This principle holds true, especially
when the latter has had no opportunity to present evidence because of a
default order.

The mere fact that a defendant is declared in default does not

automatically result in the grant of the prayers of the plaintiff. To win, the
latter must still present the same quantum of evidence that would be
required if the defendant were still present. A party that defaults is not
deprived of its rights, except the right to be heard and to present evidence
to the trial court. If the evidence presented does not support a judgment
for the plaintiff, the complaint should be dismissed, even if the defendant
may not have been heard or allowed to present any countervailing
evidence. Unfortunately for petitioners, the grant of damages was not
sufficiently supported by the evidence for the following reasons:

First, petitioners were not deprived of their property without

cause. There has been no allegation or proof of noncompliance with the
requirement of publication and public posting of the notice of sale. Neither
has there been competent evidence to show that the price paid at the
foreclosure sale was inadequate. Thus, there was no ground to invalidate
the sale.

Second, the petitioners have not convincingly established their right

to damages on the basis of the purported agreement to repurchase. The
entitlement to actual and compensatory damages must be proved even
under Section 3 of Rule 9 of the Rules of Court.

Petitioners have failed to convince this Court of the cogency of their

position, notwithstanding the advantage they enjoyed in presenting their
evidence ex parte. Not in every case of default by the defendant is the
complainant entitled to win automatically.

Hence, the petition is denied.