Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 200134               August 15, 2012

ROBERTO OTERO, Petitioner,
vs.
ROGER TAN, Respondent.

VILLARAMA, JR.,*

R E S O L U T I O N

REYES, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 dated April 29, 2011 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 02244, which affirmed the Judgment2 dated December 28, 2007 issued by the Regional Trial Court (RTC), Cagayan de Oro City, Branch 23 in Civil Case No. 2007-90.

The Antecedent Facts

A Complaint3 for collection of sum of money and damages was filed by Roger Tan (Tan) with the Municipal Trial Court in Cities (MTCC), Cagayan de Oro City on July 28, 2005 against Roberto Otero (Otero). Tan alleged that on several occasions from February 2000 to May 2001, Otero purchased on credit petroleum products from his Petron outlet in Valencia City, Bukidnon in the aggregate amount of ₱ 270,818.01. Tan further claimed that despite several verbal demands, Otero failed to settle his obligation.

Despite receipt of the summons and a copy of the said complaint, which per the records of the case below were served through his wife Grace R. Otero on August 31, 2005, Otero failed to file his answer with the MTCC.

On November 18, 2005, Tan filed a motion with the MTCC to declare Otero in default for his failure to file his answer. Otero opposed Tanís motion, claiming that he did not receive a copy of the summons and a copy of Tanís complaint. Hearing on the said motion was set on January 25, 2006, but was later reset to March 8, 2006, Otero manifesting that he only received the notice therefor on January 23, 2006. The hearing on March 8, 2006 was further reset to April 26, 2006 since the presiding judge was attending a convention. Otero failed to appear at the next scheduled hearing, and the MTCC issued an order declaring him in default. A copy of the said order was sent to Otero on May 9, 2006. Tan was then allowed to present his evidence ex parte.

Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita Sara, his employees in his Petron outlet who attended Otero when the latter made purchases of petroleum products now the subject of the action below. He likewise presented various statements of account4 showing the petroleum products which Otero purchased from his establishment. The said statements of account were prepared and checked by a certain Lito Betache (Betache), apparently likewise an employee of Tan.

The MTCC Decision

On February 14, 2007, the MTCC rendered a Decision5 directing Otero to pay Tan his outstanding obligation in the amount of ₱ 270,818.01, as well as attorneyís fees and litigation expenses and costs in the amounts of ₱ 15,000.00 and ₱ 3,350.00, respectively. The MTCC opined that Oteroís failure to file an answer despite notice is a tacit admission of Tanís claim.

Undeterred, Otero appealed the MTCC Decision dated February 14, 2007 to the RTC, asserting that the MTCCís disposition is factually baseless and that he was deprived of due process.

The RTC Decision

On December 28, 2007, the RTC rendered a Judgment6 affirming the MTCC Decision dated February 14, 2007. The RTC held that the statements of account that were presented by Tan before the MTCC were overwhelming enough to prove that Otero is indeed indebted to Tan in the amount of ₱ 270,818.01. Further, brushing aside Oteroís claim of denial of due process, the RTC pointed out that:

As to the second assignment of error, suffice to say that as borne out by the record of the case, defendant-appellant was given his day in Court contrary to his claim. His wife, Grace R. Otero received a copy of the summons together with a copy of the Complaint and its corresponding annexes on August 31, 2005, per Return of Service made by Angelita N. Bandoy, Process Server of OCC-MTCC of Davao City. He was furnished with a copy of the Motion to Declare Defendant in Default on November 18, 2005, per Registry Receipt No. 2248 which was received by the defendant. Instead of filing his answer or any pleading to set aside the Order of default, he filed his Comment to the Motion to Declare Defendant in Default of which plaintiff filed his Rejoinder to Defendantís Comment.

The case was set for hearing on January 23, 2006, but defendant through counsel sent a telegram that he only received the notice on the day of the hearing thereby he was unable to appear due to his previous scheduled hearings. Still, for reasons only known to him, defendant failed to lift the Order of Default.

The hearing on January 23, 2006 was reset on March 8, 2006 and again reset on April 26, 2006 by agreement of counsels x x x.

It is not therefore correct when defendant said that he was deprived of due process.7

Otero sought reconsideration of the Judgment dated December 28, 2007 but it was denied by the RTC in its Order8 dated February 20, 2008.

Otero then filed a petition for review9 with the CA asserting that both the RTC and the MTCC erred in giving credence to the pieces of evidence presented by Tan in support of his complaint. Otero explained that the statements of account, which Tan adduced during the ex parte presentation of his evidence, were prepared by a certain Betache who was not presented as a witness by Tan. Otero avers that the genuineness and due execution of the said statements of account, being private documents, must first be established lest the said documents be rendered inadmissible in evidence. Thus, Otero asserts, the MTCC and the RTC should not have admitted in evidence the said statements of account as Tan failed to establish the genuineness and due execution of the same.

The CA Decision

On April 29, 2011, the CA rendered the assailed Decision10 which denied the petition for review filed by Otero. In rejecting Oteroís allegation with regard to the genuineness and due execution of the statements of account presented by Tan, the CA held that any defense which Otero may have against Tanís claim is already deemed waived due to Oteroís failure to file his answer. Thus:

Otero never denied that his wife received the summons and a copy of the complaint. He did not question the validity of the substituted service. Consequently, he is charged with the knowledge of Tanís monetary claim. Section 1, Rule 9 of the Rules of Court explicitly provides that defenses and objections not pleaded are deemed waived. Moreover, when the defendant is declared in default, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant.

Due to Oteroís failure to file his Answer despite being duly served with summons coupled with his voluntary appearance in court, he is deemed to have waived whatever defenses he has against Tanís claim. Apparently, Otero is employing dilatory moves to defer the payment of his obligation which he never denied.11 (Citation omitted)

Oteroís Motion for Reconsideration12 was denied by the CA in its Resolution13 dated December 13, 2011.

Hence, the instant petition.

Issues

Essentially, the fundamental issues to be resolved by this Court are the following: first, whether Otero, having been declared in default by the MTCC, may, in the appellate proceedings, still raise the failure of Tan to authenticate the statements of account which he adduced in evidence; and second, whether Tan was able to prove the material allegations of his complaint.

The Courtís Ruling

The petition is denied.

First Issue: Authentication of the Statements of Account

The CA, in denying the petition for review filed by Otero, held that since he was declared in default by the MTCC, he is already deemed to have waived whatever defenses he has against Tanís claim. He is, thus, already barred from raising the alleged infirmity in the presentation of the statements of account.

We do not agree.

A defendant who fails to file an
answer loses his standing in court.

The effect of a defendantís failure to file an answer within the time allowed therefor is primarily governed by Section 3, Rule 9 of the Rules of Court, viz:

Sec. 3. Default; declaration of. Ė 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. Thereupon, 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. x x x (Emphasis ours)

A defendant who fails to file an answer may, upon motion, be declared by the court in default. Loss of standing in court, the forfeiture of oneís right as a party litigant, contestant or legal adversary, is the consequence of an order of default. A party in default loses his right to present his defense, control the proceedings, and examine or cross-examine witnesses. He has no right to expect that his pleadings would be acted upon by the court nor may be object to or refute evidence or motions filed against him.14

A defendant who was declared in
default may nevertheless appeal
from the judgment by default,
albeit on limited grounds.

Nonetheless, the fact that a defendant has lost his standing in court for having been declared in default does not mean that he is left sans any recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated the remedies available to party who has been declared in default, to wit:

a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)16 (Emphasis ours)

Indeed, a defending party declared in default retains the right to appeal from the judgment by default. However, the grounds that may be raised in such an appeal are restricted to any of the following: first, the failure of the plaintiff to prove the material allegations of the complaint; second, the decision is contrary to law; and third, the amount of judgment is excessive or different in kind from that prayed for.17 In these cases, the appellate tribunal should only consider the pieces of evidence that were presented by the plaintiff during the ex parte presentation of his evidence.

A defendant who has been declared in default is precluded from raising any other ground in his appeal from the judgment by default since, otherwise, he would then be allowed to adduce evidence in his defense, which right he had lost after he was declared in default.18 Indeed, he is proscribed in the appellate tribunal from adducing any evidence to bolster his defense against the plaintiffís claim. Thus, in Rural Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines,19 this Court explained that:

It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. 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.20 (Citations omitted and emphasis ours)

Here, Otero, in his appeal from the judgment by default, asserted that Tan failed to prove the material allegations of his complaint. He contends that the lower courts should not have given credence to the statements of account that were presented by Tan as the same were not authenticated. He points out that Betache, the person who appears to have prepared the said statements of account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the MTCC to identify and authenticate the same. Accordingly, the said statements of account are mere hearsay and should not have been admitted by the lower tribunals as evidence.

Thus, essentially, Otero asserts that Tan failed to prove the material allegations of his complaint since the statements of account which he presented are inadmissible in evidence. While the RTC and the CA, in resolving Oteroís appeal from the default judgment of the MTCC, were only required to examine the pieces of evidence that were presented by Tan, the CA erred in brushing aside Oteroís arguments with respect to the admissibility of the said statements of account on the ground that the latter had already waived any defense or objection which he may have against Tanís claim.

Contrary to the CAís disquisition, it is not accurate to state that having been declared in default by the MTCC, Otero is already deemed to have waived any and all defenses which he may have against Tanís claim.

While it may be said that by defaulting, the defendant leaves himself at the mercy of the court, the rules nevertheless see to it that any judgment against him must be in accordance with the evidence required by law. The evidence of the plaintiff, presented in the defendantís absence, cannot be admitted if it is basically incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence should be considered against him. If the same should prove insufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if a favorable judgment is justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.21

Thus, in SSS v. Hon. Chaves,22 this Court emphasized that:

We must stress, however, that a judgment of default against the petitioner who failed to appear during pre-trial or, for that matter, any defendant who failed to file an answer, does not imply a waiver of all of their rights, except their right to be heard and to present evidence to support their allegations. Otherwise, it would be meaningless to request presentation of evidence every time the other party is declared in default. If it were so, a decision would then automatically be rendered in favor of the non-defaulting party and exactly to the tenor of his prayer. The law also gives the defaulting parties some measure of protection because plaintiffs, despite the default of defendants, are still required to substantiate their allegations in the complaint.23 (Citations omitted and emphasis ours)

The statements of account
presented by Tan were merely
hearsay as the genuineness and due
execution of the same were not
established.

Anent the admissibility of the statements of account presented by Tan, this Court rules that the same should not have been admitted in evidence by the lower tribunals.

Section 20, Rule 132 of the Rules of Court provides that the authenticity and due execution of a private document, before it is received in evidence by the court, must be established. Thus:

Sec. 20. Proof of private document. Ė Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either:

a) By anyone who saw the document executed or written; or

b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

A private document is any other writing, deed, or instrument executed by a private person without the intervention of a notary or other person legally authorized by which some disposition or agreement is proved or set forth. Lacking the official or sovereign character of a public document, or the solemnities prescribed by law, a private document requires authentication in the manner allowed by law or the Rules of Court before its acceptance as evidence in court. The requirement of authentication of a private document is excused only in four instances, specifically: (a) when the document is an ancient one within the context of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness and authenticity of an actionable document have not been specifically denied under oath by the adverse party; (c) when the genuineness and authenticity of the document have been admitted; or (d) when the document is not being offered as genuine.24

The statements of account which Tan adduced in evidence before the MTCC indubitably are private documents. Considering that these documents do not fall among the aforementioned exceptions, the MTCC could not admit the same as evidence against Otero without the required authentication thereof pursuant to Section 20, Rule 132 of the Rules of Court. During authentication in court, a witness positively testifies that a document presented as evidence is genuine and has been duly executed, or that the document is neither spurious nor counterfeit nor executed by mistake or under duress.25

Here, Tan, during the ex parte presentation of his evidence, did not present anyone who testified that the said statements of account were genuine and were duly executed or that the same were neither spurious or counterfeit or executed by mistake or under duress. Betache, the one who prepared the said statements of account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the MTCC.

Considering that Tan failed to authenticate the aforesaid statements of account, the said documents should not have been admitted in evidence against Otero. It was thus error for the lower tribunals to have considered the same in assessing the merits of Tanís Complaint.

Second Issue: The Material Allegations of the Complaint

In view of the inadmissibility of the statements of account presented by Tan, the remaining question that should be settled is whether the pieces of evidence adduced by Tan during the ex parte presentation of his evidence, excluding the said statements of account, sufficiently prove the material allegations of his complaint against Otero.

We rule in the affirmative.

In civil cases, it is a basic rule that the party making allegations has the burden of proving them by a preponderance of evidence. The parties must rely on the strength of their own evidence and not upon the weakness of the defense offered by their opponent.26 This rule holds true especially when the latter has had no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that may be granted can only be so much as has been alleged and proved with preponderant evidence required under Section 1 of Rule 133.27

Notwithstanding the inadmissibility of the said statements of account, this Court finds that Tan was still able to prove by a preponderance of evidence the material allegations of his complaint against Otero.

First, the statements of account adduced by Tan during the ex parte presentation of his evidence are just summaries of Otero's unpaid obligations, the absence of which do not necessarily disprove the latter's liability.

Second, aside from the statements of account, Tan likewise adduced in evidence the testimonies of his employees in his Petron outlet who testified that Otero, on various occasions, indeed purchased on credit petroleum products from the former and that he failed to pay for the same. It bears stressing that the MTCC, the R TC and the CA all gave credence to the said testimonial evidence presented by Tan and, accordingly, unanimously found that Otero still has unpaid outstanding obligation in favor of Tan in the amount of ₱ 270,818.01.

Well-established is the principle that factual findings of the trial court, when adopted and confirmed by the CA, are binding and conclusive on this Court and will generally not be reviewed on appeal.28 The Court sees no compelling reason to depart from the foregoing finding of fact of the lower courts.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated April 29, 2011 rendered by the Court of Appeals in CA-G.R. SP No. 02244 is AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson, Second Division

ARTURO D. BRION
Associate Justice
MARTIN S. VILLARAMA, JR.
Associate Justice

JOSE PORTUGAL PEREZ
Associate Justice

C E R T I F I C A T I O N

I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296
The Judiciary Act of 1948, as amended)


Footnotes

* Additional member per Special Order No. 1274 dated July 30. 2012 vice Associate Justice Maria Lourdes P.A. Sereno.

1 Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo V. Borja and Rodrigo F. Lim. Jr., concurring; rollo, pp. 30-33.

2 Under the sala of Presiding Judge Ma. Anita M. Esguerra-Lucagho; id. at 49-50.

3 Id. at 44-46.

4 Id. at 73-81.

5 Under the sala of Judge Eleuteria Badoles-Algodon; id. at 47-48.

6 Id. at 49-50.

7 Id.

8 Id. at 51.

9 Id. at 52-63.

10 Id. at 30-33.

11 Id. at 32-33.

12 Id. at 34-40.

13 Id. at 42-43.

14 See S.C. Johnson & Son, Inc. v. Court of Appeals, 188 Phil. 579 (1990); Cavili v. Judge Florendo, 238 Phil. 597, 603 (1987).

15 220 Phil. 311 (1985).

16 Id. at 316-317.

17 See Martinez v. Republic of the Philippines, 536 Phil. 868 (2006).

18 See Arquero v. Court of Appeals, G.R. No. 168053, September 21, 2011.

19 479 Phil. 43 (2004).

20 Id. at 52.

21 See Tanhu v. Judge Ramolete, 160 Phil. 1101, 1126 (1975).

22 483 Phil. 292 (2004).

23 Id. at 301-302.

24 Patula v. People of the Philippines, G.R. No. 164457, April 11, 2012.

25 Salas v. Sta. Mesa Market Corporation, G.R. No. 157766, July 12, 2007, 527 SCRA 465, 472.

26 See New Sun Valley Homeownersí Association, Inc. v. Sangguniang Barangay, Barangay Sun Valley, Parañaque City, G.R. No. 156686, July 27, 2011, 654 SCRA 438, 464.

27 See Gajudo v. Traders Royal Bank, 519 Phil. 791, 803 (2006).

28 Insular Investment and 71-ust Corporation v. Capital One Equities Corp., G.R. No. 183308, April 25,2012.


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