Stratchan and Macmurray vs CA

Facts:

SM filed a case against Espinsa for a recovery of sum of money. Espinosa was eventually declared
in default and judgment was rendered against him. Espinosa later filed a petition to set aside
judgment claiming excusable negligence for his failure to appear at the trial which was denied
by the TC. Espinosa filed a notice of appeal and the order denying the petition to set aside the
judgment by default, SM filed a motion to dismiss. The TC denied the motion on the ground that
the appeal had been perfect and the records were transmitted to the RTC. Hence SM filed another
motion to dismiss before the RTC, which was granted. Espinosa filed a petition for certiorari
before the CA, a decision was rendered ruling backwards, that the filing by respondent of an
unreasonable petition to set aside the default order should be considered as an MR in accordance
with the old Rules and this constitutes a sufficient compliance of the law requiring a defaulting
party to file a motion to set aside order of default to regain his legal standing in court.

Issue:

Whether the CA erred in setting aside the RTC order dismissing the appeal and instead ordering
said court to give due course to the appeal?

Whether a party who has been declared in default in said court can still appeal from such
judgment?

Held:

1. Yes. Espinosa has indubitably lost his right of appeal since he admittedly did not
seasonably file a motion to set aside the order of default nor did he timely file with the
RTC a petition for relief from the default of judgment of the municipal court. The appellate
court’s decision is bereft of any finding that Espinosa’s failure to appear at the trial and
to file answer was due to excusable negligence, such as to warrant its ultraliberal act of
ordering the reinstatement of the appeal, despite Espinosa’s failure to comply with the
requirements of the Rules of Court. If at all, the very denial of the municipal court of such
claim of excusable negligence by Espinosa stands unchallenged and unrefuted.
2. A defendant who has been declared in default by the municipal court or city court in
order to enable him to restore his standing in court, may avaul himself of either of the
two remedies:
a. He may ask the court 1 day after notice of default to set aside such order by appearing
and showing to the satisfaction of the court that his failure to appear was due to
fraud, accident, mistake or excusable negligence under Rule 5 Sec. 13
b. He may, if he fails, file a petition for relief in the RTC under Rule 38 Sec. 1. He may
also file a motion to lift the default judgment and ask for new trial, before the
judgment becomes final and executory under Rule 5 Sec. 16.

The innovation of the Revised Rules of Court in Rule 41 Sec. 2 which allows a party who
has been declared in default to appeal from the judgment rendered against him as
contrary to the evidence or the law, even if no petition for relief to set aside the order of
default has been presented by him pursuant to Rule 38 is not applicable to municipal or
city courts.