National Power Corporation and National Power Board vs. Baysic and Santiago

Certiorari under Rule 65 may be availed of to nullify an order of default and the resulting default judgment where the trial court is charged with grave abuse of discretion amounting to excess of jurisdiction in declaring the party in default, even though the remedy of appeal is generally available to parties declared in default.

National Power Corporation (NPC) employed private respondents Emma Y. Baysic and Narcisa G. Santiago, who retired prior to the enactment of Republic Act No. 9136 (the Electric Power Industry Reform Act or EPIRA). The retirees, representing 488 former NPC employees, claimed entitlement to gratuity pay and financial assistance allegedly accrued before EPIRA's enactment. When NPC declined to provide these benefits, contending that such obligations applied only to personnel employed as of the EPIRA enactment date, the retirees initiated mandamus proceedings.

• The Mandamus Petition: On July 12, 2007, Emma Y. Baysic and Narcisa G. Santiago, for themselves and as representatives of 488 NPC retirees, filed a Petition for Mandamus with Prayer for Accounting before the RTC of Quezon City, Branch 83. They sought to compel petitioner National Power Corporation (NPC) to release gratuity pay and financial assistance allegedly accrued to them prior to the enactment of Republic Act No. 9136 (EPIRA).

• The Answer and Verification Controversy: Petitioners filed an Answer dated October 17, 2008, arguing that the obligation to provide financial assistance applied only to NPC personnel employed as of the EPIRA enactment date. The Answer was verified by Atty. Melchor P. Ridulme, NPC Vice-President and General Counsel. Private respondents moved to strike out the Answer on November 12, 2008, claiming that no proof of authority was attached to show Atty. Ridulme could verify on behalf of NPC, and that the verification failed to comply with Section 4, Rule 7 of the Rules of Court.

• Declaration of Default: By Order dated January 30, 2009, the trial court expunged the Answer as a "mere scrap of paper" due to the verification defect. On November 5, 2009, the court declared petitioners in default. Petitioners' subsequent motion to lift the order of default and admit the Answer was denied by Order dated May 18, 2010.

• Default Judgment and Certiorari Proceedings: While petitioners' Petition for Certiorari and Prohibition was pending before the Court of Appeals, the trial court rendered a default judgment against them. Petitioners amended their certiorari petition to include the default judgment. The Court of Appeals dismissed the petition via Resolution dated March 4, 2014, ruling that appeal was the proper remedy, not certiorari. The motion for reconsideration was denied on August 11, 2014.

• Availability of Certiorari: Petitioner maintained that certiorari under Rule 65 is the proper remedy where a party imputes grave abuse of discretion to the trial judge who improvidently declared them in default and consequently rendered a default judgment against them.

• Improper Expunction of Answer: Petitioner asserted that the trial court erred in considering their Answer as an unsigned pleading in view of its alleged lack of proper verification, arguing that the verification substantially complied with procedural requirements.

• Improper Remedy: Respondent countered that the Amended Petition for Certiorari was improper since the remedy of appeal from the decision of the trial court was actually available to petitioners, thus precluding them from availing of the extraordinary remedy of certiorari under Rule 65.

• Availability of Appeal: Respondent argued that a party declared in default retains the right to appeal from the trial court's default judgment, making certiorari unavailable as a substitute for appeal.

• Availability of Certiorari Despite Appeal: Whether certiorari under Rule 65 is available to challenge an order of default and the resulting default judgment where the trial court is charged with grave abuse of discretion, notwithstanding the general availability of appeal as a remedy for parties declared in default.

• Availability of Certiorari Despite Appeal: Certiorari is available to assail an order of default and default judgment where grave abuse of discretion is charged. While appeal is generally the remedy for default judgments, when a party charges the trial court with grave abuse of discretion amounting to excess of jurisdiction in declaring the party in default and rendering judgment, the extraordinary remedy of certiorari may be availed of. Appeal is not a plain, speedy, and adequate remedy where the party vigorously asserts that the trial court committed grave abuse of discretion. The Court of Appeals erred in dismissing the petition on the ground that appeal was available.

• Remedies of a Party Declared in Default — A party declared in default has the following remedies: (a) file a motion under oath to set aside the order of default before judgment on the ground that failure to answer was due to fraud, accident, mistake, or excusable negligence and that a meritorious defense exists (Sec. 3(b), Rule 9); (b) file a motion for new trial under Section 1(a) of Rule 37 if the judgment has been rendered but is not yet final; (c) file a petition for relief under Section 1 of Rule 38 if the judgment has become final and executory; (d) appeal from the judgment rendered as contrary to evidence or law (Sec. 2, Rule 41); and (e) file a petition for certiorari to declare the nullity of a judgment by default if the trial court improperly declared the party in default or if grave abuse of discretion attended such declaration.

• Certiorari as Substitute for Appeal — Certiorari is available to challenge a default judgment when the trial court is charged with grave abuse of discretion amounting to lack or excess of jurisdiction in declaring the party in default. The existence of the ordinary remedy of appeal does not preclude certiorari where appeal is not a plain, speedy, and adequate remedy, such as when the lower court's acts constitute a capricious and whimsical exercise of judgment amounting to lack of jurisdiction.

• "True, in cases of default judgments, the remedy of the party declared in default is appeal. But when that party charges the trial court with grave abuse of discretion amounting to excess of jurisdiction in declaring this party in default and eventually rendering judgment against it, the extraordinary remedy of certiorari under Rule 65 of the Rules of Court may be availed of."

• "In fine, the Court of Appeals erred when it ruled that petitioners availed of the wrong remedy. Under Rule 65, while the remedy of appeal is indeed available to petitioners, the same is clearly not a plain, speedy, and adequate remedy in light of petitioners' vigorous assertion that the trial court committed grave abuse of discretion when it declared petitioners in default and rendered an adverse judgment against them."

• David v. Judge Gutierrez-Fruelda, 597 Phil. 354 (2009) — Cited for the enumeration of remedies available to a party declared in default, including the availability of certiorari where grave abuse of discretion is present.

• Martinez v. Republic of the Philippines citing Matute v. Court of Appeals, 536 Phil. 868 (2006) — Cited for the principle that a party improvidently declared in default has the option to either perfect an appeal or interpose a petition for certiorari seeking to nullify the order of default and the default judgment.

• Rule 65, Rules of Court — Governs the petition for certiorari as an extraordinary remedy available when grave abuse of discretion amounting to lack or excess of jurisdiction is charged against a tribunal.

• Section 4, Rule 7, Rules of Court — Governs the verification of pleadings; cited regarding the verification requirements that led to the expunction of petitioners' Answer.

• Section 3(b), Rule 9, Rules of Court — Provides for the motion to set aside order of default on the ground of fraud, accident, mistake, or excusable negligence.

• Section 1(a), Rule 37, Rules of Court — Provides for motion for new trial on the ground of fraud, accident, mistake, or excusable negligence.

• Section 1, Rule 38, Rules of Court — Provides for petition for relief from judgment.

• Section 2, Rule 41, Rules of Court — Provides that a party declared in default may appeal from the judgment rendered against him.

Carpio (Chairperson), Caguioa, J. Reyes, Jr., and Zalameda, JJ.