G.R. No. 124243 - SPOUSES RUDY S. AMPELOQUIO, SR. AND LAGRIMAS OBNAMIA, VS. COURT OF APPEALS, HON. FEDERICO A. TAÑADA, PHILIPPINE NATIONAL BANK.R E S O L U T I O N - Supreme Court E-Library

Ruling

Accordingly, upon the expiration of the redemption period, TCT Nos. T-290750 and 290751 were issued, transferring ownership of said parcels to PNB. On October 24, 1994, petitioners filed before the Regional Trial Court of Lucena City, Branch 57, a complaint [4] for the annulment of a mortgage contract they entered into with PNB. Petitioners further asked for the declaration of nullity of extra-judicial foreclosure of their mortgaged properties and the cancellation of TCT Nos. T-290750 and 290751 already issued in PNB's name. On November 4, 1994, PNB filed a motion for extension of time to file an answer. On November 18, 1994, instead of filing an answer, PNB filed a motion [5] to dismiss on the ground of lack of cause of action. In its Order [6] dated February 23, 1995, the trial court denied PNB's motion to dismiss. The order was sent through registered mail and addressed to Atty. Giovanni Manzala at PNB Bldg., Escolta, Manila. PNB claimed it did not receive the trial court's order because Atty. Manzala who temporarily handled the case, no longer held office at Escolta. The case was eventually transferred to Atty. Rolando Torres of PNB, CEPZ Branch Legal Unit of Rosario, Cavite. On July 5, 1995, petitioners filed a motion to declare private respondent in default for its failure to file an answer within the reglementary period. On July 17, 1995, respondent PNB filed an opposition and attached its answer with counterclaim. HTML On July 28, 1995, the trial court issued the order, which denied petitioners' motion to declare respondent PNB in default. Petitioners' motion for reconsideration was similarly denied on September 20, 1995, to wit : "Pending resolution is plaintiffs' [herein, petitioners] Motion for Reconsideration as well as defendants' [respondent PNB] opposition thereto. After going over the pleadings and a keen study of existing jurisprudence, this Court subscribes with the Supreme Court's views that it should frown upon technicalities. There is a need for a full-blown trial in this case. Further, there is no new matters (sic) injected in plaintiffs' motion for reconsideration which will warrant a reversal or setting aside this Court's order dated July 28, 1995. WHEREFORE, premises considered, plaintiff's Motion for Reconsideration dated August 16, 1995 is hereby denied. SO ORDERED" [7] Whereupon, petitioners raised the matter to the Court of Appeals under Rule 65 of the Rules of Court. In its February 14, 1996 decision, the Court of Appeals dismissed the petition for lack of merit. Hence this petition, raising a single issue: WHETHER THE RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT AND NOT FINDING THE RESPONDENT IN DEFAULT DESPITE ITS FAILURE TO FILE AN ANSWER WITHIN THE REGLEMENTARY PERIOD PROVIDED FOR BY LAW. Briefly, petitioners assert that the trial court should have declared the respondent bank in default because PNB's reasons for the delay in filing its answer were inexcusable. The bank was valid