G.R. No. 141968 - International Corporate Bank vs. Spouses Gueco

In 1993, petitioner Viking Industrial Corporation extended a loan of P2,000,000.00 to respondent Jose L. Luison, Jr.
The loan was secured by a promissory note and a real estate mortgage.
Two years later, petitioner demanded payment of P19,102,916.39, allegedly representing the principal, interest, and penalties.
Respondent disputed the computation and accuracy of the amount claimed.

Respondent initiated a petition for prohibition and declaratory relief with the RTC, Branch 77, Quezon City, challenging the computation of indebtedness.
Petitioner did not answer the petition because it was erroneously impleaded as “Viking Trading Corporation” instead of “Viking Industrial Corporation.”
As a result, upon respondent’s motion, the RTC declared petitioner in default.
On July 8, 1996, Judge Ignacio L. Salvador rendered a default judgment in favor of respondent which:

Held that the principal of the loan was P1,453,500.00.
Ordered a reduction of the interest rate from 60% per annum to 30% per annum to commence in October 1993.
Enjoined petitioner from certain actions until respondent’s debt computation was adjusted.
Awarded petitioner P150,000.00 in attorney’s fees.

Petitioner received a copy of the judgment on August 9, 1996, but did not appeal.
Respondent, moving through the proper channels, had the RTC issue an Order on October 15, 1996, directing execution of the judgment.
The Sheriff’s Return, executed by Deputy Sheriff Angel L. Doroni, indicated that a cheque for P790,605.59 was tendered, recognized as partial payment but later acknowledged as full satisfaction once additional evidence surfaced.
Despite these proceedings, petitioner refused to acknowledge the full satisfaction of the judgment.

One to require petitioner to cancel the annotation of the mortgage and return the Transfer Certificate of Title No. 100313.
Another to enjoin the ex-officio Sheriff from selling the subject property at public auction.

Initially, the RTC denied the motions and set aside the default judgment based on lack of jurisdiction due to the erroneous service (the summons was served to “Viking Trading Corporation”).
On reconsideration, however, the RTC reversed its decision by reinstating the default judgment and granting the reliefs sought by respondent.
Petitioner’s subsequent motion for reconsideration was denied.

Petitioner filed a petition for certiorari with the Court of Appeals (CA-G.R. SP No. 45643) which was dismissed on June 11, 1998.
The CA emphasized that:

Summons, notices, and orders were properly served notwithstanding the clerical error in the naming of the corporation.
The voluntary appearance of petitioner’s president and its counsel effectively waived objections regarding service and jurisdiction.

Petitioner then exhausted all judicial remedies, including filing a petition for review on certiorari (docketed under CA-G.R. SP No. 55253) after the CA dismissed its prior petitions.

On January 21, 1999, petitioner filed a motion for new trial, citing three main grounds:

An “honest mistake” resulting from the erroneous name in the summons, which it argued deprived it of proper notice.
Insufficiency of evidence to justify the judgment.
The assertion that the judgment was against law.

On April 7, 1999, Presiding Judge Vivencio S. Baclig granted the motion for new trial, setting aside the default judgment based on the finding that petitioner’s failure to answer was due to an honest mistake.
Respondent moved for reconsideration, arguing that the judgment by default had already become final and executed, citing the October 15, 1996 order and corresponding Sheriff’s Return.
The RTC denied respondent’s motion for reconsideration.
The CA later reversed the RTC’s grant of new trial on February 29, 2000, holding that:

The new trial motion was filed out of time.
There was substantial evidence that petitioner had been properly served and had waived any jurisdictional defects.

Petitioner contended it received a copy of the default judgment on January 9, 1999, thereby arguing that its new trial motion was timely filed within the 15-day reglementary period.
Respondent presented evidence that petitioner had received the judgment copy on August 9, 1996.
The CA, supported by documentary records, held that the issue of when petitioner received the judgment copy was a fact question not subject to appellate review by certiorari.
Consequently, the CA found that the new trial motion was untimely and its grant was, in effect, a misuse of procedural mechanism.

Whether petitioner’s motion for new trial was filed within the reglementary period given the alleged late receipt of the judgment by default.

Examination of the conflicting evidence regarding the actual date of receipt of the judgment copy.
Determination if the question of actual receipt date is a pure question of fact or a proper subject for certiorari review.

Whether an “honest mistake”—stemming from the erroneous naming of the corporation in the summons—constitutes sufficient ground for granting a new trial.

Whether the nature of the mistake was such that ordinary prudence could not have guarded against it.
Whether the error was a mistake of law or fact, and its legal implications in the context of default judgment proceedings.

Whether the trial court (RTC) committed grave abuse of discretion by setting aside the default judgment and granting the motion for new trial despite evidence of timely service and waiver by petitioner.