G.R. No. 72323 - Villar vs. PDIC

Case Digest (G.R. No. 72323)
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Facts:

Background and Initiation of Legal Proceedings

The case arose from the closure of the Rural Bank of Pasacao following the Central Bank’s order on March 28, 1981, pursuant to Monetary Board Resolution No. 584.
The Philippine Deposit Insurance Corporation (PDIC), through its Bank Examiner Alexander Malveda, initiated the payment of insured deposits of the closed bank.

Issuance of Court Order and Execution

On February 15, 1982, in Civil Case No. 1430, the Court of First Instance issued an order directing the surrender of the bank’s assets, which included equipment, records, documents, collaterals, deposit books, cash funds, and the bank vault’s contents.
Sheriff Leonides de la Cruz, acting as a Deputy Sheriff (and later as a petitioner) in this process, accompanied by Manuel Villar and others, executed the court order at the premises of the closed bank.
During execution, de la Cruz, despite the objection of PDIC’s representative Malveda—who asserted that the funds belonged to PDIC—seized P16,270.25 and a cash box (No. 105-80-5) with two keys, subsequently issuing a certification attesting to his action based on the court order.

Transfer and Subsequent Handling of the Seized Assets

Instead of delivering the seized funds and cash box to Manuel Villar, as mandated by the court order, de la Cruz deposited these items with the Clerk of Court, Rosario Torrecampo, due to Malveda’s claim on behalf of PDIC.
On February 19, 1982, following another court order, the Clerk of Court turned over the funds and cash box to Manuel Villar upon receipt of an acknowledgment by Villar.
PDIC later moved for the return of the seized sum; however, the court declared such motion “moot and academic” in light of its previous order.

Default and Advent of the Controversy

Civil Case No. 3392 (later docketed under Civil Case No. 46071 before the reorganization) was instituted on May 25, 1982, jointly by PDIC and Malveda.
At the pre-trial conference on August 23, 1983, defendant de la Cruz and his counsel failed to appear, even though notice was given in open court.
The failure of appearance resulted in the trial court declaring de la Cruz in default, allowing PDIC and Malveda to present their evidence ex parte.
De la Cruz later moved to set aside the default order, citing that he had not been properly notified due to his counsel’s communication failure, compounded by his own inability to be reached as he was executing court processes in Camarines Sur.

Allegations of Misconduct and Evidence Presented

Plaintiffs (PDIC and Malveda) alleged abusive conduct during the service of the court order, including claims that de la Cruz drew a firearm, shouted abusive words, and that Manuel Villar delivered a karate blow to Malveda after a dispute over the rightful possession of the funds.
PDIC’s evidence, taken ex parte, formed the sole basis for the trial court’s judgment in their favor.
De la Cruz asserted that he was merely performing his duty by enforcing a valid court order and that the ex parte testimony of Malveda was self-serving and lacked credibility.

Appellate Review and Assignments of Error

Only de la Cruz appealed the Regional Trial Court’s decision to the Intermediate Appellate Court, which, while largely affirming the decision, modified the award by reducing the moral damages from P50,000.00 to P30,000.00.
De la Cruz raised several assignments of error, namely:

Ignoring the issue of whether his declaration of default was valid.
Failing to annul and set aside proceedings that followed the pre-trial default.
Misapplying the doctrine that holds clients liable for their counsel’s errors.
Giving undue weight to ex parte evidence presented by PDIC and Malveda.
Not recognizing that de la Cruz had a valid, meritorious defense if allowed to present evidence.
Overlooking that de la Cruz, as Deputy Sheriff, was merely enforcing a competent court order.

Issues:

Validity of the Default Declaration

Was petitioner de la Cruz validly declared in default given that his absence was due to factors beyond his control, including the failure of proper notification by his counsel?

Sufficiency of Notice and Pre-Trial Procedures

Did the trial court err in issuing an order of default when de la Cruz’s counsel, who had attempted to communicate the schedule change, failed to inform him due to circumstances such as a family emergency?

Admissibility and Credibility of Ex Parte Evidence

Should full credence be given to the evidence presented solely by PDIC and Malveda, despite allegations of self-serving testimony and inconsistencies with the natural course of events?

Doctrine on Client Responsibility for Counsel's Acts

Was it appropriate to apply the doctrine that holds clients responsible for the negligence or mistakes of their counsel in this context?

Validity of the Defense Based on Duty Performance

Does de la Cruz have a meritorious defense based on his claim that he was merely executing his assigned duty as a Deputy Sheriff under a court order?

Impact of Procedural Irregularities on the Right to be Heard

Did the failure of the lower court to ensure that de la Cruz could present evidence and cross-examine the witnesses result in a violation of his constitutional right to due process?

Ruling:

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Ratio:

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Doctrine:

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