FACTS:

The case involves a Petition for Review filed by the petitioners, challenging the Decision and Resolution of the Court of Appeals (CA) in favor of the respondent bank. The petitioners filed a complaint seeking the annulment of the extra-judicial foreclosure and auction sale of their property. They claimed that the auction sale was irregular and that they failed to redeem the property due to lack of knowledge and education. The respondent bank denied the irregularities and argued that the petitioners failed to redeem the property within the statutory period.

During the trial proceedings, a fire broke out at the City Hall of Quezon City, destroying the records of the case. After the records were reconstituted, the petitioners discovered that the foreclosed property had been sold to another party and the notice of lis pendens had been canceled. The trial court dismissed the case "without prejudice" due to the petitioners' failure to pay additional filing fees. The petitioners re-filed the complaint and included new defendants. Summons was served on the respondent bank.

The Trial Court denied the petitioners' motion for pre-trial and motion for reconsideration. The petitioners then filed a motion to declare the respondent bank in default, which was granted. The petitioners were allowed to present evidence ex parte, leading to a partial decision in their favor. The respondent bank filed a motion to set aside the partial decision and admit its answer with counterclaim, but the motion was denied.

The respondent bank appealed to the Court of Appeals, which ruled in its favor. The petitioners then filed a petition for review before the Supreme Court, raising several issues including the application of rules on negligence, redemption, and the Court's evaluation of factual findings.

ISSUES:

1. Whether the quantum of evidence for judgments flowing from a default order under Section 3 of Rule 9 of the Rules of Court is different from that provided for in Section 1 of Rule 133.

2. Whether being declared in default constitutes a waiver of rights except that of being heard and presenting evidence in the trial court.

3. Whether the lower court's findings of fact are reviewable in a petition for review.

4. Whether the parties had a voluntary agreement to extend the redemption period.

5. Whether the debtor committed to pay the redemption price on a fixed date.

6. Whether the petitioners established a firm commitment to pay the redemption price on a fixed date.

7. Whether the grant of damages in favor of the petitioners was supported by sufficient evidence.

8. Whether the petitioners were deprived of their property without cause.

9. Whether the petitioners have convincingly established their right to damages based on the purported agreement to repurchase.

RULING:

1. The quantum of evidence for judgments flowing from a default order under Section 3 of Rule 9 of the Rules of Court is not different from that provided for in Section 1 of Rule 133. The court's judgment in default proceedings must be based on the preponderance of evidence required under Section 1 of Rule 133. The relief granted can only be as much as has been alleged and proved with preponderant evidence. The party making allegations has the burden of proving them by a preponderance of evidence. A judgment by default does not automatically entitle the non-defaulting party to the relief prayed for; favorable relief can only be granted if warranted by the evidence offered and the facts proven.

2. Being declared in default does not constitute a waiver of rights except that of being heard and presenting evidence in the trial court. The defendant is not actually thrown out of court and any judgment against the defendant must be in accordance with law. The evidence to support the plaintiff's cause must be legal and sufficient, and if it is not, the complaint must be dismissed.

3. The differences in findings of fact between the trial and appellate courts is a valid ground for reviewing the evidence in the case. The absence of a hearing does not mean that no evidence was presented. The evidence adduced during the ex parte presentation should be considered in the review of the case.

4. The court found that the letters sent by the bank to the petitioner did not convincingly show that the parties had a firm agreement for the repurchase of the property.

5. The court noted that there was no showing that the petitioners had committed to pay the redemption price on a fixed date.

6. The court stated that other than the check marked "for deposit" by the bank, no other evidence was presented to establish that the petitioners had offered to pay the alleged redemption price on a fixed date.

7. The court ruled that the petitioners failed to establish the requisites for the conversion of legal redemption to conventional redemption.

8. The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals. The grant of damages was not supported by sufficient evidence. The Court ruled that the petitioners were not deprived of their property without cause, as there was no allegation or proof of noncompliance with the requirement of publication and public posting of the notice of sale, as required by Act No. 3135. The Court also held that the petitioners failed to convincingly establish their right to damages based on the purported agreement to repurchase.

PRINCIPLES:

• The party making allegations has the burden of proving them by a preponderance of evidence.

• A judgment by default does not automatically entitle the non-defaulting party to the relief prayed for; favorable relief can only be granted if warranted by the evidence offered and the facts proven.

• Default does not constitute a waiver of rights except that of being heard and presenting evidence in the trial court.

• Any judgment against a defaulted defendant must be in accordance with law.

• Only legal evidence should be considered against a defaulted defendant.

• Differences in findings of fact between trial and appellate courts is a valid ground for reviewing the evidence.

• The absence of a hearing does not mean that no evidence was presented during an ex parte presentation.

• For a legal redemption to be converted into conventional redemption, two requisites must be established: voluntary agreement of the parties to extend the redemption period and the debtor's commitment to pay the redemption price on a fixed date.

• The absence of a firm commitment to pay the redemption price on a fixed date prevents the conversion of legal redemption to conventional redemption.

• When a judgment is rendered against a party in default, the damages awarded should not exceed the amount or be different in kind from that prayed for, and unliquidated damages cannot be awarded without sufficient evidence.

• Entitlement to actual and compensatory damages must be proved even under Section 3 of Rule 9 of the Rules of Court.

• Claims for damages must be supported by sufficient evidence.

• Not every case of default by the defendant entitles the complainant to automatically win.