G.R. No. 153696. September 11, 2006.
SPOUSES HUMBERTO DELOS SANTOS and CARMENCITA DELOS SANTOS, petitioners, vs. HON. EMMANUEL C. CARPIO, Presiding Judge of RTC, Branch 16, Davao City and METROPOLITAN BANK AND TRUST COMPANY, respondents.

FACTS

Metropolitan Bank and Trust Company (Metrobank) filed a complaint for sum of money against the petitioners. After being served with summons, the petitioners failed to file an answer within the reglementary period. Metrobank consequently filed a motion to declare them in default, set for hearing on February 16, 2001. However, the trial court, presided by Judge Emmanuel C. Carpio, issued an order dated February 12, 2001, declaring the petitioners in default four days before the scheduled hearing of the motion. The petitioners filed an opposition and a motion to admit their answer, citing their unfamiliarity with legal procedures and their counsel’s unavailability. The trial court denied their motions and proceeded with the ex-parte reception of evidence.
The Court of Appeals dismissed the petitioners’ subsequent certiorari petition, finding no grave abuse of discretion. The CA ruled that the petitioners’ excuses did not constitute excusable negligence and that their affidavit of merit failed to sufficiently articulate a meritorious defense, as it merely stated they had one without elaboration.

ISSUE

Whether the trial court committed grave abuse of discretion in issuing the order of default prior to the scheduled hearing of the motion and in refusing to lift the said order.

RULING

Yes. The Supreme Court granted the petition, reversing the CA. The legal logic centers on the mandatory procedural requirement under Section 3, Rule 9 of the Rules of Court, which explicitly states that the court shall declare a party in default “upon motion of the claiming party with notice to the defending party.” The Court emphasized that a motion must first be heard, and the defending party must be given an opportunity to oppose it, before a default order is issued. Issuing the default order four days before the scheduled hearing was a patent violation of this rule, depriving the petitioners of their right to be heard on the motion.
Furthermore, the Court found that the trial court abused its discretion in not lifting the order of default. The petitioners’ immediate filing of an opposition and answer, coupled with their affidavit stating a meritorious defense (specifically, the affirmative defense of litis pendentia), demonstrated a desire to pursue their case. Default orders are disfavored; courts should be liberal in setting them aside to allow a full hearing on the merits, especially where no substantial right is prejudiced and there is no intent to delay. The trial court’s precipitate action constituted grave abuse of discretion.