G.R. No. 62370 ; January 30, 1990
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. ROSALIO A. DE LEON, Presiding Judge of the Court of First Instance of Manila, Branch II and TOWERS ASSURANCE CORPORATION, respondents.

FACTS

The Philippine National Bank (PNB) filed a collection suit against Towers Assurance Corporation (Towers) as surety for the unpaid obligations of Carmen Mindanao Mining Consolidated, Inc. (CMMCI). Summons was served on Towers on October 21, 1981. The court granted Towers a 15-day extension, until November 20, 1981, to file its Answer. However, Towers failed to file on that date. Consequently, upon PNB’s motion, the court declared Towers in default on January 8, 1982. Coincidentally, on that same date, Towers belatedly filed its Answer, which the court ignored. Subsequently, the court rendered a judgment by default against Towers on March 29, 1982.
Towers filed a Motion for Reconsideration to set aside the default judgment, explaining that its messenger was unable to file the Answer on November 20, 1981, due to the fire that gutted the Manila City Hall on November 19, 1981, which caused chaos and prevented access. The prepared Answer was misplaced in the office and only discovered and filed on January 8, 1982. Towers also raised substantive defenses, including that the surety bond sued upon did not secure the specific promissory notes in question. The newly assigned presiding judge, respondent Judge Rosalio A. de Leon, granted the motion, set aside the default judgment, and admitted the Answer. PNB’s motions for reconsideration were denied, prompting this certiorari petition.

ISSUE

Whether the respondent judge committed grave abuse of discretion in setting aside the order of default and the subsequent judgment by default.

RULING

The Supreme Court ruled that the respondent judge did not commit grave abuse of discretion. The Court emphasized that default judgments are not favored, as they deprive a party of the right to be heard. The factual circumstances presented by Towers constituted a valid excuse for the delay. The fire at the Manila City Hall on November 19, 1981, was an event of force majeure that disrupted normal court operations and legitimately prevented the timely filing. Furthermore, the Answer was filed on the very day the default order was issued, indicating a lack of obstinate refusal to comply.
The legal logic is anchored on the principle that motions to lift orders of default should be viewed with liberality, especially when filed promptly, where the delay is sufficiently explained, and where the substantive defenses raised are not patently frivolous. The Court noted that the amount involved was substantial (P600,000), warranting that the defendant be given a full opportunity to present its case on the merits. The policy is to afford parties a sporting chance to litigate their claims and defenses. Precipitate defaults are discouraged, as they often lead to unnecessary appellate litigation. Since the trial court acted within its sound discretion in setting aside the default to serve the ends of justice, no grave abuse of discretion attended its order. The petition was denied.