G.R. No. L-17456 October 22, 1966
GELACIO E. TUMAMBING, plaintiff-appellee, vs. MAURO GANZON, ET AL., defendants. MAURO GANZON, defendant-appellant.

FACTS

In Civil Case No. 37784 of the Court of First Instance of Manila, summons was served on defendant Mauro Ganzon on January 30, 1959. On February 12, 1959, Ganzon filed an urgent ex parte motion for a ten-day extension to file a responsive pleading, as his counsel had just been retained and needed time to study the case. The original period to answer was to expire on February 14, 1959. On February 21, 1959, the lower court denied the motion for extension and declared Ganzon and a co-defendant in default. Ganzon received this order on February 25, 1959 and, on the same day, filed a verified motion to set aside the order of default together with his answer. This motion was denied on February 28, 1959. On March 4, 1959, Ganzon filed a motion for reconsideration and to suspend the trial set for March 5, 1959. Despite this, the trial court rendered a decision on March 5, 1959, based on a commissioner’s findings, holding Ganzon liable for over P47,000. On March 17, 1959, after notification of the decision, Ganzon filed a verified petition for reconsideration or relief, with an affidavit of merits, explaining his delay (he was attending to his cattle ranch and was informed late) and asserting valid defenses supported by documentary evidence. The trial court denied this petition on March 21, 1959.

ISSUE

Whether the trial court gravely abused its discretion in denying the motions to set aside the order of default and the judgment by default, thereby depriving the defendant of his day in court.

RULING

Yes. The Supreme Court set aside the appealed orders and remanded the case to allow the defendant to answer and present evidence. The Court held that the refusal to set aside the order of default constituted an abuse of discretion. The motion to set aside was filed without delay on the same day the default order was received and before the trial. It was accompanied by a sworn statement of merits and documents constituting a prima facie valid defense. The granting of such a motion rests on the court’s legal discretion, which must be exercised to subserve justice and allow a defendant his day in court, especially when no prejudice to the plaintiff is shown, there is no intent to delay, and a substantial amount is involved. The Court cited precedents establishing that default judgments are expedients to induce a defendant to join issue, and when an application for relief is made immediately after default, courts should incline to permit a defense on the merits.