G.R. No. L-40945 November 10, 1986
Igmedio Azajar, petitioner, vs. The Honorable Court of Appeals (Second Division) and Cham Samco & Sons, Inc., respondents.

FACTS

Petitioner Igmedio Azajar filed a complaint for breach of contract against respondent Cham Samco & Sons, Inc. in the Court of First Instance of Camarines Sur. Azajar alleged he paid P18,000.00 for 100 kegs of nails, but Cham Samco offered to deliver only a portion. Instead of filing an answer, Cham Samco filed a Motion to Dismiss on grounds of failure to state a cause of action and improper venue. The motion contained a notice addressed to the Clerk of Court requesting submission of the motion for the court’s consideration, but it lacked a notice of hearing specifying time and place addressed to the adverse party.
Azajar moved to declare Cham Samco in default, arguing the motion was a mere scrap of paper for lack of proper notice. The trial court granted the motion, declared Cham Samco in default, and subsequently rendered a judgment by default ordering delivery of the nails and payment of damages. Cham Samco filed a Motion for New Trial, citing excusable negligence and meritorious defenses, which was denied. Cham Samco then filed a certiorari petition with the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in setting aside the order of default and the judgment by default, and in directing a trial on the merits.

RULING

The Supreme Court affirmed the Court of Appeals’ resolution. The Court held that the Motion to Dismiss was indeed defective for non-compliance with Section 5, Rule 15 of the Rules of Court, which requires a notice of hearing specifying the time and place addressed to the adverse party. A motion without such notice is considered a mere scrap of paper that does not toll the running of the period to answer. The duty to provide this notice rests on the movant, not the court. Therefore, the trial court’s initial declaration of default was technically correct.
However, the Supreme Court upheld the appellate court’s discretionary power to set aside the default judgment in the interest of substantial justice. The Court emphasized that while procedural rules are important, they are tools to facilitate justice, not hinder it. Several factors justified this relaxation: Cham Samco’s prompt filing of the motion indicated no intent to delay; its claimed grounds for dismissal, while erroneously thought to be determinable motu proprio by the court, were not entirely implausible; and most importantly, the Court of Appeals found that Cham Samco had alleged meritorious defenses which, if proven, could defeat Azajar’s claim. The paramount policy of deciding cases on their merits after full opportunity for both parties to be heard outweighs the strict application of procedural technicalities in this instance. Thus, the ends of justice were better served by allowing the case to proceed to trial.