G.R. No. L-57535 May 24, 1982
Zenith Insurance Corporation, petitioner, vs. Hon. Fidel P. Purisima, Presiding Judge of Branch VIII, CFI, Manila and Perla Compania de Seguros, respondents.

FACTS

Perla Compania de Seguros filed a damages suit against Manalang, Garcia, and Zenith Insurance Corporation arising from a vehicular accident. Petitioner Zenith Insurance filed its Answer with counterclaim. The Court of First Instance of Manila set the case for pre-trial on January 16, 1981. Petitioner failed to appear at this pre-trial. Consequently, the trial court declared Zenith Insurance in default, authorized Perla to present evidence ex-parte, and later rendered a default judgment ordering the defendants to pay Perla P35,000 with interest and attorney’s fees.
Petitioner filed a Motion for Reconsideration to set aside the order of default, insisting it never received any notice of the January 16, 1981 pre-trial hearing. It supported this claim by pointing to the absence of any proof of service in the court records for that specific order. Furthermore, petitioner submitted a verified medical certificate showing its counsel was ill with influenza from January 15 to 18, 1981. The trial court denied the motion, prompting Zenith Insurance to elevate the case to the Supreme Court via a petition for certiorari.

ISSUE

Whether the trial court committed grave abuse of discretion in declaring petitioner in default and rendering a default judgment despite lack of due notice of the pre-trial.

RULING

Yes, the Supreme Court granted the petition and set aside the default order and judgment. The legal logic centers on the fundamental requirement of due process and the judicial policy disfavoring default judgments. An examination of the expediente revealed that, unlike other court orders in the same case which bore acknowledgments or signatures proving notification, the order setting the pre-trial for January 16, 1981, contained no such proof of service to the parties or their counsel. The Court held that “due notice” was not clearly established. Therefore, declaring petitioner in default for non-appearance at an unnotified hearing constituted a denial of its right to be heard, amounting to grave abuse of discretion.
The Court reiterated that default judgments are frowned upon, and courts should be liberal in setting them aside to allow parties to litigate their cases fairly on the merits. Petitioner had substantive defenses to present, including the alleged lack of proof of insurance coverage and the possible prescription of the action. Although an ordinary appeal was technically available, the Court ruled certiorari was proper because the appeal was no longer a speedy and adequate remedy, especially since the trial court had already issued a writ of execution. Thus, to afford petitioner its day in court, the Supreme Court directed the trial court to reset the case for pre-trial and trial.