Philippine Supreme Court on Default Orders: When a Late Answer Is Excusable

The Supreme Court has long held that judgments by default are disfavored, and a recent ruling in Henry Tanchan v. Court of Appeals (G.R. No. 113150, March 29, 1999) illustrates this principle in practice. The case clarifies when a party's failure to file an answer on time may be considered excusable negligence, and when a motion to lift a default order should be granted. For litigants and lawyers, the ruling is a useful reminder that procedural rules serve the ends of justice, not technicality for its own sake.

The Dispute

Henry Tanchan, doing business as Foremost Industrial Sales, sued Philippine Rock Products, Inc. for collection of a sum of money arising from a hauling agreement. The contract contained a venue stipulation stating that any action arising out of the agreement "shall be submitted to the jurisdiction of the proper court in Rizal."

When the case was filed in Cebu, the defendant moved to dismiss on the ground of improper venue. The trial court denied the motion and ordered the defendant to file its answer within fifteen days. Instead of complying, the defendant filed a Petition for Certiorari and Prohibition with the Court of Appeals, seeking to annul the trial court's order.

The Default Order

The plaintiff then moved to declare the defendant in default, arguing that the filing of the certiorari petition did not suspend the period for filing an answer. The defendant opposed, contending that filing an answer would amount to submission to the jurisdiction of the court and would waive its objection to venue.

The trial court declared the defendant in default. Four days before the trial court rendered its decision, the defendant filed a motion to lift the order of default and to admit its answer. The trial court denied the motion and rendered judgment for the plaintiff. On appeal, the Court of Appeals reversed and remanded the case for further proceedings.

The Issue

The central question before the Supreme Court was whether the Court of Appeals erred in setting aside the order of default and remanding the case to the trial court.

The Ruling

The Supreme Court affirmed the Court of Appeals, holding that the motion to lift the default order was seasonably filed and in proper form.

Under Section 3(b), Rule 9 of the Revised Rules of Court, a party declared in default may file a motion under oath to set aside the order of default upon a proper showing that the failure to answer was due to "fraud, accident, mistake and excusable negligence" and that the party has a meritorious defense.

The Court found that the defendant's motion was filed on May 28, 1992 — four days before the trial court rendered its decision on July 2, 1992 — and was therefore timely. While the motion was not accompanied by a separate affidavit of merits, the Court cited Lim Tanhu v. Ramolete for the rule that when a motion to lift a default order contains the reasons for the failure to answer as well as the facts constituting the prospective defense, and is sworn to by the defendant, neither a formal verification nor a separate affidavit of merit is necessary.

Excusable Negligence

The Court also found the defendant's failure to answer on time excusable. The defendant reasonably believed that filing an answer while its certiorari petition was pending would constitute voluntary submission to the jurisdiction of the trial court and would render its petition moot.

Citing legal authority, the Court noted that while a mistake of law is generally not excusable, "if a mistake of law is a reasonable one under the facts as they are made to appear, the failure to file an answer because of the belief entertained is at least excusable."

The Court also found the defendant's defense meritorious. The defendant admitted its indebtedness but claimed that certain bills pertaining to a road construction project, which should have been charged to a subcontractor, were included in its account. Had the trial court lifted the default order and allowed the defendant to present its evidence, the case could have been properly threshed out.

Practical Takeaways

• Default judgments are disfavored. Courts are liberal in setting aside orders of default, and unless the reopening of a case is clearly intended for delay, both parties should be given every chance to fight their case fairly and in the open.
• A motion to lift a default order must be filed before judgment. Section 3(b), Rule 9 of the Revised Rules of Court allows a party declared in default to file a motion at any time after notice and before judgment.
• A separate affidavit of merits may not be necessary. If the motion itself contains the reasons for the failure to answer and the facts constituting the defense, and is sworn to by the defendant, it may suffice.
• A reasonable mistake of law can be excusable. The failure to answer based on a genuine belief that doing so would waive a jurisdictional objection may constitute excusable negligence.
• A meritorious defense matters. The likelihood of a valid defense on the merits weighs heavily in favor of setting aside a default order.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.