Price Stabilization Corporation v. Court of First Instance
REITERATIONFacts
The Antecedents: The Price Stabilization Corporation (PRISCO) filed a suit against George W. Batchelder and his surety, Manila Surety & Fidelity Co., Inc., to recover the price of merchandise sold on credit to Batchelder, payment of which was guaranteed by the surety company. Procedural History: The defendants failed to file an answer within the prescribed period and were declared in default. Judgment was rendered against them. The surety company filed a motion for reconsideration and new trial, alleging excusable neglect due to an employee's failure to forward the complaint and summons to their attorneys, and claiming a valid defense in a written undertaking from Batchelder. This motion was not verified and lacked an affidavit of merit. PRISCO objected, arguing the neglect was not excusable and the motion lacked an affidavit of merit. The court denied the motion. The surety company filed a second motion for reconsideration, alleging for the first time that its liability as surety had expired based on the terms of the bond. PRISCO again opposed, citing waiver of grounds and untimeliness. Despite objections, the court granted the second motion, treating both motions as a petition for relief. The Petition: PRISCO filed a petition for certiorari with the Supreme Court, alleging that the lower court acted with grave abuse of discretion and in excess of jurisdiction in granting the second motion for reconsideration.
Issue(s)
Whether the lower court committed grave abuse of discretion in granting a petition for relief that lacked a verified affidavit of merit and raised a defense that was previously available but not pleaded in the first motion.
Ruling
The Supreme Court granted the petition for certiorari, setting aside the order of the lower court. The Court found that the lower court committed a grave abuse of discretion amounting to want of jurisdiction.
Ratio Decidendi
On Issue 1: The Supreme Court ruled that a petition for relief under Rule 38 must be strictly accompanied by an affidavit of merit showing a valid defense. The Court emphasized that Manila Surety's first motion lacked this sworn allegation against the plaintiff's claim, while the second motion contained an unverified allegation of defense. An affidavit of merit is intended to state facts rather than mere opinions or conclusions of law, a requirement the respondent failed to satisfy. Furthermore, the Court invoked the Omnibus Motion Rule under Rule 26, Section 8, which dictates that a motion attacking a proceeding must include all objections then available. Since the defense regarding the expiration of the surety bond was available when the first motion was filed, the failure to raise it resulted in a waiver of that defense. Citing Rili v. Chunaco, the Court held that grounds available at the time of the first motion cannot be raised in a subsequent petition for relief. Therefore, the lower court committed a grave abuse of discretion amounting to lack of jurisdiction by entertaining the deficient motions.
Main Doctrine
A petition for relief under Rule 38 of the Rules of Court must be accompanied by an affidavit of merit stating facts, not mere opinions or conclusions of law, demonstrating a valid cause of action or defense. Grounds for relief that were available at the time of filing a motion to set aside a judgment are deemed waived if not raised therein and cannot be raised in a subsequent petition for relief.