Facts:

On November 19, 1952, the Price Stabilization Corporation (PRISCO) initiated a lawsuit in the Court of First Instance of Manila against George W. Batchelder and his surety, the Manila Surety & Fidelity Co., Inc. The suit aimed to recover the price of merchandise sold on credit to Batchelder, with the payment guaranteed by the surety company. After the summons was issued, the defendants failed to file an answer within the prescribed period, leading to their declaration in default on February 9, 1953. Subsequently, on August 7, 1953, the court rendered a judgment against them for the claimed amount, including costs. On September 8, 1953, the surety company filed a motion for reconsideration and a new trial, claiming that its failure to respond was due to excusable neglect. The company explained that the complaint and summons were mishandled by an employee, who failed to forward them to the legal department. The surety also asserted that it had a valid defense based on a wri...

Facts:

1. Parties Involved:

   • Petitioner: Price Stabilization Corporation (PRISCO).
   • Respondents: Judge of Branch VIII, Court of First Instance of Manila, and Manila Surety & Fidelity Co., Inc.

2. Background of the Case:

   • On November 19, 1952, PRISCO filed a lawsuit in the Court of First Instance of Manila against George W. Batchelder and his surety, Manila Surety & Fidelity Co., Inc., to recover the price of merchandise sold on credit.
   • The surety company guaranteed payment for the merchandise purchased by Batchelder.

3. Procedural History:

   • Summons were issued to the defendants, but they failed to file an answer within the prescribed time.
   • On February 9, 1953, the defendants were declared in default at the instance of PRISCO.
   • On August 7, 1953, judgment was rendered against the defendants for the amount claimed, with costs.

4. Motion for Reconsideration and New Trial:

   • On September 8, 1953, the surety company filed a motion for reconsideration and new trial, explaining that its failure to file an answer was due to excusable neglect.
   • The motion was accompanied by an affidavit from the assistant manager of the surety company, but it was not verified.
   • The surety company alleged that it had a valid defense, including a written undertaking executed by Batchelder, which could be raised in a cross-complaint.

5. Opposition to the Motion:

   • PRISCO opposed the motion, arguing that it lacked an affidavit of merit showing a valid defense and that the surety company’s neglect was not excusable.
   • The court denied the motion on September 9, 1953, due to the absence of an affidavit of merit.

6. Second Motion for Reconsideration:

   • On September 25, 1953, the surety company filed a second motion for reconsideration, alleging for the first time that it had a valid defense based on the expiration of its liability under the surety bond.
   • PRISCO opposed this motion, arguing that the defense was available earlier and was waived, and that the motion was filed out of time.
   • Despite the opposition, the court granted the second motion, treating both motions as a petition for relief.

7. Certiorari to the Supreme Court:

   • PRISCO filed a petition for certiorari, alleging that the lower court acted with grave abuse of discretion in granting the second motion for reconsideration.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Affidavit of Merit Requirement:

   • A petition for relief under Rule 38 must be accompanied by an affidavit of merit showing that the petitioner has a valid cause of action or defense.
   • The affidavit of merit must state facts, not mere opinions or conclusions of law.

2. Waiver of Defenses:

   • Under Rule 26, Section 8 of the Rules of Court, a motion attacking a pleading or proceeding must include all objections then available.
   • Defenses not raised in the initial motion are deemed waived and cannot be raised in a subsequent petition for relief.

3. Grave Abuse of Discretion:

   • The lower court’s decision to grant the surety company’s motions despite the lack of an affidavit of merit and the untimeliness of the second motion constituted a grave abuse of discretion.

4. Finality of Judgments:

   • The Court emphasized the importance of finality in judgments and the need to adhere to procedural rules to ensure the orderly administration of justice.