G.R. No. 165544 - Samonte vs. S.F. Naguiat, Inc.

Case Summary (G.R. No. 165544)

Factual Background

S.B. Commercial Traders, Inc. (SB Traders), represented by petitioner Romeo Samonte, purchased Mobil oil products on credit from S.F. Naguiat, Inc., with an express payment term of 60 days from delivery. S.F. Naguiat filed a complaint on September 4, 2000 for collection of P1,105,143.27 against SB Traders and Samonte, alleging SB Traders owed that amount and that SB Traders was Samonte’s alter ego, warranting joint and several liability. Samonte denied personal liability, asserting he acted for the corporation and that SB Traders issued postdated checks as part of a requested extension to settle accounts.

RTC Proceedings and Judgment

Petitioner and his counsel failed to appear at a scheduled pre-trial, and the trial proceeded ex parte. On May 25, 2001, the RTC rendered judgment ordering SB Traders and Samonte to pay jointly and severally the principal amount, 18% interest from filing, P10,000 as exemplary damages, attorney’s fees equal to 20% of the amount due, plus costs. Petitioner did not appeal the May 25, 2001 judgment; a writ of execution was issued on July 30, 2001.

Petition for Relief from Judgment at the RTC

On August 22, 2001, petitioner filed a petition for relief from judgment under Rule 38 asserting that the RTC committed serious and prejudicial mistakes in appreciating evidence and erred in holding him personally liable despite corporate separateness. The petition was opposed. The RTC denied the petition on December 21, 2001 for lack of merit, and denied reconsideration on February 12, 2002 for noncompliance with Rule 15 requirements and for failing to raise issues warranting modification or reversal.

Court of Appeals Proceedings and Ruling

Petitioner filed a petition for certiorari with the CA, which dismissed the petition on March 26, 2004 and denied reconsideration in a September 28, 2004 resolution. The CA found (1) the RTC decision had become final and executory because petitioner neither moved for reconsideration nor appealed; (2) petitioner did not offer any explanation in his Rule 38 petition for his failure to appeal nor alleged that the judgment resulted from fraud, accident, mistake, or excusable negligence; (3) the petition lacked the required affidavit of merit and, in any event, was not even verified; (4) petitioner did not attack the conduct of proceedings but only the dispositive portion of the judgment—matters properly raised by motion for reconsideration or appeal; and (5) the RTC had afforded petitioner an opportunity to present evidence on the petition for relief, which petitioner declined.

Issues Raised Before the Supreme Court

Petitioner contended that the CA erred: (1) in dismissing his petition for certiorari and denying reconsideration; (2) in strictly applying procedural rules at the expense of substantial justice; and (3) in failing to rule on the merits of his defenses to personal liability. The central legal question is whether the RTC committed grave abuse of discretion in denying petitioner’s Rule 38 petition and whether the CA erred in affirming that denial.

Legal Standards Applied (Rule 38 and Motion for Reconsideration)

The Court reiterated Rule 38, Sections 1 and 3: a petition for relief from judgment is available when a judgment or other proceeding is taken against a party through fraud, accident, mistake, or excusable negligence; it must be verified, filed within 60 days after the petitioner learns of the judgment and not more than six months after entry, and must be accompanied by affidavits showing the grounds relied upon and the facts constituting the petitioner’s good and substantial cause of action or defense. The Court emphasized that relief under Rule 38 is equitable and exceptional, available only where no other adequate remedy exists. If a party had the remedy of appeal or a motion for new trial and was not prevented from using it by fraud, accident, mistake, or excusable negligence, Rule 38 relief is inappropriate.

Distinction Between Mistake of Law and Mistake of Fact

The Court explained that the “mistake” contemplated by Rule 38 generally pertains to mistakes of fact, not judicial errors of law. Judicial error that may be corrected on appeal does not constitute the kind of mistake that justifies Rule 38 relief. Petitioner’s claims—that corporate separateness precluded his personal liability and that the RTC erred in the dispositive disposition—constituted legal errors or defenses that should have been raised by motion for reconsideration or on appeal, not by a Rule 38 petition.

Verification and Affidavit-of-Merit Requirement

Section 3 of Rule 38 requires petitions to be verified and accompanied by affidavits showing the fraud, accident, mistake, or excusable negligence relied upon and the facts constituting the petitioner’s defenses. The Court recognized that a verified petition may suffice in lieu of a separate affidavit of merit; however, petitioner’s Rule 38 petition was not verified and lacked affidavits. Consequently, the procedural prerequisites for Rule 38 relief were not met, and the CA did not err in declining to reach the merits.

Responsibility for Counsel’s Acts and Negligence

Petitioner argued that his former counsel had implied authority to determine procedural steps and that petitioner should not be penalized for counsel’s mistakes. The Court reaffirmed the settle

Case Syllabus (G.R. No. 165544)

Procedural Posture

Petition for review on certiorari filed by Romeo Samonte before the Supreme Court seeking to set aside the Court of Appeals (CA) Decision dated March 26, 2004 in CA-G.R. SP No. 70213, which dismissed his petition for certiorari challenging the Regional Trial Court (RTC), Malolos, Bulacan Order dated December 21, 2001 (Civil Case No. 585-M-2000) that denied his petition for relief from judgment.
Also assailed before the Supreme Court was the CA Resolution dated September 28, 2004 denying petitioner's motion for reconsideration.
Final Supreme Court disposition: petition DENIED; the Decision dated March 26, 2004 and the Resolution dated September 28, 2004 of the Court of Appeals in CA-G.R. SP No. 70213 are AFFIRMED. SO ORDERED.

Antecedent and Factual Background

Romeo Samonte was President and General Manager of S.B. Commercial Traders, Inc. (SB Traders), a corporation retailing motor oils and lubricants.
SB Traders purchased Mobil products on credit from authorized dealer S.F. Naguiat, Inc. (private respondent) with express agreement to pay within 60 days from delivery.
On September 4, 2000, S.F. Naguiat, Inc. filed a complaint for collection of sum of money against SB Traders and Romeo Samonte in Branch 9, RTC Malolos, Bulacan, alleging SB Traders owed P1,105,143.27 for Mobil products and alleging SB Traders was the alter ego of petitioner, operated for his sole benefit; thus petitioner and SB Traders should be solidarily liable.
Petitioner filed an answer denying material averments and asserted special/affirmative defenses:
- He acted not in personal capacity but for and on behalf of SB Traders.
- SB Traders never denied its obligation, only requested more time to settle accounts.
- SB Traders issued postdated checks of P25,000.00 per month from June to December 1999 to private respondent as partial payment.
Petitioner and counsel failed to appear at scheduled pre-trial on April 20, 2001. Trial proceeded ex parte; private respondent’s evidence was presented before the Branch Clerk of Court.
RTC rendered judgment on May 25, 2001 in favor of private respondent. The dispositive portion ordered defendants S.B. Commercial Traders, Inc. and Romeo G. Samonte, jointly and severally, to pay:
- P1,105,143.27 (for value of oil products, Exhibits 'B' to 'O' and 'O-1' and 'P') with 18% per annum interest from filing of complaint (September 4, 2000) until paid in full;
- P10,000.00 as exemplary damages;
- 20% of the entire amount due and demandable as attorney's fees, plus costs of suit.
Petitioner did not appeal the RTC decision; it became final and executory. On July 30, 2001, writ of execution was issued upon motion by private respondent.
On August 22, 2001, petitioner filed a petition for relief from judgment before the RTC, alleging the RTC made serious and prejudicial mistakes in appreciating the evidence and arguing corporate separateness precluded his personal liability.
The RTC denied the petition for relief from judgment by Order dated December 21, 2001 (first assailed order) for lack of merit.
Petitioner filed motion for reconsideration which the RTC denied on February 12, 2002 (second assailed order) on grounds of non-compliance with mandatory requirements of Sections 4 and 5 of Rule 15, 1997 Rules of Civil Procedure, and failure to raise issues warranting modification or reversal of the December 21, 2001 order.
Petitioner filed certiorari with the CA; CA dismissed the petition (March 26, 2004) and denied petitioner’s motion for reconsideration (Resolution dated September 28, 2004).

Reliefs and Remedies Sought by Petitioner

In the RTC: petition for relief from judgment under Rule 38 alleging serious and prejudicial mistakes in the RTC’s appreciation of evidence; argued he cannot be personally liable for corporate obligations.
In the CA: petition for certiorari with prayer for issuance of temporary restraining order and/or writ of preliminary injunction, reiterating grounds from the RTC petition for relief from judgment.
In the Supreme Court: petition for review on certiorari to set aside CA Decision and Resolution.

RTC Disposition and Reasoning Denying Petition for Relief from Judgment

RTC held the petition for relief from judgment could not prosper because the grounds raised (errors in judgment as to dispositive portion) should have been pursued by a motion for reconsideration or by appeal rather than Rule 38 relief.
The RTC observed petitioner did not assail the proceedings but questioned only the validity of the dispositive portion of the decision—an issue more appropriately ventilated via motion for reconsideration.
RTC found no showing that the judgment was entered against petitioner through fraud, accident, mistake, or excusable negligence as required under Rule 38.

Court of Appeals Decision and Reasoning (March 26, 2004)

CA found petitioner failed to file a motion for reconsideration or appeal from the RTC Decision dated May 25, 2001; hence that decision became final and executory.
When petitioner later filed petition for relief from judgment, he did not offer any reason for his failure to appeal, nor alleged the judgment was entered against him through fraud, accident, mistake, or excusable negligence.
CA noted petition for relief was not accompanied by an affidavit of merit showing the grounds relied upon and the facts constituting petitioner’s defenses, as required by Section 3, Rule 38.
CA agreed with RTC that petitioner did not assail procedural conduct of the trial but merely questioned the validity of the dispositive portion; the petition for relief was thus fatally flawed and should have been dismissed.
Despite defect, the RTC nonetheless proceeded to hear the petition (an act of grace); petitioner opted not to present evidence in support. CA concluded petitioner could not claim denial of his day in court or grave abuse of discretion by RTC.
CA emphasized that once judgment becomes final, prevailing party should not be deprived of its fruits by subterfuge; therefore CA dismissed the petition.
Petitioner’s motion for reconsideration before CA