GR 42900; (December, 1981) (Digest)
G.R. No. L-42900 December 14, 1981
RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. HON. GUARDSON LOOD, Judge of the Court of First Instance of Rizal, RAUL P. GARAY and MARCELO B. GARAY, respondents.
FACTS
The petitioner, Rizal Commercial Banking Corporation, filed a collection suit against the private respondents, Raul and Marcelo Garay, for sums due under promissory notes. After protracted proceedings with multiple postponements, the case was set for hearing on February 24, 1975. On that date, the respondents’ counsel had previously withdrawn, and Raul Garay’s motion for postponement was denied. Consequently, the petitioner presented its evidence ex parte and rested its case. The trial court rendered a decision against the respondents on April 7, 1975. The respondents later filed a motion for extension of time to appeal or seek reconsideration, citing the illness of Marcelo Garay and claiming late receipt of the decision. The court denied this motion and the subsequent motion for reconsideration. The respondents then filed a petition for relief from judgment under Rule 38, which the respondent judge granted, setting aside the decision and reopening the case for trial.
ISSUE
Whether the respondent judge acted with grave abuse of discretion in granting the petition for relief from judgment.
RULING
Yes, the Supreme Court granted the petition for certiorari, annulling the orders granting relief from judgment. The legal logic is twofold. First, the petition for relief was procedurally infirm. The respondent judge issued the order granting relief without furnishing the petitioner bank a copy of the petition or setting it for hearing, thereby depriving the petitioner of its right to due process and an opportunity to be heard. An order issued under such circumstances is defective and void.
Second, and more substantively, the respondents failed to demonstrate a meritorious defense, which is a fundamental requirement for relief under Rule 38. Their alleged defense was that their loan obligation was subject to extension and that the bank failed to notify them it would no longer extend the payment period. The Court found this defense unsubstantial. The record showed the bank had made prior demands for payment, which were acknowledged by the respondents, before filing the suit. Having admitted the existence of the obligation, the respondents’ purported defense did not alter their liability. The Court emphasized that relief from judgment is not granted when a defendant has no real defense, as it would unjustly subject the plaintiff to further delay and expense merely to render a judgment that would be the same. Therefore, the respondent judge committed grave abuse of discretion in reopening the case. The Supreme Court directed the execution of the original decision dated April 7, 1975.