GR 97793; (November, 1991) (Digest)
G.R. No. 97793 November 19, 1991
STRONGHOLD INSURANCE COMPANY, INC., petitioner, vs. HON. COURT OF APPEALS AND DIESEL INJECTION AND MAGNETO SERVICE COMPANY, respondents.
FACTS
Private respondent Diesel Injection and Magneto Service Co. (DIMSCO) filed a complaint against Lepol Trading as principal debtor and Stronghold Insurance Co. as surety for the collection of an unpaid account. After several postponements of pre-trial, DIMSCO filed a motion for judgment on the pleadings, which both defendants opposed. The trial court, without a hearing on the motion, rendered a decision holding both defendants solidarily liable. Both defendants appealed to the Court of Appeals, which dismissed the appeal. Only Stronghold filed a motion for reconsideration, which was denied, prompting the filing of this petition.
ISSUE
The sole issue is the propriety of the rendition of a judgment on the pleadings against the petitioner-surety, Stronghold Insurance Company.
RULING
The Supreme Court ruled that the judgment on the pleadings was improper as to the surety. The Court of Appeals erred in sustaining the trial court’s decision by suggesting that the surety was bound by the answer of the principal debtor and could not independently plead its defenses. The Court emphasized that a surety has the right to resist the complaint independently and may set up its own defenses, including a cross-claim against the principal.
A scrutiny of Stronghold’s separate answer reveals it tendered genuine issues precluding judgment on the pleadings. Specifically, Stronghold denied the material allegations for “lack of knowledge or information sufficient to form a belief,” which constitutes a specific denial under the rules. Furthermore, it raised an affirmative defense alleging that “some of the obligations… had been paid.” The Court cited jurisprudence stating that such an answer, which denies material allegations and sets up special defenses, calls for the presentation of evidence in a full trial. While Lepol’s liability may have been conceded due to its inadequate denial, Stronghold’s separate answer presented matters appropriate for trial, such as payments made and the validity of interest and attorney’s fees awards against it. Therefore, the trial court incorrectly foreclosed these defenses. The decision of the Court of Appeals was set aside and the case was remanded for trial on the merits against Stronghold.