De Guzman, et al. vs.

Chico Case Digest

Angelina De Guzman, et al. vs. Gloria A. Chico
G.R. No. 195445. December 7, 2016

Facts
The subject of this case is a property situated at 7-A 32 A. Bonifacio Street, Bangkal, Makati City,
previously registered under the name of petitioners, and covered by Transfer Certificate of Title (TCT) No.
164900.

On May 24, 2006, the property was sold at a public auction of tax delinquent properties conducted by the
City Government of Makati City. Respondent was the winning bidder at the public auction, and the City
Government of Makati executed a Certificate of Sale in her favor on even date. Petitioners failed to
redeem the property within the one-year period. Thus, on July 12, 2007, respondent filed with the RTC of
Makati City an application for new certificate of title (LRC Case No. M-4992). On December 28, 2007,
after hearing, the RTC ordered that the title over the property be consolidated and transferred in the name
of respondent. The Register of Deeds of Makati consequently cancelled TCT No. 164900 and issued a
new order, TCT No. T-224923, in favor of respondent. Afterwards, in the same court, respondent moved
for the issuance of a writ of possession. The motion was, however, denied by the court for failure to set
the motion for hearing.

On January 14, 2009, respondent filed (for the same property), an Ex Parte Petition for the Issuance of a
Writ of Possession (LRC Case No. M-5188) with the RTC of Makati City. This ex parte petition was raffled
to Branch 59 (court a quo ).

On April 1, 2009, the court a quo issued an Order granting respondent's ex parte petition and ordered the
issuance of a writ of possession in her favor. The writ was subsequently issued on August 7, 2009. On
August 28, 2009, petitioners filed an urgent motion to cite respondent in contempt, and to nullify the
proceedings on the ground that LRC Case No. M-5188 contained a defective/false verification/certification
of non-forum shopping.

On September 11, 2009, respondent filed her comment/opposition. She alleged that petitioner's objection
to the certification against forum shopping was deemed waived for failure to timely object thereto. She
also claimed that forum shopping does not exist.

RTC Ruling
Denied petitioners motion. It ruled that the ex parte petition for the issuance of a writ of possession filed
by respondent in LRC Case No. M-5188, although denominated as a petition, is not an initiatory pleading,
and, thus, does not require a certificate of non-forum shopping.

CA Ruling
The CA ruled that there is no forum shopping. Prior to the filing of the ex parte petition in LRC Case No.
M-5188, RTC Branch 62 has already denied respondent's motion for issuance of a writ of possession in
LRC Case No. M-4992. The CA added that there can be no forum shopping because the issuance of a
writ of possession is a ministerial function and is summary in nature, thus, it cannot be said to be a
judgment on the merits but simply an incident in the transfer of title.

Issues
1. Whether a certificate against forum shopping is required in a petition or motion for
issuance of a writ of possession.
2. Whether the issuance of a writ of position is warranted.
SC Rulings

No certificate against forum shopping

is required in a petition or motion for
issuance of a writ of possession.

We affirm the ruling of the CA that a certificate against forum shopping is not a requirement in an ex parte
petition for the issuance of a writ of possession. An ex parte petition for the issuance of writ of possession
is not a complaint or other initiatory pleading as contemplated in Section 5, Rule 7 of the 1997 Rules of
Civil Procedure. What distinguishes a motion from a petition or other pleading is not its form or the title
given by the party executing it, but rather its purpose. A petition for the issuance of a writ of possession
does not aim to initiate new litigation, but rather issues as an incident or consequence of the original
registration or cadastral proceedings. As such, the requirement for a forum shopping certification is
dispelled.

We also cannot subscribe to petitioners' narrow view that only cases covered by foreclosure sales under
Act No. 3135 are excused from the requirement of a certificate against forum shopping.

Based on jurisprudence, a writ of possession may be issued in the following instances: (a) land
registration proceedings under Section 17 of Act No. 496, otherwise known as The Land Registration Act;
(b) judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person,
not a party to the foreclosure suit, had intervened; ( c) extrajudicial foreclosure of a real estate mortgage
under Section 7 of Act No. 3135, as amended by Act No. 4118; and (d) in execution sales.

We note that there is no law or jurisprudence which provides that the petition for the issuance of a writ of
possession depends on the nature of the proceeding in which it is filed. Thus, we find no logical reason
for petitioners' contention that only cases covered by Act No. 3135 are exempt from the requirement of a
certificate against forum shopping. As explained in the previous paragraphs, by its very nature, a writ of
possession is a mere incident in the transfer of title. It is an incident of ownership, and not a separate
judgment. It would thus be absurd to require that a petition for the issuance of this writ to be accompanied
by a certification against forum shopping.

The issuance of a writ of possession is

warranted.

Contrary therefore, to petitioners' contentions, the CA did not err in upholding the writ of possession in
this case. In St. Raphael Montessori School, Inc. v. Bank of the Philippine Islands, an action involving the
application of Act No. 3135, this Court recognized that the writ of possession was warranted not merely
on the basis of the law, but ultimately on the right to possess as an incident of ownership. The right to
possess a property merely follows the right of ownership, and it would be illogical to hold that a person
having ownership of a parcel of land is barred from seeking possession. Precisely, the basis for the grant
of the writ of possession in this case is respondent's ownership of the property by virtue of a tax
delinquency sale in her favor, and by virtue of her absolute right of ownership arising from the expiration
of the period within which to redeem the property.

More, respondent's ownership over the property is affirmed by the final and executory judgment in LRC
Case No. M-4992. To be clear, a writ of possession is defined as a writ of execution employed to enforce
a judgment to recover the possession of land, commanding the sheriff to enter the land and give its
possession to the person entitled under the judgment.

WHEREFORE, the petition is DENIED. The Decision dated January 31, 2011 of the Court of Appeals in
CA-G.R. SP No. 114103 is hereby AFFIRMED.
Majestic Plus International, Inc. vs. Bullion Investment and
Development Corporation Case Digest
Majestic Plus International, Inc. vs. Bullion Investment and Development Corporation/Majestic
Plus International, Inc. Vs. Bullion Investment and Development Corporation, et al.
G.R. No. 201017/G.R. No. 215289. December 5, 2016

Facts
On June 30, 2003, the City of Manila, through then City Mayor Joselito Atienza, and Bullion, represented
by its President Roland Lautachang, entered into a Contract for the lease of the said property for a period
of twenty-five (25) years. Under the Contract, Bullion, as lessee, agreed to construct two 4-storey
buildings, one of which shall be used as an extension office of the Manila City Hall for its institutional
services, while the other shall be used for commercial purposes.

Bullion then commenced construction and was able to finish and turn over the City Hall extension building
to the Manila City Government. However, Bullion was unable to finish the construction of the commercial
building. Bullion then sought the help of and was able to convince petitioner corporation, Majestic Plus
Holding International, Incorporation (Majestic), to invest in Bullion's business venture, particularly the
completion of the construction of its commercial building which was intended to be used as a mall (Meisic
Mall).
On September 7, 2004, Bullion, represented by its President, entered into a Memorandum of Agreement6
(MOA) with Majestic. Following the execution of the MOA, Majestic issued five (5) checks, on various
dates, for an aggregate amount of Fifty-Seven Million Pesos (P57 ,000,000.00) in favor of Bullion, as
partial payment of the 80% equity interest in the latter. Bullion acknowledged such payment. However, it
alleged that an additional four ( 4) checks, representing a total amount of P31,000,000.00, which were
subsequently issued by Majestic were dishonored because of "Stop Payment" orders. For Majestic's
failure to heed Bullion's demands, the latter sent another letter to the former, dated June 24, 2005,
informing it that Bullion had elected to rescind the MOA.

Meanwhile, Majestic took over the supervision and eventually finished the construction of the Meisic Mall,
except with respect to some minor installations. Based on the Summary of Payments, Majestic claims
that, aside from the P57,000,000.00 it had earlier paid to Bullion, it also incurred expenses for the
purpose of sustaining the construction of Meisic Mall and the acquisition of various equipment for use
inside the mall in the sum Pl34,522,803.22. Thus, the aggregate amount alleged to have been invested
by Majestic is P191,522,803.22.

The Meisic Mall became operational as early as May 2005. Majestic conducted business therein by
renting out the mall's leasable spaces to stallholders and by employing personnel for the security,
maintenance and upkeep of the mall's premises. However, in the morning of June 25, 2005, respondent,
aided by several police personnel and security guards, entered the premises and took physical
possession and control of Meisic Mall.

This prompted Majestic to file a Complaint for Specific Performance, Injunction and Damages with a
Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction against Bullion, together
with several other persons. Majestic alleged that it has become a majority shareholder of Bullion by
reason of its P 191,522,803.22 investment, which comprises 95.76% of the agreed P200,000,000.00
authorized capital stock of Bullion. Majestic also claims that the subject MOA remains valid and binding
and that Bullion failed to comply with its unde1iakings thereunder.

The executive judge assigned the same to Branch 46, RTC of Manila which is also a commercial court.
The parties did not question the jurisdiction of Branch 46. In the ensuing proceedings before Branch 46,
the parties jointly moved that the case be submitted for summary judgment, to which the RTC acceded.
On July 28, 2011, Branch 46, RTC of Manila rendered a Decision in favor of the plaintiff Majestic Plus
Holding International, Inc. and against the herein defendants.
On August 22, 2011, Majestic filed a Motion for Execution Pending Appeal which was granted by the RTC
by vi11ue of a Special Order and two other related orders, all dated September 1, 2011. Consequently, a
Writ of Execution Pending Appeal on even date was issued. Per Sheriffs Return dated September 2,
2011, the Writ was served on Bullion and was thereby immediately implemented. In accordance with the
Writ, the Sheriff was able to completely and successfully remove the physical possession and control of
Meisic Mall from Bullion and deliver the same to Majestic.

Bullion filed a Petition for Certiorari before the CA which granted the aforesaid Petition and annulled and
set aside the Special Order and the two (2) other assailed Orders. Hence, this petition.

Issues:
1. Whether Branch 46, RTC of Manila, despite being designated as an SCC, has jurisdiction
to hear and decide Majestic's suit for specific performance.
2. Whether RTC was correct in considering the case appropriate for summary judgment.
3. Whether the execution of such Decision pending appeal was proper.

Rulings:
1. Yes. The matter of whether the RTC resolves an issue in the exercise of its general jurisdiction or of its
limited jurisdiction as a special court is only a matter of procedure and has nothing to do with the question
of jurisdiction.

Moreover, it should be noted that Special Commercial Courts (SCCs) are still considered courts of
general jurisdiction. Section 5.2 of R.A. No. 8799, otherwise known as The Securities Regulation Code,
directs merely the Supreme Court's designation of RTC branches that shall exercise jurisdiction over
intra-corporate disputes. The assignment of intra-corporate disputes to secs is only for the purpose of
streamlining the workload of the RTCs so that certain branches thereof like the SCCs can focus only on a
particular subject matter.
Nothing in the language of the law suggests the diminution of jurisdiction of those RTCs to be designated
as SCCs. The RTC exercising jurisdiction over an intra-corporate dispute can be likened to an RTC
exercising its probate jurisdiction or sitting as a special agrarian court. The designation of the SCCs as
such has not in any way limited their jurisdiction to hear and decide cases of all nature, whether civil,
criminal or special proceedings.

Hence, based on the foregoing, it is clear that Branch 46, RTC of Manila, despite being designated as an
SCC, has jurisdiction to hear and decide Majestic's suit for specific performance.

2. No. Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations
and useless delays. Relief by summary judgment is intended to expedite or promptly dispose of cases
where the facts appear undisputed and certain from the pleadings, depositions, admissions and affidavits.
Summary judgments are proper when, upon motion of the plaintiff or the defendant, the court finds that
the answer filed by the defendant does not tender a genuine issue as to any material fact and that one
party is entitled to a judgment as a matter of law. But if there be a doubt as to such facts and there be an
issue or issues of fact joined by the parties, neither one of them can pray for a summary judgment. Where
the facts pleaded by the parties are disputed or contested, proceedings for a summary judgment cannot
take the place of a trial.

In the present case, it is true that both parties moved for the rendition of a summary judgment. However,
it is apparent that the RTC did not comply with the procedural guidelines when it ordered that the case be
submitted for summary judgment without first conducting a hearing to determine if there are indeed no
genuine issues of fact that would necessitate trial. The trial court merely required the parties to submit
their respective memoranda, together with their affidavits and exhibits and, although the parties presented
opposing claims, the RTC hastily rendered a summary judgment. Thus, the trial court erred in cursorily
issuing the said judgment.
A careful examination of the pleadings will show that Majestic's causes of action in its Complaint are
anchored on Bullion's supposed violations of the provision of the subject MOA. On the other hand,
Majestic's allegations are controverted by Bullion who, in a like manner, asserts that by virtue of
Majestic's failure to comply with the provisions of the said MOA, it decided to rescind the same. These
diametrically opposed and conflicting claims present a factual dispute which can be resolved and settled
only by means of evidence presented during trial. On the basis of the foregoing, it is clear that the RTC
erred in rendering its assailed summary judgment. Thus, the CA did not commit error in setting aside the
said summary judgment.

3. No. In view of this Court's affirmance of the CA ruling which reversed and set aside the July 28, 2011
Decision of the RTC, there is no longer any RTC judgment that may be executed. Hence, the issue as to
whether or not there are "good reasons" to execute the assailed Decision of the RTC has become moot
and academic.

WHEREFORE, the instant petitions are DENIED. The November 2, 2011 Decision and March 14, 2012
Resolution of the Court of Appeals in CA-G.R. SP No. 121072 are AFFIRMED. The October 23, 2013
Decision and November 4, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 97537 are,
likewise, AFFIRMED. The Executive Judge of the Regional Trial Court of Manila is
hereby ORDERED to PROMPTLY RE-RAFFLE the case among the non-commercial courts with a
directive that the same be resolved with deliberate dispatch.
Posted by Atty. Glenn Rey Anino at 9:32 PM No comments:
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Labels: 2016, Remedial Law Case Digest

24-K Property Ventures, Inc. vs. Young Builders Corporation

Case Digest
24-K Property Ventures, Inc. Vs. Young Builders Corporation
G.R. No. 193371. December 5, 2016

Facts
On 7 August 1996, petitioner and respondent entered into a Construction Contract wherein respondent
undertook to construct for petitioner a 20-storey office/residential building along Tomas Morato, Quezon
City for the price of P165,000,000.00. In 1988, petitioner was hit by the Asian Financial Crisis of 1997 and
it incurred arrearages. Respondent refused to continue with the construction unless petitioner issued
securities for its unpaid obligations. Petitioner then executed in respondent's favor a Deed of Real Estate
Mortgage over two parcels of land covered by TCT No. N-164112 and No. N-164113. At that time, these
lots were bare and without improvements. In 1999, respondent filed a complaint for collection of sum of
money against petitioner before the CIAC. Meanwhile, petitioner commenced the construction of another
condominium project on the two parcels of land.

On 19 December 2005, the CIAC rendered a Final Award ordering petitioner to pay respondent the sum
of P91,084,206.43, with interest at the rate of 6% per annum from the date of the final award, and 12%
per annum from the date the award becomes final and executory until it is fully paid. This award became
final and executory on 28 October 2008. In the meantime, while the case was on appeal, the CIAC, upon
motion of respondent, issued a writ of execution dated 2 May 2006 for the award of P91,084,206.43, as
well as for the amount of Pl,208,801.81 as arbitration costs.

Sheriff Villegas serve the writ and the letter of request for compliance to petitioner's counsel who
acknowledged receipt thereof. Sheriff Villegas also served notices of garnishment to the following banks:
Banco de Oro Universal Bank, Philippine National Bank, Metropolitan Bank and Trust Company, United
Coconut Planters Bank, and East West Banking Corporation. Sheriff Villegas subsequently levied on the
real properties of petitioner, particularly on those covered by Condominium Certificate of Title No. N-
14163, No. N-14183 and No. N-14286, etc. and Transfer Certificate Title No. N-164112 and No. N-
164113.13 The levy effected by Sheriff Villegas was on sixteen (16) condominium units of Lansbergh
Place and on the two parcels of land upon which Torre Venezia, a 27-storey building with 302
condominium units, presently stands.

Petitioner filed a Manifestation with Motion to Suspend Enforcement of Notice of Sale and Re-
computation of Award but the auction sale proceeded and the subject properties were sold to respondent
for Pl 10,504,888.05. A Certificate of Sale was consequently issued in respondent's favor.

Petitioner filed a Motion to Set Aside Execution Sale, claiming that the sale was violative of various
provisions of the Rules of Court and that the subject properties were sold at a grossly inadequate price.
The CIAC, however, denied said motion as well as the subsequent Motion for Reconsideration.

Petitioner elevated the case to the Court of Appeals (CA), contending that the CIAC gravely abused its
discretion in upholding the execution sale. The CA dismissed the petition. Hence, the present petition for
review on certiorari.

Issue: Whether the levy effected on the real properties of petitioner was proper.

Ruling
No. It is doctrinal that "a lawful levy of execution is a prerequisite to an execution sale, either of real estate
or of personalty, to the conveyance executed in pursuant thereof, and to the title acquired thereby." A
proper levy is indispensable to a valid execution sale, and an execution sale, unless preceded by a
proper levy, is void and the purchaser in said sale acquires no title to the property sold thereunder. In the
case at bar, we find that the levy effected on the real properties of petitioner was improper.

A valid demand for the immediate payment of the full

amount stated in the writ of execution and all lawful
fees is necessary to a proper levy.

The first crucial step in the execution of money judgments is a valid demand on the judgment obligor,
usually via a valid service of the writ of execution. In the case at bar, the Sheriffs Report/Return stated:
By virtue of the Writ of Execution, dated May 2, 2006 issued by Construction Industry Arbitration
Commission, the undersigned sheriff tried to serve said writ upon officer of respondent corporation,
however, despite [diligent] effort exerted by herein sheriff to serve to the officer of respondent
corporation[,] [service] proved futile because they refused to acknowledge receipt thereof x x x.

Noticeably, the Sheriffs Report/Return failed to specifically indicate material information on the alleged
attempted service on petitioner. It failed to state the name of the officer who allegedly refused to receive
the writ and the circumstances surrounding such refusal, and even the date when said attempted service
was allegedly made.

The CIAC and the CA unquestionably accepted Sheriff Villegas' ambiguous statements regarding the
alleged attempted service on petitioner, relying on the presumption that the former performed his official
duty regularly. The Court, however, holds that such presumption cannot be applied in the case at bar
given the abstracted and vague declarations in the Sheriffs Report/Return.

A valid levy must first be effected on personal properties, if any,

and then on real properties if personal properties are insufficient
to answer for the judgment.

In case the judgment debtor fails to choose which of his properties should be levied upon, the sheriff must
first levy on the judgment debtor's personal properties, if any, and should such properties be insufficient,
then the sheriff may levy on the judgment debtor's real properties. In all of these cases, the sheriff may
levy and sell only such properties as are sufficient to satisfy the judgment debt and the lawful fees.

The Sheriffs Report/Return, presumably in an effort to comply with the Rules, stated that a levy on
petitioner's bank accounts was first attempted. The CA accepted the sheriffs statements as gospel truth.
In its recital of facts, the CA stated that "on 05 May 2006, [Sheriff Villegas] served Notice of Garnishment
to a number of banks but he was informed that the petitioner had no deposits, credits or money in those
banks. On 9 May 2006, he levied on two real properties of the petitioner.

And yet, the levy on petitioner's real properties was made on 9 May 2006, clearly showing that petitioner
was deprived of the opportunity to have his personal properties garnished or levied upon first before his
real properties. All in all, it being shown that there was no proper levy in the case at bar, the consequent
execution sale is thus declared invalid.

WHEREFORE, in view of the foregoing, the present petition is hereby GRANTED. The execution sale
over the properties covered by TCT Nos. N-164112 and N-164113 in favor of respondent is
declared NULL and VOID.
Fernando Medical Enterprises, Inc. vs. Wesleyan University
Philippines, Inc. Case Digest
Fernando Medical Enterprises, Inc. vs. Wesleyan University
Philippines, Inc.
G.R. No. 207970. January 20, 2016

BERSAMIN, J.:

Doctrine:

The trial court may render a judgment on the pleadings upon motion of the claiming party when the
defending party's answer fails to tender an issue, or otherwise admits the material allegations of the
adverse party's pleading. For that purpose, only the pleadings of the parties in the action are considered.
It is error for the trial court to deny the motion for judgment on the pleadings because the defending
party's pleading in another case supposedly tendered an issue of fact.

Facts:

From January 9, 2006 until February 2, 2007, the petitioner, a domestic corporation dealing with medical
equipment and supplies, delivered to and installed medical equipment and supplies at the respondent's
hospital. According to the petitioner, the respondent paid only P67,3 57,683.23 of its total obligation of
P123,901,650.00, leaving unpaid the sum of P54,654,195.54.

However, on February 11, 2009, the petitioner and the respondent entered into an agreement whereby
the former agreed to reduce its claim to only P50,400,000.00, and allowed the latter to pay the adjusted
obligation on installment basis within 36 months.

In the letter dated May 27, 2009, the respondent notified the petitioner that its new administration had
reviewed their contracts and had found the contracts defective and rescissible due to economic prejudice
or lesion; and that it was consequently declining to recognize the February 11, 2009 agreement because
of the lack of approval by its Board of Trustees and for having been signed by Maglaya whose term of
office had expired.

On June 24, 2009, the petitioner sent a demand letter to the respondent. Due to the respondent's failure
to pay as demanded, the petitioner filed its complaint for sum of money in the RTC.
The respondent moved to dismiss the complaint upon the following grounds, namely: (a) lack of
jurisdiction over the person of the defendant; (b) improper venue; (c) litis pendentia; and (d) forum
shopping. In support of the ground of litis pendentia, it stated that it had earlier filed a complaint for the
rescission of the four contracts and of the February 11, 2009 agreement in the RTC in Cabanatuan City;
and that the resolution of that case would be determinative of the petitioner's action for collection.

After the RTC denied the motion to dismiss on July 19, 2009, the respondent filed its answer. On
September 28, 2011, the petitioner filed its Motion for Judgment Based on the Pleadings, stating that the
respondent had admitted the material allegations of its complaint and thus did not tender any issue as to
such allegations. The respondent opposed the Motion for Judgment Based on the Pleadings, arguing that
it had specifically denied the material allegations in the complaint.

Judgment of the RTC

At the hearing, the court issued an Order denying the Motion for Judgment Based on the Pleadings
considering that the allegations stated on the Motion are evidentiary in nature. The Court, instead of
acting on the same, sets the case for pre-trial, considering that with the Answer and the Reply, issues
have been joined.

Judgment of the CA

On July 2, 2013, the CA promulgated its decision. Although observing that the respondent had admitted
the contracts as well as the February 11, 2009 agreement, the CA ruled that a judgment on the pleadings
would be improper because the outstanding balance due to the petitioner remained to be an issue in the
face of the allegations of the respondent in its complaint for rescission in the RTC in Cabanatuan City.

Issue:

Whether the Court of Appeals erred in going outside of the respondent's answer by relying on the
allegations contained in the latter's complaint for rescission.

Ruling of the SC:

Yes, the Court of Appeals erred in going outside of the respondent's answer by relying on the allegations
contained in the latter's complaint for rescission. In order to resolve the petitioner's Motion for Judgment
Based on the Pleadings, the trial court could rely only on the answer of the respondent filed in Civil Case
No. 09-122116. Under Section 1, Rule 34 of the Rules of Court, the answer was the sole basis for
ascertaining whether the complaint's material allegations were admitted or properly denied. As such, the
respondent's averment of payment of the total of P78,401,650.00 to the petitioner made in its complaint
for rescission had no relevance to the resolution of the Motion for Judgment Based on the Pleadings. The
CA thus wrongly held that a factual issue on the total liability of the respondent remained to be settled
through trial on the merits. It should have openly wondered why the respondent's answer in Civil Case
No. 09-122116 did not allege the supposed payment of the P78,401,650.00, if the payment was true, if
only to buttress the specific denial of its alleged liability. The omission exposed the respondent's denial of
liability as insincere.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on July 2,
2013; DIRECTS the Regional Trial Court, Branch 1, in Manila to resume its proceedings in Civil Case No.
09-122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-Philippines, and to
forthwith act on and grant the Motion for Judgment Based on the Pleadings by rendering the proper
judgment on the pleadings; and ORDERS the respondent to pay the costs of suit.

Fernando Medical Enterprises, Inc. vs. Wesleyan University

Philippines, Inc. Case Digest
Fernando Medical Enterprises, Inc. vs. Wesleyan University
Philippines, Inc.
G.R. No. 207970. January 20, 2016

BERSAMIN, J.:

Doctrine:

The trial court may render a judgment on the pleadings upon motion of the claiming party when the
defending party's answer fails to tender an issue, or otherwise admits the material allegations of the
adverse party's pleading. For that purpose, only the pleadings of the parties in the action are considered.
It is error for the trial court to deny the motion for judgment on the pleadings because the defending
party's pleading in another case supposedly tendered an issue of fact.

Facts:

From January 9, 2006 until February 2, 2007, the petitioner, a domestic corporation dealing with medical
equipment and supplies, delivered to and installed medical equipment and supplies at the respondent's
hospital. According to the petitioner, the respondent paid only P67,3 57,683.23 of its total obligation of
P123,901,650.00, leaving unpaid the sum of P54,654,195.54.
However, on February 11, 2009, the petitioner and the respondent entered into an agreement whereby
the former agreed to reduce its claim to only P50,400,000.00, and allowed the latter to pay the adjusted
obligation on installment basis within 36 months.

In the letter dated May 27, 2009, the respondent notified the petitioner that its new administration had
reviewed their contracts and had found the contracts defective and rescissible due to economic prejudice
or lesion; and that it was consequently declining to recognize the February 11, 2009 agreement because
of the lack of approval by its Board of Trustees and for having been signed by Maglaya whose term of
office had expired.

On June 24, 2009, the petitioner sent a demand letter to the respondent. Due to the respondent's failure
to pay as demanded, the petitioner filed its complaint for sum of money in the RTC.

The respondent moved to dismiss the complaint upon the following grounds, namely: (a) lack of
jurisdiction over the person of the defendant; (b) improper venue; (c) litis pendentia; and (d) forum
shopping. In support of the ground of litis pendentia, it stated that it had earlier filed a complaint for the
rescission of the four contracts and of the February 11, 2009 agreement in the RTC in Cabanatuan City;
and that the resolution of that case would be determinative of the petitioner's action for collection.

After the RTC denied the motion to dismiss on July 19, 2009, the respondent filed its answer. On
September 28, 2011, the petitioner filed its Motion for Judgment Based on the Pleadings, stating that the
respondent had admitted the material allegations of its complaint and thus did not tender any issue as to
such allegations. The respondent opposed the Motion for Judgment Based on the Pleadings, arguing that
it had specifically denied the material allegations in the complaint.

Judgment of the RTC

At the hearing, the court issued an Order denying the Motion for Judgment Based on the Pleadings
considering that the allegations stated on the Motion are evidentiary in nature. The Court, instead of
acting on the same, sets the case for pre-trial, considering that with the Answer and the Reply, issues
have been joined.

Judgment of the CA
On July 2, 2013, the CA promulgated its decision. Although observing that the respondent had admitted
the contracts as well as the February 11, 2009 agreement, the CA ruled that a judgment on the pleadings
would be improper because the outstanding balance due to the petitioner remained to be an issue in the
face of the allegations of the respondent in its complaint for rescission in the RTC in Cabanatuan City.

Issue:

Whether the Court of Appeals erred in going outside of the respondent's answer by relying on the
allegations contained in the latter's complaint for rescission.

Ruling of the SC:

Yes, the Court of Appeals erred in going outside of the respondent's answer by relying on the allegations
contained in the latter's complaint for rescission. In order to resolve the petitioner's Motion for Judgment
Based on the Pleadings, the trial court could rely only on the answer of the respondent filed in Civil Case
No. 09-122116. Under Section 1, Rule 34 of the Rules of Court, the answer was the sole basis for
ascertaining whether the complaint's material allegations were admitted or properly denied. As such, the
respondent's averment of payment of the total of P78,401,650.00 to the petitioner made in its complaint
for rescission had no relevance to the resolution of the Motion for Judgment Based on the Pleadings. The
CA thus wrongly held that a factual issue on the total liability of the respondent remained to be settled
through trial on the merits. It should have openly wondered why the respondent's answer in Civil Case
No. 09-122116 did not allege the supposed payment of the P78,401,650.00, if the payment was true, if
only to buttress the specific denial of its alleged liability. The omission exposed the respondent's denial of
liability as insincere.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on July 2,
2013; DIRECTS the Regional Trial Court, Branch 1, in Manila to resume its proceedings in Civil Case No.
09-122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-Philippines, and to
forthwith act on and grant the Motion for Judgment Based on the Pleadings by rendering the proper
judgment on the pleadings; and ORDERS the respondent to pay the costs of suit.