World Wide Insurance v. Manuel
REITERATIONFacts
The Antecedents: Plaintiff, The World Wide Insurance & Surety Co., Inc., filed a suit based on an "Agreement of Counter-guaranty with mortgage and/or pledge" executed by Gonzalo L. Manuel. This agreement was executed to protect the plaintiff, which had filed a bond in the sum of P28,200 to lift a writ of attachment obtained by Visayan Surety Insurance Corporation against GLM Productions and Gonzalo L. Manuel Productions in a prior civil case (Civil Case No. 16335). Procedural History: The defendant, Gonzalo L. Manuel, filed a motion to dismiss, arguing the complaint stated no cause of action because he signed the agreement not in his individual capacity but as President of GLM Productions and Gonzalo L. Manuel Productions. The trial court initially dismissed the complaint, but upon reconsideration, allowed the plaintiff ten days to amend the complaint to make Gonzalo L. Manuel personally responsible. The plaintiff amended the complaint, asserting individual responsibility on the ground that the entities represented by Manuel were not registered with the Securities and Exchange Commission and thus lacked juridical personality. The defendant again moved to dismiss. The successor judge, after examining court records, found that GLM Productions and Gonzalo L. Manuel Productions were considered a juridical entity for whom Manuel signed, and that the lack of registration did not affect its legal existence. Consequently, the amended complaint was dismissed. Plaintiff appealed this dismissal. The Petition: The plaintiff-appellant contends that the trial court erred in dismissing the complaint by going beyond the allegations of the complaint itself and considering external facts, particularly contrary to the complaint's assertions.
Issue(s)
Whether the trial court erred in dismissing the amended complaint based on facts outside the allegations of the complaint. Whether apparent contradictions between the allegations of a complaint and an incorporated document constitute grounds for dismissal or are matters of defense.
Ruling
The Supreme Court reversed the order of dismissal and remanded the case to the lower court for further proceedings. The Court held that when determining if a complaint states a cause of action, the allegations must be accepted as true. Apparent contradictions between the complaint's allegations and an attached document are not grounds for dismissal but rather present issues of defense to be resolved during trial.
Ratio Decidendi
On the issue of whether the trial court erred in dismissing the amended complaint based on facts outside the allegations of the complaint: The Court reiterated the principle that to determine if a complaint states a cause of action, one must accept its allegations as true and correct. It is improper to go beyond the complaint for data or facts, especially those contradicting its allegations, to assess its sufficiency. The Court emphasized that if there is a conflict between the allegations and an attached document, the defendant should be required to answer. This process allows the plaintiff to reconcile any apparent conflict and the defendant to refute the allegations and demonstrate the materiality of the conflict. The Court cited Mercado vs. Tan Lingco to support the principle that recitals in an incorporated document do not automatically negate the complaint's allegations unless they are basic or ultimate facts. In this case, the allegation of individual responsibility due to lack of juridical personality must be accepted as true for the purpose of a motion to dismiss. On the issue of whether apparent contradictions between the allegations of a complaint and an incorporated document constitute grounds for dismissal or are matters of defense: The Court held that apparent contradictions between the complaint's allegations and statements in an incorporated document do not affect the basic allegations of the complaint as to the defendant's individual responsibility. The fact that the agreement showed Manuel signed as President of GLM Productions, and that this entity might have legal existence, does not negate the complaint's assertion of his individual liability. Such matters, including whether GLM Productions is duly registered, has legal existence, and whether Manuel was authorized to represent it, are defenses to be alleged in the answer and proven during the hearing. The Court stressed that the test for a cause of action is whether, admitting the facts alleged, a valid judgment can be rendered. If the allegations are sufficient but their veracity is doubted, the motion to dismiss must be denied, and the case should proceed to trial on the merits.
Main Doctrine
In determining whether a complaint states a cause of action, the allegations therein must be accepted as true and correct. Any apparent contradiction between these allegations and statements in an incorporated document should not be used to refute the allegations unless such statements are basic or ultimate facts, not merely recitals or claims by a party. Such apparent contradictions present matters of defense to be proven during trial.