Convets, Inc. v. National Development Company
REITERATIONFacts
The Antecedents: The Confederation of Filipino Veterans (CONVETS), a domestic corporation, filed a complaint against the National Development Company (NDC), Land Settlement and Development Corporation (LASEDECO), and the Board of Liquidators for P36,000 in agent's commission. CONVETS alleged that on July 7, 1949, the NDC recommended allowing CONVETS a 10% commission on sales of items from the Caledonia Pile where CONVETS had a direct hand. On July 13, 1949, the NDC Board accepted CONVETS' offer to act as exclusive sales agent for the Caledonia Pile. On September 28, 1949, CONVETS informed the NDC Board it had found a buyer, Joseph Behr & Sons, Inc. On November 25, 1949, a contract of sale of approximately 4,000 tons of spare parts from the Caledonia Pile at P90 per ton between NDC and Joseph Behr & Sons, Inc. was approved, with CONVETS claiming direct intervention. A written agreement confirming prior commitments was entered into on February 8, 1950, retroactive to July 13, 1949. The sale was executed, with Joseph Behr & Sons, Inc. paying the NDC. Subsequently, management of the Caledonia Pile was transferred from NDC to LASEDECO, and then its assets were turned over to the Board of Liquidators. CONVETS claimed repeated demands for its commission were refused. Procedural History: The defendants filed a motion to dismiss, arguing the complaint did not state a cause of action and that the action had prescribed. The lower court granted the motion to dismiss. The Petition: CONVETS appealed the dismissal order.
Issue(s)
Whether the complaint stated a cause of action against the NDC. Whether the complaint stated a cause of action against LASEDECO and the Board of Liquidators. Whether the plaintiff's cause of action had prescribed.
Ruling
The Supreme Court found the appeal meritorious and set aside the order of dismissal, remanding the case for further proceedings.
Ratio Decidendi
On the issue of whether the complaint stated a cause of action against the NDC: The Court held that the lower court erred in considering the annexes to the complaint to determine the sufficiency of the cause of action. It is elementary that lack of cause of action must appear on the face of the complaint, and only the facts alleged therein should be considered. The complaint alleged CONVETS' appointment as exclusive agent, its finding of a buyer, its direct intervention in the sale's consummation, and the defendants' failure to pay the stipulated commission despite demands. These allegations, hypothetically admitted by the motion to dismiss, constitute a cause of action. Any contradiction between the complaint's allegations and the annexes is a matter of defense to be proven at trial, not a ground for dismissal. The Court cited World Wide Insurance & Surety Co., Inc. vs. Manuel, et al., emphasizing that one must accept the complaint's allegations as true and not go beyond it to determine cause of action. On the issue of whether the complaint stated a cause of action against LASEDECO and the Board of Liquidators: The Court found the lower court's ruling erroneous. These defendants were made parties because they succeeded to the management of the Caledonia Pile and the obligations incurred in its disposal. The fact that the specific articles sold might not have been inventoried in the same manner upon transfer does not negate their potential liability for obligations related to the Caledonia Pile's disposal, especially when CONVETS' role as agent for the entire pile was alleged. On the issue of whether the plaintiff's cause of action had prescribed: The Court ruled that the lower court erred in declaring the action prescribed. The claim is founded upon a written contract of agency with a commission payable within five days of the succeeding month. As the sale was consummated in December 1949, the right of action accrued on January 5, 1950. Under Article 1144 of the new Civil Code, an action based on a written contract prescribes in ten years. Therefore, the complaint filed in 1955 was within the prescriptive period. Moreover, the Court reiterated its holding in Sison vs. McQuaid, stating that if it is not clear from the complaint's allegations when the cause of action accrued, the defense of prescription cannot be sustained on a mere motion to dismiss.
Main Doctrine
A motion to dismiss based on lack of cause of action must be determined solely from the allegations in the complaint, and any conflict between the complaint's allegations and attached annexes should be resolved through trial, not dismissal. Furthermore, the defense of prescription cannot be sustained on a mere motion to dismiss if it is not clear from the complaint when the cause of action accrued.