Excel Agro-Industrial Corp. v. Gochangco
REITERATIONFacts
The Antecedents: Petitioner Excel Agro-Industrial Corporation filed a complaint against respondent Juan T. Gochangco to compel the latter to accept a P100,000.00 check as payment for a loan secured by a Deed of Assignment over nine parcels of land. Petitioner also sought to declare the Deed of Assignment ineffective and to restrain respondent from disposing of the properties. Procedural History: Respondent raised the affirmative defense of lack of cause of action, arguing that a check is not legal tender and that the Deed of Assignment was valid. Subsequently, respondent filed a motion to dismiss on similar grounds. The trial court dismissed the complaint, and the motion for reconsideration was denied. The Court of Appeals affirmed the dismissal, holding that the tender of payment by check did not constitute legal tender and thus the complaint stated no cause of action. The Petition: Petitioner contended that the Court of Appeals erred in affirming the dismissal because the motion to dismiss was filed after the answer, and that a preliminary hearing should have been conducted since the ground for dismissal was also an affirmative defense.
Issue(s)
Whether the trial court erred in allowing a motion to dismiss to be filed after the answer was submitted. Whether a hearing is necessary before a motion to dismiss, based on lack of cause of action and affirmative defenses, can be granted.
Ruling
The Supreme Court set aside the decision of the Court of Appeals, reinstated Civil Case No. 1038, and ordered the trial court to conduct a hearing on the motion to dismiss.
Ratio Decidendi
On the issue of allowing a motion to dismiss after an answer: The Court found no error in the trial court's allowance of the motion to dismiss, even though it was filed after the answer. This was considered part of the trial court's discretionary power to facilitate the speedy dispensation of justice, especially since the ground for dismissal (lack of cause of action) was the same as the affirmative defense already raised in the answer. The motion to dismiss could be treated as a reiteration of the affirmative defense or a motion for preliminary hearing on that defense. On the necessity of a hearing before dismissal: The Court held that petitioner should have been heard before the dismissal of its complaint. This is particularly important given the stipulation in the Deed of Assignment that the nine parcels of land would be forfeited if the loan remained unpaid by a specific date, which was the same day petitioner allegedly tendered payment by check. The Court emphasized that such a precipitate deprivation of ownership warranted a hearing. Furthermore, the complaint alleged that respondent refused to accept the check without legal justification, causing prejudice to the petitioner, and petitioner claimed to have proof of respondent's prior assent to payment by check. The Court cited Section 3, Rule 16 of the Revised Rules of Court, which mandates a hearing before a motion to dismiss is resolved, unless the ground is indubitable. The case of Asejo v. Leonoso was extensively quoted to underscore the necessity of a hearing where parties are allowed to present evidence, even if the court has a strong opinion on the matter, to avoid depriving a party of their claim without due process.
Main Doctrine
A motion to dismiss based on lack of cause of action, even if filed after the answer, may be allowed by the trial court in the exercise of its discretion to facilitate the speedy dispensation of justice, provided that the ground raised in the motion is the same as an affirmative defense already pleaded in the answer. However, a hearing must be conducted before ruling on such motion, especially when the dismissal of the complaint would result in a precipitate deprivation of ownership or prejudice to the plaintiff, and the plaintiff alleges refusal to accept payment without legal justification.