Far East Marble (Phils.), Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondent Bank of the Philippine Islands (BPI) filed a complaint for foreclosure of chattel mortgage with replevin against petitioner Far East Marble (Phils.), Inc. (Far East) and its guarantors, Ramon A. Tabuena, Jr. and Luis R. Tabuena, Jr. BPI alleged that Far East received loans evidenced by promissory notes and credit facilities in the form of trust receipts, all of which had matured and remained unpaid despite repeated demands. To secure these obligations, Far East executed a chattel mortgage, and the individual petitioners executed a continuing guaranty. Procedural History: Far East admitted the promissory notes but denied the trust receipts and the alleged demands for payment. It raised the affirmative defenses of prescription and lack of cause of action, claiming the action was filed more than 10 years after the maturity of the notes. BPI opposed, asserting that its cause of action had not prescribed due to written extrajudicial demands and acknowledgments of debt, which interrupted and renewed the prescriptive period. BPI also filed a motion for summary judgment. The Regional Trial Court (RTC) dismissed the complaint against Far East for lack of cause of action and prescription, denied the motion for summary judgment, and ordered the return of seized property. BPI appealed to the Court of Appeals (CA). The CA set aside the RTC order, finding that the complaint had not prescribed and remanding the case for further proceedings, including the resolution of the motion for summary judgment. The Petition: Petitioners Far East, Ramon A. Tabuena, Jr., and Luis R. Tabuena, Jr. filed a petition for review on certiorari with the Supreme Court, arguing that the CA erred in disregarding the RTC's findings on prescription, in reopening the case for reception of evidence, and in assuming jurisdiction over an appeal involving pure questions of law.
Issue(s)
Whether the Court of Appeals erred in assuming jurisdiction over the appeal, considering the issues raised were pure questions of law. Whether the Court of Appeals erred in disregarding the trial court's findings that prescription had set in, and whether the trial court erred in dismissing the complaint on the ground of prescription and lack of cause of action. Whether the Court of Appeals erred in ruling for a reopening of the trial for the reception of evidence on prescription and summary judgment when these were already tried and weighed by the trial court.
Ruling
The petition is denied, and the decision of the Court of Appeals is affirmed. The Court held that the appeal to the CA involved questions of fact, making its assumption of jurisdiction proper. The RTC's dismissal of the complaint based on prescription was premature, as the issue of whether demands for payment interrupted the prescriptive period required the reception of evidence. The allegation of "repeated requests and demands for payment" is sufficient to establish a cause of action, and prescription is a defense, not an element of a cause of action.
Ratio Decidendi
On the jurisdiction of the Court of Appeals: The Court ruled that the appeal to the Court of Appeals was proper because it involved questions of fact. The core dispute between the parties centered on the existence of previous demands for payment allegedly made by BPI on Far East, the receipt of which was denied by Far East. This dispute regarding the truth or falsity of alleged facts constitutes a question of fact, which falls within the appellate jurisdiction of the Court of Appeals. Therefore, the CA did not step beyond its authority in taking cognizance of the appeal. On the issue of prescription and cause of action: The Court held that the trial court erred in dismissing the complaint on the ground of prescription and lack of cause of action. The Court clarified that a cause of action consists of the plaintiff's legal right, the defendant's correlative obligation, and the defendant's act or omission violating that right. BPI's complaint sufficiently alleged these elements by stating that it granted loans and credit facilities, that these matured, and that Far East failed to pay despite repeated demands. The Court emphasized that prescription is a defense, not an element of a cause of action, and thus, the plaintiff is not required to plead that the prescriptive period was interrupted. The general allegation of "repeated requests and demands for payment" was deemed sufficient to establish a cause of action, with the defendant having the recourse to file a motion for a bill of particulars if further clarification was needed. On the reopening of the trial for reception of evidence: The Court affirmed the CA's decision to remand the case for further proceedings, including the reception of evidence. The trial court's finding of prescription was based on a misappreciation of the sufficiency of BPI's allegations and a pro forma hearing that did not sufficiently address the issue of whether demands for payment were actually made and received. BPI had countered Far East's defense of prescription by asserting that the period was interrupted and renewed by written extrajudicial demands and acknowledgments of debt. These counter-assertions necessitated the reception and weighing of evidence to determine the truth of the claims, which the RTC failed to do.
Main Doctrine
The allegation of "repeated requests and demands for payment" is sufficient to establish a cause of action, and prescription is a defense that must be proven by the defendant, not an element of the cause of action that the plaintiff must plead. The interruption of the prescriptive period by demands or acknowledgments of debt can be raised as a counter-argument to the defense of prescription.