Francia v. Power Merge Corporation
REITERATIONFacts
The Antecedents: Petitioner Amos P. Francia, Jr., a depositor of Westmont Bank, invested ₱14,581,710.28 in Westmont Investment Corporation (WINCORP) on November 16, 1998. He instructed WINCORP to roll over the investment upon maturity. By February 14, 2000, his placement increased to ₱17,258,907.76. WINCORP invested Francia's placement in respondent Power Merge Corporation (PMC), as indicated in Confirmation Advice No. 899604. The Confirmation Advice stated that WINCORP acted as agent for the client, without recourse or liability to WINCORP, in respect to the loan granted to the Borrower (PMC). Francia convinced his sister, co-petitioner Cecilia Zamora, to make a similar placement. On December 21, 1999, they made a joint placement of ₱16,397,387.22 at WINCORP, which was also invested in PMC, with a maturity value of ₱16,872,185.41 due on March 20, 2000. In March 2000, Francia and Cecilia attempted to withdraw their investments but failed, learning that WINCORP and Westmont Bank were facing financial difficulties. Francia sent PMC a demand letter on November 15, 2000, for the total amount of ₱34,362,650.18, representing the maturity values of his placement and their joint placement. PMC did not respond. Procedural History: Francia and Cecilia filed a Complaint for Sum of Money and Damages against WINCORP and PMC before the RTC of Makati. PMC filed a Motion to Dismiss, alleging improper service of summons and failure to state a cause of action. WINCORP also filed a Motion to Dismiss, contending failure to state a cause of action. The RTC denied both motions. PMC moved for reconsideration, which was also denied. PMC then filed a petition for certiorari and prohibition with the Court of Appeals (CA). The CA set aside the RTC orders and dismissed the complaint against PMC, finding that the complaint did not state a cause of action against PMC. Petitioners' motion for reconsideration was denied. The Petition: Petitioners filed the present petition for review on certiorari, faulting the CA for ruling that the complaint failed to state a cause of action against PMC, among other grounds.
Issue(s)
Whether the Court of Appeals erred in ruling that the complaint failed to state a cause of action against respondent Power Merge Corporation. Whether respondent Power Merge Corporation is an indispensable party to the case.
Ruling
The petition is GRANTED. The August 13, 2003 Decision and March 1, 2004 Resolution of the Court of Appeals are SET ASIDE. The Regional Trial Court of Makati, Branch 58 is DIRECTED to REINSTATE in Civil Case No. 01-436 the complaint against respondent Power Merge Corporation and to take appropriate action thereon with dispatch.
Ratio Decidendi
On the issue of failure to state a cause of action against PMC: The Court held that a motion to dismiss based on failure to state a cause of action hypothetically admits the truth of the material allegations of the complaint, including inferences fairly deducible from the complaint. The annexes attached to the complaint are considered part thereof. In this case, the Confirmation Advice issued by WINCORP to petitioners explicitly stated that WINCORP acted as agent for the client (petitioners) in the loan granted to the Borrower (PMC), and that WINCORP acted without recourse or liability. This indicates a creditor-debtor relationship between petitioners and PMC, with WINCORP merely acting as agent. Furthermore, paragraph 14 of the complaint, which was hypothetically admitted by PMC through its motion to dismiss, explicitly stated that WINCORP lent the monies of the plaintiffs to PMC, and attached a Confirmation Advice showing PMC as the borrower. Therefore, the complaint, when read with its annexes and considering the hypothetical admission, sufficiently alleged a cause of action against PMC, establishing a direct relationship or privity of contract. The Court of Appeals erred in dismissing the complaint against PMC based on a narrow interpretation of the complaint's allegations without considering the annexes and the nature of a motion to dismiss. There was no discussion of whether respondent Power Merge Corporation is an indispensable party to the case in the provided text.
Main Doctrine
A motion to dismiss based on failure to state a cause of action hypothetically admits the truth of the material allegations in the complaint, including inferences fairly deducible therefrom. The annexes attached to the complaint are considered part thereof. A complaint states a cause of action if, admitting the facts alleged, the court can render a valid judgment in accordance with the prayer.