Fernando Medical Enterprises v. Wesleyan University
REITERATIONFacts
The Antecedents: Fernando Medical Enterprises, Inc. (FMEI) supplied and installed medical equipment and furnishings for Wesleyan University-Philippines (WUP) from January 9, 2006, to February 2, 2007, under several agreements totaling P123,901,650.00. WUP paid P67,357,683.23, leaving a balance of P54,654,195.54. On February 11, 2009, the parties executed a new agreement reducing the claim to P50,400,000.00, payable in 36 monthly installments of P1,400,000.00, evidenced by postdated checks. WUP paid four checks but subsequently stopped payment on the remaining ones. WUP, through a letter dated May 27, 2009, declared the original contracts rescissible and the February 11, 2009 agreement unenforceable due to lack of board approval and the signatory's expired term. Procedural History: FMEI filed a complaint for sum of money against WUP in the Regional Trial Court (RTC) of Manila. WUP moved to dismiss, citing lack of jurisdiction, improper venue, litis pendentia, and forum shopping, which the RTC denied. WUP then filed an answer, admitting some allegations but denying others for lack of knowledge or information. FMEI filed a Motion for Judgment Based on the Pleadings, arguing that WUP's answer admitted the material allegations. The RTC denied this motion, setting the case for pre-trial. FMEI moved for reconsideration, which was also denied. FMEI then filed a petition for certiorari with the Court of Appeals (CA). The CA affirmed the RTC's denial, finding that WUP had raised an issue regarding the outstanding balance due to discrepancies in payment calculations between the parties. The Petition: FMEI filed a petition for review on certiorari under Rule 45 of the Rules of Court, arguing that the CA erred in affirming the RTC's denial of its motion for judgment on the pleadings. FMEI contended that the CA should have confined its review solely to WUP's answer in the RTC case, which FMEI argued contained admissions that warranted a judgment on the pleadings. FMEI asserted that WUP's denials were insufficient and that the CA improperly considered WUP's complaint in a separate rescission case to find a factual issue regarding the outstanding balance.
Issue(s)
Whether the Court of Appeals committed reversible error in affirming the Regional Trial Court's denial of the petitioner's motion for judgment on the pleadings. Whether the respondent's answer effectively tendered an issue of fact regarding the material allegations of the petitioner's complaint.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals. It directed the Regional Trial Court to act on and grant the Motion for Judgment on the Pleadings and render the proper judgment. The respondent was ordered to pay the costs of suit.
Ratio Decidendi
On the issue of whether the Court of Appeals committed reversible error in affirming the Regional Trial Court's denial of the petitioner's motion for judgment on the pleadings: The Supreme Court held that the appeal was meritorious. The rule on judgment based on the pleadings under Section 1, Rule 34 of the Rules of Court allows for such a judgment when the answer fails to tender an issue or admits the material allegations of the adverse party's pleading. The essential query is whether issues of fact were generated by the pleadings. The answer either admits or denies the allegations of ultimate facts in the complaint. Admissions, whether express or by omission, do not require evidence. Proper denials, however, require evidence. The answer admits material allegations not only when it expressly confesses their truth but also when it omits to deal with them at all. The controversion must be by specific denial as outlined in Section 10, Rule 8 of the Rules of Court. On the issue of whether the respondent's answer effectively tendered an issue of fact regarding the material allegations of the petitioner's complaint: The Court found that the respondent expressly admitted paragraphs 2, 3, 4, 5, 9, and 10 of the complaint, which pertained to the four transactions, total liability, payments made, balance due, and the execution of the February 11, 2009 agreement. The admission of the February 11, 2009 agreement, being the actionable document, was significant. The Court also found the respondent's denial of paragraphs 6, 7, and 8 of the complaint for lack of knowledge or information to be ineffective. These paragraphs concerned matters that the respondent ought to have known or could have easily known, such as the total obligation, the reduced claim, the installment payments, and the stopped checks. Denials based on lack of knowledge of matters clearly within the pleader's knowledge are insufficient and constitute sham denials. The respondent's qualification of its admissions and denials by subjecting them to affirmative defenses of lack of jurisdiction, improper venue, litis pendentia, and forum shopping was inconsequential because these defenses involved matters extrinsic to the merits of the petitioner's claim and did not negate the material averments of the complaint. Furthermore, the CA erred in relying on the respondent's complaint for rescission in another case to find a factual issue on the total liability, as the resolution of a motion for judgment on the pleadings must be confined to the pleadings filed in the specific case. The respondent's answer did not allege the supposed payment of P78,401,650.00, which exposed its denial of liability as insincere.
Main Doctrine
A motion for judgment on the pleadings may be granted when the answer fails to tender an issue or otherwise admits the material allegations of the adverse party's pleading. Denials based on lack of knowledge or information of matters clearly known to the pleader, or ought to be known to it, or could have easily been known by it are insufficient and constitute ineffective or sham denials.