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148-A Phil. 421

[ G.R. No. L-27940, June 10, 1971 ]




What is involved in this appeal from an order of dismissal by the lower court is whether or not plaintiff has a cause of action to nullify a judgment obtained, so it was alleged, through collusion, enabling defendant, now appellee Manuel Bellosillo, to acquire on execution the property of the other defendant, now appellee Antero Edrosolano, who was thus afforded a means of escape from satisfying whatever liability might be imposed on him in a then pending case filed by plaintiff for damages for a breach of contract of carriage.  A lawsuit is intended precisely to assure that a right may be vindicated.  Thereby the party to whom is imputed the correlative duty could, if indeed called for, be made to comply with what is incumbent upon him or to respond in damages.  The aggrieved party is thus entitled to be heard by a court of justice.  There is greater need for adherence to this principle if, as must be assumed in this case for a motion to dismiss presupposes the hypothetical admission of the facts alleged, defendants did make a mockery of the solemn processes of the law, converting a judicial proceeding into an instrument of injustice against the plaintiff.  At the very least then, he should not be denied the opportunity to prove that such a deplorable turn of events did transpire.  The lower court was of a different mind.  It sustained the motion to dismiss, unable to discern a cause of action in his favor.  What it did lacks justification.  We reverse.

Plaintiff, in his complaint dated January 3, 1967, after setting forth the jurisdictional facts, alleged that in a pending case filed on September 6, 1965,[1] he sued for damages arising from a breach of contract of carriage defendant Antero Edrosolano.[2] He was able to secure an order of preliminary attachment on the property of such defendant on January 18, 1966.[3] When the Provincial Sheriff of Iloilo, however, sought to attach equipment used by him as a public service operator, defendant Bellosillo filed a third-party claim asserting that he had previously bought, on February 28, 1966, all of the former's the TPU equipment.[4] Upon inquiry, plaintiff learned that on or about January 22, 1963, defendant Bollosillo filed a case for collection against defendant Edrosolano in the sum of Forty Five Thousand Pesos (P45, 000.00), purportedly arising from a promissory note dated February 1, 1960, executed by the latter.[5]

Then came the crucial allegation that the aforesaid civil case was based on a fictitious cause of action because such promissory note was without lawful consideration whatsoever.[6] Defendant Bellosillo, according to the complaint, was not and could not be in a position to loan such amount to his co-defendant Edrosolano.[7] Immediately upon the filing of the said civil case on January 22, 1963, defendant Edrosolano received on the same date copy of the complaint and summons although it was not coursed through the Office of the Provincial Sheriff or the City Sheriff which is the usual and standard procedure in the service of summons and other processes and writs.[8] Inspite of receipt by said defendant of the complaint and summons, he did not file any answer and allowed his co-defendant Bellosillo to take judgment against him by default, one being rendered on February 25, 1963.[9] Considering these facts, it was plaintiff's assertion that the decision rendered on February 25, 1963 in the aforesaid civil case is null and void ab initio the filing of the said civil case being a clever and fraudulent scheme perpetrated by the defendant Edrosolano with the blessings of his co-defendant for the purpose of defeating or evading money claims against him arising from his business as a public carrier operator not only in the City and Province of Iloilo but in the Island of Panay.[10] Moreover, while the decision was rendered on February 25, 1963, it having attained finality thirty (30) days from receipt by defendant Edrosolano who did not appeal from the said decision, it was only on January 19, 1966 when defendant Bellosillo caused the execution thereof after plaintiff had already instituted his civil case for damages against defendant Edrosolano and an order for issuance of preliminary attachment issued, apparently in their fraudulent desire to evade the satisfaction of whatever civil liability of the defendant Edrosolano might be adjudged in favor of plaintiff.[11] In the aforesaid execution sale, on February 7, 1966, defendant Edrosolano allowed without protest the acquisition of all the units he possessed as a public service operator, conservatively valued at Three Hundred Thousand Pesos (P300,000.00), for the supposed adjudged claim of only P52,000.00.[12] Plaintiff would impress on the lower court then that unless the aforesaid decision was revoked and declared a nullity together with all the proceedings had therewith, defendant Edrosolano would be able to evade his responsibility as a public service operator and his civil liabilities as such operator to the general public as well as the passengers and his creditors including plaintiff.[13] His prayer was for declaring such judgment null and void ab initio and for damages.[14]

To the above complaint, the response of the defendants was a motion to dismiss filed on February 6, 1967 on the ground that it stated no cause of action, as there was no showing of a right on the part of the plaintiff and the violation thereof by defendants.  It is their contention that whatever right may be possessed by plaintiff, "same is still expectant and contingent, it being solely dependent upon the final judgment that may be rendered by the Court in the aforesaid Civil Case No. 6838 in which said writ of attachment was issued and claimed by herein plaintiff to be basis of his right to annul the judgment rendered in other Civil Case No. 6216.  That is, if judgment is rendered in his favor.  But the possibility of it also being dismissed eventually in favor of therein defendant Edrosolano (one of the herein defendants) is not at all remote * * *.  These contingencies are always true in every case."[15] The concluding paragraph of such motion reads:  "Hence, until and unless said Civil Case No. 6838, upon which lies and rests the right of herein plaintiff to seek annulment of that judgment in Civil Case No. 6216 is finally deterĀ­mined and adjudged by the court, the latter has no legal ground to claim now he has already such right.  And having none, no cause of action for the present exists against herein defendants."[16] Then, on February 24, 1967, came the order of dismissal, the lower court holding "that the essential requisites of a cause of action are not present in plaintiff's complaint."[17] It thus sustained the theory of defendants that, there being no judgment as yet in favor of the plaintiff, he could not be said to have suffered any damage when his action was filed on January 3, 1967.

The appeal was duly taken to this Court on a question of law, namely, the correctness of the order of dismissal based on the finding that the complaint did not state a cause of action.  The appeal of plaintiff, as noted, is meritorious; there was a conspicuous failure on the part of the lower court to abide by the authoritative doctrines.

1.  The maintenance of the rights under any legal system calls for the appropriate remedy in the event of their disregard.  The party who is thereby injured is entitled to redress.  The courts exist for that purpose.  He has, in the technical language of the law, a cause of action if by what defendant does or fails to do there is disrespect shown for any of his legal claims.[18] The judiciary is expected then to exercise the utmost care and circumspection in passing upon a motion to dismiss on the ground of the absence thereof lest, by its failure to manifest a correct appreciation of the facts alleged and deemed hypothetically admitted, what the law grants or recognizes is effectively nullified.  If that happens, there is a blot on the legal order.  The law itself stands in disrepute.

There is need, therefore, for a judicious appraisal of the circumstances which, according to plaintiff's complaint, provided the basis for his suit.  It would be a plain departure from what has been so consistently held by this Court if, as was done by the lower court, the response to the assertion of a legal right violated was one of indifference.  Nor could it find justification in the pretext that his complaint would be proper only if he would be successful in a pending suit for damages.  By then it may be too late, his victory good only on paper.  What cannot be denied in the face of his complaint is that if the judgment based on collusion between the defendants would not be set aside, then any hope of recovery, not only on the part of plaintiff, but of any other creditor similarly situated, would indeed be futile.

No decision has been cited; and none can be found which, on the above facts, would justify a holding that no cause of action was shown.  For the doctrine consistently adhered to is to avoid the likelihood of plaintiff's recourse to the courts for the satisfaction of his just claims being rendered nugatory.  While not precisely in point, what was set forth in Adamos v. J.M. Tuason and Co.[19] bears repeating.  In the language of Justice Makalintal, who penned the decision:  "It is a well-settled rule that in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted to the court for determination is the sufficiency of the allegations in the complaint itself.  Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion.  * * * So rigid is the norm prescribed that if the court should doubt the truth of the facts averred it must not dismiss the complaint but require an answer and proceed to hear the case on the merits.  (Republic Bank v. Cuaderno, L-22399, March 30, 1967)."[20] Such a doctrine goes back to a 1914 decision, Paminsan v. Costales,[21] where it was held:  "The test of the sufficiency of the facts found in a petition to constitute a cause of action is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same, in accordance with the prayer of the petition."[22] Certainly on the facts alleged in the complaint, a valid judgment in favor of plaintiff could be rendered.

2.  More specifically, the view entertained by the lower court in its order of dismissal that an action for annulment of judgment can be availed of only by those principally or secondarily bound is contrary to what had been so clearly declared by this Court in the leading case of Anuran v. Aquino,[23] decided in 1918.  It was emphatically announced therein:  "There can be no question as to the right of any person adversely affected by a judgment to maintain an action to enjoin its enforcement and to have it declared a nullity on the ground of fraud and collusion practiced in the very matter of obtaining the judgment when such fraud is extrinsic or collateral to the matters involved in the issues raised at the trial which resulted in such judgment; * * *."[24] Such a principle was further fortified by an observation made by this Court through Justice Ozaeta in Garchitorena v. Sotelo.[25] These are his words:  "The collusive conduct of the parties in the foreclosure suit constituted an extrinsic or collateral fraud by reason of which the judgment rendered therein may be annulled in this separate action.  (Anuran v. Aquino and Ortiz, 38 Phil., 29) Aside from the Anuran-Aquino case, innumerable authorities from other jurisdictions may be cited in support of the annulment.  But were there not any precedent to guide us, reason and justice would compel us to lay down such doctrine for the first time."[26]

WHEREFORE, the order of dismissal of February 10, 1967 by Judge Valerio V. Rovira is set aside and this case is remanded to the lower court for appropriate proceedings in accordance with this opinion.  With costs against defendants.

Makalintal, Zaldivar, Teehankee, Villamor, and Makasiar, JJ., concur.
Dizon, J., concurs in a separate opinion.
Concepcion, C.J., and Reyes, J., concur in the opinion of Mr. Justice Dizon.
Barredo, J., concurs in a separate opinion.
Ruiz Castro, J., took no part.

[1] Civil Case No. 6838 of the Court of First Instance of Iloilo.

[2] Complaint, Record on Appeal, par. 3, p. 2.

[3] Ibid, par. 4, p. 2.

[4] Ibid, par. 5, pp. 2 and 3.

[5] Ibid, par. 7, p. 3.  The complaint was docketed as Civil Case No. 6216 of the Court of First Instance of Iloilo.

[6] Ibid, par. 8, p. 3.

[7] Ibid, par. 9, p. 4.

[8] Ibid, par. 10, p. 4.

[9] Ibid, par. 11, p. 4.

[10] Ibid, pars. 12 and 13, pp. 4 and 5.

[11] Ibid, par. 14, p. 5.

[12] Ibid, par. 15, pp. 5 and 6.

[13] Ibid, par. 16, p. 6.

[14] Ibid, petitory part of Complaint, p. 7.

[15] Motion to Dismiss of Defendant, Record on Appeal, pp. 12 and 13.

[16] Ibid, p. 13.

[17] Order of Dismissal, Record on Appeal, p. 30.

[18] According to Ma-ao Sugar Central Co. v. Barrios:  "A cause of action is an act or omission of one party in violation of the legal right or rights of the other; and its essential elements are legal right of the plaintiff, correlative obliĀ­gation of the defendant, and act or omission of the defendant in violation of said legal right." 79 Phil. 666, 667 (1947).  This decision is cited with approval in Remitere v. Vda. de Yulo, L-19751, Feb. 28, 1966 16 SCRA 251; Casenas v. Rosales, L-18707, Feb. 28, 1967, 19 SCRA 462; Espinosa v. Belda, L-17988, March 31, 1967, 19 SCRA 715.

[19] L-21957, Oct. 14, 1968, 25 SCRA 529.

[20] Ibid, pp. 533-534.

[21] 28 Phil. 487 (1914).  Paminsan v. Costales has been cited subsequently in the following cases:  De Jesus v. Belarmino, 95 Phil. 365 (1954); Dimayuga v. Dimayuga, 96 Phil. 859 (1955); Marabiles v. Quito, 100 Phil. 64 (1956); Wise & Co., Inc. v. City of Manila, 101 Phil. 244 (1957); A.U. Valencia & Co. v. Layug, 103 Phil. 747 (1958); Garcon v. Redemptorist Fathers, L-23510, May 30, 1966, 17 SCRA 341; Republic Bank v. Cuaderno, L-22399, March 30, 1967, 19 SCRA 671; La Suerte Cigar & Cigarette Factory v. Central Azucarera del Danao, L-23017, May 23, 1968, 23 SCRA 686.

[22] Ibid, p. 489.

[23] 38 Phil. 29 (1918).

[24] Ibid, pp. 32-33.

[25] 74 Phil. 25, 30 (1942).  Ramirez v. Baltazar, L-25059, August 30, 1968, 24 SCRA 918, may likewise be cited.

[26] Ibid, p. 30.