THE WORLD WIDE INSURANCE & SURETY CO., INC., PLAINTIFF AND APPELLANT, VS. GONZALO L. MANUEL, DOING BUSINESS UNDER THE NAME AND STYLE OF GLM PRODUCTIONS AND GONZALO L. MANUEL PRO…

In Civil Case.No. 16335 of the Court of First Instance of Manila, entitled
“Visayan Surety Insurance Corporation, plaintiff, vs. GLM Productions
& Gonzalo L. Manuel Productions, defendants”, the plaintiff obtained a writ
of attachment against the defendant. To lift the attachment, one Gonzalo L.
Manuel (defendant in the present case) in representation of.said defendant, and
the World Wide Insurance and Surety Company (plaintiff in the present case)
filed a bond in the sum of P28,200. For the protection of herein plaintiff,
Gonzalo L. Manuel supposedly in representation of the defendant in Case No.
16335, executed an “Agreement of Counter-guaranty with mortgage and/or pledge,”
in the same amount of P28,200. The plaintiff herein is now suing on that
agreement of counter-guaranty with mortgage, the action being brought against
Gonzalo L. Manuel, doing business under the name and style of GLM Productions
and Gonzalo L. Manuel Productions.

The defendant filed a motion to dismiss on the ground that the complaint
states no cause of action for the reason that according to the complaint itself,
especially the wording of the copy, of the agreement of counter-guaranty with
mortgage attached to said complaint, Gonzalo L. Manuel did not sign the
agreement in his individual capacity but as President of the GLM Productions and
Gonzalo L. Manuel Productions. The trial court presided over by Judge Francisco
E. Jose issued an order dismissing the complaint unless it was amended. Judge
Magno S. Gatmaitan who later succeeded Judge Jose, acting upon a motion for
reconsideration of the order of dismissal, gave plaintiff ten days within which
to amend the complaint “to the effect that Gonzalo L. Manuel should be made
personally responsible for the contract averred in the complaint.” Acting upon
that order and suggestion plaintiff filed an amended complaint making Gonzalo L.
Manuel a party defendant in his individual capacity on the ground that according
to the certificate of the Securities and Exchange “Commission the GLM
Productions and the Gonzalo L Manuel Productions whom Gonzalo L. Manuel
supposedly represented was not registered with the said Commission;
consequently, it had no juridical personality; and when a person enters into an
agreement or contract allegedly in representation of a company or corporation
and it turns out that the latter has no legal existence, then that person
assumes the responsibility or oblation in his individual capacity.

Defendant again filed motion to dismiss the amended complaint. Judge
Gatmaitan made his own investigation and examination of the court record
including the record of Civil Case No. 16335, and according to him he found that
according to the complaint in that case as well as according to the bond filed
by Reason of the attachment and the lifting thereof, Gonzalo L. Manuel signed
for GLM Productions alias Gonzalo L. Manuel signed for that GLM Productions is
the same and is also known as Gonzalo L. Manuel Productions and that it is a
juridical entity; that the fact that GLM Productions and Gonzalo L. Manuel
Productions as an entity is not duly registered with tne Securities and Exchange
Commission does not affect the legal existence of the legal entity for whom
Gonzalo L. Manuel signed. On the1 basis of this finding Judge Gatmaitan
dismissed the amended complaint. Plaintiff is now appealing from said order of
dismissal.

Appellant contends that in determining whether a complaint states a cause of
action one must accept the allegations of the complaint and not go beyond them
for other facts, and he cites Moran’s Comment on the Rules of Court, Vol. I,
pages 170-171, thus:

“This ground for dismissal must appear on the face of the complaint. To
determine the sufficiency of the cause of action, only the facts alleged in the
complaint, and no other, should be considered. It has been said that the test of
the sufficiency of the facts alleged 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. What
is believed, however, to be the best and simplest test is that indicated under
Rule 6 Section 1. If the Court finds the allegations to be sufficient but doubt
their, veracity, it must deny the motion to dismiss and require the defendant to
answer and then proceed to try the case on the merits.”

Appellant further asserts that if contrary to the allegation of the complaint
in the present case to the effect that Gonzalo L. Manuel signed the agreement of
counter-guaranty with mortgage and is responsible thereof in his individual
capacity, he wants to show that he merely signed as President of GLM Productions
and Gonzalo L. Manuel Productions; that the latter is duly registered and has a
legal existence as a juridical entity, and that he is therefore not personally
responsible, all that is a matter of defense to be brought out during the
hearing.

After a careful study of the legal issue to involved we are inclined to agree
with appellant. To determine whether a complaint states a cause,of action one
must accept its allegations as true. One may not go beyond and outside the
complaint for data or facts, especially contrary to the allegations of the
complaint, to determine whether there is cause of action. Of course, there are
cases where there may be a conflict or contradiction between the allegations of
a complaint and a document or exhibit attached to and made part of it. In that
case, instead of dismissing the complaint, defendant should be made to answer
the same so as to establish an issue and then the parties will be given an
opportunity, the plaintiff to reconcile any apparent conflict between the
allegations in his complaint and a document attached to support the same, and
the defendant an equal opportunity to refute the allegations of the complaint
and to show that the conflict between its allegation and the document attached
to it is real, material and decisive.

The not exactly or directly in point, we may examine with profit the case of
Mercado vs. Tan Lingco, 27 Phil., 319, Plaintiff therein brought an
action to set aside and annul a mortgage, executed by his wife over her separate
property, allegedly without his consent, on the ground that under the law, a
wife may not mortgage or alienate said kind of property without the consent of
her husband. A copy of the mortgage was incorporated in the complaint. In said
mortgage the mortgagor’s wife recites that the husband, had given her the
corresponding power or authority and “the marital license necessary for her to
appear in suit, by herself or by means of an attorney, and to perform whatever
acts may be to her interest to perform, and finally for every purpose which,
according to existing legislation, a married woman is prohibited from doing
without the consent of her husband, hereby, ratifying all her previous acts with
regard to contracts since our marriage,” and that by virtue of said consent she
was executing the mortgage in question. Acting upon a demurrer to the complaint
on the ground that the complaint did not state facts sufficient to constitute a
cause of action and the complaint was ambiguous, unintelligible, and vague, the
trial court dismissed the complaint. The trial court said that as the plaintiff
has included in his complaint the statement of his wife as mortgagor that
plaintiff (her husband) had given his consent to her entering into the contract
of mortgage, and in the same complaint alleged that his wife’s act of mortgaging
her separate property was performed without his knowledge or consent, the court
was unable to determine which allegation of the complaint the plaintiff wanted
the court to accept. Reversing the order of dismissal this Tribunal held that
the fact that the document recites certain facts which if alleged in the
complaint by the plaintiff would be in contradiction to other allegations in,
the complaint is not sufficient ground on which to find and hold that the
complaint is vague and uncertain; that plaintiff is bound only by the
allegations of the complaint unless the facts set out in the instrument itself
as incorporated in the complaint are contradictory to the allegations of the
complaint; that the recital made by the mortgagor relative to some act performed
by this person is not in reality a fact set in the instrument, at least, not in
the sense in which the date of the instrument, the names of the parties thereto,
the description of the land therein, and the amount of the debt secured are
facts set out in the instrument. In other words, this Court found that the
recital of the wife in the mortgage about marital consent having been given may
not be considered an allegation of the complaint. Applying the above reasoning
to the present case, the complaint alleges that defendant Gonzalo L. Manuel is
being held liable in his individual capacity, because he signed for a company or
entity which had no legal existence or juridical personality. The fact that the
copy of the agreement of counter-guaranty as incorporated in the complaint
apparently shows on its face that Gonzalo L. Manuel signed as President of GLM
Productions and/or alias Gonzalo L. Manuel Productions and that
consequently, he is not individually responsible, does not in our opinion.
affect the basic allegation of the complaint as to Gonzalo L. Manuel’s
individual responsibility; he may in his defense show that as supposedly found
by Judge Gatmaitan as a result of his investigation and examination of the court
records that GLM Productions is the same as Gonzalo L. Manuel Productions; that
the same is, duly registered and has a legal existence and juridical
personality; that Gonzalo L. Manuel was authorized to represent it as its
President and to bind it in the agreement of counter-guaranty and consequently,
he was not bound in his individual capacity but only as agent of his principal
and so, the plaintiff has no cause of action against him individually. But that
is a matter of defense, to be alleged in the answer and proven at the hearing.
We repeat that in order to determine whether or not a complaint states a cause
of action the allegations of the said complaint must be accepted as true and
correct and that any apparent contradiction between said allegations and
statements or recitals contained in the instrument incorporated in the complaint
itself should not be held to affect or refute said allegations, unless said
statements in the said instrument are basic or ultimate facts and not merely
recitals or claims, by one of the parties in the said instrument.

In view of the foregoing, the order of dismissal appealed from, is reversed
and the case is ordered remanded to the lower court for further proceeding, with
costs.

Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo,
Labrador, Concepcion, and Reyes, J. B. L., JJ., concur.