ALABANG MEDICAL CENTER, PETITIONER, V. GOMECO METAL CORPORATION, RESPONDENT.

Alabang Medical Center versus Gomeco Metal Corporation

The Case

This is a petition for review filed by Alabang Medical Center against Gomeco Metal Corporation, arising from a complaint for sum of money. Gomeco sued to collect an unpaid balance of 154,000 pesos under a quotation for the supply and installation of stainless steel food service equipment, with interest at three percent a month and attorney's fees. The case matters because the Supreme Court, while upholding the strict and mandatory character of the Rules on Summary Procedure, nonetheless dismissed the complaint for lack of a cause of action, since the evidence Gomeco presented did not support the allegations in its own complaint.

Procedural History

Gomeco filed its complaint for sum of money before the Metropolitan Trial Court of Valenzuela City. When Alabang Medical Center failed to file an answer, the trial court declared it in default, but later granted its motion for reconsideration and admitted its answer. The parties then agreed to litigate under the Revised Rule on Summary Procedure. Alabang Medical Center and its counsel failed to appear at the preliminary conference, and the trial court submitted the case for decision. The Metropolitan Trial Court rendered judgment in favor of Gomeco, ordering payment of the principal amount with interest at three percent a month, twenty percent attorney's fees, and costs.

Alabang Medical Center appealed to the Regional Trial Court of Valenzuela City, which affirmed the trial court's decision in full. Its motion for reconsideration was denied. Alabang Medical Center then filed a petition for review before the Supreme Court, assigning as errors the submission of the case for decision despite its late appearance, the alleged excusable absence of its counsel, the finding that the balance was already due, and the awards of interest and attorney's fees.

Facts

On March 18, 1997, Alabang Medical Center confirmed Gomeco's proposal to undertake the complete supply and installation of stainless steel food service equipment, and the parties signed the Gomeco Quotation under GMC Number 26857. Gomeco performed its obligations while Alabang Medical Center represented that it would pay upon progressive billing. Alabang Medical Center received the goods and paid the down payment, but upon further completion of the project it failed to pay the remaining balance of 154,000 pesos as of February 15, 2001.

A demand letter dated March 22, 2001 was sent, together with a statement of account, but Alabang Medical Center refused to pay the balance plus the agreed three percent monthly interest. Gomeco then filed its complaint for sum of money.

In its answer, Alabang Medical Center denied the material allegations and claimed that the Gomeco Quotation was not the contract agreed upon but was merely the basis for the specification and price of a verbal agreement. It alleged that Gomeco discontinued the works and failed to complete them despite demands, and that its refusal to pay was meant to enforce the verbal agreement that full payment would be made only after completion and turnover. It also assailed the three percent monthly interest as unconscionable. Notably, the quotation Gomeco submitted in evidence referred not to food service equipment but to stair railings.

Issues

• Whether or not the Metropolitan Trial Court was justified in submitting the case for decision upon the failure of Alabang Medical Center and its counsel to appear at the preliminary conference.
• Whether or not Alabang Medical Center was deprived of its day in court.
• Whether or not the complaint stated a cause of action against Alabang Medical Center.
• Whether or not the awards of three percent monthly interest and twenty percent attorney's fees were proper.

Applicable Provisions

Section 7, in relation to Section 6, of the Rules on Summary Procedure provides:

SEC 7. Preliminary Conference; appearance of parties. xxx If a sole defendant shall fail to appear, the plaintiff shall be entitled to judgment in accordance with Section 6 hereof. xxx

This provision authorized the trial court to render judgment when the sole defendant failed to appear at the preliminary conference.

Section 6 of the same Rules provides:

SEC. 6. Effect of failure to answer. - Should the defendant fail to answer the complaint within the period above, the court, motu proprio, or on motion of the plaintiff, shall render judgment as may be warranted by the facts alleged in the complaint and limited to what is prayed for therein: Provided, however, That the court may in its discretion reduce the amount of damages and attorney's fees claimed for being excessive or otherwise unconscionable. This is without prejudice to the applicability of Section 4, Rule 18 of the Rules of Court, if there are two or more defendants.

This provision defines the judgment the court may render, limited to what the facts alleged in the complaint warrant.

Ruling

On the first issue, the Court held that the trial court was justified in submitting the case for decision. The Rules on Summary Procedure warranted judgment when the sole defendant failed to appear despite notice. The representative of Alabang Medical Center arrived only after the case had been called, and the medical certificate of its counsel was received by the clerk of court at 9:15 in the morning, forty-five minutes after the 8:30 scheduled conference. The Court stressed that the duty to render judgment under Section 6 is mandatory, quoting its earlier ruling that the word shall underscores the mandatory character of these provisions, and that a directory application would subvert the nature of the Rule and defeat its objective of expediting adjudication.

On the second issue, the Court held that Alabang Medical Center was not deprived of its day in court, because its answer, although belatedly filed, had been admitted by the trial court.

On the third issue, the Court ruled in favor of Alabang Medical Center. The complaint alleged the supply and installation of stainless steel food service equipment, but the evidence, the Gomeco Quotation under GMC 26857 dated March 18, 1997, referred to a different obligation involving stair railings. Citing its ruling that lack of cause of action refers to a situation where the evidence does not prove the cause of action alleged in the pleading, the Court concluded that the complaint lacked a cause of action. Having so ruled, the Court found it unnecessary to resolve the remaining assigned errors on interest and attorney's fees.

Doctrine

First, under the Rules on Summary Procedure, the failure of a sole defendant to appear at the preliminary conference entitles the plaintiff to judgment in accordance with Section 6, and the court's duty to render such judgment is mandatory, not directory.

Second, a complaint lacks a cause of action when the evidence presented does not prove the cause of action alleged in the pleading. The judgment rendered under Section 6 must be warranted by the facts alleged in the complaint, so where the proof diverges from the allegations, the complaint must fail.

Disposition

The petition was granted, the decision of the Regional Trial Court was set aside and reversed, and the complaint against Alabang Medical Center was dismissed.

Remember This

Memorize this line: lack of cause of action exists where the evidence does not prove the cause of action alleged in the pleading. Examiners use this case to test the mandatory character of the Rules on Summary Procedure alongside the requirement that the judgment be limited to what the facts alleged in the complaint warrant.