FABRIANO SOCIETA PER AZIONI, INC., PLAINTIFF-APPELLEE, VS. SECONDS TO GO AND MICHAEL DAUDEN, DEFENDANTS-APPELLANTS.
DE GUIA-SALVADOR, R., J.:
“WHEREFORE, foregoing considered, the motion for judgment on the pleadings is hereby granted, for being well taken.
Accordingly, based on the pleadings submitted by the parties, the Court hereby renders judgment in favor of the plaintiff and against defendants.
The defendants are directed to:
- Pay the plaintiff the principal obligation in the amount of Three Hundred Twelve Thousand Two Hundred Thirty Nine (Php1,312,239.00) Pesos plus twelve (12%) percent legal interest from the time judicial demand to pay was made on August 28, 2008 until the obligation shall be paid in full;
- Pay the plaintiff attorney’s fees in the amount of One Hundred Thousand (Php100,000.00) Pesos; and
- Cost of suit.
SO ORDERED.”[2]
The Facts
On August 28, 2008, appellee Fabriano Societa Per Azioni, Inc. commenced the instant suit with the filing of its complaint for collection of a sum of money and damages against appellants Seconds To Go and its Owner/General Manager, Michael Dauden. Claiming to be engaged in the business of manufacturing, assembling and selling brand new and imported appliances and kitchenware, appellee alleged, among other matters, that in the years 1999, 2000, 2001 and 2002, it entered into contracts for the delivery of merchandise to appellants for the latter to sell on commission or profit gained from sales over the suggested retail price thereof. As a consequence of said agreements, appellee supposedly delivered in favor of appellants merchandise with an aggregate value of P1,671,260.00,[3] as evidenced by the invoices and receipts attached to the complaint as Annexes “C” to “TT”[4] and the delivery receipts additionally identified as Annexes “UU” to “YYY”.[5]
Appellee further alleged that, out of said deliveries, appellants made several payments amounting to P359,021.00, thereby leaving a balance in the sum P1,312,239.00. Despite receipt of the three demand letters appellee sent,[6] appellants were supposed to have unjustifiably failed and/or refused to pay the same balance.[7] In addition, appellee alleged that it was authorized to file the complaint by Asian Durables Manufacturing, Inc. (ADMI), another corporation with whom appellants appear to have had several dealings similar to those they made with appellee. As may be gleaned from the attachments to the complaint as aforesaid, the merchandise covered by the invoices and receipts identified as Annexes “C” to “TT”[8] appears to have been owned by ADMI which, as a consequence, issued in favor of appellee the authorization to file action which it appended to the initiatory pleading as Annex “A”.[9]
Served with summons, appellants filed a motion to dismiss on the ground that appellee’s complaint failed to state a cause of action. In support of the motion, appellants called the attention of the RTC to the fact, among other matters, that the good covered by Annexes “C” to “TT” were owned by ADMI and not the appellee.[10] With the denial of their motion to dismiss in the RTC’s Order dated May 8, 2009,[11] appellants filed their unverified answer reiterating their position that appellee had no cause of action against them. “Without need of disputing the veracity of the otherwise concocted and/or verifiably false allegations in the complaint,” appellants asseverated that Annexes “C” to “TT” clearly showed that appellee was not the owner of the goods thereby covered and, for said reason, was not a real party in interest to the action.[12]
On April 12, 2010, the RTC issued an order setting the case for pre-trial conference at 1:00 o’clock in the afternoon of July 1, 2010.[13] Before said scheduled setting, however, appellee filed a motion for judgment on the pleadings on the ground that appellants’ answer failed to tender an issue and effectively admitted the transactions sued upon.[14] Over the opposition thereto interposed by appellants,[15] appellee’s motion was granted in the RTC’s herein appealed Order dated May 11, 2011. Finding that the genuineness and due execution of the actionable documents attached to the complaint were deemed admitted for failure of appellants to specifically deny the same under oath,[16] the RTC also ruled as follows:
“In [their] Special and Affirmative defences incorporated in the Answer, defendants countered that plaintiff has no cause of action against them, since the plaintiff is not a real party in interest in this case. Defendants aver that the seller in all the transactions mentioned in the complaint is Asian Durables Manufacturing, Inc. and not plaintiff Fabriano Societa Per Azioni, Inc. In support of these arguments, defendants cited the provisions of Sec. 2, Rule 3, Rules of Court and Article 1311 of the Civil Code, which is the principle of relativity of contract.
The Court does not agree with the arguments of the defendant. Records show that Asian Durables, Inc. through Mary L. Chan, [its] Corporate Secretary, executed a Special Power of Attorney naming, constituting and appointing ERESTO G. SEVENCRUZ, Credit and Collection Department of the plaintiff, as its representative in filing the complaint against the defendants. Thus, by the said authority plaintiff bec[ame]a real party in interest.”[17]
Appellant’s motion for reconsideration[18] of the foregoing decision was denied for lack of merit in the RTC’s Order dated September 1, 2011,19 hence, this appeal.
The Issues
Appellants urge the reversal of the appealed order upon the following errors imputed against the RTC, to wit:
“A. THE COURT A QUO ERRED IN GRANTING THE [APPELLEE’S] MOTION FOR JUDGMENT ON THE PLEADINGS CONSIDERING THAT [APPELLANTS’] ANSWER SPECIFICALLY AND CATEGORICALLY DISPUTED AND/OR CONTROVERTED ALL OF THE [APPELLEE’S] CLAIMS AS SET FORTH IN THE COMPLAINT.
B. THE COURT A QUO ERRED IN DENYING THE [APPELLANTS’] MOTION TO DISMISS THE COMPLAINT SINCE, ON ITS FACE, THE SAME DOES NOT STATE A CAUSE OF ACTION AGAINST ANY OR BOTH [APPELLANTS].”[20]
The Court’s Ruling
The appeal is devoid of merit.
One of the ways by which the rules allow the speedy disposition of a case by dispensing a full-blown trial of the case,[21] judgment on the pleadings may be rendered pursuant to Section 1, Rule 134 of the Rules of Court[22] only when an answer fails to tender an issue or otherwise admits the allegations of the adverse party’s pleading.[23] An answer is, in turn, said to fail to tender an issue when it (1) fails to deny the material allegations of the complaint, or (2) admits the material allegations by confessing the truthfulness thereof, or (3) omitting to deal with the material allegations at all.[24] The rule is settled that judgment on the pleadings is based exclusively upon the allegations appearing in the pleadings of the parties and the annexes, if any, without consideration of any evidence aliunde.[25]
Our perusal of the record shows that the RTC did not err in granting appellee’s motion for judgment on the pleadings. With the denial of their motion to dismiss in the RTC’s May 8, 2009 Order, appellants filed an unverified answer which merely reiterated their position that appellant is not the owner of the goods covered by the invoices and receipts appended to the complaint as Annexes “C” to “TT”. Contrary to the manner provided under Section 10,[26] Rule 8 of the Rules of Court, therefore, appellants’ answer failed to specifically deny the material allegations relating to the delivery receipts appended to the complaint as Annexes “UU” to “YYY”. Because failure to make a denial in accordance with the modes of denial is equivalent to a failure to tender an issue, it stands to reason that the material allegations of the complaint are admitted and the court may render a judgment on the pleadings,[27] at least insofar as said delivery receipts are concerned.
The purpose of requiring a defendant to make a specific denial is to make him disclose the matters alleged in the complaint which he succinctly intends to disprove at the trial, together with the matter which he relies upon to support the denial.[28] Since a denial does not become “specific” merely because it is qualified by said word, specifically denying the allegations in the complaint without further particulars is a general denial and does not sufficiently comply with the rule on specific denial. Similarly, a denial for lack of knowledge of thing that, by their nature, ought to be known to defendant is not an acceptable denial.[29] Not having been controverted by a specific denial, the material allegations pertaining to the deliveries covered by Annexes “UU” to “YYY” are deemed admitted to be true for the purpose of the action, except as to the amount of unliquidated damages.[30]
In filing an unverified answer to a complaint anchored on actionable document, appellants are, moreover, deemed to have admitted the genuineness and due execution not only of the delivery receipts marked as Annexes “UU” to “YYY” but also the invoices and receipts identified as Annexes “C” to “TT”. Pursuant to Section 8, Rule 8 of the Rules of Court,[31] a pleading which denies the material allegations of a pleading anchored on actionable documents should be verified, otherwise the genuineness and due execution thereof are deemed admitted. A pleading is verified by an affidavit that the affiant has read the same and that the allegations therein are true and correct of his personal knowledge or based on authentic records.[32] This is intended to enable the adverse party to know whether or not, during the trial of the case, he will be called on to meet an issue on the genuineness or due execution of the contract or other document which constitutes the subject of the action or defense.[33]
To put in issue the execution and genuineness of an actionable document, the denial must be under oath, i.e., the opposing party must declare under oath that he did not sign the document or that it is otherwise false or fabricated.[34] Considering that the answer they filed was not verified, appellants are deemed to have admitted the genuineness and due execution of the actionable documents annexed to the complaint. When said facts are deemed admitted, the party whose signature appears on the document admits, among other matters, that “he voluntarily signed the same or it was signed by another for him and with his authority.” He also thereby acknowledges that “at the time it was signed it was in words and figures exactly set out in the pleadings of the party relying upon it.”[35]
In both their motion to dismiss and answer, appellants have, of course, consistently taken issue over the fact that appellee is not a real party in interest with respect to the invoices and receipts designated as Annexes “C” to “TT” since they were issued to them by ADMI. Concededly, the rules unequivocally mandate that every action must be prosecuted or defended by the real party in interest, who is understood to be the party who stands to be benefitted or injured by the judgment in the suit or the party entitled to the avails thereof.[36] Interest within the meaning of this requirement means material interest or interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved.[37] Thus, in an action upon a contract, the real parties in interest, either as plaintiff or defendant, are the parties thereto[38] – a fact which, on the surface, cannot be said of appellee insofar as Annexes “C” to “TT” are concerned.
While it is true that appellee had been issued an authorization by ADMI for the purpose of instituting a suit for collection relative to said invoices and receipts, appellants correctly argue that the former is not a real party in interest in respect thereto. Although a party in interest may authorize another to prosecute a case in its behalf, case law is to the effect that the action commenced by the representative on behalf of the principal must still be filed in the latter’s name. If filed only in the name of the representative or attorney-in-fact, it has been ruled that the case should be dismissed[39] on the ground of lack of cause of action for lack of personality to sue.40 Indeed, an attorney-in-fact whose authority is for the limited purpose of filing and prosecuting a complaint is not a real party in interest if he has not been subrogated to the rights of the principal.[41]
The foregoing disquisition notwithstanding, appropriate note may, however, be taken of the fact that, with the proof thereof attached to the complaint as Annex “A”, ADMI’s authorization was specifically alleged in the first paragraph of appellee’s initiatory pleading. Although their attention was, moreover, called to said authorization in appellee’s opposition to their motion to dismiss that was eventually denied by the RTC, appellants’ answer did not assail ADMI’s inclusion in the case as party-plaintiff. Given these procedural antecedents, the Court finds that the omission of ADMI’s name in the title of the complaint is one that is correctible under Sec. 4, Rule 10 of the Rules of Court.[42] In Genato vs. Viola,[43] the Supreme Court significantly ruled as follows:
“The inclusion of the names of all the parties in the title of the complaint is a formal requirement under Section 3, Rule 7 of the Rules of Court. However, the rules of pleadings require courts to pierce the form and go into the substance. The non-inclusion of of or some of the names of all the complainants in the title of a complaint, is not fatal to the case, provided there is statement in the body of the complaint indicating that such complainant/s was/were made party to such action xxx xxx xxx.”
For lack of a statement of the rationale therefor in the body of the assailed order, the RTC’s award of attorney’s fees in favor of appellee should, however, be disallowed and deleted. Time and again, it has been ruled that the discretion of the court to award attorney’s fees under Article 2208 of the Civil Code of the Philippines demands factual, legal and equitable justification.[44] Because an award of attorney’s fees without a statement of its rationale improperly leaves its basis to speculation and conjecture, the same has been characterized as a conclusion without a premise.[45] Thus, for lack of sufficient basis in fact, law and equity, the award of attorney’s fees must be deleted.[46]
WHEREFORE, the appealed Order dated May 11, 2011 is MODIFIED to delete the RTC’s award of attorney’s fees in favor of appellee. The rest is AFFIRMED in toto.
SO ORDERED.
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
Garcia, R.R., and Bueser, D.Q., JJ., concur.
[1] Rec., pp. 288-290
[2] Id., at 290
[3] Id., at 2-10
[4] Id., at 15-58
[5] Id., at 59-89
[6] Id., at 97-102
[7] Supra, at Note 3
[8] Supra, at Note 4
[9] Rec., p/ 12
[10] Rec., pp. 126-132
[11] Id., at 176
[12] Id., at 207-203
[13] Id., 222-223
[14] Id., at 232-233
[15] Id., at 265-267
[16] Supra, at Note 1
[17] Rec., pp. 289-290
[18] Id., pp. 291-299
[19] Id., at 314
[20] Rollo, p. 26
[21] Evadel Realty and Development Corporation vs. Soriano, 357 SCRA 395
[22] Section 1. Judgment on the pleadings. – Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party’s pleading, the court may, on motion of that party, direct judgment on such pleading. However, in actions for declaration of nullity of marriage or for legal separation, the material facts alleged in the complaint shall always be proved.
[23] Ong vs. Roban Lending Corporation, 557 SCRA 516
[24] Tan vs. De Vega, G.R. No. 168809, March 10, 2006
[25] Philippine National Bank vs. Aznar, 649 SCRA 214
[26] Section 10, Specific denial. – A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he tries to support the denial. Where a defendant desires to deny only a part of the averment, he shall specify so much of it as true and material and shall deny only the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.
[27] Herrera, Remedial Law, Vol. I, 2000 ed., p. 548, citing Vergara vs. Suelto, 156 SCRA 753
[28] Cua vs. Wallem Philippines, Inc., G.R. No. 171337, July 11, 2012
[29] Equitable Cardwork Network, Inc. vs. Capistrano, G.R. No. 180157, February 8, 2012
[30] Sec. 11, Rule 8, Rules of Court
[31] Section 8. How to contest such documents. – When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but the requirements does not appear to be a party to the instrument or when compliance with an order for inspection of the original document is refused.
[32] Section 4 (2), Rule 7, Rules of Court
[33] Francisco, Revised Rules of Court, Vol I, 2nd ed., p. 590
[34] Feria & Noche, Vol. I, 2001 ed., citing Songco vs. Sellner, 37 Phil 254
[35] Philippine Textile Mills, Inc. vs. Court of Appeals, G.R. No. 119800, November 12, 2003
[36] Section 2, Rule 3, Rules of Court
[37] Ang vs. Ang, G.R. No. 186993, August 22, 2012
[38] Herrera, Remedial Law, Vol. I, 2000 ed., p. 340
[39] Filipinas Industrial Corporation vs. San Diego, G.R. No. L-22347, May 27 1968
[40] Minoza vs. Lopez, G.R. No. 170914, April 13, 2011
[41] Supra, at Note 37
[42] Section 4. Formal amendments. – A defect in the designation of the parties and other clearly clerical or typographical errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion, provided no prejudice is caused thereby to the adverse party.
[43] G.R. No. 125485, September 13, 2004
[44] Land Bank of the Philippines vs. Ramos, G.R. No. 181664, November 14, 2012
[45] Tolentino vs. Laurel, G.R. No. 181386, February 22, 2012
[46] Buning vs. Santos, G.R. No. 152544, September 19, 2006