ATTY. SIMEON PAREDES AND ATTY. CLEMENTE PAREDES, PETITIONERS, VS. THE INTERMEDIATE APPELLATE COURT AND MARIA FE PEREZ, RESPONDENTS.

In December 1977, the Rural Bank of San Jose del Monte, Bulacan, as plaintiff, filed an action (Civil Case No. 79)
in the Municipal Court of San Jose del Monte, Bulacan,
against Francisco Casas, Estrellita
C. Paredes, and Epitacio Gojo Cruz to collect a sum of money.  Atty. Simeon Paredes
and Atty. Clemente Paredes
appeared as counsel for the defendants, Francisco Casas
and Estrellita G. Paredes.

On December 12, 1977,
the defendants’ counsel filed in the case an “Urgent Ex-Parte Motion for Post­ponement and
for Extension of Time to File Answer with Appearance.” In due time, they
also filed a “Motion for the Admission of Third Party Complaint
Incorporated in the Answer” and “Answer with Third
party Complaint, Special Defenses and Counterclaim.” The latter pleading
contained the following libelous and offensive allegations concerning Maria Fe
Perez, manager of the rural bank, who was impleaded
as a third-party defendant in the case.

“21.   That sometime, on
or about the middle of 1975, while the third-party defendant, Antonio Hermogenes, and the herein defendant/third-party
complainant were having one of their usual drinking sessions, the former
confided to the latter of his pressing need for money and pleaded with him to
please accommodate him by consenting to the use of his name as applicant for a
loan with the plaintiff bank to which herein third-party complainant answered
that he does not know the mechanics or procedure of obtaining a loan nor that
he is qualified to be a borrower since he has no piggery project to which
third-party defendant, Antonio Hermogenes,
countered that there is really nothing
to worry about as he will see to
it that the manager, third-party defendant,
Maria Fe Perez, will approve it as
the forms they will use for the
application already bore the signatures of
co-makers of good financial standing, and
besides, the manager herself will have
a share in the proceeds of the
loan so procured;

“22.   That despite the
said third-party defendant’s assurances that the herein third-party plaintiff
was only made to appear as loan applicant in these plaintiff’s blank forms to
accommodate his compadre, third-party defendant Antonio Hermogenes, and without responsibilities whatsoever, the
latter was shocked and surprised when he received a written demand sometime in
November 1977, from the plaintiff-bank requiring him to pay a loan which in the first place he never
applied for nor the proceeds of which he had not received and when he confronted
herein third?party defendant, herein third-party
defendant allayed his fears and
pacified him, telling him not to worry
as the said notice was just routinary standard operating procedure
of the plaintiff and that he and
the manager will see to it that
the obligation will be settled;

“23.   That, likewise,
sometimes earlier and that is in 1976, despite the fact that the herein
third-party plaintiff agreed only to accommodate his compadre,
herein third-party defendant, Antonio Hermogenes, in
obtaining a loan in accordance with the agreement set forth in paragraph 21
hereof, herein third party defendant was shocked when he was charged in a
criminal case for estafa for a loan he never applied
for nor the proceeds [of] which he never received and when he confronted herein
third-party defendant, Antonio Hermogenes, he was
assured that he will talk with the manager about it and that eventually the
case against him will be quashed;

“24.   That the
whole scheme narrated in the foregoing
paragraphs 21 to 23 hereof is an
unlawful and anomalous practice or transaction
to which plaintiff’s manager and technician
pleaded herein as third-party defendants are
engaged, utilizing and victimizing not a few
unwary persons including herein third-party plaintiff in
violation of plaintiff’s charter and Central Bank rules and regulations and
which anomalous and illegal practices may be the proper subject of an extensive
investigation by the Central Bank of the Philippines;

“xxx              
           xxx                              
xxx

“26. That these abuses could
not have been committed without the knowledge,
tolerance and even connivance and collusion
of plaintiff’s manager, Maria Fe Perez.”
(Underlining ours; pp. 8-10, Petition.)

Reacting to the libelous imputations against her, Maria Fe Perez
filed, in the CFI of Bulacan, an action for damages
against Attys. Simeon Paredes and Clemente
Paredes (Civil Case No. SM-872).

In their answer to Ms. Perez’ damage complaint, the defendants
interposed affirmative defenses, which are grounds to
dismiss, among them, that the complaint states no cause of action because the
libelous pleadings are absolutely privileged communication, hence, cannot be
the basis of any criminal or civil action. 
They asked for a preliminary hearing of said affirmative defense, which
the court granted.

After the preliminary hearing, the court, on October 13, 1980, dismissed Ms. Perez’ complaint
but it allowed the defendants (Paredeses) to present
evidence on their counterclaim against her.

Perez promptly appealed to the Intermediate Appellate Court
(AC-G.R. CV No. 00133).  On February 11, 1985, the Appellate
Court reversed the Court of First Instance and ordered it to try the merits of
the damage suit.  Hence,
this petition for review on certiorari by the defendants attorneys.

The petition hinges on the issue of whether or not the offensive
Answer with Third-Party Complaint prepared and filed by the petitioners, as
counsel for the defendants-debtors in Civil Case No. 79 of the Municipal Trial
Court, was absolutely privileged communication.

The finding of the Court of Appeals that the libelous allegations
in defendant Casas‘ answer in Civil Case No. 79 were
fabricated was anchored on the sworn statement (Exh.
1) of Casas that the libelous allegations were false and that he signed the pleading without being
aware of its libelous contents (pp. 146-­147, Rollo).

Civil Case No. 79 was an action for collection of a loan obtained
by defendant Francisco Casas, with his co-defendants,
Estrellita Paredes and Epitacio Gojo Cruz, as sureties.  The issue, therefore, in said case was the
validity or veracity of Casas‘ obligation.  However, instead of merely denying the
material allegations of the complaint regarding the loan, Casas,
thru his lawyers, made impertinent allegations and slanderous charges against
Ms. Perez who was not even a party in the case. 
The averments contained in the answer with third-party complaint to the
effect (1) that plaintiff had been engaged in “unlawful and anomalous
practice,” utilizing and victimizing not a few unwary persons, in
violation of plaintiffs’ charter and Central Bank rules and regulations which
may be the proper subject of an extensive investigation by the Central Bank
(par. 24, pp. 9-10, Petition), and (2) that in connivance and collusion with
the bank’s technicians, she “misappropriated x x
x for their own personal use proceeds of sales of
piggery and/or poultry products of bona fide borrowers,” were clearly
unrelated to the issue in Civil Case
No. 79 of whether or not Casas was indebted to the
plaintiff bank.

While latitude is given to lawyers in pleading their client’s
cause, its limits should not transcend the bounds of propriety, materiality and
relevance to the issues in litigation.

“x x x.  It is the
lawyer’s duty as a member of the Bar ‘to abstain from all offensive personality
and to advance no fact prejudicial to the honor or reputation of a party or witness, unless required by
the justice of the cause with which he is charged.’ ” (Surigao
Mineral Reservation Board vs. Cloribel, 31 SCRA 1.)

Moreover, a “pleading should contain only the plain and
concise statements of the material facts and not the evidence by which they are
to be proven.  If the pleader goes beyond
the requirements of the statute and alleges an irrelevant matter, which is
libelous, he loses his privilege.” (Tolentino
vs. Baylosis, 1 SCRA 396.)

Could the lower court conduct a preliminary hearing on the
affirmative defense of failure of the complaint to state a cause of
action?  The Appellate Court correctly
ruled that as a defendant who moves to dismiss the complaint for failure to
state a cause of action is deemed to
hypothetically admit the truth of the matters alleged therein, the sufficiency
of the cause of action should be determined from the allegations on the face of
the complaint without need of presenting evidence on either side.  Otherwise, the court would be deciding the
merits of the case upon a mere motion to dismiss before the defendant has filed
an answer.

“In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is the
sufficiency of the allegations made in the complaint to constitute a cause of
action and not whether those allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint.”

“The test of the sufficiency of the facts alleged in the
complaint 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
complaint.” (Garcon vs. Redemptorist Fathers, 17
SCRA 341)

If the allegations of the complaint are sufficient in form and
substance but their veracity and correctness are assailed, it is incumbent upon
the court to deny the motion to dismiss and require the defendant to answer and
go to trial to prove his defense.  The
veracity of the assertions of the parties can be ascertained at the trial of
the case on the merits.  (Galeon vs. Galeon, 49 SCRA
516-521).

WHEREFORE, the
petition for review is denied for lack of merit.  Costs against the
petitioners-appellants.

SO ORDERED.

Narvasa, (Chairman), Cruz, and Medialdea, JJ., concur.

Gancayco, J., on leave.