HOME SAVINGS BANK & TRUST CO., PETITIONER, VS. HON. COURT OF APPEALS, CESAR D. DE ASIS AND DAISY B. DE ASIS, RESPONDENTS.

This petition for certiorari assails the decision and
resolution, dated 10 February 1989 and 14 April 1989, respectively, of the
Court of Appeals. The dispositive
portion of the decision referred to reads:

“WHEREFORE, (1) the order dismissing the complaint as against
defendants Trident Mining Corporation, Olympic Mines Corporation, and Gregorio
B. Licaros, is hereby declared to have been issued with grave abuse of
discretion or in excess of jurisdiction; and is, therefore, hereby set aside. (2) Let this case be remanded to the lower
court for continuation of the proceedings against the aforenamed defendants and
for reception of evidence to determine whether the defendants-appellees
Abelardo B. Licaros, Concepcion B. Licaros, and Home Savings Bank & Trust Co.,
Inc., still owe plaintiffs-appellants any balance resulting from compensation
of their mutual obligations, as well as to determine whether the latter are
entitled to be awarded the damages prayed for and, if so, the amounts
thereof.”^[1]

The assailed resolution, in turn, states:

“After going over the Motion for Reconsideration filed by
defendant-appellee Home Savings Bank & Trust Company thru counsel, seeking
to set aside the decision in this case, we find no cogent reason to change,
modify and/or otherwise reverse the decision, considering that the matters
raised in the motion had already been considered and resolved in the decision;
and therefore, the motion is hereby DENIED.”^[2]

The case arose when, sometime in February 1984, herein private
respondents filed with the court a quo a complaint against Home
Savings Bank & Trust Company, Trident Mining & Industrial Corporation,
Olympic Mines & Development Corporation, Concepcion B. Licaros, Gregorio B.
Licaros and Abelardo B. Licaros. The
complaint prayed that –

“1. On the First
Cause of Action, declaring that the obligation of Plaintiffs to Defendant Home
in the amount of P636,537.80 has been fully paid by the compensation or
off-setting of said obligation with the obligations of defendants TRIDENT and
OLYMPIC to Plaintiff Cesar D. De Asis. In the event of such compensation or off-setting, there remains a
balance due to said Plaintiff, ordering the defendants TRIDENT and OLYMPIC and
the Licaros Family, jointly and severally, to pay such balance to Plaintiffs.

“2. On the Second Cause of
Action, declaring the foreclosure of mortgage and the forthcoming sale in
public auction of Plaintiffs’ property null and void, being made in violation
of the provisions of Act. No. 3135, as amended.

“3. On the Third Cause of
Action, condemning defendants HOME and the Licaros Family, jointly and
severally, to pay Plaintiffs the sum of P500,000.00 as moral damages.

“4. On the Fourth Cause of
Action, condemning the defendants HOME and Licaros Family, jointly and
severally, to pay Plaintiffs the sum of P100,000.00 as exemplary damages.

“5. On the Fifth Cause of
Action, condemning the defendants HOME and Licaros Family, jointly and
severally, to pay Plaintiffs the sum of not less than P50,000.00 as actual and
compensatory damages, representing their expenses, attorney’s fees and costs of
this suit.”^[3]

The complaint sought the issuance of a
writ of preliminary injunction to enjoin the sheriff of Quezon City and Home
Savings Bank and Trust Company from any attempt to foreclose plaintiffs’
property until after the case would have been finally decided.

Before trial on the merits could commence, the complaint, on
motion of two of the defendants, namely, Abelardo B. Licaros and Concepcion B.
Licaros, was ordered to be dismissed by the Regional Trial Court of Quezon
City.

On appeal, the Court of Appeals set aside the order of dismissal,
ratiocinating and concluding thusly:

“In the case at bar, since defendants Abelardo B. Licaros and
Concepcion B. Licaros hypothetically admitted
the facts alleged in the complaint, and our reading of the complaint shows that
indeed, the complaint did state a cause of action against the defendants, we
have no other recourse, therefore, but to grant the relief prayed for in the
complaint.

“In the order denying plaintiffs’ motion for reconsideration
of its previous order dismissing the complaint, the lower court, by way of
justifying the dismissal, stated categorically that, since plaintiffs sought to
pierce the defendants’ veil of the corporate fiction and to treat all of them
as one and the same person, it had therefore treated the questioned motion to
dismiss as benefiting all the defendants.

“Proceeding from such premise, then, the other defendants —
i.e. Home Savings Bank and Trust Company, Inc., Trident Mining and Industrial
Corporation, Olympic Mines and Development Corporation, and Gregorio B. Licaros
— who did not join defendants Abelardo B. Licaros and Concepcion B. Licaros in
filing said motion to dismiss, should also be held liable to plaintiffs, since
these other defendants, ‘treated as one and the same person,’ were considered
to have joined the motion and therefore to have also been favorably affected by
the dismissal of the case.

“That ruling of the lower court, unfortunately, has no factual
basis insofar as the other defendants are concerned as the record does not show
that they had given any indication that they had joined or at least endorsed
the motion in question. Therefore,
insofar as these other defendants are concerned who did not file a similar
motion, the lower court could not properly dismiss the action motu propio,
since for the lower court to do so without any formal motion, as it did
affecting the other defendants, would be to act against the plaintiffs with
grave abuse of discretion, if not in excess of jurisdiction.

“x x x                                  x
x x                                         x
x x

“With respect to defendants Abelardo B. Licaros, Concepcion B.
Licaros, and Home Savings Bank, whom we deem to have admitted the fact that
appellants’ obligation in favor of Home Savings Bank had been compensated by
the obligations of Trident Mining and Olympic Mines in favor of appellants,
their liability cannot still be determined since appellants themselves have no
knowledge whether or not as the result of such compensation there still remains
a balance in their favor. Hence, this
matter has yet to be proved or disproved during trial in the lower court.

“As a consequence of the admissions by appellees Abelardo B.
Licaros, Concepcion B. Licaros, and Home Savings Bank of the allegation in the
complaint that the foreclosure of mortgage and impending public auction of
appellants’ property are null and void because such proceedings violated the
provisions of Act No. 3135, as amended, necessarily such foreclosure and public
auction should be set aside until after outcome of the main case against
defendants Trident Mining, Olympic Mines, and Gregorio B. Licaros, where their
respective liability, if any, shall have been determined, considering that
appellants sought to hold all the defendants liable jointly and severally.

“With regard to awarding moral damages, exemplary damages,
actual damages, attorney’s fees and litigation expenses — which appellants
also sought to recover from all the defendants jointly and severally –, the
resolution of this matter may well be left to the discretion of the lower court
where appellants can present evidence to substantiate the amounts they are
praying for.

“Inevitably, then, the case has to be remanded for reception
of evidence to establish the balance of amount, if any, claimed by appellants
as resulting from the compensation of credits or obligations between the
parties; and also to determine whether the other defendants Trident Mining,
Olympic Mines and Gregorio B. Licaros, are liable to appellants and, if so, whether
their liability shall be considered joint and several among themselves.”^[4]

The motion for reconsideration filed by Home Savings Bank having
been denied, petitioner went to this Court.

In the instant petition for certiorari, Home
Savings Bank & Trust Co., faults the appellate court thusly:

“1.  THAT THE DECISION AND RESOLUTION OF THE COURT
OF APPEALS ARE NOT IN ACCORDANCE WITH LAW AND THE PREVAILING JURISPRUDENCE ON
THE MATTER;

“2.  THAT THE COURT OF APPEALS ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DENYING PETITIONER’S
MOTION FOR RECONSIDERATION OF ITS DECISION DATED FEBRUARY 10, 1989, ERRONEOUSLY
RULING AS FOLLOWS:

“A.     REMANDING THE CASE TO THE LOWER COURT FOR
FURTHER PROCEEDINGS AS AGAINST OTHER DEFENDANTS ONLY AND WITH THE SPECIFIC
EXCEPTION OF THE HEREIN PETITIONER THUS DENYING DUE PROCESS OF LAW TO THE
LATTER.

“B. THE RESPONDENT COURT OF APPEALS DEEMED THE
PETITIONER TO HAVE ACTUALLY ADMITTED THE PRIVATE RESPONDENTS’ ALLEGATIONS IN
THE COMPLAINT INSTEAD OF CONSIDERING THEM MERELY AS HYPOTHETICAL ADMISSIONS.

“C. AS A CONSEQUENCE OF THIS OBSERVATION OF THE
RESPONDENT COURT OF APPEALS, IT SET ASIDE THE FORECLOSURE OF MORTGAGE AND THE
PUBLIC AUCTION OF THE SUBJECT PROPERTY EVEN WITHOUT DUE HEARING DULY CONDUCTED
THEREON.

We rule for petitioner.

While we agree with the appellate court that the court a quo
has erred in the precipitate dismissal of the complaint, petitioner, however,
cannot be thereby denied its day in court. In the resolution of a motion to dismiss, the truth of the facts alleged
in the complaint are, it is true, theoretically admitted, but this admission,
it must be emphasized, is merely hypothetical^[5] and
only for the purpose of resolving the motion. In case of denial, the movant is not to be deprived of the right to
submit its own case and to present evidence to contrapose the allegations
recited in the complaint. Neither will
the grant of the motion to dismiss by a court a quo and
the ultimate reversal thereof by an appellate court have the effect of foreclosing such a right. This rule must not be confused with a
demurrer to evidence under Section 1, Rule 35, of the Rules of Court^[6]
which, if granted by the trial court, will have the effect of disentitling the
movant to submit further evidence and of allowing the appellate court, on
appeal, to decide the case on its merits on the basis of the evidence
theretofore adduced.

WHEREFORE, the decision of the Court of Appeals, dated 10
February 1989, and its resolution of 14 April 1989, are MODIFIED by allowing
petitioner to have its day in court conformably with our above opinion. No costs in this instance.

SO ORDERED.

Romero and Melo, JJ., concur.

Feliciano, (Chairman), and
Bidin, JJ., on leave.

^[1]
Rollo, pp. 29-30.

^[2]
Rollo, p. 32.

^[3]
Rollo, pp. 22-23.

^[4]
Rollo, pp. 27-29.

^[5]
See De Dios vs. Bristol
Laboratories (Phils.) Inc., 55 SCRA 349.

^[6]
Section 1. Effect of judgment on demurrer to evidence. — After the
plaintiff has completed the presentation of his evidence, the defendant without
waiving his right to offer evidence in the event the motion is not granted, may
move for a dismissal on the ground that upon the facts and the law the
plaintiff has shown no right to relief. However, if the motion is granted and the order of dismissal is reversed
on appeal, the movant loses his right to represent evidence in his behalf.