FIRST DIVISION
[G.R. No. 220542. June 30, 2021.]
MARVIN C. AMISTOSO, DOING BUSINESS UNDER THE NAME AND STYLE BAWOD BAR AND RESTAURANT [FORMERLY EIGHT-FOLD], petitioner, vs. FIRST LEISURE VENTURES GROUP, INC., AND SHOPPING CENTER MANAGEMENT CORP., ALSO KNOWN AS SM SUPER MALLS SHOPPING CENTER MANAGEMENT CORP., respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJune 30, 2021which reads as follows:
"G.R. No. 220542 (Marvin C. Amistoso, doing business under the name and style Bawod Bar and Restaurant [formerly Eight-Fold], Petitioner, v. First Leisure Ventures Group, Inc., and Shopping Center Management Corp., also known as SM Super Malls Shopping Center Management Corp., Respondents.) — This Petition for Review 1 on Certiorari under Rule 45 seeks to reverse and set aside the Orders dated 15 June 2015 2 and 21 September 2015 3 in Civil Case No. R-PSY-15-18816-CV of Branch 108, Regional Trial Court (RTC), Pasay City, dismissing petitioner Marvin C. Amistoso's (petitioner) complaint for reformation of instrument, fixing period, specific performance, and damages on the ground of failure to state a cause of action.
Antecedents
Petitioner owned and operated Eight-Fold Bar and Restaurant located at Bldg B. SM By the Bay, J.W. Diokno Blvd., Pasay City. Respondent First Leisure Ventures Group, Inc. (First Leisure) leased the space for Eight-Fold to petitioner. In 2008, and with one (1) year in its lease contract, First Leisure requested to pre-terminate the lease and proposed a relocation to accommodate the expansion of Vikings Restaurant. Petitioner initially refused the request due to the expenses from the renovation of Eight-Fold that he had not yet recovered, as well as the expenses he will incur for setting up a new establishment at the proposed location. 4
Nonetheless, he later agreed to pre-terminate the lease and to relocate based on respondent's alleged promise that the term of his new lease contract will be co-terminous with the operation and existence of Vikings Restaurant. Thus, petitioner's lease contact would be automatically renewed for as long as Vikings Restaurant is operating. Further, First Leisure also allegedly promised to give him the right of first refusal to lease the subject new premises. 5
First Leisure and SM Super Malls Shopping Center Management Corp (SM Super Malls; collectively respondents) sent petitioner Offer Sheets 6 for the new lease. Petitioner claimed that he requested that the agreement as to the co-terminus nature of the lease and his right of first refusal be included in the terms of the lease. However, he was told that there was no need to do so because the Offer Sheets were standard forms that would not in anyway diminish the right of plaintiff to automatic renewal of lease and right of first refusal. 7
A new lease contract was executed for a new location at Bldg. G, Units 3, 5, and 6, SM By the Bay. Petitioner put up Bawod Bar and Restaurant (formerly Eight-Fold) at the new location. 8 Respondents renewed the lease contract several times. 9 However, on 17 October 2014, SM Super Malls notified petitioner that it will no longer renew the lease, which shall end after mall hours on 31 January 2015. 10 Petitioner requested respondent First Leisure to intervene, to no avail. On 03 February 2015, petitioner received a demand to vacate the leased premises from First Leisure's lawyer. 11
Petitioner filed the complaint 12 against respondents before the RTC. He asserted that First Leisure's actions were contrary to its promise that the lease contract shall automatically be renewed for as long as Vikings Restaurant is operational and in existence. However, since the alleged promise was not reflected in the lease contract, he sought the reformation of said instrument, among others, on the ground that the agreement did not express the true intent of the parties.
Prior to the filing of the complaint, petitioner had filed another complaint based on the same set of facts and against the same defendants docketed as Civil Case No. R-PSY-14-18414-CV pending before Branch 111, RTC, Pasay City. He amended this particular complaint by including as additional causes of actions the reformation of instrument, fixing of period, fixing of rent, and interpleader. 13
On 05 February 2015, petitioner filed a Notice of Dismissal without Prejudice of Complaint and Amended Complaint in Civil Case No. R-PSY-14-18414-CV citing a letter from respondents' counsel imploring petitioner to enter into an amicable settlement. 14 Branch 111 confirmed the Notice of Dismissal in the Order dated 05 February 2015 and accordingly dismissed the case without prejudice. 15
However, the parties failed to reach an agreement, prompting petitioner to file another complaint for reformation of instrument, fixing period, specific performance and damages, which later became Civil Case No. R-PSY-15-18816-CV and raffled to Branch 108 of the Pasay City RTC. 16
Respondents submitted their Answer with Counterclaims on 03 March 2015. 17 They raised the affirmative defense that petitioner failed to prove respondents' alleged promise to consider the lease contract co-terminus with Viking Restaurant's continued operations. Respondents further averred that the alleged oral agreement cannot be proved without violating the parol evidence rule. Lastly, respondents argued that the complaint violates the principle of forum shopping.
In his Reply, 18 petitioner alleged that respondents' Answer was filed out of time and that their failure to specifically deny under oath the material allegations in the complaint constitutes an admission.
On 23 April 2015, petitioner filed an Omnibus Motion praying for the following reliefs: expunge defendants' (respondents herein) late Answer with Counterclaim, declare defendants in default, consider his Reply as having been filed ad cautelam, and cancel the preliminary and pre-trial conference and hold them in abeyance pending resolution of the motion to declare defendants in default. 19
On 24 April 2015, respondents filed a Motion for Preliminary Hearing of the Affirmative Defenses seeking for the dismissal of the complaint on grounds of failure to state a cause of action and forum shopping. 20
Ruling of the RTC
In its Order dated 15 June 2015, the RTC denied petitioner's Omnibus Motion and granted respondents' Motion for Preliminary Hearing of the Affirmative Defenses by dismissing the complaint. The trial court ruled that the documents signed by the parties are clear and leave no doubt upon their intention, as such, the literal meaning of the stipulations therein shall control. Thus, it held:
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As to the First motion, while it may be true that defendants filed their answer more than the period provided by the rule, it is the honest belief of this Court that the interest of justice would be best served if the answer will be accepted. Fundamentally, default orders are taken on the presumption that defendant in failing to file an answer has not oppose the allegations and prayer of the plaintiff. In the case at hand, the defendants answer, albeit belatedly. Judges are admonished against issuing precipitate orders of default as these have the effect of denying a litigant the chance to be heard and in order to prevent needless litigations in the appellate Courts where time is needed for more important or complicated cases. While there are instances when a party may properly be defaulted, these should be the exception rather than the rule and should be allowed only in clear cases of obstinate refusal or inordinate neglect to comply with the orders of the Court. A party must be given every reasonable opportunity to present his side and refute the evidence of the adverse party in deference to due process of law. (Africa vs. Intermediate Appellate Court, 188 SCRA 659)
The Omnibus Motion filed by the plaintiff through counsel particularly, to Expunge Defendant's Answer with counterclaims; to declare defendants in default; to cancel the hearing set and hold in abeyance the preliminary and pre-trial conference pending resolution of the motion to declare defendants in default is hereby Denied.
The Second, is a motion for preliminary hearing of the affirmative hearing (sic) filed by the defendant through counsel praying that the instant complaint be dismissed on the ground that the complaint fails to state a cause of action and for the reason that the plaintiff should not be allowed to violate the rule against forum shopping.
It is to be noted that the complaint is for specific performance, reformation of instrument, fixing of period, fixing of rent, interpleader, damages.
The Court has carefully examined their respective pleadings filed by the parties including the attachments. As the Court observed, the parties herein signed documents which necessarily fixed their relationship as lessor and lessee. Article 1370 of the Civil Code specifically states 'if the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control.'
The Court honestly believes that an action for specific performance cannot prosper as the contract that is the subject matter of this complaint defines the obligation of the parties. Both plaintiff and defendant ought to know the stipulations agreed upon. On the other hand, reformation of instrument, fixing of period and fixing of rent cannot also prosper because the contract they signed expresses their true intention. Moreover, taking Article 1359 of the Civil Code as guidepost, there is no showing of mistake, fraud, inequitable conduct or accident committed by anyone of the parties. So also, there is no need to fix the period nor fix the rent because the contract reveals that they are all provided in the contract.
WHEREFORE, let the above-entitled case be DISMISSED and the verified application for issuance of a TRO and/or writ of injunction is hereby withdrawn.
SO ORDERED. 21
Petitioner sought reconsideration, 22 but the trial court denied the same in its Order dated 21 September 2015. 23
Aggrieved, petitioner filed the present Petition.
Issue
For resolution is whether the court can go beyond the complaint to determine if the allegations therein are sufficient to survive a dismissal based on failure to state a cause of action.
Ruling of the Court
The Petition is meritorious.
The case at bar is a petition under Rule 45 of the Rules of Court. 24 Under the principle of the hierarchy of courts, the judgment, final order, or resolution of the RTC is appealable to the Court of Appeals (CA) either through an ordinary appeal under Rule 44, if the case was originally decided by the RTC, or petition for review under Rule 42, if the RTC decided the case in the exercise of its appellate jurisdiction.
However, the principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. 25 In other words, direct recourse to this Court to review the judgment, final order, or resolution of the RTC is allowed if the petition raises purely questions of law.
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. 26
In this case, the core issue is whether or not the sufficiency of the allegations in the complaint may be determined from sources outside of the complaint itself in order to ascertain if the case is dismissible on the ground of failure to state a cause of action. To resolve this issue, the Court is not required to examine the probative value of the evidence; hence, it is considered to be a question of law.
Owing to the nature of the issue presented, the Court deems it appropriate to exercise its judicial discretion to review.
In determining if a complaint
"Cause of action" is defined as an act or omission by which a party violates a right of another. 27 To properly plead his cause of action, a party is required to present it in a methodical and logical form, a plain, concise, and direct statement of the ultimate facts, omitting the statement of mere evidentiary facts. 28
A party may challenge the sufficiency of the allegations in the complaint through a motion to dismiss under Section 1 (g), Rule 16 of the Rules of Court 29 or by way of an affirmative defense pursuant to Section 6 of the same Rule 30 on ground that it failed to state a cause of action.
In assessing the material allegations in the complaint, inquiry is confined to the four corners of the complaint, and no other. 31 While our jurisprudence is replete with pronouncements in this regard, the Court clarifies that the "four corners of the complaint" is not to be taken literally as would limit the evaluation on assertions in support of the claim. Inquiry should extend to all matters pleaded in the complaint, including documents attached to it, as well as the defendant's defense, if so mentioned in the complaint. Sources extraneous to the complaint are excluded from consideration. Given this, courts are required to make a restricted assessment of everything that has been pleaded solely in the complaint.
The trial court dismissed the Complaint based on the examination of the "pleadings filed by the parties including the attachments." 32 This is erroneous as it is established that only those facts alleged in the complaint should be considered. No other pleading need to be examined, except for the complaint. It is true that there are exceptions to the rule that inquiry shall be confined to the face of the complaint, e.g., there is evidence which has been presented to the court by stipulation of the parties, 33 or in the course of hearings related to the case. 34 However, none of these exceptions is present in this case.
Given the foregoing, We now examine if the allegations set out in the Complaint are sufficient to establish a cause of action.
The Court rules in the affirmative.
In determining if a complaint states a cause of action, the test is whether the material allegations, assuming these to be true, state the ultimate facts which constitute plaintiff's cause of action, such that plaintiff is entitled to a favorable judgment as a matter of law. 35 The Court now applies the test to the subject Complaint.
A cause of action has three elements: 1) the legal right of the plaintiff; 2) the correlative obligation of the defendant not to violate the right; and 3) the act or omission of the defendant in violation of that legal right. 36 The Court finds that these elements are sufficiently alleged in Complaint.
First, the Complaint 37 clearly alleged the legal right petitioner is asserting, thus:
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6. However, in the year 2008, and with one (1) year remaining prior to the expiry of its lease of the premises located at Bldg. B SM By the Bay for the operation of Eight-Fold, defendant First Leisure thru its duly authorized representative, requested plaintiff for the pre-termination of said else to pave the way for the expansion of Vikings Restaurant.
7. Initially, plaintiff refused to the request of defendant First Leisure for the pre-termination of the lease and his relocation to another site because he has not yet recovered his investments in Eight-Fold and his relocation to another site would entail another big investment on renovation and similar expenses.
8. In order to make the request and suggested relocation of plaintiff attractive and easily acceptable, defendant First Leisure promised to provide plaintiff with a new lease contract whose term or period is co-terminus with the term of operation and existence of Vikings Restaurant.
9. Defendant First Leisure also promised plaintiff that the period of the lease contact will be automatically renewed for as long as Vikings Restaurant is operating and in existence. According to defendant First Leisure, plaintiff will also have a right of first refusal in leasing the new subject leased premises.
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16. In response to plaintiff's reminder and said demand, defendants First Leisure and SM Super Malls, through their respective representatives, explained that there is no need to reflect the said agreed terms in the aforesaid two (2) Offer Sheets a they were just standard forms, and that the said Offer Sheets will not in anyway diminish the right of plaintiff to automatic renewal of lease and right of first refusal.
17. Thereafter, in a letter dated 23 November 2010, defendant SM Super Malls asked plaintiff to sign the Lease Contract for the subject area covering the period from 1 December 2010 to 31 October 2011, 38 to be executed by and between plaintiff and defendant First Leisure.
18. Plaintiff again reminded defendants First Leisure and SM Super Malls through their respective representatives, about their aforesaid promise of automatic renewal of lease that is co-terminus with the operation and existence of Vikings Restaurant plus the promised right of first refusal to lease the subject premises.
19. Plaintiff insisted on said defendants that these agreed terms should be reflected in the lease contract, but to no avail.
20. Instead, defendants First Leisure and SM Super Malls, through their duly authorized representatives, assured plaintiff that it is just a standard lease contract and there is no need to reflect the aforesaid agreed terms. However, defendants First Leisure and SM Super Malls assured plaintiff that they will not renege from their said promise.
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Second, respondents' correlative obligation not to violate petitioner's right was apparent from the allegation in the Complaint that:
8. In order to make the request and suggested relocation of plaintiff attractive and easily acceptable, defendant First Leisure promised to provide plaintiff with a new lease contract whose term or period is co-terminus with the term of operation and existence of Vikings Restaurant.
9. Defendant First Leisure also promised plaintiff that the period of the lease contact will be automatically renewed for as long as Vikings Restaurant is operating and in existence. According to defendant First Leisure, plaintiff will also have a right of first refusal in leasing the new subject leased premises.
Third, it was likewise alleged in the Complaint that respondents' act of not renewing the lease contract, as verbally promised, violated petitioner's legal right, to wit:
32. Despite plaintiff's compliance with defendants' duplicate orders of renovation, defendant SM Super Malls unceremoniously sent to plaintiff, a notice dated 17 October 2014, informing the latter that, and to quote:
'x x x management decided not to renew your lease for the said area effective after mall hours of 31 January 2015 x x x.'
33. As plaintiff's protestations fell on deaf ears, he was constrained to request from defendant First Leisure, lessor of the subject leased premises, to protect him against the threat of eviction by defendant SM Super Malls — but that too fell on deaf ears.
34. Consequently, on February 3, 2015, plaintiff received a demand letter dated 1 February 2015 from the lawyer of defendant First Leisure, Atty. Josefina Wan-Remollo, conveying the message that the subject lease contract will no longer be renewed, and instead, demanding that plaintiff vacate the subject leased premises.
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Respondents' promise to automatically renew petitioner's lease for as long as Vikings Restaurant is operational and in existence is a matter of defense that is best left adjudged after a full-blown trial. It should not have been up for consideration at the time when the Complaint was being assessed for sufficiency of the allegations. If at all, this provided context to the cause of action to reform the lease contract pursuant to the authority of Article 1359 of the Civil Code as "when there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed."
At this juncture, the Court is convinced that the trial court erred in dismissing the Complaint for failure to state a cause of action. The allegations made therein are enough to allow the petitioner to present evidence to prove their veracity and ultimately, his entitlement to the relief sought.
WHEREFORE, the petition is GRANTED. The Orders dated 15 June 2015 and 21 September 2015 of Branch 108, Regional Trial Court, Pasay City are REVERSED and SET ASIDE. The Complaint is hereby REINSTATED and REMANDED to Branch 117, Regional Trial Court, Pasay City for further proceedings.
It appearing that the copy of the Resolution dated March 11, 2020, sent to Atty. Jacinto Garcia, Jr. of Garay Cruz and Associates, counsel for petitioner, at 3/F ECJ Building, Real corner Arsobispo Street, 1002 Intramuros, Manila, was returned to this Court on January 13, 2021 unserved with postal notation: "RTS-unclaimed," the Court resolves to CONSIDER said resolution as SERVED.
The letter dated June 22, 2021 of Atty. Luithe Lovella C. Quitalig-Cabangunay, Branch Clerk of Court, Regional Trial Court, Branch 117, Pasay City, in compliance with the Resolution dated January 19, 2021, transmitting the complete records of Civil Case No. R-PSY-15-18816-CV consisting of 592 pages in two (2) volumes, is NOTED.
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 9-54.
2.Id. at 58-59.
3.Id. at 60-61.
4.Id. at 63.
5.Id.
6.Id. at 83-84.
7.Id. at 64-65.
8.Id. at 64.
9.Id. at 85-87 and 100-103.
10.Id. at 105.
11.Id. at 106.
12.Id. at 62-80.
13.Id. at 107.
14.Id. at 136.
15.Id. at 135.
16.Id. at 62-80.
17.Id. at 140-176.
18.Id. at 147.
19.Id. at 177-182.
20.Id. at 184-188.
21.Id. at 58-59.
22.Id. at 192-213.
23.Id. at 60-61.
24. The 1997 Rules of Civil Procedure; applicable at the time of the filing of the petition.
25.Chavez v. Public Estates Authority and Amari Coastal Bay Development Corporation, 433 Phil. 506 (2002), G.R. No. 133250, 09 July 2002 [Per J. Carpio].
26.Vda. De Formoso v. Philippine National Bank, 665 Phil. 184 (2011), G.R. No. 154704, 01 June 2011 [Per J. Mendoza].
27. Section 2, Rule 2 of the Rules of Court.
28. Section 1, Rule 8 of the Rules of Court.
29. Section 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
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(g) That the pleading asserting the claim states no cause of action;
30. Section 6. Pleading grounds as affirmative defenses. — If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer.
31.See Acuña v. Batac Producers Cooperative, 126 Phil. 896 (1967), G.R. No. L-20333, 30 June 1967 [Per J. Makalintal].
32.Rollo, p. 59.
33.Aquino v. Quiazon, 755 Phil. 793 (2015), G.R. No. 201248, 11 March 2015 [Per J. Mendoza].
34.Id., citing Tan v. Director of Forestry, 210 Phil. 244 (1983), G.R. No. L-24548, 27 October 1983 [Per J. Makasiar].
35.Dabuco v. Court of Appeals, 379 Phil. 939 (2000), G.R. No. 133775, 20 January 2000 [Per J. Kapunan].
36.Pamaran v. Bank of Commerce, 789 Phil. 42 (2016), G.R. No. 205753, 04 July 2016 [Per J. Del Castillo].
37.Rollo, pp. 62-79.
38.Id. at 86.