Case Digest: AMOS P. FRANCIA, JR., et al. v. POWER MERGE CORPORATION

AMOS P. FRANCIA, JR., et al. v. POWER MERGE CORPORATION

         Amos P. Francia, Jr. and his sister Cecilia Zamora placed, on the suggestion of the bank manager, an investment at Westmont Investment Corporation (WINCORP). Every time his investment matures, Francia would instruct a roll over and he would be issued a receipt reflecting the amount of his placement, the net interest rate, and the duration of the placement. Soon, Francia and Cecilia attempted to withdraw their investments but they failed for the reason that WINCORP and Westmont Bank were facing financial difficulties.

        Despite several attempts to forge an out-of-court settlement between Francia and Cecilia and WINCORP and PMC, the same failed. Francia sent PMC a demand letter to pay within fifteen days the total amount of the maturity values of his placement. Receiving no response from PMC, Francia and Cecilia filed before the Regional Trial Court of Makati a Complaint for Sum of Money and Damages against WINCORP and PMC. WINCORP and PMC filed a Motion to Dismiss contending that the allegations in the complaint and its annexes failed to state a cause of action. The trial court ruled in favor of Francia and Cecilia. PMC thereafter assailed the trial court’s orders before the Court of Appeals via petition for certiorari and prohibition under Rule 65. The CA reversed the trial court‘s decision.

ISSUE:

Whether or not the complaint alleges a cause of action against PMC

HELD:

A cause of action has three elements, to wit: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right. In the determination of whether these elements are present, inquiry is generally confined to the four corners of the complaint and no other, but the annexes attached to the complaint may be considered, they being parts thereof.

A perusal of the complaint, together with its annexes, shows that each of the Confirmation Advice issued by PMC to Francia and Cecilia provides that “WINCORP has acted in the client’s behalf and/or for the client’s benefit, risk and account without recourse or liability, real or contingent, to WINCORP in respect to the loan granted to the Borrower,” the “borrower” being PMC. Each Confirmation Advice thus shows that the creditor-debtor relationship is between Francia and Cecilia and PMC, WINCORP having merely acted as PMC’s agent.

In another vein, by filing a Motion to Dismiss, PMC hypothetically admitted the truth of the material allegations of the complaint.

In a motion to dismiss, a defendant hypothetically admits the truth of the material allegations of the plaintiff’s complaint. This hypothetical admission extends to relevant and material facts pleaded in, and the inferences fairly deducible from, the complaint. Hence, to determine whether the sufficiency of the facts alleged in the complaint constitutes a cause of action, the test is as follows: admitting the truth of the facts alleged, can the court render a valid judgment in accordance with the prayer? PMC cannot thus disclaim privity of contract with petitioners for whom WINCORP was merely acting as agent.