Facts:

• Nicanor G. De Guzman, Jr. (petitioner) filed a complaint against Enrique K.P. Tan (respondent) on September 15, 1988, in the Regional Trial Court of Manila.
• The complaint arose from a long-standing friendship involving mutual favors, including the discounting of checks for cash.
• De Guzman claimed he had issued checks totaling P280,900.00 to Tan, which had been fully paid and settled by mutual agreement.
• On August 30, 1988, De Guzman received a demand letter from Tan's lawyer, asserting he owed P568,541.00, including principal, legal interest, and attorney's fees.
• De Guzman argued that Tan's claim was unfounded and sought the return of the checks, along with damages and attorney's fees.
• Tan filed a motion to dismiss the complaint on October 8, 1988, citing lack of cause of action and prescription.
• The trial court dismissed the complaint on November 24, 1988, for failure to state a cause of action.
• De Guzman’s motion for reconsideration was denied on March 17, 1989, and his appeal to the Court of Appeals was dismissed on January 30, 1990.
• De Guzman then filed a petition for review on certiorari, alleging grave abuse of discretion by the lower courts.

Issue:

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Ruling:

• The Supreme Court ruled that the trial court erred in dismissing the complaint for lack of cause of action.
• The Court found that the cause of action had not prescribed.
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Ratio:

• The Supreme Court determined that the complaint stated a sufficient cause of action, emphasizing that allegations in the complaint are hypothetically admitted when a motion to dismiss is filed.
• De Guzman had a primary right to the return of the checks, as he had settled his obli...continue reading