Case Digest (G.R. No. 159648)
Facts:
Fluor Daniel, Inc.-Philippines (Petitioner) contracted with Fil-Estate Properties, Inc. in 1996 for construction works on a Boracay project and engaged E.B. Villarosa & Partners Co., Ltd. (Respondent) by separate contracts dated May 6, 1997. Fil-Estate failed to pay petitioner, petitioner suspended work and issued notices of suspension, respondent treated the contracts as terminated and sued for sums due in Civil Case No. 98-1342 before the RTC of Makati, which denied petitioner's motion to dismiss (Nov. 19, 1998) and denied reconsideration (Mar. 24, 1999); the Court of Appeals affirmed (Oct. 24, 2002; Aug. 25, 2003).
Issues:
- Whether the Complaint sufficiently states a cause of action against FDIP (Petitioner) in light of jurisprudential tests and guidelines.
- Whether the annexes attached to the Complaint should be considered in determining whether VILLAROSA's (Respondent's) Complaint sufficiently stated a cause of action.
- Whether the Court of Appeals erred in refusing to consider the annexes and thus failing to appreciate Respondent's admission that payment of its billings was subject to timely receipt of similar payments from Fil-Estate.
- Whether the Court of Appeals erred in failing to appreciate Respondent's failure to satisfy the required criteria to justify payment under its monthly progress billings.
Ruling:
The petition was GRANTED. The Supreme Court held that, when read together with the contracts annexed to the complaint, Respondent's complaint failed to state a cause of action; accordingly, the Court REVERSED and SET ASIDE the Court of Appeals' decision and the RTC orders, and ordered costs against Respondent.
Ratio:
The Court applied Section 2, Rule 2 of the Rules of Civil Procedure, which defines a cause of action and its three essential elements, and reiterated the test of sufficiency: whether, admitting the facts alleged, the court could render a valid verdict in accordance with the prayer. The annexed contracts contained an express clause making payment by Petitioner subject to its timely receipt of similar payments from Fil-Estate, a condition precedent; the complaint did not allege that this condition was fulfilled, and therefore, on the face of the complaint and its annexes, Respondent was not entitled to relief.
Doctrine:
- Section 2, Rule 2, Rules of Civil Procedure defines the three essential elements of a cause of action.
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