GR 120384; (January, 2004) (Digest)
G.R. No. 120384 ; January 13, 2004
PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, petitioner-appellant, vs. PHILIPPINE INFRASTRUCTURES, INC., et al., respondents-appellees.
FACTS
Petitioner Philguarantee filed a collection suit against respondents, alleging it issued Letters of Guarantee to PNB for credit accommodations extended to respondent PII. Respondents executed a Deed of Undertaking to reimburse petitioner for any amounts paid under the guarantees. Upon PNB’s call on the guarantees, petitioner demanded payment from respondents, who refused. The original complaint prayed for payment of the guaranteed amounts, attorney’s fees, and damages. Respondent PII moved to dismiss, arguing the complaint stated no cause of action for failing to allege petitioner had actually suffered damage by paying PNB. The trial court initially denied this motion.
During trial, petitioner presented evidence that it paid PNB P19,035,256.57 through the National Treasury. Petitioner then filed a Motion to Amend Complaint to Conform to Evidence, seeking to incorporate this payment. Instead of ruling on the motion, the trial court, in a reversal of its prior order, dismissed the entire case without prejudice, holding the original complaint failed to state a cause of action due to the lack of an allegation of actual payment. The Court of Appeals sustained the dismissal.
ISSUE
Whether the trial court acted with grave abuse of discretion in dismissing the complaint on the ground of failure to state a cause of action.
RULING
Yes. The Supreme Court granted the petition and reversed the lower courts. The original complaint sufficiently stated a cause of action. A cause of action exists if the complaint alleges the plaintiff’s substantive right and the defendant’s correlative duty, whose violation creates an actionable wrong. The complaint alleged petitioner’s guaranty obligations, the respondents’ undertaking to reimburse, PNB’s call on the guarantees, and petitioner’s consequent demands for payment. Citing jurisprudence, the Court held that in contracts of guaranty, the guarantor’s cause of action against the principal accrues upon the guarantor’s liability to the creditor, not necessarily upon actual payment. The call on the guarantee by PNB made petitioner liable, activating respondents’ obligation under the Deed of Undertaking to keep petitioner harmless. An allegation of actual payment, while ultimately necessary for recovery, is not required to initially state a cause of action. The trial court thus patently erred in dismissing the complaint and in not allowing the amendment, which was precisely meant to conform the pleading to the evidence already presented without objection. The case was remanded for continuation of trial.