G.R. No. 87678 June 16, 1992
DEL BROS HOTEL CORPORATION, petitioner, vs. HON. COURT OF APPEALS, and LEON M. TIAMSAY, respondents.

FACTS

Petitioner Del Bros Hotel Corporation (DBHC) engaged private respondent Leon M. Tiamsay as a consultant under an Agreement dated May 9, 1984. Tiamsay’s assignments were to negotiate: (a) the sale of the DBHC hotel building; (b) the amendment or termination of the management agreement between DBHC and Hilton International; and (c) the sale of DBHC shares. For the sale of the building, Tiamsay was to be paid a commission equal to five percent (5%) of the purchase price. Paragraph 4 of the Agreement stipulated the payment schedule: fifty percent (50%) upon completion and signing of the basic agreement covering any work assignment, and the balance upon completion and execution of all required documents covering the transaction. Paragraph 5 provided for a monthly advance of P40,000.00, deductible from any future commission, and treated as an expense of DBHC if all undertakings were unsuccessful after consistent efforts.
On July 27, 1987, Tiamsay filed a complaint (amended on August 19, 1987) against DBHC to recover P1,549,118.65 as his commission for the sale of the hotel building, alleging DBHC refused to pay despite demands. DBHC moved to dismiss the amended complaint for failure to state a cause of action, arguing there was no allegation that the sale had been consummated, which it claimed was a condition sine qua non for payment. The Regional Trial Court of Makati denied the motion, finding the complaint sufficiently alleged a contract, performance by Tiamsay, entitlement to compensation, and failure to pay. The Court of Appeals affirmed this order.

ISSUE

Whether the amended complaint filed by private respondent Leon M. Tiamsay states a cause of action.

RULING

Yes, the amended complaint states a cause of action. The Supreme Court emphasized that the sole issue in a motion to dismiss for failure to state a cause of action is the sufficiency of the allegations in the complaint, which are hypothetically admitted as true for the purpose of the motion. The test is whether, admitting the alleged facts, the court can render a valid judgment in accordance with the plaintiff’s prayer. The Court found that Tiamsay’s amended complaint sufficiently alleged the existence of the Agreement, his performance thereunder, his entitlement to a commission, and DBHC’s refusal to pay despite demand. The question of whether the sale was consummated or whether Tiamsay fully performed his obligations are matters of defense that should be raised in an answer and resolved during a trial on the merits, not in a motion to dismiss. The respondent court did not err in affirming the trial court’s denial of the motion to dismiss. The petition was DENIED.