Thursday, May 9, 2019

[CASE DIGEST] Associated Bank v. Spouses Montano (G.R. No. 166383)

October 16, 2009 

Ponente: Nachura, J. 
 
FACTS:

·         In 1964, spouses Justiniano and Ligaya Montano owned three parcels of land in Tanza, Cavite. The land was utilized as an integrated farm and as a stud farm used for raising horses. Justiniano was then serving as congressman for the lone district of Cavite and as minority floor leader. In 1972, when then President Ferdinand Marcos placed the country under martial law, Justiniano went on self-exile to the US to avoid the harassment and threats made against him by the dictator.

·         In 1975, while still in the US, the Montanos transferred the said properties to Tres Cruces Agro-Industrial Corporation (TCAIC) in exchange for shares of stock in the company. A year later, in October 1976, TCAIC sold the properties to International Country Club, Inc. (ICCI) for P6M.

·         ICCI immediately mortgaged the parcels of land to Citizens Bank and Trust Co. (later renamed as Associated Bank) for P2M. The loan matured but remained unpaid, prompting Associated Bank to foreclose the mortgage. The properties were then put on public auction and were sold to Associated Bank, the sole and highest bidder. In 1987, TCTs for the subject property were issued in the name of Associated Bank.

·         Following the ouster of Marcos from Malacanang in 1986, the spouses Montano returned to the Philippines. After discovering the transfer of the properties, the Montanos immediately took physical possession of the same and began cultivating the land. 

·         In 1989, the Montanos filed an action for reconveyance of title against Associated Bank, praying that the transfer of the properties from TCAIC to ICCI, and from ICCI to Associated Bank, be declared null and void.  In their complaint, the spouses Montano averred that the transfer of the parcels of land to TCAIC was done only to avoid the confiscatory acts being applied by the dictator against the Montanos' properties, in retaliation for the latter's open opposition to Marcos. They claimed that TCAIC was only forced to sell the properties to ICCI after the latter intimidated and threatened the relatives of the Montanos who were left in the Philippines. They also argued that the mortgage by ICCI to Associated Bank was made to generate money for the latter's corporate officers as evidenced by the lack of any effort on the part of ICCI to service the loan.

·         In its Answer in 1989, Associated Bank set forth the following affirmative defenses:  that the complaint did not state a cause of action; that the allegation of threat and intimidation was not averred with particularity; that the bank was an innocent purchaser for value; and that, even if the complaint stated a cause of action, the same had already prescribed or had been barred by estoppel and laches.

·         In 1997, or eight years after filing its Answer, Associated Bank filed a Motion to Dismiss based on two grounds: that the complaint stated no cause of action and that the case was already barred by the statute of limitations.

·         RTC ruling: The spouses Montano's action for reconveyance of real property resulting from fraud is barred by the statute of limitations for having been filed beyond the four-year prescriptive period from discovery of fraud. 

·         CA ruling: RTC ruling is reversed. In resolving a motion to dismiss based on insufficiency of the complaint, it must hypothetically admit the facts alleged. If Associated Bank had actually conspired with others to manipulate procedures to put the title out of reach of the spouses Montanos, as alleged in the latter's complaint, it it is not only a right but becomes the duty of the court to proceed to hear and adjudicate the case on its merits.

·         Hence, the instant petition.

RULING:  

Petition denied. CA ruling affirmed. Case is remanded to the RTC.




Whether the Associated Bank can still file a Motion to Dismiss even if it had already filed an Answer raising affirmative defenses. – YES.

·         Section 6, Rule 16 of the ROC states that: "If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed."

·         The rule is based on practicality. Both the parties and the court can conveniently save time and expenses necessarily involved in a case preparation and in a trial at large, when the issues involved in a particular case can otherwise be disposed of in a preliminary hearing.

·         Since the rule provides that the preliminary hearing may be had thereon as if a motion to dismiss had been filed, such hearing shall therefore be conducted in the manner provided in Section 2, Rule 16 of the ROC, which reads: "At the hearing of the motion, the parties shall submit their arguments on the question of law and their evidence on the questions of fact involved except those not available at that time. Should the case go to trial, the evidence presented during the hearing shall automatically be part of the evidence of the party presenting the same."

·         Therefore, it is inconsequential that Associated Bank had already filed an answer to the complaint prior to its filing of a motion to dismiss. The option of whether to set the case for preliminary hearing after the filing of an answer which raises affirmative defenses, or to file a motion to dismiss raising any of the grounds set forth in Section 1, Rule 16 of the Rules are procedural options which are not mutually exclusive of each other.



Whether the spouses Montano's complaint for reconveyance should be dismissed. – NO.

·         When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint and from no other. The test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated therein. Where the allegations are sufficient but the veracity of the facts is assailed, the motion to dismiss should be denied. 

·         In the present case, the spouses Montano's complaint clearly states a cause of action and raises issues of fact that can be properly settled only after a full-blown trial. On this ground, the Associated Bank's motion to dismiss must be denied.

·         Also, the RTC erred when it dismissed the spouses Montanos' complaint on account of prescription. It is true that an action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud. 

·         The RTC, however, seemed to have overlooked the fact that the basis of spouses Montano's complaint for reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos cronies upon the relatives of the Montano's while the latter were on self-exile. 

·         Article 1391 of the Civil Code provides: "An action for annulment shall be brought within four years. This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of the consent ceases. x x x"

·         In the instant case, the threat or intimidation upon the spouses is deemed to have ceased only upon the ouster of then President Marcos from power on February 21, 1986. The four-year prescriptive period must, therefore, be reckoned from the said date. Thus, when the spouses filed their complaint for reconveyance on September 15, 1989, the period provided for by law had not yet prescribed.