View full case

SPS. NOLASCO FERNANDEZ v. SMART COMMUNICATIONS

FACTS:

e amount of P39,770,810.87. However, on November 11, 2009, the trial court dismissed the complaint against Nolasco and Maricris, finding that they cannot be held solidarily liable with EOL for the charges incurred on the use of the SMART cellphone units. SMART appealed the dismissal to the Court of Appeals, which reversed the trial court's ruling in its December 2, 2013 Decision. This prompted Nolasco and Maricris to file a Petition for Review on Certiorari before the Supreme Court, seeking to reverse the appellate court's decision.

The case involves a complaint filed by SMART Communications, Inc. against Everything Online, Inc. (EOL) and its directors and officers, including Salustiano Samaco III and spouses Nolasco and Maricris Fernandez. SMART alleged that EOL failed to pay its obligations under various agreements, resulting in damages amounting to P39,770,810.87. SMART also applied for the issuance of a writ of attachment and an attachment bond was posted.

The petitioners, Samaco III and the Fernandez spouses, filed a motion to dismiss the complaint and a motion to lift and discharge the writ of preliminary attachment. They argued that they are not the real parties in interest in the case. Maricris Fernandez claimed that she did not expressly agree to be bound by the provisions in the Letter Agreements and EOL Undertaking. Nolasco argued that he signed the EOL Undertaking in good faith and without the opportunity to read its contents. He also claimed that he was no longer an officer or director of EOL at the time the complaint was filed.

The RTC granted the motions to dismiss and ordered the complaint against the individual defendants to be dismissed. EOL was ordered to file its responsive pleading. EOL and SMART filed separate motions for partial reconsideration, but these were denied by the trial court.

SMART then filed a petition for certiorari with the Court of Appeals (CA) to challenge the dismissal of the complaint against the individual defendants. The CA partially granted the petition, ruling that there was overwhelming evidence indicating that Samaco III and the Fernandez spouses expressly bound themselves to be solidarity liable with EOL to SMART. The CA modified the RTC's orders and reinstated the complaint against the individual defendants.

The petitioners filed a motion for reconsideration, but the CA denied it. This led the petitioners to file the present recourse with the Supreme Court. The petition raises the issues of whether a petition for certiorari is the proper remedy to challenge an order of dismissal and whether there was a ground to dismiss the complaint against the petitioners as corporate officers and directors.

ISSUES:

  1. Whether or not an order of dismissal of the complaint should be assailed via a petition for certiorari under Rule 65.

  2. Whether or not there was a ground to dismiss complaint for a collection of sum of money against petitioners as corporate officer and director.

  3. Whether the doctrine of piercing the veil of corporate fiction is applicable in the case.

  4. Whether the complaint against petitioner Maricris stated a valid cause of action.

  5. Whether the dismissal of the complaint against petitioner Nolasco for failure to state a cause of action is proper.

  6. Whether petitioner Nolasco is a real party-in-interest in the case.

RULING:

  1. The petition for certiorari under Rule 65 is the proper remedy against a final order of dismissal issued by the Regional Trial Court (RTC). An order of dismissal of the complaint is a final order subject to appeal. However, since the case involves several defendants and the complaint for sum of money against one defendant is still pending, the order falls within an exception where no appeal may be taken. Thus, a special civil action for certiorari under Rule 65 is the appropriate remedy.

  2. The court finds the petition partly meritorious. The complaint fails to state a cause of action against the petitioners as they are not the real parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit. Since the complaint was brought against defendants who are not the real parties in interest, it should be dismissed for failure to state a cause of action.

  3. The doctrine of piercing the veil of corporate fiction is not applicable in the case as there was no clear and convincing proof that the separate and distinct personality of the corporation was purposefully employed to evade a legitimate and binding commitment and perpetuated fraud or wrongdoing.

  4. The complaint against petitioner Maricris failed to state a valid cause of action as it merely presented a legal conclusion without sufficient allegations of fraud. The trial court correctly dismissed the complaint against Maricris on the ground of failure to state a cause of action.

  5. However, the complaint against petitioner Nolasco stated a valid cause of action based on the EOL Undertaking he signed, which binds him to be solidarily liable for all charges incurred by the corporation.

  6. The dismissal of the complaint against petitioner Nolasco for failure to state a cause of action is improper. The allegations in the complaint, particularly regarding the possible personal liability of petitioner Nolasco based on Item 9 of the EOL Undertaking, sufficiently stated a cause of action.

  7. The question of whether petitioner Nolasco is a real party-in-interest who would be benefited or injured by the judgment should be determined in a full-blown trial. Parties who are normally treated as distinct individuals, such as in cases calling for the piercing of the corporate veil, should be made to participate in the proceedings to determine the extent of their liabilities.

PRINCIPLES:

  • An order of dismissal of the complaint is a final order subject to appeal. However, in certain instances where the judgment or final order is not appealable, a special civil action for certiorari under Rule 65 is the proper remedy.

  • A complaint states a cause of action if it sufficiently avers the existence of the three essential elements: (a) a right in favor of the plaintiff, (b) an obligation on the part of the defendant, and (c) an act or omission by the defendant violative of the plaintiff's right or constituting a breach of the defendant's obligation. If the allegations of the complaint do not state the concurrence of these elements, the complaint may be dismissed for failure to state a cause of action.

  • Hypothetical admission extends only to the relevant and material facts well pleaded in the complaint and inferences fairly deductible therefrom.

  • The failure to state a cause of action is a ground for dismissal of a complaint when it appears from the pleading alone that the plaintiff is not entitled to any relief under the claim asserted. However, when there are allegations in the complaint that sufficiently state a cause of action, the dismissal on this ground is improper.

  • In cases that call for the piercing of the corporate veil, parties who are normally treated as distinct individuals should be made to participate in the proceedings to determine if such distinction should be disregarded and to determine the extent of their liabilities.