Nicos Industrial Corp. v. CA

Nicos Industrial Corp. v. CA

G.R. No. 88709 February 11, 1992

Cruz, J.

Facts:

                In the complaint filed by the petitioners before the Regional Trial Court of Bulacan, it was alleged that on January 24, 1980, NICOS Industrial Corporation obtained a loan of P2,000,000.00 from private respondent United Coconut Planters Bank and to secure payment thereof executed a real estate mortgage on two parcels of land located at Marilao, Bulacan. The mortgage was foreclosed for the supposed non-payment of the loan, and the sheriff’s sale was held on July 11, 1983, without re-publication of the required notices after the original date for the auction was changed without the knowledge or consent of the mortgagor. UCPB was the highest and lone bidder and the mortgaged lands were sold to it for P3,558,547.64. On August 29, 1983, UCPB sold all its rights to the properties to private respondent Manuel Co, who on the same day transferred them to Golden Star Industrial Corporation, another private respondent, upon whose petition a writ of possession was issued to it on November 4, 1983. On September 6, 1984, NICOS and the other petitioners, as chairman of its board of directors and its executive vice-president, respectively, filed their action for annulment of sheriff’s sale, recovery of possession, and damages.

                After due hearing, the trial court issued an order as follows:

O R D E R

Acting on the “Demurrer to Evidence” dated April 30, 1986 filed by defendants Victorino P. Evangelista and Golden Star Industrial Corporation to which plaintiff and other defendants did not file their comment/opposition and it appearing from the very evidence adduced by the plaintiff that the Sheriff’s Auction Sale conducted on July 11, 1983 was in complete accord with the requirements of Section 3, Act 3135 under which the auction sale was appropriately held and conducted and it appearing from the allegations in paragraph 13 of the plaintiff’s pleading and likewise from plaintiff Carlos Coquinco’s own testimony that his cause is actually-against the other officers and stockholders of the plaintiff Nicos Industrial Corporation “. . . for the purpose of protecting the corporation and its stockholders, as well as their own rights and interests in the corporation, and the corporate assets, against the fraudulent ants and devices of the responsible officials of the corporation, in breach of the trust reposed upon them by the stockholders . . .” a subject matter not within the competent jurisdiction of the Court, the court finds the same to be impressed with merit.

WHEREFORE, plaintiff’s complaint is hereby dismissed. The Defendants’ respective counterclaims are likewise dismissed.

The Writ of Preliminary Injunction heretofore issued is dissolved and set aside.

Issue:

                whether or not the assailed order is unconstitutional as it does not state clearly and distinctly the facts and the law on which it is base

Held:

                Yes. The questioned order is an over-simplification of the issues, and violates both the letter and spirit of Article VIII, Section 14, of the Constitution. It is a requirement of due process that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to a higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.

It is important to observe at this point that the constitutional provision does not apply to interlocutory orders, such as one granting a motion for postponement or quashing a subpoena, because it refers only to decisions on the merits and not to orders of the trial court resolving incidental matters.

                As it is settled that an order dismissing a case for insufficient evidence is a judgment on the merits, it is imperative that it be a reasoned decision clearly and distinctly stating therein the facts and the law on which it is based.

It may be argued that a dismissal based on lack of jurisdiction is not considered a judgment on the merits and so is not covered by the aforecited provision. However, the rule would be applicable only if the case is dismissed on the sole ground of lack of jurisdiction and not when some other additional ground is invoked.