G.R. No.

L-48315 February 27, 1979

ATTY. DOMINADOR B. BORJE petitioner,
vs.
HON. COURT OF FIRST INSTANCE OF MISAMIS
OCCIDENTAL, BRANCH II, VIOLETA GALICINAO
MISAMIS OCCIDENTAL WATER DISTRICT, and THE
CHAIRMAN OF THE BOARD, respondents.
GUERRERO, J.:
Facts:
Petitioner alleged that he is the counsel of the water
consuming public of Ozamiz City who were against the
increase of water rates imposed by Misamis Occidental
Water District and who filed a case against PR (Civil
Case No. 0390). After acceptance of the retainer as
counsel plus the consequent representation of the
consumers also in debates and discussions on the air,
he allegedly received water bills from PR without
indication of the meter readings, the number of cubic
meters consumed and the amounts to be paid. So he
refused to pay the "blank bills." P's water service was
cut on February 6, 1978.
P filed a case in the resp. court (Civil Case No. OZ-686),
acting as his own counsel, against PR, by reason of
these acts of "harassment" resulting in his "humiliation"
as well as unlawful deprivation of a life's necessity.
CFI issued an order enjoining PRs from disconnecting
the water service of P. Upon learning that the same was
already cut, the Court issued another order to reconnect
it immediately.
PR filed a motion to dismiss on two grounds:
a) lack of jurisdiction of respondent Court allegedly
because the "Main thrust of the subject and nature
of the action or suit appearing in the complaint is
clearly within the field of special civil action or suit
action or special proceeding and
b) there is another action pending between the same
parties for the same cause, referring to Special Civil
Case No. 0390.
P filed an opposition thereto stating that the issues
raised are justiciable and a court of general jurisdiction
has the authority to try the case. He further contended
that Special Civil Case No. 0390, which questioned the
increased water rates unilaterally imposed by the
MOWD, the constitutionality of P.D. No. 198 and the
selection of the members of the Board of Directors, is
entirely different from Civil Case No. OZ-686, which is an
action for damages due to the harassment committed by
private respondents on petitioner.
Hon. Melecio A. Genato, a temporary judge, dismissed
the case not on the basis of the grounds alleged by PRs
in their MtD but on the grounds that there was no malice
or bad faith in the severance of the water of petitioner

and that PR had already reconnected the same (moot

and academic).
P filed an MR where he assailed the said order of
dismissal for having been rendered in violation of
Section 1, ROC 36, and for not being correct because
although his water service has been reconnected, he
has suffered damages which could be proved by him in
an impartial proceeding. He also assailed the said order,
denominating it as a "midnight order".
CFI denied MR stating that the P was not singled-out (3
other peoples water connection were cut) so there was
no act of malice on the part of PR.
Hence, this petition for certiorari and/or mandamus with
this Court.
Issue/Held:
WoN Borjes petition was properly dismissed- NO
Ratio:
P claims that said dismissal cannot be on lack of cause
of action because the complaint alleged sufficient facts
to show that his rights have been seriously violated by
private respondents. He also argues that it cannot be a
judgment on the pleadings because the facts are
controverted. He thereby concludes that respondent
Court has committed GAD when it dismissed the case
without any evidence presented by both parties in
support of their respective positions.
The court agrees with P.
First, the said order of dismissal dated March 9, 1978 is
not premised on the grounds alleged by PRs in their
motion to dismiss. It has been held in the case of Malig,
et al. v Bush that dismissal of actions on grounds not
alleged in the MtD is improper for in so doing, a court
in effect dismisses an action motu proprio without giving
the plaintiffs a chance to argue the point and without
receiving any arguments or evidence on the question.
Unlike in the Malig, case, which based its dismissal on
the ground of prescription under Sec. 1 of ROC 16, the
order herein brought for review is not based on any of
them rather, resp. Court made a decision, based merely
on the pleadings filed and without conducting any
hearing.
In the case of Manila Herald Publishing Co., Inc, vs.
Ramos, et al, where neither a MtD nor an answer had
been made, the court stated that the only instance in
which, according to the ROC, the court may dismiss
upon the court's own motion on action is, when the
"plaintiff fails to appear at the time of the trial or to
prosecute his action for an unreasonable length of
time or to comply with the Rules or any order of the
court.
The real cause for concern, though, is not so much the
dismissal of the case for lack of presentation of the

requisite motion but rather the dismissal thereof

without affording petitioner an opportunity to be
heard despite the presence of factual issues that
needed to be proved.
In the case at bar, respondents premised their right to
cut off the water service connection on the violation of
petitioner's water service contract, their "Notice to the
Public where the water consumers were likewise
informed that upon failure to settle their bills within the
collection period, their water service will be shut off, and
a facsimile copy of the monthly bill furnished each water
consumer wherein it is stated that "service may be
disconnected immediately if payment of the bill is not
made to the field collector after due date.
Indeed, all these empower the private respondents to
disconnect the water service of the consumers upon
failure to pay. But the question posed by petitioner is
whether or not there is really failure to pay on his
part. It is his contention that there is no failure as he was
sent water bills that did not indicate the meter readings,
the number of cubic meters consumed and the amount
to be paid.
Inasmuch as private respondents deny these allegations
of petitioner, an issue of fact exists that requires
presentation of proof. If the allegations of petitioner are
true: private respondents are not at all authorized to cut
off his water service as the collection period as to him
would not have even started yet. For an obligation to
become due there must be a demand. Default generally
begins from the moment the creditor demands the
performance of the obligation. Without such demand,
judicial or extra-judicial the effects of default will not
arise.
PRs also argue that P could have paid his account when
the final notice to pay was sent him since he was then
already certain of the amount of the bill. This final notice
is the notice of disconnection, served on the day the
service was cut off.
P, contends that this was the first time he ever came to
know of the sum due from him and he claims that only
the total amount due for the months of November and
December, 1977 was stated. There is no specification of
the amount due for each month, the meter readings and
the number of cubic meters consumed, thus, leaving him
uncertain as to how the amount was arrived at.
Assuming the truth of these allegations, private
respondents would not have been entitled still to cut off
petitioner's water supply at the time they cut if off as the
demand did not contain the requisite details and hence,
improper. And even if the sufficiency of the demand is
conceded, petitioner has still thirty days from date of
such knowledge within which to pay the same in
accordance with the contract and the avowed policy of
the water district.
Verily, the above discussion shows the need of
presentation of proof for the respective allegations of
the parties. For the respondent Court to make a finding

of lack of malice or bad faith on the part of private

respondents from those controverted facts and then
decree the dismissal of the case is, therefore, violative
of due process. In view of the doubtful question of facts
presented herein, respondent court, in the exercise of
sound discretion, should have refused to consider and
decide in a summary manner and should have allowed
the parties to present proof in support of their respective
stand. This is because the right to a hearing, which is
the right of the parties interested or affected to present
their respective cases and submit evidence in support
thereof, is one of the primary cardinal rights of
litigants.
In Constantine v Estenzo citing Garanciang, et al. v
Garanciang, et al and Botiaga v Soler, this Court held as
follows:
... Summary or outright dismissals of
actions are not proper where there
are factual matters in dispute which
need presentation and appreciation
of evidence. The demands of a fair and
wise administration of justice call for
faithful adherence to legal precepts on
procedure which ensure to litigants the
opportunity to present their evidence
and secure a ruling on all the issues
presented in their respective pleadings.
'Short cuts in judicial processes are
to be avoided where they impede
rather than promote a judicious
dispensation of justice.
WHEREFORE, the petition for certiorari and/or
mandamus is hereby GRANTED, the Orders dated
March 9,1978 and April 18, 1978 dismissing the
complaint of petitioner for damages and denying the
motion for reconsideration thereof, respectively, are set
aside for being null and void, and respondent Court of
First Instance of Misamis Occidental Branch II is hereby
ordered to try the case on the merits after conducting a
pre-tried conference.
Andaya v. Abadia
DAR, rep. by REG. DIR. NASER MUSALI, Petitioner,
vs. HON. HAKIM ABDULWAHID, Presiding Judge,
RTC, Br. XII of Zamboanga City, and YUPANGCO
COTTON MILLS, INC., Respondents (2008; CJ Puno;
G.R. No. 163285)
Doctrine: The Department of Agrarian Reform Adjudication
Board (DARAB) is vested with primary and exclusive
jurisdiction to determine and adjudicate agrarian reform
matters, including all matters involving the implementation of
the agrarian reform program. Thus, when a case is merely an
incident involving the implementation of the Comprehensive
Agrarian Reform Program (CARP), then jurisdiction remains
with the DARAB, and not with the regular courts. **Sorry for
the long digest. I included all the cited cases in the cited case.

FACTS: On Dec, 28, 2000, Yupangco Cotton Mills, Inc.

(Yupangco) filed a complaint for Recovery of Ownership
and Possession, Violations of R.A. Nos. 6657 and 3844,

as amended, Cancellation of Title, Reconveyance and

Damages with Prayer for the Issuance of Preliminary
Mandatory Injunction and/or Temporary Restraining
Order against Buenavista Yupangco Agrarian Reform
Beneficiaries Association, Inc. (BYARBAI), the DAR and
the Land Bank of the Phils. The case was raffled to the
RTC, Br. 12 of Zamboanga City.
On Jan. 26, 2001, the DAR filed a MtD on the ff.
grounds: (a) Yupangcos causes of action were not
within the jurisdiction of the RTC, (b) forum shopping,
and (c) litis pendentia.
On Nov. 6, 2001, the RTC DENIED the MtD.
RTC: Yupangcos action was within the
jurisdiction of the RTC pursuant to Sec. 19,
Chap. II of BP Blg. 129.
DAR and BYARBAI filed a MR DENIED for lack of
merit.
On March 20, 2002, DAR filed a special civil action
for certiorari under Rule 65 with the CA.
DAR: The RTC acted with GAD amounting to
lack of jurisdiction when DARs MtD was denied.
The CA sustained the RTC.
CA: The action falls within the jurisdiction of the
regular courts and not the DARAB because
Yupangco primarily sought the recovery and
possession of the subject parcel of land.
Hence this petition for review by certiorari.
DAR: The CA erred when it upheld the
jurisdiction of the RTC purely on the ground that
Yupangco primarily seeks the recovery of
ownership and possession of subject parcel of
land, jurisdiction over which is lodged with
regional trial courts, not the DARAB.
ISSUE: Who has jurisdiction over the case?
RULING: DARAB. Petition granted.
1. The jurisdiction of a tribunal, including a quasi-judicial
office or government agency, over the nature and subject
matter of a petition or complaint is determined by the
material allegations therein and the character of the
relief prayed for, irrespective of whether the petitioner or
complainant is entitled to any or all of such reliefs. Also,
jurisdiction should be determined by considering not only
the status or relationship of the parties but also the
nature of the issues or questions that is the subject of
the controversy. Thus, if the issues between the parties
are intertwined with the resolution of an issue within the
exclusive jurisdiction of the DARAB, such dispute must
be addressed and resolved by the DARAB.
In this case, Yupangcos complaint seems at first
blush to be within the RTCs jurisdiction, as it has been
denominated
as Recovery
of
Ownership
and

Possession, Violations of R.A. Nos. 6657 and 3844, as

amended, Cancellation of Title, Reconveyance and
Damages with Prayer for the Issuance of Preliminary
Mandatory Injunction and/or Temporary Restraining
Order. But as correctly pointed out by the DAR, the
allegations of the complaint actually impugn the
CARP coverage of the landholding involved and its
redistribution to farmer beneficiaries, and seek to
effect a reversion thereof to the original owner,
Yupangco. Thus, the complaint filed by Yupangco
alleged, inter alia, the ff.:
(a) Yupangco was the registered owner of certain parcels of
land primarily devoted to coconut plantation, under the
administration and supervision of plaintiff corporation with
several employees and other persons hired as laborers;
(b) Sometime in 1993, the DAR placed the subject parcels of
land under the CARP of the government pursuant to the
provisions of RA No. 6657, and 4 TCTs over the subject land
were subsequently issued in favor of BYARBAI;
(c) Yupangco vehemently objected to the coverage of the
subject parcels of land by the DAR and the valuation made by
LBP, by filing protest and objection with DAR and LBP;
(d) DAR, through the DAR Reg. Dir., Zamboanga City, issued
the 4 questioned TCTs (or Certificates of Land Ownership
Awards-- CLOAs) to BYARBAI pursuant to R.A. No. 6657,
without LBP paying Yupangco the just compensation of the
subject parcels of land which valuation was then being
contested before the DAR Adjudication Board;
(e) Majority of the members of BYARBAI are not employees
nor hired workers of Yupangco, hence, Yupangco alleged that
they should not have been given preference nor be entitled as
allocatees in the subject parcels of land;
(f) Soon after the CLOAs were issued to BYARBAI, the latter
took possession of the subject parcels of land to the prejudice
and damage of Yupangco;
(g) BYARBAIs real motive in having the land distributed to
them (pending resolution of all protests with the DAR and the
contested valuation made by the LBP) was to convert the land
into rice production resulting in the destruction of coffee
plantations and other crops, including the cutting of several
hundreds of coconut trees. This conversion was illegal and in
gross violation of RA No. 6657 and RA No. 3844, as amended,
and other existing laws and Administrative Issuances.

Yupangco also alleged in its complaint that other acts

were committed with the purpose of land speculation,
for business or industrial purpose, for immediate sale
thereof for business profits and not for planting, care and
tending of the coconut plantation, which would defeat
the purposes and policies of the Agrarian Reform Laws
and breached the conditions of the questioned award of
the land, rendering the acquisition by or distribution to
BYARBAI as the tenant-tillers of the land null and void,
and thus reverting back the ownership and possession
thereof to Yupangco.
These allegations show that Yupangco sought the
recovery of the subject property by disputing its
inclusion in the CARP and imputing errors in the
enforcement of the law pertaining to the agrarian
reform. The primal issues raised in the complaint
[i.e., protest against the CARP coverage, alleged
breach of conditions of the DAR award under the
CARP by the farmer beneficiaries resulting to

forfeiture of their right as such; nonpayment of

rentals by the farmers to the petitioner under R.A.
No. 3844 (Agricultural Land Reform Code)] gravitate
on the alleged manner the implementation of the
CARP under R.A. No. 6657 was carried out.
2. Under Sec. 50 of R.A. No. 6657, all matters
involving the implementation of agrarian reform are
within the DARs primary, exclusive and original
jurisdiction, and at the first instance, only
the DARABas the DARs quasi-judicial body, can
determine and adjudicate all agrarian disputes,
cases, controversies, and matters or incidents
involving the implementation of the CARP under R.A.
No. 6657, E.O. Nos. 229, 228 and 129-A, R.A. No. 3844
as amended by R.A. 6389, P.D. No. 27 and other
agrarian laws and their implementing rules and
regulations.
Ultimately, the complaint seeks for the RTC to cancel
CLOAs issued to the beneficiaries and the TCTs issued
pursuant thereto. These are reliefs which the RTC
cannot grant, since the complaint essentially prays
for the annulment of the coverage of the disputed
property within the CARP, which is but an incident
involving the implementation of the CARP. These are
matters relating to terms and conditions of transfer of
ownership from landlord to agrarian reform beneficiaries
over which DARAB has primary and exclusive original
jurisdiction, pursuant to Sec. 1(f), Rule II, DARAB New
Rules of Procedure.
3. The ruling in SSS vs DAR is apropos. In this case, the
former landowner, SSS, made a similar attempt to
circumvent the jurisdiction of the DARAB by filing a
complaint for recovery of possession with the RTC (San
Mateo, Rizal). When the RTC dismissed the complaint
for lack of jurisdiction, the SSS came to the SC for
recourse.
In the SSS case,
pronouncements:

the

SC

made

the

ff.

A.) The TCTs sought to be annulled by the SSS

originated from the CLOAs issued by the DAR in
pursuance of, and in accordance with, the provisions of
RA No. 6657, the CARP. Specifically, the SSS in its
Complaint implored the trial court "to restrain the DAR
from implementing RA No. 6657 and the defendants,
farmers-beneficiaries
from
occupying/tilling,
cultivating/disposing the properties."
Sec. 1, Rule II, 2002 DARAB Rules of Procedure:
Primary And Exclusive Original and Appellate
Jurisdiction. The board shall have primary and
exclusive jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes
involving the implementation of the CARP...
Specifically, such jurisdiction shall include but not be
limited to cases involving the ff.:

a) The rights and obligations of persons, whether

natural or juridical engaged in the management,
cultivation and use of all agricultural lands covered
by the CARP and other agrarian laws.
xxx
xxx
xxx
Specifically, such jurisdiction shall extend over but not
limited to the ff:
xxx
xxx
xxx
f) Cases involving the issuance of Certificate of Land
Transfer (CLT), Certificate of landownership Award
(CLOA) and Emancipation Patent (EP) and the
administrative correction thereof;
Thus, Centeno v. Centeno validated the jurisdiction of
the DARAB over cases involving issuance of CLOAs,
and went on further: Under Sec. 50 of R.A. No. 6657
(the Comprehensive Agrarian Reform Law of 1988), the
DAR is vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have the
exclusive jurisdiction over all matters involving the
implementation of the agrarian reform program. The rule
is that the DARAB has jurisdiction to try and decide any
agrarian dispute or any incident involving the
implementation of the CARP.
Sec. 1, Rule II of the Revised Rules of Procedure of the
DARAB: Primary, Original and Appellate Jurisdiction.
The Agrarian Reform Adjudication Board shall have
primary jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes,
cases, controversies, and matters or incidents
involving the implementation of the CARP
B.) In Rivera v. Del Rosario, the SC reiterated that: The
DARAB has exclusive original jurisdiction over
cases involving the rights and obligations of
persons engaged in the management, cultivation
and use of all agricultural lands covered by the
Comprehensive Agrarian Reform Law.
C.) In David v. Rivera, this Court pointed out that the
jurisdiction over agrarian reform matters is now
expressly vested in the DAR through the DARAB. The
SC said: Sec. 50 of R.A. No. 6657 confers on the DAR
quasi-judicial powers to adjudicate agrarian reform
matters. In the process of reorganizing the DAR, EO
No. 129-A created the DARAB to assume the powers
and functions with respect to the adjudication of agrarian
reform cases.
D.) In an earlier ruling rendered in the case of Vda. de
Tangub v. CA, reiterated in Morta, Sr. v.
Occidental and Heirs of the late Herman Rey Santos v.
CA, the SC decreed:
Sec. 17 of EO No. 229 1) vested the DAR with quasijudicial powers to determine and adjudicate agrarian
reform matters, and 2) granted it jurisdiction over all
matters involving implementation of agrarian
reform, except those falling under the exclusive original
jurisdiction of the DENR and the Dept. of Agriculture, as
well as powers to punish for contempt and to issue
subpoena, subpoena duces tecum and writs to enforce

its orders or decisions.

E.) In Nuesa v. CA, the SC puts emphasis on the extent
of the coverage of the term "agrarian dispute," thus:
Under Sec. 3(d) of R.A. No. 6657, "agrarian dispute" is
defined to include "(d) any controversy relating to
tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise over lands devoted to
agriculture, including disputes concerning farmworkers
associations or representation of persons in negotiating,
fixing, maintaining, changing or seeking to arrange
terms or conditions of such tenurial arrangements. It
includes any controversy relating to compensation of
lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the
proximate relation of farm operator and beneficiary,
landowner and tenant, or lessor and lessee."
REPUBLIC (represented by AMLC) v GLASGOW
CREDIT AND
COLLECTION
SERVICES
and
CITYSTATE SAVINGS BANK INC
2008 || Corona, J.
FACTS
On July 18, 2003, the Republic filed a complaint in the
RTC Manila for civil forfeiture of assets (with urgent plea
for TRO) against the bank deposits maintained by
Glasgow in CSBI. Pursuant to RA 9160 (the Anti-Money
Laundering Act of 2001). RTC Manila issued a 72-hour
TRO dated July 21, 2003. Raffled to Branch 47 and
Presiding Judge Balisi-Umali issued an order granting
the issuance of a writ of preliminary injunction. The
injunctive writ was issued on August 8, 2003.
Summons to Glasgow returned "unserved" as it could no
longer be found at its last known address. October 8,
2003, P filed a verified omnibus motion for (a) issuance
of alias summons and (b) leave of court to serve
summons by publication. RTC directed the issuance
of alias summons. No mention of summons by
publication. January 30, 2004, RTC archived the case
for P's failure to serve the alias summons. P filed an ex
parte omnibus motion to (a) reinstate the case and (b)
resolve its pending motion for leave of court to serve
summons by publication.
May 31, 2004, RTC ordered reinstatement and directed
P to serve the alias summons within 15 days. However,
it did not resolve motion for leave of court to serve
summons by publication declaring that until and unless a
return is made on the alias summons, any action on the
motion for leave of court to serve summons by
publication would be untenable if not premature.
July 12, 2004, OSG received a copy of the sheriffs
return
dated
June
30,
2004
stating
that
the alias summons was returned "unserved" as Glasgow
was no longer holding office at the given address since
July 2002 and left no forwarding address. August 11,
2005, P filed a manifestation and ex parte motion to

resolve its motion for leave of court to serve summons

by publication.
August 12, 2005, OSG received a copy of Glasgows
"Motion to Dismiss (By Way of Special Appearance)"
dated August 11, 2005. It alleged that (1) the court had
no jurisdiction over its person as summons had not yet
been served on it; (2) the complaint was premature and
stated no cause of action as there was still no conviction
for estafa or other criminal violations implicating
Glasgow and (3) there was failure to prosecute on the
part of the Republic.
P opposed M2D because suit was an action quasi in
rem where jurisdiction over the person of the defendant
was not a prerequisite to confer jurisdiction on the court.
It asserted that prior conviction for unlawful activity was
not a precondition to the filing of a civil forfeiture case
and that its complaint alleged ultimate facts sufficient to
establish a cause of action. It denied that it failed to
prosecute the case.
RTC dismissed the case on the following grounds: (1)
improper venue as it should have been filed in the RTC
of Pasig where CSBI, the depository bank of the account
sought to be forfeited, was located; (2) insufficiency of
the complaint in form and substance and (3) failure to
prosecute.
ISSUE
WON case was properly dismissed NO
RULING (sinama ko na lahat, kasi yung iba past lesson,
but lesson-relevant portion is last heading)
Complaint was filed in proper venue
On November 15, 2005, SC issued A.M. No. 05-11-04SC, the Rule of Procedure in Cases of Civil Forfeiture
under RA 9160. Glasgow itself judicially admitted that
the Rule of Procedure in Cases of Civil Forfeiture is
"applicable to the instant case."
Sec. 3. Venue of cases cognizable by the
regional trial court. A petition for civil forfeiture
shall be filed in any regional trial court of the
judicial
region
where
the
monetary
instrument,
property
or
proceeds
representing, involving, or relating to an
unlawful activity or to a money laundering
offense are located;
Clearly, the complaint for civil forfeiture of the account
may be filed in any RTC of the NCJR. Since the RTC
Manila is one of the RTCs of the NCJR.
Complaint Suffificient in Form and Substance
The test of the sufficiency of the facts alleged in the
complaint is whether or not, admitting the facts alleged,
the court could render a valid judgment upon the same
in accordance with the prayer of the complaint. Under

the Rule on Procedure in Civil Forfeiture, it was enough

that:
The verified complaint of the Republic contained the
following allegations:
(a) the name and address of the primary
defendant therein, Glasgow
(b) a description of the proceeds of Glasgows
unlawful activities with particularity, as well as
the location thereof, account no. CA-005-10000121-5 in the amount of P21,301,430.28
maintained with CSBI;
(c) the acts prohibited by and the specific
provisions of RA 9160, as amended, constituting
the grounds for the forfeiture of the said
proceeds. In particular, suspicious transaction
reports showed that Glasgow engaged in
unlawful activities of estafa and violation of the
Securities Regulation Code (under Section 3(i)
(9) and (13), RA 9160, as amended); the
proceeds of the unlawful activities were
transacted and deposited with CSBI in account
no. CA-005-10-000121-5 thereby making them
appear to have originated from legitimate
sources; as such, Glasgow engaged in money
laundering (under Section 4, RA 9160, as
amended); and the AMLC subjected the account
to freeze order and
(d) the reliefs prayed for, namely, the issuance of
a TRO or writ of preliminary injunction and the
forfeiture of the account in favor of the
government as well as other reliefs just and
equitable under the premises.
Sec 12 of RA 9160, as amended, and its implementing
rules and regulations lay down two conditions when
applying for civil forfeiture:
(1) when there is a suspicious transaction report
or a covered transaction report deemed
suspicious after investigation by the AMLC and
(2) the court has, in a petition filed for the
purpose, ordered the seizure of any monetary
instrument or property, in whole or in part,
directly or indirectly, related to said report.
Since account no. CA-005-10-000121-5 of Glasgow in
CSBI was (1) covered by several suspicious transaction
reports and (2) placed under the control of the trial court
upon the issuance of the writ of preliminary injunction,
the conditions were satisfied. P properly instituted the
complaint for civil forfeiture. A criminal conviction for an
unlawful activity is not a prerequisite for the institution of
a civil forfeiture proceeding.
No failure to prosecute
Apart from all the actions stated in the facts, P continued
to exert efforts to obtain information from other
government agencies on the whereabouts or current
status of respondent Glasgow if only to save on

expenses of publication of summons. Its efforts,

however, proved futile. The records on file with the
Securities and Exchange Commission provided no
information. Other inquiries yielded negative results.
That Glasgows whereabouts could not be ascertained
was not only beyond the Republics control, it was also
attributable to Glasgow which left its principal office
address without informing the Securities and Exchange
Commission or any official regulatory body (like the
Bureau of Internal Revenue or the Department of Trade
and Industry) of its new address. Moreover, as early as
October 8, 2003, the Republic was already seeking
leave of court to serve summons by publication.
Summons may be by publication (eto na most
important)
In Republic v. Sandiganbayan,SC declared that forfeiture
proceedings are actionsin rem. In actions in rem orquasi
in rem, jurisdiction over the person of the defendant is
not a prerequisite to conferring jurisdiction on the court,
provided that the court acquires jurisdiction over the res.
Nonetheless, summons must be served upon the
defendant in order to satisfy the requirements of due
process.For this purpose, service may be made by
publication as such mode of service is allowed in
actions in rem and quasi in rem.
Section 8, Title II of the Rule of Procedure in Cases of
Civil Forfeiture provides:
(a) The respondent shall be given notice of the petition in
the same manner as service of summons under Rule 14
of the Rules of Court and the following rules:
1. The notice shall be served on respondent
personally, or by any other means prescribed in
Rule 14 of the Rules of Court;
2. The notice shall contain: (i) the title of the
case; (ii) the docket number; (iii) the cause of
action; and (iv) the relief prayed for; and
3. The notice shall likewise contain a proviso
that, if no comment or opposition is filed within
the reglementary period, the court shall hear the
case ex parte and render such judgment as may
be warranted by the facts alleged in the petition
and its supporting evidence.
(b) Where the respondent is designated
as an unknown owner or whenever his
whereabouts are unknown and
cannot be ascertained by diligent
inquiry, service may, by leave of
court, be effected upon him by
publication of the notice of the
petition in a newspaper of general
circulation in such places and for
such time as the court may order. In
the event that the cost of publication
exceeds the value or amount of the
property to be forfeited by ten percent,

publication shall not

(emphasis supplied)

be

required.

NEMENCIO C. EVANGELISTA, et al., petitioners, vs.

CARMELINO M. SANTIAGO, respondent.
[G.R. No. 157447. April 29, 2005]
FACTS:
Petitioners alleged that they occupied and possessed
parcels of land, located in Sitio Panayawan, Barangay
San Rafael, Montalban (now Rodriquez), Province of
Rizal (Subject Property), by virtue of several Deeds of
Assignment, dated 15 April 1994 and 02 June 1994,
executed by a certain Ismael Favila y Rodriguez.
According to the Deeds of Assignment, the Subject
Property was part of a vast tract of land called Hacienda
Quibiga, which extended to Paraaque, Las Pias,
Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati,
Pasig, Mandaluyong, Quezon City, Caloocan, Bulacan,
and Rizal; awarded to Don Hermogenes Rodriguez by
the Queen of Spain and evidenced by a Spanish title.
Ismael Favila claimed to be one of the heirs and
successors-in-interest of Don Hermogenes Rodriguez.
Acting as Attorney-in-Fact pursuant to a Special Power
of Attorney executed by his mga kapatid on 25
February 1965, Ismael Favila signed the aforementioned
Deeds of Assignment, assigning portions of the Subject
Property to the petitioners, each portion measuring
around 500 to 1,000 square meters, in exchange for the
labor and work done on the Subject Property by the
petitioners and their predecessors.
Petitioners came by information that respondent was
planning to evict them from the Subject Property. Two of
the petitioners had actually received notices to vacate.
Their investigations revealed that the Subject Property
was included in Transfer Certificates of Titles (TCTs), all
originating from OCT No. 670, which was issued to
respondents mother pursuant to a decree arising from a
case in the Court of Land Registration. The mother,
Isabel, executed a Deed of Donation transferring the
property to her son, who subsequently registered such
properties in his own name.
Petitioners filed with the trial court, an action for
declaration of nullity of respondents certificates of title
on the basis that OCT No. 670 was fake and spurious.
As an affirmative defense, respondent claimed that the
petitioners had no legal capacity to file the Complaint,
and thus, the Complaint stated no cause of action.
Since OCT No. 670 was genuine and authentic on its
face, then OCT No. 670 and all of respondents land
titles derived therefrom, are incontrovertible, indefeasible
and conclusive against the petitioners and the whole
world.
Respondent also raised the affirmative defense of
prescription. He pointed out that any action against his
certificates of title already prescribed, especially with
regard to OCT No. 670, which was issued in 1913 or

more than 83 years prior to the filing of the Complaint by

the petitioners. At the very least, respondent contended,
it must be presumed that the questioned land titles were
issued by the public officials concerned in the
performance of their regular duties and functions
pursuant to the law.
Lastly, respondent denied knowing the petitioners, much
less, threatening to evict them. In fact, petitioners were
not included as defendants in Civil Case No. 783
entitled, Carmelino M. Santiago v. Remigio San
Pascual, et al., which respondent instituted before the
same trial court against squatters occupying the Subject
Property.
During said hearing, petitioners presented their lone
witness, Engineer Placido Naval, a supposed expert on
land registration laws. In response to questions from
Honorable Judge Francisco C. Rodriguez of the trial
court, Engineer Naval answered that a parcel of land
titled illegally would revert to the State if the Torrens
title was cancelled, and that it was the State, through
the Office of the Solicitor General, that should file for
the annulment or cancellation of the title.
Respondent, on the other hand, did not present any
evidence but relied on all the pleadings and documents
he had so far submitted to the trial court.
RTC denied petitioners petition. CA affirmed.
ISSUE: WON petitioners had legal capacity to sue
HELD: NO. But for a different reason.
Before anything else, it should be clarified that the
plaintiff has no legal capacity to sue and the pleading
asserting the claim states no cause of action are two
different grounds for a motion to dismiss or are two
different affirmative defenses.
Lack of legal capacity to sue means that the plaintiff is
not in the exercise of his civil rights, or does not
have the necessary qualification to appear in the
case, or does not have the character or representation
he claims. On the other hand, a case is dismissible for
lack of personality to sue upon proof that the plaintiff is
not the real party-in-interest, hence grounded on
failure to state a cause of action. The term "lack of
capacity to sue" should not be confused with the term
"lack of personality to sue." While the former refers to a
plaintiffs general disability to sue, such as on account of
minority, insanity, incompetence, lack of juridical
personality or any other general disqualifications of a
party, the latter refers to the fact that the plaintiff is not
the real party- in-interest. Correspondingly, the first can
be a ground for a motion to dismiss based on the ground
of lack of legal capacity to sue; whereas the second can
be used as a ground for a motion to dismiss based on
the fact that the complaint, on the face thereof, evidently
states no cause of action.
In resolving whether or not the Complaint in the present

case stated a cause of action, the trial court should have

limited itself to examining the sufficiency of the
allegations in the Complaint. It was proscribed from
inquiring into the truth of the allegations in the
Complaint or the authenticity of any of the documents
referred or attached to the Complaint, since these are
deemed hypothetically admitted by the respondent. The
trial court evidently erred in making findings as to the
authenticity of the Deeds of Assignment executed by
Ismael Favila in favor of petitioners on 15 April 1994 and
02 June 1994; and questioning the existence and
execution of the Special Power of Attorney in favor of
said Ismael Favila by his siblings on 25 February 1965.
These matters may only be resolved after a proper trial
on the merits.
In their Complaint, petitioners never alleged that the
Subject Property was part of the public domain. On the
contrary, petitioners asserted title over the Subject
Property by virtue of their actual, physical, open,
continuous and adverse possession thereof, in the
concept of owners, by themselves and through their
predecessors-in-interest, since time immemorial. The
Deeds of Assignment executed in their favor and
attached to their Complaint referred to a Spanish title
granted by the Queen of Spain to their predecessor-ininterest, Don Hermogenes Rodriguez. Clearly,
petitioners are asserting private title over the Subject
Property, and consequently, their action could not be one
for reversion.
In their instant Petition, petitioners further averred that
rather than an action for nullity of respondents
certificates of title, theirs was more appropriately an
action to remove a cloud on or to quiet their title over
the Subject Property. Even as this Court agrees with the
petitioners that their action was one for removal of a
cloud on or quieting of title, it does arrive at the same
conclusion as the trial court and the Court of Appeals
that petitioners had no personality to file the said action,
not being the parties-in-interest, and their Complaint
should be dismissed for not stating a cause of action.
According to Article 477 of the Civil Code, the plaintiff, in
an action to remove a cloud on or to quiet title, must
have legal or equitable title to, or interest in, the real
property which is the subject matter of the action.[32]
Petitioners failed to establish in their Complaint that they
had any legal or equitable title to, or legitimate interest
in, the Subject Property so as to justify their right to file
an action to remove a cloud on or to quiet title.
In their Complaint, petitioners claimed title to the Subject
Property by virtue of their actual and continuous
possession of the same since time immemorial, by
themselves and through their predecessors-in-interest.
Yet, the Deeds of Assignment executed by Ismael Favila
in their favor, attached to and an integral part of their
Complaint, revealed that petitioners predecessors-ininterest based their right to the Subject Property on
the Spanish title awarded to Don Hermogenes
Rodriguez.

There existed a contradiction when petitioners based

their claim of title to the Subject Property on their
possession thereof since time immemorial, and at the
same time, on the Spanish title granted to Don
Hermogenes Rodriguez. Possession since time
immemorial carried the presumption that the land had
never been part of the public domain or that it had been
private property even before the Spanish conquest. If the
Subject Property was already private property before the
Spanish conquest, then it would have been beyond the
power of the Queen of Spain to award or grant to
anyone.
The title to and possession of the Subject Property by
petitioners predecessors-in-interest could be traced only
as far back as the Spanish title of Don Hermogenes
Rodriguez. Petitioners, having acquired portions of the
Subject Property by assignment, could acquire no better
title to the said portions than their predecessors-ininterest, and hence, their title can only be based on the
same Spanish title.
Therefore, without legal or equitable title to the Subject
Property, the petitioners lacked the personality to file an
action for removal of a cloud on, or quieting of, title and
their Complaint was properly dismissed for failing to
state a cause of action. In view of the dismissal of the
case on this ground, it is already unnecessary for this
Court to address the issue of prescription of the action.
PABLO ARCEO vs. JOSE OLIVEROS and RUFINA
CABANGON
G.R. No. L-38251 | January 3, 1985 | CUEVAS, J.
Facts: Pablo and Sixta Arceo are siblings who inherited
a parcel of land from their father. Sixta Arceo sold her
undivided share to Oliveros & Cabangon without Pablos
consent. However, there was an extrajudicial settlement
between Sixta and Pablo wherein Sixta renounced her
right over the disputed lot in favor of the latter. A TCT
was then issued to Pablo covering the lot.
2 cases filed:
A. Civil Case No. 435-G:
Plaintiffs Oliveros & Cabangon: Seeked
to enforce the Deed of Absolute Sale, impugn
the extrajudicial settlement between Sixta and
Pablo, and annul the TCT issued to Pablo
Defendant Pablo Arceo: Sets up by way
of counterclaim his right of compulsory
redemption over the same lot pursuant to Sec.
119 of the Public Land Act, claiming further that
the property has never been partitioned between
him and her sister Sixta.
B. Civil Case No. C-105 (case at bar):
Plaintiff Pablo Arceo: Being a co-owner

and co-heir of said Sixta Arceo, he should be

allowed to redeem and repurchase the property.
Defendants Oliveros & Cabangon: MTD
OTG of litis pendentia (dismissed initially, asked
to file an answer, but eventually, MTD was
granted)
On appeal, Arceo averred that the first case is to enforce
the alleged sale, while the second is to redeem legally
the controverted property. If the first litigation does not
prosper and the disputed sale is voided, then this same
case will become useless and moot, but in the contrary
result, whereby the same sale is upheld, then the legal
redemption sought in this subsequent case may lie.
Hence, no litis pendentia.
Issue: W/N there is litis pendentia - YES
Ruling: Pendency of another suit between the same
parties to be a ground for dismissal requires: 1) Identity
of parties or at least such as representing the same
interest in both actions; 2) Identity of rights asserted and
prayed for, the relief being founded on the same facts;
and 3) the Identity in both cases is such that the
judgment which may be rendered in the pending case,
regardless of which party is successful, would amount
to res judicata in the other case.
Civil Case No. 435-G involves the same parcel of land
and similar issues as those in Civil Case No. C-105. In
both cases, the parties herein are litigating over the
same subject matter (the lot inherited by the Arceos from
their father) and on the same issuesvalidity of the sale
made by Sixta Arceo to the Oliveros spouses; and Pablo
Arceo's right of compulsory redemption under Section
119 of the Public Land Act as a co-heir of his sister Sixta.
The only difference being, that in Civil Case No. C-105,
Pablo Arceo asserts this right of compulsory redemption
as a cause of action in his complaint; whereas, in Case
No. 435-G he asserts said claim by way of counterclaim,
which makes no difference anyway. For while lis
pendens is normally interposed as a defense when
another case is pending upon the same cause of action
between the same parties in two complaints, it may also
be interposed even if said claim is set forth by way of a
counterclaim since the latter partakes the nature of a
complaint by the defendant against the plaintiff. Hence, it
has been held that to interpose a cause of action in a
counterclaim and again advanced the same in a
complaint against the same party, as in the case at bar,
would be violative of the rule against splitting a single
cause of action which is prohibited by the Rules of Court.
Arceos contention that "if the first litigation does not
prosper and the disputed sale is voided, then this
second case will become useless and moot, but in the
contrary result whereby the same sale is upheld, then
the legal redemption sought in the subsequent case may
lie" is mistaken. For even on the assumption that the
sale by Sixta in favor of the Oliveros spouses is upheld,
the second case, Civil Case No. C-105, will still be
useless because he is not deprived of litigating against

the Oliveros on the issue of his claimed compulsory

counterclaim in Civil Case No. 435-G by reason of
having set it up in his counterclaim in the said case.
Appellant cites Hongkong & Shanghai Bank vs. Aldecoa
& Co. Such reliance is, however, misplaced. That case
involved two actions: one for annulment of mortgage;
and the other, for foreclosure of mortgage.
The right to foreclose not having been set-up or pleaded
as a counterclaim in the first case, no adjudication may
be had thereon, hence this pronouncement
The former suit is one to annul the
mortgages. The present suit is one for
the foreclosure of the mortgage. It may
be conceded that if the final judgment in
the former action is that the mortgages
be annulled, such an adjudication will
deny the right of the bank to foreclose
the mortgages. But will a decree holding
them valid prevent the bank from
foreclosing them? Most certainly not. In
such an event, the judgment would not
be a bar to the prosecution of the
present action. The rule is not
predicated upon such a contingency. It
is applicable, between the same parties,
only when the judgment to be rendered
in the action first instituted will be such
that, regardless of which party is
successful it will amount to res
judicata against the second action. . . .
In the instant case, however, the right of compulsory
redemption and the validity of the sale by a co-heir are in
issue not only in Civil Case No. 435-G but also in Civil
Case No. C105, and both suits are between the same
parties asserting Identical rights, praying similar reliefs
premised essentially on the same facts.
ROSALINA BUAN, RODOLFO TOLENTINO, TOMAS
MERCADO, CECILIA MORALES, LIZA OCAMPO,
Quiapo Church Vendors, for themselves and all
others similarly situated as themselves, v. OFFICERIN-CHARGE GEMILIANO C. LOPEZ, JR., OFFICE OF
THE MAYOR OF MANILA
13 October 1986 | J. Narvasa
FACTS: Ps are five of about 130 licensed and duly
authorized vendors of religious articles, medicine herbs
& plants around the Quiapo church bringing suit for
themselves and all others similarly situated. They allege
that their licenses were revoked or cancelled by R
Mayor Lopez for reasons unknown to them which is
tantamount to deprivation of property without due
process of laws, that the revocation of their licenses was
beyond R Mayors competence, since Section 171 (n) of
the Local Government Code (B.P. Blg. 337) authorizes
the same only for violation of the law or ordinances or
conditions upon which they have been granted and no
such violation had been committed by them; but this

notwithstanding, respondent Mayor had given (them) an

ultimatum of 7:00 up to 12:00 o'clock in the afternoon of
5 August 1986 to vacate the premises where their
respective stalls are situated or suffer physical
demolition thereof. They instituted this special civil
action for prohibition to the end that R Mayor
Gemilliano Lopez, Jr. be perpetually prohibited from
arbitrarily, whimsically and capriciously revoking or
cancelling ... their licenses or permits (as hawkers or
street vendors) and threatening the physical demolition
of their respective business stalls in the places specified
in such licenses or permits. They also sought a
temporary restraining order in view of Mayor Lopez'
actual threats of physical demolition of their respective
small business establishment at 12:00 noon, which the
Court granted on the same day.
It appears that a special civil action of prohibition with
preliminary injunction was filed in RTC Manila against
Acting Manila City Mayor Gemilliano Lopez, Jr. by
Samahang Kapatiran sa Hanapbuhay ng Bagong
Lipunan, Inc, which was composed of some 300
individual owners & operators of separate business
stalls, mostly at the periphery beyond the fence of
Quiapo Church. Rosalina Buan is the president of
Samahan, while Liza Ocampo is its Press Relations
Officer. The three petitioners also appear to be
Samahan members.
ISSUE: W/N the special civil action before the SC should
be dismissed
HELD: YES. The action must in the first place be abated
on the ground of lis pendens, or more correctly, auter
action pendant1 or pendency of another action between
the same parties for the same cause. The two petitions
are grounded on the same facts. There exists identity
of parties, or at least such parties are represent the
same interests in both actions, as well as identity of
rights asserted and relief prayed for (being founded
on the same facts), such that any judgment rendered in
the other action will, regardless of which party is
successful, amount to res judicata in the action under
consideration: all the requisites of auter action pendant.
Citing E. Razon, Inc., et al. vs. Philippine Port Authority,
et al, G.R. No. 75197, Resolution, July 31, 1986:
The acts of petitioners constitute a clear case of
forum shopping, an act of malpractice that is
proscribed and condemned as trifling with the courts
and abusing their processes. It is improper conduct
that tends to degrade the administration of justice.
The rule has been formalized in Section 17 of the
Interim Rules and Guidelines issued by this Court on
January 11, 1983 in connection with the
implementation of the Judiciary Reorganization Act,
specifically with the grant in Section 9 of B.P. Blg. 129
of equal original jurisdiction to the Intermediate
Appellate Court to issue writs of mandamus,
prohibition, etc., and auxiliary writs or processes,
1

Auter action pendant (another action pending): a plea in

abatement stating that a prior suit has been begun for the
same cause.

whether or not in aid Of its appellate jurisdiction.

Thus, the cited Rule provides that no such petition
may be filed in the Intermediate Appellate Court 'if
another similar petition has been filed or is still
pending in the Supreme Court' and vice-versa.
The Rule orders that "A violation of the rule shall
constitute contempt of court and shall be a cause
for the summary dismissal of both petitions,
without prejudice to the taking of appropriate
action against the counsel or party concerned."
The rule applies with equal force where the party
having filed an action in the Supreme Court shops
for the same remedy of prohibition and a
restraining order or injunction in the regional trial
court (or vice-versa).
As already observed, there is between the action at bar and
RTC Case No. 86-36563, an Identity as regards parties, or
interests represented, rights asserted and relief sought, as well
as basis thereof, to a degree sufficient to give rise to the
ground for dismissal known as auter action pendant or lis
pendens. That same Identity puts into operation the sanction
Of twin dismissals just mentioned. The application of this
sanction will prevent any further delay in the settlement of the
controversy which might ensue from attempts to seek
reconsideration of or to appeal from the Order of the Regional
Trial Court in Civil Case No. 86-36563 promulgated on July 15,
1986, which dismissed the petition upon grounds which appear
persuasive.

June 29, 1988

INVESTORS' FINANCE CORPORATION vs.
ROMEO EBARLE, HON. JOSE L. CASTIGADOR,
Presiding Judge, RTC, Br. XXII, Pagadian City, The
Deputy Provincial Sheriff of Zamboanga Del Sur, and
the INTERMEDIATE APPELLATE COURT
Facts:
Flaviano Fucoy Jr. executed a promissory note in favor
of Lido Motor Sales Ozamis in the amount of P56,976.00
which he promised to pay in 48 equal, successive,
monthly installments. Jose Mariano O. Tan signed the
promissory note as a co-maker. On the same day, to
guarantee the payment of the promissory note in
accordance with its terms, the promissors executed a
chattel mortgage over the purchased car in favor of the
promissee. Also, on the same date, mortgagee Lido
Motor Sales Ozamis executed a Deed of Assignment of
all its title, rights, equities, and interests arising out of the
Deed of Chattel Mortgage with promissory note, in favor
of Investors' Finance Corporation, the herein petitioner.
For non-payment of 4 monthly installments the petitioner
corporation, as mortgagee, filed a verified Complaint For
Replevin With Damages in the then CFI Misamis
Oriental (note: it is now known as RTC Cagayan de Oro, but I used Misamis
for consistency) against Flaviano Fucoy Jr., Jose Mariano
Tan, and a John Doe, docketed as CIVIL CASE No.
8782, with a prayer for the issuance of a writ of replevin
for the seizure of the car "for the purpose of foreclosure

and/or disposal in accordance with law to satisfy

defendants obligation the plaintiff." The plaintiff filed a
bond in the amount of P25,146.34.
CFI issued the writ of replevin. The writ could not be
implemented because the car was not in the possession
of the mortgagors-defendants. It was only more than a
year later that the car was found in the possession of the
herein PR, Romeo Ebarle. Due to the difficulty of getting
the car from him because of his bodyguards, Romeo
Ebarle being the son of the former Provincial Governor,
the petitioner filed a Motion To Deputize A Military
Personnel To Serve The Alias Writ Of Replevin And Alias
Summons. The trial court appointed technical Sergeant
(TSgt.) Ibonia.
TSgt Ibonia later seized the car and placed it in the
custody of the military authorities at Lanao del Norte for
safekeeping. On the following day, as a result of a
written agreement between the lawyers of the petitioner
and the private respondent, stipulating payment by the
latter of the balance of the mortgage indebtedness
incurred originally by Flaviano Fucoy Jr. and Jose
Mariano Tan, the car was returned to PR.
Evidently, mortgagors Flaviano Fucoy Jr. and Jose
Mariano Tan transferred the possession of the car to PR
Romeo Ebarle without the consent of the petitioner. Thus
the car remained registered in the name Flaviano Fucoy
Jr., even when it was seized by Special Deputy Sheriff
Ibonia.
In the second week of November, 1983, the petitioner
sent to PR a computation of the unpaid balance due
from the mortgagors, which turned out to be higher than
the computation at Tubod Lanao del Norte.
Thus, PR filed suit for Damages and Discharge of
Chattel Mortgage with Preliminary Injunction in RTC,
Pagadian City, docketed as Civil Case No. 2312,
against the petitioner, Investors' Finance Corporation,
and Special Deputy Sheriff Antonio lbonia, who enforced
the writ of replevin.
PR alleged that he was a well-known personality in
Pagadian City, that he had paid his obligations to the
petitioner but it refused to issue a receipt; and that he
was humiliated and embarrassed by the seizure of his
car. He prayed "(T)hat pending hearing of the main case
a writ of preliminary injunction be issued against the
defendants' (herein petitioner and Special Deputy Sheriff
lbonia), that "the chattel mortgage of the car be
discharged," and for moral and corrective damages,
attorney's fees.

The petitioner, one of the two defendants in Civil Case

No. 2312, prayed for the dismissal of the case. Invoking
Section 5 of Rule 16 of the Rules of Court, it moved that
a preliminary hearing be had as if a MtD had been filed
and prayed for the dismissal of the complaint on the
ground of litis pendentia provided in Section 1(e) of the
same Rule 16.
RTC issued a writ of preliminary mandatory injunction
requiring the petitioner to return the car even while its
motion to dismiss had not yet been resolved.
IAC dismissed P's appeal: With respect to the "motion to
dismiss", We find no abuse, much less a grave abuse of
discretion on the part of the respondent Judge for having
denied the same: firstly, Civil Cases No. 2312, includes
a contempt charge, one not found in Civil Case No.
8782; secondly, there is a defendant in Civil Case No.
2312, Antonio Ibonia, who is not a party in the other
case. Certain requisites of litis pendentia are therefore
absent.
Issue: WoN IAC committed a reversible error in denying
the application of the principle of lis pendens duly
invoked by the petitioner.
Held: Yes. An action is dismissable on the ground that
there is another action pending between the same
parties for the same cause, if the following requisites
concur:
a)
identity of parties, or at least such as representing the
same interests in both actions;
b)
identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and
c)
the identity in the two cases should be such that the
judgment that may be rendered in one would, regardless of
which party is successful amount to res judicata in the other.

Corollary to Section 1(e) of Rule 16 of the Rules of Court

is the prohibition against splitting a single cause of
action. Thus, under Section 4, Rule 2, ("I)f two or more
complaints are brought for different parts of a single
cause of action, the filing of the first may be pleaded in
abatement of the other or others, in accordance with
Section 1(e) of Rule 16, and a judgment upon the merits
in any one is available as a bar in the others." The
former is the principle of litis pendentia or lis pendens,
while the latter is that of res judicata.
The doctrine of res judicata requires, among others,
identity of parties as an indispensable condition.
However, this Identity does not mean total identity of all
parties. The inclusion of new parties in the second action
does not remove the case from the operation of the

doctrine of res judicata if the party against whom the

judgment is offered in evidence was also the party in the
first action. This rule would ward off the possibility of
renewing the litigation between the same parties by the
mere expedient of bringing in new parties in the second
action.
Like res judicata as a doctrine, litis pendentia as a
principle is also a sanction of the public policy against
multiplicity of suits. This being so, the inclusion of
another party does not by itself preclude the application
of section 1(e) Rule 16 assuming that all the requisites
are present. Otherwise stated, the inclusion of new
parties in the second action does not remove the case
from the operation of the rule of litis pendentia as long as
the primary litigants are also parties in the first action. A
different rule would render illusory the principle of litis
pendentia.
In Civil Case No. 8782 before the then CFI of Misamis
Oriental, the plaintiff is the petitioner corporation and the
defendants are Flaviano Fucoy Jr., Jose Mariano Tan,
and a John Doe. John Doe, later, turned out to be PR
Romeo Ebarle who was the unauthorized transferee but
in actual possession of the car. In Civil Case No. 2312
before the RTC Pagadian City, the plaintiff is the same
PR Romeo Ebarle while the defendants are the
petitioner corporation and Antonio Ibonia the Special
Deputy Sheriff who enforced the writ of replevin in
compliance with the order of the then CFI of Misamis
Oriental. It is clear that lbonia is not a real party in
interest in the Pagadian case. There, the real parties in
interest, the principal protagonists are Investors' Finance
Corporation and Romeo Ebarle. They are the same
Identical real parties in interest, the principal
protagonists in the Cagayan de Oro case. This
concurrence suffices to satisfy the requirement of
Identity of parties in the principle of litis pendentia.
We also find identity of the rights asserted in both cases.

The true subject matter of the controversy is the car

(Corolla, 4-door de luxe Sedan). The primary objective of
the plaintiff, the petitioner herein, in the Misamis Oriental
case is the enforcement of the chattel mortgage due to
non-payment of the balance of the purchase price of the
said car. On the other hand, the plaintiff, the private
respondent herein, in the Pagadian case, seeks as his
primordial relief, the discharge of the chattel mortgage
over the same car due to alleged full payment of all the
installments on the price of the same. By way of initial
reliefs, the plaintiff in the Misamis case (defendant in the

Pagadian case and petitioner herein) prayed for the

issuance of a writ of replevin to take possession of the
car in order to foreclose the chattel mortgage thereon as
the plaintiff in the Pagadian case (defendant in the
Misamis case and private respondent herein) sought an
injunction to restrain the taking of the same car. The
denial of the motion to dismiss filed by the herein
petitioner before the Pagadian court, resulted to a
chaotic as well as a ridiculous situation for the parties. To
all legal intents and purposes, the Pagadian court issued
a second writ of replevin to counteract and to annul the
writ of replevin validly issued seven and a half months
earlier by a coordinate and co-equal tribunal the
Misamis court, which has already taken jurisdiction.
Worse, the Pagadian court practically dismissed the
case pending in the Misamis court, pronouncing that "the
replevin case, Civil Case No. 8782, to all practical intents
and purposes to have been terminated." SC cannot
countenance the spectacle of two co-equal courts racing
with each other to pre-empt judgment over the same
subject matter of the two pending actions. The resulting
confusion in the event that the decisions, orders, or
resolutions of the two courts contradict and conflict with
each other would do great damage to the administration
of justice.
An action for damages against the person obtaining the
writ of replevin and the sheriff who enforced the writ of
replevin, assuming that the seizure of the property was
unlawful, should be litigated in the replevin suit and not
by independent action. The doctrine is undisputed that
no court has the power to interfere by injunction with the
judgment or orders of another court of concurrent or
coordinate jurisdiction having power to grant the relief
sought by injunction.
We take note that the filing of Civil Case No. 2312 before
the Pagadian Court was a "specie of forum-shopping"
considering that the private respondent is an influential
person in the locality.
WHEREFORE, the Petition is hereby GRANTED. The
Decision of the then Intermediate Appellate Court is
REVERSED and Civil Case No. 2312 of the Regional
Trial Court, 9th Judicial District, Branch XXII. Pagadian
City is hereby ordered DISMISSED without prejudice to
the prosecution of the claim for damages for wrongful
replevin in Civil Case No. 8782 of the Regional Trial
Court of Misamis Oriental, Branch XVII, Cagayan de Oro
City.
Oropeza v. Allied Banking Corp

 There are 2 Civil Cases involved in this case:

st
1 CIVIL CASE (CV No. 19325-88):
Collection Suit with application of Writ of Preliminary
Attachment (Docketed in CA as CA-GR. CV No.
419986)
Parties: Allied Bank (plaintiff) v. Oropeza Mktg
(OMC) and Spouses Oropeza (defendants)
2nd CIVIL CASE (CV No. 19634-89):
Annulment of Deed of Sale with Assumption of
mortgage
Parties: Allied Bank (plaintiff) v. Spouses Oropeza
(only defendant)
Allied Bank (Bank) extended loan (P780,000) to OMC
and Spouses Oropeza. As security, the spouses
executed
a
Promissory
Note,
Continuing
Guaranty/Comprehensive Surety Agreement and a
Real Estate Mortage over their properties.
The Spouses defaulted in their obligation. Hence, the
Bank instituted the 1st Civil Case.
While the
application for a write was pending, the Bank
discovered that the Spouses executed an Absoulte
Deed of Sale with Assumption of Mortgage in favor of
a third party (Soild Gold Corpo), hence, then filed the
2nd Civil Case.
Rulings on 2nd Civil Case
RTC Davao: Ruled in favor of Spouses Oropeza
declaring that the spouses have fully settled their
debts (with their deposits and receivables) and the
deed of sale was valid.
CA: On appeal by the Bank dismissed the Banks
complaint and affirmed RTC decision.
Rulings on 1st Civil Case
RTC Davao: dismissed the Banks Complaint
CA: On appeal by the Bank, reversed and set aside
the RTC decision.
Issue/Held: Whether or not the decision of the CA in the
1st Civil Case constitute res judicata in so far as the 2 nd
Civil Case is concerned - (YES)
Ratio:
Res judicata literally means a matter adjudged; a thing
judicially acted upon or decided; a thing or matter
settled by judgment. Res judicata lays the rule that an
existing final judgment or decree rendered on the
merits, and without fraud or collusion, by a court of
competent jurisdiction, upon any matter within its
jurisdiction, is conclusive of the rights of the parties or
their privies, in all other actions or suits in the same or

any other judicial tribunal of concurrent jurisdiction on

the points and matters in issue in the first suit. The
principle of res judicata has two aspects, namely: (a)
bar by prior judgment as enunciated in Rule 39,
Section 49 (b) of the 1997 Rules of Civil Procedure;
and (b) conclusiveness of judgment which is
contained in Rule 39, Section 47 (c).
(a) bar by prior judgment: There is bar by prior
judgment when, as between the first case where
the judgment was rendered and the second case
that is sought to be barred, there is identity of
parties, subject matter, and causes of action.
Otherwise put, the judgment or decree of the
court of competent jurisdiction on the merits
concludes the litigation between the parties, as
well as their privies, and constitutes a bar to a
new action or suit involving the same cause of
action before the same or any other tribunal.
(b) conclusiveness of judgment: But where
there is identity of parties in the first and second
cases, but no identity of causes of action, the
first judgment is conclusive only as to those
matters actually and directly controverted and
determined and not as to matters merely
involved therein. Stated differently, any right,
fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an
action before a competent court in which
judgment is rendered on the merits is
conclusively settled by the judgment therein and
cannot again be litigated between the parties
and their privies whether or not the claim,
demand, purpose, or subject matter of the two
actions is the same.
The elements of res judicata are:
(1) the judgment sought to bar the new action must be
final;
(2) the decision must have been rendered by a court
having jurisdiction over the subject matter and the
parties;
(3) the disposition of the case must be a judgment on the
merits; and
(4) there must be as between the first and second
action, identity of parties, subject matter, and causes
of action.
The existence here of the first three requisites is not
disputed. With respect to the fourth element, however,
the parties disagree.

 Should identity of parties, subject matter, and causes

of action be shown in the two cases, then res judicata
in its aspect as a bar by prior judgment would apply. If
as between the two cases, only identity of parties can
be shown, but not identical causes of action, then res
judicata as conclusiveness of judgment applies.
IDENTITY OF PARTIES IS PRESENT: The operation
of the final judgment or order in a previous case is not
altered by the fact that somebody who was not a party
in the first action has been impleaded in the second
case. Otherwise, litigants can always renew any
litigation by the mere expediency of including new
parties. Hence, the fact that , the fact that OMC was
not a party in 2nd civil case (RTC and CA) does not
nullify the effect of the judgments issued in these
cases on the other case, (1st Civil Case). The rule on
identity of parties does not require an absolute, but
only a susbstantial identity of parties.
IDENTITY OF CAUSES OF ACTION NOT PRESENT:
With respect to identity of subject matter, this is
included in identity of causes of action. When there is
identity of the cause or causes of action, there is
necessarily identity of subject matter. But the
converse is not true, for different causes of action may
exist regarding the same subject matter, in which
case, the conclusiveness of judgment shall be only
with regard to the questions directly and actually put
in issue and decided in the first case.
The legal rights asserted by the Bank in the 2 cases
differ: 1st Civil Case was for the collection of the
P780,000.00 loan, secured by a promissory note,
which respondent Allied Bank insists remained unpaid
by the spouses. In other words, it is the alleged failure
of petitioners to liquidate their obligation to respondent
bank, which caused Allied Banks cause of action in
1st civil case to accrue. The situation is different in the
other case, 2nd case, where respondent bank asserts
its right as a mortgagee to the subject property by
virtue of the real estate mortgage executed by
petitioner spouses in its favor.
Another test to determine the identity of causes of
action is to consider whether the same evidence
would sustain both causes of action. We find that in
1st Civil Case, Allied Bank will have to present
evidence showing the existence of the loan and
petitioners failure to comply with their bounden duty to
pay such loan in accordance with the terms of the
promissory note executed by petitioners. However, in
2nd civil case, respondents evidence must establish
and prove its allegations to the effect that: (a)

petitioners secured a loan from it; (b) said loan was

secured by a promissory note and a mortgage over
properties owned by the Oropezas; (c) petitioners
failed to pay their debt; and (d) petitioners sold the
mortgaged properties wit. The evidence to support
Allied Banks cause of action in 1st case is included in
and forms part of the evidence needed by respondent
bank to support its cause of action in 2nd case. The
converse, however, not true. The evidence needed in
2nd case does not necessarily form part of the
evidence needed by respondent in 1st case.
Accordingly, we find that the evidence to sustain the
respective causes of action in the two cases is not
exactly the same.
There being substantial identity of parties but no
identity of causes of action, the applicable aspect of
res judicata is conclusiveness of judgment. There is
conclusiveness of judgment only as to the matters
actually determined by the trial court in 2nd civil case,
as affirmed by the CA. These include the findings that:
(1) the promissory note relied upon by respondent
bank is spurious; and (2) that the loan obligation of
the Oropeza spouses has been settled and paid.
Res judicata is founded on the principle that parties
ought not to be permitted to litigate the same issue
more than once. Hence, when a right or fact has been
judicially tried and established by a court of competent
jurisdiction, or an opportunity for such trial has been
given, the judgment of the court - - so long as it
remains unreversed - - is conclusive upon the parties
and those in privity with them in law or estate. It
having been determined with finality in CA of the 2nd
civil case that the debt of the Oropezas has been
settled, Allied Banks cause of action in 1st civil case
must be deemed extinguished
ILUMINADA CARANDANG, EDEN CARANDANG,
SWANIE CARANDANG and MARILO
CARANDANG,petitioners, vs.POMPOSA G.
VENTURANZA, and GREGORIO
VENTURANZA , respondents.
FACTS:
Petitioners are the surviving heirs of the late
ProtacioCarandang who, during his lifetime, owned and
possessed together with his spouse Iluminada, a parcel
of land.
A case was filed against spouses Carandang by the
relatives of Protacio, allegedly co-heirs to certain
hereditary shares on the land. The Carandangs sought
the help of respondent Gregorio Venturanzaa long-time

neighbor, lawyer and friend, who was then a Municipal

Judge of Victoria, Oriental Mindoro.
Pursuant to the advice and assistance of the judge, the
spouses Carandang subscribed to a Deed of Absolute
Sale in favor of respondent spouses Pomposa G.
Venturanza and Gregorio Venturanza (their judge friend)
allegedly with the specific understanding that after the
relatives' claims shall have been fully settled, title to the
subject land would be given back to ProtacioCarandang.
Because of this, the TCT was cancelled and a new one
in favor of the Venturanzas was issued.
Because of this, the relatives of Protacio filed a case in
the CFI of Calapan, Oriental Mindoro for the declaration
of nullity of the Deed of Sale. CFI Calapan ruled that the
Deed of Sale was valid and that the Sps. Venturanza are
the lawful owners and entitled to the possession of the
land described in the TCT.
CA: Denied the appeal and affirmed the ruling of the CFI
Calapan.
The Venturanzas refused to honor their alleged
understanding with the heirs. Later on, the petitioners
discovered that the land was subdivided and a new TCT
was issued in the name of Pomposa. A complaint was
then filed by the heirs of Protacio against respondent
spouses before the CFI of Oriental Mindoro.
A motion to dismiss was interposed by the spouses
Venturanza on the ground of res judicata or bar by the
prior judge judgment of the same Court of First Instance
in Civil Case No. 2149. The respondent court sustained
the motion to dismiss.
ISSUE: WON res judicata applies in the case at bar?
HELD:
The doctrine of res judicata is an old axiom of law,
dictated by wisdom and sanctified by age, and is
founded on the broad principle that it is to the interest of
the public that there should be an end to litigation by the
same parties and their privies over a subject once fully
and fairly adjudicated.
For res judicata to apply: (a) the former judgment must
be final; (b) it must have been rendered by a court
having jurisdiction of the subject matter and of the
parties; (c) it must be a judgment on the merits; and (d)
there must be, between the first and second actions
identity of parties, of subject matter, and of cause of
action.
The existence of the first three requisites in the case
at bar is not disputed. However, Anent the criterion of
identity of parties, a situation obtains whereby the parties
ProtacioCarandang and the spouses Venturanza,
formerly co-defendants in a case brought against them,
now find themselves protagonists in opposite camps.
Because of such adverse relationship, the question

arises whether or not the judgment in the first case in

which both parties were defendants is conclusive in a
subsequent litigation between the two.
We have laid down the rule in the case of Valdez v.
Mendoza (89 Phil. 83) to wit:
In the United States where our theories
on res judicata have originated, a
judgment in favor of two or more
defendants is conclusive on plaintiff as
against them. "The estoppel however is
raised only between those who were
adverse parties in the former suit, and
the judgment therein ordinarily settles
nothing as to the relative rights or
liabilities of the co-plaintiffs or codefendants inter sese, unless their
hostile or conflicting claim were actually
brought in issue." *** "by cross-petition
or separate and adverse answers" (50
C.J.S. pp. 372, 373 citing many cases)
(See also 30 Am. Jur. 233).
Based on the above ruling, there can be no identity
of parties between the first and second cases as to
bar the latter case.
Moreover the qualifications to the above rule are,
themselves, not applicable.
In the above-cited case, where this Court laid down
the foregoing rule, we held that estoppel does not
work against co-parties in a prior case "unless their
hostile or conflicting claims were actually brought in
issue" ... "by cross-petition or separate and adverse
answers (50 C.J.S. 372, 373; 30 AM. Jur. 233)." No
such thing appears in the records so as to bring the
present case under the above qualification to the rule.
The petitioners' present claims have never been set forth
in Civil Case No. R-2149, nor were they litigated therein.
Only insofar as the decision of the respondent court in
the earlier case declares the Deed of Sale between
deceased ProtacioCarandang and the spouses
Venturanza valid and subsisting between them will the
rule of res judicata apply. But even if the judgment
rendered upon the validity of the deed of sale between
the parties in Civil Case No. 2149 is conclusive between
the same parties in the subsequent action, Civil Case
No. 2480 involving the same deed of sale, the
petitioners' case is not anchored on this issue. This
brings us to the question of identity of causes of action.
Respondents allege that the main issue in both cases is
the question of ownership. They state that this question
has been adjuged in their favor and they may no longer
be sued by petitioners on the same cause. At first blush,
the validity of such an argument appears convincing.
However, a more careful study of the respective
contentions of the parties inclines us to uphold the
contrary. The present cause of action is not a basis for a
finding of res judicata.
A comparison alone of the complaints in both cases
reveals a difference in objectives. Civil Case No. R2149 brought by Trinidad Moreno and others against
the parties herein had for its purpose the annulment
of the sale of the property under litigation and the

recovery of hereditary rights. On the other hand,

Civil Case No. R-2480 brought by the petitioners
against the spouses Venturanza seeks the
reconveyance of property or recovery of ownership
on the basis of a trust agreement between the
parties. Petitioners do not seek the annulment of the
Deed of Sale which they had executed in favor of the
respondents nor do they question the respondents'
ownership of the property by virtue of the deed. Rather,
the petitioners pray for the enforcement of the trust
agreement between the parties under Article 1453 of the
Civil Code to wit:
When a property is conveyed to a
person in reliance upon his declared
intention to hold it for, or transfer it to
another or the grantor, there is an
implied trust in favor of the person
whose benefit is contemplated.
Thus, though the ownership of the respondents by virtue
of the deed of sale executed in their favor by petitioners
may have been established, the question of ownership
on the basis of the trust agreement between the same
parties was not adjudicated by the court in Civil Case
No. R-2149. Therefore, the judgment in the earlier case
cannot bar the petitioners' present cause of action which
is founded on facts and law different from those of the
previous case involving them. As held in Heirs of Roxas
v. Galindo, et. al (108 Phil. 582) and Viray v. Marinas (49
SCRA 44) "where the second action between the same
parties is upon a different claim or demand, the
judgment in the prior action operates as an estoppel only
as to those matters in issue or points controverted upon
which the finding or judgment was rendered. In fine, the
previous judgment is conclusive in the second case, only
as to those matters actually and directly controverted
and determined and not as to matters merely involved
therein." This is the rule on conclusiveness of judgment
embodied in Subdivision c, Section 49, Rule 39 of the
Revised Rules of Court, which must be interpreted and
its applicability ascertained in the case at bar and not the
doctrine of res judicata, which respondent spouses
invoke to bar the petitioners' claims.
MANILA ELECTRIC COMPANY, petitioner, vs. COURT
OF APPEALS and PEDRO J. VELASCO,
respondents.
G.R. No. L-33794 | May 31, 1982
FACTS: (This is the Petition for Review of the Nuisance
case in Property Casis; remember the buzzing sound
from Meralco site.) Respondent Velasco purchased 3
lots located at the corner of the then South D and South
6 Streets of Quezon City from PHHC. These lots are to
be used for residential purposes only. He sold two lots to
petitioner Manila Electric Company. MERALCO
established a substation within the property.
Velasco wrote a letter to MERALCO stating that he and
his family tried to tolerate it for a while, but the severe
noise and the electrification of the ground, especially that
in which the artesian well of the undersigned is located,
made life of the whole family unbearable.

Thereafter, Velasco filed a complaint (the NUISANCE

CASE) before the CFI praying that Meralco be ordered
"to remove and abate the nuisances herein complained
against," with damages. The Trial Court dismissed the
complaint but, on appeal to this Court (our long property
case!), the dismissal was set aside and Meralco was
ordered to either transfer its sub-station or take
appropriate measures to reduce its noise at the property
line between the defendant company's compound and
that of the plaintiff-appellant to an average of 40 to 50
decibels within 90 days from finality of the decision.
Meanwhile, Velasco instituted another complaint (the
CANCELLATION CASE) for the rescission of the sale of
the property to Meralco and to collect rentals for the use
and occupation of the property while in the latter's
possession. The complaint was dismissed by the Trial
Court on the ground that two cases split Velascos cause
of action such that the CANCELLATION CASE was
precluded from being instituted.
CA reversed TC considering that abatement of nuisance
was distinct and separate from rescission of the contract
of sale.
ISSUE: Whether or not the two cases split a single
cause of action
HELD: No, CA was correct in that there was no splitting
of a single cause of action because the cause of action
for abatement of nuisance is different from a cause of
action for cancellation of contract. HOWEVER, it does
not mean that a judicial proceeding cannot be barred by
a previous case involving another cause of action. The
principle applicable would be estoppel by judgment or,
more specifically, "collateral estoppel by judgment".
[Hoag v. New Jersey] A common statement of
the rule of collateral estoppel is that "where a
question of fact essential to the judgment is
actually litigated and determined by a valid and
final judgment, the determination is conclusive
between the parties in a subsequent action on a
different cause of action". As an aspect of the
broader doctrine of res judicata, collateral
estoppel is designed to eliminate the expense,
vexation, waste, and possible inconsistent
results of duplicatory litigation.
[Cromwell vs. Sac Country] It is a finality as to
the claim or demand in controversy, concluding
parties and those in privity with them, not only as
to every matter which was offered and received
to sustain or defeat the claim or demand, but as
to any other admissible matter which might have
been offered for that purpose.
When VELASCO instituted the NUISANCE CASE, he
conceded, which he is now estopped to deny, that
MERALCO had the right to establish the sub-station
within the PROPERTY without violation of the restriction

to "residential purposes". What he subsequently alleged,

after the sub-station had become operative, was that the
sub-station, because of the generated noise, had
become a nuisance which should be abated. Although
the propriety of the establishment of the sub-station was
not a controverted matter in the NUISANCE CASE, it
was a tacit admission on the part of VELASCO, which
can form part of an estoppel within the NUISANCE
CASE. It would not be good law to allow him now to take
the position, even if he had the right of action, that the
construction of the sub-station violated the restriction
provided for by PHHC. If the present standpoint of
VELASCO should be upheld, then the procedurally
wrong result would be that, after this Court had decided
that the sub-station can remain within the PROPERTY
with reduction of the noise, the Appellate Tribunal, a
subordinate tribunal, can subsequently nullify the
decision of this Court and order the removal of the substation from the PROPERTY.
EXTRA ISSUES:
THE RIGHT OF ACTION.- The contract of sale between
PHHC (original owner) and VELASCO provided that only
constructions exclusively for "residential purposes" shall
be built on the PROPERTY. That requirement, naturally,
was binding on VELASCO himself, as it is also binding
on MERALCO as his assignee. Be that as it may, that
contract implies that it is PHHC itself which has the right
of action against any assignee of VELASCO.
Cancellation of the title to the PROPERTY would be by
virtue of the condition imposed in the PHHC-VELASCO
contract, and not by virtue of the contract between
VELASCO and MERALCO.
RESIDENTIAL PURPOSES. From the PHHC, or
community, point of view, the construction of an electric
sub-station by the local electric public service company
within the subdivision can be deemed encompassed
within "residential purposes" for the simple reason that
residences are expected to be furnished with electrical
connection. If there is no electric current because of the
lack of a sub- station, the residences within the entire
subdivision area could be valueless for residential
purposes.
Moreover, the authorities of Quezon City granted a
permit for the construction of the sub-station, thereby
conceding that a sub-station is not necessarily nonresidential.
CONTRACTUAL ESTOPPEL.- Even if the requirement
for "residential purposes" were a condition imposed by
VELASCO himself in the contract of sale between
VELASCO and MERALCO, the former can no longer
cancel the contract on the alleged violation of the
condition. When MERALCO erected the sub-station in
September, 1953, VELASCO did not object to its
construction as such. Actually, what was ultimately
objected to by VELASCO was the noise of the substation; but there was no original and timely objection to
the establishment itself of the sub-station as being not

for residential purposes. If there had been no noise

whatsoever from the sub-station, no controversy would
have arisen.
VIRGINIA AVISADO AND JOCELYN AVISADO
GARGARITA, petitioners, vs. AMOR RUMBAUA,
VICTORIA C. RUMBAUA and COURT OF
APPEALS, respondents.
Facts:
Respondents Abelardo Amor Rumbaua and
Victoria Consengco-Rumbaua (hereafter Amor and
Victoria) are husband and wife, Filipinos, residents of
Jacksonville, Florida, U.S.A. On July 1, 1971, Victoria
became the registered owner of a parcel of land located
on Maayusin St., U.P. Village, Diliman, Quezon City. On
June 28, 1971, respondents Rafael and Aurora
Consengco (hereafter Rafael and Aurora) became
the registered owners of the lot adjacent to Amor and
Victorias lot.
Amor, Victoria, Rafael and Aurora contend that on
or about the second week of February 1973, they
discovered that Abelardo and petitioner Virginia Avisado
(hereafter the Avisados) were occupying both parcels
of land and had built thereon a bungalow made of strong
materials. Respondents demanded that the Avisados
vacate the lots, to no avail.
On December 3, 1977, Victoria executed a
special power of attorney authorizing Rafael to:
...ask, demand, sue for, recover,
extrajudicially and/or judicially, that certain
real property located at Maayusin St.,
Diliman, Quezon City, Philippines, covered by
and described in Transfer Certificate of Title
No. 166065 of the Register of Deeds of
Quezon City, belonging to me solely and
exclusively, my title, my title thereto being
evidenced by said Transfer of Certificate Title
No. 166065, in connection thereto, to
represent me in the pre-trial and trial of that
case which he will have to institute and file for
that purpose, with full power and authority to
enter into any compromise agreement with
anybody under any terms and conditions
which he may deem just, proper and
equitable under the premises.
On November 17, 1978, Amor and Victoria,
represented by Rafael (and in his own capacity as coplaintiff) and Aurora filed with the Court of First Instance
of Rizal, Branch 16, Quezon City, a complaint for
recovery of possession of realty with damages against
the Avisados.
On April 15, 1980, Rafael (in his own capacity),
Amor and Victoria (through Rafael), and Aurora entered
into a compromise agreement with the Avisados,

stating: First, the Avisados (vendees) shall pay Amor

and Victoria (vendors) the amount of seventy thousand
pesos (P70,000.00), after which Amor and Victoria shall
execute an absolute deed of sale in favor of the
Avisados. The total purchase price shall be paid in
installments. The first payment of five thousand pesos
(P5,000.00) to be paid on April 14, 1980 and the second
payment of the balance of sixty five thousand pesos
(P65,000.00) to be paid on or before September 30,
1980. Second, within a month from the registration of
the absolute deed of sale, the Avisados shall remove
any portion of their residential house located within the
boundaries of the lot belonging to Rafael and
Aurora. Third, all expenses for the registration of the lot
shall be borne by the Avisados. Fourth, should the
Avisados violate the compromise agreement they shall
forfeit five thousand pesos (P5,000.00) in favor of the
vendors and shall vacate the lot within thirty (30) days
from the time of default. In such event, the agreement to
sell
shall
be ipso
facto cancelled. Fifth,
the
compromise agreement shall have the effect of a
mutual quit-claim of all claims for damages and
reimbursement set up in the complaint and the answer
that the parties may have against each other. The
compromise agreement was submitted to the trial court
for approval.

City a complaint for recovery of real property with

damages against the Avisados. The complaint was
docketed as Civil Case No. Q-93-18138. Essentially,
the complaint alleged that the compromise
agreement of April 15, 1980 resulting in the sale of
Victoria and Amors lot to the Avisados was invalid
as the special power of attorney executed by
Victoria in Rafaels favor never authorized him to sell
the lot in question.

On April 15, 1980, the trial court approved the

compromise agreement,

WON the Court of Appeals erred when it did not

consider Civil Case No. Q-26392 as a bar to Civil Case
No. Q-93-18138 on the ground of res judicata YES

On October 3, 1980, Amor and Victoria (through

Rafael), Rafael (in his own capacity) and Aurora filed
with the trial court a manifestation stating that the
compromise agreement was violated by the Avisados
refusal to pay the amount of sixty five thousand pesos in
cash on or before September 30, 1980. On October 17,
1980, the trial court noted the manifestation. On August
18, 1981, Aurora, Rafael, in his own capacity and on
behalf of his co-plaintiffs, Amor and Victoria filed with the
trial court a motion for execution of judgment, praying
that given that the Avisados breached the compromise
agreement, a writ of execution be issued ordering them
to vacate the lots.
On February 12, 1982, the trial court denied the
motion for execution of judgment reasoning that the
compromise agreement involved reciprocal obligations
of the parties (i.e., the vendees to pay the purchase
price and for the vendors to execute the absolute deed
of sale). On July 12, 1985, the Avisados filed with the
trial court a motion for execution of the April 15, 1980
decision. On July 19, 1985, the trial court granted the
motion for execution.
On August 14, 1985, the trial court, through branch
clerk of court Virginia M. Pagoron, issued a writ of
execution in favour of the Avisados.
On October 29, 1993, Amor and Victoria (through
their new attorney-in-fact, Noemi Candido Natividad)
[25]
filed with the Regional Trial Court, Branch 77, Quezon

On February 12, 1996, the trial court dismissed the

complaint for being barred by prior judgment. On March
12, 1996, Amor and Victoria interposed an appeal to the
Court of Appeals.
On October 27, 1998, the Court of Appeals decided
that the causes of action in Civil Case No. Q26392 and Civil
Case
No.
Q-93-18138 were
different. The former case is an accion publiciana for the
recovery of possession of realty and damages, while the
latter case is based on the violation of the compromise
agreement. Res judicata does not apply. Hence, it
remanded the case to the lower courts.
Issue:

Held
When Amor and Victoria filed Civil Case No. Q93-18138, and argued that Rafael did not have the
authority to enter into the compromise agreement, they
collaterally attacked the judgment in Civil Case No. Q26392 which approved the compromise agreement.
This cannot be done.
The judgment in Civil Case No. Q-26392 has
become final and executory. What Amor and Victoria
should have done was to either timely appeal the
decision to the Court of Appeals under Rule 41, 1997
Rules of Civil Procedure, or to seasonably file a petition
for relief from judgment under Rule 38. A party who fails
to acquire complete relief from a decision of a court has
various remedies to correct it. A party may move for a
correction or clarification of judgment, or even seek its
modification through ordinary appeal. This they did not
do. There must, therefore, be an end to litigation.
Furthermore, even if we limit ourselves to the
issue of whether or not res judicata applies, still the
Court of Appeals decision must be reversed.
Res judicata exists when the following elements
are present:
(a) the former judgment must be final;
(b) the court which rendered judgment had jurisdiction
over the parties and the subject matter;
(c) it must be a judgment on the merits;

(d) and there must be between the first and second

actions identity of parties, subject matter, and cause of
action.
There is no question with respect to the
existence of the first three elements of res judicata. As to
the last issue, specifically with respect to identity of
causes of action, we find that contrary to the ruling of
the Court of Appeals, the causes of action in Civil Case
No. Q-26392 and Civil Case No. Q-93-18138 are one
and the same.
In Civil Case No. Q-26392, the cause of action
was the illegal occupation of the lots by the Avisados, to
the prejudice of Amor, Victoria, Rafael and
Aurora. In Civil Case No. Q-93-18138. Amor and
Victoria likewise complained that the Avisados occupied
their lot, through strategy and stealth, and without (their)
knowledge and consent.
Even assuming that they were different causes
of action, we note that these issues were settled and
passed upon in Civil Case No. Q-26392.
The validity of the compromise agreement was
passed upon by the lower court when it categorically
stated on April 15, 1980 that the Compromise
Agreement (is) not contrary to law, good morals, public
policy. By such action, the trial court made a finding of
law and fact. .
The fact that the compromise agreement was
not breached by the Avisados was also ruled upon by
the lower court when it declared on February 12, 1982,
that the compromise agreement involved reciprocal
obligations of the parties. This factual finding of the trial
court is buttressed by its order dated July 19, 1985,
granting the Avisados motion for execution and its writ of
execution dated August 14, 1985, which commanded
the ex-officio sheriff of Manila to order Amor and Victoria
to execute the deed of sale in favor of the Avisados upon
their payment of the sum of sixty five thousand pesos
(P65,000.00).
Individuals should not be vexed twice for the
same cause, memo debet bis vexari et eadem causa.
When Amor and Victoria filed Civil Case No. Q93-18138 they were seeking the same relief--that the
Avisados peacefully surrender the lot to them. They
merely raised a different theory. They adopted a
different stance, relying on the purported invalidity of the
compromise agreement and alternatively, on its alleged
breach.
Material facts or questions which were in issue
in a former action and were there admitted or judicially
determined are conclusively settled by a judgment
rendered therein become res judicata and may not again
be litigated in a subsequent action between the same
parties or their privies. The rule is true regardless of the
form the issue may take in the subsequent action. It
does not matter if the subsequent action involves the
same or a different form of proceeding, or whether the

second action is upon the same or a different cause of

action, subject matter, claim or demand, as the earlier
action. It is also immaterial that the two actions are
based on different grounds, or tried on different theories,
or instituted for different purposes, and seek different
reliefs.
Our ruling against Amor and Victoria is justified
all the more by the fact that they are filed Civil Case No.
Q-93-18138 assailing the compromise agreement on
October 29, 1993. Thirteen years have lapsed.
There is laches when there is failure or neglect,
for an unreasonable length of time to do that which by
exercising due diligence could or should have been done
earlier. When there is laches, the presumption arises
that the party entitled to assert a right has either
abandoned it or has declined to assert it. Even a
registered owner may be barred from recovering
possession of land by virtue of laches. Its elements are:
(1) conduct on the part of defendant, or one under
whom he claims, giving rise to the situation that led to
the complaint and for which the complaint seeks a
remedy;
(2) delay in asserting the complainants rights, having
had knowledge or notice of the defendants conduct and
having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of defendant
that the complainant would assert the right on which he
bases his suit; and
(4) injury or prejudice to the defendant in the event relief
is accorded to the complainant, or the suit is not held
barred.
EDGAR H. ARREZA, petitioner, vs. MONTANO M.
DIAZ, JR., respondent.
Facts:
Bliss Development Corporation is the owner of a
housing unit located at Lot 27, Block 30, New Capitol
Estates I, Barangay Matandang Balara, Quezon City. In
the course of a case involving a conflict of ownership
between petitioner Edgar H. Arreza and respondent
Montano M. Diaz, Jr., docketed as Civil Case No. 942086 before the Regional Trial Court of Makati, Branch
146, Bliss Development Corporation filed a complaint for
interpleader.
In a decision dated March 27, 1996, the trial
court resolved the conflict in favour of Arreza, and
ordered Bliss Development to recognize the transfer of
rights to Arreza.
The decision became final and was duly
executed with Bliss executing a Contract to Sell the
aforementioned property to petitioner
Arreza. Respondent Diaz was constrained to deliver the
property with all its improvements to petitioner.
Thereafter respondent Diaz filed a complaint
against Bliss Development Corporation, Edgar H.
Arreza, and Domingo Tapay in the Regional Trial Court

of Makati, Branch 59, docketed as Civil Case No. 961372. He sought to hold Bliss Development Corporation
and petitioner Arreza liable for reimbursement to him of
P1,706,915.58 representing the cost of his acquisition
and improvements on the subject property with interest
at 8% per annum.
Petitioner Arreza filed a Motion to Dismiss the
case, citing as grounds res adjudicata or conclusiveness
of the judgment in the interpleader case as well as lack
of cause of action.
The motion was denied for lack of merit, so
Arreza filed a petition for certiorari before the Court of
Appeals alleging that the Orders dated February 4 and
March 20, 1997, were issued against clear provisions of
pertinent laws, the Rules of Court, and established
jurisprudence such that respondent court acted without
or in excess of jurisdiction, or grave abuse of discretion
amounting to lack or excess of jurisdiction.
The petition was also dismissed for lack of
merit. The Court of Appeals said that the decision
invoked by the petitioner as res adjudicata resolved only
the issue of who between Edgar H. Arreza and Montano
Diaz has the better right over the property under
litigation. It did not resolve the rights and obligations of
the parties. The action filed by Montano M. Diaz against
Bliss Development Corporation, et al. seeks principally
the collection of damages in the form of the payments
Diaz made to the defendant and the value of the
improvements he introduced on the property matters
that were not adjudicated upon in the previous case for
interpleader.
Issues:
WON Diazs claims are barred by res judicata
YES
Held:
Respondent claims that there is no identity of
causes of action between Civil Case No. 94-2086, the
prior case, and Civil Case No. 96-1372, the present case
subject of this petition, as the former involved a
complaint for interpleader while the latter now involves
an action for a sum of money and damages. He avers
that a complaint for interpleader is nothing more than the
determination of rights over the subject matter involved.
In its assailed decision, respondent Court of
Appeals pointed out that the 1997 Rules of Civil
Procedure provide that in a case for interpleader, the
court shall determine the respective rights and
obligations of the parties and adjudicate their respective
claims. The appellate court noted, however, that the
defendants in that interpleader case, namely Diaz and
Arreza, did not pursue the issue of damages and
reimbursement although the answer of respondent Diaz
did pray for affirmative relief arising out of the rights of a
buyer in good faith.

Respondent in effect argues that it was

incumbent upon petitioner as a party in Civil Case No.
94-2086 to put in issue respondents demands for
reimbursement. However, it was not petitioners duty
to do the lawyering for respondent. As stated by the
Court of Appeals, the court in a complaint for
interpleader shall determine the rights and
obligations of the parties and adjudicate their
respective claims. Such rights, obligations and
claims could only be adjudicated if put forward by
the aggrieved party in assertion of his rights. That
party in this case referred to respondent Diaz. The
second paragraph of Section 5 of Rule 62 of the 1997
Rules of Civil Procedure provides that the parties in an
interpleader action may file counterclaims, cross-claims,
third party complaints and responsive pleadings thereto,
as provided by these Rules. The second paragraph
was added to Section 5 to expressly authorize the
additional pleadings and claims enumerated therein, in
the interest of a complete adjudication of the controversy
and its incidents.
Pursuant to said Rules, respondent should have filed his
claims against petitioner Arreza in the interpleader
action. Having asserted his rights as a buyer in good
faith in his answer, and praying relief therefor,
respondent Diaz should have crystallized his demand
into specific claims for reimbursement by petitioner
Arreza.
Regarding whether or not the private
respondents can still file a separate complaint against
the petitioners on the ground that they are builders in
good faith and consequently, recover the value of the
improvements introduced by them on the subject lot, the
case of Heirs of Laureano Marquez v. Valencia, provides
the answer:
Although the alternative defense of being builders in good faith
is only permissive, the counterclaim for reimbursement of the
value of the improvements is in the nature of a compulsory
counterclaim. Thus, the failure by the private respondents to
set it up bars their right to raise it in a subsequent litigation
(Rule 9, Section 4 of the Rules of Court). While We realize the
plight of the private respondents, the rule on compulsory
counterclaim is designed to enable the disposition of the whole
controversy at one time and in one action. The philosophy of
the rule is to discourage multiplicity of suits. (Italics supplied)

Having failed to set up his claim for

reimbursement, said claim of respondent Diaz being in
the nature of a compulsory counterclaim is now barred.
In cases involving res adjudicata, the parties and the
causes of action are identical or substantially the same
in the prior as well as the subsequent action. The
judgment in the first action is conclusive as to every
matter offered and received therein and as to any other
matter admissible therein and which might have been
offered for that purpose, hence said judgment is an
absolute bar to a subsequent action for the same
cause The bar extends to questions necessarily
involved in an issue, and necessarily adjudicated, or
necessarily implied in the final judgment, although no

specific finding may have been made in reference

thereto, and although such matters were directly referred
to in the pleadings and were not actually or formally
presented. Said prior judgment is conclusive in a
subsequent suit between the same parties on the same
subject matter, and on the same cause of action, not
only as to matters which were decided in the first action,
but also as to every other matter which the parties could
have properly set up in the prior suit.
In the present case, we find there is an identity
of causes of action between Civil Case No. 94-2086 and
Civil Case No. 96-1372. Respondent Diazs cause of
action in the prior case, now the crux of his present
complaint against petitioner, was in the nature of an
unpleaded compulsory counterclaim, which is now
barred. There being a former final judgment on the
merits in the prior case, rendered in Civil Case No. 942086 by Branch 146 of the Regional Trial Court of
Makati, which acquired jurisdiction over the same
parties, the same subject property, and the same cause
of action, the present complaint of respondent herein
(Diaz) against petitioner Arreza docketed as Civil Case
No. 96-1372 before the Regional Trial of Makati, Branch
59 should be dismissed on the ground of res adjudicata.
EDITHA M. FRANCISCO vs ROQUE CO and/or
MARIANO CO
G.R. NO. 151339 | January 31, 2006 | J. Tinga
FACTS:
A complaint for accion publiciana (case#1) was filed
against the heirs of Pastora Baetiong in 1975, including
P by Rs Roque Co and Mariano Co for two parcels of
land. It was settled through a Compromise Agreement
where the parties acknowledged the heirs of Baetiong as
the owner of the subject properties. Further, it was
agreed upon that the heirs of Baetiong would lease
to respondents a portion of the properties, totaling
between 25,000 to 30,000 square meters, covering
land then already occupied by respondents. The
lease agreement, which was contained in a Contract of
Lease, was to subsist for 15 years commencing
retroactively from 1 October 1983.
5 years later, the heirs of Baetiong alleged that Rs were
occupying space larger than what was allotted to them.
They prayed that a commission be constituted for the
proper enforcement of the Compromise Agreement. The
RTC granted the motion. The CA, on a petition for
certiorari and prohibition (case#2) reversed and said that
a commission was unnecessary. It ruled that since the
Contract of Lease specified that the leased portion
had an area of "approximately" three (3) hectares (or
30,000 sq.m.), the area occupied by Rs was the same
property agreed upon for lease by the parties in the
Compromise Agreement. On the claim that the area
leased was actually in excess of 7,659 sq. meters,
the CA held that the heirs of Baetiong were
precluded by laches and negligence from asserting
such claim, as they had remained silent for almost
five years in contesting the subject area. In sum, the
Court of Appeals set aside the RTC order

constituting a commission, and declared "the

judgment by compromise rendered was finally
terminated and executed." The SC later denied a
petition for review of the CA decision.
4 years later, a complaint for forcible entry was filed by P
against Rs (case #3). P maintains that Rs entered and
fenced property which she had inherited from her
mother. In Rs answer, they alleged that the property in
question was part of the Contract of Lease and in any
case, P was already barred by res judicata through the
CAs decision in the previous case. The MTC and RTC
ruled in favor of P, especially in the sense that the
identity of causes of action was not present in the facts
in order to constitute res judicata. Judgment was then
executed while it was on appeal with the CA. The CA
reversed the previous lower courts saying that there was
res judicata, as the same evidence would support and
establish both the former and present causes of action. It
was observed that the evidence to be presented by the
contending parties in both actions was that which would
support their allegation of having a better right to the
possession of the subject property. The CA said P had
no basis for the forcible entry complaint and that it had
already been expressly stipulated that the property in the
present case was part of the Contract of Lease.
ISSUE:
WON res judicata is applicable Yes. The CA decision
was affirmed except for the grant of moral and
exemplary damages, which were deleted.
RATIO:
On this score, the matter would be best illuminated
by pointing out that there are two aspects to the
doctrine of res judicata. The first, known as "bar by
prior judgment," is the effect of a judgment as a bar
to the prosecution of a second action upon the same
claim, demand or cause of action. The second,
known as "conclusiveness of judgment," issues
actually and directly resolved in a former suit cannot
again be raised in any future case between the same
parties involving a different cause of action.
The CA, in reversing the lower courts, invoked Mendiola
v. Court of Appeals, which involved the application of the
first kind of res judicata or "bar by prior judgment." In
particular, the appellate court cited the rule from
Mendiola that "[t]he test of identity of causes of action
lies not in the form of an action but on whether the same
evidence would support and establish the former and
present causes of action." Applying this test, it does
appear that the present ejectment case could be barred
by the prior judgment in CA-G.R. SP No. 18032. It is
possible that the same evidence may be used to
establish that petitioners could occupy in excess of three
(3) hectares of TCT No. 44546 and they could also
occupy Lot No. 2-F-4.
Still, the Court considers the second facet of res
judicata,
"conclusiveness
of
judgment"
as
controlling in this case. Conclusiveness of judgment

operates as a bar even if there is no identity as

between the first and second causes of judgment.
Under the doctrine, any right, fact, or matter in issue
directly adjudicated or necessarily involved in the
determination of an action before a competent court
in which judgment is rendered on the merits is
conclusively settled by the judgment therein and
cannot again be litigated between the parties and
their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the
same.
The judgment is conclusive in the second case, only as
to those matters actually and directly controverted and
determined, and not as to matters merely involved
therein.
The Compromise Agreement speaks for itself. The
delineation of the subject property was immediately
to be conducted by both parties for proper inclusion
in the Contract of Lease. Thus, when the Contract of
Lease was executed, the Compromise Agreement
have (sic) already been fully implemented and duly
enforced. Hence, the constitution of a commission for
the purpose of delineating the bounds of the property will
serve no other purpose.
As regards the contention of the private respondent
that the inclusion of the land in the Contract of
Lease is in excess of what was really agreed upon
deserves no scant consideration. The fact remains
that the contract of lease specifically stipulates,
thus: " . . . certain portions of the above-mentioned
parcels of land now actually occupied by the
LESSEES with
the
warehouses/buildings
constructed and owned by said LESSEESS, with a
road and fences constructed by them, with an
approximate area of Three (3) hectares more or less
which is hereby delineated as per plan." It is very
clear that the area now occupied by the lessees petitioners is the property that was actually agreed
upon by the lessees-petitioners and private
respondents-lessors as stipulated in said Contract
of Lease.
Granting that the area leased is really in excess of
7,659.84 sq. meters as claimed by respondents, the
same is already precluded from asserting such
contention. Records of the case show that
respondents-lessors by their silence and inaction for
almost five years in contesting the area subject of
the lease constitutes laches that places them in
estoppel to assert their alleged right under the
compromise agreement. It should be understood that
these pronouncements contained in the earlier Court of
Appeals decision have the force of law between the
parties. Since this decision establishes the right of
respondents to occupy by way of lease a portion of TCT
No. 44546 which may even exceed three (3) hectares, it
thus becomes imperative for petitioner to establish her
cause of action which is that respondent had beyond

that which they were entitled to occupy according to the

decision of the Court of Appeals.
The instant complaint predicated petitioner's cause of
action on her alleged ownership of Lot No. 2-F-4, without
any reference to the subsisting Contract of Lease. In
answer, respondents asserted that they had been in
actual possession of the said portion since 1962. The
decision of the MTC did not dwell on this claim of
respondents. Instead, it proceeded from the initial
premise that petitioner's right of ownership over Lot No.
2-F-4 was evidenced by the Extra-Judicial Settlement. In
order that the trial court could rule in favor of
petitioner without unsettling the earlier final and
executory decision of the Court of Appeals, it should
have been able to establish that Lot No. 2-F-4 was
outside the coverage of the Contract of Lease as
construed by the appellate court. By reason of the
conclusiveness of the final judgment of the Court of
Appeals, it was essential on her part to establish
that Lot No. 2-F-4 was not among that portion which
respondents had been occupying at the time of the
execution of the Contract of Lease.
The burden lies on petitioner as plaintiff to establish that
respondents had no legal right to enter into possession
of Lot No. 2-F-4. Such burden is further militated by the
earlier binding declarations of the Court of Appeals on
the scope in area of the Contract of Lease.
Josefina M. Cruz and Ernestina M. Concepcion v.
CA, Mariano Boy Bunag and Rolando Bunag
G.R. No. 164797 | Feb 13, 2006 | J. Chico-Nazario
FACTS
There are four cases involved in this controversy:
1) Civil Case No. 4365 for Unlawful Detainer
litigated before the MTC of Gapan, Nueva Ecija
entitled "Josefina M. Cruz and Ernestina M.
Concepcion, plaintiffs, vs. Mariano 'Boy' Bunag,
Rolando Bunag, Remedios Bunag, et al.,
Defendants." MTC ruled in favor of Josefina
Cruz and Ernestina Concepcion.
2) Civil Case No. 1600 for Quieting of Title, filed
before the RTC of Gapan, Nueva Ecija, with
"Carlos L. Bunag, Elias Bunag Natividad,
Mariano Bunag, SaludBunagClanaoc and
Juliana Bunag Arevalo, as Plaintiffs and
Josefina M. Cruz and Ernestina M. Concepcion
as Heirs of Sps. Carlos Maniquis and Marina
Bunag, as Defendants." RTC DISMISSED for
failure to prosecute.
3) Civil Case No. 2573-02 for Injunction, with
"Mariano 'Boy' Bunag and Rolando Bunag as
Petitioners against Carlos Bunag, Elias
BunagNatividad, Mariano Bunag, Salud Bunag
Clanaoc and Juliana Bunag Arevalo as
Defendants." RTC Gapan DISMISSED on the
ground of res judicata.
4) The instant controversy for Annulment of Title
With Damages (Civil Case No. 2583-02). It was
lodged by herein private respondents Mariano

"Boy" Bunag and Rolando Bunag against herein

petitioners Josefina M. Cruz and Ernestina M.
Concepcion.
Herein petitioners Cruz and Concepcion interposed a
Motion for Outright Dismissal of Civil Case No. 2583
(#4).
TC granted Herein case (#4) involve the same
parties, subject matter and issue as that in Civil Case
No. 1600 (#2) which has become final and executory
and Civil Case No. 2573-02 (#3) which was already
dismissed by this Court on the ground of res judicata.
1) In all three cases, Mariano Bunag was included
as party-plaintiff and Ernestina Concepcion as
party-defendant.
2) The subject matter involves a parcel of land
located in San Nicolas, Gapan City with an area
of 1,160 square meters, more or less.
3) The issue is who between the two parties has
the lawful title over the same.
4) Accion pendente lite is also present in herein
case which the plaintiffs and their counsel
should
have
revealed
in
the
Certificate/Verification of their complaint.
However, when herein private respondents filed MR, TC
reversed itself.
CA dismissed petition and ruled that one of the elements
of res judicata, i.e., that there must be, between the first
and the second actions, identity of parties, of subject
matter and of cause of action, is lacking.
1) The issue in the Injunction case is the propriety
of the demolition order; while in the present
action (Petition for Annulment of Title With
Damages), the pivot of inquiry is the ownership
of the controversial estate.
2) Private respondent Mariano Bunag denied that
he authorized Carlos Bunag to sign the Verified
Complaint in his behalf. Because of this,
Mariano Bunag cannot be considered as a party
litigant in the Injunction case. Concomitantly,
there is no identity of parties between the
present case and in Civil Case No. 2573-02
(Injunction).
MR Denied.
ISSUE
W/N the present action should be dismissed on the
ground of res judicata
HELD
YES. Civil Case No. 2583-02 dismissed.
Res Judicata
Under the rule of res judicata, also known as "bar by
prior judgment," a final judgment or order on the merits,
rendered by a Court having jurisdiction of the subject

matter and of the parties, is conclusive in a subsequent

case between the same parties and their successor-ininterest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing
and under the same title and in the same capacity.
The requisites essential for the application of the
principle are:
1) there must be a final judgment or order
2) said judgment or order must be on the merits
3) the Court rendering the same must have
jurisdiction on the subject matter and the parties
4) there must be between the two cases identity of
parties, identity of subject matter, and identity of
causes of action.
The issue in this case revolves around the presence of
the 2nd and 4th elements (1st and 3rd are undisputed).
Second element: Judgment on the merits
Section 3 of Rule 17 enumerates the instances where
the complaint may be dismissed due to plaintiff's fault:
1) if he fails to appear on the date for the
presentation of his evidence in chief;
2) if he fails to prosecute his action for an
unreasonable length of time; or
3) if he fails to comply with the rules or any order of
the court.
Once a case is dismissed for failure to prosecute, this
has the effect of an adjudication on the merits and is
understood to be with prejudice to the filing of another
action unless otherwise provided in the order of
dismissal. In other words, unless there be a qualification
in the order of dismissal that it is without prejudice, the
dismissal should be regarded as an adjudication on the
merits and is with prejudice.
Since the order dismissing Civil Case No. 1600 did not
contain a qualification whether same is with or without
prejudice, following Section 3, it is deemed to be with
prejudice and shall have the effect of an adjudication on
the merits.
A ruling based on a motion to dismiss, without any trial
on the merits or formal presentation of evidence, can still
be a judgment on the merits.
Fourth element: Identity of parties, subject matter,
and causes of action
Private respondent Mariano "Boy" Bunag's claim that the
Quieting of Title case was filed without his knowledge
does not inspire belief.
In the decision of the trial court in Civil Case No. 4365
(for Unlawful Detainer), it is very clear that the
defendants in said case that included both private
respondents, have knowledge of the pendency of the
Quieting of Title case. It was the defendants, through
their trial brief, that informed the court hearing the

ejectment case that a case (Civil Case No. 1600 for

Quieting of Title) is pending where the issue of
ownership is the subject of the proceedings. Thus, as
early as the pendency of the Ejectment case, private
respondents had known of the case for Quieting of Title.
If he really did not authorize Carlos Bunag to include him
as one of the plaintiffs in the Quieting of Title case, he
could have easily questioned his inclusion therein at an
earlier time. This, he did not do. He executed his affidavit
only on 14 April 2003 or more than three years after the
case for Quieting of Title has been dismissed, and after
the Injunction case which he and private respondent
Rolando Bunag filed, was dismissed. The affidavit was a
mere afterthought executed after MR in the injunction
case was denied.
The principle of res judicata may not be evaded by the
mere expedient of including an additional party to the
first and second action. Only substantial identity is
necessary to warrant the application of res judicata. The
addition or elimination of some parties does not alter the
situation. There is substantial identity of parties when
there is a community of interest between a party in the
first case and a party in the second case albeit the latter
was not impleaded in the first case.
Identity of parties:
From the face of the complaint for Quieting of Title,
private respondent Rolando Bunag was not a party
therein as his name does not appear in the title. This,
notwithstanding, his claim and that of the plaintiffs
therein, which included private respondent Mariano
Bunag, are the same to be declared the true owners
of the parcel of land covered by Original OCT No. 22262
and TCT No. 67161 of the Registry of Deeds of Nueva
Ecija.
Private respondent Rolando Bunag and the plaintiffs are
all heirs of the alleged owners of the parcel of land
covered by OCT No. 22262. Private respondent Rolando
Bunag, though not a party therein, shared an identity of
interest from which flowed an identity of relief sought,
namely, to declare them the true owners of the parcel of
land covered by OCT No. 22262 and TCT No. 67161.
Such identity of interest is sufficient to make them privyin-law, thereby satisfying the requisite of substantial
identity of parties.
Identity of subject matter:
What is involved is one and the same parcel of
land covered by TCT No. 67161.
Identity of causes of action:
Identity of causes of action does not mean absolute
identity. Otherwise, a party could easily escape the
operation of res judicata by changing the form of the
action or the relief sought.
TEST: Ascertain whether the same evidence will sustain
both actions, or whether there is an identity in the facts

essential to the maintenance of the two actions. If the

same facts or evidence would sustain both, the two
actions are considered the same, and a judgment in the
first case is a bar to the subsequent action.
Civil Case No. 1600 was for Quieting of Title, while Civil
Case No. 2583 is for Annulment of Title with Damages.
The two cases are different only in the form of action but
an examination of the allegations in the second case
would reveal that the issue raised ownership of the
land and the relief sought be declared as owner
and TCTs be issued in their names are substantially
the same.
Rationale
The doctrine of res judicata is a rule which pervades
every well-regulated system of jurisprudence and is
founded upon two grounds embodied in various maxims
of the common law, namely: (1) public policy and
necessity, which makes it to the interest of the State that
there should be an end to litigation republicaeut sit
litium, and (2) the hardship on the individual that he
should be vexed twice for the same cause
nemodebetbisvexari et eademcausa.
Sps. Ricardo and Consolacion Pascual vs. CA and
Remedios Eugenio-Gino
GR No. 115925 | August 15, 2003 | J. Carpio
Facts:
P Consolacion and R Remedios are the niece and
granddaughter, respectively, of the late Canuto Sioson.
Canuto, his sister Catalina, his brother Victoriano, and 9
others were co-owners of a parcel of land in Navotas.
The lot was surveyed and each of the 3 had 10/70 share
or 1,335 sqm. On September 26, 1956, Canuto sold his
share to P Consolacion evidenced by a Kasulatan.
Canutos children even executed an affidavit affirming
the sale. On October 28, 1968, P registered these with
the Register of Deeds which issued a TCT covering 2
lots with an area of 2,670 sqm (double the 10/70 share).
On February 4, 1988, R Remedios filed a complaint
against Ps for annulment of TCT and damages, claiming
ownership over the lots due to a provision in Catalinas
will and testament. She contends that P obtained title to
the lots through fraudulent means as the area is twice
the size of Canutos 10/70 share.
Ps sought to dismiss for prescription. Because the basis
is fraud, the action should have been filed within 4 years
from registration of title and not 19 years later. R
opposed the MtD as she only became aware of the
adverse title in February 1987, well within the 4-year
period. R also declared that she was only claiming
Catalinas 10/70 share or of the registered area.
TC: denied MtD as reckoning of prescriptive period is
evidentiary, thus needs a trial --- eventually dismissed
the case because of:

Prescription (4 years for fraud), since R knew of

the adverse title as early as November 19, 1982
when she testified against Ps in an ejectment
suit Ps had filed against tenants
R had no right of action because Catalinas will
has not yet been admitted to probate. CC 838:
no will passes real or personal property unless
allowed in probate in accordance with the ROC

CA: reversed TC = prescriptive period had not yet

expired
Not an action based on fraud but to enforce an
implied trust executed in Rs favor when P
fraudulently registered her title, the prescriptive
period of which is 10 years counted from
November 19, 1982 or when R knew of the
adverse title (see TC decision)
The unprobated last will does not preclude R as
it may subsequently be admitted to probate
Issues:
1. WON prescription bars Rs action YES
2. WON R is a real party-in-interest NO
Held:
1. What R filed was an action to enforce an implied
trust but it is already barred by prescription,
since the prescriptive period is 10 years counted
from registration of adverse title.
R did not assail the validity of the Kasulatan; in
fact, she admitted its validity but only as to the
10/70 share or 1,335 sqm. R sought the removal
of the excess 1,335 sqm from the TCT that was
issued to P. Her action is based on implied trust
under CC 1456, as P acquired the additional
1,335 sqm through mistake or fraud and thus, P
should be considered a trustee of an implied
trust for the benefit of the rightful owner, which in
this case is R.
But, R filed her complaint more than 19 years
after P registered her title. CAs basis was Adille
vs. CA wherein the court reckoned the 10-year
period not from registration of adverse title but
from actual notice by the cestui que trust
because of commission of specific fraudulent
conduct (ie. misrepresentation in an affidavit that
he was the only heir) by one party. In instant
case, there was no such fraudulent conduct.
P obtained title through the Kasulatan executed
by Canuto and the affidavit by his children, one
of whom is the mother of R. There was no
specification as to the area of the lot. It was only
in the TCT issued by the Register of Deeds that
the area doubled. This increase must be treated
as a mistake only, not a result of fraud which
must be proved by clear and convincing
evidence.

At any rate, even if Adille is applied, prescription

still bars the complaint. As executrix of Catalinas
will, R submitted an inventory of Catalinas
estate to the court, wherein P filed a motion to
exclude her lots from the inventory. R was
served a copy of the motion on November 8,
1977 which counts as actual notice of Ps
adverse title. She even filed an opposition to
said motion. If the ten-year period is to be
counted from November 8, 1977, the complaint
filed on February 4, 1988 is clearly beyond the
prescriptive period.
2. R is not a real party-in-interest because the last
will has not yet been admitted to probate. The
special proceedings for such is still pending.
Until admitted to probate, a will has no effect
whatever and no right can be claimed
thereunder.
CA opined that because R was executrix of
Catalinas last will, she has right of action.
However, R sued Ps not in such capacity as
executrix but as the alleged owner of the 1,335
sqm lot.
CA decision SET ASIDE. Rs complaint against Ps is
DISMISSED.
LITTON MILLS, INC. vs. GALLEON TRADER, INC.,
SUPREME INVESTMENT CORPORATION and
OVERSEAS INSURANCE CORPORATION
Nature: This is an appeal from the summary
judgment rendered by the CFI of Manila, Branch XVII,
declaring defendants-appellants liable to plaintiffappellee, in an action for recovery of sum of money with
damages and attorney's fees.
On 25 July 1967, a contract of dealership was entered
into between Galleon Trader, Inc. (Galleon) and Litton
Mills, Inc., (Litton) whereby the former was authorized to
distribute a particular product manufactured by the latter.
In connection with said contract, Galleon incurred an
obligation with Litton amounting to P84,368.24. As proof
of said obligation, Galleon executed an Acknowledgment
of Indebtedness and Promissory Note dated 15 August in
favor of Litton. In the same document, Supreme
Investment Corporation (Supreme) bound. itself
solidarily with Galleon in the payment of the obligation to
Litton, while a surety bond was issued by Overseas
Insurance Corporation (Overseas) in favor of Litton in an
amount not less than 150% of P64,368.24 or
P96,552.36, with a minimum maturity date of four (4)
months from 15 August 1968.
Under the terms of the agreement, the first P20,000 was
to be paid after the document was signed, and the
balance of the account was to be payable in three (3)
equal monthly installments. Should the debtor (Galleon)
fail to pay any one installment on or before due date or
violate any of the terms agreed upon, the whole
obligation would become due and demandable.

After Galleon failed to pay the first installment the whole

obligation became due and demandable. However, on
10, 12, and 30 October 1968, the debtor made partial
payments amounting to P21,456.08, leaving a balance
of P42,912.16.

appellants to indirectly review and reconsider the

decision of the Court of Appeals, which became final and
unappealable, after the petition for review on certiorari of
said Court of Appeals decision was denied by this
Court.

On December 2, 1968, separate demands were made

upon Galleon, Supreme and Overseas. Despite said
demands, no payment was made to Litton; hence, the
latter filed a complaint for recovery of sum of money
against defendants-appellants before the Court of First
Instance of Manila, Branch XVII.

On the other hand, defendants-appellants claim that

their petition earlier filed before the Court of Appeals was
a special civil action for certiorari and the issue raised
therein was purely on the question of jurisdiction .
Hence, whatever findings the Court of Appeals had
made in connection with said petition, touching on the
merits of the case, were merely obiter dicta and not
binding on the parties.

After the defendants had filed their respective answers,

Litton moved for summary judgment, on the ground that
defendants' answers failed to tender any valid defense
or raise an issue of fact that could give rise to a valid
defense. Defendants filed an opposition, but failed to
controvert the allegations therein by a counter-affidavit.
The court a quo granted the motion in favor of Litton.
Litton then filed a motion for execution pending appeal.
Despite opposition from the defendants the trial court
resolved to grant the execution for the special reason
that the appeal would only delay the giving of prompt
relief to the plaintiff, which has established a clear claim
and that it is on such proposition that a summary
judgment was promulgated. Defendants then filed a
motion for leave to file a supersedeas bond but the same
was denied.
A petition for certiorari and prohibition with preliminary
injunction was filed by the defendants with the CA citing
grave abuse of discretion. The CA denied their appeal. A
petition for review of the aforesaid Court of Appeals
decision was filed by defendants before this Court, but
the same was denied. The motion to reconsider said
resolution was likewise denied.
After the finality of the aforesaid Court of Appeals
defendants pursued the appeal at bar (having earlier
filed a notice of a peal from the summary judgment and
a joint record on appeal) again with the Court of Appeals.
On 27 January 1971, Litton moved for the dismissal of
the appeal, on the ground that the issues raised therein
had already been resolved by the Court of Appeals
which had already become final and
unappealable. Defendants-appellants filed an opposition
to said motion, alleging that the aforementioned earlier
decision of the Court of Appeals was not determinative
of the issue as to the propriety or impropriety of the
summary judgment. Finding that the appeal involves
purely questions of law, the appeal was certified by the
Court of Appeals to this Court for resolution.

The main thrust of defendants-appellants arguments

presented in this appeal is directed at the propriety of the
summary judgment, the execution pending appeal and
the denial of their motion to file a supersedeas bond to
stay execution pending appeal. These issues have
been fully threshed out, discussed and disposed of
by the Court of Appeals in resolving the petition for
certiorari earlier filed by defendants-appellants for
alleged grave abuse of discretion and excess of
jurisdiction committed by the respondent judge in
issuing the aforesaid judgment and orders. It is
significant to note that it was material and, in fact,
necessary for the Court of Appeals to first ascertain
whether the questioned acts of the respondent judge
were in accordance with law and jurisprudence, before it
could resolve the issue of alleged grave abuse of
discretion and excess of jurisdiction.
It was the finding of the Court of Appeals that the
questioned summary judgment, the execution pending
appeal and the rejection of a supersedeas bond to stay
such execution, were in accordance with law, thereby
warranting the conclusion that the respondent judge did
not act in grave abuse of discretion or in excess of
jurisdiction. This finding is now "the law of the case"
and it cannot be raised anew in this appeal.
Whatever has been irrevocably established as the
controlling legal rule between the parties in a case
continues to be the law of the case, whether correct
on general principles or not, so long as the facts on
which such decision was predicated continue to be
the facts of the case before the Court. Once a
judgment has become final, the issues therein
should be laid to rest.

WON the lower court committed an error in ordering

premature execution and in refusing to stay the same
notwithstanding offer of supersedeas bond. NO

For this Court to grant defendants-appellants' prayer to

reverse the judgment and orders appealed from and
remand the case to the trial court for a trial on the merits,
would amount to a reopening of the case which could
result in never ending appeals. Their arguments raised
in this appeal do not attack at all the merits of the
judgment finding them liable under the terms of the
agreement, but persistently impugn the procedural
aspect of the act of the court a quo in rendering a
summary judgment, allowing execution pending appeal
and denial of their supersedeas bond to stay execution
pending appeal.

RATIO: It is the contention of plaintiff-appellee that the

present appeal is an attempt on the part of defendants-

It clearly appears then that the instant appeal is merely a

ploy on the part of defendants-appellants to delay (as, in

ISSUES:
WON the trial court erred in rendering summary
judgment in favor of plaintiff-appellee and against
defendants-appellants, jointly and severally. NO

fact, they have delayed) the execution of a judgment

validly rendered against them, and the Court will not
tolerate such act. To rule otherwise would amount to a
denial and failure of justice.
WHEREFORE, the appeal is DISMISSED. Costs against
defendant-appellants. This decision is immediately
executory.
SO ORDERED.
Ayala Corporation v. Rosa-Diana Realty and
Development Corporation
GR No. 134284, December 1, 2000
Facts: Ayala registered owner of 840m2 lot in Salcedo
Village, Makati. In 1976, Ayala sold lot to Manuel Sy and
Sy Ka Kieng with Special Conditions of Sale and Deed
Restrictions: build on lot and submit building plans
before September 30, 1976 for approval, construct OOB
March 30, 1977 and completed before 1979, no resale of
property, gross floor area shall not be more than 5x the
lot area, total height not exceed 42m. Restrictions to
expire in 2025.
Manuel Sy and Sy Ka Kieng failed to construct building,
sold to Rosa-Diana with Ayalas approval in 1989. RosaDiana executed Undertaking to promise to abide by
special conditions. Rosa-Diana submitted plans for a
condo project, The Peak so Ayala released TCT.
Rosa-Diana submitted another set of plans for The
Peak substantially different from those it submitted
earlier. Original plan: 24m high, 7-storey condo,
3,968.56m2. New plan: 91.65m high, 38-storey condo,
23,305,09m2.
During construction, Ayala filed with RTC Makati action
for specific performance with application for a writ of
preliminary injunction/TRO against Rosa-Diana Realty to
comply with the contractual obligations under the deed
of restrictions annotated on its title as well as with the
building plans it submitted to the latter. In the alternative,
Ayala prayed for rescission of the sale.
RTC: denied Ayalas prayer for injunctive relief, enabling
Rosa-Diana to complete the construction of the building.
Ayala tried to cause the annotation of a notice of lis
pendens on Rosa-Dianas title. RD Makati refused
registration of the notice of lis pendens on the ground
that the case pending before RTC, being an action for
specific performance and/or rescission, is an action in
personam which does not involve the title, use or
possession of the property.
LRA: reversed the ruling of RD, saying that an action for
specific performance or rescission may be classified as
a proceeding of any kind in court directly affecting title to
the land or the use or occupation thereof for which a
notice of lis pendens may be held proper.

CA: overturned LRA (C.A. G.R. S.P. No. 29157). SC:

(G.R. No. 112774) affirmed CA; notice of lis pendens is
not proper in this instance. Case before RTC personal
action since CoA thereof arises primarily from alleged
violation of the Deed of Restrictions.
In the meantime, Ayala completed its presentation of
evidence before RTC. Rosa-Diana filed a Demurrer to
Evidence averring that Ayala failed to establish its right
to the relief sought.
RTC sustained Rosa-Dianas Demurrer to Evidence.
Ayala was guilty of abandonment and/or estoppel due to
failure to enforce the terms of deed of restrictions and
special conditions of sale against Manuel Sy and Sy Ka
Kieng. Despite violation of the special conditions of sale,
Manuel Sy and Sy Ka Kieng were able to transfer the
title to Rosa-Diana with the approval of Ayala. Ayalas
failure to enforce the restrictions with respect to
Trafalgar, Shellhouse, Eurovilla, LPL Plaza, Parc
Regent, LPL Mansion and Leronville which are located
within Salcedo Village, shows that Ayala discriminated
against those which it wants to have the obligation
enforced. For Ayala to discriminately choose which
obligor would be made to follow certain conditions and
which should not, did not seem fair and legal.
CA: affirmed RTC. Ayala barred from enforcing the Deed
of Restrictions pursuant to the doctrine of waiver and
estoppel. Under the terms of DoS, the vendee Sy Ka
Kieng assumed faithful compliance with the special
conditions of sale and with the Salcedo Village Deed of
Restrictions. One of the conditions was that a building
would be constructed within 1 year. However, Sy Ka
Kieng failed to construct the building as required under
DoS. Ayala did nothing to enforce the terms of the
contract. In fact, it even agreed to the sale of the lot by
Sy Ka Kieng in favor of petitioner Realty in 1989 or 13
years later. No justifiable reason for Ayala to attempt to
enforce the terms of the conditions of sale against the
petitioner.
Also citedAyala Corporation v. Ray Burton Development
Corporation which relied on C.A. G.R. S.P. No. 29157 in
ruling Ayala is barred from enforcing the deed
restrictions. Upon MR, CA clarified that the citation of
the decision in Ayala v. Ray Burton was made not
because said decision is res judicata to the case at bar
but rather because it is precedential under the doctrine
of stare decisis.
Issue: WoN CA erred in holding that the doctrine of the
law of the case/stare decisis operated to dismiss Ayalas
appeal
Held: Yes. The doctrine of the law of the case has
certain affinities with, but is clearly distinguishable from,
the doctrines of res judicata and stare decisis, principally
on the ground that the rule of the law of the case
operates only in the particular case and only as a rule of
policy and not as one of law. At variance with the
doctrine of stare decisis, the ruling adhered to in the

particular case under the doctrine of the law of the case

need not be followed as a precedent in subsequent
litigation between other parties, neither by the CA which
made the decision followed on a subsequent appeal in
the same case, nor by any other court. The ruling
covered by the doctrine of the law of the case is adhered
to in the single case where it arises, but is not carried
into other cases as a precedent.
On the other hand, under the doctrine of stare decisis,
once a point of law has been established by the court,
that point of law will, generally, be followed by the same
court and by all courts of lower rank in subsequent cases
where the same legal issue is raised. Stare decisis
proceeds from the first principle of justice that, absent
powerful countervailing considerations, like cases ought
to be decided alike.
CA stated that the appeal is sealed by the doctrine of
the law of the case, referring to G.R. No. 112774 entitled
Ayala v. CA. CA likewise made reference to Ayala v.
Ray Burton in ruling against petitioner saying that it is
jurisprudential under the doctrine of stare decisis.
The only issue that was raised before the CA in C.A.
G.R. S.P. No. 29157 was WoN annotation of lis pendens
is proper. CA stated the principal issue to be resolved is:
WoN an action for specific performance, or in the
alternative, rescission of deed of sale to enforce the
deed of restrictions governing the use of property, is a
real or personal action, or one that affects title thereto
and its use or occupation thereof."
CA even justified the cancellation of the notice of lis
pendens on the ground that Ayala had ample protection
should it succeed in proving its allegations regarding the
violation of the deed of restrictions, without unduly
curtailing the right of the petitioner to fully enjoy its
property in the meantime that there is as yet no decision
by RTC.
CA was aware that the issue as to WoN Ayala is
estopped from enforcing the deed of restrictions has
yet to be resolved by RTC. Though CA said that Ayala
is estopped from enforcing the deed of restrictions, it
also mentioned at the same time that this particular
issue has yet to be resolved by RTC. Notably, upon
appeal to SC, We have affirmed CA ruling only as
regards the particular issue of the propriety of the
cancellation of the notice of lis pendens.
We see no reason then, how the law of the case or stare
decisis can be held to be applicable in the case at
bench. If at all, the pronouncement made by CA that
Ayala is barred from enforcing the deed of
restrictions can only be considered as obiter dicta.
As earlier mentioned, the only issue before the CA at the
time was the propriety of the annotation of the lis
pendens. The additional pronouncement of the CA that
Ayala is estopped from enforcing the deed of restrictions
even as it recognized that this said issue is being tried
before RTC was not necessary to dispose of the issue

as to the propriety of the annotation of the lis pendens. A

dictum is an opinion of a judge which does not embody
the resolution or determination of the court, and made
without argument, or full consideration of the point, not
the proffered deliberate opinion of the judge himself. It is
not necessarily limited to issues essential to the decision
but may also include expressions of opinion which are
not necessary to support the decision reached by the
court. Mere dicta are not binding under the doctrine
of stare decisis.
While CA did not err in ruling that the present petition is
not barred by Ayala v. Ray Burton under the doctrine of
res judicata, neither, however, can the latter case be
cited as precedential under the doctrine of stare decisis.
It must be pointed out that at the time the assailed
decision was rendered, C.A. G.R. C.V. No. 46488 was
on appeal with this Court. Significantly, in the decision
We have rendered in Ayala vs. Ray Burton which
became FAE on July 5, 1999 we have clearly stated that
An examination of the decision in the said Rosa-Diana
case reveals that the sole issue raised before the
appellate court was the propriety of the lis pendens
annotation. However, CA went beyond the sole issue
and made factual findings bereft of any basis in the
record to inappropriately rule that Ayala is in estoppel
and has waived its right to enforce the subject
restrictions. Such ruling was immaterial to the resolution
of the issue of the propriety of the annotation of the lis
pendens. The finding of estoppel was thus improper and
made in excess of jurisdiction.
Wherefore, CA Decision reversed and set aside. RosaDiana to pay development charges as computed and to
pay Ayala 2.5M ED + 250k AF
MARCOPPER MINING CORPORATION, petitioner, vs.
MIGUEL GARCIA and HON. ROSALIO A. DE LEON, in
his capacity as Presiding Judge of the Court of First
Instance of Marinduque, respondents.
G.R. No. L-55935 | July 30, 1986
FACTS: Petitioner Marcopper Mining Corporation filed a
complaint for quieting of title/reconveyance and
damages against private respondent Miguel Garcia
praying that Garcia's Free Patent and Original Certificate
of Title be declared null and void. It alleged that it
acquired the land in good faith and for value from
Buenaventura Paez, who had been in open, continuous,
exclusive, adverse and notorious possession thereof
since 1921. Buenaventura inherited the land from his
father Arcadio Paez and paid its taxes. Private
respondent Garcia, through fraud, deceit, and
misrepresentation, succeeded in misleading the Director
of Lands to believe that it is still part of the public domain
and thus obtained the free patent and the corresponding
OCT in his name.
Respondent Garcia, on the other hand, alleged that he is
the sole and exclusive owner of the land as the holder of
a free patent and OCT. Paez never possessed nor

occupied the land in question in the concept of owner

but was just residing in a small portion of the land purely
by mere tolerance of the respondent. He further alleged
that Paez had executed an affidavit of quitclaim before
the Inspector of the Bureau of Lands who was
processing the free patent application, stating
categorically that he had absolutely no claim nor interest
in the land. The free patent and the corresponding OCT
issued on October 23, 1973, both had long become final
and indefeasible, hence, no longer subject to any
question nor judicial scrutiny.
Petitioner admitted that he was not able to file any
opposition against the issuance of a Free Patent to the
respondent because it had no notice of any such
application for free patent filed by respondent. However,
petitioner filed an action for the annulment of the free
patent upon its discovery in 1973 (and certificate of title
in 1975).
TC dismissed the complaint. It found that plaintiff and its
predecessor-in-interest were guilty of laches in the
assertion of their rights, if any, over subject land.
PETITONER: It is a well-settled rule that when the
motion to dismiss is based on the ground that the
complaint states no cause of action, no evidence may
be allowed and the issue should only be determined in
the light of the allegations of the complaint. The motion
hypothetically admits, for purposes of the motion itself
the truth of the allegations of fact made in the complaint,
and that the judge may not inquire into the truth of the
allegations, and find them to be false before a hearing is
had on the merits of the case. Therefore, assuming that
the facts alleged in the complaint are true, this would
mean that the land is private. The Director of Lands had
no authority to dispose of it and the court should have
ordered the reconveyance of the title to the petitioner.
ISSUE: Whether or not the complaint states a cause of
action
HELD: No, dismissal of complaint is proper for
insufficiency of cause of action.
The rule on a motion to dismiss cited by the petitioner
above, while correct as a general rule is not without
exceptions. In the present case, before the trial court
issued the questioned order dismissing petitioner's
complaint, it had the opportunity to examine the merits of
the complaint, the answer with counterclaim, the
petitioner's answer to the counterclaim and its
answer to the request for admission (the different
pleadings submitted). It was but logical for said court to
consider all of these pleadings in determining whether or
not there was a sufficient cause of action in the
petitioner's complaint. The order of dismissal was in the
nature of a summary judgment.
[Tan v. Director of Forestry] The trial court can
properly dismiss a complaint on a motion to
dismiss due to lack of cause of action even

without a hearing, by taking into consideration

the discussion in said motion and the opposition
thereto Furthermore, even if the complaint
stated a valid cause of action, a motion to
dismiss for insufficiency of cause of action will
be granted if documentary evidence admitted by
stipulation disclosing facts sufficient to defeat the
claim enabled the court to go beyond disclosure
in the complaint.
Moreover, petitioner-appellant cannot invoke the
rule that, when the ground for asking dismissal
is that the complaint states no cause of action,
its sufficiency must be determined only from the
allegations in the complaint. The rules of
procedure are not to be applied in a very rigid,
technical sense; rules of procedure are used
only to help secure substantial justice.
TC was correct in considering, in addition to the
complaint, other pleadings submitted by the parties in
deciding whether or not the complaint should be
dismissed for lack of a cause of action.
EXTRA ISSUES:
1) Land remains public
Petitioner in its complaint, impliedly admitted that the
land is public when it alleged that the free patent should
have been issued to it by virtue of the allegedly more
than 30 years possession by its predecessor-in-interest.
Furthermore, the petitioner cannot argue that the
Director of Lands had no jurisdiction to issue the free
patent to private respondent on the ground that the land
was private. The mere possession of the land for 30
years, assuming that Paez really possessed the land for
this length of time, did not automatically divest the land
of its public character.
Records reveal that no application for confirmation of
incomplete or imperfect title had been filed by
respondent's predecessors-in-interest under Section 48
(b) of the Public Land Law. Under the law, the
questioned land retains its public character. Moreover,
nowhere in the complaint nor in subsequent pleadings of
the petitioner did it state that it ever applied for a free
patent.
The lower court correctly stated that as a mining
corporation the petitioner could not legally obtain a free
patent to the land. The petitioner denies any knowledge
as to whether Paez, from whom it bought the land, ever
applied for a free patent or obtained one. The petitioner
cannot maintain that Paez was the rightful owner of the
land, much less the person qualified for the issuance of
a free patent for the latter did not do anything to secure a
title or confirm an imperfect one, assuming that he was
entitled to the same.
We, therefore, hold that prior to the award of the free
patent to the respondent, the land in dispute was part of

the public domain and the Director of Lands had the

power to dispose of it in the manner provided by law to a
qualified applicant, who in this case was ascertained to
be the respondent. Thus, the free patent issued in the
respondent's favor and the corresponding OCT in his
name are both valid and binding not only against
petitioner but against the whole world.
2) There is no implied or constructive trust created in
favor of Marcopper
An implied or constructive trust presupposes the
existence of a defrauded party who is the rightful owner
of the disputed property. In the case at bar, aside from
the fact that the petitioner and its predecessor-in-interest
never applied for a free patent although the petitioner
claims that it was entitled to the same, it also did not
allege the existence of any relationship, fiduciary or
otherwise, with the respondent which may justify the
creation of an implied trust. The respondent, therefore,
could not have committed fraud against the petitioner or
its predecessor-in-interest.
There being no implied or constructive trust, the
petitioner cannot invoke the ten-year prescriptive period
within which to file an action for reconveyance. Thus,
even assuming that the respondent was indeed guilty of
fraud in the procurement of the free patent and the
corresponding OCT in his name and that the petitioner is
the one entitled to the issuance of a patent, then
petitioner's action should have been filed within four (4)
years from the issuance of the respondent's OCT which
was on October 23, 1973.
In this case, the petitioner filed the action only on August
16, 1979, after the lapse of almost six years. Clearly, the
petitioner's action has prescribed.
The petitioner's delay in the filing of the action and its
repeated failure to oppose the respondent's application
both before the Bureau of Lands and the Register of
Deeds also lead us to no other conclusion but that it is
guilty of laches in pursuing whatever right it might have
had over the land in dispute.
TC decision affirmed.
FLUOR
DANIEL,
INC.-PHILIPPINES
vs.E.B.
VILLAROSA & PARTNERS CO., LTD.QUISUMBING, J
SUMMARY: Villarosa provided Flour Daniel with
materials for a construction project, which were to be
paid when Flour Daniel is paid by its clients. Flour Daniel
was not able to cope with its expenses so it suspended
project. Villarosa filed a complaint for sum of money.
Flour Daniel moved to dismiss for lack of cause of
action. SC: The complaint of Villarosa, taken with the
contacts attached to it, sufficiently alleges all operative
facts which would give rise to a cause of action.

DOCTRINE: The complaint may be dismissed for lack of

cause of action if it is obvious from the complaint and its
annexes that the plaintiff is not entitled to any relief.
Cause of action = ROVIN: [1] right of plaintiff, [2]
obligation of respondent, [3] violation of the right, [4]
injury results. Test of sufficiency of facts alleged as
constituting a cause of action = admitting the facts
alleged, court could render a valid verdict in accordance
with the prayer of the complaint.
FACTS:
Fluor Daniel, Inc.-Philippines(FDIP): provide
construction
and
program
management
services.
1996: FDIP entered into an agreement with FilEstate Properties, Inc. (Fil-Estate) for the
construction of the Fairways & Bluewater,
Newcoast Island Resort in Boracay Island.
E.B. Villarosa & Partners Co., Ltd. (EB
Villarosa): one of the contractors engaged by
FDIP
May 6 97: FDIP and EB Villarosa executed a
separate contract for civil structure and
architecture, for plumbing and fire protection,
and for millworks.
Fil-Estate failed to satisfy FDIPSs monthly
progress billing.
Hence, FDIP did not pay EB
FDIP apprised Fil-Estate that the project would
have to be suspended.
FDIP issued a notice of suspension of work to all
its contractors, including EB Villarosa.
EB Villarosa informed FDIP that it deemed the
contracts between them good as terminated and
demanded payment for suspension cost and for
work so far performed
Believing that FDIP was in bad faith, EB
Villarosa filed with RTC of Makati City, Br. 58, a
complaint for a sum of money and damages
FDIP filed a MTD on the ground that the
complaint failed to state a cause of action.
TC [1st assailed order]: denied the motion
o Pursuant to Sec. 4 of Rule 16, 1997
Rules of Civil Procedure, defendantmovant shall file its answer within the
balance of the period prescribed by Rule
11, same Rules, to which defendant was
entitled at the time of serving its motion,
but not less than five (5) days in any
event, computed from receipt of this
order.
nd
TC [2 impugned order]: FDIPs MR denied
o The filing of the last pleading and the
consequent joinder of issues has
ripened this case for pre-trial which is
hereby set. Let notices of pre-trial be
sent to the parties and their counsel.
EB Villarosa filed a motion to amend its
complaint followed by its amended complaint.
FDIP filed a motion to suspend proceedings.

TC: granted EB Villarosa's, but denied FDIP's

motion
o FDIP is given 15 days after receipt of
this Order within which to file its
Amended Answer to the Amended
Complaint.
FDIP filed with the CA a special civil action for
certiorari assailing the Nov 19, 1998 and March
24, 1999 Orders of the TC and praying for a
TRO and/or WPI
CA: RTC affirmed.
o TRO lifted.
Hence, the instant petition
FDIP: the complaint utterly and miserably failed
to state the operative facts which would give rise
to a cause of action against it.
o the annexes attached to EB Villarosa's
complaint and other pleadings should be
considered in determining EB Villarosa's
cause of action, or lack of it, against
FDIP.
o the CA committed manifest error when it
refused to consider the annexes to the
complaint, showing EB Villarosa's
admission that payment of its billings
was subject to the condition of timely
receipt of similar payments from FDIP.
EB Villarosa: its complaint sufficiently stated a
cause of action against FDIP and that the
annexes attached to the complaint bear no
relevance, not having been admitted by
stipulation.
o the three elements of a cause of action
are all present in this case, namely: (i)
legal right of respondent EB Villarosa to
demand payment from petitioner FDIP;
(ii) obligation of petitioner FDIP to pay
respondent EB Villarosa; and (iii) failure
of petitioner FDIP to pay respondent EB
Villarosa.
o FDIP cannot evade its liability to pay by
claiming that payments to EB are
subject to timely receipt of similar
payments from Fil-Estate.
ISSUES:
W/N the complaint sufficiently states a cause of action?
NO. The complaint should have been dismissed on the
ground of failure to state a cause of action.
HELD: Petition GRANTED. CA REVERSED AND SET
ASIDE.
RATIO:
Rules of Civil Procedure, SEC. 2. Cause of action,
defined. A cause of action is the act or omission by
which a party violates a right of another.
The essential elements of a cause of action
are as follows:
o 1) A right in favor of the plaintiff by
whatever means and under whatever
law it arises or is created;

2) An obligation on the part of the

defendant not to violate such right;
and
o 3) An act or omission on the part of
the defendant in violation of the right
of the plaintiff or constituting a
breach of the obligation of the
defendant to the plaintiff for which
the latter may maintain an action for
recovery of damages or other relief.
It is only upon the occurrence of the last element
that a cause of action arises, giving the plaintiff a
right to file an action in court for recovery of
damages or other relief.
The test of sufficiency of facts alleged in the
complaint as constituting a cause of action
is whether or not admitting the facts alleged,
the court could render a valid verdict in
accordance with the prayer of the complaint.
That in determining sufficiency of cause of
action, the court takes into account only the
material allegations of the complaint and no
other, is not a hard and fast rule.
In some cases, the court considers the
documents attached to the complaint to truly
determine sufficiency of cause of action.
A complaint should not be dismissed for
insufficiency of cause of action if it appears
clearly from the complaint and its attachments
that the plaintiff is entitled to relief.
o The converse is also true.
The complaint may be dismissed for lack of
cause of action if it is obvious from the
complaint and its annexes that the plaintiff is
not entitled to any relief.
CAB: Annexed to the subject complaint are the
three contracts governing the rights and
obligations between FDIP and EB Villarosa,
o the contract for civil structure and
architecture,
o the contract for plumbing and fire
protection, and
o the contract for millworks.
Recurring in each of the said contracts is the
provision that payment by FDIP shall be subject
to its timely receipt of similar payments from FilEstate.
2.0 PRICING BASIS
The Contract Price set forth herein is firm for the
duration of the Work and includes all
Contractor's costs, expenses, overhead and
profit for complete performance of the Work.
. . . Payment of the billings shall be subject
to the timely receipt of similar payments
from the client by Fluor Daniel. Any prolonged
delay in payment by Fluor Daniel is subject to a
suspension of activities by EBV within five (5)
work days after proper written notice is provided
by contractor to Fluor Daniel.
o

On their face, the said attached contracts, which

define and delimit the rights and obligations of
the parties, clearly require a specific condition
before petitioner FDIP may be held liable for
payment.
The complaint, however, failed to state that the
said condition had been fulfilled.
Without the said condition having taken place,
FDIP cannot be said to have breached its
obligation to pay.
EBs complaint, taken with the contracts
annexed to it, failed to pass the test of
sufficiency of cause of action.

CECILIO MENDOZA, petitioner, vs. THE HONORABLE

COURT OF APPEALS, and LUISA DE LA ROSA
MENDOZA, respondents.
G.R. No. L-23102 ; April 24, 1967 ; J. JBL Reyes
Nature: Review of CA decision
Facts: This is a suit between husband, Petitioner
Cecilio Mendoza, and wife, Respondent Luisa dela Rosa
Mendoza.
Wife filed a complaint for support against her husband,
P. Wife alleged that her husband has not provided her
support since the latter went to the US to pursue his
studies and medical profession. Husband left in 14 July
1954. Wife alleged that she needs support because she
was pregnant, sickly, and basically just needed money.
P - Husband filed MTD on the ground of LACK OF
JUDXN and IMPROPER VENUE -- > CFI denied the
MTD
P Husband filed his ANSWER with Counterclaim,
assailing the validity of his marriage to Wife.
P subsequently filed another MTD on the ground of
LACK OF CAUSE OF ACTION, invoking Art. 222 of the
NCC (now FC 151), which states:
ART. 222. No suit shall be filed or maintained between members of the
same family unless it should appear that earnest efforts toward a
compromise have been made, but that the same have failed, subject to
the limitations in article 2035.
ART. 2035. No compromise upon the following questions shall be valid:
(1) x x x; (2) The validity of a marriage or a legal separation; (3) x x x;
(4) Future support.

CFI: Denied second MTD

P Hubby went to CA, praying for a WRIT OF
PROHIBITION and PRELIM INJUNCTION.
CA: Denied Petition for issuance of WRIT OF
PROHIBITION
Issue: WON NCC 222s provision re. earnest efforts is a
condition precedent for the complaint for support

Arguments of P Husband:
1. Since the law forbids a suit being initiated (filed)
or maintained unless such earnest efforts at
compromise appear (cf. NCC 222), the showing
that efforts in question were made is a condition
precedent to the existence of the cause of
action.
2. Complaint is one for support in arrears therefore
it is subject to compromise and not within NCC
2035s prohibition
Held: No. No compromise is allowed for future support
Ratio:
Applicability of NCC 222 (now FC 151)
While we agree that petitioner's position represents a
correct statement of the general rule on the matter, we
are nevertheless constrained to hold that the Court of
Appeals and the Court of First Instance committed no
error in refusing to dismiss the complaint, for on its face,
the same involved a claim for future support that under
Article 2035 of the Civil Code of the Philippines can not
be subject of a valid compromise, and is, therefore,
outside the sphere of application of Article 222 of the
Code upon which petitioner relies. Even P-Hubbys
answer assailing the validity of his marriage is noncompromisable under NCC 2035.
Since no valid compromise is possible on these issues,
a showing of previous efforts to compromise them would
be superfluous.
Re. Nature of Complaint: Support in Arrears v Future
Support
It may be that the complaint asks for both future support
and support in arrears, as petitioner contends. But, the
possibility of compromise on the latter does not negate
the existence of a valid cause of action for future
support, to which Article 222 can not apply.
MALICDEM vs Flores
FACTS: On August 3, 1993, Dr. Apolinario G. Bautista,
the former dean of Pangasinan State University (PSU), 1
entered into a "contract of agreement" with respondent
Romeo Flores and a certain Francisco Lotivio. In the
contract, Dr. Bautista, as PSU's representative,
allowed them to lease the canteen building and
general merchandise store for a monthly rental of
P1,200. The contract also obligated them to "shoulder in
advance the cost of the required repair/renovation of the
said building." The P1,200 rent was to be deducted from
the cost of the repair/renovation until the amount they
spent therefor was paid. The term of the contract was
six years "subject to extension by agreement of the
parties."
Sept 12, 1999, Flores informed the new dean,
petitioner Dr. Melanio Malicdem, of his intention to
renew the lease contract. Dr Malicdem notified

him that the contract was not going to be

renewed. After a 2nd request, he was informed that
PSU's decision not to renew the lease was final.
Flores instituted
an action for specific
performance and damages, with prayer for a
temporary restraining order (TRO) and/or preliminary
injunction against PSU, represented by university
officials Dr. Rodolfo Asanion, President; Dr. Melanio
D. Malicdem, College Dean and Roy C. Ferrer,
Special Director for Administrative Services.
On December 20, 1999, Dr. Rodolfo Asanion, as
PSU's representative, filed an answer alleging that
the lease in question "was an unauthorized contract
for it was never approved by the President of the
PSU." Furthermore, petitioners never assured
respondent that the lease contract would be
renewed. In fact, as early as June 9, 1995, the
university had advised respondent that the lease
contract would be terminated effective at the start of
the school year 1995 to 1996. Complaint did not
state a cause of action because "a contract of
lease (was) a consensual contract and the court
(had) no authority to force the (petitioners) to enter
into one."
On the same date, petitioners filed a "motion to
dismiss (with opposition to the prayer for issuance
of a TRO and preliminary injunction)." hey
maintained that respondent had no cause of action
against them "as they (were) not legally bound to
renew the contract of lease." Petitioners also stated
that they had no intention of renewing the contract
because respondent allegedly violated several
provisions of the lease, namely: (a) failing to pay
rentals amounting to P3,510; (b) failing to settle
water and electric bills; (c) using the canteen as
dwelling place and (d) making improvements without
PSU's prior approval.
In his "comment and/or opposition " to the motion to
dismiss,
respondent
maintained
that
he
repaired/renovated the premises because of the
assurances made to him that the lease contract
would be renewed. He further asserted that the civil
case was not only for specific performance but also
for damages.
TC: this motion was filed after the filing of the
answer of the defendants, hence, it should be
denied in consonance with Section 1, Rule 16 of the
Rules of Court.
CA dismissed the petition.
Hence, this petition for review on certiorari

ISSUES:
WON MTD was properly dismissed (YES)
WON TC failed to state reason for dismissal (No)
WON there was a cause of action stated (YES)

HELD: There is no merit in the petition

RATIO:
The special civil action for certiorari filed by
petitioners with the Court of Appeals was not the
proper remedy to assail the denial by the trial court
of the motion to dismiss. The order of the trial court
denying the motion to dismiss was merely
interlocutory. It neither terminated nor finally
disposed of the case as it still left something to be
done by the court before the case was finally
decided on the merits. This being so, the general
rule applied: the denial of a motion to dismiss
cannot be questioned in a certiorari proceeding
under Rule 65 of the Rules of Court as it is a
remedy designed to correct errors of jurisdiction
and not errors of judgment.
However, in a few instances, we allowed the
denial of the motion to dismiss to be the subject
of a certiorari proceeding. The parties filing it,
however, clearly showed that the trial court
committed grave abuse of discretion in denying the
motion. Not so in this case, however, as no grave
abuse of discretion was demonstrated to have
been committed by the trial court in denying
petitioners' motion to dismiss. The CA did not err
in affirming
First, the motion to dismiss was clearly
dismissible because petitioners had already filed
an answer before they filed the motion to
dismiss.
Section 1, Rule 16 of the Rules of Court provides
that the motion to dismiss must be filed "within the
time for but before filing the answer to the complaint
or pleading asserting a claim."
CAB: The records undeniably show that petitioners,
through Dr. Asanion, filed an answer dated
December 20, 1999, a month before they filed the
motion to dismiss on January 21, 2000. The answer
filed by Dr. Asanion as PSU's representative was
binding on petitioners because they were not sued in
their personal capacities but as PSU officials.
trial court did nOT fail to state its reasons for
denying the motion
The trial court's order denying the motion to dismiss
complied fully with Section 3, Rule 16. 34 It narrated
the conflicting claims of the parties and concluded
that their divergent positions were best threshed out
in a full-blown hearing.
It also denied the motion to dismiss on the basis of
Section 1, Rule 16 for having been filed after the
filing of an answer. This was sufficient to deny the
said motion.
Besides, the requirement of specificity of rulings
under Section 14, Article VIII 35 of the Constitution
and Section 1, Rule 36 36 is stringently applied only

to judgments and final orders. A liberal interpretation

of this requirement, on the other hand, may be given
to interlocutory orders.
FLORES did NOT fail to state a cause of action
allegations in the complaint constituted a cause of
action for damages.
Section 1, Rule 8 of the Rules of Court: complaint
needs only to allege the ultimate facts upon which
plaintiff bases his claim.
complaint must make a concise statement of the
ultimate facts or the essential facts constituting the
plaintiff's cause of action. A fact is essential if it
cannot be stricken out without leaving the statement
of the cause of action inadequate.

A complaint states a cause of action only when it

has its three indispensable elements, .namely:
(1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created;
(2) an obligation on the part of the named defendant to
respect or not to violate such right; and
(3) an act or omission on the part of such defendant
violate of the right of plaintiff or constituting a breach of
the obligation of defendant to the plaintiff for which the
latter may maintain an action for recovery of damages
It might have been true that PSU was under no legal
compulsion to renew the contract with respondent. It
might have also been true that there was a violation
of Sections 531 and 533 of the GAAM due to the
absence of public bidding and violation of the twoyear limit on a revenue-generating contract.
However, nothing is more settled than the rule
that, in a motion to dismiss for failure to state a
cause of action, the focus is on the sufficiency,
not the veracity, of the material allegations.
Moreover, the determination is confined to the four
corners of the complaint and nowhere else.
In a motion to dismiss a complaint based on lack
of cause of action, the question submitted to the
court for determination is the sufficiency of the
allegations made in the complaint to constitute a
cause of action and not whether those
allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged
in the complaint.
The test of the sufficiency of the facts alleged in
the complaint is whether or not, admitting the facts
alleged, the court could render a valid judgment
upon the same in accordance with the prayer of the
complaint.
If the allegations of the complaint are sufficient in
form and substance but their veracity and
correctness are assailed, it is incumbent upon the
court to deny the motion to dismiss and require the
defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties

can be ascertained at the trial of the case on the

merits.
issue of whether or not respondent in fact secured
PSU's prior approval before he undertook the said
repair/renovation was a matter best threshed out in a
full-blown trial.
While, in the resolution of a motion to dismiss, the
truth of the facts alleged in the complaint are
theoretically admitted, such admission is merely
hypothetical and only for the purpose of resolving
the motion
In case of denial, the movant is not to be deprived of
the right to submit its own case and to submit
evidence to rebut the allegation in the complaint.
Neither will the grant of the motion by a trial court
and the ultimate reversal thereof by an appellate
court have the effect of stifling such right. So too, the
trial court should be given the opportunity to
evaluate the evidence, apply the law and decree the
proper remedy. Hence, we remand the instant case
to the trial court to allow private respondents to have
their day in court.