1. Guillermo v. Philippine Information Agency, G.R. No.

223751, March 15, 2017

Failure to state a cause of action, test of the sufficiency of the cause of action

Facts:

(On December 10, 2010) Petitioners Miguel “Lucky” Guillermo (Guillermo) and AV Manila Creative
Production Co. (AV Manila) filed a Complaint for a sum of money and damages before the Regional
Trial Court of Marikina City, against Respondents Philippine Information Agency (PIA) and Department
of Public Works and Highway (DPWH) for the “Joyride” project, and advocacy campaign the purpose
of which was to counteract the public’s negative perception of the performance of the outgoing Arroyo
Administration. It turned out that after all the deliverables had been delivered by the Petitioners under
the said Project, and despite several demands made by them, no payments were made by the PIA unto
which Guillermo was instructed to send the billings directly.

The Complaint attempted to lay down the elements of a contract between the petitioners on one hand,
and respondents on the other, on which to enforce the claim. Thus, it alleged a series of
communications, meetings, and memoranda, all tending to show that petitioners agreed to complete
and deliver the “Joyride” project, and that respondents agreed to pay P25,000,000.00 as consideration.

The Office of the Solicitor General moved to dismiss the Complaint for failure to state a cause of action
(and for failure to exhaust administrative remedies). Then, the RTC of Marikina granted the Office of
the Solicitor General’s Motion to Dismiss, finding that, although a contract existed between petitioners
and Acting Secretary Domingo of the DPWH, this contract was not binding on the government of the
Philippines. Because of absence of legal requirements for entering into a contract with the government,
petitioners could not file a complaint for specific performance against the government. Petitioners
moved for reconsideration, but the same was denied.

Petitioners appealed to the Court of Appeals which affirmed the RTC’s Order dismissing petitioners’
Complaint. Petitioners moved for reconsideration, but the same was denied.

Issue:

Whether the Complaint was properly dismissed for failure to state a cause of action.

Ruling:

In Zuñiga-Santos v. Santos-Gran, 738 SCRA 33 (2014):

A complaint states a cause of action if it sufficiently avers the existence of the three (3)
essential elements of a cause of action, namely: (a) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (b) an obligation on the part
of the named defendant to respect or not to violate such right; and (c) an act or omission
on the part of the named defendant violative of the right of the 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. If the allegations of the complaint do not state the
concurrence of these elements, the complaint becomes vulnerable to a motion to dismiss on
the ground of failure to state a cause of action.

It is well to point out that the plaintiff’s cause of action should not merely be “stated” but,
importantly, the statement thereof should be “sufficient.” This is why the elementary test in
a motion to dismiss on such ground is whether or not the complaint alleges facts which if
 true would justify the relief demanded. As a corollary, it has been held that only ultimate
facts and not legal conclusions or evidentiary facts are considered for purposes of applying
the test. This is consistent with Section 1, Rule 8 of the Rules of Court which states that the
complaint need only allege the ultimate facts or the essential facts constituting the plaintiff’s
cause of action. A fact is essential if they cannot be stricken out without leaving the statement
of the cause of action inadequate. Since the inquiry is into the sufficiency, not the veracity,
of the material allegations, it follows that the analysis should be confined to the four corners
of the complaint, and no other.

Thus, to determine the sufficiency of a cause of action in a motion to dismiss, only the facts alleged in
the complaint should be considered, in relation to whether its prayer may be granted. In Heirs of
Maramag v. Maramag, 588 SCRA 774 (2009):

When a motion to dismiss is premised on this ground, the ruling thereon should be based
only on the facts alleged in the complaint. The court must resolve the issue on the strength
of such allegations, assuming them to be true. The test of sufficiency of a cause of
action rests on whether, hypothetically admitting the facts alleged in the
complaint to be true, the court can render a valid judgment upon the same, in
accordance with the prayer in the complaint. This is the general rule.

To sufficiently state a cause of action, the Complaint should have alleged facts showing that the trial
court could grant its prayer based on the strength of its factual allegations.

In here, to support the Complaint for a sum of money and damages, the Complaint attempted to lay
down the elements of a contract between the petitioners on one hand, and respondents on the other
alleging a series of communications, meetings, and memoranda, all tending to show that petitioners
agreed to complete and deliver the “Joyride” project, and that respondents agreed to pay
P25,000,000.00 as consideration. Assuming they are true, the same were not sufficient to establish
that the RTC could grant its prayer. The Complaint attempts to establish a contract that involves
expenditure of public funds. As pointed out by respondents, contracts involving the expenditure of
public funds have additional requisites to be valid. Sections 46, 47, and 48 of Book V, Title I, Subtitle
B, Chapter 8 of the Administrative Code provides for essential requisites for the validity of contracts.

The Administrative Code of 1987 expressly prohibits the entering into contracts involving the
expenditure of public funds unless two prior requirements are satisfied. First, there must be an
appropriation law authorizing the expenditure required in the contract. Second, there must be attached
to the contract a certification by the proper accounting official and auditor that funds have been
appropriated by law and such funds are available. Failure to comply with any of these two requirements
renders the contract void.

The Complaint, however, completely ignored the foregoing requisites for the validity of contracts
involving expenditure of public funds. Thus, the Regional Trial Court could not order the enforcement
of the alleged contract on the basis of the Complaint, and the Complaint was properly dismissed for
failure to state a cause of action.

2. Mangila v. Court of Appeals, G.R. No. 125027, August 12, 2002

Venue of personal actions

Facts:
(Sometime in January 1988) Petitioner Anita Mangila, (an exporter of sea foods and doing business under
the name and style of Seafoods Products), contracted the freight forwarding services of Private respondent
Loreta Guina, (the President and General Manager of Air Swift International, a single registered
proprietorship engaged in the freight forwarding business), for shipment of petitioner’s products, such as
crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed
to pay private respondent cash on delivery.

Petitioner Mangila was able to pay private respondent on the first shipment, however, she was not able to
shipping charges for the next three shipments. Despite several demands, Petitioner Mangila never paid
Private Respondent Guina. Thus, a case for the collection of sum of money was filed with Regional Trial
Court of Pasay City by Private Respondent Guina.

Petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue because Private
Respondent Guina’s invoice for the freight forwarding service stipulates that “if court litigation becomes
necessary to enforce collection x x x the agreed venue for such action is Makati, Metro Manila.

The RTC dismissed the motion to dismiss to which CA affirmed.

Issue:

Whether there was improper venue.

Ruling:

We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner
Mangila.

Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is “where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of
the plaintiffs resides, at the election of the plaintiff.” The exception to this rule is when the parties
agree on an exclusive venue other than the places mentioned in the rules1. But, this exception is not
applicable in this case. Hence, following the general rule, the instant case may be brought in the place of
residence of the plaintiff or defendant, at the election of the plaintiff (private respondent herein).

In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga
while private respondent resides in Parañaque City. However, this case was brought in Pasay City, where
the business of private respondent is found. There is no law authorizing sole proprietorships to file a suit
in court. A sole proprietorship does not possess a juridical personality separate and distinct from the
personality of the owner of the enterprise. The law merely recognizes the existence of a sole proprietorship
as a form of business organization conducted for profit by a single individual and requires its proprietor or
owner to secure licenses and permits, register its business name, and pay taxes to the national government.

1 The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.
However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. The
parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties’ intention to restrict the
filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are
followed. Venue stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set
forth in Rule 4 of the Revised Rules of Court. In the absence of qualifying or restrictive words, they should be considered merely as
an agreement on additional forum, not as limiting venue to the specified place.

In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the
invoice that would evince the intention of the parties that Makati is the “only or exclusive” venue where the action could be
instituted. We therefore agree with private respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend
an action in court.

It is the residence of the proprietor which should be considered as one of the proper venues, not the
business address of the sole proprietorship. Thus, private respondent should have filed this case either in
San Fernando, Pampanga (petitioner’s residence) or Parañaque (private respondent’s residence). Since
private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed
on the ground of improper venue.

3. Heirs of Andres Naya v. Naya, G.R. No. 215759, November 28, 2016

What constitutes forum shopping

Facts:

Petitioners filed a complaint for quieting of title, reconveyance of ownership, damages, and attorney’s fees
before the RTC, Branch 7 of Cebu City against respondents involving a parcel of land at V. Rama Ave.,
Cebu City.

(In its Order dated August 9, 2010, the RTC dismissed the complaint for failure to state a cause of action
(and laches). The RTC ruled that the assailed transactions were conducted through the deceit and
fraudulent scheme of Orlando, yet, petitioners did not give details of the same, in violation of Section 5, 11
Rule 8 of the Rules of Court. The CA denied the appeal and affirmed the findings of the RTC.)

In the instant petition to the Supreme Court, Spouses Ruiz (one of the respondents) raised the argument
that the petition should be dismissed because petitioners are guilty of forum shopping. Spouses Ruiz cite a
Complaint for Quieting of title, Declaration of Absolute Nullity of Deed of Sale, Transfer Certificate of Title
No. 107-2010001175, Tax Declaration, and Damages filed by petitioners against respondents and Spouses
Romeo O. Jatico before the RTC, Branch 23 of Cebu City. Spouses Ruiz allege that this complaint has the
same facts and issues as the case at bar.

Issue:

Whether there was forum shopping.

Ruling:

(The SC finds that it would be prudent as well that the question as to whether petitioners are guilty of
forum shopping be threshed out in a trial. Respondents argue that petitioners are guilty of forum shopping
because they also filed another case for quieting of title, declaration of absolute nullity of deed of sale,
transfer certificate of title, tax declaration, and damages before the RTC, Branch 23 of Cebu City, docketed
as Civil Case No. CEB-38883.32 Respondents thusly pray that the case be dismissed on this ground.) Forum
shopping, however, may or may not be deliberate, intentional, or willful. The consequences in relation to
the dismissal of the cases simultaneously or successively filed vary as to whether forum shopping is
deliberate, intentional, or willful.—Forum shopping, however, may or may not be deliberate, intentional, or
willful. The consequences in relation to the dismissal of the cases simultaneously or successively filed vary
as to whether forum shopping is deliberate, intentional, or willful. If the forum shopping is not considered
willful and deliberate, the subsequent case shall be dismissed without prejudice, on the ground of either
litis pendentia or res judicata. If the forum shopping is willful and deliberate, both (or all, if there are more
than two) actions shall be dismissed with prejudice. However, the question as to whether there was
deliberate or willful intent to forum shop is a question of fact, which the trial court is in the best
position to determine.

4. Chu v. Mach Asia Trading Corp. G.R. No. 184333, April 1, 2013

Facts:

Issue:

Ruling:

Remedial Law; Summons; Service of Summons; Substituted Service of Summons; As a rule, summons
should be personally served on the defendant. It is only when summons cannot be served personally within
a reasonable period of time that substituted service may be resorted to.―Courts acquire jurisdiction over
the plaintiffs upon the filing of the complaint. On the other hand, jurisdiction over the defendants in a civil
case is acquired either through the service of summons upon them or through their voluntary appearance
in court and their submission to its authority. As a rule, summons should be personally served on the
defendant. It is only when summons cannot be served personally within a reasonable period of time that
substituted service may be resorted to. Section 7, Rule 14 of the Rules of Court provides:

SEC. 7. Substituted service.—If, for justifiable causes, the defendant cannot be served within a reasonable
time as provided in the preceding section, service may be effected (a) by leaving copies of the summons
at the defendant’s residence with some person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant’s office or regular place of business with some competent person in
charge thereof.

Same; Same; Same; Same; In case of substituted service, there should be a report indicating that the
person who received the summons in the defendant’s behalf was one with whom the defendant had a
relation of confidence, ensuring that the latter would actually receive the summons.―It is to be noted that
in case of substituted service, there should be a report indicating that the person who received the
summons in the defendant’s behalf was one with whom the defendant had a relation of confidence,
ensuring that the latter would actually receive the summons. Also, impossibility of prompt personal service
must be shown by stating that efforts have been made to find the defendant personally and that such
efforts have failed. This is necessary because substituted service is in derogation of the usual method of
service. It is a method extraordinary in character, hence, may be used only as prescribed and in the
circumstances authorized by statute. The statutory requirements of substituted service must be followed
strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered
ineffective.

Same; Same; Same; Same; It was not shown that the security guard who received the summons in behalf
of the petitioner was authorized and possessed a relation of confidence that petitioner would definitely
receive the summons.―Clearly, it was not shown that the security guard who received the summons in
behalf of the petitioner was authorized and possessed a relation of confidence that petitioner would
definitely receive the summons. This is not the kind of service contemplated by law. Thus, service on the
security guard could not be considered as substantial compliance with the requirements of substituted
service.
Same; Same; Same; Same; As a rule, if defendants have not been validly summoned, the court acquires
no jurisdiction over their person, and a judgment rendered against them is null and void.―The service of
summons is a vital and indispensable ingredient of due process. As a rule, if defendants have not been
validly summoned, the court acquires no jurisdiction over their person, and a judgment rendered against
them is null and void. Since the RTC never acquired jurisdiction over the person of the petitioner, the
judgment rendered by the court could not be considered binding upon him for being null and void.