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RULE 2 DIGESTED CASES:


EIRS OF TOMAS DOLLETON, HERACLIO
ORCULLO, REMEDIOS SAN PEDRO, HEIRS OF
BERNARDO MILLAMA, HEIRS OF AGAPITO
VILLANUEVA, HEIRS OF HILARION GARCIA,
SERAFINA SP ARGANA, and HEIRS OF
MARIANO VILLANUEVA,
Petitioners,
- versus -

CHICO-NAZARIO, J.:
Present:
QUISUMBING,*
YNARES-SANTIAGO, J.,
Chairperson,
CARPIO MORALES,**
CHICO-NAZARIO, and
PERALTA, JJ.

FIL-ESTATE MANAGEMENT INC., ET AL. AND


THE REGISTER OF DEEDS OF LASPIAS CITY,
Re s p o n d e n t s .

Promulgated:
April 7, 2009

x---------------------------- ---------------------x

DECISION

G.R. No. 170750

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing (1) the Decision [1] dated 16 September 2005, rendered by the Court of Appeals
in CA-G.R. CV No. 80927, which affirmed the Resolutions [2] dated 8 September 2000 and
30 June 2003, of the Regional Trial Court (RTC), Branch 253, of Las Pias City, dismissing
the Complaints in Civil Cases No. LP-97-0228, No. LP-97-0229, No. LP-97-0230, No. LP-970231, No. LP-97-0236, No. LP-97-0237, No. LP-97-0238, and No. LP-97-0239; and (2)
the Resolution dated 9 December 2005 of the same court denying petitioners Motion for
Reconsideration.
In October 1997, petitioners Heirs of Tomas Dolleton, [3] Heraclio Orcullo,
Remedios San Pedro, et al.,[4] Heirs of Bernardo Millama, et al.,[5] Heirs of Agapito
Villanueva, et al.,[6] Heirs of Hilarion Garcia, et al.,[7] Serafina SP Argana, et al.,[8] and Heirs
of Mariano Villanueva, et al.[9] filed before the RTC separate Complaints for Quieting of
Title and/or Recovery of Ownership and Possession with Preliminary Injunction/Restraining
Order and Damages against respondents Fil-Estate Management Inc., Spouses Arturo E.
Dy and Susan Dy, Megatop Realty Development, Inc., [10] and the Register of Deeds of Las
Pias. The Complaints, which were later consolidated, were docketed as follows:
1.

Civil Case No. L-97-0228, which was filed by the Heirs of


Tomas Dolleton covering a parcel of land with an area of 17,681
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal under Psu-235279 approved by the Director
of the Bureau of Lands on 20 February 1959;

2.

Civil Case No. L-97-0229, which was filed by Heraclio Orcullo


covering two (2) parcels of land with the total areas of 14,429
square meters and 2,105 square meters, respectively, located in
Magasawang Mangga, Barrio Pugad Lawin, Las Pias, Rizal under
Lots 1 and 2, Psu-169404 approved by the Director of the Bureau
of Lands on 4 December 1959;

3.

Civil Case No. L-97-0230, which was filed by Remedios San


Pedro, et al., covering a parcel of land with an area of 17,159
square meters, located in Barrio Pugad Lawin, Las Pias, Rizal
under Psu-96901 approved by the Director of the Bureau of Lands
on 21 July 1933;

4.

Civil Case No. L-97-0231, which was filed by the Heirs of


Bernardo Millama, et al., covering a parcel of land with an area of
23,359 square meters, located in Magasawang Mangga, Barrio
Pugad Lawin, Las Pias, Rizal under Psu-96905 approved by the
Director of the Bureau of Lands on 16 January 1933;

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5.

6.

7.

8.

Civil Case No. L-97-0236, which was filed by the Heirs of


Agapito Villanueva covering a parcel of land with an area of 10,572
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal;
Civil Case No. L-97-0237, which was filed by the Heirs of
Hilarion Garcia, et al., covering a parcel of land with an area of
15,372 square meters, located in Magasawang Mangga, Barrio
Pugad Lawin, Las Pias, Rizal under Psu-96920 approved by the
Director of the Bureau of Lands on 16 January 1933;
Civil Case No. L-97-0238, which was filed by Serafina SP
Argana, et al., covering a parcel of land with an area of 29,391
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal under Psu-96909 approved by the Director
of the Bureau of Lands on 18 January 1933; and
Civil Case No. L-97-0239, which was filed by the Heirs of
Mariano Villanueva, et al., covering a parcel of land with an area of
7,454 square meters, located in Magasawang Mangga, Barrio
Pugad Lawin, Las Pias, Rizal under Psu-96910 approved by the
Director of the Bureau of Lands on 16 January 1933.

The eight Complaints[11] were similarly worded and contained substantially identical
allegations. Petitioners claimed in their Complaints that they had been in continuous, open,
and exclusive possession of the afore-described parcels of land (subject properties) for more
than 90 years until they were forcibly ousted by armed men hired by respondents in
1991. They had cultivated the subject properties and religiously paid the real estate taxes for
the same. Respondents cannot rely on Transfer Certificates of Title (TCTs) No. 9176, No.
9177, No. 9178, No. 9179, No. 9180, No. 9181 and No. 9182,[12] issued by the Registry of
Deeds of Las Pias in their names, to support their claim over the subject properties since,
petitioners averred, the subject properties were not covered by said certificates. Petitioners
also alleged that said TCTs, purportedly derived from Original Certificate of Title (OCT) No.
6122, issued in favor of Jose Velasquez, were spurious.
To support their narration of facts, petitioners cited Vda. de Cailles v.
Mayuga[13] and Orosa v. Migrino,[14] which both involved the parcel of land referred to as Lot 9,
Psu-11411, Amd-2. In these cases, the Court adjudicated said piece of land to Dominador
Mayuga, who later transferred it to Marciano Villanueva, who sold it to Nicolas Orosa. Pending
a controversy between the Heirs of Nicolas Orosa and Jose Velasquez, Delta Motors
Corporation somehow acquired the rights over their conflicting claims to the land and
managed to obtain certificates of title over the same. Delta Motors Corporation sold the land
to Goldenrod, Inc., which finally transferred it to a consortium composed of respondents,
Peaksun Enterprises and Export Corporation, and Elena Jao.
Petitioners stressed, however, that in Vda. de Cailles and Orosa, the land that was
transferred was Lot 9, Psu-11411, Amd-2, measuring 53 hectares, which was only a portion of
the entire Lot 9, Psu-11411, with a total area of 119.8 hectares. And respondents TCTs,
derived from OCT No. 6122 in the name of Jose Velasquez, covered only 26.44 hectares or

roughly half of Lot 9, Psu-11411, Amd-2. Petitioners averred that the subject properties were
not included in the 53 hectares of Lot 9, Psu-11411, adjudicated to Dominador Mayuga.
Petitioners thus sought from the RTC that an order be issued enjoining respondents
from making any developments on the subject properties, and that after hearing, judgment
be rendered as follows:
A. [Herein respondents] be ordered to recognize the rights of
[herein petitioners]; to vacate the subject lot and peacefully surrender
possession thereof to [petitioners]; and that Transfer Certificate of Title
Numbers 9176, 9177, 9178, 9179, 9180 and 9182 be cancelled by the
Register of Deeds for Las Pinas, Metro Manila, insofar as they are or may be
utilized to deprive [petitioners] of the possession and ownership of said lot.
B. Making the preliminary injunctions permanent.
C. An order be issued directing [respondents] to pay [petitioners]
the sums of:
a.

P500,000.00 as moral damages;

b.

P150,000.00 as exemplary damages;

c.

P100,000.00 as attorneys fees; and,

d.

Cost of suit.

[Petitioners] further pray for such other affirmative reliefs as are


deemed just and equitable in the premises.[15]
Respondents filed before the RTC a Motion to Dismiss and Opposition to Application
for a Temporary Restraining Order/Writ of Preliminary Injunction. [16] They moved for the
dismissal of the eight Complaints on the grounds of (1) prescription; (2) laches; (3) lack of
cause of action; and (4) res judicata.[17]
Respondents argued that the Complaints sought the annulment of the certificates of
title that were issued in their names. Section 32 of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree, [18] provides that the decree of registration and the
certificate of title issued pursuant thereto can only be nullified on the ground of fraud within
one year after the entry of such decree of registration. Respondents TCTs could be traced
back to the decree/s of registration entered in 1966/1967, which resulted in the issuance of
OCT No. 6122 in the name of Jose Velasquez, respondents predecessor-in-interest. Hence,
the filing of the Complaints only in October 1997 was made beyond the prescription period
for assailing a decree of registration and/or the certificate of title issued pursuant
thereto. Additionally, petitioners Complaints were actions for reconveyance of the subject
properties based on implied trust, the filing of which prescribes after 10 years from the time
said properties were first registered under the Torrenssystem, in accordance with Articles
1144 and 1456 of the Civil Code.[19] Since the subject properties were first registered in

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1966/1967, then the actions for their reconveyance, instituted only in 1997 or 30 years later,
should be dismissed on the ground of prescription.[20]
Respondents also contended that petitioners were guilty of laches. Despite their
alleged possession of the subject properties for 90 years, petitioners failed to take any steps
to oppose the land registration cases involving the same properties or to seek the
nullification of the decrees of registration and certificates of title which were entered and
issued as early as 1966 and 1967.[21]
Moreover, respondents maintained that the Complaints should be dismissed for
failure to state a cause of action. Even assuming that petitioners were able to prove their
allegations of longtime possession and payment of realty taxes on the subject properties, and
to submit a sketch plan of the same, these cannot defeat a claim of ownership over the
parcels of land, which were already registered under the Torrens system in the name of
respondents and the other consortium members.[22]
Lastly, respondents insisted that the Complaints should be dismissed on the ground
of res judicata.[23] By virtue of the decided cases Vda. de Cailles and Orosa, which petitioners
themselves cited in their Complaints, any claims to all portions of Lot 9, Psu 11411, Amd-2
are barred by res judicata. In said cases, respondents predecessors-in-interest were
declared owners of Lot 9, Psu 11411, Amd-2. Respondents also referred to a
Decision[24] dated 17 December 1991 rendered by the Metropolitan Trial Court (MTC) of Las
Pias, Branch 79, in Civil Case No. 3271, entitled Heirs of Benito Navarro v. Fil-Estate
Management Inc.[25] In its Decision, the MTC declared that therein plaintiffs were not in
possession of the land, which it found to belong to respondent Fil-Estate Management Inc.
On 11 June 1998, the Heirs of Jose Velasquez (intervenors) filed a Motion for
Intervention with Leave of Court and a Complaint-in-Intervention, alleging that the subject
properties, covered by TCTs No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, and No. 9181,
were once owned by the Spouses Jose Velasquez and Loreto Tiongkiao. Without settling the
conjugal partnership after the death of his wife Loreto Tiongkiao, and without obtaining the
intervenors consent, Jose Velasquez, together with J.V. Development Corporation, Delta
Motors Corporation, and Nicolas Orosa, transferred all their rights to the subject properties to
Goldenrod, Inc., from which respondents acquired the same. The intervenors sought the
cancellation and nullification of respondents certificates of title insofar as their mothers
share in the subject properties was concerned.[26]
On 8 September 2000, the RTC issued a Resolution [27] in Civil Case No. LP-97-0228
granting respondents Motion to Dismiss. The trial court determined that the subject
properties were already registered in the names of respondents, and that petitioners were
unable to prove by clear and convincing evidence their title to the said properties. The
dispositive part of the RTC Resolution reads:
On the basis of the foregoing reasons alone, the instant complaint
should immediately be DISMISSED. Accordingly, the prayer for a temporary
restraining order and preliminary injunction is DENIED. This, however, is
without prejudice to the complaint-in-intervention filed by intervenors over
the disputed properties, their undivided interests being intertwined and
attached to the disputed properties wherever it goes and whoever is in

possession of the same, their right to bring action to pursue the same being
imprescriptible.[28]
On 12 August 2002, respondents filed a Motion for Clarification [29] asking the RTC
whether the order of dismissal of Civil Case No. LP-97-0228, included Civil Cases No. LP-970229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-97-0238, and
No. LP-97-0239. In a Resolution[30] dated 30 June 2003, the RTC reiterated its Resolution
dated 8 September 2000 dismissing the Complaint of petitioners Heirs of Tomas Dolleton in
Civil Case No. LP-97-0228; and declared that the other cases Civil Cases No. LP-97-0229,
No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-97-0238, and No. LP97-0239 were similarly dismissed since they involved the same causes of action as Civil
Case No. LP-97-0228.
On 9 July 2003, petitioners filed a consolidated Notice of Appeal questioning the 30
June 2003 Resolution of the RTC. [31] They accordingly filed an appeal of the said Resolution of
the trial court with the Court of Appeals, docketed as CA-G.R. CV No. 80927.
In its Decision dated 16 September 2005 in CA-G.R. CV No. 80927, the Court of
Appeals denied petitioners appeal and affirmed the RTC Resolutions dated 8 September
2000 and 30 June 2003. The appellate court found that respondents titles to the subject
properties were indefeasible because they were registered under the Torrens system. Thus,
petitioners could not say that any claim on the subject properties casts a cloud on their title
when they failed to demonstrate a legal or an equitable title to the same. The Court of
Appeals also ruled that petitioners actions had already prescribed. Section 32 of Presidential
Decree No. 1529 requires that an action assailing a certificate of title should be filed within
one year after its issuance. Moreover, actions assailing fraudulent titles should be filed within
10 years after the said titles were issued. The appellate court further decreed that the cases
for quieting of title should be dismissed based on the allegation of petitioners themselves
that the parcels of land covered by respondents certificates of title were not the subject
properties which petitioners claimed as their own.[32]
[33]

Petitioners filed a Motion for Reconsideration of the afore-mentioned Decision,


which the Court of Appeals denied in a Resolution dated 9 December 2005. [34]
Hence, the present Petition, where petitioners made the following assignment of

errors:
I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT AFFIRMED
THE RESOLUTION OF THE COURT A QUO, DATED SEPTEMBER 8, 2000 AND
THE RESOLUTION DATED JUNE 30, 2003, BASED PURELY ON THE
TECHNICALITY OF THE LAW RATHER THAN THE LAW THAT PROTECT[S] THE
PROPERTY RIGHTS OF THE PETITIONERS WHO WERE FORCIBLY EVICTED
FROM THEIR RESPECTIVE LANDHOLDINGS BY THE USED (sic) OF BRUTE
FORCE OF ARMED MEN ON THE BASIS OF THE TITLES OF THE PRIVATE
RESPONDENTS, IN VIOLATION OF THEIR PROPERTY RIGHTS AND OF DUE
PROCESS.

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II
THAT THE COURT OF APPEALS GRAVELY ERRED WHEN IT AFFIRMED THE
RESOLUTION OF THE COURT A QUO, DESPITE THE FACT THAT A FULL
BLOWN HEARING ON THE MERIT[S] IS NECESSARY TO DETERMINE THE
ACTUAL LOCATION ON THE ACTUAL GROUND [OF] THE LOTS COVERED BY
THE PRIVATE RESPONDENT (sic) TITLES, LOTS COVERED BY ITS TITLES ARE
MORE THAN THREE HUNDRED (300 m) METERS AWAY TO THE WESTNORTHWEST FROM THE CONSOLIDATED LOTS OF THE HEREIN PETITIONERS
AND THEREFORE PRIVATE RESPONDENTS BRUTAL ACTION IN FORCIBLY
EVICTING THE PETITIONERS FROM THEIR RESPECTIVE LANDHOLDINGS BY
THE USED (sic) OF BRUTE FORCE OF ARMED MEN, ARE PURELY CASES OF
LANDGRABBING.[35]
This Petition is meritorious.
The main issue in this case is whether the RTC properly granted respondents motion
to dismiss. This Court finds that the trial court erred in dismissing petitioners Complaints.
Complaints sufficiently
cause of action.

stated

Respondents seek the dismissal of petitioners Complaints for failure to state a


cause of action. Even assuming as true that the subject properties have been in the
possession of petitioners and their predecessors-in-interest for 90 years; that petitioners have
been paying the realty taxes thereon; and that petitioners are able to submit a sketch plan of
the subject properties, respondents maintain that their ownership of the subject properties,
evidenced by certificates of title registered in their names, cannot be defeated. This
contention is untenable.
Respondents mistakenly construe the allegations in petitioners Complaints. What
petitioners alleged in their Complaints was that while the subject properties were not covered
by respondents certificates of title, nevertheless, respondents forcibly evicted petitioners
therefrom. Hence, it is not simply a question of whether petitioners possession can defeat
respondents title to registered land. Instead, an initial determination has to be made on
whether the subject properties were in fact covered by respondents certificates of title.
Section 2, Rule 2 of the Rules of Civil Procedure defines a cause of action as the act
or omission by which a party violates the right of another. Its essential elements are as
follows: (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 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 appropriate
relief. [36]
The elementary test for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded. The inquiry is into the

sufficiency, not the veracity, of the material allegations. If the allegations in the complaint
furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of
the defense that may be presented by the defendant.[37]
This Court is convinced that each of the Complaints filed by petitioners sufficiently
stated a cause of action. The Complaints alleged that petitioners are the owners of the
subject properties by acquisitive prescription. As owners thereof, they have the right to
remain in peaceful possession of the said properties and, if deprived thereof, they may
recover the same. Section 428 of the Civil Code provides that:
Article 428. The owner has the right to enjoy and dispose of a thing without
other limitations than those established by law.
The owner has also a right of action against the holder and possessor of the
thing in order to recover it.
Petitioners averred that respondents had violated their rights as owner of the subject
properties by evicting the former therefrom by means of force and intimidation. Respondents
allegedly retained possession of the subject properties by invoking certificates of title
covering other parcels of land. Resultantly, petitioners filed the cases before the RTC in order
to recover possession of the subject properties, to prevent respondents from using their TCTs
to defeat petitioners rights of ownership and possession over said subject properties, and to
claim damages and other reliefs that the court may deem just and equitable.
The Court notes that petitioners prayer for the cancellation of respondents
certificates of title are inconsistent with their allegations. Petitioners prayed for in their
Complaints that, among other reliefs, judgment be rendered so that Transfer Certificate of
Title Numbers 9176, 9177, 9178, 9179, 9180, 9181, and 9182 be cancelled by the Register of
Deeds for Las Pias, Metro Manila, insofar as they are or may be utilized to deprive plaintiffs
of possession and ownership of said lot. Yet, petitioners also made it plain that the subject
properties, of which respondents unlawfully deprived them, were not covered by
respondents certificates of title. It is apparent that the main concern of petitioners is to
prevent respondents from using or invoking their certificates of title to deprive petitioners of
their ownership and possession over the subject properties; and not to assert a superior right
to the land covered by respondents certificates of title. Admittedly, while petitioners can
seek the recovery of the subject properties, they cannot ask for the cancellation of
respondents TCTs since petitioners failed to allege any interest in the land covered
thereby. Still, the other reliefs sought by petitioners, i.e., recovery of the possession of the
subject properties and compensation for the damages resulting from respondents forcible
taking of their property, are still proper.
Petitioners Complaints should not have been dismissed despite the seeming error
made by petitioners in their prayer. To sustain a motion to dismiss for lack of cause of
action, the complaint must show that the claim for relief does not exist, rather than that a
claim has been defectively stated, or is ambiguous, indefinite or uncertain. [38]
Complaints are not barred
prescription and laches.

by

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In their Motion to Dismiss, respondents argued that petitioners cases were barred
by prescription, in accordance with Section 32 of the Property Registration Decree and
Articles 1144(2) and 1456 of the Civil Code. Respondents relied on the premise that the
actions instituted by petitioners before the RTC were for the reopening and review of the
decree of registration and reconveyance of the subject properties.
Section 32 of the Property Registration Decree provides that a decree of registration
may be reopened when a person is deprived of land or an interest therein by such
adjudication or confirmation obtained by actual fraud. On the other hand, an action for
reconveyance respects the decree of registration as incontrovertible but seeks the transfer of
property, which has been wrongfully or erroneously registered in other persons names, to its
rightful and legal owners, or to those who claim to have a better right. [39] In both instances,
the land of which a person was deprived should be the same land which was fraudulently or
erroneously registered in another persons name, which is not the case herein, if the Court
considers the allegations in petitioners Complaints.
As previously established, petitioners main contention is that the subject properties
from which they were forcibly evicted were not covered by respondents certificates of
title. Stated differently, the subject properties and the land registered in respondents names
are not identical. Consequently, petitioners do not have any interest in challenging the
registration of the land in respondents names, even if the same was procured by fraud.
While petitioners improperly prayed for the cancellation of respondents TCTs in their
Complaints, there is nothing else in the said Complaints that would support the conclusion
that they are either petitions for reopening and review of the decree of registration under
Section 32 of the Property Registration Decree or actions for reconveyance based on implied
trust under Article 1456 of the Civil Code. Instead, petitioners Complaints may be said to be
in the nature of an accion reivindicatoria, an action for recovery of ownership and possession
of the subject properties, from which they were evicted sometime between 1991 and 1994 by
respondents. An accion reivindicatoria may be availed of within 10 years from
dispossession.[40] There is no showing that prescription had already set in when petitioners
filed their Complaints in 1997.
Furthermore, the affirmative defense of prescription does not automatically warrant
the dismissal of a complaint under Rule 16 of the Rules of Civil Procedure. An allegation of
prescription can effectively be used in a motion to dismiss only when the Complaint on its
face shows that indeed the action has already prescribed. [41] If the issue of prescription is
one involving evidentiary matters requiring a full-blown trial on the merits, it cannot be
determined in a motion to dismiss.[42] In the case at bar, respondents must first be able to
establish by evidence that the subject properties are indeed covered by their certificates of
title before they can argue that any remedy assailing the registration of said properties or the
issuance of the certificates of title over the same in the names of respondents or their
predecessors-in-interest has prescribed.
Neither can the Court sustain respondents assertion that petitioners Complaints were
barred by laches.
Laches has been defined as the failure of or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence, could or should

have been done earlier; or to assert a right within reasonable time, warranting a presumption
that the party entitled thereto has either abandoned it or declined to assert it. Thus, the
doctrine of laches presumes that the party guilty of negligence had the opportunity to do
what should have been done, but failed to do so. Conversely, if the said party did not have
the occasion to assert the right, then, he cannot be adjudged guilty of laches. Laches is not
concerned with the mere lapse of time; rather, the party must have been afforded an
opportunity to pursue his claim in order that the delay may sufficiently constitute laches. [43]
Again, going back to petitioners chief claim that the subject properties are distinct
from the land covered by respondents certificates of title, then, petitioners would have no
standing to oppose the registration of the latter property in the names of respondents or their
predecessors-in-interest, or to seek the nullification of the certificates of title issued over the
same.
It also appears from the records that the RTC did not conduct a hearing to receive
evidence proving that petitioners were guilty of laches. Well-settled is the rule that the
elements of laches must be proven positively. Laches is evidentiary in nature, a fact that
cannot be established by mere allegations in the pleadings and cannot be resolved in a
motion to dismiss. At this stage, therefore, the dismissal of petitioners Complaints on the
ground of laches is premature. Those issues must be resolved at the trial of the case on the
merits, wherein both parties will be given ample opportunity to prove their respective claims
and defenses.[44]
Complaints are not barred by res
judicata.
Lastly, respondents argued in their Motion to Dismiss that petitioners Complaints
are barred by res judicata, citing Vda. de Cailles and Orosa. Likewise, petitioners are barred
from instituting any case for recovery of possession by the MTC Decision in Civil Case No.
3271.
Res judicata refers to the rule that a final judgment or decree on the merits by a
court of competent jurisdiction is conclusive of the rights of the parties or their privies in all
later suits on all points and matters determined in the former suit. Res judicata has two
concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47 (b) of the Rules of
Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47 (c).
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. But where there is identity of parties and
subject matter 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. There is conclusiveness of
judgment. Under the doctrine of conclusiveness of judgment, facts and issues actually and
directly resolved in a former suit cannot again be raised in any future case between the same
parties, even if the latter suit may involve a different claim or cause of action. The identity of
causes of action is not required but merely identity of issues. [45]

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Vda. de Cailles and Orosa cannot bar the filing of petitioners Complaints before the
RTC under the doctrine of conclusiveness of judgment, since they involve entirely different
subject matters. In both cases, the subject matter was a parcel of land referred to as Lot 9
Psu-11411 Amd-2, while subject matter of the petitioners Complaints are lots which are not
included in the said land.
It follows that the more stringent requirements of res judicata as bar by prior
judgment will not apply to petitioners Complaints. In Vda. de Cailles, the Court confirmed
the ownership of Dominador Mayuga over a 53-hectare parcel of land located in Las Pias,
Rizal, more particularly referred to as Lot 9, Psu-11411, Amd-2. The Court also recognized
that Nicolas Orosa was Dominador Mayugas successor-in-interest. However, the judgment in
said case was not executed because the records of the Land Registration Authority revealed
that the property had previously been decreed in favor of Jose T. Velasquez, to whom OCT No.
6122 was issued. During the execution proceedings, Goldenrod Inc. filed a motion to
intervene, the granting of which by the trial court was challenged in Orosa. The Court held
in Orosa that Goldenrod, Inc., despite having acquired the opposing rights of Nicolas Orosa
and Jose T. Velasquez to the property sometime in 1987, no longer had any interest in the
same as would enable it to intervene in the execution proceedings, since it had already sold
its interest in February 1989 to the consortium composed of respondents, Peaksun
Enterprises and Export Corporation, and Elena Jao.
The adjudication of the land to respondents predecessors-in-interest in Vda. de
Cailles and Orosa is not even relevant to petitioners Complaints. According to petitioners
allegations in their Complaints, although the subject properties were derived from the 119.8hectare parcel of land referred to as Lot 9, Psu-11411, they are not included in the 53-hectare
portion thereof, specifically identified as Lot 9, Psu-11411, Amd-2, subject of Vda. de
Cailles and Orosa. This was the reason why petitioners had to cite Vda. de Caillesand Orosa:
to distinguish the subject properties from the land acquired by respondents and the other
members of the consortium. There clearly being no identity of subject matter and of parties,
then, the rulings of this Court in Vda. de Cailles and Orosa do not bar by prior judgment Civil
Cases No. LP-97-0228, No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No.
LP-97-0237, No. LP-97-0238, and No. LP-97-0239 instituted by petitioners in the RTC.
The Court is aware that petitioners erroneously averred in their Complaints that the
subject properties originated from Psu-11411, Lot 9, Amd-2, instead of stating that the said
properties originated from Psu-11411, Lot 9. However, this mistake was clarified in later
allegations in the same Complaints, where petitioners stated that Psu-114, Lot9 consists of
1, 198,017 square meters, or 119.8 hectares when converted, while Psu-11411, Lot 9, Amd2 referred to a 53-hectare parcel. Petitioners pointed out that in Vda. de Cailles and Orosa,
the Court acknowledged the ownership [of respondents predecessor-in-interest] only over a
fifty-three (53) hectare parcel, more particularly referred to as Lot 9 Psu-11411, Amd2. Thus, petitioners argued that the rights which respondents acquired from Mayuga and
Orosa cover[ed] only 531, 449 square meters or 53 hectares of Psu-11411, Lot 9. They do
not extend to the latters other portion of 1,198, 017 square meters part of which
[petitioners]
had
been
occupying
until
they
were
forcibly
evicted
by
[respondents]. Accordingly, the single statement in the Complaints that the subject
properties originated from Lot 9, Psu-11411, Amd-2, is an evident mistake which cannot
prevail over the rest of the allegations in the same Complaints.

Similarly, the Decision dated 17 December 1991 of the MTC in Civil Case No. 3271
cannot bar the filing of petitioners Complaints before the RTC because they have different
subject matters. The subject matter in Civil Case No. 3271 decided by the MTC was the
parcel of land covered by TCTs No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, and No.
9181, in the name of respondents and the other consortium members; while, according to
petitioners allegations in their Complaints, the subject matters in Civil Cases No. LP-97-0228,
No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-970238, and No. LP-97-0239, before the RTC, are the subject properties which are not covered
by respondents certificates of title.
The MTC, in its 17 December 1991 Decision in Civil Case No. 3271 found that:
The subject parcels of land are covered by (TCT) Nos. 9176, 9177,
9178, 9179, [9180], [9181] and 9182 (Exhs. 1 to 7,
Defendants) all issued in the name of defendant Fil-Estate
Management, Inc. It appears from the evidence presented that
defendant Fil-Estate purchased the said property from Goldenrod, Inc. It
also appears from the evidence that the subject property at the time of the
purchase was then occupied by squatters/intruders. By reason thereof,
the Municipality of Las Pias conducted in 1989 a census of all
structures/shanties on subject property. Those listed in the census were
relocated by defendant, which relocation program started in 1990 up to the
present. Interestingly, however, all of the plaintiffs herein except
theAlmas, were not listed as among those in possession of
defendants land as of November 1989.
xxxx
In fine, plaintiffs have not clearly established their right of
possession over the property in question. They claim ownership, but
no evidence was ever presented to prove such fact. They claim possession
from time immemorial. But the Census prepared by Las Pias negated this
posture.[46] (Emphasis provided.)
The determination by the MTC that petitioners were not occupants of the parcels of land
covered by TCTs No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, and No. 9181 cannot bar
their claims over another parcel of land not covered by the said TCTs. It should also be
noted that petitioners Heirs of Agapito Villanueva do not appear to be plaintiffs in Civil Case
No. 3271 and, therefore, cannot be bound by the MTC Decision therein.
In all, this Court pronounces that respondents failed to raise a proper ground for the
dismissal of petitioners Complaints. Petitioners claims and respondents opposition and
defenses thereto are best ventilated in a trial on the merits of the cases.
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The Decision
dated 16 September 2005 and Resolution dated 9 December 2005 of the Court of Appeals in
CA-G.R. CV No. 80927 are REVERSED and SET ASIDE. Let the records of the case be
remanded for further proceedings to the Regional Trial Court, Branch 253, of Las Pias City,
which is hereby ordered to try and decide the case with deliberate speed.

7 | Page

SO ORDERED.
HSBC INTERNATIONAL TRUSTEE LIMITED, petitioner,
vs.
CECILIA DIEZ CATALAN, respondent.
G.R. No. 159590 & 159591 October 18, 2004|
FACTS

Frederick Arthur Thomson drew 5 checks payable to Catalan in the total amount of
HK$3.2 million. Catalan presented these checks to HSBC [Bank]. The checks were
dishonored for having insufficient funds. Thomson demanded that the checks be
made good because he, in fact, had sufficient funds.

Catalan knowing that Thomson had communicated with the Bank, asked HSBCBank
to clear the checks and pay her the said amount. HSBC did not heed her.

Thomson died but Catalan was not paid yet. The account was transferred to HSBC
[Trustee]. Catalan then requested Trustee to pay her. They still refused and even
asked her to submit back to them the original checks for verification.

Catalan and her lawyer went to Hongkong on their own expense to


personally submit the checks. They still were not honored, leading Catalan to file a
suit against HSBC to collect her HK$3.2M

ISSUES
Whether or not HSBC Bank and Trustee are liable to pay damages to Catalan on the ground of
Abuse of right under Article 19 of the Civil Code
ARGUMENTS
Petitioner: HSBC claims that they are a foreign corporation not doing business in the
Philippines thus the courts do not have jurisdiction over them. Moreover, there is no cause of
action because it was not alleged in the there was abuse of right.
Respondent: Catalan claims that although HSBC has the right to examine the checks, they
did so in bad faith because they required her to submit all sorts of documents and yet even
upon showing that the checks were good, the Bank still refused to release the money to her.
There was abuse of right on the part of the Bank. HOLDING & RATIO DECIDENDI THERE IS
CAUSE OF ACTION, IT NEED NOT BE EXPRESSLY STATED, THE FACTS SUFFICIENTLY DESCRIBE
THAT THERE WAS AN ABUSEOF RIGHT.
APPLICATION:

Article 19 of the Civil Code speaks of the fundamental principle of law and human
conduct that a person "must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith." It sets
the standards which may be observed not only in the exercise of ones rights but also in the
performance of ones duties.
When a right is exercised in a manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But a right, though by itself legal because recognized or
granted by law as such, may nevertheless become the source of some illegality. A person
should be protected only when he acts in the legitimate exercise of his right, that is, when he
acts with prudence and in good faith; but not when he acts with negligence or abuse.
There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring
another. The exercise of a right must be in accordance with the purpose for which it was
established, and must not be excessive or unduly harsh; there must be no intention to injure
another.
Thus, in order to be liable under the abuse of rights principle, three elements must concur, to
wit: (a) that there is a legal right or duty; (b) which is exercised in bad faith; and (c) for the
sole intent of prejudicing or injuring another.
HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the
repeated assurance of the drawer Thomson as to the authenticity of the check sand frequent
directives to pay the value thereof to Catalan. Her allegations in the complaint that the gross
inaction of HSBANK on Thomsons instructions, as well as its evident failure to inform Catalan
of the reason for its continued inaction and non-payment of the checks, smack of insouciance
on its part, are sufficient statements of clear abuse of right for which it may be held liable to
Catalan for any damages she incurred resulting therefore. HSBANKs actions or lack thereof,
prevented Catalan from seeking further redress with Thomson for the recovery of her claim
while the latter was alive
DECISION OF THE COURT:
The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75757
dismissing the petition for certiorari of the Hongkong and Shanghai Banking Corporation
Limited is AFFIRMED. The petition in G.R. No. 159591 is GRANTED. The Decision of the
Court of Appeals, dated August 14, 2003, in CA-G.R. SP No. 75756 dismissing the petition for
certiorari of the HSBC International Trustee Limited is REVERSED and SET ASIDE. The
Regional Trial Court, Branch 44, Bacolod City is declared without jurisdiction to take
cognizance of Civil Case No. 01-11372 against the HSBC International Trustee Limited, and all
its orders and issuances with respect to the latter are hereby ANNULLED and SET ASIDE.
The said Regional Trial Court is hereby ORDERED to DESIST from maintaining further
proceedings against the HSBC International Trustee Limited in the case aforestated.
_________
ALFREDO REMITERE V., ET AL
G.R. NO. G.R. NO. L-19751, FEBRUARY 28,
1966

8 | Page
vs.
REMEDIOS MONTINOLA VDA. DE YULO , ET AL

Note: See full text for definition of cause of action and ultimate facts

Gregorio Remitere was declared the registered owner of two questioned Lots by then CFI of
Negros Occidental. When he died, CFI appointed his wife as administratrix of his estate,
among which are the two lots in question.
During this period, the provincial sheriff of Negros Occidental, conducted a public auction sale
over the said parcels of land, and on the same day, he issued thereof a deed of sale in favor
of Mariano Yulo.
This lead to a series of cancellations of the Certificate of Titles and finally to the registration
of the TCT by virtue of deeds of sales in the name of RemediosMontinolaVda. deYulo.
Hence, the plaintiffsfiled a complaint against the defendants and the Register of Deeds of
Negros Occidental.
The complaint prayed that the defendants be ordered to reconvey the two lots in question to
the plaintiffs and that the defendant Register of Deeds be ordered to cancel the certificates of
titles in the name of the defendant and to issue new ones in the names of the plaintiffs.
The defendants-appellees filed a motion to dismiss the complaint on the grounds that the
complaint does not state a cause of action (and, that even assuming that a cause of action
exists, the same has already prescribed.)
The lower court dismissed the complaint precisely on the grounds relied upon by the
defendants-appellees. Hence this appeal.
ISSUE
Whether or not the complaint states a cause of action.
RULING: NO
SC held that no ultimate facts which may constitute the basis of plaintiffs rights which had
been violated are alleged. Neither are there allegations of ultimate facts showing acts or
omissions on the part of the defendants which constitute a violation of the rights of plaintiffs.
Hence, the lower court had correctly ruled that the complaint in the present case does not
narrate facts that constitute a cause of action.
RATIONALE
The lack of a cause of action as a ground for dismissal must appear on the face of the
complaint, and to determine whether the complaint states a cause of action, only the facts
alleged therein, and no other, should be considered.
It is not stated anywhere in the complaint why the sale at public auction was absolutely void,
nor were there stated any particular facts or circumstances upon which the alleged nullity of
the sale or transaction is predicated. The averment that "the public sale . . . was and still is
absolutely a void sale, and certainly did not pass titles and ownerships of said lots, starting
from its primitive owner, now being represented by the plaintiffs herein, as surviving heirs
thereto, until it reaches the possession by the defendants . . ." is a conclusion of law or an
inference from (or conclusion of) facts not stated in the pleading.
A pleading should state the ultimate facts essential to the rights of action or defense
asserted, as distinguished from a mere conclusion of fact, or conclusion of law. An allegation
that a contract is valid or void, as in the instant case, is a mere conclusion of law.
Not being statements of ultimate facts which constitute the basis of a right of the plaintiffs,
nor are they statements of ultimate facts which constitute the wrongful acts or omissions of
the defendants that violated the right of the plaintiffs the allegations of the complaint in the
present case have not fulfilled the requirements of the Rules of Court that the complaint
should contain a "concise statement of the ultimate facts constituting the plaintiffs cause or
causes of action."

A pleading should state the ultimate facts essential to the rights of action or defense
asserted, as distinguished from mere conclusion of fact, or conclusion of law. An allegation
that a contract is valid, or void, as in the instant case, is a mere conclusion of law.
General allegations that a contract is valid or legal, or is just, fair and reasonable, are mere
conclusion of law. Likewise, allegations that a contract is void, voidable, invalid, illegal, ultra
vires, or against public policy, without stating facts showing its invalidity, are mere
conclusions of law; as are allegations that a contract is in conformity with, or in violation of a
constitutional or statutory provision. . . . . (71 C.J.S. pp. 44-45.) (Emphasis supplied.)
Not being statements of ultimate facts which constitute the basis of a right of the plaintiffsappellants, nor are they statements of ultimate facts which constitute the wrongful acts or
omissions of the defendants-appellees that violated the right of the plaintiffs-appellants the
allegations of the complaint in the present case have not fulfilled the requirements of Section
3, Rule 6 of the Revised Rules of Court (Sec. 1, Rule 6 of the former Rules of Court) that the
complaint should contain a "concise statement of the ultimate facts constituting the plaintiff's
cause or causes of action."
This Court has defined the term "cause of action" as follows:
A cause of action has been defined by the Supreme Court as an act or omission of one party
in violation of the legal right or rights of the other; and its essential elements are legal right
of the plaintiff, correlative obligations of the defendant, and act or omission of the defendant
in violation of said legal right. (Ma-ao Sugar Central Co., Inc. vs. Barrios, et al., L-1539, Dec.
30, 1947)
The term "ultimate facts" has been defined or explained as follows:
Ultimate facts defined.The term "ultimate facts" as used in Sec. 3, Rule 3 of the Rules of
Court, means 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 insufficient. . .
. . (Moran, Rules of Court, Vol. I, 1963 ed., p. 213)
Ultimate facts are important and substantial facts which either directly form the basis of the
primary right and duty, or which directly make up the wrongful acts or omissions of the
defendant. The term does not refer to the details of probative matter or particulars of
evidence by which these material elements are to be established. It refers to principal
determinate, constitutive facts, upon the existence of which, the entire cause of action rests.
(Montemayor vs. Raborar, et al., 53 O.G. No. 19, p. 6596, citing Pomeroy, Code Remedies, 5th
Ed., sec. 420).
____________
ABAD VS. CFI-PANGASINAN
Facts:
-

Spouses Ramon Gil Abad and Consuelo Abad invested various sums to Dimcontrad
Corp, on which the latter, issued promissory notes.
However, Dimcontrad Corp. upon maturity was able to pay a portion of their share of
the profits to the spouses despite repeated demands.
This prompted, Sps. Abad to file a case for collection of Sum of Money and Damages
to CFI-Pangasinan.
Dimcontrad opposed the case and alleged that CFI-Pangasinan does not have
jurisdiction, but instead the SEC has jurisdiction as provided in Sec 5 of PD 902

9 | Page
stating that the allegations in Abads complaint alleged devices or schemes
amounting to fraud and misrepresentation.
Issue:
Held:
-

Whether or not CFI Pangasinan has jurisdiction or the SEC.

CFI Pangasinan has jurisdiction.


The recitals in the case, disclose that Abads cause of action was for collection of
sum of money based on the promissory note that have already become payable and
matured. There was no allegations of that a device or scheme was resorted to by
Dimcontrad Corp. amounting to fraud and misrepresentation.
Averments in the complaint determine the nature of the action and jurisdiction of
courts.
The complaint must contain a concise statement of the ultimate facts constituting
plaintiffs cause of action and must specify the relief sought.
Sec 5, Rule 8 of the Rules of Court provides that in all averments of fraud or mistake,
the circumstances constituting fraud or mistake must be stated with particularity.
In this case, the allegations of fraud are not particular enough to bring the
controversy to the SECs jurisdiction.
______________

G.R. No. 138814


April 16, 2009
MAKATI STOCK EXCHANGE, INC., MA. VIVIAN YUCHENGCO, ADOLFO M. DUARTE,
MYRON C. PAPA, NORBERTO C. NAZARENO, GEORGE UY-TIOCO, ANTONIO A. LOPA,
RAMON B. ARNAIZ, LUIS J.L. VIRATA, and ANTONIO GARCIA, JR. Petitioners,
vs.
MIGUEL V. CAMPOS, substituted by JULIA ORTIGAS VDA. DE CAMPOS, 1 Respondent.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 seeking the reversal of the
Decision2 dated 11 February 1997 and Resolution dated 18 May 1999 of the Court of Appeals
in CA-G.R. SP No. 38455.
The facts of the case are as follows:
SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent Miguel V.
Campos, who filed with the Securities, Investigation and Clearing Department (SICD) of the
Securities and Exchange Commission (SEC), a Petition against herein petitioners Makati Stock
Exchange, Inc. (MKSE) and MKSE directors, Ma. Vivian Yuchengco, Adolfo M. Duarte, Myron C.
Papa, Norberto C. Nazareno, George Uy-Tioco, Antonio A, Lopa, Ramon B. Arnaiz, Luis J.L.
Virata, and Antonio Garcia, Jr. Respondent, in said Petition, sought: (1) the nullification of the
Resolution dated 3 June 1993 of the MKSE Board of Directors, which allegedly deprived him of
his right to participate equally in the allocation of Initial Public Offerings (IPO) of corporations
registered with MKSE; (2) the delivery of the IPO shares he was allegedly deprived of, for
which he would pay IPO prices; and (3) the payment of P2 million as moral damages, P1
million as exemplary damages, and P500,000.00 as attorneys fees and litigation expenses.
On 14 February 1994, the SICD issued an Order granting respondents prayer for the issuance
of a Temporary Restraining Order to enjoin petitioners from implementing or enforcing the 3
June 1993 Resolution of the MKSE Board of Directors.

The SICD subsequently issued another Order on 10 March 1994 granting respondents
application for a Writ of Preliminary Injunction, to continuously enjoin, during the pendency of
SEC Case No. 02-94-4678, the implementation or enforcement of the MKSE Board Resolution
in question. Petitioners assailed this SICD Order dated 10 March 1994 in a Petition for
Certiorari filed with the SEC en banc, docketed as SEC-EB No. 393.
On 11 March 1994, petitioners filed a Motion to Dismiss respondents Petition in SEC Case No.
02-94-4678, based on the following grounds: (1) the Petition became moot due to the
cancellation of the license of MKSE; (2) the SICD had no jurisdiction over the Petition; and (3)
the Petition failed to state a cause of action.
The SICD denied petitioners Motion to Dismiss in an Order dated 4 May 1994. Petitioners
again challenged the 4 May 1994 Order of SICD before the SEC en banc through another
Petition for Certiorari, docketed as SEC-EB No. 403.
In an Order dated 31 May 1995 in SEC-EB No. 393, the SEC en banc nullified the 10 March
1994 Order of SICD in SEC Case No. 02-94-4678 granting a Writ of Preliminary Injunction in
favor of respondent. Likewise, in an Order dated 14 August 1995 in SEC-EB No. 403, the SEC
en banc annulled the 4 May 1994 Order of SICD in SEC Case No. 02-94-4678 denying
petitioners Motion to Dismiss, and accordingly ordered the dismissal of respondents Petition
before the SICD.
Respondent filed a Petition for Certiorari with the Court of Appeals assailing the Orders of the
SEC en banc dated 31 May 1995 and 14 August 1995 in SEC-EB No. 393 and SEC-EB No. 403,
respectively. Respondents Petition before the appellate court was docketed as CA-G.R. SP No.
38455.
On 11 February 1997, the Court of Appeals promulgated its Decision in CA-G.R. SP No. 38455,
granting respondents Petition for Certiorari, thus:
WHEREFORE, the petition in so far as it prays for annulment of the Orders dated May 31,
1995 and August 14, 1995 in SEC-EB Case Nos. 393 and 403 is GRANTED. The said orders are
hereby rendered null and void and set aside.
Petitioners filed a Motion for Reconsideration of the foregoing Decision but it was denied by
the Court of Appeals in a Resolution dated 18 May 1999.
Hence, the present Petition for Review raising the following arguments:
I.
THE SEC EN BANC DID NOT COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT DISMISSED THE PETITION FILED BY RESPONDENT
BECAUSE ON ITS FACE, IT FAILED TO STATE A CAUSE OF ACTION.
II.
THE GRANT OF THE IPO ALLOCATIONS IN FAVOR OF RESPONDENT WAS A MERE
ACCOMMODATION GIVEN TO HIM BY THE BOARD OF [DIRECTORS] OF THE MAKATI STOCK
EXCHANGE, INC.
III.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE SEC EN BANC COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT MADE AN
EXTENDED INQUIRY AND PROCEEDED TO MAKE A DETERMINATION AS TO THE TRUTH OF
RESPONDENTS ALLEGATIONS IN HIS PETITION AND USED AS BASIS THE EVIDENCE ADDUCED
DURING THE HEARING ON THE APPLICATION FOR THE WRIT OF PRELIMINARY INJUNCTION TO
DETERMINE THE EXISTENCE OR VALIDITY OF A STATED CAUSE OF ACTION.
IV.
IPO ALLOCATIONS GRANTED TO BROKERS ARE NOT TO BE BOUGHT BY THE BROKERS FOR
THEMSELVES BUT ARE TO BE DISTRIBUTED TO THE INVESTING PUBLIC. HENCE,
RESPONDENTS CLAIM FOR DAMAGES IS ILLUSORY AND HIS PETITION A NUISANCE SUIT. 3

10 | P a g e
On 18 September 2001, counsel for respondent manifested to this Court that his client died
on 7 May 2001. In a Resolution dated 24 October 2001, the Court directed the substitution of
respondent by his surviving spouse, Julia Ortigas vda. de Campos.
Petitioners want this Court to affirm the dismissal by the SEC en banc of respondents Petition
in SEC Case No. 02-94-4678 for failure to state a cause of action. On the other hand,
respondent insists on the sufficiency of his Petition and seeks the continuation of the
proceedings before the SICD.
A cause of action is the act or omission by which a party violates a right of another. 4 A
complaint states a cause of action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant in violation of said legal right. If these
elements are absent, the complaint becomes vulnerable to dismissal on the ground of failure
to state a cause of action.
If a defendant moves to dismiss the complaint on the ground of lack of cause of action, he is
regarded as having hypothetically admitted all the averments thereof. The test of sufficiency
of the facts found in a complaint as constituting a cause of action is whether or not admitting
the facts alleged, the court can render a valid judgment upon the same in accordance with
the prayer thereof. The hypothetical admission extends to the relevant and material facts
well pleaded in the complaint and inferences fairly deducible therefrom. Hence, if the
allegations in the complaint furnish sufficient basis by which the complaint can be
maintained, the same should not be dismissed regardless of the defense that may be
assessed by the defendant.5
Given the foregoing, the issue of whether respondents Petition in SEC Case No. 02-94-4678
sufficiently states a cause of action may be alternatively stated as whether, hypothetically
admitting to be true the allegations in respondents Petition in SEC Case No. 02-94-4678, the
SICD may render a valid judgment in accordance with the prayer of said Petition.
A reading of the exact text of respondents Petition in SEC Case No. 02-94-4678 is, therefore,
unavoidable. Pertinent portions of the said Petition reads:
7. In recognition of petitioners invaluable services, the general membership of respondent
corporation [MKSE] passed a resolution sometime in 1989 amending its Articles of
Incorporation, to include the following provision therein:
"ELEVENTH WHEREAS, Mr. Miguel Campos is the only surviving incorporator of the Makati
Stock Exchange, Inc. who has maintained his membership;
"WHEREAS, he has unselfishly served the Exchange in various capacities, as governor from
1977 to the present and as President from 1972 to 1976 and again as President from 1988 to
the present;
"WHEREAS, such dedicated service and leadership which has contributed to the
advancement and well being not only of the Exchange and its members but also to the
Securities industry, needs to be recognized and appreciated;
"WHEREAS, as such, the Board of Governors in its meeting held on February 09, 1989 has
correspondingly adopted a resolution recognizing his valuable service to the Exchange,
reward the same, and preserve for posterity such recognition by proposing a resolution to the
membership body which would make him as Chairman Emeritus for life and install in the
Exchange premises a commemorative bronze plaque in his honor;
"NOW, THEREFORE, for and in consideration of the above premises, the position of the
"Chairman Emeritus" to be occupied by Mr. Miguel Campos during his lifetime and
irregardless of his continued membership in the Exchange with the Privilege to attend all
membership meetings as well as the meetings of the Board of Governors of the Exchange, is
hereby created."

8. Hence, to this day, petitioner is not only an active member of the respondent corporation,
but its Chairman Emeritus as well.
9. Correspondingly, at all times material to this petition, as an active member and Chairman
Emeritus of respondent corporation, petitioner has always enjoyed the right given to all the
other members to participate equally in the Initial Public Offerings (IPOs for brevity) of
corporations.
10. IPOs are shares of corporations offered for sale to the public, prior to the listing in the
trading floor of the countrys two stock exchanges. Normally, Twenty Five Percent (25%) of
these shares are divided equally between the two stock exchanges which in turn divide these
equally among their members, who pay therefor at the offering price.
11. However, on June 3, 1993, during a meeting of the Board of Directors of respondentcorporation, individual respondents passed a resolution to stop giving petitioner the IPOs he
is entitled to, based on the ground that these shares were allegedly benefiting Gerardo O.
Lanuza, Jr., who these individual respondents wanted to get even with, for having filed cases
before the Securities and Exchange (SEC) for their disqualification as member of the Board of
Directors of respondent corporation.
12. Hence, from June 3, 1993 up to the present time, petitioner has been deprived of his right
to subscribe to the IPOs of corporations listing in the stock market at their offering prices.
13. The collective act of the individual respondents in depriving petitioner of his right to a
share in the IPOs for the aforementioned reason, is unjust, dishonest and done in bad faith,
causing petitioner substantial financial damage. 6
There is no question that the Petition in SEC Case No. 02-94-4678 asserts a right in favor of
respondent, particularly, respondents alleged right to subscribe to the IPOs of corporations
listed in the stock market at their offering prices; and stipulates the correlative obligation of
petitioners to respect respondents right, specifically, by continuing to allow respondent to
subscribe to the IPOs of corporations listed in the stock market at their offering prices.
However, the terms right and obligation in respondents Petition are not magic words that
would automatically lead to the conclusion that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal meaning. A right is a claim or
title to an interest in anything whatsoever that is enforceable by law. 7 An obligation is defined
in the Civil Code as a juridical necessity to give, to do or not to do. 8 For every right enjoyed by
any person, there is a corresponding obligation on the part of another person to respect such
right. Thus, Justice J.B.L. Reyes offers9 the definition given by Arias Ramos as a more
complete definition:
An obligation is a juridical relation whereby a person (called the creditor) may demand from
another (called the debtor) the observance of a determinative conduct (the giving, doing or
not doing), and in case of breach, may demand satisfaction from the assets of the latter.
The Civil Code enumerates the sources of obligations:
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
Therefore, an obligation imposed on a person, and the corresponding right granted to
another, must be rooted in at least one of these five sources. The mere assertion of a right
and claim of an obligation in an initiatory pleading, whether a Complaint or Petition, without
identifying the basis or source thereof, is merely a conclusion of fact and law. A pleading
should state the ultimate facts essential to the rights of action or defense asserted, as
distinguished from mere conclusions of fact or conclusions of law. 10 Thus, a Complaint or

11 | P a g e
Petition filed by a person claiming a right to the Office of the President of this Republic, but
without stating the source of his purported right, cannot be said to have sufficiently stated a
cause of action. Also, a person claiming to be the owner of a parcel of land cannot merely
state that he has a right to the ownership thereof, but must likewise assert in the Complaint
either a mode of acquisition of ownership or at least a certificate of title in his name.
In the case at bar, although the Petition in SEC Case No. 02-94-4678 does allege respondents
right to subscribe to the IPOs of corporations listed in the stock market at their offering
prices, and petitioners obligation to continue respecting and observing such right, the
Petition utterly failed to lay down the source or basis of respondents right and/or petitioners
obligation.
Respondent merely quoted in his Petition the MKSE Board Resolution, passed sometime in
1989, granting him the position of Chairman Emeritus of MKSE for life. However, there is
nothing in the said Petition from which the Court can deduce that respondent, by virtue of his
position as Chairman Emeritus of MKSE, was granted by law, contract, or any other legal
source, the right to subscribe to the IPOs of corporations listed in the stock market at their
offering prices.
A meticulous review of the Petition reveals that the allocation of IPO shares was merely
alleged to have been done in accord with a practice normally observed by the members of
the stock exchange, to wit:
IPOs are shares of corporations offered for sale to the public, prior to their listing in the
trading floor of the countrys two stock exchanges. Normally, Twenty-Five Percent (25%) of
these shares are divided equally between the two stock exchanges which in turn divide these
equally among their members, who pay therefor at the offering price. 11 (Emphasis supplied)
A practice or custom is, as a general rule, not a source of a legally demandable or
enforceable right.12 Indeed, in labor cases, benefits which were voluntarily given by the
employer, and which have ripened into company practice, are considered as rights that
cannot be diminished by the employer.13 Nevertheless, even in such cases, the source of the
employees right is not custom, but ultimately, the law, since Article 100 of the Labor Code
explicitly prohibits elimination or diminution of benefits.
There is no such law in this case that converts the practice of allocating IPO shares to MKSE
members, for subscription at their offering prices, into an enforceable or demandable right.
Thus, even if it is hypothetically admitted that normally, twenty five percent (25%) of the
IPOs are divided equally between the two stock exchanges -- which, in turn, divide their
respective allocation equally among their members, including the Chairman Emeritus, who
pay for IPO shares at the offering price -- the Court cannot grant respondents prayer for
damages which allegedly resulted from the MKSE Board Resolution dated 3 June 1993
deviating from said practice by no longer allocating any shares to respondent.1avvphi1
Accordingly, the instant Petition should be granted. The Petition in SEC Case No. 02-94-4678
should be dismissed for failure to state a cause of action. It does not matter that the SEC en
banc, in its Order dated 14 August 1995 in SEC-EB No. 403, overstepped its bounds by not
limiting itself to the issue of whether respondents Petition before the SICD sufficiently stated
a cause of action. The SEC en banc may have been mistaken in considering extraneous
evidence in granting petitioners Motion to Dismiss, but its discussion thereof are merely
superfluous and obiter dictum. In the main, the SEC en banc did correctly dismiss the Petition
in SEC Case No. 02-94-4678 for its failure to state the basis for respondents alleged right, to
wit:
Private respondent Campos has failed to establish the basis or authority for his alleged right
to participate equally in the IPO allocations of the Exchange. He cited paragraph 11 of the
amended articles of incorporation of the Exchange in support of his position but a careful
reading of the said provision shows nothing therein that would bear out his claim. The

provision merely created the position of chairman emeritus of the Exchange but it mentioned
nothing about conferring upon the occupant thereof the right to receive IPO allocations. 14
With the dismissal of respondents Petition in SEC Case No. 02-94-4678, there is no more
need for this Court to resolve the propriety of the issuance by SCID of a writ of preliminary
injunction in said case.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated 11
February 1997 and its Resolution dated 18 May 1999 in CA-G.R. SP No. 38455 are REVERSED
and SET ASIDE. The Orders dated 31 May 1995 and 14 August 1995 of the Securities and
Exchange Commission en banc in SEC-EB Case No. 393 and No. 403, respectively, are hereby
reinstated. No pronouncement as to costs.
SO ORDERED.
________
Bacolod-Murcia Milling vs First Farmers Milling(del Rosario)
BACOLOD-MURCIA MILLING CO., INC., plaintiff-appellant,vs.FIRST FARMERS MILLING
CO., INC., ETC.; RAMON NOLAN in his capacity as Administrator of the Sugar Quota
Administration, ET AL., defendants; PHILIPPINE NATIONAL BANK and NATIONAL
INVESTMENT AND DEVELOPMENT CORPORATION, defendants-appellees.
Emergency Recit:
Bacolod commenced an action against FFMC for creating a sugar central known as the First
Farmers Sugar Central. What happened was the defendants transferred their quota "A"
allotments to their co-defendant FFMC and are actually milling their sugar with the said FFMC
which illegal transfer has been made over the vigorous protest and objections of the
plaintiff. (Not sure who is doing what)
PNB and NIDC were included as new defendants in the amended complaint stating, That
defendants NIDC and PNB have extended loans to defendant sugar mill to assist in the
illegal creation and operation of said mill, hence, a joint tortfeasor in the trespass of
plaintiff's rights.
Whether or not the allegations of the Amended and Supplemental Complaint constituted a
sufficient cause of action against the PNB and NIDC. - Insufficient cause of action.
The subject Amended and Supplemental Complaint fails to meet the test. It should be noted
that it charges PNB and NIDC with having assisted in the illegal creation and operation of
defendant sugar mill. Granting, for the sake of argument, that, indeed, assistance in the
"illegal" act was rendered, the same, however, is not supported by well- pleaded averments
of facts.This absence is fatal and buoy-up instead the PNB-NIDC's position of lack of cause of
action.
Facts: Appeal taken by Bacolod-Murcia Milling Co., Inc. (Bacolod) from the order of CFI Rizal
dismissing their amended complaint against Philippine National Bank (PNB) and National
Investment and Developmental Corporation (NIDC).
Bacolod commenced an action for injuctionand Prohibition with Damages against defendants
First Farmers Milling Co., Inc. (FFMC) and others claiming:

That in the year 1964 the defendant FFMC established and operated a sugar
central known as the First Farmers Sugar Central and for the crop years 1964-65 and
1965-66, the defendants transferred their quota "A" allotments to their co-defendant
FFMC and are actually milling their sugar with the said FFMC which illegal transfer
has been made over the vigorous protest and objections of the plaintiff, but with the
unwarranted, unjustified and likewise illegal approval of their co-defendant the
Sugar Quota Administration;"

12 | P a g e
In its answer FFMC alleged that the non-inclusion of PNB and NIDC as party defendants, "who
became creditors of defendant FFMC and who therefore are necessary parties, is fatal to the
complaint.Because of this, FFMC instituted motionto admit Amended and Supplemental
Complaint including PNB and NIDC as defendants. They alleged:

That defendants NIDC and PNB have extended loans to defendant sugar mill in the
amount of P12,210,000.00 on June 18, 1965, and P4,000,000.00 on Dec. 14, 1966,
respectively, to assist in the illegal creation and operation of said mill, hence,
a joint tortfeasor in the trespass of plaintiff's rights, aggravated by the fact that
defendant mill has only a paid up capital stock of P500,000.00, hence, said loans are
far beyond the limits fixed by law;
PNB and NIDC in their answer contended that they had nothing to do with any illegal activity
and that the granting of the loans were in the ordinary and usual course of their business. Not
having committed any tortious actions, the plaintiffs have no cause of action against PNB and
NIDC.
Issue: Whether or not the allegations of the Amended and Supplemental Complaint
constituted a sufficient cause of action against the PNB and NIDC. - Insufficient cause of
action.
Held: NO.
A negative finding is called for.
It is basic that the Complaint must contain a concise statement of the ultimate facts
constituting the plaintiff's cause of action. "Ultimate facts" are the important and substantial
facts which either directly form and basis of the plaintiff'sprimary right and duty, or directly
make up the wrongful acts or omissions by the defendant.
When the ground for dismissal is that the Complaint states no cause of action, the rule is that
its sufficiency can only be determined by considering the facts alleged in the Complaint and
no other.The court may not consider other matters outside of the Complaint.Defenses
averred by the defendant are not to be taken into consideration in ruling on the motion.The
allegations in the Complaint must be accepted as true and it is not permissible to go beyond
and outside of them for date or facts.And the test of sufficiency of the facts alleged is
whether or not the Court could render a valid judgment as prayed for accepting as true the
exclusive facts set forth in the Complaint.
The subject Amended and Supplemental Complaint fails to meet the test. It should be noted
that it charges PNB and NIDC with having assisted in the illegal creation and operation of
defendant sugar mill. Granting, for the sake of argument, that, indeed, assistance in the
"illegal" act was rendered, the same, however, is not supported by well- pleaded averments
of facts. Nowhere is it alleged that defendants-appellees had notice, information or
knowledge of any flaw, much less any illegality, in their co-defendants' actuations, assuming
that there was such a flaw or illegality. This absence is fatal and buoy-up instead the PNBNIDC's position of lack of cause of action.
Although it is averred that the defendants' acts were done in bad faith,the Complaint does
not contain any averment of facts showing that the acts were done in the manner alleged. It
is a mere conclusion of law not sustained by declarations of facts, much less admitted by
defendants-appellees. It does not, therefore, aid in any wise thecomplaint in setting forth a
cause of action.Besides, bad faith is never presumed (Civil Code, Art. 527). And, it has been
held that "to support a judgment for damages, facts which justify the inference of a lack or
absence of good faith must be alleged and proven."
WHEREFORE, without resolving the issue in the main case regarding the alleged illegal
creation and operation of First Farmers Milling, Co., Inc., there having been no presentation of
evidence as yet in the lower Court, the challenged Order dismissing the Amended and

Supplemental Complaint is hereby affirmed, and the appeal dismissed. Costs against plaintiffappellant.
______________
SWAGMAN VS CA
Facts: Sometime in 1996 and 1997, Swagman through Atty. Infante and Hegerty, its
president and vice-president, respectively, obtained from Christian loans evidenced by
three promissory notes dated 7 August 1996, 14 March 1997, and 14 July 1997. Each of
thepromissory notes is in the amount of US$50,000 payable after three years from its date
with an interest of 15% per annum payable every three months. In a letter dated 16
December 1998, Christian informed the petitioner corporation that he was terminating the
loans and demanded from the latter payment of said loans.
On 2 February 1999, Christian filed with the RTC a complaint for a sum of money and
damages against the petitioner corporation, Hegerty, and Atty. Infante.
The petitioner corporation, together with its president and vice-president, filed an Answer
raising as defenses lack of cause of action. According to them, Christian had no cause of
action because the three promissory notes were not yet due and demandable.
The trial court ruled that under Section 5 of Rule 10 of the 1997Rules of Civil Procedure, a
complaint which states no cause of action may be cured by evidence presented without
objection. Thus, even if the plaintiff had no cause of action at the time he filed the instant
complaint, as defendants obligation are not yet due and demandable then, he may
nevertheless recover on the first twopromissory notes in view of the introduction of evidence
showing that the obligations covered by the two promissory notes are now due and
demandable. When the instant case was filed on February 2, 1999, none of the promissory
notes was due and demandable, but , the first and the second promissory notes have already
matured during the course of the proceeding. Hence, payment is already due.
This finding was affirmed in toto by the CA.
Issue: Whether or not a complaint that lacks a cause of action at the time it was filed be
cured by the accrual of a cause of action during the pendency of the case.
Held: No. Cause of action, as defined in Section 2, Rule 2 of the 1997 Rules of Civil
Procedure, is the act or omission by which a party violates the right of another. Its essential
elements are as follows:
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. Act or omission on the part of such 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 appropriate relief.

13 | P a g e
It is, thus, only upon the occurrence of the last element that a cause of action arises, giving
the plaintiff the right to maintain an action in court for recovery of damages or other
appropriate relief.
Such interpretation by the trial court and CA of Section 5, Rule 10 of the 1997 Rules of Civil
Procedure is erroneous. The curing effect under Section 5 is applicable only if a cause of
action in fact exists at the time the complaint is filed, but the complaint is defective for failure
to allege the essential facts.Amendments of pleadings are allowed under Rule 10 of the
1997 Rules of Civil Procedure in order that the actual merits of a case may be determined in
the most expeditious and inexpensive manner without regard to technicalities, and that all
other matters included in the case may be determined in a single proceeding, thereby
avoiding multiplicity of suits.
__________
FIRST DIVISION
[G.R. Nos. 92029-30 : December 20, 1990.]
192 SCRA 507
NICANOR G. DE GUZMAN, JR., Petitioner, vs. HON. COURT OF APPEALS, Former Fifth
Division, HON. REGIONAL TRIAL COURT, National Capital Judicial Region, Br. 48,
Manila, and ENRIQUE KP. TAN, Respondents.
DECISION
GANCAYCO, J.:
A cause of action is the fact or combination of facts which affords a party a right to judicial
interference in his behalf. 1 An action means an ordinary suit in a court of justice, by which
one party prosecutes another for the enforcement or protection of a right, or the prosecution
or redress of a wrong. 2
The cause of action must always consist of two elements: (1) the plaintiff's primary right and
the defendant's corresponding primary duty, whatever may be the subject to which they
relate person, character, property or contract; and (2) the delict or wrongful act or
omission of the defendant, by which the primary right and duty have been violated. 3 The
cause of action is determined not by the prayer of the complaint but by the facts alleged. 4
The term right of action is the right to commence and maintain an action. 5 In the law on
pleadings, right of action is distinguished from cause of action in that the former is a remedial
right belonging to some persons, while the latter is a formal statement of the operative facts
that give rise to such remedial right. The former is a matter of right and depends on the
substantive law, while the latter is a matter of statement and is governed by the law of
procedure. 6
The right of action springs from the cause of action, but does not accrue until all the facts
which constitute the cause of action have occurred. 7 When there is an invasion of primary
rights, then and not until then does the adjective or remedial law become operative, and
under it arise rights of action. There can be no right of action until there has been a wrong
a violation of a legal right and it is then given by the adjective law. 8
The herein petition for review on Certiorari of a decision of the Court of Appeals dated
January 30, 1990 in CA G.R. No. 22481 9 puts into test the sufficiency of the cause of action
of a complaint filed in the Regional Trial Court of Manila.: nad
The undisputed antecedents are that on September 15, 1988, petitioner filed a complaint for
damages and other equitable reliefs in the trial court, the relevant allegations of which are as
follows:

"3. Plaintiff and defendant have been friends and in the course of this relationship, they have
exchanged mutual favors and accommodations, including discounting of check for cash.
4. More than seven (7) years ago, several checks were issued by plaintiff to defendant in
exchange for cash which probably amounted to P280,900.00. In due time, these checks were
either fully paid, settled, extinguished or condoned by agreement of the parties, and for
which reason, plaintiff did not anymore redeem the checks precisely because they have been
close and mutual friends.
5.a. Lately, however, plaintiff received from defendant's lawyer a demand letter dated 1988
supposedly detailing out therein the former's obligation to the latter, as follows:
Principal Amount
P280,900.00
(Value of 66 dishonored checks)
Legal Interest at
235,956.00
1% per Month (For 84
months or 7 years)
Attorney's Collection
51,685.00
Fee (At 10% Only)

TOTAL Amount Due


P568,541.00
========
Copy of said letter is attached hereto as Annex A and made an integral part hereof.
b. The claim of P568,541.00 is not due and owing from the plaintiff to the defendant because,
as already stated, the amounts of the checks issued to defendant some more than (7) years
ago, were either fully paid, settled, extinguished or treated as condoned by agreement of the
parties.
6. In the said letter, Annex A hereof, defendant threatened to "institute the proper action and
hold (plaintiff liable for the consequence," in the following manner:
. . . unfortunately, you had not heeded his (defendant's) request and so we hereby inform you
that this shall definitely be our last letter to you on this matter and we are giving you a final
period of ten (10) days from receipts hereof to remit full payment of said sum of P568,541.00,
otherwise, without need of further advice to you, we shall institute the proper action and hold
you liable for the consequence.:-cralaw
7. Defendant knows fully well that the sum of P568,541.00 is not wholly or partly due or
owing to him from plaintiff particularly the huge, fantastic, and unwarranted claim for alleged
legal interests in the sum of P235,956.00 which roughly accounts for 84% of the alleged
principal amount being collected by defendant from plaintiff under his ill-tenored Annex A
hereof, and the unwarranted claim for attorney's collection fees of P51,685.00.
8. Plaintiff is very reluctant to file the instant complaint against his defendant friend but was
gravely agitated to do so because of a clearly perceived and palpable injury to him as
unequivocally expressed in defendant's letter, Annex A hereof.
9. In the circumstances given, defendant has kept possession of the alleged checks
amounting to P280,900.00 at the expense of plaintiff and since the obligation thereunder has
either been fully or wholly paid, settled, extinguished, or condoned by agreement of the
parties, defendant holds them without just or legal ground and is bound to return them to
plaintiff.
10. In writing the letter, Annex A hereof and demanding therein an obligation from plaintiff
which is not due and owing from the latter, defendant failed to act with justice, observe
honesty and good faith.
11. To prosecute the instant action, plaintiff has incurred actual expenses in the sum of at
least P15,000.00.

14 | P a g e
12. In the circumstances herein-above given, defendant acted in a wanton, reckless,
oppressive, or malevolent manner. Hence, exemplary damages in the sum of P200,000.00
should be imposed against the defendant for the public good, in addition to other damages
claimed herein.
13. Nominal damages should be adjudicated against the defendant in order that the right of
plaintiff which has been invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by the latter.
14. To prosecute the case herein, plaintiff has retained the services of counsel at the agreed
attorney's fees of P75,000.00.
WHEREFORE, it is respectfully prayed that, after due hearing judgment be rendered in favor
of plaintiff and against defendant, as follows:
1. Ordering defendant to pay plaintiff the sum of P15,000.00 as actual or compensatory
damages;
2. Ordering the defendant to pay plaintiff the exemplary damages in the sum of P200,000.00;
3. Ordering defendant to return to plaintiff the several checks mentioned in Annex A of the
complaint and adjudicating nominal damages in favor of plaintiff and against the defendant;
4. Ordering defendant to pay plaintiff the sum of P75,000.00 for and as attorney's fees; and
5. Ordering the defendant to pay the costs of the suit.: nad
Plaintiff prays for other relief just and proper in the premises of the case." 10
On October 8, 1988, private respondent filed a motion to dismiss the complaint for lack of
cause of action and prescription. An opposition thereto was filed by petitioner to which a
reply was made by private respondent. After a rejoinder was submitted by petitioner, on
November 24, 1988 the trial court dismissed the complaint for failure to state a cause of
action. 11
A motion for reconsideration thereof filed by petitioner, which was opposed by private
respondent, and to which a reply was filed by petitioner, was denied by the trial court on
March 17, 1989. 12
Hence, petitioner filed a petition for Certiorari and mandamus and other relief in the Court of
Appeals against said orders of the trial court. As earlier stated, on January 30, 1990, the
Court of Appeals rendered its decision dismissing the appeal with costs against petitioner.
Thus, the herein petition whereby petitioner alleges that the trial court committed a grave
abuse of discretion in issuing the questioned orders dated November 24, 1988 and March 17,
1989, and that the Court of Appeals did likewise in dismissing the appeal of petitioner
thereby disregarding a question of substance not in accord with law.
The petition is impressed with merit.
A reading of the complaint shows that it is therein alleged that more than seven (7) years
ago, several checks were issued by petitioner to private respondent in exchange for cash
amounting to P280,900.00; that in due time, said checks were "either fully paid, settled,
extinguished or condoned by agreement of the parties" so petitioner did not anymore redeem
the checks because of their friendship; that on August 30, 1988, private respondent's lawyer
sent a letter of demand to petitioner to pay said principal amount plus interest and attorney's
fees with a total amount due of P568,541.00, which claim is not due and owing having been
settled between the parties; that in said letter threat of court action was made causing injury
to petitioner; that private respondent illegally withheld the petitioner's checks which should
be returned to petitioner; that for private respondent's act of demanding payment for an
obligation not due and for the former's failure to act with justice, observe honesty and good
faith, petitioner prays for relief by way of actual, exemplary and nominal damages, and also
prays that the private respondent be ordered to return to petitioner the checks mentioned in
the complaint, and to pay the costs.

Contrary to the findings of the lower court and the appellate court that the complaint states
no cause of action, this Court finds and so holds that it states a sufficient cause of action.
It must be remembered that when a party files a motion to dismiss the complaint for lack of
cause of action he is deemed to hypothetically admit the allegations thereof.
From the allegation of the complaint in this case it appears that, (1) petitioner has a primary
right, because of having paid his obligation to private respondent, to have the checks he
issued to cover the amount returned to him or otherwise cancelled by private respondent;
and (2) the primary right of was violated when private respondent demanded payment of a
settled obligation relying on the very checks of petitioner he had not returned. Consequently,
on account of such demand for payment for an obligation duly settled, the petitioner thereby
suffered damages 13 and should be afforded such relief as prayed for in the complaint.:cralaw
Contrary to the observation made by the appellate court, the cause of action had not
prescribed. The cause of action accrued only on August 20, 1988 when in a demand letter for
payment private respondent thereby committed a wrongful act against petitioner. The
complaint was filed promptly on September 15, 1988, well within the four (4) year
prescriptive period of an action of this nature. 14
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals
dated January 30, 1990 as well as the questioned orders of the Regional Trial Court of Manila
dated November 24, 1988 and March 17, 1989, are hereby REVERSED AND SET ASIDE. Let
the records of this case be remanded to the trial court for further proceedings. Costs against
private respondent.
SO ORDERED.
______

4. Fluor Daniel v. EB Villarosa G.R. No. 159648 Jul 27, 2007


Facts:
E.B Villarosa filed a complaint for collection of a sum of money and damages against Fluor
Daniel for its failure to pay the payment for suspension cost and for work so far performed by
E.B Villarosa.
Fluor Daniel moved to dismiss the complaint on the ground that it failed to state a cause of
action. RTC denied the motion of petitioner and favored the respondents.
So, petitioner assailed RTCs ruling before the CA.
WON the complaint sufficiently state a cause of action. NO.
In this case, the 3 contracts that were attached with the subject complaint governed the rights
and obligations between petitioner and respondent. Records show that in each of the said
contracts a provision that payment by petitioner shall be subject to its timely receipt of similar
payments from Fil-Estate was stipulated. The attached annexes defined and delimit the
obligations of the parties, that a specific condition must be met before petitioner is held liable
for payment. Therefore, considering the contracts annexed to it, the complaint for collection
of sum of money and damages failed to sufficiently state a cause of action. The complaint
should be dismissed for lack of cause of action.
___________

15 | P a g e
1. Alberto v. CA G.R No. 119088 Jun 30, 2000
Facts:
This case involves the Complaint for collection of money filed by petitioner Atty. Alberto
against Sps. Alano when the latter refused to pay her fees stipulated in their retainer
agreement. Petitioner Atty. Alberto represented the spouses before the SEC case to recover
real properties, money and other assets that may pertain to them by virtue of their
stockholdings in the Natalia Realty, Inc. However, the SEC Case was later dismissed as the
opposing parties reached a settlement without consulting petitioner. The RTC ruled in favor of
petitioner and declared that the Attorneys fees shall constitute a lien on the property subject
of the case.
Atty. Alberto later found out that a portion of the subject property was sold to Sps. Alanos
daughter, Yolanda as settlement before the parties moved to dismiss the case. Because of
this, Atty. Alberto filed second Amended Complaint to declare the deed of sale void. The RTC
dismissed the complaint for lack of cause of action and cancelled the attorneys lien on the
TCT.
WON Atty. Alberto has cause of action to assail the deed of sale between Natalia Realty and
Yolanda.
Ruling: YES. By virtue of the retainer agreement, a right was created in her favor. This right
was confirmed by the RTC in first case that petitioner filed against the spouses.
Correspondingly, the spouses had the obligation to honor and not to violate the retainer
agreement. However, the Sps. breached their obligation and worse, Alberto found that the
Sps had no more leviable property as such was sold to Yolanda. Thus, Atty. Alberto not only
have a cause of action against the Sps. Alano but also against Yolanda.
The rule that in order to determine the cause of action the court must examine only the
averments in the complaint has exceptions:
1st, All documents attached to a complaint, the due execution and genuineness of which are
not denied under oath by the defendant, must be considered as part of the complaint without
need of introducing evidence thereon.
2nd, Other pleadings submitted by the parties, in addition to the complaint, may be
considered in deciding whether the complaint should be dismissed for lack of cause of action.
All the pleadings attached should be considered in determining whether there was a sufficient
cause of action as the order of dismissal is summary in nature. So long as they are
procedurally responsive to the complaint, then they may be used to determine the sufficiency
of the cause of action in the complaint. Strictly limiting the evaluation of the merits of the
complaint to its averments or allegations would limit the interpretation of the rule
_____________
OSIMO GODINEZ, ELIZABETH
G.R. No. 154330
GODINEZ and EDWIN GODINEZ,
Petitioners,
Present:
- versus -

THE COURT OF APPEALS, HON. OSCAR G.

PUNO, C.J., Chairperson,


SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

TIROL in his capacity As Presiding Judge,


Regional Trial Court, Branch 1, Tagum City,
Promulgated:
Davao del Norte, and DELFINA VILLAGE
SUBDIVISION HOMEOWNERS ASSOCIATION,
February 15, 2007
Respondents.
x -------------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Certiorari assailing the
Decision[1] of the Court of Appeals promulgated on February 22, 2002 in CA-G.R. SP
No. 65445.
The facts are:
On August 30, 2000, Delfina Village Subdivision Homeowners Association (DVSHA),
respondent, filed with the Regional Trial Court, Tagum City, Davao del Norte, an amended
complaint for injunction and damages against spouses Zosimo and Elizabeth Godinez and
their son Edwin, petitioners, docketed as Special Case No. 383. The complaint alleges that
petitioners were operating a mineral processing plant in the annex of their residential house
located within Delfina Village. The village has been classified by Municipal Ordinance No.
63, s. 1993 as a medium-density residential district.
On September 13, 2000, petitioners filed their answer raising the following affirmative
defenses: a) the complaint states no cause of action; b) respondent DVSHA has no capacity
to sue; c) it is not a real party in interest; d) the complaint fails to implead the real parties in
interest; and
e) respondent failed to refer the case for conciliation to the barangay before
filing its complaint.
On April 3, 2001, the trial court issued an Order directing respondent to amend its
complaint and attach thereto proofs showing that it is a juridical person with capacity to sue
and that it is the real party in interest.
On April 16, 2001, respondent submitted its amended complaint impleading, as
additional plaintiffs, its officers and members, and attaching thereto its Certificate of
Registration with the Home Insurance and Guaranty Corporation, as well as its Articles of
Incorporation and By-Laws.
On April 27, 2001, petitioners filed a motion for reconsideration of the trial courts
Order dated April 3, 2001, but it was denied on May 21, 2001, prompting them to file a
petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 65445.
On February 22, 2002, the Court of Appeals rendered its assailed Decision dismissing
the petition for certiorari.
The Court of Appeals held that the trial court did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in directing respondent to amend its
complaint. The purpose of the trial court was to determine whether respondent is a juridical

16 | P a g e
person and whether it is a real party in interest. In sum, its intention was to ensure
respondents compliance with the procedural rules.
Petitioners timely filed their motion for reconsideration, but in its
Resolution[2] dated June 26, 2002, the Court of Appeals denied the same.
Hence, this recourse.
The only issue for our resolution is whether the Court of Appeals erred in sustaining the
trial courts April 3, 2001 Order directing respondent to amend its complaint in Special Case
No. 383.
In resolving this issue, we are guided by two principles. First, there is nothing sacred
about processes or pleadings and their forms or contents, their sole purpose being to
facilitate the application of justice to the rival claims of contending parties. [3] Hence,
pleadings as well as procedural rules should be construed liberally. [4] Second, the judicial
attitude has always been favorable and liberal in allowing amendments to a pleading in order
to avoid multiplicity of suits and so that the real controversies between the parties are
presented, their rights determined, and the case decided on the merits without unnecessary
delay.[5]
Here, we find no reason to deviate from the foregoing dicta. It is on record that in its
first amended complaint, respondent DVSHA alleged that it is a registered
association. However, it failed to attach to its complaint the supporting certificate of
registration, as well as its articles of incorporation and by-laws. In their answer, petitioners
promptly assailed respondents lack of personality to sue. The trial court, desiring to
determine if indeed respondent has the capacity to sue, directed respondent to amend its
complaint anew by attaching thereto the necessary documents.
Sections 1 and 4, Rule 10 of the 1997 Rules of Civil Procedure, as amended, provide:
SEC. 1. Amendments in general. Pleadings may be amended by adding or striking out
an allegation or the name of any party, or by correcting a mistake in the name of a party or a
mistaken or inadequate allegation or description in any other respect, so that the actual
merits of the controversy may speedily be determined without regard to technicalities, and in
the most expeditious and inexpensive manner.
SEC. 4. Formal amendments. A defect in the designation of the parties and other
clearly clerical or typographical errors may be summarily corrected by the court at any stage
of the action, at its initiative or on motion, provided no prejudice is caused thereby to the
adverse party.
Here, the amendment of respondents complaint at the instance of the trial court
merely involves the designation of respondent as a proper party, i.e., whether it has a
juridical personality and, therefore, can sue or be sued. We note that when respondent
amended its complaint by attaching the required supporting documents, such amendment
did not change its cause of action. Nor was its action intended to prejudice
petitioners. Verily, the Court of Appeals correctly ruled that the RTC did not gravely abuse its
discretion when it ordered the amendment of the complaint.

Anent petitioners contention that respondent is not a real party in interest, the same is
without merit. Section 2, Rule 3 of the same Rules defines a real party in interest as the
party who stands to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of a suit. In its complaint, respondent alleged that it will be prejudiced by
petitioners act complained of. Even assuming it will not suffer an injury from the alleged
unlawful act of petitioners, its members or homeowners may sustain such injury. In this
jurisdiction, an association has a standing to file suit for its members despite lack of interest
if its members are directly affected by the action.[6]
WHEREFORE, we DENY the petition and AFFIRM the Decision of the Court of Appeals in
CA-G.R. SP No. 65445. Costs against the petitioners.
_____________
1. UNICAPITAL v. RAFAEL CONSING
CAUSE OF ACTION
FACTS:
Petitioner obtained for himself and his mother various loans amounting to P18,000,000 from
Unicapital. The loans were secured by Real Estate Mortgage (REM) constituted on parcel of
land in Cavite registered under the name of the mother of petitioner (Cecilia Dela Cruz). In
pursuance with the option to purchase on the mortgaged property, Unicapital agreed to
purchase one half of the property. The payment was set off by the loans of the petitioner
while the other half was purchased by Plus Builders, Inc, a joint venture partner of the
Unicapital. Before both companies could develop the land, they discovered that the property
was in the names of Po Willie Yu and Juanito Tan Teng. Thus, Unicapital demanded the return
of the total amount of P41,377,851.48 as of April 19, 1999 that had been paid to and
received by de la Cruz and Consing, but the latter ignored the demands.
On July 22, 1999, Petitioner Consing filed Civil Case in the Pasig City Regional Trial Court to
enjoin Unicapital from proceeding against him for the collection of the sum of money on the
ground that he had acted as a mere agent of his mother. On the same date, Unicapital
initiated a criminal complaint for estafa through falsification of public document against
Petitioner Consing and the mother in the Makati City Prosecutors Office. Finding probable
cause, City Prosecutor filed an information for estafa against Petioner. In 2000, Petitioner
moved to defer arraignment because of the existence of a prejudicial question. RTC granted
and suspended the proceedings in Makati Criminal Case. The State thus assailed in the CA
the last two orders of the RTC in the Makati criminal case via petition for certiorari. It was
found that indeed, the resolution of the pasig civil case is prejudicial to the Cavite and Makati
Criminal Cases.
Meanwhile, Plus Builders commenced an action for damages against Petitioner Consing in
RTC Manila. Petitioner again filed a motion to defer the arraignment on the ground of the
existence of a prejudicial question. CA Ruled that there is NO Prejudicial question. Thus,
petitioner filed before SC.
ISSUE: Whether or not there is a prejudicial question that would justify the
suspension of the proceedings n the Criminal Case
HELD:
NO. There was no prejudicial question.

17 | P a g e
The fact remains that both the crime charged in the information in the criminal case and the
eleventh cause of action in the civil case are based upon fraud, hence both the civil and
criminal cases could proceed independently of the other pursuant to Article 33 of the new
Civil Code which provides: In cases of defamation, fraud and physical injuries, a civil action
for damages, entirely separate and distinct from the criminal action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of
evidence. (j) That, therefore, the act of respondent judge in issuing the orders referred to in
the instant petition was not made with grave abuse of discretion.
The case in Unicapital involved fraud and it is well settled that a civil action based on
defamation, fraud and physical injuries may be independently instituted pursuant to Article
33 of the Civil Code, and does not operate as a prejudicial question that will justify the
suspension of a criminal.
___________
G.R. NO. L-48276 September 30, 1987
DR. PEDRO A. DANAO (substituted by his heirs MARTIN DANAO, MINDA DANAO and
co-petitioner CONCEPCION S. DANAO) and CONCEPCION S. DANAO, petitioners,
vs.
HON. COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS, Successor to the
PEOPLES BANK & TRUST COMPANY, respondents.
No. L-48980 September 30, 1987
BANK OF THE PHILIPPINE ISLANDS, Successor to the PEOPLES BANK & TRUST
COMPANY, petitioner,
vs.
HON. COURT OF APPEALS, DR. PEDRO A. DANAO (Substituted by his heirs MARTIN
DANAO, MINDA DANAO and correspondent CONCEPCION S. DANAO) and
CONCEPCION S. DANAO, respondents.
PARAS, J.:
These are two petitions for review on certiorari of the decision 1 of respondent Court of
Appeals in CA-G.R. No. 59865-R promulgated on April 14, 1978 (Rollo, p. 22), affirming the
decision 2 of the Court of First Instance of Manila with modifications. The dispositive portion of
the appellate judgment reads;
WHEREFORE, with the modifications that the actual and compensatory damages are
eliminated the moral damages are reduced to P30,000.00, and the attorney's fees are
likewise reduced to P5,000.00 the decision appealed from is affirmed.
The facts of the cases involved are quoted from the decision of respondent Court of Appeals
as follows:
On February 27, 1963, spouses Pedro Danao and Concepcion S. Danao applied for a
commercial credit line of P20,000.00 with the People's Bank and Trust Company. The
application having been granted, the parties on March 14, 1963, executed a Commercial
Credit Agreement and Mortgage in which, among others, they stipulated:
WHEREFORE, the said mortgagor(s) have offered and agreed to secure the repayment of the
said credits and advances with interest due or accruing thereon as well as any other liability
or liabilities of the said mortgagors to the said mortgagee, now existing, due or to become
due, or hereafter incurred by means of a good and valid mortgage as hereinafter stated, and
the mortgagee has consented to grant the line of credit applied for a good and sufficient
security;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein set
forth the parties do have agreed and do hereby agree, as follows:

The said mortgagor(s) shall be and are hereby granted a line of credit not to exceed at any
one time the sum total of TWENTY THOUSAND AND 00/000 (P20,000.00) at NINE (9%) per
cent per annum, which credit shall be available to said Mortgagor(s) or EITHER OF THEM in
the form of advances from time to time to be evidenced by promissory note or notes. ...
and on the mortgage that-This mortgage shall continue as security for the payment of the indebtedness herein
contracted by said Mortgagor(s) as aforesaid, and of all money expanded or abilities incurred
by virtue hereof, with interest thereon, as well as security for the repayment of any other
sums now or hereafter owing to the said Mortgagee in addition to or aside from the credit
facilities herein granted by the Mortgagee to the Mortgagor(s).
F.--In the event that the Mortgagor(s) should fail to pay the sums of money secured by the
mortgage, or any part thereof, in accordance with the terms and conditions herein set
forth, ..., the Mortgagee shall have the right, at its election, to foreclose this mortgage
extrajudicially. ...
The proceeds of such sale of the mortgaged properties shall be applied as follows: ... 3) To
the satisfaction of the principal amount of obligation herein secured; and 4) To the
satisfaction of all further obligations owing by the Mortgagor(s) to the Mortgagee.
Given as a security for the credit line of P20,000.00 was a parcel of land in the City of Baguio,
covered by Transfer Certificate of Title No. T-223, together with the buildings and
improvements thereon.
The spouses availed of the credit facility granted them by the People's Bank and Trust
Company not only during the original term of one year, but also during the renewals or
extensions thereof. The last promisory not signed by Pedro Danao during the extensions was
fully paid on July 5, 1968.
It appears the October 28, 1963, Antonio Co Kit and Pedro Danao signed a promissory not for
P10,000.00. The two agreed to pay the note, jointly and severally, within 179 days after date.
The check for the proceeds of the note was issued in the name of Antonio Co Kit alone. The
note was renewed by Antonio Co Kit and Pedro Danao for the amount of P8,650.00 on April
27, 1964, payable within 91 days. The promised to pay the amount, jointly and severally.
On September 30, 1968, counsel for the People's Bank and Trust Company wrote a demand
letter to Antonio Co Kit a demand letter to Antonio Co Kit and Pedro Danao for the payment of
the balance of the promissory note in the amount of P5,870.09.
On July 14, 1969, the manager of the People's Bank and Trust Company wrote another
demand letter, this time to Pedro Danao, for the payment of the balance of P4,225.15,
excluding interest.
On September 19, 1969, the People's Bank and Trust Company filed a complaint in the City
Court of Baguio City against Antonio Co Kit and Pedro Danao, praying that judgment be
rendered, ordering defendants, jointly and severally, to pay it (plaintiff) the sum of P4,225.15,
plus interest thereon at the rate of 13.5% per annum from July 8, 1969, until full payment,
attorney's fees in that sum equal 10% of the total amount due, and the cost of suit.
On January 5, 1971 the City Court issued an order, dismissing the complaint "for lack of
interest on the part of the plaintiff".
On March 1, 1971, the branch manager of the People's Bank and Trust Company, Baguio
Branch, wrote a letter to Pedro Danao, informing the latter that they had filed a petition for
foreclosure to the City Sheriff of Baguio City, attaching therewith a copy of the petition.
Stated therein is that the parcel of land covered by Transfer Certificate of Title No. 2033 will
be sold at public auction. according to the petition, the land is security for the payment of
any other sums owing to the Bank "in addition to or aside from ... credit facility." The
indebtedness to be satisfied out of the proceeds of the foreclosure sales is P3,024.03,
exclusive of interest.

18 | P a g e
On March 4, 1971 notice of public auction sale was published in the Baguio Mid-land Courier,
a weekly newspaper published and edited in the City of Baguio and which is of wide
circulation in the City, province of Benguet and in the Philippines, for three consecutive
weeks, once a week. Copies of the notice were also posted in three public and conspicuous
places in Baguio for the information of the public. In the published notice of public auction
sale, it is stated that in the petition for foreclosure it is alleged that Mortgagors' spouses
PEDRO DANAO and CONCEPCION DANAO, ... failed to pay the ... loan when it fell due thereby
violating the terms and conditions of the real estate mortgage above mentioned.
On March 10, 1971, counsel for the People's Bank and Trust Company, Baguio Branch, wrote
a letter, informing the Bank of the full payment of the obligations of Antonio Co Kit and Pedro
Danao.
On March 16, 1971, the branch manager of the People's Bank and Trust Company executed a
cancellation of the real estate mortgage, stating therein that the mortgagors had fully paid
the obligation or indebtedness secured by the mortgage.
On June 16, 1972, Pedro Danao and Concepcion S. Danao filed a complaint for damages
against the Bank of Philippine Islands, as successor to the People's Bank and Trust Company,
in the Court of First Instance of Manila, where it was docketed as Civil Case No. 8781.
The complaint alleged, inter alia, that both the petition for foreclosure and the notice of
public auction sale published in the "Baguio Midland Courier" have neither legal nor factual
bases, because (1) while the credit line was availed of from time to time in different amounts
by promissory notes, the credits and loans obtained where duly paid in 1968 and since then
no further loans were assailed of under the credit line secured by mortgage of the plaintiffs'
properties; (2) the plaintiffs' alleged indebtedness mentioned in the defendant's petition for
foreclosure and in the consequent notice of public auction sale was the balance due on a
"clean loan" granted by the defendant to Antonio Co Kit, although admittedly the promissory
note was co-signed by plaintiff Pedro Danao, and the same was a distinct and separate
transaction from the plaintiffs' credit line, and was not covered nor secured by the plaintiffs'
properties mortgaged to the defendant. The complaint further alleged that the publication of
the notice of public auction sale in the "Baguio Midland Courier" was malicious and/or with
deliberate intent, or was due to gross negligence, causing the plaintiffs, who are respected
members of the community of Baguio Cities untold mental and moral anguish, serious
anxiety, besmirched reputation and social humiliation; that as a result of his social
humiliation, anxiety, mental and moral anguish, plaintiff Pedro Danao suffered serious heart
attack and was hospitalized and confined in bed for a period of one year, causing him to incur
hospitalization and medical expenses, and resulting in the loss of his income from his medical
practice. The plaintiffs ask for actual or compensatory, moral and exemplars, damages, as
well as attorney's fees.
In its answer with counterclaim, the People's Bank and Trust Company contended that in
firing the petition for extra-judicial foreclosure of the mortgage with the consequent
publication of notice of public auction sale, it merely exercised its legal right as creditormortgagee after plaintiff Pedro Danao had defaulted, despite repeated demands, in the
payment of the indebtedness or obligation contracted by him jointly and severally with
Antonio Co Kit; that in exercising such right, it acted lawfully, in good faith and with full
justification to protect its interest; and, as affirmative defense, alleged that, contrary to
plaintiffs' allegations, the Commercial Credit Agreement and Mortgagee provides that the
mortgage shall continue as security for the payment of the indebtedness therein contracted
by the mortgagors, as well as security for the repayment of any other sums ... (then or
thereafter) owing to the said mortgagee in addition to or aside from the credit facilities
therein) granted by the Mortgagee to the Mortgagors: and that plaintiff Pedro Danao's
solidarity obligation upon the promissory note signed by him as co-maker jointly and

severally with Antonio Co Kit constitutes a further obligation secured by the aforementioned
mortgage, in addition to the indebtedness arising from the commercial credit line, which
additional obligation was subsisting at tile time the extrajudicial foreclosure proceeding was
commenced.
After the issues had been joined upon the filing of the answer to the counterclaim and reply
to answer, the case was set for pre-trial.
After trial on the merits, the Court of First Instance of Manila rendered a decision the
dispositive part of which read as follows:
WHEREFORE, in view of all the foregoing considerations, the Court hereby renders judgment
in favor of the plaintiffs and against the defendant ordering the latter to pay the former the
sum of P14,290.00 as actual and compensatory damages, P100,000.00, as moral damages,
and P10,000.00, as exemplary damages, in addition to P20,000.00 as and for attorney's fees,
as well as the costs of suit. The counterclaim is dismissed.
SO ORDERED.
From this decision only the Bank of the Philippine Islands as successor of Peoples Bank and
Trust Company appealed. Respondent Court affirmed the trial court's decision with some
modifications as earlier quoted. Both parties moved for reconsideration. The motion for
reconsideration filed by Pedro and Concepcion Danao, as plaintiff-appellees (Rollo, p. 39) was
denied in respondent Court's resolution dated May 9, 1978 (Rollo, P. 48), while the motion for
reconsideration filed by the Bank of the Philippines Islands, as defendant-appellant (Rollo, p.
41), was also denied in the resolution of the same Appellate Court dated September 6, 1978
(rollo, p. 53).
Hence, these petitions filed by both parties.
The petition in G.R. No. L-48276 was filed with the Court by the spouses Dr. Pedro A. Danao
and Concepcion S. Danao on June 7, 1978 (Rollo, p. 5); while the petition in G.R. No. L-48980
was filed by the Bank of the Philippine Islands on October 7, 1978 (Rollo, p. 7).
In G.R. No. L-48276 respondent be filed its comment on the petition for review on certiorari
(Rollo, L-48276, p. 114) in compliance with the resolution of the First Division of this Court
dated June 27, 1978 (ibid, p. 107) on August 8, 1978 while the petitioners filed their reply on
September 14, 1978 (ibid, p. 265) in compliance with the resolution of August 21, 1978 (ibid,
p. 261). The Court gave due course to the petition in the resolution dated October 4, 1978
(ibid, p. 274). The brief for the petitioners was filed on December 5, 1978 (ibid, p. 277); while
the brief for the respondent, was filed on February 3, 1979 (ibid, p. 301). Petitioner having
failed to file the required reply brief within the period granted by the Court which expired on
March 1, 1979, the Court resolved on April 16, 1979 (ibid, p. 305) to declare the case
submitted for decision.
In G.R. No. L-48980, respondents filed their comment on the petition for review on certiorari
on November 15, 1978 (Rollo, L-48980, p. 62) in compliance with the resolution of the Second
Division of this Court dated October 18, 1978 (ibid, p. 61) while petitioner filed its Reply on
January 18, 1979 (ibid, p. 76) in compliance with the resolution of December 4, 1978 (Rollo,
p. 73). The Court resolved to give due course to the petition in the resolution of March 21,
1979 respondent was filed on July 8, 1979 (ibid, P. 101). On September 14, 1979 the Court
resolved to consider the case submitted for decision (ibid, p. 105), petitioner having failed to
file its reply brief within the period granted by the Court which expired on August 7, 1979.
On April 29, 1980, the spouses Pedro and Concepcion Danao, petitioners in L-8276 and
private respondents in L-48980 moved for the consolidation of the two cases (Rollo, L-48276,
p. 308) which was granted by the First Division of the Court in its resolution dated May 7,
1980 (ibid, p. 311). On July 2, 1980 the Second Division of the Court also ordered the
consolidation of L-48980 with L-48276 and the transfer of the case to the First Division of the
Court (Rollo, L-48980, p. 110).

19 | P a g e
On August 16, 1985, counsel for the spouses Pedro and Concepcion Danao manifested to the
Court the death of his client Pedro Danao and moved for the substitution of the heirs Martin
Danao and Minda Danao as co-petitioners and co-respondents of Concepcion Danao in the
instant cases (Rollo, L-48276, p. 327). On September 4, 1985 the heirs submitted to the Court
a copy of the death certificate of Pedro A. Danao (ibid, p. 341), hence the effecting of the
substitution.
In L-48276, petitioners raised the following assignment of errors:
FIRST THE COURT OF APPEALS ERRED IN FINDING THAT THE REAL ESTATE MORTGAGED
UNDER THE COMMERCIAL CREDIT AGREEMENT & MORTGAGE BY AND BETWEEN THE PARTIES
ALSO SECURED THE CLEAN LOAN EXTENDED TO MR. ANTONIO CO KIT, THE PROMISSORY
NOTE FOR WHICH WAS CO-SIGNED BY PETITIONER DR. PEDRO A. DANAO.
SECOND THE COURT OF APPEALS ERRED IN FINDING THAT THE ILLNESS AND HEART
ATTACKS SUFFERED BY PETITIONER DR. PEDRO A. DANAO HAD NO CASUAL RELATIONSHIP TO
THE FORECLOSURE OF MORTGAGE AND PUBLICATION OF THE NOTICE OF AUCTION SALE.
THIRD THE COURT OF APPEALS ERRED IN REDUCING THE MORAL DAMAGES AND
ATTORNEY'S FEES AWARDED BY THE TRIAL COURT.
In L-48980, petitioner bank raised the following assignment of errors:
I. The Court of Appeals erred in holding that petitioner's predecessor Peoples Bank and Trust
Company, by filing a civil complaint against Antonio Co Kit and Pedro A. Danao in the Baguio
City Court for the collection of the unpaid balance of the latter's promissory note "had
waived" the remedy of extra-judicial foreclosure of mortgage, and "such complaint barred the
subsequent petition for foreclosure of mortgage."
II. The Court of Appeals erred in concluding that the extrajudicial foreclosure of mortgage
ultimately resorted to as a last recourse to enforce payment of the outstanding balance long
past due on Co Kit and Danao's promissory note "was unwarranted", and in not holding that
said bank as creditor-mortgagee acted lawfully and was fully justified in exercising such
remedy.
III. The Court of Appeals erred in awarding moral damages, exemplary damages and
attorney's fees to the plaintiffs-appellees, private respondents herein.
IV. The Court of Appeals erred in not awarding at least temperate damages and reasonable
attorney's fees upon defendant-appellant bank's counterclaim against the plaintiffsappellees, private respondents herein.
Plaintiffs' (Petitioners in L-48276 and respondents in L-48980) claim for damages is
predicated on the theory that the real estate mortgage executed by them on March 14, 1963
in favor of defendant did not secure the solidarity obligation of Dr. Danao upon the
promissory note signed by him jointly and severally with Antonio C. Kit on October 28, 1963
and therefore, defendant's act in foreclosing said mortgagee extra-judicially was
unwarranted. (Respondent's brief in L-48276, Rollo, p. 301).
Placed in proper perspective, the deed of mortgage otherwise called "Commercial Credit
Agreement and Mortgage" is under scrutiny not for the purposes of the loan itself because
the same has been fully paid but for the determination of the legality or illegality of the
foreclosure proceedings instituted by the bank, which is now the subject of the action for
damages.
The creditor bank insists that the promissory note co-signed by Dr. Danao with Antonio C. Kit
as accommodation party for the latter, is secured by the deed of mortgage in favor of the
bank so that in the foreclosure proceedings so instituted, it was merely exercising its rights as
stipulated in the contract and was acting with justification. (L-48980, Petition, Rollo, p. 19).
Be that as it may, such distinction is in fact immaterial for even assuming that the promissory
note of Antonio C. Kit was indeed included among the obligations secured by the deed of
mortgage of Dr. Danao, still the creditor bank in opting to file a civil action (Civil Case No.

4281) in the Baguio City Court for the collection of the unpaid balanced of P4,225.15 plus
interest has abandoned its mortgage lien on the property in question.
Thus the Court has invariably held that:
... The rule is now settled that a mortgage creditor may elect to waive his security and bring,
instead, an ordinary action to recover the indebtedness with the right to execute a judgment
thereon on all the properties of the debtor, including the subject matter of the mortgage . . .,
subject to the qualification that if he fails in the remedy by him elected, he cannot pursue
further the remedy he has waived. (Manila Trading and Supply Co. vs. Co Kim, et al. 71 Phil.
448 [1941]; Movido v. RFC et al., 105 Phil. 886 [1959]).
Anent real properties in particular, the Court has laid down the rule that a mortgage creditor
may institute against the mortgage debtor either a personal action for debt or a real action to
foreclose the mortgage. In other words, he may pursue either of the two remedies, but not
both. As explained by the Court, the rule is as follows:
For non-payment of a note secured by mortgage, the creditor has a single cause of action
against the debtor. This single cause of action consists in the recovery of the credit with
execution of the security. In other words, the creditor in his action may make two demands,
the payment of the debt and the foreclosure of the mortgage. But both demands arise from
the same cause, the non-payment of the debt, and, for that reason, they constitute a single
cause of action. Though the debt and the mortgage constitute separate agreements, the
latter is subsidiary to the former, and both refer to one and the same obligation.
Consequently there exists only once cause of action for a single breach of that obligation.
Plaintiff, then, by applying the rule above stated cannot split up his single cause of action by
filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of
the mortgage. If he does so, the fishing of the first complaint will bar the subsequent
complaint. By allowing the creditor to file two separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, we will, in
effect, be authorizing him plural redress for a single breach of contract at much cost to the
courts and with so much vexation and oppression to the debtor.
... a rule that would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would result
not only in multiplicity of suits so offensive to justice (Soriano v. Enriquez, 24 Phil. 584) and
obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the
defendant to the vexation of being sued in the place of his residence or of the residence of
the Icarangal et al., 38 Off. Gaz. 389 [1939]).
Evidently, the prior recourse of the creditor bank in filing a civil action against the Danao
spouses and subsequently resorting to the complaint of foreclosure proceedings, are not only
a demonstration of the prohibited splitting up of a cause of action but also of the resulting
vexation and oppression to the debtor.
Both the lower court and the Court of Appeals found that the People's Bank and Trust Co.
(succeeded by the Bank of the Philippine Islands) acted unlawfully and without justification in
extra-judicially foreclosing the disputed mortgage and hence the Danao spouses are entitled
to damages.
As basis for actual damages, the lower court relied on the testimonies of Mrs. Danao and Dr.
Rodolfo Perez and the medical certificates of the various doctors and came out with the
award of actual and compensatory damages in the total amount of P14,290.00 in favor of the
same spouses, computed as follows: (1) P1,290.00 representing medical and hospitalization
expenses of Pedro Danao while confined at the Manila Medical Center from October 1 to
October 12, 1972; (2) P7,000.00 as costs for various examinations; and (3) P6,000.00
supposed to be the amount of income lost by Pedro Danao from his medical practice because
of thing incident.

20 | P a g e
But the evidence as correctly appreciated by the Court of Appeals shows that the first mild
heart attack suffered by Pedro Danao occurred in October 1977 or more than seven months
after the initial publication of the notice of foreclosure sale and the second heart attack
occurred in October 1978 or more than 19 months after said publication. No less important is
the fact that Dr. Rodolfo Perez, the regular attending physician of Pedro Danao and the
latter's own witness, testified to the effect that aforesaid heart attacks were the natural result
or outgrowth of a chronic rheumatic heart disease of long standing which developed over a
period of years, possibly even before 1966. (Decision D.A., G.R. No. 59865-R; Rollo, pp. 3637).
The second item was found to be unsupported by evidence while as to the third item, Pedro
Danao did not testify to prove the alleged lost income. (Ibid, p. 37). In the case of Sy vs. Court
of Appeals (131 SCRA 127 [1984]) the Court ruled that an alleged loss of income is not
recoverable for being speculative if no receipt or any kind of evidence on the matter is
presented to prove it.
The Court has ruled that actual or compensatory damages are "those recoverable because of
pecuniary loss in business, trade, property, profession, job or occupation and the same must
be proved, otherwise if the proof is flimsy and non-substantial, no damages will be given."
(Perfecto vs. Gonzales, 128 SCRA 640 [1984]).
More specifically in point to the case at bar, the Court has said:
... Well settled is the rule that even if the complaint filed by one against the other is clearly
unfounded this does not necessarily mean, in the absence of specific facts proving damages,
that said defendant really suffered actual damages over and above attorney's fees and costs.
The Court cannot rely on its speculations as to the fact and amount of damages. It must
depend on actual proof of the damages alleged to have been suffered. (Ibid, p. 640).
On the other hand, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission. The assessment of such damages, except liquidated
ones, is left to the discretion of the court, according to the circumstances of the case. (People
v. Baylon, 129 SCRA 63 [984]).
As a general rule, the filing alone of the foreclosure application should not be a ground for an
award of moral damages.
In the case at bar, however, the main bone of contention is not only the filing of the petition
for foreclosure proceedings but the manner in which the same was carried out, such as the
publication of the notice of extrajudicial foreclosure and sale at public auction in a Sunday
edition of the Baguio Midland Courier in the society page, instead of in the "legal notices" or
"classified ads" sections as usual in these types of notices, in extra-ordinarily large and boxed
advertisements, which allegedly bespoke the bank's malicious intent to embarrass and
harass the Danao spouses which actuations are contrary to the canons of conduct provided
for in Articles 19, 20 and 21 of the Civil Code. (Comment, Rollo, p. 67)
Both the lower court and the Court of Appeals took cognizance of the spouses' mental
anguish, serious anxiety and besmirched reputation traceable to the unfortunate publication
(Record on Appeal, p. 79; Rollo, p. 38).
For moral damages, the lower court awarded P100,000.00 but the Court of Appeals reduced
said amount to P30,000.00 and attorney's fees from P20,000.00 to P5,000.00.
We have laid down the rule that the fairness of the award of damages by the trial court also
calls for appellate determination (Luzon Concrete Products Inc. vs Court of Appeals, 135 SCRA
456 [1985]), such that where the award of moral damages is far too excessive compared to
the actual losses sustained by the claimants the former may be reduced. (Siguenza vsCourt
of Appeals, 137 SCRA 577-579). In fact, We have held that reduction of moral damages is
justified where the negligence of petitioner bank and its employees is not wanton and
reckless. (Bank of the Philippine Islands vs Court of Appeals, 117 SCRA 628).

After a careful review of the records, no plausible reason can be found to justify the reversal
of the findings of the Court of Appeals, however in view of the embarrassing circumstances
attendant to the foreclosure notice, as already explained herein above, We hereby MODIFY
the judgment of the respondent Court of Appeals by increasing the award of moral damages
to P60,000.00 and the attorney's fees to P1,000.00 and by imposing exemplary damages in
the amount of P20,000.00.
SO ORDERED.
____________
Bank of America vs American Realty Corporation
GR 133876 December 29, 1999
Facts:
Petitioner granted loans to 3 foreign corporations. As security, the latter mortgaged a
property located in the Philippines owned by herein respondent ARC. ARC is a third party
mortgagor who pledged its own property in favor of the 3 debtor-foreign corporations.
The debtors failed to pay. Thus, petitioner filed collection suits in foreign courts to enforce the
loan. Subsequently, it filed a petition in the Sheriff to extra-judicially foreclose the said
mortgage, which was granted.
On 12 February 1993, private respondent filed before the Pasig RTC, Branch 159, an action for
damages against the petitioner, for the latters act of foreclosing extra-judicially the real
estate mortgages despite the pendency of civil suits before foreign courts for the collection of
the principal loan.
Issue:
WON petitioners act of filing a collection suit against the principal debtors for the recovery of
the loan before foreign courts constituted a waiver of the remedy of foreclosure.
Held: Yes.
1. Loan; Mortgage; remedies:
In the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action or debt or a real action to foreclose the mortgage.
In other words, he may pursue either of the two remedies, but not both. By such election, his
cause of action can by no means be impaired, for each of the two remedies is complete in
itself.
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative
and not cumulative. Notably, an election of one remedy operates as a waiver of the other. For
this purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the
filing of the complaint in an action for foreclosure of mortgage. As to extrajudicial foreclosure,
such remedy is deemed elected by the mortgage creditor upon filing of the petition not with
any court of justice but with the Office of the Sheriff of the province where the sale is to be
made.
In the case at bar, petitioner only has one cause of action which is non-payment of the debt.
Nevertheless, alternative remedies are available for its enjoyment and exercise. Petitioner
then may opt to exercise only one of two remedies so as not to violate the rule against
splitting a cause of action.
Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing
four civil suits before foreign courts, necessarily abandoned the remedy to foreclose the real
estate mortgages constituted over the properties of third-party mortgagor and herein private
respondent ARC. Moreover, by filing the four civil actions and by eventually foreclosing extrajudicially the mortgages, petitioner in effect transgressed the rules against splitting a cause
of action well-enshrined in jurisprudence and our statute books.
2. Conflicts of Law

21 | P a g e
Incidentally, petitioner alleges that under English Law, which according to petitioner is the
governing law with regard to the principal agreements, the mortgagee does not lose its
security interest by simply filing civil actions for sums of money.
We rule in the negative.
In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction
that there is no judicial notice of any foreign law. A foreign law must be properly pleaded and
proved as a fact. Thus, if the foreign law involved is not properly pleaded and proved, our
courts will presume that the foreign law is the same as our local or domestic or internal
law. This is what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in said foreign law would still not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established
public policy of the forum, the said foreign law, judgment or order shall not be applied.
Additionally, prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country.
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action.
Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important
function of law; hence, a law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws.
Clearly then, English Law is not applicable.
_________
FERDINAND S. AGUSTIN,
G.R. No. 168139
Petitioner,
Present:
- versus -

SPS. MARIANO and


PRESENTACION DELOS
SANTOS,
Respondents.

PUNO, C.J., Chairperson,


CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
Promulgated:
January 20, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
PUNO, C.J.:
Before us is a petition for review on certiorari under Rule 45 seeking a review of the
Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA G.R. SP No. 80586 partly
reversing the decision[3] of the Regional Trial Court (RTC), Branch 33, Manila.

As borne by the records, respondent spouses Mariano delos Santos and Presentacion
delos Santos are the lawful owners of apartment units located at 230 Manrique Street,
Sampaloc, Manila.[4] On the other hand, petitioner Ferdinand Agustin has continuously
occupied one of respondents' apartment units since 1990 for a monthly rent of two thousand
pesos (P2,000.00). The monthly rental was increased to two thousand three hundred pesos
(P2,300.00) in May 1999.[5]
On May 10, 2000, respondents filed a complaint for ejectment against petitioner before
Branch 22 of the Metropolitan Trial Court (MeTC) of Manila docketed as Civil Case No. 167142CV. Respondents alleged that they needed to repossess the apartment unit occupied by the
petitioner because their daughters children would be studying at theUniversity of Sto. Tomas
in Manila.[6]
In a decision dated January 9, 2002, the MeTC, Branch 22 held:
Based on the evidence adduced by both parties, this Court is of the opinion, and so
holds that the instant complaint for ejectment lodged by the plaintiffs against the defendants,
MUST BE DISMISSED for lack of cause of action, it appearing that plaintiffs failed to comply
with the requirements when the ground for ejectment is personal need of the premises.
WHEREFORE, premises considered, the instant complaint is hereby DISMISSED
without prejudice to the right of the plaintiffs to collect the monthly rental of two thousand
three hundred pesos (P2,300.00) agreed upon in the Lease Contract and the corresponding
fifteen percent (15%) increase thereof, in accordance with the new rent control law with costs
against the plaintiff.
The counterclaim is likewise dismissed.
SO ORDERED.[7]
The decision lapsed into finality and was enforced by the respondents through the
imposition and collection of the monthly rent and the corresponding fifteen percent (15%)
increase thereon. A few months thereafter, respondents, in a Notice of Termination dated
October 10, 2002, informed petitioner of the termination of the verbal month-to-month
contract of lease and gave him thirty (30) days within which to vacate and peacefully
surrender the premises.[8]
The petitioner failed to vacate the premises despite notice. Thus, respondents again
filed a complaint for ejectment against petitioner on the ground of termination of the contract
of lease. The second ejectment case, which is the subject of the instant petition, was
docketed as Civil Case No. 174168 in Branch 15 of the MeTC of Manila.
In a decision dated June 12, 2003, the MeTC, Branch 15 ruled that petitioner's reliance
on res judicata was misplaced because the cause of action in Civil Case No. 174168 is
anchored on a different ground.[9] According to the MeTC, the verbal lease contract that
existed between the parties on a month-to-month basis pursuant to Article 1687 of the Civil
Code is one with a fixed term, and terminates at the end of each month, if notice to vacate is
properly given. Accordingly, the lease period had already expired. Hence:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs
and against defendant, ordering the latter and all persons claiming right under him, to vacate

22 | P a g e
the subject premises and surrender peaceful possession thereof to the plaintiffs, and for
defendant to pay plaintiffs:
a) the fair rental value or reasonable compensation for the continued use and
occupation of the premises at the rate of P5,000.00 per month effective upon the date of
filing of the complaint on November 19, 2002 and until the premises shall have been totally
vacated; and
of suit.

b) attorney's fees in the amount of Ten Thousand (P10,000.00) Pesos, plus the costs
SO ORDERED.[10]

On appeal, the RTC of Manila reversed the MeTC decision, thus:


The Court agrees with the first error cited by the defendant-appellant.
Indeed, the Court a quo cannot require the defendant-appellant to pay the plaintiffs-appellees
the amount of Php5,000.00 per month as the fair rental value or a reasonable compensation
for the continued use and occupation of the premises because before the termination of the
month to month verbal contract of lease, the rental being paid was P2,530.00 per month.
xxx
xxx
xxx
The court a quo was in error when it ruled that res judicata does not apply in this
case.
The court a quo ruled that there is no res judicata because there is no identity of
cause of action. The Court stated that in the first ejectment case decided by Hon. Hipolito
dela Vega the ground for ejectment was based on the need by the lessor of the leased
premises, while the case at bar is based on the expiration or termination. This is erroneous
because there is only one cause of actionunlawful detaineralthough this cause of action
may give the plaintiffs several reliefs. They may eject the defendant on the ground of 'need
of premises by owner' or 'expiration of the period of verbal lease agreement'. And when the
plaintiffs-appellees filed two separate complaints for these reliefs against the defendantappellant, such acts constitute splitting up of the cause of action. Thus, under Section 4, Rule
2 of the Revised Rules of Civil Procedure, 'If two or more suits are instituted on the basis of
the same cause of action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others.
Consequently, since the ejectment case based on 'the use of the premises by the
owner' filed by the plaintiffs-appellees was dismissed on the merits by the Honorable Judge
Hipolito dela Vega, the filing of the case at bar against the defendant-appellant may be
dismissed on the ground of res judicata.
xxx
xxx
xxx
WHEREFORE, the judgment appealed from is REVERSED on the ground of res
judicata. The Clerks of Court of the Regional Trial Court and the Metropolitan Trial Court of
Manila are ordered to return to the appellant the excess of P5,000.00 a month or the sum of
P2,217 a month beginning August 2003. The supersedeas bond put up by the appellant is
ordered cancelled and the appellees are ordered to pay the cost of the supersedeas bond;
and to pay the cost of suit.
SO ORDERED.[11]
Respondents repaired to the CA, which partially reversed the findings of the RTC. In its
decision, the CA found that the acts and omissions complained of and involved in the two civil

cases were not the same.[12] Likewise, the appellate court applied the same evidence test
and decided that there was no identity of causes of action between the first and second
cases of ejectment as different facts and evidence were needed for the resolution of each
case, and consequently, the principle of res judicata as a bar by prior judgment was
inapplicable.[13] It was also found that res judicata in the concept of conclusiveness of
judgment will not apply since the personal need issue decided upon in the first case is
different from and does not encompass any element of the expiration of lease contract at
issue in the second case.[14] Lastly, the CA declared that the lease contract between the
parties was on a month-to-month basis and that petitioner should vacate the subject
premises because his lease had already expired. [15] Thus, the dispositive portion of the
decision reads:
WHEREFORE, premises considered, the Decision dated October 14, 2003 of the Regional Trial
Court, Branch 33, Manila is PARTLY REVERSED as follows:
a) Appellees-petitioners' complaint for Ejectment is GRANTED;
b) Appellant-respondent and all persons claiming right under him are hereby ORDERED TO
VACATE the subject premises and to surrender peaceful possession thereof to appelleespetitioners; and
c) The appellees-petitioners must reimburse the appellant-respondent the amount in excess
of the monthly rental of P2,530.00 that the appellees-petitioners can charge until the
appellant-respondent surrenders peaceful possession of the premises to them.
SO ORDERED.[16]
Petitioner filed a motion for reconsideration of said Decision, which was also denied by
the appellate court.
Persisting in his position that the principle of res judicata in its concept of bar by prior
judgment should apply in the instant case and that therefore, the first suit for ejectment
should operate as a bar to the present action for ejectment, petitioner is now before us
questioning the order of the CA for him to vacate the leased premises.
Res judicata is defined as a matter adjudged; a thing judicially acted upon or decided;
a thing or matter settled by judgment.[17] According to the doctrine of res judicata, 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.
[18]
To state simply, a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all
points and matters determined in the former suit. [19]
The principle of res judicata is applicable by way of: 1) bar by prior judgment and 2)
conclusiveness of judgment. We have had occasion to explain the difference between these
two aspects of res judicata as follows:
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. In this instance, the judgment in the first case
constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of
the court of competent jurisdiction on the merits concludes the litigation between the parties,

23 | P a g e
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 other tribunal.
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. This is
the concept of res judicata known as conclusiveness of judgment. 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.[20]
In the case at bar, petitioner seeks to apply the principle of res judicata in its concept
of bar by prior judgment by pointing out that the final decision rendered in the first case for
ejectment, Civil Case No. 167142-CV, constitutes a bar to the litigation of the second
ejectment suit, the subject of the instant petition.[21]
We find no merit in the argument of the petitioner.
Res judicata applies in the concept of bar by prior judgment if the following requisites
concur: (1) the former judgment or order must be final; (2) the judgment or order must be on
the merits; (3) the decision must have been rendered by a court having jurisdiction over the
subject matter and the parties; and (4) there must be, between the first and the second
action, identity of parties, of subject matter and of causes of action. [22]
In the case before us, the existence of and compliance with the first three elements is
undisputed. Likewise, there is no issue as to the identity of the parties in the two actions for
ejectment. Hence, the identity of subject matter and the identity of causes of action between
the first and second ejectment cases are the only remaining bones of contention in need of
our final determination concerning the issue of res judicata.
As to the subject matter, we find that there is no identity. The subject matter of an
action is the matter or thing with respect to which the controversy has arisen, concerning
which the wrong has been done, and this ordinarily is the property, or the contract and its
subject matter, or the thing in dispute.[23] In an unlawful detainer case, the subject matter is
the contract of lease between the parties while the breach thereof constitutes the suits
cause of action.[24] In the present case, the lease contract subject of the controversy is verbal
and on a monthly basis. In these instances, it is well settled that the lease is one with a
definite period which expires after the last day of any given thirty-day period. [25] Following this
reasoning, it becomes apparent that what exists between the parties is not just one
continuous contract of lease, but a succession of lease contracts, each spanning a period of
one month. Hence, to be accurate, each action for ejectmenteach referring to a unique
thirty-day period of occupation of respondents property by the petitionerdeals with a
separate and distinct lease contract corresponding to a separate and distinct juridical relation
between the parties. Considering, therefore, that the subject matter of Civil Case No. 167142CV is a different contract of lease from the subject matter of the instant case, it is obvious
that there is no identity of subject matter between the first ejectment suit and the ejectment
suit subject of the present action.

Since there is no identity of subject matter between the two cases, it is but logical to
conclude that there is likewise no identity of causes of action. A cause of action is the act or
omission by which a party violates the legal right of the other. [26] Here, petitioner argues that
there is but one single cause of action in both ejectment suits as the alleged acts of
dispossession or unlawful withholding of possessions were the same delict or wrong that were
alleged and prayed for by the respondents in both complaints for ejectment. [27] Petitioner is
mistaken. In the first action for ejectment, respondents cause of action consists of
petitioners continued possession of the premises in violation of respondents' legal rights
under the provisions of the amended Rent Control Act, which rights were deemed included
into the lease contract existing at the time of the filing of the case in May 2000. [28] On the
other hand, the cause of action in the second suit only materialized when petitioner refused
to vacate the premises despite receipt of the notice of termination of lease sent by
respondents on October 10, 2002 and the expiration of the 30-day grace period given him.
From that moment on, petitioners possession of the leased premises became unlawful and a
new cause of action accrued. Hence, the cause of action in the present case for ejectment
only arose subsequent to the dismissal of the first ejectment suit dated January 9,
2002. Therefore, while the causes of action in the first and second ejectment suits are similar
in that both consist of unlawful possession by petitioner, they are not identical. Each act of
refusal to vacate by petitionerone in May 2000 and another in October 2002breached
separate and distinct lease contracts which consequently gave birth to separate and distinct
causes of action. Petitioners contention that there is but one single cause of action in the two
ejectment suits must perforce fail.
We have previously employed various tests in determining whether or not there is
identity of causes of action as to warrant the application of the principle of res judicata. One
test of identity is the absence of inconsistency test where it is determined whether the
judgment sought will be inconsistent with the prior judgment. If no inconsistency is shown,
the prior judgment shall not constitute a bar to subsequent actions. [29] In one case,[30] we held
that the failure of the petitioner to secure an injunction to prevent the respondents from
entering the land and gathering nuts is not inconsistent with the petitioners being adjudged
the owner of the land. In another case,[31] we found that affirmative relief in a subsequent
action for specific performance and recovery of ownership and possession with damages
against the petitioner would be inconsistent with a prior judgment holding the same
petitioner the owner of the lot under litigation.
Applying the same test to the case before us, we are convinced that a finding in the
instant case that the lease contract has already expired would not be inconsistent with the
finding of lack of cause of action in the first ejectment case. Petitioner asserts that the
expiration of the lease contract is one of the requisites of ejectment on the ground of need
of premises, and that necessarily, the issue of expiration of the lease contract had already
been disposed of in the first ejectment case. Accordingly, petitioner contends that a decision
in favor of respondents in the instant case would in effect be inconsistent with the decision
rendered in the first ejectment case. Petitioners contention is bereft of merit. We reiterate
that the subject matter of the first ejectment suit, on the one hand, and the subject matter of
the second ejectment suit, on the other, are two separate and distinct contracts of lease.
Given these facts, the issue of expiration of lease contract involved in the first case is
different and far removed from the issue of expiration of the lease contract subject of the
instant case. Logically, any ruling on the expiration of lease contract in the earlier ejectment
case will never be conclusive on this subsequent case.

24 | P a g e
Conceding, for the sake of argument, petitioners premise that the first and second
ejectment cases involve the same lease contract, petitioner's argument still does not hold
water, but even serves to boost respondents case. It is to be noted that by singling out the
issue of the expiration of the lease contract, petitioner invoked the application of res
judicata in the concept of conclusiveness of judgment. Well settled is the rule that 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. [32] In the first case for
ejectment, it bears stressing that the dismissal of the complaint only declared that the
respondents failed to comply with the requirements when the ground for ejectment is
personal need of premises. Notably, no express pronouncement can be found in the decision
of the MeTC of Manila, Branch 22 as to whether or not the lease contract subsisting between
the parties had already expired. The decision therefore only directly attests to respondents
lack of cause of action when the ground for ejectment is personal need of premises, and not
to the particular issue of expiration of the contract of lease subsisting between the parties.
Hence, we cannot sustain petitioners reliance on the doctrine of conclusiveness of judgment
as regards the expiration of the purportedly subsisting lease contract.
The more common approach in ascertaining identity of causes of action is the same
evidence test, whereby the following question serves as a sufficient criterion: would the
same evidence support and establish both the present and former causes of action? [33] If the
answer is in the affirmative, then the prior judgment is a bar to the subsequent action;
conversely, it is not.
In our view, a simple application of this test to the facts of the instant case readily
reveals that the evidence necessary to obtain affirmative relief in the present action for
ejectment based on expiration of lease contract is not the same as that in the first ejectment
case based on need of premises. At this juncture, we again stress that there is no identity
of subject matter between the previous and present ejectment suits. This finding necessarily
translates to the utter difference in the pieces of evidence necessary to prove the causes of
action in the two actions.

The first ejectment case had for a cause of action based on the need for the premises.
The second ejectment case involved a different cause of action, that is, for non-payment of
rentals up to February 1982. In the third case, the cause of action was the need for the
premises and non-payment of rentals from November 1987 up to May 1988. In this latest
ejectment suit, the cause of action is the non-payment of rentals from December 1987
accumulating to P17,064.65. Clearly, the cause of action and the circumstances present in
the instant case are not the same but differ markedly from those in previous suits cited.
Reliance on the doctrine of res judicata by petitioner is sadly misplaced. [37]
We are not unaware of authorities that tend to widen rather than to restrict the
doctrine of res judicata for the reason that public interest, as well as private interest,
demands an end to litigation as well as the protection of the individual from being vexed
twice for the same cause.[38] Indeed, to adhere otherwise would subject the public peace and
quiet to the will and neglect of individuals and prefer the gratification of the litigious
disposition on the part of suitors to the preservation of the public tranquility and
happiness.[39] However, as in this case, we do not see how untempered overzealousness can
help work justice into a situation where an application of the principle of res judicata is clearly
not proper.
As to the issue of novation raised by petitioner, we are not persuaded by the latters
theory that the acceptance of rental payments by respondents pending the final
determination of the instant petition amounts to a novation of the decision of the CA ordering
petitioner to vacate the subject leased premises. In the first place, there is nothing to novate
because as petitioner himself pounds on, the judgment to vacate has not yet become final.
Furthermore, it bears stressing that novation is never presumed, and the animus novandi,
whether totally or partially, must appear by express agreement of the parties, or by acts that
are too clear and unequivocal to be mistaken.[40] In the present case, no intent to novate can
be gleaned from the parties actuations as they entered into the subsequent lease contracts
with the qualification that the instant petition is pending before this Court. Hence, the final
outcome of the judgment in this case will only operate as a resolutory condition to the
existing contract between the parties as regards the leased premises.

Aside from the absence of inconsistency test and same evidence test, we have also
ruled that a previous judgment operates as a bar to a subsequent one when it had touched
on [a] matter already decided,[34] or if the parties are in effect litigating for the same
thing.[35] Under these tests, however, petitioners reliance on the applicability of the principle
of res judicata is still for naught, given that the two cases for ejectment do not share the
same subject matter. We have consistently held that a judgment in a previous case of
ejectment could not serve as a bar to a subsequent one if the latter is predicated on a new
factual and juridical situation. As a consequence, even in cases where the dismissal of a suit
brought for the ejectment of the lessee for nonpayment of rentals for a given period becomes
final and executory, the lessor is still not precluded from making a new demand upon the
tenant to vacate should the latter again fail to pay the rents due or should another ground for
ejectment arise, in which case such subsequent demand and refusal of the tenant to vacate
shall constitute a new cause of action.[36]

IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court of
Appeals is AFFIRMED.

Finally, the circumstances of the case at bar are comparable to those in Siapian v.
Court of Appeals, which likewise involved a monthly verbal contract of lease. We disposed
of the issue of identity of causes of action in the following manner:

FACTS: Rodrigo Enriquez and the spouses Urbano Dizon and Aurea Dizon sold to Socorro
Ramos 11 parcels of land located in Quezon City which are covered by their corresponding
certificates of title. The lands were sold to Ramos for the price of P101, 000 through a notarial
deed. Ramos paid P5,000 down, P2,500 cash, and P2,500 by check drawn against the PNB.

SO ORDERED.
______________
OPIC: LOAN/S SECURED BY A MORTGAGE IN RELATION TO SINGLENESS OF A CAUSE
OF ACTION
RODRIGO ENRIQUEZ, ET AL. VS. SOCORRO RAMOS, ET. AL.; GR 16797, 2/27/63
NATURE OF THE CASE: This is a direct appeal made by Socorro upon the decision of the CFI
against her averment that the Enriquez and the spouses Dizon are guilty of splitting a single
cause of action.

25 | P a g e
Ramos agreed to pay the remaining P96,000 balance within 90 days. For security, Ramos
mortgaged the eleven parcels of land in favor of the vendors in the same deed of sale.
Additionally, Ramos, as attorney-in-fact of her children and as judicial guardian of her minor
child, executed another morgage on a lot situated in Malinta.
Ramos failed to comply with some conditions of the mortgage so Enriquez and the
spouses Dizon filed an action for foreclosure of the mortgage. In response, Ramos moved to
dismiss the case on the ground that Enriquez and the spouses Dizon had previously filed an
action against her in the CFI of Manila for the recovery of P2,500 paid by check as part of the
down payment accrued and demandable. Enriquez and the spouses Dizon, then, are guilty of
splitting a single cause of action under sec. 4 of Rule 2 of the Rules of Court. The filing of the
first action for P2,500 was a defense that could be pleaded in abatement of the second suit.
Enriquez and the spouses Dizon opposed Ramos' motion to dismiss, which was
granted by the CFI of Quezon City. But, Ramos repleaded her aforementioned averments as a
special defense in her answer.
CFI: Its decision was against Ramos and she was ordered to pay P96,000 with 12% interest
from Feb. 24, 1959 ntil payment, 10% of the amount due as attorney's fees, and the costs of
the suit; and further decreed the foreclosure sale of the mortgaged properties in case of nonpayment within ninety (90) days.
RAMOS: She insists that the action should be dismissed on account of the alleged splitting of
appellee's cause of action, and that the obligation not having fixed a period, although one
was intended, the court below should have set first a date of maturity before ordering
payment or foreclosure.
ENRIQUEZ, ET.AL. : They did not split a single cause of action. They are correct in filing two
cases against Ramos. The first case they filed was for collection of the unsecured portion of
the consideration of the sale or collection of the check drawn by Ramos, while the second
was to foreclose the mortgage used as security on the balance.
ISSUE: WON the case filed by Enriquez, et. al. should be dismissed on the ground of splitting
their cause of action.
HELD: No, the Court finds no merit on this appeal.
An examination of the first complaint filed against appellant in the Court of First Instance of
Manila shows that it was based on appellants' having unlawfully stopped payment of the
check for P2,500.00 she had issued in favor of appellees; while the complaint in the present
action was for non-payment of the balance of P96,000.00 guaranteed by the mortgage. The
claim for P2,500.00 was, therefore, a distinct debt not covered by the security; and since the
mortgage was constituted on lands situated in Quezon City, the appellees could not ask for
its foreclosure in the Manila courts. The two causes of action being different, section 4 of Rule
2 does not apply.
______________
[G.R. No. 155736. March 31, 2005]
SPOUSES DANILO and CRISTINA DECENA, petitioners, vs. SPOUSES PEDRO and
VALERIA PIQUERO, respondents.
RESOLUTION
CALLEJO, SR., J.:
The petitioners, Spouses Danilo and Cristina Decena were the owners of a parcel of land, with
a house constructed thereon, located in Paraaque, Metro Manila (now Paraaque City)
covered by Transfer Certificate of Title (TCT) No. 134391 issued on February 24, 1998. [1]

On September 7, 1997, the petitioners and the respondents, the Spouses Pedro and Valeria
Piquero, executed a Memorandum of Agreement (MOA) [2] in which the former sold the
property to the latter for the price of P940,250.00 payable in six (6)
installments via postdated checks. The vendees forthwith took possession of the property.
It appears in the MOA that the petitioners obliged themselves to transfer the property to the
respondents upon the execution of the MOA with the condition that if two of the postdated
checks would be dishonored by the drawee bank, the latter would be obliged to reconvey the
property to the petitioners.
On May 17, 1999, the petitioners, then residents of Malolos, Bulacan, filed a
Complaint[3] against the respondents with the Regional Trial Court (RTC) of Malolos, Bulacan,
for the annulment of the sale/MOA, recovery of possession and damages. The petitioners
alleged therein that, they did not transfer the property to and in the names of the
respondents as vendees because the first two checks drawn and issued by them in payment
for the purchase price of the property were dishonored by the drawee bank, and were not
replaced with cash despite demands therefor.
The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus:
a.
The sale/Memorandum of Agreement (Annex A, supra) be declared null and void,
rescinded and with no further force and effect;
b.
Defendants, and all persons claiming right under them, be ordered to immediately
vacate the subject property and turnover its possession to the plaintiffs;
c.
Defendants, jointly and severally, be ordered to pay the plaintiffs:
i. P10,000.00 monthly, starting 01 October 1997 until complete turnover of the subject
property to the plaintiffs, as reasonable compensation for its continued unlawful use and
occupation by the defendants;
ii. P200,000.00 moral damages;
iii. P200,000.00 exemplary damages;
iv. P250,000.00 attorneys fees and litigation related expenses; and
v. the costs of suit.
Other reliefs just and equitable are, likewise, prayed for.[4]
The petitioners declared in their complaint that the property subject of the complaint was
valued at P6,900,000.00. They appended copies of the MOA and TCT No. 134391 to their
complaint. The case was eventually raffled to Branch 13 of the RTC of Malolos, Bulacan.
The respondents filed a motion to dismiss the complaint on the ground, inter alia, of improper
venue and lack of jurisdiction over the property subject matter of the action.
On the first ground, the respondents averred that the principal action of the petitioners for
the rescission of the MOA, and the recovery of the possession of the property is a real action
and not a personal one; hence, it should have been brought in the RTC of Paraaque City,
where the property subject matter of the action was located, and not in the RTC of Malolos,
Bulacan, where the petitioners resided. The respondents posited that the said court had no
jurisdiction over the property subject matter of the action because it was located in
Paraaque City.[5]
In opposition, the petitioners insisted that their action for damages and attorneys fees is a
personal action and not a real action; hence, it may be filed in the RTC of Bulacan where they
reside. They averred that while their second cause of action for the recovery of the
possession of the property is a real action, the same may, nevertheless, be joined with the
rest of their causes of action for damages, conformably with Section 5(c), Rule 2 of the Rules
of Court.[6]
By way of reply, the respondents averred that Section 5(c), Rule 2 of the Rules of Court
applies only when one or more of multiple causes of action falls within the exclusive

26 | P a g e
jurisdiction of the first level courts, and the other or others are within the exclusive
jurisdiction of the RTC, and the venue lies therein.
On February 9, 2000, the trial court issued an Order [7] denying the motion for lack of merit. It
found merit in the petitioners contention that Section 5(c), Rule 2 was applicable.
Meanwhile, the case was re-raffled to Branch 10 of the RTC of Malolos, Bulacan. In a
Motion[8] dated December 20, 2000, the respondents prayed for the reconsideration of the
trial courts February 9, 2000 Order. On October 16, 2001, the court issued an
Order[9] granting the motion and ordered the dismissal of the complaint. It ruled that the
principal action of the petitioners was a real action and should have been filed in the RTC of
Paraaque City where the property subject matter of the complaint was located. However,
since the case was filed in the RTC of Bulacan where the petitioners reside, which court had
no jurisdiction over the subject matter of the action, it must be dismissed.
Hence, the present recourse.
The petition has no merit.
The sole issue is whether or not venue was properly laid by the petitioners in the RTC of
Malolos, Bulacan. The resolution of this issue is, in turn, anchored on whether Section 5, Rule
2 of the Rules of Court invoked by the petitioners is applicable in this case.
Under the said Rule, a party may, in one pleading, assert, in the alternative or otherwise, as
many causes of action as he may have against an opposing party subject to the conditions
therein enumerated, one of which is Section 5(c) which reads:
Sec. 5. Joinder of causes of action. --

(c) Where the causes of action are between the same parties but pertain to different venues
or jurisdiction, the joinder may be allowed in the Regional Trial Court provided one of the
causes of action falls within the jurisdiction of said court and the venue lies therein;
Explaining the aforequoted condition, Justice Jose Y. Feria declared:
(c) Under the third condition, if one cause of action falls within the jurisdiction of the Regional
Trial Court and the other falls within the jurisdiction of a Municipal Trial Court, the action
should be filed in the Regional Trial Court. If the causes of action have different venues, they
may be joined in any of the courts of proper venue. Hence, a real action and a personal
action may be joined either in the Regional Trial Court of the place where the real property is
located or where the parties reside.[10]
A cause of action is an act or omission of one party in violation of the legal right of the other
which causes the latter injury. The essential elements of a cause of action are the following:
(1) the existence of a legal right of the plaintiff; (2) a correlative legal duty of the defendant
to respect ones right; and (3) an act or omission of the defendant in violation of the plaintiffs
right.[11] A cause of action should not be confused with the remedies or reliefs prayed for. A
cause of action is to be found in the facts alleged in the complaint and not in the prayer for
relief. It is the substance and not the form that is controlling.[12] A party may have two or
more causes of action against another party.
A joinder of causes of action is the uniting of two or more demands or right of action in a
complaint. The question of the joinder of causes of action involves in particular cases a
preliminary inquiry as to whether two or more causes of action are alleged. [13] In declaring
whether more than one cause of action is alleged, the main thrust is whether more than one
primary right or subject of controversy is present. Other tests are whether recovery on one
ground would bar recovery on the other, whether the same evidence would support the other
different counts and whether separate actions could be maintained for separate relief; [14] or
whether more than one distinct primary right or subject of controversy is alleged for
enforcement or adjudication.[15]

A cause of action may be single although the plaintiff seeks a variety of remedies. The mere
fact that the plaintiff prays for multiple reliefs does not indicate that he has stated more than
one cause of action. The prayer may be an aid in interpreting the petition and in determining
whether or not more than one cause of action is pleaded. [16] If the allegations of the complaint
show one primary right and one wrong, only one cause of action is alleged even though other
matters are incidentally involved, and although different acts, methods, elements of injury,
items of claims or theories of recovery are set forth. [17] Where two or more primary rights and
wrongs appear, there is a joinder of causes of action.
After due consideration of the foregoing, we find and so rule that Section 5(c), Rule 2 of the
Rules of Court does not apply. This is so because the petitioners, as plaintiffs in the court a
quo, had only one cause of action against the respondents, namely, the breach of the MOA
upon the latters refusal to pay the first two installments in payment of the property as
agreed upon, and turn over to the petitioners the possession of the real property, as well as
the house constructed thereon occupied by the respondents. The claim for damages for
reasonable compensation for the respondents use and occupation of the property, in
the interim, as well as moral and exemplary damages suffered by the petitioners on account
of the aforestated breach of contract of the respondents are merely incidental to the main
cause of action, and are not independent or separate causes of action. [18]
The action of the petitioners for the rescission of the MOA on account of the respondents
breach thereof and the latters failure to return the premises subject of the complaint to the
petitioners, and the respondents eviction therefrom is a real action. [19] As such, the action
should have been filed in the proper court where the property is located, namely, in
Paraaque City, conformably with Section 1, Rule 4 of the Rules of Court which reads:
SECTION 1. Venue of real actions. Actions affecting title to or possession of real property,
or interest therein, shall be commenced and tried in the proper court which has jurisdiction
over the area wherein the real property involved, or a portion thereof, is situated.
Since the petitioners, who were residents of Malolos, Bulacan, filed their complaint in the said
RTC, venue was improperly laid; hence, the trial court acted conformably with Section 1(c),
Rule 16 of the Rules of Court when it ordered the dismissal of the complaint.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against
the petitioners.
SO ORDERED.
____________
G.R. No. 140746. March 16, 2005]
PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN, petitioners,
vs. STANDARD INSURANCE COMPANY, INC., and MARTINA GICALE,respondents.
FACTS:
1. A passenger bus driven by BUNCAN and owned PANTRANCO hit the left rear side of
the jeepney driven by CRISPIN GACALE owned by MARTINA GACALE, his mother. Bus
sped away after hitting the jeep.
2. STANDARD and CRISPIN reported the incident to the POLICE STATION. STANDARD
and MARTINA caused the repair, with participation of the owner with the cost
3. Upon refusal of PANTRANCO and BUNCAN to pay for reimbursement, RESPONDENTS
filed with RTC for collection of sum money
4. RTC ruled in favor of the RESPONDENTS
5. On appeal, PANTRANCO argue that the appellee Gicales claim of P13,415 and the
insurance claim of P8,000 individually fell under the exclusive original jurisdiction of
the municipal trial court. CA ruled in favor of the RESPONDENTS, because the two
claims is definitely more than P20,000 which at that time within the JUR of RTC. (the
two claims arouse from the same vehicular accident)

27 | P a g e
6.

MR: Denied by CA. Certiorari: SC

ISSUE: WON the RTC has JUR over the case considering that the respondents respective
cause of action v. PET did not arise out of the same transaction nor are these questions of law
and facts common to both PET and RES
HELD: YESYESYO! RULE 3 SEC 6 of the Revised Rules of Court
Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to
relief in respect to or arising out of the same transaction or series of transactions is
alleged to exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such
defendants may arise in the action; but the court may make such orders as may be just to
prevent any plaintiff or defendant from being embarrassed or put to expense in connection
with any proceedings in which he may have no interest.
Permissive joinder of parties requires that: (a) the right to relief arises out of the same
transaction or series of transactions; (b) there is a question of law or fact common to all the
plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions of
the Rules on jurisdiction and venue.
In this case, there is a single transaction common to all, that is, Pantrancos bus hitting the
rear side of the jeepney. There is also a common question of fact, that is, whether petitioners
are negligent. There being a single transaction common to both respondents, consequently,
they have the same cause of action against petitioners.
To determine identity of cause of action, it must be ascertained whether the same
evidence which is necessary to sustain the second cause of action would have been sufficient
to authorize a recovery in the first.Here, had respondents filed separate suits against
petitioners, the same evidence would have been presented to sustain the same cause of
action. Thus, the filing by both respondents of the complaint with the court below is in order.
Such joinder of parties avoids multiplicity of suit and ensures the convenient, speedy and
orderly administration of justice.
Corollarily, Section 5(d), Rule 2 of the same Rules provides:
Sec. 5. Joinder of causes of action. A party may in one pleading assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party, subject to
the following conditions:(d) Where the claims in all the causes of action are
principally for recovery of money the aggregate amount claimed shall be the test
of jurisdiction.
The above provision presupposes that the different causes of action which are joined accrue
in favor of the same plaintiff/s and against the same defendant/s and that no misjoinder of
parties is involved. The issue of whether respondents claims shall be lumped together is
determined by paragraph (d) of the above provision. This paragraph embodies the totality
rule as exemplified by Section 33 (1) of B.P. Blg. 129[9] which states, among others, that
where there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of whether the causes
of action arose out of the same or different transactions.
Clearly, it is the RTC that has jurisdiction over the instant case. It bears emphasis that when
the complaint was filed, R.A. 7691 expanding the jurisdiction of the Metropolitan, Municipal
and Municipal Circuit Trial Courts had not yet taken effect. It became effective on April 15,
1994.

Respondent Standards claim: P8,000.00, Martina Gicale is P13,415.00, or a total


of P21,415.00 = RTC
_________________
G.R. No. L-66620 September 24, 1986
REMEDIO V. FLORES, petitioner,
vs.
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO
CALION, respondents.
Lucio A. Dixon for respondent F. Calion.
FERIA, J.:
The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa
Blg. 129 and Section 11 of the Interim Rules is subject to the requirements for the permissive
joinder of parties under Section 6 of Rule 3 which provides as follows:
Permissive joinder of parties.-All persons in whom or against whom any right to relief in
respect to or arising out of the same transaction or series of transactions is alleged to exist,
whether jointly, severally, or in the alternative, may, except as otherwise provided in these
rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law
or fact common to all such plaintiffs or to all such defendants may arise in the action; but the
court may make such orders as may be just to prevent any plaintiff or defendant from being
embarrassed or put to expense in connection with any proceedings in which he may have no
interest.
Petitioner has appealed by certiorari from the order of Judge Heilia S. Mallare-Phillipps of the
Regional Trial Court of Baguio City and Benguet Province which dismissed his complaint for
lack of jurisdiction. Petitioner did not attach to his petition a copy of his complaint in the
erroneous belief that the entire original record of the case shall be transmitted to this Court
pursuant to the second paragraph of Section 39 of BP129. This provision applies only to
ordinary appeals from the regional trial court to the Court of Appeals (Section 20 of the
Interim Rules). Appeals to this Court by petition for review on certiorari are governed by Rule
45 of the Rules of Court (Section 25 of the Interim Rules).
However, the order appealed from states that the first cause of action alleged in the
complaint was against respondent Ignacio Binongcal for refusing to pay the amount of
P11,643.00 representing cost of truck tires which he purchased on credit from petitioner on
various occasions from August to October, 1981; and the second cause of action was against
respondent Fernando Calion for allegedly refusing to pay the amount of P10,212.00
representing cost of truck tires which he purchased on credit from petitioner on several
occasions from March, 1981 to January, 1982.
On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the
ground of lack of jurisdiction since the amount of the demand against said respondent was
only P11,643.00, and under Section 19(8) of BP129 the regional trial court shall exercise
exclusive original jurisdiction if the amount of the demand is more than twenty thousand
pesos (P20,000.00). It was further averred in said motion that although another person,
Fernando Calion, was allegedly indebted to petitioner in the amount of P10,212.00, his
obligation was separate and distinct from that of the other respondent. At the hearing of said
Motion to Dismiss, counsel for respondent Calion joined in moving for the dismissal of the
complaint on the ground of lack of jurisdiction. Counsel for petitioner opposed the Motion to
Dismiss. As above stated, the trial court dismissed the complaint for lack of jurisdiction.
Petitioner maintains that the lower court has jurisdiction over the case following the "novel"
totality rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules.
The pertinent portion of Section 33(l) of BP129 reads as follows:

28 | P a g e
... Provided,That where there are several claims or causes of action between the same or
different parties, embodied in the same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of whether the causes of action
arose out of the same or different transactions. ...
Section 11 of the Interim Rules provides thus:
Application of the totality rule.-In actions where the jurisdiction of the court is dependent on
the amount involved, the test of jurisdiction shall be the aggregate sum of all the money
demands, exclusive only of interest and costs, irrespective of whether or not the separate
claims are owned by or due to different parties. If any demand is for damages in a civil
action, the amount thereof must be specifically alleged.
Petitioner compares the above-quoted provisions with the pertinent portion of the former rule
under Section 88 of the Judiciary Act of 1948 as amended which reads as follows:
... Where there are several claims or causes of action between the same parties embodied in
the same complaint, the amount of the demand shall be the totality of the demand in all the
causes of action, irrespective of whether the causes of action arose out of the same or
different transactions; but where the claims or causes of action joined in a single complaint
are separately owned by or due to different parties, each separate claim shall furnish the
jurisdictional test. ...
and argues that with the deletion of the proviso in the former rule, the totality rule was
reduced to clarity and brevity and the jurisdictional test is the totality of the claims in all, not
in each, of the causes of action, irrespective of whether the causes of action arose out of the
same or different transactions.
This argument is partly correct. There is no difference between the former and present rules
in cases where a plaintiff sues a defendant on two or more separate causes of action. In such
cases, the amount of the demand shall be the totality of the claims in all the causes of action
irrespective of whether the causes of action arose out of the same or different transactions. If
the total demand exceeds twenty thousand pesos, then the regional trial court has
jurisdiction. Needless to state, if the causes of action are separate and independent, their
joinder in one complaint is permissive and not mandatory, and any cause of action where the
amount of the demand is twenty thousand pesos or less may be the subject of a separate
complaint filed with a metropolitan or municipal trial court.
On the other hand, there is a difference between the former and present rules in cases where
two or more plaintiffs having separate causes of action against a defendant join in a single
complaint. Under the former rule, "where the claims or causes of action joined in a single
complaint are separately owned by or due to different parties, each separate claim shall
furnish the jurisdictional test" (Section 88 of the Judiciary Act of 1948 as amended, supra).
This was based on the ruling in the case of Vda. de Rosario vs. Justice of the Peace, 99 Phil.
693. As worded, the former rule applied only to cases of permissive joinder of parties plaintiff.
However, it was also applicable to cases of permissive joinder of parties defendant, as may
be deduced from the ruling in the case of Brillo vs. Buklatan, thus:
Furthermore, the first cause of action is composed of separate claims against several
defendants of different amounts each of which is not more than P2,000 and falls under the
jurisdiction of the justice of the peace court under section 88 of Republic Act No, 296. The
several claims do not seem to arise from the same transaction or series of transactions and
there seem to be no questions of law or of fact common to all the defendants as may warrant
their joinder under Rule 3, section 6. Therefore, if new complaints are to be filed in the name
of the real party in interest they should be filed in the justice of the peace court. (87 Phil. 519,
520, reiterated in Gacula vs. Martinez, 88 Phil. 142, 146)
Under the present law, the totality rule is applied also to cases where two or more plaintiffs
having separate causes of action against a defendant join in a single complaint, as well as to

cases where a plaintiff has separate causes of action against two or more defendants joined
in a single complaint. However, the causes of action in favor of the two or more plaintiffs or
against the two or more defendants should arise out of the same transaction or series of
transactions and there should be a common question of law or fact, as provided in Section 6
of Rule 3.
The difference between the former and present rules in cases of permissive joinder of parties
may be illustrated by the two cases which were cited in the case of Vda. de Rosario vs. Justice
of the Peace (supra) as exceptions to the totality rule. In the case of Soriano y Cia vs. Jose (86
Phil. 523), where twenty-nine dismissed employees joined in a complaint against the
defendant to collect their respective claims, each of which was within the jurisdiction of the
municipal court although the total exceeded the jurisdictional amount, this Court held that
under the law then the municipal court had jurisdiction. In said case, although the plaintiffs'
demands were separate, distinct and independent of one another, their joint suit was
authorized under Section 6 of Rule 3 and each separate claim furnished the jurisdictional test.
In the case of International Colleges, Inc. vs. Argonza (90 Phil. 470), where twenty-five
dismissed teachers jointly sued the defendant for unpaid salaries, this Court also held that
the municipal court had jurisdiction because the amount of each claim was within, although
the total exceeded, its jurisdiction and it was a case of permissive joinder of parties plaintiff
under Section 6 of Rule 3.
Under the present law, the two cases above cited (assuming they do not fall under the Labor
Code) would be under the jurisdiction of the regional trial court. Similarly, in the abovecited
cases of Brillo vs. Buklatan and Gacula vs. Martinez (supra), if the separate claims against the
several defendants arose out of the same transaction or series of transactions and there is a
common question of law or fact, they would now be under the jurisdiction of the regional trial
court.
In other words, in cases of permissive joinder of parties, whether as plaintiffs or as
defendants, under Section 6 of Rule 3, the total of all the claims shall now furnish the
jurisdictional test. Needless to state also, if instead of joining or being joined in one complaint
separate actions are filed by or against the parties, the amount demanded in each complaint
shall furnish the jurisdictional test.
In the case at bar, the lower court correctly held that the jurisdictional test is subject to the
rules on joinder of parties pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules
of Court and that, after a careful scrutiny of the complaint, it appears that there is a
misjoinder of parties for the reason that the claims against respondents Binongcal and Calion
are separate and distinct and neither of which falls within its jurisdiction.
WHEREFORE, the order appealed from is affirmed, without pronouncement as to costs.
SO ORDERED.
_____________
LIANAS SUPERMARKET,petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and NATIONAL LABOR UNION, respondents.
DECISION
BELLOSILLO,J.:
LIANAs SUPERMARKET, as its name implies, is a departmentized self-service retail market
selling foods, convenience goods, and household merchandise with business outlets in Sucat,
Paraaque, and Pasig City. Sometime in 1980, 1981 and 1982 it employed as sales ladies,
cooks, packers, cashiers, electricians, warehousemen, etc., members of private respondent
National Labor Union. However in the course of their employment they were allegedly
underpaid and required, among others, to work more than eight (8) hours a day without
overtime pay and deprived of legal holiday pay and monthly emergency allowance. Starting
late 1982 and early 1983 they aired their grievances to petitioner through Peter Sy, its

29 | P a g e
General Manager, and Rosa Sy, its Consultant, but were only scolded and threatened with
outright dismissal. Consequently, they formed a labor union and affiliated it with respondent
National Labor Union. Thereafter they demanded from petitioner recognition and compliance
with existing labor laws.
On 30 April 1983 petitioner entered into a three-year contract with Warner Laputt, owner of
BAVSPIA International Services, to supply petitioner with laborers.
About November and December 1984 Rosa Sy met with the employees individually and told
them to quit their membership with the union under pain of being suspended, dismissed or
criminally prosecuted. When they refused, many were dismissed without any charges and
others were given memorandum on concocted offenses and violations.
Meanwhile in March and April 1984 petitioner through Peter Sy and Rosa Sy required the
other employees to resign from employment and to accomplish information sheets and/or
application forms with BAVSPIA otherwise they would be dismissed and/or not paid their
salaries. With some degree of reluctance they complied. Nonetheless, they were allowed to
continue working with petitioner under the same terms and conditions of their previous
employment.
On 24 March 1984 respondent Union on behalf of its members filed a complaint against
petitioner and/or Peter Sy, Rosa Sy, BAVSPIA and Warner Laputt before the Labor Arbiter for
underpayment of wages, nonpayment of overtime pay, monthly emergency allowance, legal
holiday pay, service incentive leave pay and 13th month pay (NLRC-NCR Case No. 3-127084). On 24 May 1984 the complaint was amended since respondent Union manifested
through its authorized representative that it was intended as a class suit.
On 28 August 1984 another case was filed, docketed as NLRC-NCR Case No. 8-3043-84, with
Elorde Padilla, Jr., et al., as complainants.
On 22 October 1984 a third case was filed, docketed as NLRC-NCR Case No. 10-3755-84, with
Carmelita Reyes, Elizabeth Mahanlud, Danny Sida, Omar Napiri and Edgar Mahusay as
individual complainants.
On 12 December 1984 still another case was filed, docketed as NLRC-NCR Case No. 12-431284, with Gloria Estoque and Estrellita Bansig as individual complainants.
Subsequently the four (4) cases were consolidated. Respondent National Labor Union
submitted two (2) lists of one hundred thirty-six (136) workers, seventy-three (73) assigned
at Sucat and sixty-three (63) at Pasig City. There were eighty-five (85) original complainants
in the lists. However sixteen (16) complainants later filed motions to withdraw with prejudice
and five (5) were found to be non-employees of petitioner. On 27 January 1987 three (3)
other complainants settled with petitioner and moved to dismiss their complaints. Thus, a
total of twenty-four (24) complainants were dropped from the lists thereby reducing the
number to sixty-one (61).
But twenty-seven (27) more employees submitted their sworn statements thus increasing
again the number of complainants to eighty-eight (88).
When petitioner learned of the charges before the Labor Arbiter it demanded the resignation
of the employees from the Union and withdrawal of their cases or face criminal charges. It
also threatened to withhold their wages and even to dismiss them from their
employment. Since they refused to resign petitioner dismissed them. Hence, charges of
unfair labor practice and illegal dismissal were added as causes of action in their complaints.
Petitioner contended that there was no unfair labor practice because there was no ongoing
union activity before the alleged illegal dismissals; but even if there were, the dismissals
were not effected by petitioner as complainants were not its employees but of BAVSPIA. If
what were referred to as illegal dismissals were those of complainants who resigned, there
can be no unfair labor practice as their resignations were voluntary and their applications
with BAVSPIA were of their own volition.

On 6 February 1987, after the consolidated cases were submitted for decision, petitioner filed
what was purportedly a compromise agreement between itself and the local chapter of
respondent Union. It appeared to have been signed by representatives of petitioner and the
President, Vice President and another officer of the local chapter of respondent Union with a
prayer that the consolidated cases be dismissed.
BAVSPIA participated during the initial stages of the hearings but later moved to have its
name dropped as co-respondent when it noted, after complainants have rested, that the
evidence formally offered was directed only against petitioner.
On 28 February 1989 the Labor Arbiter held that (1) petitioner was the employer of
complainants with BAVSPIA being engaged in labor-only contracting; (2) complainants were
illegally dismissed; (3) Peter Sy and Rosa Sy were not personally liable; and, (4) the charge of
unfair labor practice and all labor standards claims were unsubstantiated by evidence.
Corollarily, petitioner was ordered to reinstate all the complainants and to pay them
backwages and all benefits reckoned from the date of their respective dismissals until actual
reinstatement but not to exceed three (3) years, and if reinstatement was no longer feasible
the complainants should be granted separation pay equivalent to one-half month salary for
every year of service, a fraction of at least six (6) months to be considered as one (1) whole
year.1
On 30 June 1993 public respondent National Labor Relations Commission affirmed the ruling
of the Labor Arbiter.2
The petitioner now asks how many individual complainants are there in these cases, whether
seven (7) or eighty-five (85); whether these complainants were illegally dismissed; and,
whether a compromise agreement with a motion to dismiss filed by a local chapter of
respondent Union may be given legal effect.
Petitioner claims that there are only seven (7) individual complainants in these cases whose
names appear in the captions of the decision of the Labor Arbiter. Anent thereto, petitioner
argues that Sec. 3, Rule 6, of the Rules of Court clearly provides that the names and
residences of the parties plaintiff and defendant must be stated in the complaint; similarly,
Sec. 1, Rule III, of the New Rules of Procedure of respondent NLRC states that the full names
of all the real parties in interest, whether natural or juridical persons or entities authorized by
law, shall be stated in the caption of the complaint or petition as well as in the decision,
award or judgment. Moreover, according to petitioner, these cases do not fall under the term
class suit as defined in Sec. 12, Rule 3, of the Rules of Court because the parties are not so
numerous that it would be impracticable to bring them all before the court. It is further the
position of petitioner that BAVSPIA is the true employer of the complainants and the
resignations of certain employees were voluntary. Petitioner still further argues that the
compromise agreement duly signed by the officers of the local chapter of
respondent Union and filed while the case was still pending before the Labor Arbiter is
binding on all the complainants.
We disagree with petitioner. This is a representative suit as distinguished from class suit
defined in Sec. 12, Rule 3, of the Rules of Court -Sec. 12. Class suit.
When the subject matter of the controversy is one of common or general interest to many
persons, and the parties are so numerous that it is impracticable to bring them all before the
court, one or more may sue or defend for the benefit of all. But in such case the court shall
make sure that the parties actually before it are sufficiently numerous and representative so
that all interests concerned are fully protected. Any party in interest shall have a right to
intervene in protection of his individual interest.
In Re: Request of the Heirs of the Passengers of the Doa Paz to SetAside the Order
Dated January 4, 1988 of Judge B. D. Chingcuangco,3 the Court had occasion to explain class
suit

30 | P a g e
What is contemplated, as will be noted, is that (a) the subject matter in controversy is of
common or general interest to many persons, and (b) those persons are so numerous as to
make it impracticable to bring them all before the court x x x What makes the situation a
proper case for a class suit is the circumstance that there is only one right or cause of action
pertaining or belonging in common to many persons (Italics supplied), not separately or
severally to distinct individuals x x x The object of the suit is to obtain relief for or against
numerous persons as a group or as an integral entity, and not as separate, distinct
individuals whose rights or liabilities are separate from and independent of those affecting
the others x x x The other factor that serves to distinguish the rule on class suits x x x is x x x
the numerousness of parties involved x x x The rule is that for a class suit to be allowed, it is
needful inter alia that the parties be so numerous that it would be impracticable to bring
them all before the court.
In the present case, there are multiple rights or causes of action pertaining separately to
several, distinct employees who are members of respondent Union. Therefore, the applicable
rule is that provided in Sec. 3, Rule 3, of the Rules of Court on representative parties, which
states
Sec. 3. Representative parties. - A trustee of an express trust, a guardian, executor or
administrator, or a party authorized by statute (Italics supplied), may sue or be sued without
joining the party for whose benefit the action is presented or defended; but the court may, at
any stage of the proceedings, order such beneficiary to be made a party x x x.
One of the rights granted by Art. 242 of the Labor Code to a legitimate labor organization,
like respondent Union, is to sue and be sued in its registered name. In Liberty Manufacturing
Workers Union v. Court of First Instance of Bulacan,4 citing National Brewery and Allied
Industries Labor Union of the Philippines v. San Miguel Brewery, Inc., 5 and Itogon-Suyoc
Mines, Inc. v. Sangilo-Itogon Workers Union,6 the Court held that the aforementioned
provision authorizes a union to file a representative suit for the benefit of its members in
the interest of avoiding an otherwise cumbersome procedure of joining all union members in
the complaint, even if they number by the hundreds. The Court further rationalized that
To hold otherwise and compel the 57 union members-employees to file 57 separate cases on
their own individual and respective causes of action before the municipal court rather than
through the presentsingle collective action filed by petitioner union on their behalf and for
their benefit would be to unduly clog the court dockets and slow down the prompt and
expeditious determination of cases by the sheer number, time and volume of paper work that
would be involved and required in disposing of 57 identical cases that could be adjudged in
a single case such as that filed before the lower court.
What is worse then x x x by such an unrealistic approach, the courts would not keep faith
with the Constitutional injunction to extend protection to labor x x x.
In another case, Davao Free Workers Front v. Court of industrial Relations, 7 the Court stated
that the detail that the number and names of the striking members of petitioner union were
not specified in the decision nor in the complaint is of no consequence. Reiterating the rule
in the Liberty case, the Court held that it was the function precisely of a labor union to carry
the representation of its members and to file an action for their benefit and behalf without
joining them and avoid the cumbersome procedure of joining each and every member as a
separate party. Still, inLa Carl ota Sugar Central v. Court of industrial Relations, 8 the Court
emphasized that it would be an unwarranted impairment of the right to self-organization
through formation of labor associations if thereafter such collective entities would be barred
from instituting action in their representative capacity.
A representative suit is akin to a class suit in the limited sense that the phrases found in
Sec. 12 of Rule 3, one or more may sue or defend for the benefit of all, and the parties
actually before it are sufficiently numerous and representative, are similar to the

phrase may sue or be sued witho ut joining the party for whose benefit the action is
presented or defended found in Sec. 3 of the same Rule. In other words, both suits are
always filed in behalf of another or others. That is why the two terms are sometimes used
interchangeably. Apparently respondent Union, the Labor Arbiter and respondent Commission
merely denominated the suit, although erroneously, as a class suit when, in reality, it is a
representative suit. Anyway, the issue as to the actual number of complainants in this case
was correctly resolved by the Labor Arbiter with this ratiocination
The very first complaint (No. 3-1270-84) filed in these consolidated cases was captioned
National Labor Union for and in behalf of its members as complainants. It was dated March
24, 1984. When the same was amended on May 24, 1984, the same caption for complainants
also appeared x x x Consistently with the instruction of said Arbiter as to the number of
complainants allegedly prejudiced by the acts of respondents, their counsel submitted two
lists (Exhs. A-i & A-2) containing a total of one hundred thirty-six names. However, said
counsel submitted in evidence only around sixty affidavits of complainants, thereby giving
credence to the allegation of respondents that not all those listed are actually complaining.
Nonetheless and considering that respondents recognized that there are eighty-five
complainants (Exhs. 48 & 49) we hold that the instant cases have been filed by the said
Union for and in behalf of such number (85) of complainants.9
Section 1, Rule III, of the NLRC New Rules of Procedure cited by petitioner is simply
inapplicable because it was issued on 31 August 1990 or six (6) years after the complaints in
these cases were filed in 1984.
The evidence clearly establishes that complainants were employed by petitioner. According
to the Labor Arbiter
As to the issue of which company is the employer of complainants, we hold that it is
respondent Lianas. This is so because we find the co-respondent BAVSPIA engaged in laboronly contracting which is prohibited under the Labor Code.10
Article 106, par. 4, of the Labor Code provides that there is labor-only contracting where the
person supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to
the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him. The conclusion of the
Labor Arbiter was bolstered by the fact that x x x even the employees who allegedly resigned from Lianas and applied/accepted by
BAVSPIA were also re-assigned to Lianas. These employees were performing jobs which are
necessary and desirable in the usual business or trade of Liana s. Even the premises, tools
and equipment used by the employees were those of Lianas. And, more important, these
employees were under the control and supervision of said respondent Liana s. 11
Likewise, the evidence sufficiently proves that complainants were illegally dismissed by
petitioner
Coming now to the main thrust of these complaints the issue of illegal dismissal - we find
that indeed the complainants were illegally dismissed. Respondents contention that
complainants were dismissed not by them but by BAVSPIA is untenable precisely because the
latter was engaged in labor-only contracting. In this connection, respondent Lianas (has) not
been able to show that the dismissals of complainants were for a just cause and, if ever, they
were accorded due process. In short, said respondent Lianas failed to prove that their (its)
mdismissals of complainants were justified.
xxx
xxx
xxx

31 | P a g e
The alleged resignation of thirty-three other complainants (who later applied to BAVSPIA)
cannot be given effect, not because they were forced to do so but in view of our finding that
said BAVSPIA was engaged in labor-only contracting. Hence, they could not have been
working without any employer. Besides, resigned from Lianas and then apply to BAVSPIA
only to be re-assigned later to the former, not to mention the glaring fact that all such letters
of resignations are uniformly worded. 12
Before money claims can be the object of settlement through a union, the individual consent
of the employees concerned should first be procured. This is because waiver of money
claims is considered a personal right which must be protected by the courts on consideration
of public policy. To really give teeth to the constitutional mandate of giving laborers
maximum protection and security, they must be protected not only against their employer
but also against the leaders of their own labor union. Thus, in General Rubber and Footwear
Corporation v. Drilon,13 citing Kaisahan ng Manggagawa sa La Campana v. Sarmiento,14 it was
held
Money claims due to laborers cannot be the object of settlement or compromise effected by a
union or counsel without the specific individual consent of each laborer concerned. The
beneficiaries are the individual complainants themselves. The union to which they belong can
only assist them but cannot decide for them x x x.
There is no evidence on record that the compromise agreement was approved by the
complainants individually. The document does not bear their signatures except those of the
localUnions President, Vice President and another officer. Neither is there evidence to show
that the compromise agreement was ever approved by the Labor Arbiter. Clearly then, it
cannot bind the complainants.
The grave abuse of discretion imputed to public respondent NLRC does not exist. But the
alternative award of separation pay granted by the Labor Arbiter in an amount equivalent to
one-half month salary for every year of service must be modified. It has been our consistent
ruling that in awarding separation pay to an illegally dismissed employee, in lieu of reins
tatement, the amount to be awarded shall be equivalent to one month salary for every year
of service.15 We have no reason to hold otherwise.
WHEREFORE, the resolution of the National Labor Relations Commission dated 30 June 1993
affirming the decision of the Labor Arbiter dated 28 February 1989 is AFFIRMED, subject to
the modification that the separation pay granted as an alternative relief shall be equivalent to
one-month salary for every year of service, a fraction of at least six (6) months to be
considered one (1) whole year. Costs against petitioner.
SO ORDERED.
_________

FLORAIDA TERAA,
Petitioner,

G.R. No. 152131


Present:
*

QUISUMBING, J. Chairperson,
CARPIO MORALES,
**
TINGA,
VELASCO, JR., and
BRION, JJ.
*

versus

HON. ANTONIO DE SAGUN, PRESIDING JUDGE,


REGIONAL TRIAL COURT, BRANCH XIV,
NASUGBU, BATANGAS AND ANTONIO B.
SIMUANGCO,
Respondents.

Promulgated:
April 29, 2009

x ---------------------------------------------------------------------------------------x

DECISION
BRION, J.:
The petitioner Floraida Terana (petitioner) asks us to reverse and set aside, through this
Petition for Review on Certiorari,[1] the September 7, 2001 Decision[2] of the Court of Appeals
(CA), and its subsequent Resolution[3] denying the petitioners motion for reconsideration.
THE FACTS
The respondent Antonio Simuangco (respondent) owned a house and lot at 138 J.P. Laurel St.,
Nasugbu, Batangas, which he leased to the petitioner.[4] Sometime in 1996, the petitioner
demolished the leased house and erected a new one in its place.[5] The respondent alleged
that this was done without his consent.[6] The Contract of Lease[7]defining the respective
rights and obligations of the parties contained the following provisions, which the petitioner
allegedly violated:
3. That the lessee obligated herself with the Lessor by virtue of this Lease, to do the
following, to wit:
a)

xxx

b)
To keep the leased property in such repair and condition as it was in the commencement
of the Lease with the exception of portions or parts which may be impaired due to reasonable
wear and tear;

32 | P a g e
c)

xxx

d) Not to make any alterations in the Leased property without the knowledge and consent
of the Lessor; x x x
The petitioner allegedly also gave the materials from the demolished house to her
sister, who built a house adjacent to the respondents property.[8] When the respondent
discovered what the petitioner did, he immediately confronted her and advised her to vacate
the premises.[9] She refused. On February 3, 1997, the respondent sent a letter demanding
the petitioner to vacate the leased property. [10] Despite this letter of demand, which the
petitioner received on February 10,[11] she still refused to vacate the said property.
The respondent thus filed a complaint for unlawful detainer[12] against the petitioner
on April 16, 1997 on the ground of the petitioners violation of the terms of the Contract of
Lease.[13] The respondent prayed for the petitioners ejectment of the leased property, and
for the award of P70,000.00, representing the cost of the materials from the demolished
house, attorneys fees, and costs.[14]
The presiding judge of the Municipal Trial Court (MTC) of Nasugbu,
Batangas, Hon. Herminia Lucas, inhibited from the case on the ground that she is related to
the respondent.[15]
The petitioner denied allegations of the complaint in her Sagot.[16] She claimed that
she demolished the old building and built a new one with the knowledge and consent of the
respondent; that the original house was old and was on the verge of collapsing; [17] that
without the timely repairs made by the petitioner, the houses collapse would have caused
the death of the petitioner and her family. The petitioner prayed for the court to:
1)
dismiss the ejectment case against her; and 2) award in her favor:
a)P100,000.00 as
moral damages, b) P200,000.00 as reimbursement for the expenses incurred in building the
new house, c) P50,000.00 as attorneys fees, and d) P10,000.00 as costs incurred in relation
to the suit.[18]
The trial court called for a preliminary conference under Section 7 of the Revised Rules
of Summary Procedure (RSP) and Section 8 of Rule 70 of the Rules of Court, and required the
parties to file their position papers and affidavits of their witnesses after they failed to reach
an amicable settlement.[19] Instead of filing their position papers, both parties moved for an
extension of time to file the necessary pleadings. The trial court denied both motions on the
ground that the RSP and the Rules of Court, particularly Rule 70, Section 13(5), prohibit the
filing of a motion for extension of time.[20]
The MTC framed the issues in the case as follows:
1.
Whether or not there was a violation of the contract of lease when the old house was
demolished and a new house was constructed by the defendant; and
2.
Whether or not defendant is entitled to be reimbursed for her expenses in the
construction of the new house.[21]

THE MTCS DECISION[22]


The MTC rendered its decision on November 5, 1997[23] despite the parties failure to
timely file their respective position papers.[24] The decision stated that: according to the
parties Contract of Lease, the consent of the respondent must be obtained before any
alteration or repair could be done on the leased property; that the petitioner failed to produce
any evidence that the respondent had given her prior permission to demolish the leased
house and construct a new one; that even in her answer, she failed to give specific details
about the consent given to her; that in demolishing the old structure and constructing the
new one, the petitioner violated the Contract of Lease; that this violation of the terms of the
lease was a ground for judicial ejectment under Article 1673(3) of the Civil Code; and that
since the demolition and construction of the new house was without the consent of the
respondent, there was no basis to order the respondent to reimburse the petitioner.
The MTC thus ruled:
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff
Antonio B. Simuangco and against the defendant Aida Terana as follows:
1.
Ordering the defendant Aida Terana and all persons claiming right under her to vacate
and surrender possession of the subject house to the plaintiff;
2.
Ordering the said defendant to pay the amount of Five Thousand Pesos (P5,000.00) as
Attorneys fees; and
3.

To pay the costs of suit.

SO ORDERED.[25]
Unaware that a decision had already been rendered, the petitioner filed a letter
entitled Kahilingan,[26] to which she attached her position paper and the affidavits of her
witnesses.[27] The submission was essentially a motion for reconsideration of the denial of
motion for extension of time. On November 6, 1977, the MTC denied the
petitionersKahilingan as follows:
Defendant Aida Teranias KAHILINGAN dated November 5, 1997 is DENIED for being moot
and academic on account of the decision on the merits rendered by this court
datedNovember 4, 1997 relative to the instant case.
SO ORDERED.[28]
Petitioner then filed a Notice of Appeal on November 12, 1997. [29] The records of the case
were ordered elevated to the Regional Trial Court (RTC) where the case was docketed as Civil
Case No. 439.

33 | P a g e
an opportunity to file his position paper and affidavits of witnesses as required by Section 10,
Rule 70, of the 1997 Rules of Civil Procedure. [Underscoring supplied.]
THE RTCS DECISION[30]
The RTC rendered judgment affirming the decision of the MTC on February 26, 1998. The RTC
ruled that: 1) the ruling of the MTC was supported by the facts on record; 2) although the
respondent failed to submit his position paper and the affidavits of his witnesses, the MTC
correctly rendered its decision on the basis of the pleadings submitted by the parties, as well
as the evidence on record; 3) the petitioner failed to show enough reason to reverse the
MTCs decision. The court further declared that its decision was immediately executory,
without prejudice to any appeal the parties may take.
The petitioner filed a Motion for Reconsideration and/or for New Trial on March 3, 1998.
[31]
The petitioner argued that the appealed MTC decision was not supported by any
evidence, and that the respondent failed to substantiate the allegations of his complaint and
to discharge the burden of proving these allegations after the petitioner denied them in
her Sagot. In effect, the petitioner argued that the allegations of the complaint should not
have been the sole basis for the judgment since she filed an answer and denied the
allegations in the complaint; the RTC should have also appreciated her position paper and the
affidavit of her witnesses that, although filed late, were nevertheless not expunged from the
records.
In her motion for a new trial, the petitioner argued that her failure to submit her position
paper and the affidavits of her witnesses within the 10-day period was due to excusable
negligence. She explained that she incurred delay because of the distance of some of her
witnesses residence. The petitioner alleged that she had a good and meritorious claim
against the respondent, and that aside from her position paper and the affidavits of her
witnesses, she would adduce receipts and other pieces of documentary evidence to establish
the costs incurred in the demolition of the old house and the construction of the new
one.

SO ORDERED.

On May 9, 1998, the petitioner challenged the order of remand through another motion for
reconsideration.[32] The petitioner argued that since the original action for unlawful detainer
had already been elevated from the MTC to the RTC, the RSP no longer governed the disposal
of the case. Before the RTC, the applicable rule is the Rules of Court, particularly Section 6 of
Rule 37, which reads:
Sec. 6. Effect of granting of motion for new trial. If a new trial is granted in accordance with
the provisions of this Rule, the original judgment or final order shall be vacated, and the
action shall stand for trial de novo; but the recorded evidence taken upon the former trial, in
so far as the same is material and competent to establish the issues, shall be used at the new
trial without retaking the same.

Thus, the RTC should have conducted a trial de novo instead of remanding the case to the
MTC. The petitioner further argued that a remand to the court a quo may only be ordered
under Section 8, Rule 40[33] of the Rules of Court.
The RTC denied the motion noting that the petitioner missed the whole point of the reversal
of the decision. First, the reversal was made in the interest of substantial justice and the RTC
hewed more to the spirit that vivifieth than to the letter that killeth, [34] and that a lawsuit is
best resolved on its full merits, unfettered by the stringent technicalities of procedure. The
RTC further emphasized that a remand is not prohibited under the Rules of Court and that
Section 6 of Rule 135 allows it:

On April 28, 1998, the RTC granted the motion for reconsideration, and thus reversed
its February 26, 1998 judgment, as well as the November 5, 1997 decision of the MTC. It
noted that: 1) the MTC rendered its decision before the petitioner was able to file her position
paper and the affidavit of her witnesses; 2) the rule on the timeliness of filing pleadings may
be relaxed on equitable considerations; and 3) the denial of the petitioners motion for
reconsideration and/or new trial will result to a miscarriage of justice. Thus, believing that it
was equitable to relax the rules on the timeliness of the filing of pleadings, the RTC remanded
the case to the MTC for further proceedings, after giving the respondent the opportunity to
submit his position paper and the affidavits of his witnesses. The fallo reads:

Sec. 6. Means to carry jurisdiction into effect When by law jurisdiction is conferred on a
court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer, and if the procedure to be followed in
the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears conformable to the
spirit of said law or rules.

WHEREFORE, on considerations of equity and substantial justice, and in the light of Section
6, Rule 135 of the Rules of Court, the judgment of this Court dated February 26, 1998, as well
as the Decision dated November 4, 1997 of the Lower Court in Civil Case No. 1305, are
hereby both set aside. The lower court to which the records were heretofore remanded is
hereby ordered to conduct further proceedings in this case, after giving the plaintiff-appellee

Third, Section 6 of Rule 37 contemplates a motion for new trial and for
reconsideration filed before a trial court a quo. The RTC in this case was acting as an
appellate court; the petitioners motion for new trial and reconsideration was directed against
the appellate judgment of the RTC, not the original judgment of the trial court.

Second, Rule 40 governs appeals from the MTC to the RTC. Nowhere in Rule 40 is
there a provision similar to Section 6 of Rule 37.

34 | P a g e
Fourth, after Republic Act No. 6031 mandated municipal trial courts to record
their proceedings, a trial de novo at the appellate level may no longer be conducted. The
appellate courts may instead review the evidence and records transmitted to it by the trial
court. Since the petitioner is asking the court to review the records of the MTC, inclusive of
her position paper and the affidavits of her witnesses, it is also important to give the
respondent an opportunity to file his position paper and the affidavits of his witnesses before
the MTC renders a judgment. It is the MTC or the trial court that has the jurisdiction to do
that.

affidavit of witnesses and evidence, were not submitted on time and the extension of time to
file the same was denied because it is prohibited under the Rules on Summary Procedure. [39]

THE CAS DECISION

THE COURTS RULING

The CA affirmed the RTC in a decision promulgated on September 7, 2001.[35] The CA noted
that the RTCs order of remand was not just based on equity and substantial justice, but was
also based on law, specifically Section 6 of Rule 135. Thus, the CA ruled that the RTC did not
err in remanding the case to the MTC and ordering the conduct of further proceedings after
giving the respondent an opportunity to present his position paper and the affidavits of his
witnesses. This ruling did not satisfy petitioner, giving way to the present petition.

which we break down into the following sub-issues: 1) whether a remand is proper; 2)
whether the Court should appreciate the petitioners position paper and the affidavits of her
witnesses; and 3) whether the complaint for unlawful detainer should be dismissed.

The petition is partly meritorious.


Remand Not Necessary
We find that a remand of the case to the lower courts is no longer necessary, given the
pleadings and submissions filed, and the records of the proceedings below. A remand would
delay the overdue resolution of this case (originally filed with the MTC on April 16, 1997), and
would run counter to the spirit and intent of the RSP. [40]
Petitioners Position Paper and the Affidavits of Her Witnesses Cannot Be Admitted

THE PETITION
Should the Court admit the petitioners position paper and the affidavits of her witnesses
attached to her Kahilingan?
Before this Court, the petitioner alleges: 1) that the respondent made a request for the
petitioner to vacate the subject property because his nearest of kin needed it; 2) that she was
only going to vacate the premises if she were reimbursed the actual cost incurred in building
the said house;[36] 3) that the case be decided on the basis of the entire record of the
proceedings in the court of origin, including memoranda and briefs submitted by the parties,
instead of being remanded to the MTC.
In his Comment[37] and Memorandum,[38] the respondent joins the petitioners prayer for a
ruling based on the records instead of remanding the case to the MTC. He prays that, as the
MTC ruled, the petitioner be ordered to vacate the leased property, and that the petitioners
claim for reimbursement be denied. The respondent argues that the MTC correctly ruled on
the basis of the parties pleadings, the stipulation of facts during the preliminary conference,
and the records of the proceedings.
ISSUES

The petitioner submits the following as the issue to be decided:


[W]hether under the Rules of Summary Procedure, the Regional Trial Court, as well as the
Court of Appeals, may order the case remanded to the MTC after the plaintiff, herein
respondent, failed to submit evidence in support of his complaint because his Position Paper,

The intent and terms of the RSP both speak against the liberality that the petitioner sees. By
its express terms, the purpose of the RSP is to achieve an expeditious and inexpensive
determination of the cases they cover, among them, forcible entry and unlawful detainer
cases.[41] To achieve this objective, the RSP expressly prohibit certain motions and pleadings
that could cause delay, among them, a motion for extension of time to file pleadings,
affidavits or any other paper. If the extension for the filing of these submissions cannot be
allowed, we believe it illogical and incongruous to admit a pleading that is already filed
late. Effectively, we would then allow indirectly what we prohibit to be done directly. It is for
this reason that in Don Tino Realty Development Corporation v. Florentino,[42] albeit on the
issue of late filing of an answer in a summary proceeding, we stated that [t]o admit a late
answer is to put a premium on dilatory measures, the very mischief that the rules seek to
redress.
The strict adherence to the reglementary period prescribed by the RSP is due to the essence
and purpose of these rules. The law looks with compassion upon a party who has been
illegally dispossessed of his property. Due to the urgency presented by this situation, the RSP
provides for an expeditious and inexpensive means of reinstating the rightful possessor to the
enjoyment of the subject property.[43] This fulfills the need to resolve the ejectment case
quickly. Thus, we cannot reward the petitioners late filing of her position paper and the
affidavits of her witnesses by admitting them now.
The failure of one party to submit his position paper does not bar at all the MTC from issuing
a judgment on the ejectment complaint. Section 10 of the RSP states:

35 | P a g e

Section 10. Rendition of judgment. Within thirty (30) days after receipt of the last affidavits
and position papers, or the expiration of the period for filing the same, the court shall render
judgment. [Underscoring supplied.]
However, should the court find it necessary to clarify certain material facts, it may, during the
said period, issue an order specifying the matters to be clarified, and require the parties to
submit affidavits or other evidence on the said matters within ten (10) days from receipt of
said order. Judgment shall be rendered within fifteen (15) days after the receipt of the last
affidavit or the expiration of the period for filing the same.
The court shall not resort to the foregoing procedure just to gain time for the rendition
of the judgment.
Thus, the situation obtaining in the present case has been duly provided for by the Rules; it
was correct to render a judgment, as the MTC did, after one party failed to file their position
paper and supporting affidavits.
That a position paper is not indispensable to the courts authority to render judgment is
further evident from what the RSP provides regarding a preliminary conference: on the basis
of the pleadings and the stipulations and admissions made by the parties, judgment may be
rendered without the need for further proceedings, in which event the judgment shall be
rendered within 30 days from the issuance of the order. [44] Thus, the proceedings may stop
at that point, without need for the submission of position papers. In such a case, what would
be extant in the record and the bases for the judgment would be the complaint, answer, and
the record of the preliminary conference.
Unlawful detainer

The special civil action for unlawful detainer has the following essential requisites:
1) the fact of lease by virtue of a contract, express or implied;
2) the expiration or termination of the possessor's right to hold possession;
3) withholding by the lessee of possession of the land or building after the expiration or
termination of the right to possess;
4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and
vacate the premises; and
5) the filing of the action within one year from the date of the last demand received by the
defendant.[45]
Requisites 1, 4, and 5 have been duly established. The presence of the Contract of Lease is
undisputed; the letter of demand was sent on February 3, 1997, and received by the
petitioner on February 10, 1997; and the action was filed on April 16, 1997, well within the
one-year period from the letter of demand. For our determination is whether the petitioners
right to possess the subject property may be terminated by virtue of her violation of the

terms of the contract. If we answer in the affirmative, her continued detention of the property
is illegal.
Section 1673(3) of the Civil Code answers this question by providing that the lessor may
terminate the lease contract for violation of any of the conditions or terms agreed upon,
[46]
and may judicially eject the lessee.[47] One of the stipulated terms of the parties Contract
of Lease, as narrated above, is that no alterations may be made on the leased property
without the knowledge and consent of the lessor. The issue in this case is beyond the fact of
alteration since it is not disputed that the petitioner demolished the house under lease and
built a new one. The crucial issue is whether the demolition was with or without the
knowledge and consent of the respondent.
The petitioner contends that the Court should not give credence to the respondents
claim that he neither had knowledge of nor gave his consent to her acts. She argued that the
respondent had the burden of proving this allegation with positive evidence after she frontally
denied it in her answer. Since the respondent failed to discharge this burden, she argues that
she no longer needed to prove her defense that the demolition and construction were done
with the respondents knowledge and consent. [48]
The petitioners contention is misplaced.
First, the material allegations in a complaint must be specifically denied by the
defendant in his answer. Section 10, Rule 8 of the 1997 Rules of Court, provides:
A defendant must specify each material allegation of fact the truth of which he does not
admit and, whenever practicable, shall set forth the substance of the matters upon which he
relies to support his denial. Where a defendant desires to deny only a part of an averment, he
shall specify so much of it as is true and material and shall deny the remainder. Where a
defendant is without knowledge or information sufficient to form a belief as to the truth of
a material averment made in the complaint, he shall so state, and this shall have the effect of
a denial.
Section 11, Rule 8 of the Rules of Court likewise provides that material allegations in the
complaint which are not specifically denied, other than the amount of unliquidated damages,
are deemed admitted. A denial made without setting forth the substance of the matters
relied upon in support of the denial, even when to do so is practicable, does not amount to a
specific denial.[49]
The petitioners denial in her answer consists of the following:
1.
Maliban sa personal na katangian at tirahan ng nasasakdal, ay walang katotuhanan ang
mga isinasakdal ng nagsasakdal;
2.

Na hindi lumabag sa kasunduan ng upahan ang nasasakdal;

3.
Na, ang pagpapagawa ng bahay na inuupahan ng nasasakdal ay sa kaalaman at
kapahintulutan ng nagsasakdal at higit na gumanda at tumibay ang bahay ng nagsasakdal sa
pamamagitan ng pagpapagawa ng nasasakdal; xxx[50]

36 | P a g e
We do not find this denial to be specific as the petitioner failed to set forth the
substance of the matters in which she relied upon to support her denial. The
petitioner merely alleged that consent was given; how and why, she did not say. If indeed
consent were given, it would have been easy to fill in the details. She could have stated in
her pleadings that she verbally informed the respondent of the need for the repairs, or wrote
him a letter. She could have stated his response, and how it was conveyed, whether verbally
or in writing. She could have stated when the consent was solicited and procured. These,
she failed to do. Ergo, the petitioner is deemed to have admitted the material allegations in
the complaint.

(a)
parties;

Second, both parties failed to present evidence other than the allegations in their
pleadings. Thus, the court may weigh the parties allegations against each other. The
petitioner presented a general denial, while the respondent set forth an affirmative assertion.
This Court has time and again said that a general denial cannot be given more weight than
an affirmative assertion.[51]

(d)
Where the claims in all the causes of action are principally for recovery of money,
the aggregate amount claimed shall be the test of jurisdiction. [Underscoring supplied.]

Damages recoverable in an unlawful detainer action are limited to rentals or


reasonable compensation for the use of the property
This Court has no jurisdiction to award the reimbursement prayed for by both parties. Both
parties seek damages other than rentals or reasonable compensation for the use of the
property, which are the only forms of damages that may be recovered in an unlawful detainer
case.[52] Rule 70, Section 17 of the Rules of Court authorizes the trial court to order the award
of an amount representing arrears of rent or reasonable compensation for the use and
occupation of the premises if it finds that the allegations of the complaint are true. [53]
The rationale for limiting the kind of damages recoverable in an unlawful detainer case was
explained in Araos v. Court of Appeals,[54] wherein the Court held that:
The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can
be recovered is the fair rental value or the reasonable compensation for the use and
occupation of the leased property. The reason for this is that in such cases, the only issue
raised in ejectment cases is that of rightful possession; hence, the damages which could be
recovered are those which the plaintiff could have sustained as a mere possessor, or those
caused by the loss of the use and occupation of the property, and not the damages which he
may have suffered but which have no direct relation to his loss of material possession.
An action for reimbursement or for recovery of damages may not be properly joined with the
action for ejectment. The former is an ordinary civil action requiring a full-blown trial, while an
action for unlawful detainer is a special civil action which requires a summary procedure. The
joinder of the two actions is specifically enjoined by Section 5 of Rule 2 of the Rules of Court,
which provides:
Section 5. Joinder of causes of action. A party may in one pleading assert, in the alternative
or otherwise, as many causes of action as he may have against an opposing party, subject to
the following conditions:

The party joining the causes of action shall comply with the rules on joinder of

(b)
The joinder shall not include special civil actions or actions governed by
special rules;
(c)
Where the causes of action are between the same parties but pertain to different
venues or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of
the causes of action falls within the jurisdiction of said court and the venue lies therein; and

WHEREFORE, the petition is PARTIALLY GRANTED. The decision of the Court of Appeals in
CA-G.R. No. SP-48534 is REVERSED AND SET ASIDE. The petitioner FLORAIDA TERANA and
all persons claiming right under her are ordered to vacate and surrender possession of the
subject property to the respondent ANTONIO SIMUANGCO. No costs.
SO ORDERED.
______________
G.R. No. 181622
November 20, 2013
GENESIS INVESTMENT, INC., CEBU JAYA REALTY INC., and SPOUSES RHODORA and
LAMBERT LIM,Petitioners,
vs.
HEIRS of CEFERINO EBARASABAL,* NAMELY: ROGELIO EBARASABAL, SPOUSES
LIGAYA E. GULIMLIM AND JOSE GULIMLIM, SPOUSES VISITACION E. CONEJOS and
ELIAS CONEJOS, BEN TEJERO, POCAS TEJERO, GERTRUDES TEJERO, BANING HAYO,
LACIO EBARASABAL and JULIETA EBARASABAL; HEIRS OF FLORO EBARASABAL,
namely: SOFIA ABELONG, PEPITO EBARASABAL AND ELPIDIO EBARASABAL; HEIRS
OF LEONA EBARASABAL- APOLLO, namely: SILVESTRA A. MOJELLO and MARCELINO
APOLLO; HEIRS OF PEDRO EBARASABAL, namely: BONIFACIO EBARASABAL, SERGIO
EBARASABAL and JAIME EBARASABAL; HEIRS of ISIDRO EBARASABAL, NAMELY:
SPOUSES CARLOSA E. NUEVO and FORTUNATO NUEVA;** HEIRS of BENITO
EBARASABAL, namely: PAULO BAGAAN, SPOUSES CATALINA A. MARIBAO and RENE
MARIBAO, VICENTE ABRINICA and PATRON EBARASABAL; HEIRS of JULIAN
EBARASABAL, NAMELY: ALFREDO BAGAAN, JUAN BAGAAN, AVELINO BAGAAN,
FERDINAND BAGAAN, MAURO BAGAAN, SPOUSES ROWENA B. LASACA and
FRANCISCO LACASA,*** SPOUSES MARIA B. CABAG and EMILIO CABAG and
ESTELITA BAGAAN, all being represented herein by VICTOR MOJELLO, FEDERICO
BAGAAN and PAULINO EBARASABAL, as their Attorneys-in-Fact, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Decision1 and Resolution,2 dated July 11, 2007 and
January 10, 2008, respectively, of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01017.
The antecedents of the case are as follows:
On November 12, 2003, herein respondents filed against herein petitioners a Complaint 3 for
Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's
Fees. The Complaint was filed with the Regional Trial Court (RTC) of Barili, Cebu.

37 | P a g e
On August 5, 2004, herein petitioners filed a Motion to Dismiss 4 contending, among others,
that the RTC has no jurisdiction to try the case on the ground that, as the case involves title
to or possession of real property or any interest therein and since the assessed value of the
subject property does not exceed P20,000.00 (the same being only P11,990.00), the action
falls within the jurisdiction of the Municipal Trial Court (MTC).5
In its Order6 dated September 29, 2004, the RTC granted petitioners' Motion to Dismiss,
holding as follows:
xxxx
And while the prayer of the plaintiffs for the annulment of documents qualified the case as
one incapable of pecuniary estimation thus, rendering it cognizable supposedly by the second
level courts but considering that Republic Act No. 7691 expressly provides to cover "all civil
actions" which phrase understandably is to include those incapable of pecuniary estimation,
like the case at bar, this Court is of the view that said law really finds application here more
so that the same case also "involves title to, or possession of, real property, or any interest
therein." For being so, the assessed value of the real property involved is determinative of
which court has jurisdiction over the case. And the plaintiffs admitting that the assessed
value of the litigated area is less thanP20,000.00, the defendants are correct in arguing that
the case is beyond this Court's jurisdiction.7
Respondents filed a Motion for Partial Reconsideration, 8 arguing that their complaint consists
of several causes of action, including one for annulment of documents, which is incapable of
pecuniary estimation and, as such, falls within the jurisdiction of the RTC. 9
On March 17, 2005, the RTC issued an Order granting respondents' Motion for Partial
Reconsideration and reversing its earlier Order dated September 29, 2004. The RTC ruled,
thus:
On the issue of want of jurisdiction, this court likewise finds to be with merit the contention of
the movants as indeed the main case or the primary relief prayed for by the movants is for
the declaration of nullity or annulment of documents which unquestionably is incapable of
pecuniary estimation and thus within the exclusive original jurisdiction of this court to try
although in the process of resolving the controversy, claims of title or possession of the
property in question is involved which together with all the other remaining reliefs prayed for
are but purely incidental to or as a consequence of the foregoing principal relief sought. 10
Petitioners filed a Motion for Reconsideration,11 but the RTC denied it in its Order dated June
23, 2005.
Aggrieved, petitioners filed a petition for certiorari with the CA. However, the CA dismissed
the petition via its assailed Decision dated July 11, 2007, holding that the subject matter of
respondents' complaint is incapable of pecuniary estimation and, therefore, within the
jurisdiction of the RTC, considering that the main purpose in filing the action is to declare null
and void the documents assailed therein.12
Petitioners' Motion for Reconsideration was, subsequently, denied in the CA Resolution dated
January 10, 2008.
Hence, the instant petition for review on certiorari raising the sole issue, to wit:
Whether or not the Honorable Court of Appeals gravely erred in concluding that the Regional
Trial Court, Branch 60 of Barili, Cebu has jurisdiction over the instant case when the
ALLEGATIONS IN THE COMPLAINT clearly shows that the main cause of action of the
respondents is for the Recovery of their Title, Interest, and Share over a Parcel of Land, which
has an assessed value of P11,990.00 and thus, within the jurisdiction of the Municipal Trial
Court.13
The petition lacks merit.
For a clearer understanding of the case, this Court, like the CA, finds it proper to quote
pertinent portions of respondents' Complaint, to wit:

xxxx
1. Plaintiffs are all Filipino, of legal age, surviving descendants either as grandchildren or
great grandchildren and heirs and successors-in-interest of deceased Roman Ebarsabal,
who died on 07 September 1952 x x x
xxxx
8. During the lifetime of Roman Ebarsabal, he acquired a parcel of land situated in Basdaku,
Saavedra, Moalboal, Cebu, x x x.
xxxx
with a total assessed value of P2,890.00 x x x. However, for the year 2002, the property was
already having (sic) a total assessed value of P11,990.00 x x x.
9. Upon the death of said Roman Ebarsabal, his eight (8) children named in par. 7 above,
became co-owners of his above-described property by hereditary succession; taking peaceful
possession and enjoyment of the same in fee simple pro indiviso, paying the real estate taxes
thereon and did not partition the said property among themselves until all of them likewise
died, leaving, however, their respective children and descendants and/or surviving heirs and
successors-in-interest, and who are now the above-named plaintiffs herein;
10. The plaintiffs who are mostly residents in (sic) Mindanao and Manila, have just recently
uncovered the fact that on 28th January 1997, the children and descendants of deceased Gil
Ebarsabal, namely: Pelagio, Hipolito, Precela, Fructuosa, Roberta, Florentino, Erlinda,
Sebastian, Cirilo, all surnamed Ebarsabal, have executed among themselves a Deed of
Extrajudicial Settlement with Sale of Roman Ebarsabal's entire property described above, by
virtue of which they allegedly extrajudicially settled the same and, for P2,600,000.00
although only the sum of P950,000.00 was reflected in their Deed of Sale for reason only
known to them, they sold the whole property to defendants Genesis Investment Inc.
represented by co-defendant Rhodora B. Lim, the wife of Lambert Lim, without the
knowledge, permission and consent of the plaintiffs who are the vendors' co-owners of the lot
in question, x x x.
11. Surprisingly, however, the defendant Genesis managed to have the Tax Declaration of the
property issued in the name of co-defendant Cebu Jaya Realty Incorporated, a firm which, as
already intimated above, is also owned by Spouses Lambert and Rhodora B. Lim, instead of in
the name of Genesis Investment, Incorporated, which is actually the vendee firm of the lot in
question.
xxxx
Hence, the reason why Cebu Jaya Realty, Incorporated is joined and impleaded herein as a
co-defendant.
12. Without the participation of the plaintiffs who are co-owners of the lot in question in the
proceedings, the aforementioned extrajudicial settlement with sale cannot be binding upon
the plaintiff-co-owners.
13. Further, where as in this case, the other heirs who are the plaintiffs herein, did not
consent to the sale of their ideal shares in the inherited property, the sale was only to be
limited to the pro indiviso share of the selling heirs.
xxxx
14. By representation, the plaintiffs, are therefore, by law, entitled to their rightful shares
from the estate of the deceased Roman Ebarsabal consisting of seven (7) shares that would
have been due as the shares of seven (7) other children of Roman Ebarsabal who are also
now deceased, namely: Ceferino, Floro, Leona, Pedro, Isidoro, Julian and Benito, all surnamed
Ebarsabal.
15. The defendants who had prior knowledge of the existence of the other heirs who are coowners of the vendors of the property they purchased, had unlawfully acted in bad faith in
insisting to buy the whole property in co-ownership, only from the heirs and successors-in-

38 | P a g e
interest of deceased Gil Ebarsabal, who is only one (1) of the eight (8) children of deceased
Roman Ebarsabal, and without notifying thereof in whatever manner the plaintiffs who are
the heirs and successors-in-interest of the other co-owners of the property-in-question; thus,
have compelled the plaintiffs herein to file this instant case in court to protect their interests,
x x x.
xxxx
PRAYER
WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable
Court that, after due notice and hearing, judgment shall be rendered in favor of the plaintiffs,
as follows, to wit:
1 Declaring as null and void and not binding upon the plaintiffs, the following documents to
wit:
(a) Deed of Extrajudicial Settlement with Sale executed by and between the heirs of
deceased Gil Ebarsabal headed by Pedro Ebarsabal, and Genesis Investment, Inc.,
represented by Rhodora Lim, dated 28th of January, 1997, marked as Annex-A;
(b) Memorandum of Agreement executed between Pedro Ebarsabal and Genesis Investment,
Inc., represented by Rhodora Lim dated 27 January, which document is notarized;
(c) Tax Declaration of Real Property issued to Cebu Jaya Realty, Inc., marked as Annex-D;
2 Ordering the defendants to make partition of the property in litigation with the plaintiffs
into eight (8) equal shares; to get one (1) share thereof, which is the only extent of what they
allegedly acquired by purchase as mentioned above, and to transfer, restore or reconvey and
deliver to the plaintiffs, seven (7) shares thereof, as pertaining to and due for the latter as the
heirs and successors-in-interest of the seven (7) brothers and sister of deceased Gil
Ebarsabal already named earlier in this complaint;
xxxx
Further reliefs and remedies just and equitable in the premises are also herein prayed for.
x x x x14
It is true that one of the causes of action of respondents pertains to the title, possession and
interest of each of the contending parties over the contested property, the assessed value of
which falls within the jurisdiction of the MTC. However, a complete reading of the complaint
would readily show that, based on the nature of the suit, the allegations therein, and the
reliefs prayed for, the action is within the jurisdiction of the RTC.
As stated above, it is clear from the records that respondents' complaint was for "Declaration
of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees." In filing
their Complaint with the RTC, respondents sought to recover ownership and possession of
their shares in the disputed parcel of land by questioning the due execution and validity of
the Deed of Extrajudicial Settlement with Sale as well as the Memorandum of Agreement
entered into by and between some of their co-heirs and herein petitioners. Aside from
praying that the RTC render judgment declaring as null and void the said Deed of
Extrajudicial Settlement with Sale and Memorandum of Agreement, respondents likewise
sought the following: (1) nullification of the Tax Declarations subsequently issued in the name
of petitioner Cebu Jaya Realty, Inc.; (2) partition of the property in litigation; (3) reconveyance
of their respective shares; and (3) payment of moral and exemplary damages, as well as
attorney's fees, plus appearance fees.1wphi1
Clearly, this is a case of joinder of causes of action which comprehends more than the issue
of partition of or recovery of shares or interest over the real property in question but includes
an action for declaration of nullity of contracts and documents which is incapable of
pecuniary estimation.15
As cited by the CA, this Court, in the case of Singson v. Isabela Sawmill, 16 held that:

In determining whether an action is one the subject matter of which is not capable of
pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of
the principal action or remedy sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the
municipal courts or in the courts of first instance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a sum of money,
where the money claim is purely incidental to, or a consequence of, the principal relief
sought, this Court has considered such actions as cases where the subject of the litigation
may not be estimated in terms of money, and are cognizable by courts of first instance [now
Regional Trial Courts].17
This rule was reiterated in Russell v. Vestil 18 and Social Security System v. Atlantic Gulf and
Pacific Company of Manila Inc.19
Contrary to petitioners contention, the principal relief sought by petitioners is the nullification
of the subject Extrajudicial Settlement with Sale entered into by and between some of their
co-heirs and respondents, insofar as their individual shares in the subject property are
concerned. Thus, the recovery of their undivided shares or interest over the disputed lot,
which were included in the sale, simply becomes a necessary consequence if the above deed
is nullified. Hence, since the principal action sought in respondents Complaint is something
other than the recovery of a sum of money, the action is incapable of pecuniary estimation
and, thus, cognizable by the RTC.20 Well entrenched is the rule that jurisdiction over the
subject matter of a case is conferred by law and is determined by the allegations in the
complaint and the character of the relief sought, irrespective of whether the party is entitled
to all or some of the claims asserted.21
Moreover, it is provided under Section 5 (c), Rule 2 of the Rules of Court that where the
causes of action are between the same parties but pertain to different venues or jurisdictions,
the joinder may be allowed in the RTC provided one of the causes of action falls within the
jurisdiction of said court and the venue lies therein. Thus, as shown above, respondents
complaint clearly falls within the jurisdiction of the RTC.
WHEREFORE, the petition is DENIED. The Decision and Resolution dated July 11, 2007 and
January 10, 2008, respectively, of the Court of Appeals in CA-G.R. CEB-SP No. 01017 are
AFFIRMED.
SO ORDERED.
SECTION 6
[G.R. No. 133240. November 15, 2000]
RUDOLF LIETZ HOLDINGS, INC., petitioner, vs. THE REGISTRY OF DEEDS OF
PARAAQUE CITY, respondent.
DECISION
YNARES-SANTIAGO, J.:
The instant petition for review is filed on a pure question of law arising from the Decision
rendered by the Regional Trial Court of Paraaque City, Metro Manila, Branch 257, in LRC
Case No. 97-0170.
Petitioner corporation was formerly known as Rudolf Lietz, Incorporated. On July 15, 1996, it
amended its Articles of Incorporation to change its name to Rudolf Lietz Holdings, Inc. The
Amended Articles of Incorporation was approved by the Securities and Exchange Commission
on February 20, 1997.[1]
As a consequence of its change of name, petitioner sought the amendment of the transfer
certificates of title over real properties owned by the said corporation, all of which were under
the old name, Rudolf Lietz, Incorporated. For this purpose, petitioner instituted, on November
20, 1997, a petition for amendment of titles with the Regional Trial Court of Paraaque City,
docketed as LRC Case No. 97-0170.[2]

39 | P a g e
The petition impleaded as respondent the Registry of Deeds of Pasay City, apparently
because the titles sought to be amended, namely, Transfer Certificates of Title Nos. 99446,
99447, 99448, 102486, 102487, 102488 and 102489,[3] all state that they were issued by the
Registry of Deeds of Pasay City. Petitioner likewise inadvertently alleged in the body of the
petition that the lands covered by the subject titles are located in Pasay City.
Subsequently, petitioner learned that the subject titles are in the custody of the Register of
Deeds of Paraaque City.[4] Hence, on February 16, 1998, petitioner filed an Ex-Parte Motion
to Admit Amended Petition.[5] In the attached Amended Petition,[6] petitioner impleaded
instead as respondent the Registry of Deeds of Paraaque City, and alleged that its lands are
located in Paraaque City.
In the meantime, however, on January 30, 1998, the court a quo had dismissed the
petition motu proprio on the ground of improper venue, it appearing therein that the
respondent is the Registry of Deeds of Pasay City and the properties are located in Pasay City.
[7]

Before counsel for petitioner could receive an official copy of the aforesaid order of dismissal,
he filed with the lower court a Motion for Reconsideration.[8] On February 20, 1998, in view of
the dismissal of the petition, the lower court denied the Ex-Parte Motion to Admit Amended
Petition.[9] On March 30, 1998, the lower court denied the Motion for Reconsideration. [10]
Petitioner, thus, is before this Court arguing that
The court a quo acted contrary to the rules and jurisprudence on the matter for the following
reasons:
1. It has no power to immediately dismiss an initiatory pleading for improper venue;
2. Assuming the Order of 30 January 1998 was proper, it was nevertheless still a matter of
right on petitioners part to amend its petition in order to correct the wrong entries therein;
and
3. The unassailable reality is that the subject parcels of land are located in Paraaque City,
so venue was properly laid despite that erroneous allegation in the original petition. [11]
The Solicitor General filed on November 4, 1998 his Comment. [12] He contends that the trial
court did not acquire jurisdiction over the res because it appeared from the original petition
that the lands are situated in Pasay City; hence, outside the jurisdiction of the Paraaque
court. Since it had no jurisdiction over the case, it could not have acted on the motion to
admit amended petition.
On February 15, 1999, petitioner filed its Reply. [13] It discussed the distinction between
jurisdiction and venue, and maintained that the trial court had jurisdiction over the petition,
but that venue appeared to be improperly laid based on the erroneous allegation therein on
the location of the properties.
The issue involved herein is simple. May the trial court motu proprio dismiss a complaint on
the ground of improper venue? This question has already been answered in Dacoycoy v.
Intermediate Appellate Court,[14] where this Court held that it may not.
While the ground invoked by the trial court in dismissing the petition below was clearly that
of improper venue,[15] the Solicitor General confuses venue with jurisdiction. A distinction
between the two must be drawn. Jurisdiction over the subject matter or nature of an action is
conferred only by law.[16] It may not be conferred by consent or waiver upon a court which
otherwise would have no jurisdiction over the subject matter of an action. On the other hand,
the venue of an action as fixed by statute may be changed by the consent of the parties, and
an objection on improper venue may be waived by the failure of the defendant to raise it at
the proper time. In such an event, the court may still render a valid judgment. Rules as to
jurisdiction can never be left to the consent or agreement of the parties. Venue is procedural,
not jurisdictional, and hence may be waived. It is meant to provide convenience to the
parties, rather than restrict their access to the courts as it relates to the place of trial. [17]

In Dacoycoy v. IAC, this Court ruled:


The motu proprio dismissal of petitioners complaint by respondent trial court on the ground
of improper venue is plain error, obviously attributable to its inability to distinguish between
jurisdiction and venue.
Questions or issues relating to venue of actions are basically governed by Rule 4 of the
Revised Rules of Court. It is said that the laying of venue is procedural rather than
substantive. It relates to the jurisdiction of the court over the person rather than the subject
matter. Provisions relating to venue establish a relation between the plaintiff and the
defendant and not between the court and the subject matter. Venue relates to trial not to
jurisdiction, touches more of the convenience of the parties rather than the substance of the
case.
xxx xxx
xxx.
Dismissing the complaint on the ground of improper venue is certainly not the appropriate
course of action at this stage of the proceedings, particularly as venue, in inferior courts as
well as in the courts of first instance (now RTC), may be waived expressly or impliedly. Where
the defendant fails to challenge timely the venue in a motion to dismiss as provided by
Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a decision to be
rendered, he cannot on appeal or in a special action be permitted to belatedly challenge the
wrong venue, which is deemed waived.
Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue
cannot be truly said to have been improperly laid, as for all practical intents and purposes,
the venue, though technically wrong, may be acceptable to the parties for whose
convenience the rules on venue had been devised. The trial court cannot pre-empt the
defendants prerogative to object to the improper laying of the venue by motu
proprio dismissing the case.
Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by
dismissing motu proprio the complaint on the ground of improper venue without first allowing
the procedure outlined in the rules of court to take its proper course. Although we are for the
speedy and expeditious resolution of cases, justice and fairness take primary
importance. The ends of justice require that respondent trial court faithfully adhere to the
rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be
heard on his cause.[18]
Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses and objections not
pleaded either in a motion to dismiss or in the answer are deemed waived. The court may
only dismiss an action motu proprio in case of lack of jurisdiction over the subject matter, litis
pendentia, res judicata and prescription. Therefore, the trial court in this case erred when it
dismissed the petition motu proprio. It should have waited for a motion to dismiss or a
responsive pleading from respondent, raising the objection or affirmative defense of improper
venue, before dismissing the petition. However, this was overtaken by petitioners motion for
leave to amend its petition.
Petitioner correctly invoked the jurisdiction of the Regional Trial Court in seeking the
amendment of its certificates of title. The jurisdiction of the Regional Trial Court over matters
involving the registration of lands and lands registered under the Torrens system is conferred
by Section 2 of Presidential Decree No. 1529, The Property Registration Decree, viz:
Nature of registration proceedings; jurisdiction of courts. --- Judicial proceedings for the
registration of lands throughout the Philippines shall be in rem and shall be based on the
generally accepted principles underlying the Torrens system.
Courts of First Instance (now Regional Trial Courts) shall have exclusive jurisdiction over all
applications for original registration of title to lands, including improvements and interest
therein, and over all petitions filed after original registration of title, with power to hear and

40 | P a g e
determine all questions arising upon such applications or petitions. The court through its
clerk of court shall furnish the Land Registration Commission with two certified copies of all
pleadings, exhibits, orders, and decisions filed or issued in applications or petitions for land
registration, with the exception of stenographic notes, within five days from the filing or
issuance thereof.
More specifically, jurisdiction over petitions for amendments of certificates of title, such as
the one brought below, is provided for by Section 108 of P.D. 1529, thus:
Amendment and alteration of certificates. --- No erasure, alteration, or amendment shall be
made upon the registration book after the entry of a certificate of title or of a memorandum
thereon and the attestation of the same by the Register of Deeds, except upon order of the
proper Court of First Instance (now Regional Trial Court). A registered owner or other
person having an interest in registered property, or, in proper cases, the Register of
Deeds with the approval of the Commissioner of Land Registration, may apply by petition
to the court upon the ground that the registered interests of any description, whether
vested, contingent, expectant inchoate appearing on the certificate, have terminated and
ceased; or that new interest not appearing upon the certificate have arisen or been created;
or that an omission or error was made in entering a certificate or any memorandum thereon,
or on any duplicate certificate; or that the name of any person on the certificate has
been changed; or that the registered owner has married, or, if registered as married, that
the marriage has been terminated and no right or interest of heirs or creditors will thereby be
affected, or that a corporation which owned registered land and has been dissolved has not
conveyed the same within three years after its dissolution; or upon any other reasonable
ground and the court may hear and determine the petition after notice to all parties in
interest, and may order the entry or cancellation of a new certificate, or grant any other relief
upon such terms and conditions, requiring security or bond if necessary, as it may consider
proper: xxx. (Emphasis ours.)
In the case at bar, the lands are located in Paraaque City, as stated on the faces of the
titles. Petitioner, thus, also correctly filed the petition in the place where the lands are
situated, pursuant to the following rule:
Venue of real actions. --- Actions affecting title to or possession of real property, or interest
therein, shall be commenced and tried in the proper court which has jurisdiction over the
area wherein the real property involved, or a portion thereof, is situated. [19]

Petitioner, however, named as respondent the Register of Deeds of Pasay City, under the
mistaken impression that it was still the custodian of the titles to lands in Paraaque. Later,
petitioner learned that a Register of Deeds for Paraaque City had taken over the record and
custody of titles therein. Petitioner, thus, promptly moved for leave of court to amend its
petition. This, to our mind, was justified. In preparing its amended petition, petitioner
likewise corrected its allegation on the location of the lands involved.
Before the amended petition was filed, the trial court had already dismissed the petition
based on improper venue. It relied on the allegation in the petition that the lands are located
in Pasay City. However, the titles of the land, copies of which were attached to the petition,
plainly show that the lands involved are situated in Paraaque City. The trial court should
have considered these annexes, as these form an integral part of the pleading.
At the very least, the trial court should have allowed petitioner to amend its petition, for this
was still a matter of right on its part.
Amendments as a matter of right. --- A party may amend his pleading once as a matter of
right at any time before a responsive pleading is served or, in the case of a reply, at any time
within ten (10) days after it is served.[20]
Amendments to pleadings are liberally allowed in furtherance of justice, in order that every
case may so far as possible be determined on its real facts, and in order to speed the trial of
cases or prevent the circuitry of action and unnecessary expense. [21] The trial court, therefore,
should have allowed the amendment proposed by petitioner for in so doing, it would have
allowed the actual merits of the case to be speedily determined, without regard to
technicalities, and in the most expeditious and inexpensive manner. [22]
The courts should be liberal in allowing amendments to pleadings to avoid multiplicity of suits
and in order that the real controversies between the parties are presented, their rights
determined and the case decided on the merits without unnecessary delay. This liberality is
greatest in the early stages of a lawsuit, especially in this case where the amendment to the
complaint was made before the trial of the case thereby giving petitioner all the time allowed
by law to answer and to prepare for trial.[23]
WHEREFORE, the petition for review is GRANTED. The Orders dated January 30, 1998,
February 20, 1998, and March 30, 1998 are REVERSED and SET ASIDE. LRC Case No. 970170 is ordered REINSTATED.
SO ORDERED.