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IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA LOPEZ, respondent.

[G.R. No. 138497. January 16, 2002]


The Case
The case is a petition for review on certiorari[1] seeking to set aside the decision[2] of the Court of
Appeals that denied a petition for certiorari assailing the trial courts order denying petitioners motion to
dismiss the case against her inclusion as party defendant therein.
The Facts
The facts, as found by the Court of Appeals, are as follows:
On September 15, 1993, herein private respondent Angelina Mejia Lopez (plaintiff below) filed a petition
for APPOINTMENT AS SOLE ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC., against defendant Alberto Lopez and petitioner Imelda Relucio, docketed as
Spec. Proc. M-3630, in the Regional Trial Court of Makati, Branch 141. In the petition, privaterespondent alleged that sometime in 1968, defendant Lopez, who is legally married to the private
respondent, abandoned the latter and their four legitimate children; that he arrogated unto himself full
and exclusive control and administration of the conjugal properties, spending and using the same for his
sole gain and benefit to the total exclusion of the private respondent and their four children; that
defendant Lopez, after abandoning his family, maintained an illicit relationship and cohabited with herein
petitioner since 1976.

and either spent the proceeds thereof for his sole benefit and that of petitioner Relucio and their two
illegitimate children or permanently and fraudulently placed them beyond the reach of the privaterespondent and their four children.
On December 8, 1993, a Motion to Dismiss the Petition was filed by herein petitioner on the ground that
private respondent has no cause of action against her.
An Order dated February 10, 1994 was issued by herein respondent Judge denying petitioner Relucios
Motion to Dismiss on the ground that she is impleaded as a necessary or indispensable party because
some of the subject properties are registered in her name and defendant Lopez, or solely in her name.
Subsequently thereafter, petitioner Relucio filed a Motion for Reconsideration to the Order of the
respondent Judge dated February 10, 1994 but the same was likewise denied in the Order dated May
31, 1994.[3]
On June 21, 1994, petitioner filed with the Court of Appeals a petition for certiorari assailing the
trial courts denial of her motion to dismiss.[4]
On May 31, 1996, the Court of Appeals promulgated a decision denying the petition. [5] On June 26,
1996, petitioner filed a motion for reconsideration. [6] However, on April 6, 1999, the Court of Appeals
denied petitioners motion for reconsideration.[7]
Hence, this appeal.[8]
The Issues

It was further alleged that defendant Lopez and petitioner Relucio, during their period of cohabitation
since 1976, have amassed a fortune consisting mainly of stockholdings in Lopez-owned or controlled
corporations, residential, agricultural, commercial lots, houses, apartments and buildings, cars and
other motor vehicles, bank accounts and jewelry. These properties, which are in the names of defendant
Lopez and petitioner Relucio singly or jointly or their dummies and proxies, have been acquired
principally if not solely through the actual contribution of money, property and industry of defendant
Lopez with minimal, if not nil, actual contribution from petitioner Relucio.
In order to avoid defendant Lopez obligations as a father and husband, he excluded the private
respondent and their four children from sharing or benefiting from the conjugal properties and the
income or fruits there from.As such, defendant Lopez either did not place them in his name or otherwise
removed, transferred, stashed away or concealed them from the private-respondent. He placed
substantial portions of these conjugal properties in the name of petitioner Relucio.
It was also averred that in the past twenty five years since defendant Lopez abandoned the privaterespondent, he has sold, disposed of, alienated, transferred, assigned, canceled, removed or stashed
away properties, assets and income belonging to the conjugal partnership with the private-respondent

1. Whether respondents petition for appointment as sole administratrix of the conjugal


property, accounting, etc. against her husband Alberto J. Lopez established a cause of
action against petitioner.
2. Whether petitioners inclusion as party defendant is essential in the proceedings for a
complete adjudication of the controversy.[9]
The Courts Ruling
We grant the petition. We resolve the issues in seriatim.
First issue: whether a cause of action exists against petitioner in the proceedings below. A cause
of action is an act or omission of one party the defendant in violation of the legal right of the other.
[10]
The elements of a cause of action are:

(1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created;

The second cause of action is for an accounting by respondent husband.[14] The accounting of
conjugal partnership arises from or is an incident of marriage.

(2) an obligation on the part of the named defendant to respect or not to violate such right;
and

Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, no
cause of action can exist against petitioner on this ground.

(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.[11]

Respondents alternative cause of action is for forfeiture of Alberto J. Lopez share in the co-owned
property acquired during his illicit relationship and cohabitation with [petitioner][15] and for the dissolution
of the conjugal partnership of gains between him [Alberto J. Lopez] and the [respondent].

A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts were
admitted or proved.[12]

The third cause of action is essentially for forfeiture of Alberto J. Lopez share in property co-owned
by him and petitioner. It does not involve the issue of validity of the co-ownership between Alberto J.
Lopez and petitioner. The issue is whether there is basis in law to forfeit Alberto J. Lopez share, if any
there be, in property co-owned by him with petitioner.

In order 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 merely defectively stated or is
ambiguous, indefinite or uncertain.[13]
Hence, to determine the sufficiency of the cause of action alleged in Special Proceedings M-3630,
we assay its allegations.

Respondents asserted right to forfeit extends to Alberto J. Lopez share alone. Failure of Alberto J.
Lopez to surrender such share, assuming the trial court finds in respondents favor, results in a breach of
an obligation to respondent and gives rise to a cause of action. [16] Such cause of action, however,
pertains to Alberto J. Lopez, not petitioner.
The respondent also sought support. Support cannot be compelled from a stranger.

In Part Two on the Nature of [the] Complaint, respondent Angelina Mejia Lopez summarized the
causes of action alleged in the complaint below.
The complaint is by an aggrieved wife against her husband.
Nowhere in the allegations does it appear that relief is sought against petitioner. Respondents
causes of action were all against her husband.
The first cause of action is for judicial appointment of respondent as administratrix of the
conjugal partnership or absolute community property arising from her marriage to Alberto J.
Lopez.Petitioner is a complete stranger to this cause of action. Article 128 of the Family Code refers
only to spouses, to wit:
If a spouse without just cause abandons the other or fails to comply with his or her obligations to the
family, the aggrieved spouse may petition the court for receivership, for judicial separation of property,
or for authority to be the sole administrator of the conjugal partnership property xxx
The administration of the property of the marriage is entirely between them, to the exclusion of all
other persons. Respondent alleges that Alberto J. Lopez is her husband. Therefore, her first cause of
action is against Alberto J. Lopez. There is no right-duty relation between petitioner and respondent that
can possibly support a cause of action. In fact, none of the three elements of a cause of action exists.

The action in Special Proceedings M-3630 is, to use respondent Angelina M. Lopez own words,
one by an aggrieved wife against her husband.[17] References to petitioner in the common and specific
allegations of fact in the complaint are merely incidental, to set forth facts and circumstances that prove
the causes of action alleged against Alberto J. Lopez.
Finally, as to the moral damages, respondents claim for moral damages is against Alberto J.
Lopez, not petitioner.
To sustain a cause of action for moral damages, the complaint must have the character of an
action for interference with marital or family relations under the Civil Code.

[18]

A real party in interest is one who stands to be benefited or injured by the judgment of the suit.
In this case, petitioner would not be affected by any judgment in Special Proceedings M-3630.

If petitioner is not a real party in interest, she cannot be an indispensable party. An indispensable
party is one without whom there can be no final determination of an action. [19] Petitioners participation in
Special Proceedings M-3630 is not indispensable. Certainly, the trial court can issue a judgment
ordering Alberto J. Lopez to make an accounting of his conjugal partnership with respondent, and give
support to respondent and their children, and dissolve Alberto J. Lopez conjugal partnership with
respondent, and forfeit Alberto J. Lopez share in property co-owned by him and petitioner. Such
judgment would be perfectly valid and enforceable against Alberto J. Lopez.

Nor can petitioner be a necessary party in Special Proceedings M-3630. A necessary party as one
who is not indispensable but who ought to be joined as party if complete relief is to be accorded those
already parties, or for a complete determination or settlement of the claim subject of the action. [20] In the
context of her petition in the lower court, respondent would be accorded complete relief if Alberto J.
Lopez were ordered to account for his alleged conjugal partnership property with respondent, give
support to respondent and her children, turn over his share in the co-ownership with petitioner and
dissolve his conjugal partnership or absolute community property with respondent.

MIGUEL, VICENTE T. PADDAYUMAN, DELFRANDO T.


SEVILLA, ELVIRA SIMANGAN-INTERIOR, CELESTINO
P. TABANIAG and CIRILO B. TEGA, JR., Respondents.

Promulgated:
September 29, 2008

The Judgment
WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of
Appeals.[21] The Court DISMISSES Special Proceedings M-3630 of the Regional Trial Court,Makati,
Branch 141 as against petitioner.

QUISUMBING, J.:

No costs.

In this special civil action for certiorari before us, petitioner seeks the nullification of the Decision 1 dated
January 27, 2005 and the Resolution2 dated August 4, 2005 of the Court of Appeals in CA-G.R. SP No. 77773,
which had dismissed its earlier petition for certiorari assailing the Order3 dated May 13, 2003 of the Regional
Trial Court (RTC) of Tuguegarao City, Cagayan, Branch 5, in Civil Case No. 6123.

SO ORDERED.

The facts in this case are as follows.


Petitioner Philippine Crop Insurance Corporation (PCIC) is a government-owned and controlled corporation
engaged in the business of crop insurance. Private respondents Renato S. Allas, Lydia H. Almeron, Willie U.
Antalan, Ramon P. Aquino, Nestor M. de Roma, Roberto T. Feri, Osmundo M. Gumasing, Rosa P. Calubaquib,
Telita C. Barasi, Patrocinia D. Herrero, Charito A. Mallillin, Teresita A. Caranguian, Delfin B. Cruz, Romeo P.
Mapagu, Estrella May K. Miguel, Vicente T. Paddayuman, Delfrando T. Sevilla, Elvira Simangan-Interior,
Celestino P. Tabaniag and Cirilo B. Tega, Jr. are all retired employees and officers of petitioner.
Prior to the effectivity on July 1, 1989 of Republic Act No. 6758, 4 or the Compensation and Position
Classification Act of 1989, private respondents were employed with PCIC and were receiving cost of living
allowance (COLA) equivalent to 40% of their basic salary, amelioration allowance equivalent to 10% of their
basic salary and additional COLA known as equity pay.

G.R. No. 169558


PHILIPPINE CROP INSURANCE
CORPORATION,Petitioner,
- versus COURT OF APPEALS, HON. JUDGE ELMO N.
ALAMEDA, RENATO S. ALLAS, LYDIA H. ALMERON,
WILLIE U. ANTALAN, RAMON P. AQUINO, NESTOR M.
DE ROMA, ROBERTO T. FERI, OSMUNDO M.
GUMASING, ROSA P. CALUBAQUIB, TELITA C.
BARASI, PATROCINIA D. HERRERO, CHARITO A.
MALLILLIN, TERESITA A. CARANGUIAN, DELFIN B.
CRUZ, ROMEO P. MAPAGU, ESTRELLA MAY K.

Present:
Quisumbing, J., Chairperson,
Carpio Morales,
Tinga,
VELASCO, JR., and
BRION, JJ.

To implement the law, the Department of Budget and Management (DBM) issued Corporate Compensation
Circular (CCC) No. 105 specifying that the COLA, amelioration allowance and equity pay previously granted to
government employees shall be deemed included in the basic salary. It disallowed without qualification all
allowances and fringe benefits granted to said employees on top of their basic salary effective November 1,
1989. Pursuant to DBM-CCC No. 10, petitioner stopped paying the aforecited benefits to private respondents.
On August 12, 1998, the Supreme Court nullified DBM-CCC No. 10 in De Jesus v. Commission on Audit 6 due
to its non-publication in the Official Gazette or in a newspaper of general circulation in the country.7
On February 4, 2003, private respondents instituted an action for specific performance against petitioner
before the Regional Trial Court of Tuguegarao City, Cagayan, Branch 5. They prayed that petitioner be
ordered to pay them the subject benefits from July 1, 1989 up to their respective retirement dates or the
publication of DBM-CCC No. 10, whichever is earlier. They alleged that the nullification of DBM-CCC No. 10
rendered the integration of the subject benefits into their salaries ineffective. They added that the Office of the
Government Corporate Counsel8 and the Commission on Audit9 sustained their entitlement to the subject
benefits. But petitioner still refused to pay them.

On March 11, 2003, petitioner filed a Motion to Dismiss10 on the grounds that (1) the complaint stated no
cause of action since the parties have no contractual relationship; (2) the subject benefits have already been
integrated into the basic salaries of private respondents; and (3) private respondents reliance on the De
Jesus case was misplaced since said case involved the payment of a different benefit which was not
integrated into the basic salaries of the employees concerned.
In their opposition,11 private respondents averred that the sufficiency of the complaint should be tested based
on the strength of its allegations and no other. They also argued that there was a contractual relationship
between the parties since their claim for the subject benefits accrued when they were still petitioners
employees.
On May 13, 2003, the trial court issued an Order denying the motion to dismiss. It noted that the allegations in
the complaint for specific performance constituted a valid cause of action on which the court could render a
valid judgment. It held that where the allegations are sufficient but the veracity of the facts is assailed, the
motion to dismiss should be denied.
Dissatisfied, petitioner filed a special civil action for certiorari 12 with the Court of Appeals. It argued that public
respondent judge committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying
its motion to dismiss despite the fact that (1) the complaint stated no cause of action since the parties have no
contractual relationship; (2) private respondents failed to exhaust all administrative remedies; (3) the claim
was barred by laches; (4) the claim had already been paid in full since the subject benefits were already
integrated into the basic salaries of private respondents; and (5) the De Jesus case did not invalidate the
mandatory consolidation of allowances and compensation of government employees.
The appellate court dismissed the petition and thus affirmed that the complaint stated a cause of action. First,
it ruled that while the complaint is labeled as an action for specific performance thereby giving the impression
that it is based on contract, a close reading of its allegations reveals that the action is based on law,
particularly Section 1213 of Rep. Act No. 6758. In determining the sufficiency of a cause of action, only the
facts alleged in the complaint and no other should be considered. Thus, it is the body of the complaint and not
its title which defines a cause of action. Second, it held that private respondents have sufficiently alleged in
their complaint facts constituting the elements of a cause of action: (1) that they are entitled to the subject
benefits under Rep. Act No. 6758; (2) that petitioner is bound by said law to pay the subject benefits; and (3)
that petitioner has refused to pay said benefits. Third, it declared that the doctrine of exhaustion of
administrative remedies does not apply since private respondents claim to the subject benefits involves a
purely legal issue. Fourth, it noted that private respondents made several demands on petitioner to pay the
subject benefits but they were compelled to commence legal action only after petitioner refused to heed their
demands. Hence, they are not barred by laches since they have not slept on their rights.
In sum, the appellate court ruled that public respondent judge did not commit grave abuse of discretion in
denying petitioners motion to dismiss. The decretal portion of the decision reads:
WHEREFORE, for lack of merit, the instant petition is DENIED due course and, accordingly, DISMISSED. The
assailed order of the Regional Trial Court of Cagayan (Tuguegarao, Branch 5) dated May 13, 2003 is hereby
AFFIRMED.
SO ORDERED.14
In the present petition, petitioner submits these issues for our consideration:
I.

THERE WAS NO CAUSE OF ACTION, ABSENT A BINDING CONTRACT BETWEEN THE


PETITIONER AND THE PRIVATE RESPONDENTS.
II.
THE ACTION FOR SPECIFIC PERFORMANCE IS CAPABLE OF PECUNIARY ESTIMATION.
THERE WAS NO CAUSE OF ACTION BECAUSE THE PRIVATE RESPONDENTS FAILED AND
OMITTED TO QUANTIFY THE AMOUNTS OF THEIR RESPECTIVE CLAIMS. ALSO, THE COURT
DID NOT ACQUIRE JURISDICTION OVER THE CASE DUE TO NON-PAYMENT OF DOCKET
FEES.
III.
THE PRIVATE RESPONDENTS EXPRESSLY ADMITTED THAT THEIR COLA, AMELIORATION
ALLOWANCE AND EQUITY PAY WERE ALREADY PAID THRU SALARY INTEGRATION BY
VIRTUE OF BOARD RESOLUTION NO. 89-055 AND 90-002.
IV.
THE INTEGRATION OR CONSOLIDATION OF THE COLA, AMELIORATION ALLOWANCE AND
EQUITY PAY IS MANDATED BY SECTION 12 OF R.A. [NO.] 6758, NOTWITHSTANDING THE DE
JESUS RULING DECLARING THE NULLITY OF DBM CIRCULAR NO. 10 DUE TO NONPUBLICATION.
V.
THE ISSUE INVOLVED IN THE CASE IS NOT PURELY LEGAL AND THE PRIVATE
RESPONDENTS HAVE NOT EXHAUSTED ALL ADMINISTRATIVE REMEDIES IN THE
DEPARTMENT OF BUDGET AND MANAGEMENT.
VI.
THE CLAIM OF THE PRIVATE RESPONDENTS ARE DEEMED TO [HAVE] BEEN ABANDONED
AND ARE NOW BARRED BY LACHES AFTER A PERIOD OF INACTION FOR MORE THAN 14
YEARS.15
Petitioner contends that a complaint for specific performance implies that the basis is a contractual
relationship between the parties. In this case, private respondents failed to make any allegation, much less
produce any evidence, to support the existence of any express contract with petitioner. Thus, the complaint
should have been dismissed outright for lack of or failure to state a cause of action. Petitioner adds that
private respondents failed to specify the amounts they are claiming although the same were capable of
pecuniary estimation. In that way, they were able to avoid the payment of the correct docket fees, which is
also a ground to dismiss their complaint. Petitioner also argues that private respondents themselves admitted
that their COLA, amelioration allowance and equity pay were already paid through salary integration.
Moreover, the validity of Rep. Act No. 6758 and the integration of the COLA, amelioration allowance and
equity pay in private respondents salaries remained valid notwithstanding the De Jesus ruling. Petitioner
further argues that the issues in this case are not purely legal and private respondents have not exhausted all
administrative remedies. Finally, petitioner posits that private respondents claims are deemed to have been
abandoned and barred by laches after a period of inaction for more than 14 years.

- versus - Sandoval-Gutierrez,
Corona,
Carpio Morales,* and
Garcia, JJ
SANDIGANBAYAN and
REPUBLIC OF THE Promulgated:
PHILIPPINES,
Respondents. October 18, 2004

Private respondents counter that the present petition is improper since it seeks to reverse the decision of the
Court of Appeals on questions of law which is not covered by Rule 65. Further, the issues raised have already
been passed upon by the appellate court, some of which are defenses which should be threshed out during
the trial proper. In any event, private respondents insist that their complaint stated a cause of action since it
sought to compel petitioner to pay their COLA, amelioration allowance and equity pay.1avvphi1.net
Notwithstanding petitioners formulation of six issues, we only have to resolve one issue, i.e., whether the
Court of Appeals gravely erred and abused its discretion when it affirmed public respondent judges order
denying petitioners motion to dismiss. The appellate court upheld the public respondent judges ruling that the
complaint stated a cause of action.
Section 1,16 Rule 8 of the Rules of Court requires the complaint to contain a plain, concise and direct
statement of the ultimate facts upon which the plaintiff bases his claim. A fact is essential if it cannot be
stricken out without leaving the statement of the cause of action inadequate. A complaint states a cause of
action only when it has its three indispensable elements, namely: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the
right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may
maintain an action for recovery of damages.17
These elements are present in the case at bar. Private respondents have sufficiently alleged in their complaint
that (1) they are entitled to the subject benefits under Rep. Act No. 6758; (2) petitioner is bound by said law to
pay the subject benefits; and (3) petitioner has refused to pay said benefits.
Although the complaint is labeled as an action for specific performance thereby giving the impression that it is
based on contract, the allegations therein reveal that the action is based on law, i.e., Rep. Act No. 6758. We
have ruled that the cause of action is determined from the allegations of a complaint, not from its
caption.18 Moreover, the focus is on the sufficiency, not the veracity, of the material allegations. The
determination is confined to the four corners of the complaint and nowhere else. 19
We need not pass upon the other issues raised by petitioner since the same are matters best threshed out in
a hearing on the merits. Reason dictates that the parties proceed with the trial where they can present their
respective evidence.
Everything considered, there was no grave abuse of discretion by the Court of Appeals when it affirmed public
respondent judges order denying petitioners motion to dismiss.
WHEREFORE, the Decision dated January 27, 2005 and the Resolution dated August 4, 2005 of the Court of
Appeals in CA-G.R. SP No. 77773 are AFFIRMED. Accordingly, the Regional Trial Court of Tuguegarao City,
Cagayan, Branch 5, is hereby DIRECTED to continue with the proceedings in Civil Case No. 6123 and decide
the said case with dispatch.
No pronouncement as to costs. SO ORDERED.

HEIRS OF GREGORIO LICAROS; G.R. No. 157438


namely, CONCEPCION B. LICAROS
and ABELARDO B. LICAROS, Present:
Petitioners,
Panganiban, J.,
Chairman,

Basic is the rule that only the allegations of a complaint may be used to determine whether a
cause of action is being pleaded. Whether these are true or false is unimportant at this point. The
test is, assuming the allegations to be true, can a valid judgment, as prayed for by the plaintiff, be
rendered by the court? If so, then the complaint states a cause of action.
* On leave.
In the present case, the Second Amended Complaint contains sufficient allegations to implicate
Gregorio S. Licaros in an alleged conspiracy to accumulate ill-gotten wealth. The contentions that
his acts were done in good faith, or by the Monetary Board are matters of defense that cannot
abate the Complaint upon a motion to dismiss.
The Case
Before the Court is a Petition for Certiorari[1] under Rule 65 of the Rules of Court, seeking to
nullify the August 13, 2002[2] and the February 6, 2003[3] Resolutions of the Sandiganbayan in
Civil Case No. 0005. The decretal portion of the first assailed Resolution reads:
WHEREFORE, for lack of merit, the motion to dismiss is hereby DENIED.[4]
The second challenged Resolution denied petitioners Motion for Reconsideration.
The Facts
Gregorio S. Licaros, petitioners predecessor-in-interest, served as governor of the Central Bank of
the Philippines from 1970 to 1980, during the incumbency of then President Ferdinand E. Marcos.
He died on August 3, 1983.
On July 17, 1987, the Republic of the Philippines -- through the Presidential Commission on Good
Government (PCGG), assisted by the Office of the Solicitor General (OSG) -- filed a Complaint for
reversion, reconveyance, restitution, accounting and damages against former President Marcos
and his alleged crony, Lucio C. Tan. The Complaint, docketed as Sandiganbayan Case No. 0005,
summed up the nature of the action as follows:

x x x. This is a civil action against Defendants Lucio C. Tan, Ferdinand E. Marcos, Imelda R.
Marcos and the rest of the Defendants to recover from them ill-gotten wealth consisting of funds
and other property which they, in unlawful concert with one another, had acquired and
accumulated in flagrant breach of trust and of their fiduciary obligations as public officers, with
grave abuse of right and power and in brazen violation of the Constitution and laws of the Republic
of the Philippines, thus resulting in their unjust enrichment during Defendant Ferdinand E. Marcos
20 years of rule from December 30, 1965 to February 25, 1986, first as President of the
Philippines under the 1935 Constitution and, thereafter, as one-man ruler under martial law and
Dictator under the 1973 Marcos-promulgated Constitution.[5]
Aside from the main defendants (Marcos, his wife Imelda R. Marcos, and Tan), twenty-three other
persons -- who had purportedly acted as their dummies, nominees or agents -- were likewise
impleaded in the Complaint. It alleged, among others, that Tan -- with the connivance of some
government officials, including Central Bank Governor Gregorio S. Licaros -- had fraudulently
acquired the assets of the General Bank and Trust Company (GBTC), now known as the Allied
Bank. A pertinent portion of the Complaint reads thus:
SPECIFIC AVERMENTS OF DEFENDANTS ILLEGAL ACTS
13. Defendant Lucio C. Tan, by himself and/or in unlawful concert with Defendants Ferdinand E.
Marcos and Imelda R. Marcos, and taking undue advantage of his relationship and influence with
Defendant spouses, among others:
(a) without sufficient collateral and for a nominal consideration, with the active collaboration,
knowledge and willing participation of Defendant Willy Co, arbitrarily and fraudulently acquired
control of the General Bank and Trust Company which eventually became Allied Banking
Corporation, through then Central Bank Governor Gregorio Licaros x x x.[6] (Emphasis supplied)
Despite the allegation, Licaros was not impleaded in this Complaint or in the subsequent
Expanded Complaint.
On September 13, 1991, four years after the filing of the original action,[7] the Republic filed a
Motion for Leave to Amend Complaint and for Admission of a Second Amended Complaint, which
impleaded the Estate/Heirs of Licaros for the first time. The Amended Complaint, reiterating earlier
allegations in the Expanded Complaint, detailed Licaros participation in the alleged unholy
conspiracy as follows:

SPECIFIC AVERMENTS OF DEFENDANTS ILLEGAL ACTS


14. Defendant Lucio C. Tan, by himself and/or in unlawful concert with Defendants Ferdinand E.
Marcos and Imelda R. Marcos, taking undue advantage of his relationship and influence with
Defendant spouses, and embarking upon devices, schemes and strat[a]gems, including the use of
Defendant Corporations, among others: (a) without sufficient collateral and for a nominal
consideration, with the active collaboration, knowledge and willing participation of Defendant Willy
Co, arbitrarily and fraudulently acquired control of the General Bank and Trust Company (GBTC)
which eventually became Allied Banking Corporation. Through the manipulation of then Central
Bank Governor Gregorio Licaros and of then President Panfilo O. Domingo of the Philippine
National Bank (PNB), as shown by, but not limited to the following circumstances:
(1) In 1976, the General Bank and Trust Company, (GBTC for short) got into financial difficulties.
The Central Bank then extended an emergency loan to GBTC reaching a total of P310 million. In
extending this loan, the CB, however, took control of GBTC when the latter executed an
irrevocable Proxy of 2/3 of GBTCs outstanding shares in favor of the CB and 7 of the 11-member
Board of Directors were CB nominees. Subsequently, on March 25, 1977, the Monetary Board of
CB issued a Resolution declaring GBTC insolvent, forbidding it to do business and placing it under
receivership.
(2) In the meantime, a public bidding for the sale of GBTC assets and liabilities was scheduled at
7:00 P.M. on March 28, 1977. Among the conditions of the bidding were: (a) submission by the
bidder of Letter of Credit issued by a bank acceptable to CB to guaranty payment or as collateral
of the CB emergency loan; and (b) a 2-year period to repay the said CB emergency loan. On
March 29, 1977, CB thru a Monetary Board Resolution, approved the bid of the group of Lucio Tan
and Willy Co. This bid, among other things, offered to pay only P500,000.00 for GBTC assets
estimated at P688,201,301; Capital Accounts of P103,984,477.55; Cash of P25,698,473.00; and
the takeover of the GBTC Head Office and branch offices. The required Letter of Credit was not
also attached to the bid. What was attached to the bid was a letter of Defendant Panfilo O.
Domingo as PNB President promising to open an irrevocable letter of credit to secure the
advances of the Central Bank in the amount of P310 Million. Without this letter of commitment, the
Lucio Tan bid would have not been approved. But such letter of commitment was a fraud because
it was not meant to be fulfilled. Defendants Ferdinand E. Marcos, Gregorio Licaros and Panfilo O.
Domingo conspired together in giving the Lucio Tan group undue favors such as the doing away
with the required irrevocable letter of credit, the extension of the term of payment from two years
to five years, the approval of the second mortgage as collateral for the Central Bank advances
which was deficient by more than P90 Million, and other concessions to the great prejudice of the
government and of the GBTC stockholders.[8]

THE PARTIES
5a. Former Central Bank Governor Licaros, now deceased, had facilitated the fraudulent
acquisition of the assets of General Bank and Trust Company (GBTC) worth over P688 Million at
that time, to favor the Marcoses and the Lucio Tan Group who acquired said GBTCs assets for a
measly sum of P500,000.00. Hence, his Estate represented by his heirs must be impleaded as a
party defendant for the purpose of obtaining complete relief. The said heirs may be served with
summons and other court processes at Home Bankers Trust, 105 Paseo de Roxas, Makati, Metro
Manila.

The Amended Complaint restated the same causes of action originally appearing in the initial
Complaint: (1) abuse of right and power in violation of Articles 19, 20 and 21 of the Civil Code; (2)
unjust enrichment; (3) breach of public trust; (4) accounting of all legal or beneficial interests in
funds, properties and assets in excess of lawful earnings and income; and (5) actual, moral,
temperate, nominal and exemplary damages.

On September 3, 2001, the heirs of Licaros filed a Motion to Dismiss the Complaint. Essentially, it
raised the following grounds therefor: (1) lack of cause of action and (2) prescription. On October
12, 2001, the Republic filed its Opposition to the Motion.
Ruling of the Sandiganbayan
The Sandiganbayan held that the averments in the Second Amended Complaint had sufficiently
established a cause of action against former Central Bank Governor Licaros. Ruled untenable was
the argument of petitioners that he could not be held personally liable, because the GBTC assets
had been acquired by Tan through a public bidding duly approved by the Monetary Board.
According to the anti-graft court, this argument was a matter of defense that could not be resorted
to in a motion to dismiss, and that did not constitute a valid ground for dismissal.
It was immaterial that Licaros was not a business associate of the main defendants; and not an
officer, a director, or a stockholder of any of the defendant corporations. The paramount issue
hinged on his acts as Central Bank governor, particularly his participation in an allegedly illegal
conspiracy with Marcos and Domingo to give undue advantage to Tans bid for the GBTC assets.
The Sandiganbayan also brushed aside the claim of petitioners that the action against Licaros had
already prescribed. It pointed to Section 15 of Article XI of the 1987 Constitution, which mandated
that [t]he right of the State to recover properties unlawfully acquired by public officials or
employees, from them or from their nominees or transferees, shall not be barred by prescription,
laches or estoppel.
Hence, this Petition.[9]
Issues
In their Memorandum, petitioners raise the following issues[10] for our consideration:
A. Whether or not the Second Amended Complaint states a cause of action against petitioners.
B. Whether or not the Second Amended Complaint is barred by prescription and laches.
C. Whether or not Respondent Court has jurisdiction to determine the validity of the liquidation of
General Bank and Trust Company (GENBANK or GBTC) and its acquisition by the Lucio Tan
group and the consequent culpability of the late Central Bank Governor Licaros in view of the
pendency of the issues in G.R. No. 152551 (General Bank and Trust Co. versus Central Bank of
the Philippines, et. al.).[11]
The Courts Ruling
The Petition has no merit.
First Issue: Cause of Action

A cause of action exists if the following elements are present: (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 and not to violate that right; and (3) an act or omission constituting a
breach of obligation of the defendant to the plaintiff or violating the right of the plaintiff, for which
the latter may maintain an action for recovery of damages.[12]
The allegations in the Second Amended Complaint clearly and unequivocally outlines its cause of
action against Defendant Licaros as follows:
The wrongs committed by Defendants, acting singly or collectively and in unlawful concert with
one another, include the misappropriation and theft of public funds, plunder of the nations wealth,
extortion, blackmail, bribery, embezzlement and other acts of corruption, betrayal of public trust
and brazen abuse of power, as more fully described below, all at the expense and to the grave and
irreparable damage of the plaintiff and the Filipino people.
Former Central Bank Governor Gregorio Licaros, now deceased, had facilitated the fraudulent
acquisition of the assets x x x General Bank and Trust Company (GBTC) worth over P688-Million
at that time, to favor the Marcoses and the Lucio Tan group who acquired said GBTCs assets for a
measly sum of P500,000.00. Hence, his Estate represented by his heirs must be impleaded as a
party defendant for the purpose of obtaining complete relief.[13]

The Second Amended Complaint was unambiguous when it charged that Licaros, during his
lifetime, had conspired with the main defendants -- particularly former President Ferdinand E.
Marcos, Imelda R. Marcos, Lucio Tan and Philippine National Bank President Panfilo O. Domingo
-- in facilitating the allegedly questionable transfer of the GBTC assets to Tan.
This charge of conspiracy casts a wide net, sufficiently extensive to include all acts and all
incidents incidental, related to or arising from the charge of systematic plunder and pillage against
the main defendants in Sandiganbayan Case No. 0005. The assailed role of Licaros as Central
Bank governor in the questioned GBTC deal is not excluded therefrom. If proven, the allegation of
conspiracy may make him liable with his co-defendants.
The alleged conspiracy to defraud the Republic put the case against the Estate/Heirs of Licaros
squarely under the exclusive jurisdiction of the Sandiganbayan. Said the Court:
Under Section 2 of the Presidents Executive Order No. 14 issued on May 7, 1986, all cases of the
Commission regarding the Funds, Moneys, Assets and Properties Illegally Acquired or
Misappropriated by Former President Ferdinand Marcos, their close Relatives, Subordinates,
Business Associates, Dummies, Agents or Nominees whether civil or criminal are lodged with the
exclusive and original jurisdiction of the Sandiganbayan and all incidents arising from, incident to,
or related to, such cases necessarily fall likewise under the Sandiganbayans exclusive and original
jurisdiction, subject to the review on certiorari exclusively by the Supreme Court.[14] (Emphasis
supplied)

No Ground to Dismiss the Amended Complaint.


In Virata v. Sandiganbayan,[15] a similar case for reconveyance, reversion, accounting and
restitution of the allegedly hidden loot of the Marcos regime, this Court denied petitioners prayer
for the dismissal of the Expanded Complaint, insofar as it had impleaded him. Applicable to the
instant case is our pronouncement therein:
The essential elements of a cause of action are a legal right of the plaintiff, a correlative obligation
of the defendant, and an act or omission of the defendant violative of said legal right. The test of
sufficiency of the facts to constitute a cause of action is whether or not, admitting the facts alleged,
the court could render a valid judgment upon the same in accordance with the prayer. As stated in
Adamos vs. J.M. Tuason & Co., Inc., (25 SCRA 529), It is a well-settled rule that in a motion to
dismiss based on the ground that the complaint fails to state a cause of action, the question
submitted to the court for determination is the sufficiency of the allegations in the complaint itself.
Whether these allegations are true or not is beside the point, for their truth is hypothetically
admitted. The issue rather is: admitting them to be true, may the court render a valid judgment in
accordance with the prayer in the complaint? So rigid is the norm prescribed that if the court
should doubt the truth of the facts averred, it must not dismiss the complaint but require an answer
and proceed to hear the case on the merits.[16]
Starkly similar to the foregoing discussion, the herein petitioners are seeking the dismissal of the
present case, because (1) the actions imputed to Licaros as Central Bank governor were allegedly
official acts of the members of the Monetary Board acting as a collegial body; and (2) the
acquisition was done through a public bidding and in good faith. These contentions are evidently
matters of defense, the veracity of which must be determined in a full-blown trial (or in a pretrial
stipulation), and not in a mere motion to dismiss.
Second Issue: Prescription
The instant action for reconveyance, restitution, and accounting impleads the Estate/Heirs of
Gregorio Licaros for previous acts committed by the decedent during his lifetime, more particularly
for conspiring with the main defendants to prejudice the Republic. An action to recover ill-gotten
wealth is outside the purview of the ordinary rules on prescription, as contained in Article 1146 of
the Civil Code.[17] Section 15 of Article XI of the 1987 Constitution states:

jurisdiction when it issued the assailed Resolutions denying, for lack of merit, petitioners Motion to
Dismiss.
Third Issue: Pendency of GR No. 152551 Inconsequential
Petitioners further argue that in not dismissing the Complaint against Licaros for his acts as
Central Bank governor, the anti-graft court is in effect passing judgment on the validity of the
liquidation of the GBTC and its acquisition by the Lucio Tan group. They contend that the Second
Amended Complaint, insofar as it had impleaded Licaros, was clearly pushed beyond the
Sandiganbayans jurisdiction, as the issue is presently being raised in GR No. 152551 (General
Bank and Trust Co. v. Central Bank of the Philippines et al.), pending before this Court.
Suffice it to say that, having established the jurisdiction of the Sandiganbayan over the Second
Expanded Complaint and without prejudging the merits of the aforementioned case, this Court
believes, and so holds, that a further discussion of this third alleged error raised by petitioners is
no longer necessary.
Epilogue
This Court is as interested as the government in recovering ill-gotten wealth. We commend the
present leadership of both the PCGG and the OSG for their demonstrated zeal in prosecuting this
case. Asking only for an extended period of 40 days, the Office of the Solicitor General has filed its
Comment and Memorandum within record time.[18] Petitioners are also to be lauded for their
timeliness in filing their Reply and Memorandum,[19] which manifest a candid intent to settle the
issues raised and not to delay unduly the resolution of Sandiganbayan Case No. 0005.
The conduct of both parties in the foregoing case has made it possible for the Court to dispose of
the matter in less than a year after the last pleading was filed. Such conduct should characterize
the ideal that must be aspired for by parties involved in cases of ill-gotten wealth, when they
prosecute and defend their causes before the courts -- with utmost dispatch.

The intendment of the foregoing constitutional provision -- exempting actions to recover ill-gotten
wealth from the operation of the general rules of prescription -- presumably lies in the special
attendant circumstances and the primordial state interests involved in cases of such nature.

The Court, however, cannot ignore earlier lapses, particularly the past lackadaisical prosecution of
the present case. The voluminous records show that while the original Complaint had been filed
on August 20, 1987, and subsequently expanded in 1988 to include additional and more specific
allegations, it was only in 1991 -- or more than four years later -- when it was amended to include
as party-defendants Gregorio Licaros, his heirs and his estate. No new evidence had surfaced
within the interim period to justify their belated inclusion. The Amended Complaint was, in
essence, a rehash of the earlier Expanded Complaint. While the rules allow amendments, they
must be made on just and reasonable grounds. An amendment is unwarranted if it involves facts
already within the knowledge of the plaintiffs at the time of the filing of the original action;
otherwise, the protracted trial involving the allegedly ill-gotten wealth of Marcos -- almost twenty
years in the running -- may further stretch unreasonably with no end in sight.

From the preceding discussion, it is clear that any action involving the recovery of unlawfully
acquired properties against Licaros or his transferees, may not be deemed to have prescribed.
The language of the Constitution, the law and the Rules of Court is clear and unequivocal. Clearly,
the Sandiganbayan did not commit any grave abuse of discretion amounting to lack or excess of

More incredibly, from the time the Second Amended Complaint was filed in 1991, it took the then
PCGG and the then OSG ten long years to cause the service of summons on the heirs of Gregorio
Licaros.[20] The OSG cannot, as it did in its Memorandum, so cavalierly dismiss the delay by
conveniently pointing to the clerk of court as the official who had the duty to issue summonses to

Section 15. The right of the State to recover properties unlawfully acquired by public officials or
employees, from them or from their nominees or transferees, shall not be barred by prescription,
laches or estoppel.

the defendants. While indeed the Rules of Court entrusts that task to the clerk of court, it
behooved the plaintiff to ascertain and inform the court where the summons could be served.
As manifested in the present Petition, Mrs. Concepcion Licaros, the widow of Gregorio S. Licaros,
has been living at 802 Harvard Street, Mandaluyong City, to this day. The same address appears
on both the private and the official records of the deceased -- particularly on his Death Certificate,
[21] which respondents could have obtained with facility. That it took the then OSG all of ten years
just to cause the service of summons on the Licaros heirs is certainly dismaying.
After nearly twenty years, the commitment to exorcise the specter of the bygone dictatorship, a
resolve that was forged on the streets of EDSA in 1986, may have sadly been lost to memory.
Those who are tasked to undo past wrongs and transgressions are exhorted to tenaciously and
steadfastly keep the resolve alive, so that our people could at last put a closure to this dark
chapter in our history, avoid the same thorny path, and move forward in the quest for our nations
destiny.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED.
Costs against petitioners.

NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B. BUENA, EUSEBIA V. TABLADA, CANUTO


G. TISBE, DAVID R. CARULLO, SOFONIAS E. COLEGADO, FELIX B. BUENA, TORIBIO C.
EVANGELISTA, LEBRADA A. NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS REYES, SALVADOR I. DE
LA TORRE, MOISES CRUZ, RUFINO INFANTE, ALICIA ASTROLOGO, TRINIDAD LUMIQUED,
LUZMINIDA QUINIQUINI, & TEODORA C. TEMERAS, petitioners, vs. CARMELINO M.
SANTIAGO, respondent.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray for the reversal of the Decision
of the Court of Appeals in CA-G.R. CV No. 64957,[1] affirming the Order of the Regional Trial Court (RTC) of
San Mateo, Rizal, Branch 77, in Civil Case No. 1220,[2] dismissing petitioners Complaint for declaration of
nullity of Original Certificate of Title (OCT) No. 670 and all other titles emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels of land, located in Sitio
Panayawan, Barangay San Rafael, Montalban (now Rodriquez), Province of Rizal (Subject Property), by
virtue of several Deeds of Assignment, dated 15 April 1994 and 02 June 1994, executed by a certain Ismael
Favila y Rodriguez.[3]
According to the Deeds of Assignment, the Subject Property was part of a vast tract of land called Hacienda
Quibiga, which extended to Paraaque, Las Pias, Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig,
Mandaluyong, Quezon City, Caloocan, Bulacan, and Rizal; awarded to Don Hermogenes Rodriguez by the
Queen of Spain and evidenced by a Spanish title. Ismael Favila claimed to be one of the heirs and
successors-in-interest of Don Hermogenes Rodriguez. Acting as Attorney-in-Fact pursuant to a Special Power
of Attorney executed by his mga kapatidon 25 February 1965, Ismael Favila signed the aforementioned Deeds
of Assignment, assigning portions of the Subject Property to the petitioners, each portion measuring around
500 to 1,000 square meters, in exchange for the labor and work done on the Subject Property by the
petitioners and their predecessors.[4]
Petitioners came by information that respondent was planning to evict them from the Subject Property. Two of
the petitioners had actually received notices to vacate. Their investigations revealed that the Subject Property
was included in Transfer Certificates of Titles (TCTs) No. 53028, No. 281660, No. N-39258 and No. 205270,
all originating from OCT No. 670, and now in the name of respondent. [5]
OCT No. 670 was issued in the name of respondents mother, Isabel Manahan y Francisco, and three other
individuals, pursuant to Decree No. 10248, dated 13 February 1913, in Case No. 8502 of the Court of Land
Registration of the Philippine Islands. The whole property covered by OCT No. 670 was subsequently
adjudicated in favor of Isabel Manahan Santiago (formerly Isabel Manahan y Francisco). Consequently, OCT
No. 670 was cancelled and TCT No. T-53028 was issued exclusively in the name of Isabel Manahan
Santiago. On 28 December 1968, Isabel Manahan Santiago executed a Deed of Donation transferring the
property to her son, respondent herein, who subsequently secured TCTs No. 281660, No. N-39258 and No.
205270 in his own name.[6]

[G.R. No. 157447. April 29, 2005]

Petitioners filed with the trial court, on 29 April 1996, an action for declaration of nullity of respondents
certificates of title on the basis that OCT No. 670 was fake and spurious. Among the defects of OCT No. 670
pointed out by petitioners were that: (1) OCT No. 670 was not signed by a duly authorized officer; (2) Material
data therein were merely handwritten and in different penmanships; (3) OCT No. 670 was not printed on the

Official Form used in 1913, the year it was issued; (4) It failed to indicate the Survey Plan which was the basis
of the Technical Description of the property covered by the title; (5) Decree No. 10248 referred to in OCT No.
670 was issued only on 11 April 1913, while OCT No. 670 was issued earlier, on 13 February 1913; and (6)
Decree No. 10248 was issued over a property other than the one described in OCT No. 670, although also
located in the Province of Rizal.[7]
Respondent filed his Answer with Prayer for Preliminary Hearing on the Affirmative Defenses on 03 July 1996.
According to respondent, [t]he allegations in the Complaint would readily and patently show that the same are
flimsy, fabricated, malicious, without basis in law and in fact [8]
As an affirmative defense, respondent claimed that the petitioners had no legal capacity to file the Complaint,
and thus, the Complaint stated no cause of action. Since OCT No. 670 was genuine and authentic on its face,
then OCT No. 670 and all of respondents land titles derived therefrom, are incontrovertible, indefeasible and
conclusive against the petitioners and the whole world.[9]
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M. Muoz, et al. and
Pinagcamaligan Indo-Agro Development Corporation v. Hon. Macario Peralta, Jr., et al., [10]respondent argued
that the Spanish title, on which petitioners based their claim, was neither indefeasible nor imprescriptible.
Moreover, Presidential Decree (P.D.) No. 892, which took effect on 16 February 1976, required all holders of
Spanish titles or grants to apply for registration of their lands under Republic Act No. 496, otherwise known as
the Land Registration Act,[11] within six months from effectivity of the decree. After the given period, Spanish
titles could no longer be used as evidence of land ownership in any registration proceedings under the Torrens
System. [12]
Respondent also raised the affirmative defense of prescription. He pointed out that any action against his
certificates of title already prescribed, especially with regard to OCT No. 670, which was issued in 1913 or
more than 83 years prior to the filing of the Complaint by the petitioners. At the very least, respondent
contended, it must be presumed that the questioned land titles were issued by the public officials concerned in
the performance of their regular duties and functions pursuant to the law.[13]
Even assuming arguendo that the petitioners entered and occupied the Subject Property, they did so as mere
intruders, squatters and illegal occupants, bereft of any right or interest, since the Subject Property was
already covered by Torrens certificates of title in the name of respondent and his predecessors-in-interest. [14]
Lastly, respondent denied knowing the petitioners, much less, threatening to evict them. In fact, petitioners
were not included as defendants in Civil Case No. 783 entitled, Carmelino M. Santiago v. Remigio San
Pascual, et al., which respondent instituted before the same trial court against squatters occupying the
Subject Property. In its decision, dated 01 July 1992, the trial court held that there is no doubt that the plaintiff
(respondent herein) is the owner of the land involved in this case on which the defendants have built their
houses and shanties Although the decision in Civil Case No. 783 was appealed to the Court of Appeals, it had
become final and executory for failure of the defendants-appellants therein to file their appellants brief. [15]
In the instant case, the trial court held a preliminary hearing on the affirmative defenses as prayed for by the
respondent. During said hearing, petitioners presented their lone witness, Engineer Placido Naval, a
supposed expert on land registration laws. In response to questions from Honorable Judge Francisco C.
Rodriguez of the trial court, Engineer Naval answered that a parcel of land titled illegally would revert to the
State if the Torrens title was cancelled, and that it was the State, through the Office of the Solicitor General,
that should file for the annulment or cancellation of the title. Respondent, on the other hand, did not present
any evidence but relied on all the pleadings and documents he had so far submitted to the trial court. [16]

After the preliminary hearing, the trial court issued the questioned Order, dated 05 February 1999, dismissing
petitioners Complaint. Pertinent portions of the Order of the trial court read:
After considering the testimonial and documentary evidence presented, this Court is inclined not to grant
plaintiffs (sic) prayer. Finding credence and giving weight to plaintiffs (sic) lone but expert witness, it is crystal
clear that, to quote:
1. a parcel of land titled illegally will revert to the State
2. it is the State who must file the corresponding case of annulment of title through the Office of the Solicitor
General, and
3. a land illegally titled in the name of private individual, the State through the Office of the Solicitor General
should file the corresponding case for cancellation of title. (TSN August 26, 1997).
The above quoted testimony is straight from horse (sic) mouth so to speak as this was the testimony of the
plaintiffs (sic) expert witness. And judging from the said testimony alone aforecited, plaintiffs (sic) cause [of
action] is bound to fail. Plaintiffs (sic) own testimony wrote finis to their case. From the record, this case was
initiated and filed by private individuals, Nemencio Evangelista, et. al., contradicting their witness (sic)
testimony. To reiterate, this Court finds credence to the testimony of the plaintiffs (sic) witness, i.e., is (sic) the
State through the Office of the Solicitor General who must initiate and file a case of this nature when title to a
land is being claimed to be obtained through fraud and allegedly spurious.
The opinion of this Court anent the testimony of the witness is not without basis. Explicit is the pronouncement
of the Supreme Court in the recent case of Heirs of Marciano Nagano v. Court of Appeals, to wit:
An action for reversion has to be instituted by the Solicitor General pursuant to Section 101, Commonwealth
Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the Deed of Assignment/s purportedly executed by
and between a certain Ismael Favila y Rodriguez and the plaintiffs, which is the principal if not the only basis
of plaintiffs claim ownership and possession of the subject parcel of land, the same does not hold water in a
manner of speaking, for being self-serving. Assignor Ismael Favila y Rodriguez claimed in said Deed that he is
the Attorney-in-Fact by virtue of an alleged Special Power of Attorney executed in his favor by his mga kapatid
on February 23, 1965, but said Special Power of Attorney was not presented before this Court, thus there
arises a doubt as to its existence and execution not to mention doubt on the existence of his mga kapatid who
as alleged executed said Special Power Attorney (sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of said Deeds of Assignment/s, that will not
alter the outcome of the pending incident/s before this Court. Why? Because the said Deed of Assignment/s
which were based on Spanish title have lost their evidentiary value pursuant to the Presidential Decree No.
892 i.e. DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF REGISTRATION AND OF THE
USE OF SPANISH TITLES AS EVIDENCE IN LAND REGISTRATION PROCEEDINGS.
There is no need to elaborate on the above-cited provisions of PD 892 as they are self-explanatory. Suffice it
to say that there is no showing, that plaintiffs complied with the said law i.e. to apply for registration of their
lands under Act No. 496, otherwise known as the Land Registration Act, within six (6) months from the
effectivity of this decree (February 16, 1976). Thereafter, Spanish titles cannot be used as evidence of land
ownership in any registration proceedings under the Torrens System.

This being the case and likewise being clear that plaintiffs were not the lawful owners of the land subject of
this case, for they did not comply with PD 892, the said plaintiffs do not have the legal standing to bring before
this Court the instant complaint

different affirmative defenses. Failure to distinguish between the lack of legal capacity to sue from the lack of
personality to sue is a fairly common mistake. The difference between the two is explained by this Court
in Columbia Pictures, Inc. v. Court of Appeals:[25]

Moreover, the principal issue in this case is for the declaration of nullity of defendants title, which has nothing
to do with plaintiffs (sic) claim of ownership and possession even if we set aside, albeit momentarily, the truth
that plaintiffs (sic) claim were based on barred Spanish Title/s, and thus plaintiffs were never the owners of the
parcel of land subject of this case.

Among the grounds for a motion to dismiss under the Rules of Court are lack of legal capacity to sue and that
the complaint states no cause of action. Lack of legal capacity to sue means that the plaintiff is not in the
exercise of his civil rights, or does not have the necessary qualification to appear in the case, or does not have
the character or representation he claims. On the other hand, a case is dismissible for lack of personality to
sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of
action. The term "lack of capacity to sue" should not be confused with the term "lack of personality to sue."
While the former refers to a plaintiffs general disability to sue, such as on account of minority, insanity,
incompetence, lack of juridical personality or any other general disqualifications of a party, the latter refers to
the fact that the plaintiff is not the real party- in-interest. Correspondingly, the first can be a ground for a
motion to dismiss based on the ground of lack of legal capacity to sue; whereas the second can be used as a
ground for a motion to dismiss based on the fact that the complaint, on the face thereof, evidently states no
cause of action.

Further, defendants (sic) title especially so with the mother title OCT 670 was entered and issued in 1913 or
more than Eighty Three (83) years ago, the same not having been questioned by any party. Only now that it is
being questioned, but sad to say, plaintiffs who are on the offensive and relying on their lone expert witness,
instead of bolstering their case, unwittingly sealed their fate [17]
After the trial court denied petitioners Motion for Reconsideration in its Order, dated 20 July 1999,
[18]
petitioners appealed both Orders of the trial court to the Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002,[19] affirmed the Order of the trial court, dated 05
February 1999, dismissing petitioners Complaint. The Court of Appeals denied petitioners Motion for
Reconsideration in its Resolution, dated 14 February 2003.[20]
Thus, petitioners filed this Petition for Review [21] under Rule 45 of the Rules of Court, raising the following
issues and praying for the reversal of the aforementioned Decision of the Court of Appeals affirming the Order
of dismissal of the trial court:
I. Whether the lower courts dismissal of the petitioners complaint should be proscribed by the rules of
evidence it being based inter alia on Engr. Navals testimony, which was indisputably not based on facts but
conclusion of law.
II. Whether the lower courts dismissal of petitioners complaint should be proscribed by the rules of evidence it
being done sans ample evidence except bare allegations of respondent.
III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as evidence of land ownership in any
registration proceedings under the Torrens system, holds of an exception.
IV. Whether an action for quieting of title, specifically where petitioners are in possession of subject land, can
be subject of prescription.
In his Comment,[22] the respondent, for the most part, reiterated the findings of the trial court and the Court of
Appeals.
The Court believes that the trial court rightfully dismissed petitioners Complaint, but for reasons different from
those relied upon by the trial court and the Court of Appeals.
According to the respondent, petitioners had no legal capacity to file the Complaint, and thus, the Complaint
filed before the trial court stated no cause of action.
Before anything else, it should be clarified that the plaintiff has no legal capacity to sue [23] and the pleading
asserting the claim states no cause of action[24] are two different grounds for a motion to dismiss or are two

In the present case, this Court may assume that the respondent is raising the affirmative defense that the
Complaint filed by the petitioners before the trial court stated no cause of action because the petitioners
lacked the personality to sue, not being the real party-in-interest. It is the respondents contention that only the
State can file an action for annulment of his certificates of title, since such an action will result in the reversion
of the ownership of the Subject Property to the State.
The affirmative defense that the Complaint stated no cause of action, similar to a motion to dismiss based on
the same ground, requires a hypothetical admission of the facts alleged in the Complaint. In the case
of Garcon v. Redemptorist Fathers,[26] this Court laid down the rules as far as this ground for dismissal of an
action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint based on lack of cause of action, the
question submitted to the court for determination is the sufficiency of the allegations of fact made in the
complaint to constitute a cause of action, and not on whether these allegations of fact are true, for said motion
must hypothetically admit the truth of the facts alleged in the complaint; that the test of the sufficiency of the
facts alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid
judgment upon the same in accordance with the prayer of said complaint. Stated otherwise, the insufficiency
of the cause of action must appear in the face of the complaint in order to sustain a dismissal on this ground,
for in the determination of whether or not a complaint states a cause of action, only the facts alleged therein
and no other matter may be considered, and the court may not inquire into the truth of the allegations, and find
them to be false before a hearing is had on the merits of the case; and it is improper to inject in the allegations
of the complaint facts not alleged or proved, and use these as basis for said motion.
In resolving whether or not the Complaint in the present case stated a cause of action, the trial court should
have limited itself to examining the sufficiency of the allegations in the Complaint. It was proscribed from
inquiring into the truth of the allegations in the Complaint or the authenticity of any of the documents referred
or attached to the Complaint, since these are deemed hypothetically admitted by the respondent. The trial
court evidently erred in making findings as to the authenticity of the Deeds of Assignment executed by Ismael
Favila in favor of petitioners on 15 April 1994 and 02 June 1994; and questioning the existence and execution
of the Special Power of Attorney in favor of said Ismael Favila by his siblings on 25 February 1965. These
matters may only be resolved after a proper trial on the merits.

Petitioners alleged in their Complaint, and respondent hypothetically admitted that: (1) Petitioners
predecessors-in-interest, in the concept of owners, had been in actual, physical, open, continuous and
adverse possession of the Subject Property against the whole world since time immemorial; (2) The Subject
Property was part of the vast tract of land called Hacienda Quibiga awarded to Don Hermogenes Rodriguez
by the Queen of Spain by virtue of a Spanish title; (3) Ismael Favila, an heir and successor-in-interest of Don
Hermogenes Rodriguez, acting as Attorney-in-Fact pursuant to a Special Power of Attorney executed by
his mga kapatid on 25 February 1965, executed Deeds of Assignment covering the Subject Property in favor
of petitioners; (4) Petitioners still occupied and possessed the Subject Property, on which their houses were
erected, when they discovered that the Subject Property was already covered by Torrens certificates of title in
the name of respondent; and (5) That petitioners filed the Complaint to prevent their eviction by the
respondent. To determine whether these allegations are sufficient to constitute a cause of action, it is
important for this Court to establish first the nature of petitioners action.

In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,[30] the difference between an
action for declaration of nullity of land titles from an action for reversion was more thoroughly discussed as
follows:

Indeed, petitioners Complaint filed before the trial court was captioned as an action for declaration of nullity of
respondents certificates of title. However, the caption of the pleading should not be the governing factor, but
rather the allegations therein should determine the nature of the action, because even without the prayer for a
specific remedy, the courts may nevertheless grant the proper relief as may be warranted by the facts alleged
in the Complaint and the evidence introduced.[27]

On the other hand, a cause of action for declaration of nullity of free patent and certificate of title would require
allegations of the plaintiffs ownership of the contested lot prior to the issuance of such free patent and
certificate of title as well as the defendants fraud or mistake, as the case may be, in successfully obtaining
these documents of title over the parcel of land claimed by plaintiff. In such a case, the nullity arises strictly not
from the fraud or deceit but from the fact that the land is beyond the jurisdiction of the Bureau of Lands to
bestow and whatever patent or certificate of title obtained therefore is consequently void ab initio. The real
party-in-interest is not the State but the plaintiff who alleges a pre-existing right of ownership over the parcel of
land in question even before the grant of title to the defendant

The trial court believed that petitioners action was ultimately one for reversion of the Subject Property to the
public domain. Based on the testimony of Engineer Naval and the case of Nagao v. Court of Appeals,[28] it
declared that the State, represented by the Office of the Solicitor General, is the party-in-interest in an action
for cancellation of a certificate of title illegally issued in the name of a private individual, because the eventual
effect of such cancellation is the reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far closer review of its decision
in Nagao v. Court of Appeals,[29] wherein the Court held that
It is then clear from the allegations in the complaint that private respondents claim ownership of the 2,250
square meter portion for having possessed it in the concept of an owner, openly, peacefully, publicly,
continuously and adversely since 1920. This claim is an assertion that the lot is private land, or that even
assuming it was part of the public domain, private respondents had already acquired imperfect title thereto
under Section 48(b) of C.A. No. 141, otherwise known as the Public Land Act, as amended by R.A. No. 1942
Under Section 48, a subject lot is, for all legal intents and purposes, segregated from the public domain,
because the beneficiary is conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this chapter.
Consequently, merely on the basis of the allegations in the complaint, the lot in question is apparently beyond
the jurisdiction of the Director of the Bureau of Lands and could not be the subject of a Free Patent. Hence,
dismissal of private respondents complaint was premature and trial on the merits should have been conducted
to thresh out evidentiary matters.
It would have been entirely different if the action were clearly for reversion, in which case, it would have to be
instituted by the Solicitor General pursuant to Section 101 of C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the
name of the [Republic] of the Philippines.

An ordinary civil action for declaration of nullity of free patents and certificates of title is not the same as an
action for reversion. The difference between them lies in the allegations as to the character of ownership of
the realty whose title is sought to be nullified. In an action for reversion, the pertinent allegations in the
complaint would admit State ownership of the disputed land. Hence, in Gabila vs. Barriga [41 SCRA 131],
where the plaintiff in his complaint admits that he has no right to demand the cancellation or amendment of
the defendants title because even if the title were canceled or amended the ownership of the land embraced
therein or of the portion affected by the amendment would revert to the public domain, we ruled that the action
was for reversion and that the only person or entity entitled to relief would be the Director of Lands.

In their Complaint, petitioners never alleged that the Subject Property was part of the public domain. On the
contrary, petitioners asserted title over the Subject Property by virtue of their actual, physical, open,
continuous and adverse possession thereof, in the concept of owners, by themselves and through their
predecessors-in-interest, since time immemorial. The Deeds of Assignment executed in their favor and
attached to their Complaint referred to a Spanish title granted by the Queen of Spain to their predecessor-ininterest, Don Hermogenes Rodriguez. Clearly, petitioners are asserting private title over the Subject Property,
and consequently, their action could not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action for nullity of respondents
certificates of title, theirs was more appropriately an action to remove a cloud on or to quiet their title over the
Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title, provides that:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and
in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.
Respondents certificates of title over the Subject Property appeared valid or effective; but according to the
petitioners, they were fake, spurious and/or fraudulent, and a cloud on their title to the same property that
needed to be removed. A cloud on title has been defined as follows:

Cloud on Title. A cloud on title is an outstanding instrument, record, claim, encumbrance or proceeding which
is actually invalid or inoperative, but which may nevertheless impair or affect injuriously the title to property.
The matter complained of must have a prima facie appearance of validity or legal efficacy. The cloud on title is
a semblance of title which appears in some legal form but which is in fact unfounded. The invalidity or
inoperativeness of the instrument is not apparent on the face of such instrument, and it has to be proved by
extrinsic evidence[31]

P.D. No. 892 became effective on 16 February 1976. The successors of Don Hermogenes Rodriguez had only
until 14 August 1976 to apply for a Torrens title in their name covering the Subject Property. In the absence of
an allegation in petitioners Complaint that petitioners predecessors-in-interest complied with P.D. No. 892,
then it could be assumed that they failed to do so. Since they failed to comply with P.D. No. 892, then the
successors of Don Hermogenes Rodriguez were already enjoined from presenting the Spanish title as proof of
their ownership of the Subject Property in registration proceedings.

Even as this Court agrees with the petitioners that their action was one for removal of a cloud on or quieting of
title, it does arrive at the same conclusion as the trial court and the Court of Appeals that petitioners had no
personality to file the said action, not being the parties-in-interest, and their Complaint should be dismissed for
not stating a cause of action.

Registration proceedings under the Torrens system do not create or vest title, but only confirm and record title
already created and vested.[36] By virtue of P.D. No. 892, the courts, in registration proceedings under the
Torrens system, are precluded from accepting, confirming and recording a Spanish title. Reason therefore
dictates that courts, likewise, are prevented from accepting and indirectly confirming such Spanish title in
some other form of action brought before them (i.e., removal of cloud on or quieting of title), only short of
ordering its recording or registration. To rule otherwise would open the doors to the circumvention of P.D. No.
892, and give rise to the existence of land titles, recognized and affirmed by the courts, but would never be
recorded under the Torrens system of registration. This would definitely undermine the Torrens system and
cause confusion and instability in property ownership that P.D. No. 892 intended to eliminate.

According to Article 477 of the Civil Code, the plaintiff, in an action to remove a cloud on or to quiet title, must
have legal or equitable title to, or interest in, the real property which is the subject matter of the action.
[32]
Petitioners failed to establish in their Complaint that they had any legal or equitable title to, or legitimate
interest in, the Subject Property so as to justify their right to file an action to remove a cloud on or to quiet title.
Title to real property refers to that upon which ownership is based. It is the evidence of the right of the owner
or the extent of his interest, by which means he can maintain control and, as a rule, assert right to exclusive
possession and enjoyment of the property.[33]
In their Complaint, petitioners claimed title to the Subject Property by virtue of their actual and continuous
possession of the same since time immemorial, by themselves and through their predecessors-in-interest. Yet,
the Deeds of Assignment executed by Ismael Favila in their favor, attached to and an integral part of their
Complaint, revealed that petitioners predecessors-in-interest based their right to the Subject Property on the
Spanish title awarded to Don Hermogenes Rodriguez.
There existed a contradiction when petitioners based their claim of title to the Subject Property on their
possession thereof since time immemorial, and at the same time, on the Spanish title granted to Don
Hermogenes Rodriguez. Possession since time immemorial carried the presumption that the land had never
been part of the public domain or that it had been private property even before the Spanish conquest.
[34]
If the Subject Property was already private property before the Spanish conquest, then it would have been
beyond the power of the Queen of Spain to award or grant to anyone.
The title to and possession of the Subject Property by petitioners predecessors-in-interest could be traced
only as far back as the Spanish title of Don Hermogenes Rodriguez. Petitioners, having acquired portions of
the Subject Property by assignment, could acquire no better title to the said portions than their predecessorsin-interest, and hence, their title can only be based on the same Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the Spanish title as basis of their
ownership of the Subject Property. P.D. No. 892 strengthens the Torrens system by discontinuing the system
of registration under the Spanish Mortgage Law, and by categorically declaring all lands recorded under the
latter system, not yet covered by Torrens title, unregistered lands. It further provides that within six months
from its effectivity, all holders of Spanish titles or grants should apply for registration of their land under what is
now P.D. No. 1529, otherwise known as the Land Registration Decree. Thereafter, Spanish titles can no
longer be used as evidence of land ownership in any registration proceedings under the Torrens
system. [35]Indubitably, P.D. No. 892 divests the Spanish titles of any legal force and effect in establishing
ownership over real property.

Petitioners argued that the Spanish title may still be presented as proof of ownership on the basis of the
exception provided in the fourth whereas clause of P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought under the operation of the Torrens
system, being subject to prescription, are now ineffective to prove ownership unless accompanied by proof of
actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject Property, then they could still
present the Spanish title as evidence of their ownership of the Subject Property. [37]
This Court cannot sustain petitioners argument. Actual proof of possession only becomes necessary because,
as the same whereas clause points out, Spanish titles are subject to prescription. A holder of a Spanish title
may still lose his ownership of the real property to the occupant who actually possesses the same for the
required prescriptive period.[38] Because of this inherent weakness of a Spanish title, the applicant for
registration of his Spanish title under the Torrens system must also submit proof that he is in actual
possession of the real property, so as to discount the possibility that someone else has acquired a better title
to the same property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the statute as a whole, and not just a
particular provision alone. A word or phrase taken in the abstract may easily convey a meaning quite different
from the one actually intended and evident when the word or phrase is considered with those with which it is
associated. An apparently general provision may have a limited application if read together with other
provisions of the statute.[39]
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized with the other provisions of
the whole statute.[40] Note that the tenor of the whole presidential decree is to discontinue the use of Spanish
titles and to strip them of any probative value as evidence of ownership. It had clearly set a deadline for the
filing of applications for registration of all Spanish titles under the Torrens system (i.e., six months from its
effectivity or on 14 August 1976), after which, the Spanish titles may no longer be presented to prove
ownership.

All holders of Spanish titles should have filed applications for registration of their title on or before 14 August
1976. In a land registration proceeding, the applicant should present to the court his Spanish title plus proof of
actual possession of the real property. However, if such land registration proceeding was filed and initiated
after 14 August 1976, the applicant could no longer present his Spanish title to the court to evidence his
ownership of the real property, regardless of whether the real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject Property when they filed the
Complaint with the trial court on 29 April 1996 does not exclude them from the application of P.D. No. 892, and
their Spanish title remain inadmissible as evidence of their ownership of the Subject Property, whether in a
land registration proceeding or in an action to remove a cloud on or to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming ownership of the real property
on some other basis, such as those provided in either the Land Registration Decree[41] or the Public Land Act.
[42]
Petitioners though failed to allege any other basis for their titles in their Complaint aside from possession of
the Subject Property from time immemorial, which this Court has already controverted; and the Spanish title,
which is already ineffective to prove ownership over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners lacked the personality to file
an action for removal of a cloud on, or quieting of, title and their Complaint was properly dismissed for failing
to state a cause of action. In view of the dismissal of the case on this ground, it is already unnecessary for this
Court to address the issue of prescription of the action.

Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of the Court of Appeals, dated
29 July 2002, and the Order of the Regional Trial Court of San Mateo, Rizal, Branch 77, dated 05 February
1999, dismissing petitioners Complaint for failure to state a cause of action.
SO ORDERED.