Essential elements of cause of action

Development Bank of the Philippines vs. Pundogar, GR No. 96921, 29 January 1993, Romero [J].

Facts: This is a special civil action for certiorari which seeks to annul and set aside the trial court's Order
dated August 31, 1990 which denied petitioners' motion to dismiss and also the Order dated December
27, 1990 which likewise denied petitioners' motion for reconsideration.
Jacinto Steel Inc (JSI) was entrusted with the government’s project in relation to RA 1396
authorizing National Shipyards and Steel Corp (NSSC) to establish a pig-iron smelting plant after
contracting a USD 62.3M loan from US ImPex Bank (EXIMBANK0. Iligan Integrated State Mills, Inc.
(ISSMI) was later incorporated through GSOS, SSS, and NASCO as principal investors. Agreements were
entered into by Government, IISMI, and EXIMBANK to provide for funding. Subsequently, IISMI and the
Government entered into a collateral agreement, and a second collateral agreement with the DBP.
However, In order to forestall a threatened foreclosure due to defaults in loan payments, IISMI
instituted on June 1,1971 an injunction suit against the RP, DBP, among others alleging that alleged that
the inability of IISMI to meet its obligations was due to "(g)overnment violations of its commitments to
the Integrated Steel Project" to take over IISMI.
The preliminary injunction issued by the court on August 11, 1971 was questioned by the DBP.
When the motion to dismiss filed by the Republic and the BOI on the grounds of improper venue and
non-suability of the State was denied, the parties likewise questioned the denial order in G.R. No. L-
33949. Subsequently, this Court ordered the consolidation of these petitions. On January 10, 1974, the
lower court issued an Order dissolving the writ of preliminary injunction. It held that there was
mismanagement of the financial affairs of IISMI …

Issue: Whether the respondent court erred in its ruling to dismiss the petitioner’s motion to dismiss and
another petition for motion for reconsideration
Failure to state a cause of action

Ruling: Yes, the court erred in its ruling.

Res judicata is indeed present. The elements constituting res judicata as a ground for the
dismissal of a complaint are: a) the former judgment must be final; b) the court which rendered it had
jurisdiction over the subject matter and the parties; c) it must be a judgment on the merits and d) there
must be, between the first and second actions, identity of parties, subject matter and causes of action.
Indeed, the first 3 requisites are met. For the fourth requisite to exist, the identity required is
not only of the parties and subject matter but also of the causes of action. A cause of action is an act or
omission of one party in violation of the legal right of the other. Its essential elements are, namely: (1)
the existence of a legal right in the plaintiff, (2) a correlative legal duty on the part of the defendant, and
(3) an act or omission of the defendant in violation of plaintiff s right with consequential injury or
damage to the plaintiff for which he may maintain an action for the recovery of damages or other
appropriate relief.
Here, private respondents, having the legal right to file the instant case, we find that the
complaint states a cause of action. However, a finding that a complaint states a cause of action does not
imply that the complainant is assured of a ruling in his favor. What truly is for determination is the
sufficiency of the allegation in the complaint. Moreover, a motion to dismiss may be based on only one
of the grounds enumerated in Sec. 1, Rule 16 of the Rules of Court. That the petitioners were able to
prove the presence of three of the four grounds they raised, viz., res judicata, lack of jurisdiction and
prescription, more than warrants the reversal of the Order below denying the petitioners' motion to
dismiss.
Fallo: WHEREFORE, there being grave abuse of discretion on the part of the court a quo in denying
petitioners' motion to dismiss and motion for reconsideration, the instant petition is hereby GRANTED.
The Temporary Restraining Order issued on February 7, 1991 is made PERMANENT and respondent
Judge Amir Pundogar is hereby ordered to DISMISS Civil Case No. 111-1549. The Temporary Restraining
Order issued on May 9, 1992 is hereby DISSOLVED.