VOL.

528,JULY27,2007
321
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
G.R.No.159648.July27,2007.
FLUORDANIEL,INC.PHILIPPINES,petitioner,vs.E.B.
VILLAROSA&PARTNERSCO.,LTD.,respondent.
*

Remedial Law; Actions; Causes of Action; Essential Elements of a Cause of

Action;Thetestofsufficiencyoffactsallegedinthecomplaintasconstitutinga
cause of action is whether or not admitting the facts alleged, the court could
render a valid verdict in accordance with the prayer of the complaint.The
essentialelementsofacauseofactionareasfollows:1)Arightinfavorofthe
plaintiffbywhatevermeansandunderwhateverlawitarisesoriscreated;2)An
obligationonthepartofthedefendantnottoviolatesuchright;and3)Anactor
omissiononthepartofthedefendantinviolationoftherightoftheplaintiffor
constitutingabreachoftheobligationofthedefendanttotheplaintiffforwhich
thelattermaymaintainanactionforrecoveryofdamagesorotherrelief.Itis,thus,
onlyupontheoccurrenceofthelastelementthatacauseofactionarises,giving
theplaintiffarighttofileanactionincourtforrecoveryofdamagesorotherrelief.
Thetestofsufficiencyoffactsallegedinthecomplaintasconstitutingacauseof
actioniswhetherornotadmit
_______________
*SECONDDIVISION.
322

322
SUPREMECOURTREPORTSANNOTATED
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
tingthefactsalleged,thecourtcouldrenderavalidverdictinaccordancewiththe
prayerofthecomplaint.Thatindeterminingsufficiencyofcauseofaction,the
court takes into account only the material allegations of the complaint and no
other,isnotahardandfastrule.Insomecases,thecourtconsidersthedocuments
attachedtothecomplainttotrulydeterminesufficiencyofcauseofaction.
Same;Same;Same;Acomplaintshouldnotbedismissedforinsufficiencyofcause
of actionif itappears clearlyfromthecomplaintanditsattachmentsthatthe
plaintiff is entitled to relief.We have ruled that a complaint should not be
dismissed for insufficiency of cause of action if it appears clearly from the

complaintanditsattachmentsthattheplaintiffisentitledtorelief.Theconverseis
also true. The complaint may bedismissed for lack of cause of action if itis
obviousfromthecomplaintanditsannexesthattheplaintiffisnotentitledtoany
relief.

PETITIONforreviewoncertiorariofthedecisionandresolutionofthe
CourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
Angara,Abello,Concepcion,RegalaandCruzforpetitioner.
A.Tan,Zoleta&AssociatesLawFirmforrespondent.
QUISUMBING,J.:
ForreviewoncertiorariaretheDecision datedOctober24,2002andthe
Resolution datedAugust25,2003oftheCourtofAppealsinCAG.R.
SPNo.52897,whichhadaffirmedtheNovember19,1998 andMarch
24,1999 OrdersoftheRe
1

_______________
1 Rollo,pp.5774.PennedbyAssociateJusticeBienvenidoL.Reyes,withAssociate
JusticesRomeoA.BrawnerandMarioL.GuariaIIIconcurring.
2Id.,atpp.7677.
3Id.,atpp.373376.
4Id.,atpp.466469.
323

VOL.528,JULY27,2007

323
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
gionalTrialCourtofMakatiCity,Branch58,inCivilCaseNo.98
1342.
Thepertinentfacts,bornebytherecords,areasfollows.
Petitioner Fluor Daniel, Inc.Philippines is a domestic corporation
providingconstructionandprogrammanagementservices.Sometimein
1996,petitioner enteredintoanagreement withFilEstateProperties,
Inc. (FilEstate) for the construction of the Fairways & Bluewater,
NewcoastIslandResortinBoracayIsland.RespondentE.B.Villarosa&
PartnersCo.,Ltd.wasoneofthecontractorsengagedbypetitionerto
provideservicesforthesaidproject.

OnMay6,1997,petitionerandrespondentexecutedaseparatecontract
forcivilstructureandarchitecture,forplumbingandfireprotection,and
formillworks.However,FilEstatefailedtosatisfypetitionersmonthly
progressbilling.Hence,petitionerdidnotpayrespondent.
Petitioner apprised FilEstate that the project would have to be
suspended.Petitionerlikewiseissuedanoticeofsuspensionofworkto
all its contractors, including respondent. In response, respondent
informedpetitionerthatitdeemedthecontractsbetweenthemgoodas
terminated. Thus, respondent demanded payment for suspension cost
andforworksofarperformed.
Believingthatpetitionerwasinbadfaith,respondentalsofiledwiththe
RegionalTrialCourtofMakatiCity,Branch58,acomplaint forasum
ofmoneyanddamages,docketedasCivilCaseNo.981342.
Petitionerfiledamotiontodismiss onthegroundthatthecomplaint
failedtostateacauseofaction.Thetrialcourtdeniedthemotioninits
firstassailedOrder,towit:
5

WHEREFORE, foregoing considered, defendants motion to dismiss is hereby

DENIED.
_______________
5Id.,atpp.7987.
6Id.,atpp.345353.
324

324

SUPREMECOURTREPORTSANNOTATED
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
Pursuant to Section 4 of Rule 16, 1997 Rules of Civil Procedure, defendant
movantshallfileitsanswerwithinthebalanceoftheperiodprescribedbyRule11,
sameRules,towhichdefendantwasentitledatthetimeofservingitsmotion,but
notlessthanfive(5)daysinanyevent,computedfromreceiptofthisorder.
SOORDERED.
7

Petitionersmotionforreconsiderationwaslikewisedeniedinthetrial
courtssecondimpugnedOrder,thus:
WHEREFORE,foregoingconsidered,defendantsMotionforReconsiderationis
herebyDENIED.

Thefilingofthelastpleadingandtheconsequentjoinderofissueshasripenedthis
caseforpretrialwhichisherebyset...
Letnoticesofpretrialbesenttothepartiesandtheircounsel.
SOORDERED.
8

Respondentsubsequentlyfiledamotiontoamenditscomplaintfollowed
byitsamendedcomplaint.Petitioner,ontheotherhand,filedamotion
tosuspendproceedings.Thetrialcourtgrantedrespondents,butdenied
petitionersmotion,towit:
WHEREFORE,inviewoftheforegoing:
1 1)
Plaintiffs Urgent Motion to Amend Complaint With Leave of Court is
herebyGRANTED.Accordingly,plaintiffsAmendedComplaintfiledon
May07,1999isherebyadmittedinlieuoftheoriginalcomplaintwhichis
hereby deemed withdrawn for all intents and purposes. Consequently,
defendantisgivenfifteen(15)daysafterreceiptofthisOrderwithinwhich
tofileitsAmendedAnswertoplaintiffsAmendedComplaint.
2 2)
DefendantsMotiontoSuspendProceedingsisherebyDENIED.
SOORDERED.
9

_______________
7Id.,atp.376.
8Id.,atp.469.
9Id.,atp.61.
325

VOL.528,JULY27,2007

325
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
Petitioner filed with the Court of Appeals a special civil action for
certiorariassailingtheNovember19,1998andMarch24,1999Orders
ofthecourtaquoandprayingforatemporaryrestrainingorderand/or
writofpreliminaryinjunction.Theappellatecourtdecreed:
WHEREFORE,theOrderdated19November1998issuedbytheRegionalTrial
CourtofMakati,Branch58inCivilCaseNo.981342entitled E.B.Villarosa&
PartnersCo.,Inc.vs.FluorDaniel,Inc.Philippines denyingpetitionersMotion

ToDismissaswellasitsorderof24March1999denyingreconsiderationthereof,
arebothaffirmed.
Accordingly,thetemporaryrestrainingorderissuedbytheNinthDivisionofthis
CourtascontainedinResolutiondated25May2000...isherebylifted.
Costsagainstpetitioner.
SOORDERED.
10

Hence,theinstantpetition,raisingthefollowingissues:

I.
WHETHERORNOTTHECOMPLAINTSUFFICIENTLYSTATESACAUSE
OF ACTION AGAINST FDIP [PETITIONER] IN LIGHT OF THE
JURISPRUDENTIAL TESTS AND GUIDELINES LAID DOWN BY THIS
HONORABLECOURT.
II.
WHETHER OR NOT THE ANNEXES ATTACHED TO THE COMPLAINT
SHOULD BE CONSIDERED IN DETERMINING WHETHER OR NOT
VILLAROSAS[RESPONDENTS]COMPLAINTSUFFICIENTLYSTATEDA
CAUSE OF ACTION AGAINST FDIP IN LIGHT OF JURISPRUDENTIAL
TESTSANDGUIDELINESLAIDDOWNBYTHISHONORABLECOURT.
III.
WHETHER OR NOT THE COURT OF APPEALS, IN REFUSING TO
CONSIDERTHEANNEXESTOTHECOMPLAINT,ERREDIN
_______________
10Id.,atpp.7374.

326

326

SUPREMECOURTREPORTSANNOTATED
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
FAILING TO APPRECIATE THE CLEAR ADMISSION OF VILLAROSA
[RESPONDENT] THAT PAYMENT OF ITS BILLINGS WAS SUBJECT TO
THECONDITIONOFTIMELYRECEIPTOFSIMILARPAYMENTSFROM
FILESTATE.
IV.
WHETHER OR NOT THE COURT OF APPEALS, IN REFUSING TO
CONSIDER THE ANNEXES TO THE COMPLAINT, FAILED TO
APPRECIATE THE SIGNIFICANCE OF VILLAROSAS [RESPONDENTS]
FAILURETOSATISFYTHEREQUIREDCRITERIATOJUSTIFYPAYMENT
UNDERITSMONTHLYPROGRESSBILLINGS.
11

Petitioner contendsthat thecomplaint utterly andmiserably failedto

state the operative facts which would give rise to a cause of action
against it. Petitioner insists that the annexes attached to respondents
complaint and other pleadings should be considered in determining
respondentscauseofaction,orlackofit,againstpetitioner.Petitioner
maintainsthattheCourtofAppealscommittedmanifesterrorwhenit
refusedtoconsidertheannexestothecomplaint,showingrespondents
admissionthatpaymentofitsbillingswassubjecttotheconditionof
timelyreceiptofsimilarpaymentsfrompetitioner.
Respondent,however,countersthatitscomplaintsufficientlystateda
causeofactionagainstpetitionerandthattheannexesattachedtothe
complaintbearnorelevance,nothavingbeenadmittedbystipulation.
Respondentassertsthatthethreeelementsofacauseofactionareall
present in this case,namely: (i) legal right of respondent to demand
paymentfrompetitioner;(ii)obligationofpetitionertopayrespondent;
and(iii)failureofpetitionertopayrespondent.Respondentstressesthat
petitionercannotevadeitsliabilitytopaybyclaimingthatpaymentsto
respondentaresubjecttotimelyreceiptofsimilarpaymentsfromFil
Estate.
_______________
11Id.,atpp.819820.
327

VOL.528,JULY27,2007

327
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
Thepetitionisimpressedwithmerit.
Section2,Rule2oftheRulesofCivilProcedureprovides:
SEC.2.Causeofaction,defined.Acauseofactionistheactoromissionby
whichapartyviolatesarightofanother.

Theessentialelementsofacauseofactionareasfollows:1)Arightin
favor of the plaintiff by whatever means and under whatever law it
arisesoriscreated;2)Anobligationonthepartofthedefendantnotto
violatesuchright;and3)Anactoromissiononthepartofthedefendant

inviolationoftherightoftheplaintifforconstitutingabreachofthe
obligation of the defendant to the plaintiff for which the latter may
maintainanactionforrecoveryofdamagesorotherrelief.
Itis,thus,onlyupontheoccurrenceofthelastelementthatacauseof
actionarises,givingtheplaintiffarighttofileanactionincourtfor
recoveryofdamagesorotherrelief. Thetest ofsufficiency offacts
allegedinthecomplaintasconstitutingacauseofactioniswhetheror
notadmittingthefactsalleged,thecourtcouldrenderavalidverdictin
accordance with the prayer of the complaint. That in determining
sufficiency of cause of action, the court takes into account only the
materialallegationsofthecomplaintandnoother,isnotahardandfast
rule.Insomecases,thecourtconsidersthedocumentsattachedtothe
complainttotrulydeterminesufficiencyofcauseofaction.
Wehaveruledthatacomplaintshouldnotbedismissedforinsufficiency
of cause of action if it appears clearly from the complaint and its
attachmentsthattheplaintiffisentitledto
12

13

14

15

_______________
12SwagmanHotelsandTravel,Inc.v.CourtofAppeals,G.R.No.161135,April8,2005,
455SCRA175,183.
13Id.
14MisamisOccidentalIICooperative,Inc.v.David,G.R.No.129928,August25,2005,
468SCRA63,72.
15Jimenez,Jr.v.Jordana,G.R.No.152526,November25,2004,444SCRA250,260
261.
328

328

SUPREMECOURTREPORTSANNOTATED
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
relief. Theconverseisalsotrue.Thecomplaintmaybedismissedfor
lack of cause of action if it is obvious from the complaint and its
annexesthattheplaintiffisnotentitledtoanyrelief.
Inthiscase,wenotethatannexedtothesubjectcomplaintarethethree
contracts governing therights andobligations betweenpetitioner and
respondent,namelythecontractforcivilstructureandarchitecture,the
contractforplumbingandfireprotection,andthecontractformillworks.
16

Recordsshowthatrecurringineachofthesaidcontractsistheprovision
thatpaymentbypetitionershallbesubjecttoitstimelyreceiptofsimilar
payments from FilEstate. The said provision, found in each of the
aforesaidcontracts,isquotedbelow:
2.0PRICINGBASIS
The Contract Price set forth herein is firm for the duration of the Work and
includes all Contractors costs, expenses, overhead and profit for complete
performanceoftheWork.
xxxx
. . . Payment of the billings shall be subject to the timely receipt of similar
paymentsfromtheclientbyFluorDaniel.Anyprolongeddelayinpaymentby
FluorDanielissubjecttoasuspensionofactivitiesbyEBVwithinfive(5)work
days after proper written notice is provided by contractor to Fluor Daniel.
(Emphasissupplied.)

17

Ontheirface,thesaidattachedcontracts,whichdefineanddelimitthe
rightsandobligationsoftheparties,clearlyrequireaspecificcondition
before petitioner may be held liable for payment. The complaint,
however, failed to state that the said condition had been fulfilled.
Withoutthesaidconditionhavingtakenplace,petitionercannotbesaid
tohavebreacheditsobligationtopay.
_______________
16Albertov.CourtofAppeals,G.R.No.119088,June30,2000,334SCRA756,770.
17Rollo,p.118.
329

VOL.528,JULY27,2007

329
FluorDaniel,Inc.Philippinesvs.E.B.Villarosa&PartnersCo.,Ltd.
We thus hold that respondents complaint, taken with the contracts
annexedtoit,failedtopassthetestofsufficiencyofcauseofaction.
Thus,thesaidcomplaintshouldhavebeendismissedonthegroundof
failuretostateacauseofaction.
WHEREFORE, the petition is GRANTED. The assailed Decision
datedOctober24,2002andtheResolutiondatedAugust25,2003ofthe
Court of Appeals in CAG.R. SP No. 52897, which affirmed the
November19,1998andMarch24,1999OrdersoftheRegionalTrial

Court of Makati City, Branch 58 in Civil Case No. 981342, are

REVERSEDANDSETASIDE.
Costsagainstrespondent.
SOORDERED.
Carpio,CarpioMorales,TingaandVelasco,Jr.,JJ.,concur.
Petition granted, assailed decision and resolution reversed and set
aside.
Note.Participationinacontractisnotnecessarilyanelementthat
determinestheexistenceofacauseofaction.(Jimenez,Jr.vs.Jordana,
444SCRA250[2004])
o0o
330
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