VIRATA v.
SANDIGANBAYAN In a Resolution promulgated, the Sandiganbayan partially granted the said motion by
Facts:
Petitioner Cesar E. A. Virata is one of the defendants in Civil Case No. 0035,
entitled Republic of the Philippines versus Benjamin (Kokoy) Romualdez, et. al.. The
case, which was filed by the Presidential Commission on Good Government against
fifty three persons (53) including Virata, involves the recovery of ill-gotten wealth
during the reign President Marcos.
The complaint against the defendants was amended three times. The last amended
complaint filed with the Sandiganbayan, known as the expanded Second Amended
Complaint, states the following relevant allegations against petitioner Virata “that
Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez, in unlawful
concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, unjustly
enriched themselves at the expense of plaintiff and the Filipino people by:
14.b.) gave MERALCO undue advantage (i) by effecting the increase of
power rates, and (ii) by reducing the electric franchise tax from 5% to 2% of
gross receipts and the tariff duty on fuel oil imports by public utilities from
20% to 10%, resulting in substantial savings for MERALCO but without any
significant benefit to the consumers of electric power.
14.g.) secured, in a veiled attempt to justify MERALCO's anomalous
acquisition of the electric cooperatives, the approval by Defendant
Ferdinand E. Marcos and his cabinet of the so-called "Three-Year Program
for the Extension of MERALCO's Services to Areas Within the 60-Kilometer
Radius of Manila," which required government capital investment amounting
to millions of pesos;
14.m.) manipulated, with the collaboration of Philguarantee officials led by
Chairman Cesar E. A. Virata, the formation of Erecton Holdings, Inc. without
infusing additional capital solely for the purpose of making it assume the
obligation of Erectors Incorporated with Philguarantee in the amount of
P527,387,440.71 with insufficient Securities/collaterals just to enable
Erectors Inc. to appear viable and to borrow more capitals.
17. The following Defendants acted as dummies, nominees and/or agents
by allowing themselves (i) as instruments in accumulating ill-gotten wealth
through government policies prejudicial to plaintiff, or (ii) to be directors of
corporations beneficially held and/or controlled by Defendants Ferdinand E.
Marcos, Imelda R. Marcos, Benjamin (Kokoy) T. Romualdez and Julliette
Gomez Ramualdez in order (to) conceal and prevent recovery of assets
illegally obtained.
Asserting that the foregoing allegations are vague and are not averred with sufficient
definiteness as to enable him to effectively prepare his responsive pleading, petitioner
Virata filed a motion for a bill of particulars.
requiring the Republic to submit a bill of particulars concerning the charges against
petitioner Virata stated only in paragraph 17 (acting as dummy, nominee and/or agent)
and paragraph 18 (gross abuse of authority and violation of laws and the Constitution)
of the expanded Second Amended Complaint. However, as to the other charges, the
Sandiganbayan declared that these accusations are clear and specific enough to
allow Virata to submit an intelligent responsive pleading, hence, the motion for a bill of
particulars respecting the foregoing three charges was denied.
In view of the Sandiganbayan's order of August 4, 1992, the Republic through the
Office of the Solicitor General submitted the bill of particulars dated October 22, 1992,
called as the Limited Bill of Particulars which was signed by a certain Ramon A. Felipe
IV, who was designated in the bill of particulars as "private counsel".
Way back on September 1, 1992, Virata, who was dissatisfied with the
Sandiganbayan Resolution of August 4, 1992, filed a petition for certiorari (G.R. No.
106527) with this Court questioning the Sandiganbayan's denial of his motion for a bill
of particulars. The PCGG submitted the bill of particulars dated November 3, 1993,
which was apparently signed by a certain Reynaldo G. Ros, who was named in the bill
of particulars as "deputized prosecutor" of the PCGG.
Virata filed on November 23, 1993 his comment on the bill of particulars with motion to
dismiss the expanded Second Amended Complaint. He alleges that both the bills of
particulars are pro forma and should be stricken off the records. According to him, the
bill of particulars dated November 3, 1993 is merely a rehash of the assertions made
in the expanded Second Amended Complaint. Furthermore, a reading of the Limited
Bill of Particulars shows that it alleges new imputations which are immaterial to the
charge of being a dummy, nominee or agent, and that Virata acted, not as a dummy,
nominee or agent of his co-defendants as what is charged in the complaint, but as a
government officer of the Republic.
Dissatisfied, Virata filed this instant petition for certiorari under Rule 65 of the Rules of
Court to challenge the foregoing Resolution of the Sandiganbayan.
Issue: 1. Whether the Sandiganbayan committed GAD in admitting the Bill of
Particulars submitted by the Repuublic. – Yes.
2. Whether the Sol-Gen and the PCGG are authorized by law to deputize a counsel to
file the Bill of Particulars in behalf of the Repiblic. - No.
Rationale:
1. The instant petition meritorious. The rule is that a complaint must contain the
ultimate facts constituting plaintiff's cause of action. As long as a cause of action
exists even though the allegations therein are vague, and dismissal of the action is not
the proper remedy when the pleading is ambiguous because the defendant may ask
for more particulars.
As such, the Rules of Court provide that a party may move for more definite statement
or for a bill of particulars of any matter which is not averred with sufficient definiteness
or particularity to enable him properly to prepare his responsive pleading or to prepare
for trial. Such motion shall point out the defects complained of and the details desired.
Under this Rule, the remedy available to a party who seeks clarification of any issue or
matter vaguely or obscurely pleaded by the other party, is to file a motion, either for a
more definite statement or for a bill of particulars. An order directing the submission of
such statement or bill, further, is proper where it enables the party movant intelligently
to prepare a responsive pleading, or adequately to prepare for trial.
A bill of particulars is a complementary procedural document consisting of an
amplification or more particularized outline of a pleading, and being in the nature of a
more specific allegation of the facts recited in the pleading. It is the office of the bill of
particulars to inform the opposite party and the court of the precise nature and
character of the cause of action or defense which the pleader has attempted to set
forth and thereby to guide his adversary in his preparations for trial, and reasonably to
protect him against surprise at the trial. It gives information of the specific proposition
for which the pleader contends, in respect to any material and issuable fact in the
case, and it becomes a part of the pleading which it supplements. It has been held
that a bill of particulars must inform the opposite party of the nature of the pleader's
cause of action or defense, and it must furnish the required items of the claim with
reasonable fullness and precision. Generally, it will be held sufficient if it fairly and
substantially gives the opposite party the information to which he is entitled, as
required by the terms of the application and of the order therefor. It should be definite
and specific and not contain general allegations and conclusions. It should be
reasonably certain and as specific as the circumstances will allow.
Guided by the foregoing rules and principles, both the bill of particulars and the
Limited Bill of Particulars are couched in such general and uncertain terms as would
make it difficult for petitioner to submit an intelligent responsive pleading to the
complaint and to adequately prepare for trial. It is apparent from the foregoing
allegations that the Republic did not furnish Virata the following material matters which
are indispensable for him to be placed in such a situation wherein he can properly be
informed of the charges against him: a) Did Virata, who was only one of the members
of the Board, act alone in approving the Resolution? Who really approved the
Resolution, Virata or the Monetary Board?; b) What were these outstanding loan
obligations of the three corporations concerned? Who were the creditors and debtors
of these loan obligations? How much were involved in the restructuring of the loan
obligations? What made the transaction a 'sweetheart' or 'behest' accommodation?;
and c) How was the acquisition of MERALCO by Meralco Foundation, Inc. related to
the Resolution restructuring the loan obligations of the three corporations?
There are certain matters in the foregoing allegations which lack in substantial
particularity. The following are the specific matters which the Republic failed to
provide, to wit: a) What made the transaction 'disadvantageous' to the government?
The allegation that it was disadvantageous is a conclusion of law that lacks factual
basis. How did MERALCO gain the P206.2 million? The Republic should have
provided for more specifics how was the transaction favorable to MERALCO?; b)
What were these foreign obligations of MERALCO which were assumed by the
government? Who were the creditors in these obligations? When were these
obligations contracted? How much were involved in the assumption of foreign
obligations by the government?; and c) By the presence of the provision of the
contract quoted by the Republic, what made the agreement a 'sweetheart' deal? The
allegation that the agreement is a 'sweetheart deal' is a general statement that needs
further amplification.
In like manner, the statement of facts fails to provide the following relevant matters: a)
What was this $33.5 million proposed behest loan? What were its terms? Who was
supposed to be the grantor of this loan?; b) What were these short term loans? Who
were the parties to these transactions? When were these transacted? How was this $
33.5 million behest loan related to the short term loans?
As clearly established by the foregoing discussion, the two bills of particulars filed by
the Republic failed to properly amplify the charges leveled against Virata because, not
only are they mere reiteration or repetition of the allegations set forth in the expanded
Second Amended Complaint, but, to the large extent, they contain vague, immaterial
and generalized assertions which are inadmissible under our procedural rules.
2. The Limited Bill of Particulars dated October 22, 1992 signed by Ramon Felipe IV
and the Bill of Particulars dated November 3, 1993 signed by Reynaldo Ros are valid
pleadings which are binding upon the Republic because the two lawyer-signatories
are legally deputized and authorized by the Office of the Solicitor General and the
Presidential Commission on Good Government to sign and file the bills of particulars
concerned.
The Administrative Code of 1987, which virtually reproduces the powers and functions
of the OSG enumerated in P.D. No. 478 (The Law Defining the Powers and Functions
of the Office of the Solicitor General): “Sec. 35. Powers and Functions, . . . . It (the
OSG) shall have the power to (8) Deputize legal officers of government departments,
bureaus, agencies and offices to assist the Solicitor General and appear or represent
the Government in cases involving their respective offices, brought before the courts
and exercise supervision and control over such legal officers with respect to such
cases.” Thus, the Solicitor General acted within the legal bounds of its authority when
it deputized Attorney Felipe IV to file in behalf of the Republic the bill of particulars
concerning the charges stated in paragraph 17 and 18 of the expanded Second
Amended Complaint.
BANCO FILIPINO vs. CA Case Digest
BANCO FILIPINO vs. COURT OF APPEALS
332 SCRA 241
FACTS: Elsa Arcilla and her husband, Calvin Arcilla
secured on three occasions, loans from the Banco
Filipino Savings and Mortgage bank in the amount of
Php.107,946.00 as evidenced by the “Promissory Note”
executed by the spouses in favor of the said bank. To
secure payment of said loans, the spouses executed
“Real Estate Mortgages” in favor of the appellants (Banco
Filipino) over their parcels of land. The appellee spouses
failed to pay their monthly amortization to appellant. On
September 2, 1985 the appellee’s filed a complaint for
“Annulment of the Loan Contracts, Foreclosure Sale with
Prohibitory and Injunction” which was granted by the
RTC. Petitioners appealed to the Court of Appeals, but
the CA affirmed the decision of the RTC.
ISSUE: Whether or not the CA erred when it held that the
cause of action of the private respondents accrued on
October 30, 1978 and the filing of their complaint for
annulment of their contracts in 1085 was not yet barred
by the prescription
RULING: The court held that the petition is
unmeritorious. Petitioner’s claim that the action of the
private respondents have prescribed is bereft of merit.
Under Article 1150 of the Civil Code, the time for
prescription of all kinds of action where there is no
special provision which ordains otherwise shall be
counted from the day they may be brought. Thus the
period of prescription of any cause of action is reckoned
only from the date of the cause of action accrued. The
period should not be made to retroact to the date of the
execution of the contract, but from the date they received
the statement of account showing the increased rate of
interest, for it was only from the moment that they
discovered the petitioner’s unilateral increase thereof.
DATE OF DISCOVERY FROM THE COMPLETION OF THE SURVEY
ALICE VITANGCOL and NORBERTO
VITANGCOL, Petitioners, v. NEW VISTA PROPERTIES, INC.,
MARIA ALIPIT, REGISTER OF DEEDS OF CALAMBA, LAGUNA,
and the HONORABLE COURT OF APPEALS Respondents.
DECISION
FACTS : Subject of the instant controversy is Lot No. 1702 covered
by Transfer Certificate of Title (TCT) No. (25311) 2528 of the
Calamba, Laguna Registry in the name of Maria A. Alipit and
Clemente A. Alipit, married to Milagros
On June 18, 1989, Maria and Clemente A. Alipit, with the marital
consent of the latters wife, executed a Special Power of Attorney[4]
(SPA) constituting Milagros A. De Guzman as their attorney-in-fact to
sell their property described in the SPA as located at Bo. Latian,
Calamba, Laguna covered by TCT No. (25311) 2538 with Lot No.
1735 consisting of 242,540 square meters more or less. Pursuant to
her authority under the SPA, De Guzman executed on August 9,
1989 a Deed of Absolute Sale[5] conveying to New Vista Properties,
Inc. (New Vista) a parcel of land with an area of 242,540 square
meters situated in Calamba, Laguna.
Following the sale, New Vista immediately entered the subject lot,
fenced it with cement posts and barbed wires, and posted a security
guard to deter trespassers. he controversy arose more than a
decade later when respondent New Vista learned that the parcel of
land it paid for and occupied, i.e., Lot No. 1702, was being claimed
by petitioners Vitangcol on the strength of a Deed of Absolute Sale
for Lot No. 1702 under TCT No. (25311) 2528 entered into on
August 14, 2001 by and between Vitangcol and Maria Alipit.
Consequent to the Vitangcol-Maria Alipit sale, TCT No. (25311) 2528
was canceled and TCT No. T-482731 issued in its stead in favor of
Vitangcol on August 15, 2001.
Alarmed by the foregoing turn of events, New Vista lost no time in
protecting its rights by, first, filing a notice of adverse claim over TCT
No. T-482731, followed by commencing a suit for quieting of title
before the RTC. By Order of November 25, 2003, the trial court
denied Vitangcols and Maria Alipits separate motions to dismiss the
amended complaint. As there held by the RTC, the amended
complaint[10] sufficiently stated a cause of action as shown therein
that after the purchase and compliance with its legal obligations
relative thereto, New Vista was immediately placed in possession of
the subject lot, but which Maria Alipit, by herself, later sold to
Vitangcol to New Vistas prejudice
On August 14, 2006, the appellate court rendered the assailed
Decision reversing the December 21, 2004 RTC Order
ISSUE : WON THE DECISION AND THE RESOLUTION OF THE
TWELFTH DIVISION OF THE COURT OF APPEALS UNDER
CHALLENGE ARE CONTRARY TO LAW
HELD : The Rules of Court defines cause of action as the act or
omission by which a party violates a right of another. It contains
three elements: (1) a right existing in favor of the plaintiff; (2) a
correlative duty on the part of the defendant to respect that right; and
(3) a breach of the defendants duty.[19] It is, thus, only upon the
occurrence of the last element that a cause of action arises, giving
the plaintiff a right to file an action in court for recovery of damages
or other relief.[20].
Lack of cause of action is, however, not a ground for a dismissal of
the complaint through a motion to dismiss under Rule 16 of the
Rules of Court, for the determination of a lack of cause of action can
only be made during and/or after trial. What is dismissible via that
mode is failure of the complaint to state a cause of action. Sec. 1(g)
of Rule 16 of the Rules of Court provides that a motion may be made
on the ground that the pleading asserting the claim states no cause
of action.
The rule is that in a motion to dismiss, a defendant hypothetically
admits the truth of the material allegations of the ultimate facts
contained in the plaintiffs complaint.[21] When a motion to dismiss is
grounded on the failure to state a cause of action, a ruling thereon
should, as rule, be based only on the facts alleged in the
complaint.[22] However, this principle of hypothetical admission
admits of exceptions. Among others, there is no hypothetical
admission of conclusions or interpretations of law which are false;
legally impossible facts; facts inadmissible in evidence; facts which
appear by record or document included in the pleadings to be
unfounded;[23] allegations which the court will take judicial notice are
not true;[24] and where the motion to dismiss was heard with
submission of evidence which discloses facts sufficient to defeat the
claim.[25]
Dabuco vs CA
FACTS: The Lazarrabal family were the registered owners of the
properties, subject matter of this case. In 1991, on different
occasions, the subject properties were sold to the Ruben Baculi,
Editha Belocura, Lira Puno, Rafael Lapuz, Ladrioro Montealto,
Joel Masecampo, Delsa N. Manay, Ilderim Castañares, Maria
Theresa Puno, [and] Jill Mendoza. On June 27, 1994, GABI Multi-
Purpose Cooperative, a registered non-stock, non-profit
cooperative filed a civil complaint against DABUCO, et al. who
were found residing and/or tilling the subject properties. The trial
court issued a TRO enjoining Dabuco, et al. to desist from further
development of GABI’s properties. The trial court then lifted the
TRO upon failure of GABI to prove its title over the properties.
Dabuco et al. filed their answer alleging that GABI had no
personality to sue since they do not appear to be buyer of the
properties neither were the properties titled in its name. Dabuco
filed a Motion to Dismiss on the ground of lack of cause of action,
GABI has no personality to sue and lack of jurisdiction. The trial
court dismissed the case. GABI appealed to the CA and the
decision was reversed. The success of this petition rests on the
validity of the dismissal by the trial court. Petitioners assert that
there was sufficient reason to dismiss the action below on the
ground that GABI had no cause of action against petitioners.
They also aver in the alternative that the Complaint by GABI was
properly dismissed on the ground that it failed to state a cause of
action. As a preliminary matter, we wish to stress the distinction
between the two grounds for dismissal of an action: failure to
state a cause of action, on the one hand, and lack of cause of
action, on the other hand. The former refers to the insufficiency of
allegation in the pleading, the latter to the insufficiency of factual
basis for the action. Failure to state a cause may be raised in a
Motion to Dismiss under Rule 16, while lack of cause may be
raised any time. Dismissal for failure to state a cause can be
made at the earliest stages of an action. Dismissal for lack of
cause is usually made after questions of fact have been resolved
on the basis of stipulations, admissions or evidence presented.
ISSUE: Whether or not the dismissal of the trial court on the
ground of lack of cause of action was proper
ELD: The dismissal by the trial court was not proper. We note that
the issue of sufficiency of GABI's cause of action does not appear
to have been passed upon by the appellate court in its assailed
decision. It appears that the trial court dismissed the case on the
ground that GABI was not the owner of the lands or one entitled
to the possession thereof, and thus had no cause of action. In
dismissal for lack of cause of action, the court in effect declared
that plaintiff is not entitled to a favorable judgment inasmuch as
one or more elements of his cause of action do not exist in fact.
Because questions of fact are involved, courts hesitate to declare
a plaintiff as lacking in cause of action. Such declaration is
postponed until the insufficiency of cause is apparent from a
preponderance of evidence. Usually, this is done only after the
parties have been given the opportunity to present all relevant
evidence on such questions of fact. We do not here rule on
whether GABI has a cause of action against petitioners. What we
are saying is that the trial court's ruling, to the effect that GABI
had no title to the lands and thus had no cause of action, was
premature. Indeed, hearings were conducted. And the view of the
Court of Appeals was that such hearings were sufficient. The
Court disagrees with the appellate court's ruling. The hearing of
July 27, 1994 was on the propriety of lifting the restraining order.
At such preliminary hearing, the trial court required GABI to
produce Certificates of Title to the lands in its name. GABI
admitted that it did not have such Certificates, only Deeds of Sale
from the registered owners. Anent petitioners' thesis that
dismissal of the complaint by the trial court was proper of failure
to state a cause of action, we, likewise, find no valid basis to
sustain the same. Dismissal of a Complaint for failure to state a
cause of action is provided for by the Rules of Court. In dismissal
for failure to state a cause, the inquiry is into the sufficiency, not
the veracity, of the material allegations. The test is whether the
material allegations, assuming these to be true, state ultimate
facts which constitute plaintiff's cause of action, such that plaintiff
is entitled to a favorable judgment as a matter of law. The general
rule is that inquiry is confined to the four corners of the complaint,
and no other. This general rule was applied by the Court of
Appeals. Said court stated: It is a well-settled rule that in
determining the sufficiency of the cause of action, ONLY the facts
alleged in the complaint and no others, should be considered. In
determining the existence of a cause of action, only the
statements in the complaint may properly be considered. If the
complaint furnish sufficient basis by which the complaint may be
maintained, the same should not be dismissed regardless of the
defenses that may be assessed [ sic ] by defendants- appellees.
There are well-recognized exceptions to the rule that the
allegations are hypothetically admitted as true and inquiry is
confined to the face of the complaint. There is no hypothetical
admission of the veracity of allegations if their falsity is subject to
judicial notice, or if such allegations are legally impossible, or if
these refer to facts which are inadmissible in evidence, or if by
the record or document included in the pleading these allegations
appear unfounded. Also, inquiry is not confined to the complaint if
there is evidence which has been presented to the court by
stipulation of the parties, or in the course of hearings related to
the case.
LETICIA NAGUIT AQUINO v. CESAR B. QUIAZON, GR
No. 201248, 2015-03-11
Facts:
Issues:
Whether the CA erred in affirming the dismissal of
petitioners' complaint on the ground of lack of cause of
action or failure to state a cause of action.
Ruling:
As a preliminary matter, we wish to stress the distinction
between the two grounds for dismissal of an action: failure
to state a cause of action, on the one hand, and lack of
cause of action, on the other hand. The former refers to the
insufficiency of allegation in... the pleading, the latter to the
insufficiency of factual basis for the action. Failure to state a
cause may be raised in a Motion to Dismiss under Rule 16,
while lack of cause may be raised any time. Dismissal for
failure to state a cause can be made at the earliest stages
of an... action. Dismissal for lack of cause is usually made
after questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented
Exceptions and Section 6 of Rule 16 not applicable...
exceptions to the general rule
A review of the first ground under paragraph 6 of the
answer reveals that respondents alleged that "[p]laintiffs
have no valid, legal and sufficient cause of action against
the defendants." It is at this point that it must again be
emphasized that it is not "lack or... absence of cause of
action" that is a ground for dismissal of the complaint under
Rule 16, but rather, that "the complaint states no cause of
action."[33] The issue submitted to the court was, therefore,
the determination of the sufficiency of the... allegations in
the complaint to constitute a cause of action and not
whether those allegations of fact were true, as there was a
hypothetical admission of facts alleged in the complaint.[34]
An affirmative defense, raising the ground that there is no...
cause of action as against the defendants poses a question
of fact that should be resolved after the conduct of the trial
on the merits.[35] A reading of respondents' arguments in
support of this ground readily reveals that the arguments
relate not to... the failure to state a cause of action, but to
the existence of the cause of action, which goes into the
very crux of the controversy and is a matter of evidence for
resolution after a full-blown hearing.
a preliminary hearing on a motion to... dismiss is proscribed
when the ground is failure to state a cause of action.
Principles:
distinction between the grounds of "failure to state a cause
of action" and "lack of cause of action"
The ground of "lack of cause of action," as already
explained, however, is not one of the grounds for a motion
to dismiss under Rule 16, and hence, not proper for
resolution during a preliminary hearing held pursuant to
Section 6.
test for determining the existence of a cause of action...
whether or not, admitting hypothetically the truth of the
allegations of fact made in the complaint, a judge may
validly grant the relief... demanded in the complaint.
In resolving whether or... not the complaint 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, as
these were deemed hypothetically admitted by the
respondents.
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.
First, there is no hypothetical admission of (a) the veracity
of allegations if... their falsity is subject to judicial notice; (b)
allegations that are legally impossible; (c) facts inadmissible
in evidence; and (d) facts which appear, by record or
document included in the pleadings, to be unfounded.[28]
Second, inquiry is not... confined to the complaint if culled
(a) from annexes and other pleadings submitted by the
parties;[29] (b) from documentary evidence admitted by
stipulation which disclose facts sufficient to defeat the claim;
or (c) from evidence admitted in the course of... hearings
related to the case.
Pointing to the exception that inquiry was not confined to
the complaint if evidence had been presented in the course
of hearings related to the case, the CA ruled that it was
within the trial court's discretion to receive and consider
other evidence aside from the allegations... in the complaint
in resolving a party's affirmative defense. It held that this
discretion was recognized under Section 6 of Rule 16 of the
Rules of Court, which allowed the court to conduct a
preliminary hearing, motu proprio, on the defendant's
affirmative defense if no... corresponding motion to dismiss
was filed. This section reads in part:
Section 6. Pleading grounds as affirmative defenses. - If no
motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an
affirmative defense in the answer and, in the discretion of
the court, a... preliminary hearing may be had thereon as if
a motion to dismiss had been filed.
It is at this point that it must again be emphasized that it is
not "lack or... absence of cause of action" that is a ground
for dismissal of the complaint under Rule 16, but rather, that
"the complaint states no cause of action."
Thus, in a preliminary hearing on a motion to dismiss or on
the affirmative defenses raised in an answer, the parties are
allowed to present evidence except... when the motion is
based on the ground of insufficiency of the statement of the
cause of action which must be determined on the basis only
of the facts alleged in the complaint and no other.
Pilipinas Shell Petroleum Corporation vs John Bordman
eeply imbedded in our jurisprudence is the
doctrine that the factual findings of the Court of
Appeals (CA) affirming those of the trial court
are, subject to some exceptions, binding upon
this Court. Otherwise stated, only questions of
law, not of facts, may be raised before this Court
in petitions for review under Rule 45 of the
Rules of Court. Nonetheless, in the interest of Resolution[3] of the Court of Appeals (CA) in
CA-GR CV No. 46974. The challenged Decision
substantial justice, the Court delved into both the
disposed as follows:
factual and the legal issues raised in the present
WHEREFORE, premises
case and found no reason to overturn the CAs considered, the assailed decision dated
August 30, 1991 of the RTC, Branch 26,
main Decision. Furthermore, under the peculiar Manila in Civil Case No. 13419 is
hereby AFFIRMED with
the MODIFICATION that the award of
factual circumstances of the instant appeal, this exemplary damages and attorneys fees
be both reduced to P100,000.00.
Court holds that the period for reckoning the
The order dated December 9,
prescription of the present cause of action began 1991 is likewise AFFIRMED.[4]

only when respondent discovered with certainty

the short deliveries made by petitioner. The assailed Resolution denied

reconsideration.
The Case The Facts

Before us is a Petition for Review[1] under Petitioner Pilipinas Shell Petroleum

Rule 45 of the Rules of Court, assailing the Corporation (Pilipinas Shell) is a corporation
August 20, 2002 Decision[2] and August 29, 2003 engaged in the business of refining and
processing petroleum products.[5] The invoicing
of the products was made by Pilipinas Shell, but
delivery was effected through Arabay, Inc., its
sole distributor at the time material to the
present case.[6] From 1955 to 1975, Respondent
John Bordman Ltd. of Iloilo, Inc. (John
Bordman) purchased bunker oil in drums from
Arabay.[7] When Arabay ceased its operations in
1975, Pilipinas Shell took over and directly
marketed its products to John Bordman.[8]
On August 20, 1980, John Bordman filed
against Pilipinas Shell a civil case for specific
performance. The former demanded the latters
short deliveries of fuel oil since 1955; as well as
the payment of exemplary damages, attorneys
fees and costs of suit.[9] John Bordman alleged
that Pilipinas Shell and Arabay had billed it at
210 liters per drum, while other oil companies
operating in Bacolod had
billed their customers at 200 liters per drum. On
July 24, 1974, when representatives from John
Bordman and Arabay conducted a volumetric
test to determine the quantity of fuel oil actually
delivered, the drum used could only fill up to 190
liters, instead of 210 liters, or a short delivery rate
of 9.5%.[10] After this volumetric test, Arabay
reduced its billing rate to 200 (instead of 210)
liters per drum, except for 4 deliveries between
August 1 and September 9, 1974, when the
billing was at 190 liters per drum.[11]
On January 23, 1975, another volumetric
test allegedly showed that the drum could
contain only 187.5 liters.[12] On February 1, 1975,
John Bordman requested from Pilipinas Shell
that 640,000 liters of fuel oil, representing the
latters alleged deficient deliveries, be credited to
the formers account.[13] The volume demanded
was adjusted to 780,000 liters, upon a realization
that the billing rate of 210 liters per drum had
been effective since 1966.
On October 24, 1977 and November 9,
1977, representatives from John Bordman, the
auditor of the Iloilo City Commission on Audit,
pump boat carriers, and truck drivers conducted
actual measurements of fuel loaded on tanker
trucks as transferred to dented drums at mouth
full. They found that the drums could contain
180 liters only.[14] In its Complaint, John
Bordman prayed for the appointment of
commissioners to ascertain the volume of short
deliveries.[15]
On October 21, 1980, Pilipinas Shell and
Arabay filed their Answer with
Counterclaim.[16] They specifically denied that
fuel oil deliveries had been less than those
billed.[17] Moreover, the drums used in the
volumetric tests were allegedly not representative
of the ones used in the actual deliveries.[18]
By way of affirmative defense, Pilipinas
Shell and Arabay countered that John Bordman
had no cause of action against them.[19] If any
existed, it had been waived or extinguished; or
otherwise barred by prescription, laches, and
estoppel.[20]
 During the pretrial, the parties agreed to
limit the issues to the following: (1) whether the
action had prescribed, and (2) whether there had
been short deliveries in the quantities of fuel
oil.[21] John Bordmans Motion for Trial by
Commissioner was granted by the RTC,[22] and
the court-appointed commissioner submitted her
Report on April 20, 1988.[23]
On April 3, 1989, Pilipinas Shell and
Arabay filed a Motion for Resolution of their
affirmative defense of prescription.[24] Because
prescription had not been established with
certainty, the RTC ordered them on November
6, 1989, to present evidence in support of their
defense.[25]
On August 30, 1991, the RTC issued a
Decision in favor of respondent.[26] Pilipinas
Shell and Arabay were required to deliver to
John Bordman 916,487.62 liters of bunker fuel
oil, to pay actual damages of P1,000,000;
exemplary damages of P500,000; attorneys fees
of P500,000; and the costs of suit.[27] The basis of
the trial courts decision was predicated on the
following pronouncement:
Since [respondent] had fully paid their
contract price at 210 liters per drum,
then the [petitioner] should deliver to the
[respondent] the undelivered volume of
fuel oil from 1955 to 1974, which is 20
liters per drum; and 10 liters per drum
from 1974 to 1977. Per the invoice
receipts submitted, the total volume of
fuel oil which [petitioner] have failed to
deliver to [respondent] is 916,487.62
liters.[28]
 Pilipinas Shell appealed to the CA, alleging
that John Bordman had failed to prove the short
deliveries; and that the suit had been barred by
estoppel, laches, and prescription.[29]
Ruling of the Court of Appeals
Upholding the trial court, the CA overruled
petitioners objections to the evidence of
respondent in relation to the testimonies of the
latters witnesses and the results of the volumetric
tests.[30] The CA noted that deliveries from 1955
to 1977 had been admitted by petitioner; and the
fact of deficiency, established by respondent.[31]
The appellate court also debunked petitioners
claims of estoppel and laches. It held that the
stipulation in the product invoices stating that
respondent had received the products in good
order was not controlling.[32] On the issue of
prescription, the CA ruled that the action had
been filed within the period required by law.[33]
Hence, this Petition.[34]
The Issues
Petitioner states the issues in this wise:
I.
Respondents allegation that the Petition
must be summarily dismissed for
containing a false, defective and
unauthorized verification and
certification against forum shopping is
patently unmeritorious, as the requisites
for a valid verification and certification
against forum shopping have been
complied with.
II.
The Decisions of the court a quo and of
the Honorable Court of Appeals were
clearly issued with grave abuse of
discretion, based as they are on an
unmistakable misappreciation of facts
clearly appearing in the records of the
case.
A.
The Honorable Court of
Appeals erred giving full faith
and credence to the testimony
of respondents sole witness,
who was neither an expert
witness nor one with personal
knowledge of the material
facts.
B.
The Honorable Court of
Appeals erred in ruling that
the testimony of respondents
sole witness was not
controverted and that the
results of his volumetric tests
were not disproved by
petitioner as the records of
the court a quo indubitably
show that petitioner disputed
the testimony of said witness
in every material respect.
C.
The court a quo and the
Honorable Court of Appeals
erred when it failed to hold
that the results of the
volumetric tests conducted by
respondents sole witness are
not worthy of full faith and
credence, considering that
drums subjected to said tests
in 1974 and 1975 were not
the same with, or otherwise
similar to those used by
petitioner in the deliveries
made to respondent since
1955.
D.
The Honorable Court of
Appeals erred in holding that
petitioners unilateral reduction
of billing rates constitutes an
implied admission of the fact
of short deliveries. The
reduction was made for no
other purpose than as a
business accommodation of a
valued client.
 III. The Courts Ruling

The court a quo, as well as the

Honorable Court of Appeals, gravely
erred in not ruling that respondents
claims of alleged short deliveries for the
period 1955 to 1976 were already
barred by prescription.
IV.
In the main, the Petition has no merit, except in
regard to the CAs grant of exemplary damages.
First Issue:
Validity of Verification and Certification

The Honorable Court of Appeals and the

court a quo erred in not ruling that
respondents claims are barred by Preliminarily, the Court shall tackle
estoppel and laches considering that
respondent failed to assert its claim for respondents allegation that petitioners verification
about twenty-five (25) years.
and certification against forum shopping had not
V. complied with, and were in fact made in
The Honorable Court of Appeals erred contravention of, Section 4 of Rule 45 of the Rules
in awarding to respondent
compensatory damages, exemplary of Court.[36] Respondent alleges that Romeo B.
damages, attorneys fees and cost of
Garcia, vice-president of Pilipinas Shell, had no
suit, when petitioner has not otherwise
acted in a wanton, fraudulent, reckless, authority to execute them.[37]
oppressive or malevolent manner.[35]
 The records, however, show that
petitioners president conferred upon its vice-
president the power to institute actions. As
certified by the assistant board secretary, the
delegation was authorized by petitioners board
of directors.[38] The power to institute actions
necessarily included the power to execute the
verification and certification against forum
shopping, as required in a petition for review
before this Court.
In any event, the policy of liberal
interpretation of procedural rules compels us to
give due course to the Petition.[39] There appears to
be no intention to circumvent the need for proper
verification and certification, which are intended to
assure the truthfulness and correctness of the
allegations in the Petition and to discourage forum
shopping.[40]
Second Issue:
Appreciation of Facts
As a general rule, questions of fact may not be
raised in a petition for review.[41] The factual
findings of the trial court, especially when
affirmed by the appellate court, are binding and
conclusive on the Supreme
Court.[42]Nevertheless, this rule has certain
exceptions,[43] which petitioner asserts are present
in this case.[44] The Court reviewed the evidence
presented and revisited the applicable pertinent
rules. Being intertwined, the issues raised by

petitioner relating to the evidence will be We clarify. Macarubbo testified that sometime in
discussed together. May 1974, respondent had contacted him to

review the reception of fuel at its lime plant. He

Objection to Respondents Witness discovered that Arabay had been billing

respondent at 210 liters per drum, while other oil

Petitioner claims that the trial court erred in
companies billed their customers at 200 liters per
giving credence to the testimony of respondents
drum.[47] On July 24, 1974, he and Jerome Juarez,
witness, Engineer Jose A. Macarubbo. The
branch manager of Pilipinas Shell, conducted a
testimony had allegedly consisted of his personal
volumetric test to determine the amount of fuel
opinion. Under the Rules of Evidence, the
that was actually being delivered to
opinion of a witness is not admissible, unless it is
respondent.[48] On January 25, 1975, the test was
given by an expert.[45] Macarubbo was allegedly
again conducted in the presence of Macarubbo,
not an expert witness; neither did he have

personal knowledge of material facts.[46]

Juarez and Manuel Ravina (Arabays sales

supervisor).[49]
Challenge to Volumetric Tests
From the foregoing facts, it is evident that

Macarubbo did not testify as an expert witness. Petitioner disputes the CAs finding that it had
The CA correctly noted that he had testified failed to disprove the results of the volumetric
based on his personal knowledge and tests conducted by respondent. The former
involvement in discovering the short claims that it was able to controvert the latters
deliveries.[50] His testimony as an ordinary evidence.[52]
witness was aptly allowed by the appellate court

under the following rule on admissibility: During the July 24, 1974 volumetric test,
Sec. 36. Testimony generally representatives of both petitioner and
confined to personal knowledge;
hearsay excluded. A witness can testify respondent allegedly agreed to conduct two tests
only to those facts which he knows of
his personal knowledge; that is, which using drums independently chosen by
are derived from his own perception,
except as otherwise provided in these
rules.[51]
each.[53] Respondent allegedly chose the worst-
dented drum that could fill only up to 190 liters.

The second drum, which was chosen by Petitioner also challenges the reliability of
petitioner, was not tested in the presence of the volumetric tests on the grounds of failure to

Macarubbo because of heavy rain.[54] It simulate the position of the drums during

supposedly filled up to 210 liters, however.[55] filling[56] and the fact that those tested were not

representative of the ones used from 1955 to

The issue, therefore, relates not to the 1974.[57] These contentions fail to overturn the

submission of evidence, but to its weight and short deliveries established by respondent.

credibility. While petitioner may have submitted The evidence of petitioner challenging the

evidence, it failed to disprove the short volumetric tests was wanting. It did not present

deliveries. The lower courts obviously gave any as regards the correct position of the drums

credence to the volumetric tests witnessed by during loading. Notably, its representative had

both parties as opposed to those done solely by witnessed the two tests showing the short

petitioner. deliveries.[58] He therefore had the opportunity to


correct the position of the drums, if indeed they
had been incorrectly positioned. Further, there
was no proof that those used in previous years
were all good drums with no defects. Neither
was there evidence that its deliveries from 1955
manner the deliveries were made,
whether pre-packed drums, by the dip
stick method or through ex-jetty, the fact
remains that [petitioner] failed to
overcome the burden of proving that
indeed the drums used during the
deliveries contain 210 liters. The
[petitioner], to support its claim, adduced
no evidence. Moreover, it failed to
disprove the results of the volumetric
tests.[59]

had been properly measured.

From the foregoing observations, it is Having sustained the finding of short deliveries,

apparent that the evidence presented by both the Court finds it no longer necessary to address

parties preponderates in favor of respondent. the contention of petitioner that its subsequent

The Court agrees with the following reduction of billings constituted merely a

observations of the CA: business accommodation.[60]

[Petitioner] posits that its fuel

deliveries were properly measured Third Issue:
and/or calibrated. To the mind of this Prescription
Court, regardless of what method or
Action Based on Contract Sale with petitioner, and from which resulted the

formers obligation in the present case. Any

action to enforce a breach of that Contract
Petitioner avers that respondents action -- a
prescribes in ten years.[63]
claim for damages as a result of over-billing --

has already prescribed. Respondents claim

Prescriptive Period Counted from
supposedly constitutes a quasi-delict, which the Accrual of the Cause of Action

prescribes in four years.[61]

Petitioner avers that the action of respondent,

We do not agree. It is elementary that a quasi- even if based on a Contract, has nevertheless

delict, as a source of an obligation, occurs only already prescribed, because more than ten years

when there is no preexisting contractual relation had lapsed since 1955 to August 20, 1970 -- the

between the parties.[62] The action of respondent period of short deliveries that the latter seeks to

for specific performance was founded on short recover.[64] Respondents request for fuel

deliveries, which had arisen from its Contract of adjustments on October 24, 1974, February 1,
1975, April 3, 1975, and September 22, 1975, extrajudicial demands that interrupted the

were not formal demands that would interrupt prescriptive period.[67] Nevertheless, the
the prescriptive period, says petitioner. interruption has no bearing on the prescriptive

period, as will be shown presently.

The Court shall first address the contention that

formal demands were not alleged in the Cause of Action Defined

Complaint. This argument was not raised in the
Actions based upon a written contract should be
courts a quo; thus, it cannot be brought before
brought within ten years from the time the right
this tribunal.[65] Well settled is the rule that issues
of action accrues.[68] This accrual refers to the
not argued in the lower courts cannot be raised
cause of action, which is defined as the act or the
for the first time on appeal.[66] At any rate, it
omission by which a party violates the right of
appears from the records that respondents letters
another.[69]
to petitioner dated October 24, 1974 and

February 1, 1975 were formal and written

 Jurisprudence is replete with the elements violation.[72] Therefore, the period of prescription

of a cause of action: (1) a right in favor of the commences, not from the date of the execution
plaintiff by whatever means and under whatever of the contract, but from the occurrence of the

law it arises or is created; (2) an obligation on the breach.

part of the named defendant to respect or not to

violate the right; and (3) an act or omission on The cause of action resulting from a breach

the part of the defendant violative of the right of of contract is dependent on the facts of each

the plaintiff or constituting a breach of an particular case. The following cases involving

obligation to the latter.[70] It is only when the last prescription illustrate this statement.

element occurs that a cause of action arises.[71]

Nabus v. Court of Appeals[73] dealt with an

Applying the foregoing elements, it can action to rescind a Contract of Sale. The cause of

readily be determined that a cause of action in a action arose at the time when the last installment

contract arises upon its breach or was not paid. Since the case was filed ten years
after that date, the action was deemed to have

prescribed.[74] Banco Filipino Savings & Mortgage Bank v.

Court of Appeals[77] involved a Contract of Loan

In Elido v. Court of Appeals,[75] the overdraft with real estate mortgages, whereby the creditor

Agreement stipulated that the obligation was could unilaterally increase the interest rate. When

payable on demand. Thus, the breach started the debtor failed to pay the loan, the creditor

only when that judicial demand was made. This foreclosed on the mortgage. The Court ruled that

rule was applied recently to China Banking the cause of action for the annulment of the

Corporation v. Court of Appeals,[76] which held that foreclosure sale should be counted from the date

the prescriptive period commenced on the date the debtor discovered the increased interest rate.[78]

of the demand, not on the maturity of the

certificate of indebtedness. In that case, the In Cole v. Gregorio,[79] the agreement to buy

certificate had stipulated that payment should be and sell was conditioned upon the conduct of a

made upon presentation. preliminary survey of the land to verify whether

it contained the area stated in the Tax deemed that the issues had not yet been joined

Declaration. Both the agreement and the survey prior to the definite denial of the claim, because
were made in 1963. The Court ruled that the the employee could have still been reinstated.[83]

right of action for specific performance arose

only in 1966, when the plaintiff discovered the Naga Telephone Co. v. Court of

completion of the survey.[80] Appeals[84] involved the reformation of a

Contract. Among others, the grounds for the

Serrano v. Court of Appeals[81]dealt with action filed by the plaintiff included allegations

money claims arising from a Contract of that the contract was too one-sided in favor of

Employment, which would prescribe in three the defendant, and that certain events had made

years from the time the cause of action the arrangement inequitable.[85] The Court ruled

accrued.[82] The Court noted that the cause of that the cause of action for a reformation would

action had arisen when the employer made a arise only when the contract appeared

definite denial of the employees claim. It was disadvantageous.[86]

 dependence upon the seller
Cause of Action in
the Present Case for the correctness of the volume. When fuel is
delivered in drums, a buyer readily assumes that

The Court of Appeals noted that, in the the agreed volume can be, and actually is,

case before us, respondent had been negotiating contained in those drums.

with petitioner since 1974. Accordingly, the CA

ruled that the cause of action had arisen only in Buyer dependence is common in many

1979, after a manifestation of petitioners denial ordinary sale transactions, as when gasoline is

of the claims.[87] loaded in the gas tanks of motor vehicles, and

when beverage is purchased in bottles and ice

The nature of the product in the present cream in bulk containers. In these cases, the

factual milieu is a major factor in determining buyers rely, to a considerable degree, on the

when the cause of action has accrued. The sellers representation that the agreed volumes are

delivery of fuel oil requires the buyers being delivered. They are no longer expected to
make a meticulous measurement of each and
every delivery.
To the mind of this Court, the cause of
action in the present case arose on July 24, 1974,
when respondent discovered the short deliveries
with certainty. Prior to the discovery, the latter
had no indication that it was not getting what it
was paying for. There was yet no issue to speak
of; thus, it could not have brought an action
against petitioner. It was only after the discovery
of the short deliveries that respondent got into a
position to bring an action for specific
performance. Evidently then, that action was
brought within the prescriptive period when it
was filed on August 20, 1980.
Fourth Issue:
Estoppel
Petitioner alleges, in addition to prescription, that
respondent is estopped from claiming short
deliveries.[88] It is argued that, since the initial
deliveries had been made way back in 1955, the
latter belatedly asserted its right only in 1980, or
after twenty-five years. Moreover, respondent
should allegedly be bound by the Certification in
the delivery Receipts and Invoices that state as
follows:
RECEIVED ABOVE
PRODUCT(S) IN GOOD CONDITION. I
 HAVE INSPECTED THE
COMPARTMENTS OF THE BULK
LORRY, WHEN FULL AND EMPTY,
AND FOUND THEM IN ORDER.[89]
Estoppel by Laches
Estoppel by laches is the failure or neglect
for an unreasonable length of time to do that
which, by the exercise of due diligence, could or
should have been done earlier.[90] Otherwise
stated, negligence or omission to assert a right
within a reasonable time warrants a presumption
that the party has abandoned or declined the
right.[91] This principle is based on grounds of
public policy, which discourages stale claims for
the peace of society.[92]
Respondent cannot be held guilty of delay
in asserting its right during the time it did not yet
know of the short deliveries. The facts in the
present case show that after the discovery of the
short deliveries, it immediately sought to recover
the undelivered fuel from petitioner.[93] Laches
refers, inter alia, to the length of time in asserting
a claim. The Court, therefore, agrees with the
lower courts that respondents claim was not lost
by laches.
Alleged Certification Not a Bar
It is not disputed that the alleged
Certification stating that respondent received the
fuel oil in good condition is in the nature of a favored when the facts and circumstances

contract of adhesion.[94] The statement was in warrant the contrary.[96] Noting the nature of the
fine print at the lower right of petitioners product in the present factual milieu, as

invoices.[95] It was made in the form and language discussed earlier in the claim of prescription, the

prepared by petitioner. The latters customers, dependence of the buyer upon the seller makes

including respondent, were required to sign the the stipulation inapplicable.

statement upon every delivery. The primary

purpose of an invoice, however, is merely to Indeed, it would be too cumbersome and

evidence delivery and receipt of the goods stated impractical for respondent to measure the fuel

in it. oil in each and every drum delivered.

Nonetheless, upon delivery by petitioner, the

While the Court has sustained the validity former was obliged to sign the Certification in

of similar stipulations in other contracts, it has the invoice. In signing it, respondent could not

also recognized that reliance on them cannot be have waived the right to a legitimate claim for
hidden defects. Thus, it is not estopped from awards of exemplary damages and attorneys fees

recovering short deliveries. in favor of respondent.[98] The directive for the

Doubts in the interpretation of stipulations delivery of 916,487.62 liters of bunker oil will no

in contracts of adhesion should be resolved longer be taken up because, as discussed earlier,

against the party that prepared them. This this fact is borne out by the evidence.

principle especially holds true with regard to

waivers, which are not presumed, but which The CA sustained the award of exemplary

must be clearly and convincingly shown.[97] damages because of petitioners wanton refusal to

deliver the shortages of fuel oil after the demand

Fourth Issue:
Exemplary Damages and Attorneys Fees was made.[99] Similarly, attorneys fees were

imposed, because respondent had been compelled

to litigate to protect its interests.[100] Both awards,

In the last error assigned, petitioner challenges however, were each reduced from P500,000
the Order for specific performance and the to P100,000.[101]
 readily granted respondents requests to conduct

Exemplary Damages Not Proper volumetric tests. It simply had the mistaken
belief that it was not liable for any shortages.
Exemplary damages are imposed as a corrective
Unfortunately, the evidence showed the contrary.
[102]
measure when the guilty party has acted in a
Absent any showing of bad faith on the part of
wanton, fraudulent, reckless, oppressive, or
petitioner, exemplary damages cannot be
[103]
malevolent manner. These damages are
imposed upon it.
awarded in accordance with the sound discretion

of the court.[104]
Attorneys Fees Allowed

Petitioner argues that its refusal to deliver the Petitioner claims that the award of attorneys fees

shortages of fuel was premised on good was tied up with the award for exemplary

faith.[105] Indeed, records reveal that it had damages.[107] Since those damages were not

reviewed respondents requests for the delivery of recoverable, then the attorneys fees allegedly had

shortages before declining them.[106] It likewise no legal basis.

 will not totally recompense respondent for the

While attorneys fees are recoverable when actual fees spent to prosecute its cause. The case
exemplary damages are awarded, the former may has dragged on unnecessarily despite petitioners

also be granted when the court deems it just and failure to present countervailing evidence during

equitable.[108] The grant of attorneys fees depends the trial. Moreover, respondent was compelled to

on the circumstances of each case and lies within litigate, notwithstanding its attempt at an

the discretion of the court. They may be awarded amicable settlement from the time it discovered

when a party is compelled to litigate or to incur the shortages in 1974 until the actual filing of the

expenses to protect its interest by reason of an case in 1980.[111]

unjustified act by the other.[109]

WHEREFORE, the Petition is
hereby DENIED. The assailed Decision and
The Court agrees that the award
Resolution are AFFIRMED with the
of P100,000 as attorneys fees is very
slight MODIFICATION that the award of
reasonable;[110] in fact, it is almost symbolic, as it

exemplary damages is deleted. Costs against
petitioner.
SO ORDERED.
NAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M.
MAGGAY, VS. THE COURT OF APPEALS AND CAMARINES
SUR II ELECTRIC COOPERATIVE, INC. (CASURECO II)
1994 February 24
230 SCRA 351
FACTS: Petitioner Naga Telephone Co., Inc. (NATELCO) is a
telephone company rendering local as well as long distance
service in Naga City while private respondent Camarines Sur II
Electric Cooperative, Inc. (CASURECO II) is a private corporation
established for the purpose of operating an electric power service
in the same city.
On November 1, 1977, the parties entered into a contract for the
use by petitioners in the operation of its telephone service the
electric light posts of private respondent in Naga City. In
consideration therefor, petitioners agreed to install, free of
charge, ten (10) telephone connections for the use by private
respondent. After the contract had been enforced for over ten
(10) years, private respondent filed with the Regional Trial Court
against petitioners for reformation of the contract with damages,
on the ground that it is too one-sided in favor of petitioners; that it
is not in conformity with the guidelines of the National
Electrification Administration (NEA); that after eleven (11) years
of petitioners' use of the posts, the telephone cables strung by
them thereon have become much heavier with the increase in the
volume of their subscribers; that a post now costs as much as
P2,630.00; so that justice and equity demand that the contract be
reformed to abolish the inequities thereon.
As second cause of action, private respondent alleged that
starting with the year 1981, petitioners have used 319 posts
outside Naga City, without any contract with it; that at the rate of
P10.00 per post, petitioners should pay private respondent for the
use thereof the total amount of P267,960.00 from 1981 up to the
filing of its complaint; and that petitioners had refused to pay
private respondent said amount despite demands. And as third
cause of action, private respondent complained about the poor
servicing by petitioners.
The trial court ruled, as regards private respondent’s first cause of
action, that the contract should be reformed by ordering
petitioners to pay private respondent compensation for the use of
their posts in Naga City, while private respondent should also be
ordered to pay the monthly bills for the use of the telephones also
in Naga City. And taking into consideration the guidelines of the
NEA on the rental of posts by telephone companies and the
increase in the costs of such posts, the trial court opined that a
monthly rental of P10.00 for each post of private respondent used
by petitioners is reasonable, which rental it should pay from the
filing of the complaint in this case on January 2, 1989. And in like
manner, private respondent should pay petitioners from the same
date its monthly bills for the use and transfers of its telephones in
Naga City at the same rate that the public are paying.
On private respondent's second cause of action, the trial court
found that the contract does not mention anything about the use
by petitioners of private respondent's posts outside Naga City.
Therefore, the trial court held that for reason of equity, the
contract should be reformed by including therein the provision
that for the use of private respondent's posts outside Naga City,
petitioners should pay a monthly rental of P10.00 per post, the
payment to start on the date this case was filed, or on January 2,
1989, and private respondent should also pay petitioners the
monthly dues on its telephone connections located outside Naga
City beginning January, 1989. And with respect to private
respondent's third cause of action, the trial court found the claim
not sufficiently proved.
The Court of Appeals affirmed the decision of the trial court, but
based on different grounds to wit: (1) that Article 1267 of the New
Civil Code is applicable and (2) that the contract was subject to a
potestative condition which rendered said condition void.
ISSUE: Whether or not the principle of Rebus Sic Stantibus is
applicable in the case at bar.
RULING: No. Article 1267 speaks of "service" which has become
so difficult. Taking into consideration the rationale behind this
provision, the term "service" should be understood as referring to
the "performance" of the obligation.
In the present case, the obligation of private respondent consists
in allowing petitioners to use its posts in Naga City, which is the
service contemplated in said article. Furthermore, a bare reading
of this article reveals that it is not a requirement thereunder that
the contract be for future service with future unusual change.
According to Senator Arturo M. Tolentino, Article 1267 states in
our law the doctrine of unforseen events. This is said to be based
on the discredited theory of rebus sic stantibus in public
international law; under this theory, the parties stipulate in the
light of certain prevailing conditions, and once these conditions
cease to exist the contract also ceases to exist. Considering
practical needs and the demands of equity and good faith, the
disappearance of the basis of a contract gives rise to a right to
relief in favor of the party prejudiced.
The allegations in private respondent's complaint and the
evidence it has presented sufficiently made out a cause of action
under Article 1267. The Court, therefore, release the parties from
their correlative obligations under the contract. However, the
disposition of the present controversy does not end here. The
Court has to take into account the possible consequences of
merely releasing the parties therefrom: petitioners will remove the
telephone wires/cables in the posts of private respondent,
resulting in disruption of their essential service to the public; while
private respondent, in consonance with the contract will return all
the telephone units to petitioners, causing prejudice to its
business.
The Court shall not allow such eventuality. Rather, the Court
requires, as ordered by the trial court: 1) petitioners to pay private
respondent for the use of its posts in Naga City and in the towns
of Milaor, Canaman, Magarao and Pili, Camarines Sur and in
other places where petitioners use private respondent's posts, the
sum of ten (P10.00) pesos per post, per month, beginning
January, 1989; and 2)private respondent to pay petitioner the
monthly dues of all its telephones at the same rate being paid by
the public beginning January, 1989. The peculiar circumstances
of the present case, as distinguished further from the Occeña
case, necessitates exercise of a equity jurisdiction. By way of
emphasis, the Court reiterates the rationalization of respondent
court that:
". . . In affirming said ruling, we are not making a new contract for
the parties herein, but we find it necessary to do so in order not to
disrupt the basic and essential services being rendered by both
parties herein to the public and to avoid unjust enrichment by
appellant at the expense of plaintiff . . . "
Decision affirmed.
NABUS vs. PACSON , G.R. No. 161318, November 25, 2009
FACTS:
 The spouses Bate and Julie Nabus were the owners of parcels
of land with a total area of 1,665 square meters, situated in
Pico, La Trinidad, Benguet, duly registered in their names
under TCT No. T-9697 of the Register of Deeds of the Province
of Benguet. The property was mortgaged by the Spouses Nabus
 to the Philippine National Bank (PNB), La Trinidad Branch, to
secure a loan in the amount of P30,000.00.
 On February 19, 1977, the Spouses Nabus executed a Deed of
Conditional Sale4 covering 1,000 square meters of the 1,665
square meters of land in favor of respondents Spouses Pacson
for a consideration of P170,000.00, which was duly notarized
on February 21, 1977.
 Pursuant to the Deed of Conditional Sale, respondents paid
PNB the amount of P12,038.86 on February 22, 19776 and
P20,744.30 on July 17, 19787 for the full payment of the loan.
 On December 24, 1977, before the payment of the balance of
the mortgage amount with PNB, Bate Nabus died. On August
17, 1978, his surviving spouse, Julie Nabus, and their minor
daughter, Michelle Nabus, executed a Deed of Extra Judicial
Settlement over the registered land covered by TCT No. 9697.
On the basis of the said document, TCT No. T- 177188 was
issued on February 17, 1984 in the names of Julie Nabus and
Michelle Nabus.
 Meanwhile, respondents continued paying their balance, not in
installments of P2,000.00 as agreed upon, but in various, often
small amounts ranging from as low as P10.009 to as high as
P15,566.00,10 spanning a period of almost seven years, from
March 9, 197711 to January 17, 1984.12
 There was a total of 364 receipts of payment. The receipts
showed that the total sum paid by respondents to the Spouses
Nabus was P112,455.16,14 leaving a balance of P57,544.84.
 During the last week of January 1984, Julie Nabus,
accompanied by her second husband, approached Joaquin
Pacson to ask for the full payment of the lot. Joaquin Pacson
agreed to pay, but told her to return after four days as his
daughter, Catalina Pacson, would have to go over the
numerous receipts to determine the balance to be paid. When
Julie Nabus returned after four days, Joaquin sent her and his
daughter, Catalina, to Atty. Elizabeth Rillera for the execution
of the deed of absolute sale. Since Julie was a widow with a
minor daughter, Atty. Rillera required Julie Nabus to return in
four days with the necessary documents, such as the deed of
extrajudicial settlement, the transfer certificate of title in the
names of Julie Nabus and minor Michelle Nabus, and the
guardianship papers of Michelle. However, Julie Nabus did not
return.
 Getting suspicious, Catalina Pacson went to the Register of
Deeds of the Province of Benguet and asked for a copy of the
title of the land. She found that it was still in the name of Julie
and Michelle Nabus.
 After a week, Catalina Pacson heard a rumor that the lot was
already sold to petitioner Betty Tolero.
 On March 28, 2008, respondents Joaquin and Julia Pacson filed
with the Regional Trial Court of La Trinidad, Benguet (trial
court) a Complaint for Annulment of Deeds, with damages and
prayer for the issuance of a writ of preliminary injunction.
 Julie and Michelle Nabus alleged that respondent Joaquin
Pacson did not proceed with the conditional sale of the subject
property when he learned that there was a pending case over
the whole property. Joaquin proposed that he would rather
lease the property with a monthly rental of P2,000.00 and
apply the sum ofP13,000.00 as rentals, since the amount was
already paid to the bank and could no longer be withdrawn.
Hence, he did not affix his signature to the second page of a
copy of the Deed of Conditional Sale.26 Julie Nabus alleged that
in March 1994, due to her own economic needs and those of
her minor daughter, she sold the property to Betty Tolero, with
authority from the court.
 Betty Tolero put up the defense that she was a purchaser in
good faith and for value. She testified that it was Julie Nabus
who went to her house and offered to sell the property
consisting of two lots with a combined area of 1,000 square
meters. She consulted Atty. Aurelio de Peralta before she
agreed to buy the property. She and Julie Nabus brought to
Atty. De Peralta the pertinent papers such as TCT No. T-17718
in the names of Julie and Michelle Nabus, the guardianship
papers of Michelle Nabus and the blueprint copy of the survey
plan showing the two lots. After examining the documents and
finding that the title was clean, Atty. De Peralta gave her the go-
signal to buy the property.
ISSUES:
 1. Whether or not the Deed of Conditional Sale was converted
into a contract of lease.
2. Whether the Deed of Conditional Sale was a contract to sell or a
contract of sale.
RULING:
1. The Deed of Conditional Sale entered into by the Spouses
Pacson and the Spouses Nabus was not converted into a
contract of lease. The 364 receipts issued to the Spouses
Pacson contained either the phrase "as partial payment of lot
located in Km. 4" or "cash vale" or "cash vale (partial payment
of lot located in Km. 4)," evidencing sale under the contract and
not the lease of the property. Further, as found by the trial
court, Joaquin Pacson’s non-signing of the second page of a
carbon copy of the Deed of Conditional Sale was through sheer
inadvertence, since the original contract and the other copies
of the contract were all signed by Joaquin Pacson and the other
parties to the contract.
2. The Court holds that the contract entered into by the Spouses
Nabus and respondents was a contract to sell, not a contract of
sale.
 A contract of sale is defined in Article 1458 of the Civil
Code, thus:
Art. 1458. By the contract of sale, one of the contracting
parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or conditional.
 Ramos v. Heruela differentiates a contract of absolute
sale and a contract of conditional sale as follows:
Article 1458 of the Civil Code provides that
a contract of sale may be absolute or conditional. A which for present purposes we shall take as the full
contract of sale is absolute when title to the property passes to
the vendee upon delivery of the thing sold. A deed of
sale is absolute when there is no stipulation in the contract that
title to the property remains with the seller until full
payment of the purchase price. The sale is also absolute if
there is no stipulation giving the vendor the right to cancel
unilaterally the contract the moment the vendee fails to
pay within a fixed period. In a conditional sale, as in a contract
to sell, ownership remains with the vendor and does not pass
to the vendee until full payment of the purchase price. The
full payment of the purchase price partakes of a suspensive
condition, and non- fulfillment of the condition prevents
the obligation to sell from arising.36
 Coronel v. Court of Appeals distinguished a contract to
sell from a contract of sale, thus:
Sale, by its very nature, is a consensual
contract because it is perfected by mere consent. The
essential elements of a contract of sale are the
following:
a. Consent or meeting of the
minds, that is, consent to
transfer ownership in
exchange for the price;
b. Determinate subject matter;
and
c. Price certain in money or its
equivalent.
Under this definition, a Contract to Sell may
not be considered as a Contract of Sale because the
first essential element is lacking. In a contract to sell,
the prospective seller explicitly reserves the transfer
of title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the
contract to sell until the happening of an event,
 payment of the purchase price. What the
seller agrees or obliges himself to do is to fulfill his
promise to sell the subject property when the
entire amount of the purchase price is delivered to
him. In other words, the full payment of the purchase
price partakes of a suspensive condition, the
non-fulfilment of which prevents the obligation to sell
from arising and, thus, ownership is retained by the
prospective seller without further remedies by
the prospective buyer.
 Stated positively, upon the fulfillment of the
suspensive condition which is the full payment of the
purchase price, the prospective seller’s obligation to
sell the subject property by entering into a contract of
sale with the prospective buyer becomes demandable
as provided in Article 1479 of the Civil Code which
states:
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a
consideration distinct from the price.
 A contract to sell may thus be defined as a bilateral
contract whereby the prospective seller, while
expressly reserving the ownership of the subject
property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment
of the condition agreed upon, that is, full payment of
the purchase price.
 It is not the title of the contract, but its express terms
or stipulations that determine the kind of contract
entered into by the parties. In this case, the contract
entitled "Deed of Conditional Sale" is actually a
contract to sell. The contract stipulated that "as soon
as the full consideration of the sale has been paid by
the vendee, the corresponding transfer documents
shall be executed by the vendor to the vendee for the
portion sold."41 Where the vendor promises to
execute a deed of absolute sale upon the completion
by the vendee of the payment of the price, the contract
is only a contract to sell."42 The aforecited stipulation
shows that the vendors reserved title to the subject
property until full payment of the purchase price.
 If respondents paid the Spouses Nabus in accordance
with the stipulations in the Deed of Conditional Sale,
the consideration would have been fully paid in June
1983. Thus, during the last week of January 1984, Julie
Nabus approached Joaquin Pacson to ask for the full
payment of the lot. Joaquin Pacson agreed to pay, but
told her to return after four days as his daughter,
Catalina Pacson, would have to go over the numerous
receipts to determine the balance to be paid.
 Unfortunately for the Spouses Pacson, since the Deed
of Conditional Sale executed in their favor was merely
a contract to sell, the obligation of the seller to sell
becomes demandable only upon the happening of the
suspensive condition. The full payment of the
purchase price is the positive suspensive condition,
the failure of which is not a breach of contract, but
simply an event that prevented the obligation of the
vendor to convey title from acquiring binding force.
Thus, for its non-fulfilment, there is no contract to
speak of, the obligor having failed to perform the
suspensive condition which enforces a juridical
relation. With this circumstance, there can be no
rescission or fulfilment of an obligation that is still
non-existent, the suspensive condition not having
occurred as yet. Emphasis should be made that the
 breach contemplated in Article 1191 of the New Civil
Code is the obligor’s failure to comply with an
obligation already extant, not a failure of a condition to
render binding that obligation.
 Since the contract to sell was without force and effect,
Julie Nabus validly conveyed the subject property to
another buyer, petitioner Betty Tolero, through a
contract of absolute sale, and on the strength thereof,
new transfer certificates of title over the subject
property were duly issued to Tolero.
 The Spouses Pacson, however, have the right to the
reimbursement of their payments to the Nabuses, and
are entitled to the award of nominal damages.
 WHEREFORE, the petition is GRANTED. The Decision
of the Court of Appeals in CA-G.R. CV No. 44941, dated
November 28, 2003, is REVERSED and SET ASIDE.
Judgment is hereby rendered upholding the validity of
the sale of the subject property made by petitioners
Julie Nabus and Michelle Nabus in favor of petitioner
Betty Tolero, as well as the validity of Transfer
Certificates of Title Nos. T-18650 and T-18651 issued
in the name of Betty Tolero. Petitioners Julie Nabus
and Michelle Nabus are ordered to reimburse
respondents spouses Joaquin and Julia Pacson the sum
of One Hundred Twelve Thousand Four Hundred Fifty-
Five Pesos and Sixteen Centavos (P112,455.16), and to
pay Joaquin and Julia Pacson nominal damages in the
amount of Ten Thousand Pesos (P10,000.00), with
annual interest of twelve percent (12%) until full
payment of the amounts due to Joaquin and Julia
Pacson.
Serrano vs CA; GR 139420 – COA
FACTS: From 1974 to 1991, A Company, the
local agent of foreign corporation B Company,
deployed petitioner Serrano as a seaman to
Liberian, British and Danish ships. As petitioners
was on board a ship most of the time, respondent
Maersk offered to send portions of petitioners salary
to his family in the Philippines by money order.
Petitioner agreed and from 1977 to 1978, he
instructed respondent Maersk to send money orders
to his family. Respondent Maersk
also deducted various amounts from his salary
for Danish Social Security System (SSS),
welfarecontributions, ship clubs, and SSS medicate.
Petitioner’s family failed to received the money
orders petitioners sent through respondent Maersk.
Upon learning this in 1978, petitioners demanded
that respondent Maersk pay him the amounts the
latter deducted from his salary, which request
were ignored. Whenever he returned to the
Philippines, petitioners follow up his money claims
but he would be told to return after several weeks
while respondent Maersk would hire him again to
board another one of their vessels for about a year.
Finally, in October 1993, petitioner wrote to
respondent Maersk demanding immediate payment
to him of the total amount of the money
orders deducted from his salary from 1977 to 1978.
On November 11, 1993, B company replied to
petitioner that they keep accounting documents
only for a certain number of years, thus data on his
money claims from 1977 to 1978 were no longer
declined petitioners demand for payment. In April
1994, petitioners filed a complaint for collection of
the total amount of the unsent money orders
and illegal salary deductionsagainst the respondents
Maersk in the Philippine
Overseas EmploymentAgency (POEA). The NLRC
dismissed within three years from the time the
cause of action accrued, otherwise they shall be
forever berried.
ISSUE: Did the money claim of petitioner
prescribe?
HELD: No. Petitioner’s cause of action
accrued only in 1993 when respondent A.P Moller
wrote to him that its accounting records showed it
had no outstanding money orders and that his case
was considered outdated. Thus the three (3) years
prescriptive period should be counted from 1993
and not 1978 and since his complaint was filed in
1994, he claims that it has not prescribed. It is
settled jurisprudence that a cause of action has
three elements, to wit (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 defendantvolatile of the right of the plaintiff or
constituting a branch of the obligation of
the defendant to the plaintiff. In October 1993,
Serrano finally demanded in writing payment of the
unsent money orders. Then and only then was the
claim categorically denied by respondent. AP. Moller
in its letter dated November 22, 1993. Following the
Baliwag Transit ruling (1989), petitioner’s cause of
action accrued only upon respondent. AP. Mollers
definite denial of his claim in November 1993.
Having filed his action five (5) months thereafter or
in April 1994, we holds that it was filed within the
three – year (3) prescriptive period provided in
Article 291 of the Labor Code.
ELIDO v CA
Remedial Law; Action; Essential elements of a cause of action.—“A cause of action
has three 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 the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff. It is only when the last element occurs or
takes place that it can be said in law that a cause of action has arisen. Translated in
terms of hypothetical situation regarding a written contract, no cause of action arises
until there is breach or violation thereof by either party. It is not, therefore, from the
date of the instrument but from the date of the breach that the period of prescription of
the action starts.”
Same; Same; Same; Prescription; It is only from the judicial demand that the cause of
action accrued and not from 11 January 1966, the date the Overdraft Agreement and
the Continuing Surety Agreement were executed.—For, even if We disregard the
various demands (anyway, no evidence was adduced as to when they were received),
this could only mean that the prescriptive period never commenced to run since there
was no point in time when petitioner could have refused to pay, or committed a
breach, until the judicial demand on 23 July 1976 which, incidentally, also suspended
the running of the period. This must be so as the Overdraft Agreement stipulates that
the obligation shall be payable upon demand, while the Continuing Surety Agreement,
being a supplemental agreement, merely provides that the obligation shall become
due upon maturity, with or without demand. Hence, it is only from this judicial demand
that the cause of action accrued, and not from 11 January 1966, the date the
Overdraft Agreement and the Continuing Surety Agreement were executed. Besides,
even assuming that the action on the debt is already barred by the statute of
limitations, this cannot prevent the debtor from recognizing the confessing judgment
upon it, which was what petitioner did in fact. Elido, Sr. vs. Court of Appeals, 216
SCRA 637, G.R. No. 95441 December 16, 1992
Cole vs Gregorio; 202 Phil. 226
Rural Bank of Calinog vs CA
Date: July 8, 2005
Petitioner: Rural Bank of Calinog Inc
Respondents: CA, Spouses Gregorio Cerbana and Filma Cerbo-Cerbana
Ponente: Tinga
Facts: Carmen D. Cerbo executed a REM over her property in favor of the
Rural Bank of Calinog. The mortgage was foreclosed and the subject
property was sold at public auction Calinog Bank as the highest bidder. The
spouses redeemed the subject property by depositing the amount of
P18,000 to Calinog Bank. To complete payment of the total redemption
price of the subject property, the spouses obtained a loan from Rural Bank
of Dingle, Iloilo, in the amount of P109,000. To secure payment of the loan
obtained from Dingle Bank, the spouses mortgaged the subject property in
favor of Dingle Bank. The spouses have paid the loan obtained from the
bank. Later, the spouses received a Notice of Sale at public auction of the
subject property allegedly for failure to pay the mortgage debt. The
spouses demanded from the bank an accounting of all payments made and
the holding in abeyance by Dingle Bank of the public sale. The public sale
proceeded as scheduled and the subject property was adjudicated in favor
of Calinog Bank. Because of the failure of the bank to account all payments
made by and for the spouses the mortgaged property was unjustly
foreclosed. Hence, the complaint.
Calinog Bank moved for the dismissal of the complaint. It said that
only Carmen Cerbo was the proper party because she was the one who
executed the mortgage. Since Carmen is dead, the case should be
dismissed against Calinog Bank. The spouses opposed claiming that they
are the heirs of Carmen. The court ordered the dismissal of the case. The
CA reversed and ruled that the spouses have both the capacity and
personality to sue. Also it ruled that the spouses need not be
parties to the mortgage contract in order to have a cause of action to
recover the payments which they allege to have paid the bank in excess of
the redemption price.
Issue: WON the spouses have a cause of action
Held: Yes
Ratio: In determining whether the allegations of a complaint are
sufficient to support a cause of action, it must be borne in mind that the
complaint does not have to establish or allege the facts proving the
existence of a cause of action at the outset; this will have to be done at the
trial on the merits of the case. If the allegations in a complaint can furnish
a sufficient basis by which the complaint can be maintained, the same
should not be dismissed regardless of the defenses that may be assessed
by the defendants. To sustain a motion to dismiss for lack of cause of
action, the complaint must show that the claim for relief does not exist
rather than that a claim has been defectively stated or is ambiguous,
indefinite or uncertain. Moreover, a defendant moving to dismiss a
complaint on the ground of lack of cause of action is regarded as having
hypothetically admitted all the averments thereof.
It is enough that private respondents allege that they made a
deposit in the amount of P18,000.00 after the mortgaged property was
sold to petitioner at public auction; that they subsequently applied for and
obtained an agricultural loan from another rural bank, the net proceeds of
which they paid to petitioner in order to discharge the obligation under the
mortgage constituted on Carmen Cerbo’s property; that the excess
amount of P392.47 was not accounted for by petitioner; and that the
P18,000 deposit was not deducted from the repurchase price of the
property. In fine, private respondents contend that they were the ones
who paid Carmen Cerbo’s loan obligation with petitioner. Whether these
allegations entitle private respondents to the reliefs prayed for is a
question which can best be resolved after trial on the merits at which each
party can present evidence to prove their respective allegations and
defenses.
It is significant to note that petitioner already filed an answer to
the complaint at which it admitted that private respondent Gregorio
Cerbaña made a deposit of P18,000 as initial payment on the redemption
price, and that the latter made a total payment of P101,000. Petitioner,
therefore, had acknowledged that it was Gregorio Cerbaña, Carmen
Cerbo’s son-in-law, who was making payments on the loan obligation. In
fact, petitioner referred to Gregorio Cerbaña as the redemptioner of the
foreclosed property.This admission cannot be disavowed by petitioner’s
allegation in its motion to dismiss filed 8 months after its answer, that
private respondents do not have a cause of action against it just because
Carmen Cerbo had already passed away.
While the death of Carmen Cerbo certainly extinguished whatever
cause of action she had against petitioner, private respondents’ cause of
action, based on the allegations in the complaint, was not thereby similarly
extinguished. Indeed, assuming the allegations of the complaint to be
true, private respondents, having paid the redemption price, have the right
to demand an accounting, to be refunded for whatever excess payments
they made, and even to redeem the property. Correlatively, petitioner,
having accepted payment from private respondents, has the obligation to
account for such payment, to return the excess, if any, and to allow
redemption.
As regards the ancillary procedural question concerning the
propriety of certiorari in lieu of appeal, we find that private respondents’
resort to certiorari is warranted under the circumstances. While it is true
that certiorari is not a substitute for appeal, jurisprudence exempts from
the application of this rule cases when the trial court’s decision or
resolution was issued without jurisdiction or with grave abuse of
discretion. Considering that the trial court in this case completely
disregarded the fact that private respondents also filed the complaint on
their own behalf and in so doing prevented the latter from having their day
in court, it gravely abused its discretion justifying private respondents’
petition for certiorari.
MISAMIS OCCIDENTAL II COOPERATIVE, INC. vs DAVID G.R. No.
129928, August 25, 2005
Facts: Private respondent David, a supplier of electrical hardware,
filed a case for specific performance and damages against MOELCI
II, a rural electric cooperative in Misamis Occidental. The said case,
which was essentially a collection suit, pending before Judge
Felixberto Olalia (hereinafter, Judge Olalia) of the RTC Manila, was
predicated on a document and that according to David is the
contract pursuant to which he sold to MOELCI II one (1) unit of 10
MVA Transformer. MOELCI II filed its Answer to Amended
Complaint which pleaded, among others, affirmative defenses
which also constitute grounds for dismissal of the complaint. These
grounds were lack of cause of action, there being allegedly no
enforceable contract between David and MOELCI II under the
Statute of Frauds pursuant to Section 1 (g) and (i), Rule 16 of the
Rules of Court, and improper venue. MOELCI II filed with the trial
court a Motion (For Preliminary Hearing of Affirmative Defenses and
Deferment of PreTrial Conference) (hereinafter referred to as
Motion) arguing that the document attached as Annex "A" to the
Amended Complaint was only a quotation letter and not a contract
as alleged by David. Thus, it contends that David’s Amended
Complaint is dismissible for failure to state a cause of action. David
contended in the main that because a motion to dismiss on the
ground of failure to state a cause of action is required to be based
only on the allegations of the complaint, the "quotation letter,"
being merely an attachment to the complaint and not part of its
allegations, cannot be inquired into. MOELCI II filed a rejoinder to
the opposition in which it asserted that a complaint cannot be
separated from its annexes; hence, the trial court in resolving a
motion to dismiss on the ground of failure to state a cause of action
must consider the complaint’s annexes. Judge Olalia issued an order
denying MOELCI II’s motion for preliminary hearing of affirmative
defenses. MOELCI II’s motion for reconsideration of the said order
was likewise denied in another order. MOELCI II elevated this
incident to the Court of Appeals by way of a special civil action for
certiorari, alleging grave abuse of discretion on the part of Judge
Olalia in the issuance of the two aforesaid orders. Court of Appeals
dismissed MOELCI II’s petition holding that the allegations in David’s
complaint constitute a cause of action. With regard to MOELCI II’s
contention that David’s Amended Complaint is dismissible as the
document, attached thereto as Annex "A," upon which David’s claim
is based is not a contract of sale but rather a quotation letter, the
Court of Appeals ruled that the interpretation of the document
requires evidence aliunde which is not allowed in determining
whether or not the complaint states a cause of action. The appellate
court further declared that when the trial court is confronted with a
motion to dismiss on the ground of lack of cause of action, it is
mandated to confine its examination for the resolution thereof to
the allegations of the complaint and is specifically enjoined from
receiving evidence for that purpose. With the denial of its Motion
for Reconsideration, petitioner is now before this Court seeking a
review of the appellate court’s pronouncements. MOELCI II asserts
that the Court of Appeals committed serious error in: (1) ruling that
the resolution of its motion to dismiss on the ground of lack of
cause of action necessitated hearings by the trial court with the end
in view of determining whether or not the document attached as
Annex "A" to the Amended Complaint is a contract as alleged in the
body of said pleading; and (2) not ordering the trial court to dismiss
the Amended Complaint on the ground of lack of cause of action.
Anent the first ground, MOELCI II further claims that with the denial
of its Petition, the appellate court in effect exhorted the trial court
to defer the resolution of its motion to dismiss until after the
hearing of the case on the merits contrary to Rule 16 of the Rules of
Court and wellsettled jurisprudence.
Issue: Whether or not the Court of Appeals erred in dismissing the
petition for certiorari and in holding that the trial court did not
commit grave abuse of discretion in denying petitioner’s Motion.
Held: No. To determine the existence of a cause of action, only the
statements in the complaint may be properly considered. It is error
for the court to take cognizance of external facts or hold preliminary
hearings to determine their existence. If the allegations in a
complaint furnish sufficient basis by which the complaint can be
maintained, the same should not be dismissed regardless of the
defenses that may be averred by the defendants. The test of
sufficiency of facts alleged in the complaint as constituting a cause
of action is whether or not admitting the facts alleged, the court
could render a valid verdict in accordance with the prayer of said
complaint. It has been hypothetically admitted that the parties had
entered into a contract sale David bound himself to supply MOELCI
II (1) unit 10 MVA Power transformer with accessories for a total
price of P5,200,000.00 plus 69 KV Line Accessories for a total price
of P2,169,500.00; that despite written and verbal demands, MOELCI
II has failed to pay the price thereof plus the custom duties and
incidental expenses of P272,722.27; and that apart from the
previously stated contract of sale, David regularly delivered various
electrical hardware to MOELCI II which, despite demands, has an
outstanding balance of P281,939.76. The court believed all the
foregoing sufficiently lay out a cause of action. Even extending our
scrutiny to Annex "A," which is after all deemed a part of the
Amended Complaint, will not result to a change in our conclusion.
The interpretation of a document requires introduction of evidence
which is precisely disallowed in determining whether or not a
complaint states a cause of action. The Court of Appeals therefore
correctly dismissed MOELCI II’s petition and upheld the trial court’s
ruling.
CHU vs. SPOUSES CUNANAN
G.R. No. 156185; September 12, 2011
Facts: Spouses Chu executed a deed of sale with
assumption of mortgage involving their five parcels
of land, in favour of Trinidad N. Cunanan. The
parties stipulated that the ownership of lots would
remain with the spouses as the vendors and would
be transferred to Cunanan only upon complete
payment of the total consideration and compliance
with the terms of the deed of sale with assumption
of mortgage. Thereafter, the Chus executed an SPA
authorizing Cunanan to borrow the amount of
consideration from any banking institution and to
mortgage the lots as security, and then to deliver the
proceeds to the Chus. Cunanan was able to transfer
the title of the lots to her name without the
knowledge of the Chus, and was able to borrow
money with the lots as security without paying the
balance and the purchase price to the Chus. She later
transferred two of the lots to Spouses Garcia. As a
result, the Chus caused the annotation of an unpaid
vendor’s lien on three of the lots. Nonteheless,
Cunanan still assigned the remaining lots to Cool
Town Realty.
The Chus commenced Civil Case No. G-
1936 in the RTC to recover the unpaid balance
from Spouses Fernando and Trinidad Cunanan (Cun
anans), which complaint was later on amended to
seek the annulment of the deed of sale with
assumption of mortgage and of the TCTs issued
pursuant to the deed, and to recover damages.
They impleaded Cool Town Realty and the Office of
the Registry of Deeds of Pampanga as defendants. By
virtue of the sale by the spouses Carlos of the two
lots to Benelda Estate, the Chus further amended the
complaint to Benelda Estate as additional defendant.
Benelda Estate filed its answer with a motion
to dismiss, claiming, among others, that the
amended complaint stated no cause of action. The
same was denied by the RTC which prompted the
former to assail the denial on certiorari in the CA.
The CA annulled RTC’s denial and dismissed the
civil case as against Benelda Estate. Said dismissal of
the case was later on upheld by the Supreme Court
in a subsequent case involving the same parties.
Subsequently, the Chus, Cunanans and Cool Town
Realty entered into a compromise agreement
whereby the Cunanans transferred to the Chus their
50% share in all the parcels of land registered in the
name of Cool Town Realty for an in consideration of
the full settlement of the case, which the RTC
approved.
Thereafter, the Chus brought another suit
against the Carloses and Benelda Estate seeking the
cancellation of the titles in Benelda Estate’s names.
The petitioners then amended their complaint to
implead the Cunanans as additional defendants. The
Cunanans and the Carloses moved for the dismissal
 of the case on several grounds including res judicata.
The RTC denied both motions holding that the
action was not barred by res judicata because there
was no identity of parties and subject matter
between the present case and the first case.
Reconsideration was sought by the Cunanans but
the same was denied, prompting them to file a
petition for certiorari in the CA which was granted.
Issue: Whether or not Civil Case No. 12251 is
barred by res judicata although the compromise
agreement did not expressly include Benelda Estate
as a party and although the compromise agreement
made no reference to the lots registered in the name
of Benelda Estates.
Ruling: Yes, Civil Case No. 12251 is barred by res
judicata although the compromise agreement did
not expressly include Benelda Estate as a party and
although the compromise agreement made no
reference to the lots registered in the name of
Benelda Estates.
A compromise agreement is a contract
whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one
already commenced. It encompasses the objects
specifically stated therein, although it may include
other objects by necessary implication, and is
binding on the contracting parties, being expressly
acknowledged as a juridical agreement between
them. It has the effect and authority of res judicata
upon the parties. The intent of the parties to settle
all their claims against each other is expressed in the
phrase “any and all their respective claims against
each other as alleged in the pleading they
respectively filed in connection with this case, which
was broad enough to cover whatever claims the
petitioners might asset based on the deed of sale
with assumption of mortgage covered all the five
lots.
Under the doctrine of res judicata, a final
judgment or decree on the merits rendered by a
court of competent jurisdiction is conclusive of the
rights of the parties or their privies in all later suits
and on all points and matters determined in the
previous suit.
The first requisite of res judicata – that the
former judgment must be final –is attendant in the
case. Civil Case No. 6-1936 was already terminated
under the compromise agreement, for the judgment,
being upon a compromise, was immediately final
and unappealable. As to the second requisite, the
RTC had jurisdiction over the cause of action in the
first case, the action being incapable of pecuniary
estimation. Lastly, that the compromise agreement
explicitly settled the entirety of the first case by
resolving all claims of the parties against each other,
indicated that the third requisite was also satisfied.
Hence all three requisites concur. Thus Civil Case
No. 12251 is barred by res judicata
HEIRS OF VALERIANO S. CONCHA, SR., Petitioners,
vs.
SPOUSES GREGORIO J. LUMOCSO and BIENVENIDA GUYA,
ET. AL., Respondents.
PONENTE: PUNO, C.J.
Facts:
Petitioners, claiming to be the rightful owners of Lot 6195 (CC:
5188), a one-hectare portion of Lot 6196-A (CC: 5433), and a
one-hectare portion of Lots 6196-B and 7529-A (CC: 5434),
under Sec. 48(b) of CA 141, filed a complaint for Reconveyance
and / or Annulment of Title against respondent
siblings Gregorio Lumocso (CC: 5188), Cristita Lumocso Vda.
de Daan (CC: 5433) and Jacinto Lumocso (CC: 5434), who are
the patent holders and registered owners of the subject lots.
The complaints alleged that: (1) on 21 May 1958, petitioners'
parents acquired a 24-hectare parcel of land by homestead; 2)
since 1931, they "painstakingly preserved" it including the
excess 4 hectares "untitled forest land"; (3) they possessed
this excess land (subject lots) "continuously, publicly,
notoriously, adversely, peacefully since 1931 when
respondents, by force, intimidation, and stealth forcibly
entered it; and (4) respondents' free patents and OCTs were
issued by fraud, deceit, bad faith and misrepresentation. Respondents
moved for dismissal on grounds of: (1) lack of
jurisdiction of RTC pursuant to Section 19(2) of BP 129, as
amended by RA 7691, the assessed values of subject lots
being less than P20K; (2) failure to state causes of action for
reconveyance; (3) prescription; and (4) waiver, abandonment,
laches and estoppel. Petitioners opposed contending that: (1)
the subject matters of the case are incapable of pecuniary
estimation; (2) their causes of action are for reconveyance
and for recovery of the value of the cut trees. Hence, the case
falls within the exclusive original jurisdiction of the RTC.
The trial court denied dismissal and the subsequent MR. On
appeal, the CA reversed RTC decision on the ground of
prescription ruling that an action for reconveyance based on
fraud prescribes in ten years. Here, the titles involved has
been issued for at least 22 years prior to the filing of the
complaints. Hence, the present appeal by certiorari under
Rule 45.
Issue:
Whether or not RTC has jurisdiction.
Ruling:
NO. CA Decision is Affirmed.
Jurisdiction over the subject matter is the power to hear and
determine cases of the general class to which the proceedings
in question belong.[28] It is conferred by law and an objection
based on this ground cannot be waived by the parties.[29] To
determine whether a court has jurisdiction over the subject
matter of a case, it is important to determine the nature of the
cause of action and of the relief sought.[30]
The trial court correctly held that the instant cases involve
actions for reconveyance.[31] An action for reconveyance
respects the decree of registration as incontrovertible but
seeks the transfer of property, which has been wrongfully or
erroneously registered in other persons' names, to its rightful
and legal owners, or to those who claim to have a better
right.[32] There is no special ground for an action for
reconveyance. It is enough that the aggrieved party has a
legal claim on the property superior to that of the registered
owner[33] and that the property has not yet passed to the
hands of an innocent purchaser for value.[34]
The reliefs sought by the petitioners in the instant cases typify
an action for reconveyance. The following are also the
common allegations in the three complaints that are sufficient
to constitute causes of action for reconveyance, viz:
(a) That plaintiff Valeriano S. Concha, Sr. together
with his spouse Dorotea Concha have painstakingly
preserve[d] the forest standing in the area [of their
24-hectare homestead] including the four hectares untitled
forest land located at the eastern portion of the forest from
1931 when they were newly married, the date they
acquired this property by occupation or possession;[35]
(b) That spouses Valeriano S. Concha Sr. and
Dorotea P. Concha have preserved the forest trees standing
in [these parcels] of land to the exclusion of the defendants
Lomocsos or other persons from 1931 up to November 12,
1996 [for Civil Case No. 5188] and January 19
account of fraud, deceit, bad faith and
misrepresentation;[40] and
(f) The land in question has not been transferred to
an innocent purchaser.[41]
These cases may also be considered as actions to remove
cloud on one's title as they are intended to procure the
cancellation of an instrument constituting a claim on
petitioners' alleged title which was used to injure or vex them
in the enjoyment of their alleged title.[42]
Being in the nature of actions for reconveyance or actions to
remove cloud on one's title, the applicable law to determine
which court has jurisdiction is Section 19(2) of B.P. 129, as
amended by R.A. No. 7691, viz:
Section 19. Jurisdiction in Civil Cases.-- Regional Trial
Courts shall exercise exclusive original jurisdiction: x x x
(2) In all civil actions which involve the title to, or
possession of, real property, or any interest therein, where
the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or for civil actions in Metro
Manila, where such value exceeds Fifty thousand pesos
(P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction
over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;
x x x.
In the cases at bar, it is undisputed that the subject lots are
situated in Cogon, Dipolog City and their assessed values are
less than P20,000.00, to wit:
Civil Case No. Lot No. Assessed Value
5188 6195 P1,030.00
5433 6196-A 4,500.00
5434 6196-B 4,340.00
7529-A 1,880.00.[43]
Hence, the MTC clearly has jurisdiction over the instant
cases.
Petitioners' contention that this case is one that is incapable of
pecuniary estimation under the exclusive original jurisdiction
of the RTC pursuant to Section 19(1) of B.P. 129 is erroneous.
In a number of cases, we have held that actions for
reconveyance[44] of or for cancellation of title[45] to or to quiet
title[46] over real property are actions that fall under the
classification of cases that involve "title to, or possession of,
real property, or any interest therein."
The original text of Section 19(2) of B.P. 129 as well as its
forerunner, Section 44(b) of R.A. 296,[47] as amended, gave
the RTCs (formerly courts of first instance) exclusive
original jurisdiction "[i]n all civil actions which involve
the title to, or possession of, real property, or any
interest therein, except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction
over which is conferred upon Metropolitan Trial Courts, [MTCs],
and Municipal Circuit Trial Courts (conferred upon the city and
municipal courts under R.A. 296, as amended)." Thus, under
the old law, there was no substantial effect on jurisdiction
whether a case is one, the subject matter of which was
incapable of pecuniary estimation, under Section 19(1) of B.P.
129 or one involving title to property under Section 19(2).The
distinction between the two classes became crucial with the
amendment introduced by R.A. No. 7691[48] in 1994 which
expanded the exclusive original jurisdiction of the first level
courts to include "all civil actions which involve title to, or
possession of, real property, or any interest therein where
the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00)
or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and
costs." Thus, under the present law, original jurisdiction over
cases the subject matter of which involves "title to, possession
of, real property or any interest therein" under Section 19(2)
of B.P. 129 is divided between the first and second level courts,
with the assessed value of the real property involved as the
benchmark. This amendment was introduced to "unclog the
overloaded dockets of the RTCs which would result in the
speedier administration of justice."[49]
The cases of Raymundo v. CA[50] and Commodities
Storage and ICE Plant Corporation v. CA,[51] relied upon
by the petitioners, are inapplicable to the cases at
bar. Raymundo involved a complaint for mandatory
injunction, not one for reconveyance or annulment of
title. The bone of contention was whether the case was
incapable of pecuniary estimation considering petitioner's
contention that the pecuniary claim of the complaint was only
attorney's fees of P10,000, hence, the MTC had
jurisdiction. The Court defined the criterion for determining
whether an action is one that is incapable of pecuniary
estimation and held that the issue of whether petitioner
violated the provisions of the Master Deed and Declaration of
Restriction of the Corporation is one that is incapable of
pecuniary estimation.The claim for attorney's fees was merely
incidental to the principal action, hence, said amount was not
determinative of the court's jurisdiction. Nor
can Commodities Storage and ICE Plant
Corporation provide any comfort to petitioners for the issue
resolved by the Court in said case was venue and not
jurisdiction. The action therein was for damages, accounting
and fixing of redemption period which was filed on October 28,
1994, before the passage of R.A. No. 7691. In resolving the
issue of venue, the Court held that "[w]here the action affects
title to property, it should be instituted in the [RTC] where the
property is situated. The Sta. Maria Ice Plant & Cold Storage is
located in Sta. Maria, Bulacan. The venue in Civil Case No.
94-727076 was therefore improperly laid."
Worse, the cases of Swan v. CA[52] and Santos v.
CA[53] cited by the petitioners, contradict their own position
that the nature of the instant cases falls under Section 19(1)
of B.P. 129. The complaints in Swan and Santos were filed
prior to the enactment of R.A. No. 7691. In Swan, the Court
held that the action being one for annulment of title, the RTC
had original jurisdiction under Section 19(2) of B.P.
129. InSantos, the Court similarly held that the complaint for
cancellation of title, reversion and damages is also one that
involves title to and possession of real property under Section
19(2) of B.P. 129. Thus, while the Court held that the RTC had
jurisdiction, the Court classified actions for "annulment of
title" and "cancellation of title, reversion and damages" as civil
actions that involve "title to, or possession of, real property,
or any interest therein" under Section 19(2) of B.P. 129.
Petitioners' contention that the value of the trees cut in the subject
properties constitutes "any interest therein (in the subject properties)"
that should be computed in addition to the respective assessed values of
the subject properties is unavailing. Section 19(2) of B.P. 129, as amended
by R.A. No. 7691, is clear that the RTC shall exercise jurisdiction "in all civil
actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed
value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or for civil actions in
Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00)." It is true that the recovery of the
value of the trees cut from the subject properties may be
included in the term "any interest therein." However, the law
is emphatic that in determining which court has jurisdiction, it
is only the assessed value of the realty involved that should be
computed.[54] In this case, there is no dispute that the
assessed values of the subject properties as shown by their
tax declarations are less than P20,000.00.Clearly, jurisdiction
over the instant cases belongs not to the RTC but to the MTC.
PHILROCK V.
CONSTRUCTION
INDUSTRY ARBITRATION
COMMISSION (G.R.
NO. 132848-49)
Facts:
The Cid spouses, herein private respondents, were
purchasers of ready-mix concrete from petitioner
herein, PhilRock, Inc. The concrete delivered by
the latter turned out to be of substandard quality,
and as a result the structures built using such
cement developed cracks and honey combs.
Respondents, thus, filed a Complaint for Damages
against petitioner with the RTC of Quezon City,
which then issued an order dismissing the case and
referring the same to CIAC because the spouses
and petitioner had filed an Agreement to
Arbitrate. Since no common ground can be
reached by the parties, they requested the case be
remanded back again to court, to which it had
declared it no longer had jurisdiction over the case
and ordered the records of the case to be remanded
back again to CIAC. Petitioner while contending
the supposed jurisdiction of CIAC, the latter
rendered a decision in favor of the spouses. Thus,
petitioner filed a Petition for Review before the
CA, to which the latter dismissed. Hence this
petition.
Issue:
Whether or not the CIAC could take jurisdiction
over the case of respondent spouses and petitioner
after it had been dismissed by both the RTC and
CIAC.
Ruling:
The petition has no merit. Section 4 of EO 1008
expressly vests in the CIAC original and exclusive
jurisdiction over disputes arising from or
connected with construction contracts entered into
by parties that have agreed to submit their disputes
to voluntary arbitration. Further, petitioner
continued participating in the arbitration even after 2.
the CIAC order has been issued as evidenced by
3.
their concluding and signing of the Terms of
Reference. The Court will not countenance any
4.
effort of any party to subvert or defeat the
objective of voluntary arbitration for its own
private motives. Petitioner is stopped from
assailing the jurisdiction of the CIAC, merely
5.
because the latter rendered an adverse decision.
Dolores Macaslang v. Renato and Melba Zamora (Bersamin)
2011
6.
Facts:
Issues:
1. Mar 10, 1999: Zamora’s FILED: Unlawful detainer with
MTCC, alleging among others:
a. Macaslang sold to them a residential lot in Sabang,
Davao City. 400sqm. Including a residential house,
where Macaslang was then living.
b. After the sale, Macaslang requested to be allowed to
live in the house. Zamora granted the request on the
reliance of Macaslang’s promise to vacate as soon
as she would be able to find a new residence
c. After 1 year, Zamora’s demanded upon the
defendant to vacate but she failed and refused. The
demand letter (Sept 1998) reads:
i. “This is to give notice that since the
mortgage to your property has long been
expired and that since the property is
already in my name, I will be taking over the
occupancy of said property two (2) months
from the date of this letter.”
d. Zamora’s sought the help of the Lupon, but no
settlement was reached as shown by certification to
file.
Despite the due service of summons, Macaslang did not file
an answer. Hence MTCC declared her in default.
MTC: In favor of Zamora’s, ordered Macaslang to vacate,
pay atty’s fees, and rental until they shall have vacated the
properties in question.
Macaslang appealed to the RTC alleging:
a. Extrinsic Fraud
b. Meritorious defense: there was no actual sake
considering that the deed of absolute sale relied
upon is a patent nullity as her signature therein was
procured through fraud and trickery.
RTC: Ruled in favor of Macaslang and DISMISSED
Zamora’s complaint, for failure to state a COA. The same
maybe refilled in the same court by alleging a COA, if any.
Zamora’s M for Execution of MTCC decision rendered moot
by this judgment.
CA: REVERSED RTC decision for having no basis in fact
and law. MTCC decision reinstated.
w/n RTC in its appellate juris limited to assigned errors
w/n in an action for unlawful detainer, where there was no
prior demand to vacate and comply with the conditions of the
lease, a valid COA exists.
w/n there was a violation of the Rules on Summary
procedure.
Decision:
1. RTC in its appellate jurisdiction may rule upon an issue not
raised on appeal.
a. CA said that RTC cannot rule on issue not assigned
as an error. This may have been correct if the
appeal to the CA was a first appeal from RTC to CA
(R41). There is an express limitation of the review to
only specified in the assignment of errors.
b. But HERE this is a, MTC to RTC appeal governed
by a specific rule for unlawful detainer cases. R70
§18 provides that MTC judgment may be appealed
to the RTC which shall decide the same on the
basis of the entire record.
c. This difference in procedure is traceable from BP129
§22, then in the 1991 Rules on summary procedure
§21, then 1997 Rules of Civil Procedure R40 §7.
(Please see code)
d. Even if the rules did not differentiate in the
procedure, the review on the entire case is still
allowed as an exception (c) and (d).
GN: Appellate court may only review errors assigned
and properly argued1
EXCS: (a) When the question affects jurisdiction
(b) Matters that evidently plain or clerical
errors
(c) Matters whose consideration is
necessary for a just and complete resolution
(d) Matters of record having bearing on the
issue that parties failed to raise
(e) Matters closely related to an error
assigned
(f) Matters upon which the determination of
a question is dependent
1 Comilang v. Burcena GR 146853 (2006)
2. CA Correctly delved into w/n there was a COA.
a. RTC: there is no COA because there was no
demand to vacate.
b. CA: No, the complaint readily reveals that there was
a demand to vacate.
c. A complaint for Unlawful detainer is sufficient if
it alleges the withholding of possession or the
refusal is unlawful without necessarily
employing the terminology of the law. (See Fact
#1 (c)i) Demand was not only made but also alleged
in the complaint.
d. A complaint has sufficient COA for unlawful det.
If it states the FF2:
i. Initial possession by defendant was by
contract or tolerance
ii. Eventually possession became illegal upon
notice re:termination
iii. Defendant still remained in possession and
deprived plaintiff of its enjoyment
iv. Complaint was instituted within one year
from last demand to vacate.
e. TEST for sufficiency of complaint: is w/n the court
can render a valid judgment based on facts alleged
in complaint.
f. SC: Complaint sufficiently stated a COA. Complaint
complied with 1-4. BUT Fail to state and Lack of
COA are different. RTC said there is failure to state
COA when in fact its basis was that there was no
demand to vacate. Again RTC erred in this regard,
see Fact #1 (c)i.
i. Golden Gate Realty Co. v. IAC: The term
vacate is not a talismatic word that must be
employed in all notices to vacate.
3. Ejectment was not proper due to defense of ownership.
2 Cabrera v. Getaruela GR 164213 (2009)
 a. Zamora’s COA is based on right to posses resulting WHEREFORE GRANTED. Complaint for unlawful detainer
from ownership. dismissed.
b. BUT exhibits show that the real transaction is one of
equitable mortgage not sale. NCC1602 instances
where a contract may be presumed to be an
equitable mortgage.
i. Land was sold for P100K, when the demand
letter was for a sum of P1.6M. Price
inadequate. Then the vendor remained in
possession of the property. Deed of sale
was executed as a result or by reason of a
loan.
c. Nonetheless, findings favorable to Macaslang’s
ownership are not finally definitive because R70 §16
provides: that when the defendant raises ownership,
and the Q of possession cannot be resolved,
ownership shall only be resolved to determine
possession [not title].
4. MTC committed procedural lapses.
a. MTC granted M to Declare Macaslang in default for
failure to file an answer.
i. This motion is expressly prohibited under
R70 §13 (8)
ii. What MTC should have done was provided
for in R70 § 7: to simply render judgment as
may be warranted by the facts alleged in the
comlaint and limited to what is prayed for
therein.
iii. Failure to file an answer under R70, results
only to a judgment by default not a
declaration of default.
b. MTC’s reception of oral testimony is also a
procedural lapse.
i. R70 envisions the submission only of
affidavits of the witnesses under §10
ii. §11 (2) that should the MTC need to clarify
material facts, it may require parties to
submit affidavits or other evidence. (note:in
both sections no mention of testimony, only
affidavits.)