FIRST DIVISION

G.R. No. 106847 March 5, 1993

PATRICIO P. DIAZ, Petitioner, vs. JUDGE SANTOS B. ADIONG, RTC, Br. 8, Marawi City, SULTAN MACORRO
L. MACUMBAL, SULTAN LINOG M. INDOL, MACABANGKIT LANTO and MOHAMADALI ABEDIN,
Respondents.

Rex J.M.A. Fernandez for petitioner.chanrobles virtual law library

Manguran B. Batuampar for respondents.

BELLOSILLO, J.:

VENUE in the instant civil action for damages arising from libel was improperly laid; nonetheless, the
trial court refused to dismiss the complaint. Hence, this Petition for Certiorari, with prayer for the
issuance of a temporary restraining order, assailing that order of denial 1 as well as the order denying
reconsideration. 2chanrobles virtual law library

The facts: On 16 July 1991, the Mindanao Kris, a newspaper of general circulation in Cotabato City,
published in its front page the news article captioned "6-Point Complaint Filed vs. Macumbal," and in its
Publisher's Notes the editorial, "Toll of Corruption," which exposed alleged anomalies by key officials in
the Regional Office of the Department of Environment and Natural Resources. 3chanrobles virtual law
library

On 22 July 1991, the public officers alluded to, namely, private respondents Sultan Macorro L.
Macumbal, Sultan Linog M. Indol, Atty. Macabangkit M. Lanto and Atty. Mohamadali Abedin, instituted
separate criminal and civil complaints arising from the libel before the City Prosecutor's Office and the
Regional Trial Court in Marawi City. The publisher-editor of the Mindanao Kris, petitioner Patricio P.
Diaz, and Mamala B. Pagandaman, who executed a sworn statement attesting to the alleged corruption,
were named respondents in both complaints. 4chanrobles virtual law library

On 2 September 1991, the City Prosecutor's Office dismissed the criminal case thus 5 -
WHEREFORE . . . this investigation in the light of Agbayani vs. Sayo case finds that it has no jurisdiction to
handle this case and that the same be filed or instituted in Cotabato City where complainant is officially
holding office at the time respondents caused the publication of the complained news item in the
Mindanao Kris in Cotabato City, for which reason it is recommended that this charge be dropped for lack
of jurisdiction.

In the interim, the civil complaint for damages, docketed as Civil Case No. 385-91 and raffled to Branch
10 of the Regional Trial Court in Marawi City, was set for Pre-Trial Conference. The defendants therein
had already filed their respective Answers with Counterclaim.chanroblesvirtualawlibrarychanrobles
virtual law library

On 18 November 1991, petitioner Diaz moved for the dismissal of the action for damages on the ground
that the trial court did not have jurisdiction over the subject matter. He vehemently argued that the
complaint should have been filed in Cotabato City and not in Marawi City. 6chanrobles virtual law library

Pending action on the motion, the presiding judge of Branch 10 inhibited himself from the case which
was thereafter reraffled to the sala of respondent judge.chanroblesvirtualawlibrarychanrobles virtual
law library

On 15 June 1991, respondent judge denied petitioner's Motion to Dismiss for lack of merit. Diaz
thereafter moved for reconsideration of the order of denial. The motion was also denied in the Order of
27 August 1991, prompting petitioner to seek relief therefrom.chanroblesvirtualawlibrarychanrobles
virtual law library

Petitioner Diaz contends that the civil action for damages could not be rightfully filed in Marawi City as
none of the private respondents, who are all public officers, held office in Marawi City; neither were the
alleged libelous news items published in that city. Consequently, it is petitioner's view that the Regional
Trial court in Marawi City has no jurisdiction to entertain the civil action for
damages.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioner is correct. Not one of the respondents then held office in Marawi City: respondent
Macumbal was the Regional Director for Region XII of the DENR and held office in Cotabato City;
respondent Indol was the Provincial Environment and Natural Resources Officer of Lanao del Norte and
held office in that province; respondent Lanto was a consultant of the Secretary of the DENR and, as
averred in the complaint, was temporarily residing in Quezon City; and, respondent Abedin was the
Chief of the Legal Division of the DENR Regional Office in Cotabato City. 7 Indeed, private respondents
do not deny that their main place of work was not in Marawi City, although they had sub-offices
therein.chanroblesvirtualawlibrarychanrobles virtual law library
Apparently, the claim of private respondents that they maintained

sub-offices in Marawi City is a mere afterthought, considering that it was made following the dismissal of
their criminal complaint by the City Prosecutor of Marawi City. Significantly, in their complaint in Civil
Case No. 385-91 respondents simply alleged that they were residents of Marawi City, except for
respondent Lanto who was then temporarily residing in Quezon City, and that they were public officers,
nothing more. This averment is not enough to vest jurisdiction upon the Regional Trial Court of Marawi
City and may be properly assailed in a motion to dismiss.chanroblesvirtualawlibrarychanrobles virtual
law library

The Comment of private respondents that Lanto was at the time of the commission of the offense
actually holding office in Marawi City as consultant of LASURECO can neither be given credence because
this is inconsistent with their allegation in their complaint that respondent Lanto, as consultant of the
Secretary of the DENR, was temporarily residing in Quezon City.chanroblesvirtualawlibrarychanrobles
virtual law library

Moreover, it is admitted that the libelous articles were published and printed in Cotabato City. Thus,
respondents were limited in their choice of venue for their action for damages only to Cotabato City
where Macumbal, Lanto and Abedin had their office and Lanao del Norte where Indol worked. Marawi
City is not among those where venue can be laid.chanroblesvirtualawlibrarychanrobles virtual law
library

The third paragraph of Art. 360 of the Revised Penal Code, as amended by R.A. No. 4363, specifically
requires that -

The criminal and civil action for damages in cases of written defamations as provided for in this chapter,
shall be filed simultaneously or separately with the Court of First Instance (now Regional Trial Court) of
the province or city where the libelous article is printed and first published or where any of the offended
parties actually resides at the time of the commission of the offense: Provided, however, That where
one of the offended parties is a public officer . . . (who) does not hold office in the City of Manila, the
action shall be filed in the Court of First Instance (Regional Trial Court) of the province or city where he
held office at the time of the commission of the offense or where the libelous article is printed and first
published and in case one of the offended parties is a private individual, the action shall be filed in the
Court of First Instance of the province or city where he actually resides at the time of the commission of
the offense or where the libelous matter is printed and first published . . . . (emphasis supplied).

From the foregoing provision, it is clear that an offended party who is at the same time a public official
can only institute an action arising from libel in two (2) venues: the place where he holds office, and the
place where the alleged libelous articles were printed and first
published.chanroblesvirtualawlibrarychanrobles virtual law library

Private respondents thus appear to have misread the provisions of Art. 360 of the Revised Penal Code,
as amended, when they filed their criminal and civil complaints in Marawi City. They deemed as
sufficient to vest jurisdiction upon the Regional Trial Court of Marawi City the allegation that "plaintiffs
are all of legal age, all married, Government officials by occupation and residents of Marawi City." 8 But
they are wrong.chanroblesvirtualawlibrarychanrobles virtual law library

Consequently, it is indubitable that venue was improperly laid. However, unless and until the defendant
objects to the venue in a motion to dismiss prior to a responsive pleading, the venue cannot truly be
said to have been improperly laid since, for all practical intents and purposes, the venue though
technically wrong may yet be considered acceptable to the parties for whose convenience the rules on
venue had. been devised. 9chanrobles virtual law library

Petitioner Diaz then, as defendant in the court below, should have timely challenged the venue laid in
Marawi City in a motion to dismiss, pursuant to Sec. 4, Rule 4, of the Rules of Court. Unfortunately,
petitioner had already submitted himself to the jurisdiction of the trial court when he filed his Answer to
the Complaint with Counterclaim. 10chanrobles virtual law library

His motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of
jurisdiction to hear and decide the instant civil action for damages. Well-settled is the rule that improper
venue may be waived and such waiver may occur by laches. 11chanrobles virtual law library

Petitioner was obviously aware of this rule when he anchored his motion to dismiss on lack of cause of
action over the subject matter, relying on this Court's ruling in Time, Inc. v. Reyes. 12 Therein, We
declared that the Court of First Instance of Rizal was without jurisdiction to take cognizance of Civil Case
No. 10403 because the complainants held office in Manila, not in Rizal, while the alleged libelous articles
were published abroad.chanroblesvirtualawlibrarychanrobles virtual law library

It may be noted that in Time, Inc. v. Reyes, the defendant therein moved to dismiss the case without
first submitting to the jurisdiction of the lower court, which is not the case before Us. More, venue in an
action arising from libel is only mandatory if it is not waived by defendant. Thus -
The rule is that where a statute creates a right and provides a remedy for its enforcement, the remedy is
exclusive; and where it confers jurisdiction upon a particular court, that jurisdiction is likewise exclusive,
unless otherwise provided. Hence, the venue provisions of Republic Act No. 4363 should be deemed
mandatory for the party bringing the action, unless the question of venue should be waived by the
defendant . . . . 13chanrobles virtual law library

Withal, objections to venue in civil actions arising from libel may be waived; it does not, after all, involve
a question of jurisdiction. Indeed, the laying of venue is procedural rather than substantive, relating as it
does to jurisdiction of the court over the person rather than the subject matter. 14 Venue relates to trial
and not to jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library

Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion to
dismiss before any responsive pleading is filed. Responsive pleadings are those which seek affirmative
relief and set up defenses. Consequently, having already submitted his person to the jurisdiction of the
trial court, petitioner may no longer object to the venue which, although mandatory in the instant case,
is nevertheless waivable. As such, improper venue must be seasonably raised, otherwise, it may be
deemed waived.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, for lack of merit, the Petition for Certiorari is DISMISSED and the Temporary Restraining
Order heretofore issued is LIFTED.chanroblesvirtualawlibrarychanrobles virtual law library

This case is remanded to the court of origin for further

proceedings.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

Cruz, Griño-Aquino and Quiason, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 160653 July 23, 2008

JESUSITO D. LEGASPI, doing business under the name and style of J.D. Legaspi Construction, Petitioner,

vs.

REPUBLIC OF THE PHILIPPINES, represented by Social Security System (SSS), Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Jesusito D. Legaspi, as owner and manager of J.D. Legaspi Construction (petitioner), entered into a
Construction Agreement with the Social Security System (respondent) in June 1997 for the construction
of a four-storey building in Baguio City which will serve as respondent's branch office. The contract price
was ₱88,348,533.74.

In an unfortunate turn of events, the Philippine peso collapsed as against the U.S. Dollar in 1997.1 Thus,
the cost of imported materials which petitioner was contracted to use and install on the project shot up,
and petitioner incurred expenses more than the original contract price. Petitioner had several meetings
with respondent's representatives during which he informed them of his difficulty in meeting his
obligations under the contract due to the devaluation of peso. After several failed meetings, petitioner
sent a letter to respondent requesting an adjustment in the contract price, which was denied by
respondent. This constrained petitioner to file a complaint for payment of sum of money plus damages
with the Regional Trial Court (RTC) of Makati City, docketed as Civil Case No. 00-1354.

Instead of filing an answer, respondent, represented by the Office of the Solicitor General, filed a Motion
to Dismiss on the grounds that venue was improperly laid and petitioner had no cause of action. On the
ground of improper venue, it was respondent's argument that the Construction Agreement provided
that all actions may be brought before the proper court in Quezon City and that petitioner waived any
other venue.

Respondent also contended that petitioner's allegations in his Complaint stated no cause of action.
According to respondent, petitioner sought to amend the contract by increasing the stipulated contract
price; however, this cannot be done since amendments or modifications are not allowed in bidded
government contracts, specially since the contract expressly provided for a "no escalation" clause.
Respondent also argued that an adjustment of the price would be disadvantageous to the government.

In its Order2 dated July 18, 2001, the RTC denied respondent's Motion to Dismiss. It was the RTC's ruling
that the venue was properly laid since petitioner's action was not based on the Construction Agreement
which was faithfully complied with by petitioner; rather, it was a collection suit for the increase in the
price of imported materials and equipment furnished and installed to complete the construction. The
RTC also ruled that petitioner's cause of action was based on Article 1267 of the Civil Code3 provision on
price adjustment and not on the terms and conditions of the Construction Agreement. The RTC was also
of the view that respondent's claim of lack of cause of action should be properly raised and proved in a
regular trial and not merely by pleadings.4

Respondent moved to reconsider the Order but this was denied by the RTC in an Order5 dated
September 25, 2001.

Respondent then filed a petition for certiorari with the Court of Appeals (CA), and in the assailed
Decision6 dated August 26, 2003, respondent's petition was granted and the RTC was ordered to dismiss
Civil Case No. 00-1354, to wit:

WHEREFORE, the writ of certiorari prayed for is hereby GRANTED, and the respondent trial court is
ordered to DISMISS the complaint of JESUSITO D. LEGASPI in Civil Case No. 00-1354, without prejudice
to the filing of said complaint in the proper court.

SO ORDERED.7

Petitioner sought reconsideration of the assailed Decision, which was denied by the CA in its Resolution
dated October 27, 2003.8
Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court, raising as sole
ground, viz:

THE HONORABLE COURT OF APPEALS PLAINLY ERRED AND ACTED CONTRARY TO EXISTING LAW AND
JURISPRUDENCE IN ORDERING THE DISMISSAL OF THE CIVIL CASE BEFORE THE COURT A QUO
CONSIDERING THAT VENUE IS PROPERLY LAID.9

Petitioner insists that the venue provision in the Construction Agreement does not apply. He argues that
his cause of action does not arise from the agreement, nor was it for the performance of any of the
obligations under the agreement. According to petitioner, his action was for additional payment due to
the extraordinary devaluation of the peso at the time; and is based on Article 1267 of the Civil Code, not
on any provision of the Construction Agreement. Petitioner believes that his action is personal in nature
such that Section 2, Rule 4 of the Rules of Court applies, and he has the option to file the same where he
or respondent resides.

Respondent counters that petitioner's claim, while anchored on Article 1267 of the Civil Code, emanated
from the Construction Agreement; hence, the restrictive provision on venue applies. Respondent also
reiterates its argument that petitioner does not have any cause of action against respondent.

As a general rule, venue of personal actions is governed by Section 2, Rule 4 of the Rules of Court, to wit:

Sec. 2. Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or
any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant, where he may be found, at the election of the plaintiff.

The parties, however, are not precluded from agreeing in writing on an exclusive venue, as qualified by
Section 4 of the same rule. Written stipulations as to venue may be restrictive in the sense that the suit
may be filed only in the place agreed upon, or merely permissive in that the parties may file their suit
not only in the place agreed upon but also in the places fixed by law. As in any other agreement, what is
essential is the ascertainment of the intention of the parties respecting the matter.10

As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown that such
stipulation is exclusive. In the absence of qualifying or restrictive words, such as "exclusively," "waiving
for this purpose any other venue," "shall only" preceding the designation of venue, "to the exclusion of
the other courts," or words of similar import, the stipulation should be deemed as merely an agreement
on an additional forum, not as limiting venue to the specified place.11lawphil
In the present case, the Construction Agreement provides:

ARTICLE XIV – JUDICIAL REMEDIES

All actions and controversies that may arise from this Agreement involving but not limited to demands
for the specific performance of the obligations as specified in the clauses contained herein and/or as
resolved or interpreted by the CLIENT pursuant to the third paragraph of Article I hereof may be brought
by the parties before the proper courts in Quezon City where the main office of the CLIENT is located,
the CONTRACTOR hereby expressly waiving any other venue.

x x x x12 (Emphasis supplied)

The venue is specific - Quezon City - and accompanied by the words "the CONTRACTOR hereby expressly
waiving any other venue," which connote exclusivity of the designated venue. These terms clearly
stipulate exclusively the venue where actions arising from the Construction Agreement should be filed.

Petitioner, however, contends that the case does not arise from the Construction Agreement; hence, it
may be filed in Makati City, which is his place of residence.

Contrary to petitioner’s contention, the allegations in his complaint indubitably show that his cause of
action arose from the Construction Agreement, viz:

12. Defendant should be ordered to pay the just and fair price for the construction of its building in
Baguio, considering that the foreign currency crisis that hit the country was manifestly beyond the
contemplation of the parties. Hence, a re-negotiation of the contract price would be just and reasonable
under the circumstances.

13. Plaintiff's request for price adjustment is based on Article 1267 of the New Civil Code, which states:

xxxx
15. Clearly, the 65% increase in price for the imported components of the project was manifestly beyond
the contemplation of the parties. Hence, plaintiff’s request for price adjustment should not be
considered as falling under the prohibition stated in Article III of the Construction Agreement. Following
the principle enunciated in Article 1267 of the Civil Code, plaintiff should be released from the obligation
to complete the project at the original contract price, specifically by granting plaintiff a price adjustment
in the amount equivalent to the difference between the unit prices as stated in the plans and the actual
cost of the purchase.13

Petitioner’s claim for price adjustment rests on the basic operative facts that the Construction
Agreement originally pegged the contract price at ₱88, 348,533.74, and that the devaluation of the peso
in 1997 brought about an increase in the costs of imported materials and furnishings to be used in the
construction.

Petitioner also alleges in his Complaint that his request for price adjustment should not be considered as
falling under the prohibition clause in Article III of the Construction Agreement, to wit:

ARTICLE III - CONTRACT PRICE

The CLIENT shall pay the CONTRACTOR for the full, faithful and complete performance of the works
called for under this Agreement, a fixed amount of EIGHTY EIGHT MILLION THREE HUNDRED FORTY
EIGHT THOUSAND FIVE HUNDRED THIRTY THREE PESOS AND 74/100 (₱88,348,533.74), Philippine
Currency, the manner of payment of which shall be in accordance with Article V hereof subject to the
retention of six percent (6%) withholding tax to be remitted directly by the CLIENT to the Bureau of
Internal Revenue. The Contract price shall not be subject to escalation. All costs and expenses over and
above thereof, except as provided for in Article IV shall be for the account of the CONTRACTOR.14

Ineluctably, the allegations in the Complaint relating to petitioner’s request for price adjustment clearly
originate from the Construction Agreement. Article 1267 of the Civil Code is merely the law upon which
petitioner’s claim for price adjustment is anchored. What is essential is the factual substance of his
claim, as alleged in the Complaint, which should be taken into account in determining whether or not it
arose from the Construction Agreement.

As correctly ruled by the CA which the Court adopts as its own:

Although the court was correct in holding that Mr. Legaspi’s prayer for price adjustment is anchored on
the Civil Code, the controversy in this case started when J.D. Legaspi Construction claimed difficulty of
performance due to change of circumstances. In effect, Mr. Legaspi is assailing the "no escalation
clause" of the project cost indicated in the contract. If the action proceeds, the court in determining
whether Mr. Legaspi has the right to claim will necessarily have to determine the intent of the parties in
assuming the contractual risks by necessarily referring to the Construction Agreement. Undoubtedly,
Mr. Legaspi’s action refers to a dispute arising out of and relating to the provisions of the Agreement.
Therefore, the venue stipulation will have to be applied.15

The Court also agrees with the CA that petitioner has a cause of action against respondent.

A motion to dismiss based on lack of cause of action hypothetically admits the truth of the allegations in
the complaint. The allegations in a complaint are sufficient to constitute a cause of action against the
defendants if, hypothetically admitting the facts alleged, the court can render a valid judgment upon the
same in accordance with the prayer therein.16 The complaint filed by petitioner sets forth the ultimate
facts upon which his claim for price adjustment is based. Respondent’s allegation that petitioner is not
entitled to it is a matter of defense, properly raised in an answer which will then be accordingly threshed
out in full-blown proceedings. Thus, the CA was correct when it ruled that the complaint does not have
to establish or allege facts proving the existence of a cause of action at the outset, as this will have to be
done at the trial on the merits of the case.17

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioner.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 74854 April 2, 1991

JESUS DACOYCOY, petitioner,

vs.

HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial
Court, Branch LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN, respondents.

Ramon V. Sison for petitioner.

Public Attorney's Office for private respondent.

FERNAN, C.J.:

May the trial court motu proprio dismiss a complaint on the ground of improper venue? This is the issue
confronting the Court in the case at bar.

On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the
Regional Trial Court, Branch LXXI, Antipolo, Rizal, a complaint against private respondent Rufino de
Guzman praying for the annulment of two (2) deeds of sale involving a parcel of riceland situated in
Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof and damages for private
respondent's refusal to have said deeds of sale set aside upon petitioner's demand.

On May 25, 1983, before summons could be served on private respondent as defendant therein, the
RTC Executive Judge issued an order requiring counsel for petitioner to confer with respondent trial
judge on the matter of venue. After said conference, the trial court dismissed the complaint on the
ground of improper venue. It found, based on the allegations of the complaint, that petitioner's action is
a real action as it sought not only the annulment of the aforestated deeds of sale but also the recovery
of ownership of the subject parcel of riceland located in Estanza, Lingayen, Pangasinan, which is outside
the territorial jurisdiction of the trial court.

Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision of
April 11, 1986,1 affirmed the order of dismissal of his complaint.

In this petition for review, petitioner faults the appellate court in affirming what he calls an equally
erroneous finding of the trial court that the venue was improperly laid when the defendant, now private
respondent, has not even answered the complaint nor waived the venue.2

Petitioner claims that the right to question the venue of an action belongs solely to the defendant and
that the court or its magistrate does not possess the authority to confront the plaintiff and tell him that
the venue was improperly laid, as venue is waivable. In other words, petitioner asserts, without the
defendant objecting that the venue was improperly laid, the trial court is powerless to dismiss the case
motu proprio.

Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper
because the same can "readily be assessed as (a) real action." He asserts that "every court of justice
before whom a civil case is lodged is not even obliged to wait for the defendant to raise that venue was
improperly laid. The court can take judicial notice and motu proprio dismiss a suit clearly denominated
as real action and improperly filed before it. . . . the location of the subject parcel of land is controlling
pursuant to Sec. 2, par. (a), Rule 4 of the New Rules of Court . . .3

We grant the petition.

The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of
improper venue is plain error, obviously attributable to its inability to distinguish between jurisdiction
and venue.

Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of
Court. It is said that the laying of venue is procedural rather than substantive. It relates to the
jurisdiction of the court over the person rather than the subject matter. Provisions relating to venue
establish a relation between the plaintiff and the defendant and not between the court and the subject
matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the parties rather
than the substance of the case.4
Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the
locality, the place where the suit may be had.5

In Luna vs. Carandang,6 involving an action instituted before the then Court of First Instance of Batangas
for rescission of a lease contract over a parcel of agricultural land located in Calapan, Oriental Mindoro,
which complaint said trial court dismissed for lack of jurisdiction over the leased land, we emphasized:

(1) A Court of First Instance has jurisdiction over suits involving title to, or possession of, real estate
wherever situated in the Philippines, subject to the rules on venue of actions (Manila Railroad Company
vs. Attorney General, etc., et al., 20 Phil. 523; Central Azucarera de Tarlac vs. De Leon, et al., 56 Phil. 169;
Navarro vs. Aguila, et al., 66 Phil. 604; Lim Cay, et al. vs. Del Rosario, etc., et al., 55 Phil. 692);

(2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be
brought in the Court of First Instance of the province where the land lies is a rule on venue of actions,
which may be waived expressly or by implication.

In the instant case, even granting for a moment that the action of petitioner is a real action, respondent
trial court would still have jurisdiction over the case, it being a regional trial court vested with the
exclusive original jurisdiction over "all civil actions which involve the title to, or possession of, real
property, or any interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With
respect to the parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus Dacoycoy,
now petitioner, the moment he filed his complaint for annulment and damages. Respondent trial court
could have acquired jurisdiction over the defendant, now private respondent, either by his voluntary
appearance in court and his submission to its authority, or by the coercive power of legal process
exercised over his person.7

Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or
his deputy to serve the summons on defendant Rufino de Guzman at his residence at 117 Irving St.,
Tapinac, Olongapo City,8 it does not appear that said service had been properly effected or that private
respondent had appeared voluntarily in court9 or filed his answer to the complaint.10 At this stage,
respondent trial court should have required petitioner to exhaust the various alternative modes of
service of summons under Rule 14 of the Rules of Court, i.e., personal service under Section 7,
substituted service under Section 8, or service by publication under Section 16 when the address of the
defendant is unknown and cannot be ascertained by diligent inquiry.
Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of
action at this stage of the proceeding, particularly as venue, in inferior courts as well as in the courts of
first instance (now RTC), may be waived expressly or impliedly. Where defendant fails to challenge
timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and
allows the trial to be held and a decision to be rendered, he cannot on appeal or in a special action be
permitted to challenge belatedly the wrong venue, which is deemed waived.11

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be
truly said to have been improperly laid, as for all practical intents and purposes, the venue, though
technically wrong, may be acceptable to the parties for whose convenience the rules on venue had been
devised. The trial court cannot pre-empt the defendant's prerogative to object to the improper laying of
the venue by motu proprio dismissing the case.

Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing
motu proprio the complaint on the ground of improper venue without first allowing the procedure
outlined in the Rules of Court to take its proper course. Although we are for the speedy and expeditious
resolution of cases, justice and fairness take primary importance. The ends of justice require that
respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but
the plaintiff as well, the right to be heard on his cause.

WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate Court, now Court of
Appeals, dated April 11, 1986, is hereby nullified and set aside. The complaint filed by petitioner before
the Regional Trial Court of Antipolo, Branch LXXI is revived and reinstated. Respondent court is enjoined
to proceed therein in accordance with law.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

THIRD DIVISION

[G.R. NO. 170750 : April 7, 2009]

HEIRS OF TOMAS DOLLETON, HERACLIO ORCULLO, REMEDIOS SAN PEDRO, HEIRS OF BERNARDO
MILLAMA, HEIRS OF AGAPITO VILLANUEVA, HEIRS OF HILARION GARCIA, SERAFINA SP ARGANA, and
HEIRS OF MARIANO VILLANUEVA, Petitioners, v. FIL-ESTATE MANAGEMENT INC., ET AL. AND THE
REGISTER OF DEEDS OF LAS PIÑAS CITY, Respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing (1) the Decision1
dated 16 September 2005, rendered by the Court of Appeals in CA-G.R. CV No. 80927, which affirmed
the Resolutions2 dated 8 September 2000 and 30 June 2003, of the Regional Trial Court (RTC), Branch
253, of Las Piñas City, dismissing the Complaints in Civil Cases No. LP-97-0228, No. LP-97-0229, No. LP-
97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-97-0238, and No. LP-97-0239; and (2)
the Resolution dated 9 December 2005 of the same court denying petitioners' Motion for
Reconsideration.

In October 1997, petitioners Heirs of Tomas Dolleton,3 Heraclio Orcullo, Remedios San Pedro, et al.,4
Heirs of Bernardo Millama, et al.,5 Heirs of Agapito Villanueva, et al.,6 Heirs of Hilarion Garcia, et al.,7
Serafina SP Argana, et al.,8 and Heirs of Mariano Villanueva, et al.9 filed before the RTC separate
Complaints for Quieting of Title and/or Recovery of Ownership and Possession with Preliminary
Injunction/Restraining Order and Damages against respondents Fil-Estate Management Inc., Spouses
Arturo E. Dy and Susan Dy, Megatop Realty Development, Inc.,10 and the Register of Deeds of Las
Piñas. The Complaints, which were later consolidated, were docketed as follows:

1. Civil Case No. L-97-0228, which was filed by the Heirs of Tomas Dolleton covering a parcel of land with
an area of 17,681 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las Piñas, Rizal
under Psu-235279 approved by the Director of the Bureau of Lands on 20 February 1959;

2. Civil Case No. L-97-0229, which was filed by Heraclio Orcullo covering two (2) parcels of land with the
total areas of 14,429 square meters and 2,105 square meters, respectively, located in Magasawang
Mangga, Barrio Pugad Lawin, Las Piñas, Rizal under Lots 1 and 2, Psu-169404 approved by the Director
of the Bureau of Lands on 4 December 1959;

3. Civil Case No. L-97-0230, which was filed by Remedios San Pedro, et al., covering a parcel of land with
an area of 17,159 square meters, located in Barrio Pugad Lawin, Las Piñas, Rizal under Psu-96901
approved by the Director of the Bureau of Lands on 21 July 1933;

4. Civil Case No. L-97-0231, which was filed by the Heirs of Bernardo Millama, et al., covering a parcel of
land with an area of 23,359 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las
Piñas, Rizal under Psu-96905 approved by the Director of the Bureau of Lands on 16 January 1933;

5. Civil Case No. L-97-0236, which was filed by the Heirs of Agapito Villanueva covering a parcel of land
with an area of 10,572 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las Piñas,
Rizal;

6. Civil Case No. L-97-0237, which was filed by the Heirs of Hilarion Garcia, et al., covering a parcel of
land with an area of 15,372 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las
Piñas, Rizal under Psu-96920 approved by the Director of the Bureau of Lands on 16 January 1933;

7. Civil Case No. L-97-0238, which was filed by Serafina SP Argana, et al., covering a parcel of land with
an area of 29,391 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las Piñas, Rizal
under Psu-96909 approved by the Director of the Bureau of Lands on 18 January 1933; andcralawlibrary

8. Civil Case No. L-97-0239, which was filed by the Heirs of Mariano Villanueva, et al., covering a parcel
of land with an area of 7,454 square meters, located in Magasawang Mangga, Barrio Pugad Lawin, Las
Piñas, Rizal under Psu-96910 approved by the Director of the Bureau of Lands on 16 January 1933.

The eight Complaints11 were similarly worded and contained substantially identical allegations.
Petitioners claimed in their Complaints that they had been in continuous, open, and exclusive
possession of the afore-described parcels of land (subject properties) for more than 90 years until they
were forcibly ousted by armed men hired by respondents in 1991. They had cultivated the subject
properties and religiously paid the real estate taxes for the same. Respondents cannot rely on Transfer
Certificates of Title (TCTs) No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, No. 9181 and No. 9182,12
issued by the Registry of Deeds of Las Piñas in their names, to support their claim over the subject
properties since, petitioners averred, the subject properties were not covered by said certificates.
Petitioners also alleged that said TCTs, purportedly derived from Original Certificate of Title (OCT) No.
6122, issued in favor of Jose Velasquez, were spurious.
To support their narration of facts, petitioners cited Vda. de Cailles v. Mayuga13 and Orosa v. Migrino,14
which both involved the parcel of land referred to as Lot 9, Psu-11411, Amd-2. In these cases, the Court
adjudicated said piece of land to Dominador Mayuga, who later transferred it to Marciano Villanueva,
who sold it to Nicolas Orosa. Pending a controversy between the Heirs of Nicolas Orosa and Jose
Velasquez, Delta Motors Corporation somehow acquired the rights over their conflicting claims to the
land and managed to obtain certificates of title over the same. Delta Motors Corporation sold the land
to Goldenrod, Inc., which finally transferred it to a consortium composed of respondents, Peaksun
Enterprises and Export Corporation, and Elena Jao.

Petitioners stressed, however, that in Vda. de Cailles and Orosa, the land that was transferred was Lot 9,
Psu-11411, Amd-2, measuring 53 hectares, which was only a portion of the entire Lot 9, Psu-11411, with
a total area of 119.8 hectares. And respondents' TCTs, derived from OCT No. 6122 in the name of Jose
Velasquez, covered only 26.44 hectares or roughly half of Lot 9, Psu-11411, Amd-2. Petitioners averred
that the subject properties were not included in the 53 hectares of Lot 9, Psu-11411, adjudicated to
Dominador Mayuga.

Petitioners thus sought from the RTC that an order be issued enjoining respondents from making any
developments on the subject properties, and that after hearing, judgment be rendered as follows:

A. [Herein respondents] be ordered to recognize the rights of [herein petitioners]; to vacate the subject
lot and peacefully surrender possession thereof to [petitioners]; and that Transfer Certificate of Title
Numbers 9176, 9177, 9178, 9179, 9180 and 9182 be cancelled by the Register of Deeds for Las Pinas,
Metro Manila, insofar as they are or may be utilized to deprive [petitioners] of the possession and
ownership of said lot.

B. Making the preliminary injunctions permanent.

C. An order be issued directing [respondents] to pay [petitioners] the sums of:

A. P500,000.00 as moral damages;

b. P150,000.00 as exemplary damages;

c. P100,000.00 as attorney's fees; and,

d. Cost of suit.

[Petitioners] further pray for such other affirmative reliefs as are deemed just and equitable in the
premises.15

Respondents filed before the RTC a Motion to Dismiss and Opposition to Application for a Temporary
Restraining Order/Writ of Preliminary Injunction.16 They moved for the dismissal of the eight
Complaints on the grounds of (1) prescription; (2) laches; (3) lack of cause of action; and (4) res
judicata.17

Respondents argued that the Complaints sought the annulment of the certificates of title that were
issued in their names. Section 32 of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree,18 provides that the decree of registration and the certificate of title issued
pursuant thereto can only be nullified on the ground of fraud within one year after the entry of such
decree of registration. Respondents' TCTs could be traced back to the decree/s of registration entered in
1966/1967, which resulted in the issuance of OCT No. 6122 in the name of Jose Velasquez, respondents'
predecessor-in-interest. Hence, the filing of the Complaints only in October 1997 was made beyond the
prescription period for assailing a decree of registration and/or the certificate of title issued pursuant
thereto. Additionally, petitioners' Complaints were actions for reconveyance of the subject properties
based on implied trust, the filing of which prescribes after 10 years from the time said properties were
first registered under the Torrens system, in accordance with Articles 1144 and 1456 of the Civil Code.19
Since the subject properties were first registered in 1966/1967, then the actions for their reconveyance,
instituted only in 1997 or 30 years later, should be dismissed on the ground of prescription.20

Respondents also contended that petitioners were guilty of laches. Despite their alleged possession of
the subject properties for 90 years, petitioners failed to take any steps to oppose the land registration
cases involving the same properties or to seek the nullification of the decrees of registration and
certificates of title which were entered and issued as early as 1966 and 1967.21

Moreover, respondents maintained that the Complaints should be dismissed for failure to state a cause
of action. Even assuming that petitioners were able to prove their allegations of longtime possession
and payment of realty taxes on the subject properties, and to submit a sketch plan of the same, these
cannot defeat a claim of ownership over the parcels of land, which were already registered under the
Torrens system in the name of respondents and the other consortium members.22
Lastly, respondents insisted that the Complaints should be dismissed on the ground of res judicata.23 By
virtue of the decided cases Vda. de Cailles and Orosa, which petitioners themselves cited in their
Complaints, any claims to all portions of Lot 9, Psu 11411, Amd-2 are barred by res judicata. In said
cases, respondents' predecessors-in-interest were declared owners of Lot 9, Psu 11411, Amd-2.
Respondents also referred to a Decision24 dated 17 December 1991 rendered by the Metropolitan Trial
Court (MTC) of Las Piñas, Branch 79, in Civil Case No. 3271, entitled Heirs of Benito Navarro v. Fil-Estate
Management Inc.25 In its Decision, the MTC declared that therein plaintiffs were not in possession of
the land, which it found to belong to respondent Fil-Estate Management Inc.

On 11 June 1998, the Heirs of Jose Velasquez (intervenors) filed a Motion for Intervention with Leave of
Court and a Complaint-in-Intervention, alleging that the subject properties, covered by TCTs No. 9176,
No. 9177, No. 9178, No. 9179, No. 9180, and No. 9181, were once owned by the Spouses Jose Velasquez
and Loreto Tiongkiao. Without settling the conjugal partnership after the death of his wife Loreto
Tiongkiao, and without obtaining the intervenors' consent, Jose Velasquez, together with J.V.
Development Corporation, Delta Motors Corporation, and Nicolas Orosa, transferred all their rights to
the subject properties to Goldenrod, Inc., from which respondents acquired the same. The intervenors
sought the cancellation and nullification of respondents' certificates of title insofar as their mother's
share in the subject properties was concerned.26

On 8 September 2000, the RTC issued a Resolution27 in Civil Case No. LP-97-0228 granting respondents'
Motion to Dismiss. The trial court determined that the subject properties were already registered in the
names of respondents, and that petitioners were unable to prove by clear and convincing evidence their
title to the said properties. The dispositive part of the RTC Resolution reads:

On the basis of the foregoing reasons alone, the instant complaint should immediately be DISMISSED.
Accordingly, the prayer for a temporary restraining order and preliminary injunction is DENIED. This,
however, is without prejudice to the complaint-in-intervention filed by intervenors over the disputed
properties, their undivided interests being intertwined and attached to the disputed properties
wherever it goes and whoever is in possession of the same, their right to bring action to pursue the
same being imprescriptible.28

On 12 August 2002, respondents filed a Motion for Clarification29 asking the RTC whether the order of
dismissal of Civil Case No. LP-97-0228, included Civil Cases No. LP-97-0229, No. LP-97-0230, No. LP-97-
0231, No. LP-97-0236, No. LP-97-0237, No. LP-97-0238, and No. LP-97-0239. In a Resolution30 dated 30
June 2003, the RTC reiterated its Resolution dated 8 September 2000 dismissing the Complaint of
petitioners Heirs of Tomas Dolleton in Civil Case No. LP-97-0228; and declared that the other cases - Civil
Cases No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-97-
0238, and No. LP-97-0239 - were similarly dismissed since they involved the same causes of action as
Civil Case No. LP-97-0228.
On 9 July 2003, petitioners filed a consolidated Notice of Appeal questioning the 30 June 2003
Resolution of the RTC.31 They accordingly filed an appeal of the said Resolution of the trial court with
the Court of Appeals, docketed as CA-G.R. CV No. 80927.

In its Decision dated 16 September 2005 in CA-G.R. CV No. 80927, the Court of Appeals denied
petitioners' appeal and affirmed the RTC Resolutions dated 8 September 2000 and 30 June 2003. The
appellate court found that respondents' titles to the subject properties were indefeasible because they
were registered under the Torrens system. Thus, petitioners could not say that any claim on the subject
properties casts a cloud on their title when they failed to demonstrate a legal or an equitable title to the
same. The Court of Appeals also ruled that petitioners' actions had already prescribed. Section 32 of
Presidential Decree No. 1529 requires that an action assailing a certificate of title should be filed within
one year after its issuance. Moreover, actions assailing fraudulent titles should be filed within 10 years
after the said titles were issued. The appellate court further decreed that the cases for quieting of title
should be dismissed based on the allegation of petitioners themselves that the parcels of land covered
by respondents' certificates of title were not the subject properties which petitioners claimed as their
own.32

Petitioners filed a Motion for Reconsideration of the afore-mentioned Decision,33 which the Court of
Appeals denied in a Resolution dated 9 December 2005.34

Hence, the present Petition, where petitioners made the following assignment of errors:

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

II

THAT THE COURT OF APPEALS GRAVELY ERRED WHEN IT AFFIRMED THE RESOLUTION OF THE COURT A
QUO, DESPITE THE FACT THAT A FULL BLOWN HEARING ON THE MERIT[S] IS NECESSARY TO DETERMINE
THE ACTUAL LOCATION ON THE ACTUAL GROUND [OF] THE LOTS COVERED BY THE PRIVATE
RESPONDENT (sic) TITLES, LOTS COVERED BY ITS TITLES ARE MORE THAN THREE HUNDRED (300 m)
METERS AWAY TO THE WEST-NORTHWEST FROM THE CONSOLIDATED LOTS OF THE HEREIN
PETITIONERS AND THEREFORE PRIVATE RESPONDENTS BRUTAL ACTION IN FORCIBLY EVICTING THE
PETITIONERS FROM THEIR RESPECTIVE LANDHOLDINGS BY THE USED (sic) OF BRUTE FORCE OF ARMED
MEN, ARE PURELY CASES OF LANDGRABBING.35

This Petition is meritorious.

The main issue in this case is whether the RTC properly granted respondents' motion to dismiss. This
Court finds that the trial court erred in dismissing petitioners' Complaints.

Complaints sufficiently stated a cause of action.

Respondents seek the dismissal of petitioners' Complaints for failure to state a cause of action. Even
assuming as true that the subject properties have been in the possession of petitioners and their
predecessors-in-interest for 90 years; that petitioners have been paying the realty taxes thereon; and
that petitioners are able to submit a sketch plan of the subject properties, respondents maintain that
their ownership of the subject properties, evidenced by certificates of title registered in their names,
cannot be defeated. This contention is untenable.

Respondents mistakenly construe the allegations in petitioners' Complaints. What petitioners alleged in
their Complaints was that while the subject properties were not covered by respondents' certificates of
title, nevertheless, respondents forcibly evicted petitioners therefrom. Hence, it is not simply a question
of whether petitioners' possession can defeat respondents' title to registered land. Instead, an initial
determination has to be made on whether the subject properties were in fact covered by respondents'
certificates of title.

Section 2, Rule 2 of the Rules of Civil Procedure defines a cause of action as the act or omission by which
a party violates the right of another. Its essential elements are as follows: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part
of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of
such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff, for which the latter may maintain an action for recovery of damages or other
appropriate relief.36
The elementary test for failure to state a cause of action is whether the complaint alleges facts which if
true would justify the relief demanded. The inquiry is into the sufficiency, not the veracity, of the
material allegations. If the allegations in the complaint furnish sufficient basis on which it can be
maintained, it should not be dismissed regardless of the defense that may be presented by the
defendant.37

This Court is convinced that each of the Complaints filed by petitioners sufficiently stated a cause of
action. The Complaints alleged that petitioners are the owners of the subject properties by acquisitive
prescription. As owners thereof, they have the right to remain in peaceful possession of the said
properties and, if deprived thereof, they may recover the same. Section 428 of the Civil Code provides
that:

Article 428. The owner has the right to enjoy and dispose of a thing without other limitations than those
established by law.

The owner has also a right of action against the holder and possessor of the thing in order to recover it.

Petitioners averred that respondents had violated their rights as owner of the subject properties by
evicting the former therefrom by means of force and intimidation. Respondents allegedly retained
possession of the subject properties by invoking certificates of title covering other parcels of land.
Resultantly, petitioners filed the cases before the RTC in order to recover possession of the subject
properties, to prevent respondents from using their TCTs to defeat petitioners' rights of ownership and
possession over said subject properties, and to claim damages and other reliefs that the court may
deem just and equitable.

The Court notes that petitioners' prayer for the cancellation of respondents' certificates of title are
inconsistent with their allegations. Petitioners prayed for in their Complaints that, among other reliefs,
judgment be rendered so that "Transfer Certificate of Title Numbers 9176, 9177, 9178, 9179, 9180,
9181, and 9182 be cancelled by the Register of Deeds for Las Piñas, Metro Manila, insofar as they are
or may be utilized to deprive plaintiffs of possession and ownership of said lot." Yet, petitioners also
made it plain that the subject properties, of which respondents unlawfully deprived them, were not
covered by respondents' certificates of title. It is apparent that the main concern of petitioners is to
prevent respondents from using or invoking their certificates of title to deprive petitioners of their
ownership and possession over the subject properties; and not to assert a superior right to the land
covered by respondents' certificates of title. Admittedly, while petitioners can seek the recovery of the
subject properties, they cannot ask for the cancellation of respondents' TCTs since petitioners failed to
allege any interest in the land covered thereby. Still, the other reliefs sought by petitioners, i.e., recovery
of the possession of the subject properties and compensation for the damages resulting from
respondents' forcible taking of their property, are still proper.
Petitioners' Complaints should not have been dismissed despite the seeming error made by petitioners
in their prayer. To sustain a motion to dismiss for lack of cause of action, the complaint must show that
the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous,
indefinite or uncertain.38

Complaints are not barred by prescription and laches.

In their Motion to Dismiss, respondents argued that petitioners' cases were barred by prescription, in
accordance with Section 32 of the Property Registration Decree and Articles 1144(2) and 1456 of the
Civil Code. Respondents relied on the premise that the actions instituted by petitioners before the RTC
were for the reopening and review of the decree of registration and reconveyance of the subject
properties.

Section 32 of the Property Registration Decree provides that a decree of registration may be reopened
when a person is deprived of land or an interest therein by such adjudication or confirmation obtained
by actual fraud. On the other hand, an action for reconveyance respects the decree of registration as
incontrovertible but seeks the transfer of property, which has been wrongfully or erroneously registered
in other persons' names, to its rightful and legal owners, or to those who claim to have a better right.39
In both instances, the land of which a person was deprived should be the same land which was
fraudulently or erroneously registered in another person's name, which is not the case herein, if the
Court considers the allegations in petitioners' Complaints.

As previously established, petitioners' main contention is that the subject properties from which they
were forcibly evicted were not covered by respondents' certificates of title. Stated differently, the
subject properties and the land registered in respondents' names are not identical. Consequently,
petitioners do not have any interest in challenging the registration of the land in respondents' names,
even if the same was procured by fraud.

While petitioners improperly prayed for the cancellation of respondents' TCTs in their Complaints, there
is nothing else in the said Complaints that would support the conclusion that they are either petitions
for reopening and review of the decree of registration under Section 32 of the Property Registration
Decree or actions for reconveyance based on implied trust under Article 1456 of the Civil Code. Instead,
petitioners' Complaints may be said to be in the nature of an accion reivindicatoria, an action for
recovery of ownership and possession of the subject properties, from which they were evicted
sometime between 1991 and 1994 by respondents. An accion reivindicatoria may be availed of within
10 years from dispossession.40 There is no showing that prescription had already set in when
petitioners filed their Complaints in 1997.
Furthermore, the affirmative defense of prescription does not automatically warrant the dismissal of a
complaint under Rule 16 of the Rules of Civil Procedure. An allegation of prescription can effectively be
used in a motion to dismiss only when the Complaint on its face shows that indeed the action has
already prescribed.41 If the issue of prescription is one involving evidentiary matters requiring a full-
blown trial on the merits, it cannot be determined in a motion to dismiss.42 In the case at bar,
respondents must first be able to establish by evidence that the subject properties are indeed covered
by their certificates of title before they can argue that any remedy assailing the registration of said
properties or the issuance of the certificates of title over the same in the names of respondents or their
predecessors-in-interest has prescribed.

Neither can the Court sustain respondents' assertion that petitioners' Complaints were barred by laches.

Laches has been defined as the failure of or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence, could or should have been done earlier; or to assert a
right within reasonable time, warranting a presumption that the party entitled thereto has either
abandoned it or declined to assert it. Thus, the doctrine of laches presumes that the party guilty of
negligence had the opportunity to do what should have been done, but failed to do so. Conversely, if the
said party did not have the occasion to assert the right, then, he cannot be adjudged guilty of laches.
Laches is not concerned with the mere lapse of time; rather, the party must have been afforded an
opportunity to pursue his claim in order that the delay may sufficiently constitute laches.43

Again, going back to petitioners' chief claim that the subject properties are distinct from the land
covered by respondents' certificates of title, then, petitioners would have no standing to oppose the
registration of the latter property in the names of respondents or their predecessors-in-interest, or to
seek the nullification of the certificates of title issued over the same.

It also appears from the records that the RTC did not conduct a hearing to receive evidence proving that
petitioners were guilty of laches. Well-settled is the rule that the elements of laches must be proven
positively. Laches is evidentiary in nature, a fact that cannot be established by mere allegations in the
pleadings and cannot be resolved in a motion to dismiss. At this stage, therefore, the dismissal of
petitioners' Complaints on the ground of laches is premature. Those issues must be resolved at the trial
of the case on the merits, wherein both parties will be given ample opportunity to prove their respective
claims and defenses.44

Complaints are not barred by res judicata.

Lastly, respondents argued in their Motion to Dismiss that petitioners' Complaints are barred by res
judicata, citing Vda. de Cailles and Orosa. Likewise, petitioners are barred from instituting any case for
recovery of possession by the MTC Decision in Civil Case No. 3271.

Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and
matters determined in the former suit. Res judicata has two concepts: (1) "bar by prior judgment" as
enunciated in Rule 39, Section 47 (b) of the Rules of Civil Procedure; and (2) "conclusiveness of
judgment" in Rule 39, Section 47 (c).

There is "bar by prior judgment" when, as between the first case where the judgment was rendered,
and the second case that is sought to be barred, there is identity of parties, subject matter, and causes
of action. But where there is identity of parties and subject matter in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely involved therein. There is "conclusiveness of
judgment." Under the doctrine of conclusiveness of judgment, facts and issues actually and directly
resolved in a former suit cannot again be raised in any future case between the same parties, even if the
latter suit may involve a different claim or cause of action. The identity of causes of action is not
required but merely identity of issues.45

Vda. de Cailles and Orosa cannot bar the filing of petitioners' Complaints before the RTC under the
doctrine of conclusiveness of judgment, since they involve entirely different subject matters. In both
cases, the subject matter was a parcel of land referred to as Lot 9 Psu-11411 Amd-2, while subject
matter of the petitioners' Complaints are lots which are not included in the said land.

It follows that the more stringent requirements of res judicata as "bar by prior judgment" will not apply
to petitioners' Complaints. In Vda. de Cailles, the Court confirmed the ownership of Dominador Mayuga
over a 53-hectare parcel of land located in Las Piñas, Rizal, more particularly referred to as Lot 9, Psu-
11411, Amd-2. The Court also recognized that Nicolas Orosa was Dominador Mayuga's successor-in-
interest. However, the judgment in said case was not executed because the records of the Land
Registration Authority revealed that the property had previously been decreed in favor of Jose T.
Velasquez, to whom OCT No. 6122 was issued. During the execution proceedings, Goldenrod Inc. filed a
motion to intervene, the granting of which by the trial court was challenged in Orosa. The Court held in
Orosa that Goldenrod, Inc., despite having acquired the opposing rights of Nicolas Orosa and Jose T.
Velasquez to the property sometime in 1987, no longer had any interest in the same as would enable it
to intervene in the execution proceedings, since it had already sold its interest in February 1989 to the
consortium composed of respondents, Peaksun Enterprises and Export Corporation, and Elena
Jao.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The adjudication of the land to respondents' predecessors-in-interest in Vda. de Cailles and Orosa is not
even relevant to petitioners' Complaints. According to petitioners' allegations in their Complaints,
although the subject properties were derived from the 119.8-hectare parcel of land referred to as Lot 9,
Psu-11411, they are not included in the 53-hectare portion thereof, specifically identified as Lot 9, Psu-
11411, Amd-2, subject of Vda. de Cailles and Orosa. This was the reason why petitioners had to cite Vda.
de Cailles and Orosa: to distinguish the subject properties from the land acquired by respondents and
the other members of the consortium. There clearly being no identity of subject matter and of parties,
then, the rulings of this Court in Vda. de Cailles and Orosa do not bar by prior judgment Civil Cases No.
LP-97-0228, No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236, No. LP-97-0237, No. LP-
97-0238, and No. LP-97-0239 instituted by petitioners in the RTC.

The Court is aware that petitioners erroneously averred in their Complaints that the subject properties
"originated from Psu-11411, Lot 9, Amd-2," instead of stating that the said properties originated from
Psu-11411, Lot 9. However, this mistake was clarified in later allegations in the same Complaints, where
petitioners stated that "Psu-114, Lot 9 consists of 1, 198,017 square meters," or 119.8 hectares when
converted, while Psu-11411, Lot 9, Amd-2 referred to a 53-hectare parcel. Petitioners pointed out that in
Vda. de Cailles and Orosa, the Court acknowledged "the ownership [of respondents' predecessor-in-
interest] only over a fifty-three (53) hectare parcel, more particularly referred to as Lot 9 Psu-11411,
Amd-2." Thus, petitioners argued that the rights which respondents acquired from Mayuga and Orosa
"cover[ed] only 531, 449 square meters or 53 hectares of Psu-11411, Lot 9. They do not extend to the
latter's other portion of 1,198, 017 square meters part of which [petitioners] had been occupying until
they were forcibly evicted by [respondents]." Accordingly, the single statement in the Complaints that
the subject properties originated from Lot 9, Psu-11411, Amd-2, is an evident mistake which cannot
prevail over the rest of the allegations in the same Complaints.

Similarly, the Decision dated 17 December 1991 of the MTC in Civil Case No. 3271 cannot bar the filing
of petitioners' Complaints before the RTC because they have different subject matters. The subject
matter in Civil Case No. 3271 decided by the MTC was the parcel of land covered by TCTs No. 9176, No.
9177, No. 9178, No. 9179, No. 9180, and No. 9181, in the name of respondents and the other
consortium members; while, according to petitioners' allegations in their Complaints, the subject
matters in Civil Cases No. LP-97-0228, No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236,
No. LP-97-0237, No. LP-97-0238, and No. LP-97-0239, before the RTC, are the subject properties which
are not covered by respondents' certificates of title.

The MTC, in its 17 December 1991 Decision in Civil Case No. 3271 found that:

The subject parcels of land are covered by (TCT) Nos. 9176, 9177, 9178, 9179, [9180], [9181] and 9182
(Exhs. "1" to "7", Defendants) all issued in the name of defendant Fil-Estate Management, Inc. It appears
from the evidence presented that defendant Fil-Estate purchased the said property from Goldenrod, Inc.
It also appears from the evidence that the subject property at the time of the purchase was then
occupied by squatters/intruders. By reason thereof, the Municipality of Las Piñas conducted in 1989 a
census of all structures/shanties on subject property. Those listed in the census were relocated by
defendant, which relocation program started in 1990 up to the present. Interestingly, however, all of the
plaintiffs herein except the Almas, were not listed as among those in possession of defendant's land as
of November 1989.

xxx

In fine, plaintiffs have not clearly established their right of possession over the property in question.
They claim ownership, but no evidence was ever presented to prove such fact. They claim possession
from time immemorial. But the Census prepared by Las Piñas negated this posture.46 (Emphasis
provided.)

The determination by the MTC that petitioners were not occupants of the parcels of land covered by
TCTs No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, and No. 9181 cannot bar their claims over
another parcel of land not covered by the said TCTs. It should also be noted that petitioners Heirs of
Agapito Villanueva do not appear to be plaintiffs in Civil Case No. 3271 and, therefore, cannot be bound
by the MTC Decision therein.

In all, this Court pronounces that respondents failed to raise a proper ground for the dismissal of
petitioners' Complaints. Petitioners' claims and respondents' opposition and defenses thereto are best
ventilated in a trial on the merits of the cases.

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The Decision dated 16 September 2005
and Resolution dated 9 December 2005 of the Court of Appeals in CA-G.R. CV No. 80927 are REVERSED
and SET ASIDE. Let the records of the case be remanded for further proceedings to the Regional Trial
Court, Branch 253, of Las Piñas City, which is hereby ordered to try and decide the case with deliberate
speed.

SO ORDERED.
FIRST DIVISION

[G.R. NO. 169889 : September 29, 2009]

SPOUSES SIMON YAP AND MILAGROS GUEVARRA, Petitioners, v. FIRST e-BANK CORPORATION
(previously known as PDCP DEVELOPMENT BANK, INC.), Respondent.

DECISION

CORONA, J.:

On August 30, 1990, Sammy Yap obtained a P2 million loan from PDCP Development Bank, Inc.1 (PDCP).
As security, Sammy's parents, petitioners Simon Yap and Milagros Guevarra, executed a third-party
mortgage on their land2 and warehouse standing on it. The mortgage agreement provided that PDCP
may extrajudicially foreclose the property in case Sammy failed to pay the loan.

On November 7, 1990, Sammy issued a promissory note and six postdated checks3 in favor of PDCP as
additional securities for the loan.

When Sammy defaulted on the payment of his loan, PDCP presented the six checks to the drawee bank
but the said checks were dishonored.4 This prompted PDCP to file a complaint against Sammy for six
counts of violation of BP 22 (Bouncing Checks Law) on February 8, 1993.

On May 3, 1993, PDCP filed an application for extrajudicial foreclosure of mortgage on the property of
petitioners which served as principal security for Sammy's loan.

On December 16, 1993, on motion of Sammy and without objection from the public prosecutor and
PDCP, the BP 22 cases were provisionally dismissed.

On October 26, 1994, pursuant to the petition of PDCP for extrajudicial foreclosure, the extrajudicial sale
was set on December 28, 1994. Copies of the notice of extrajudicial sale were sent by registered mail to
Sammy, petitioners, the Registrar of Deeds of San Carlos City, Pangasinan, the Sangguniang Panglungsod
of San Carlos City and the office of the barangay secretary of Taloy District, San Carlos City, Pangasinan.
The notice was also published in the Sunday Punch, a newspaper of general circulation in Pangasinan on
November 27, December 4 and 11, 1994.

On December 20, 1994, petitioners filed in the Regional Trial Court (RTC) of San Carlos City, Pangasinan a
complaint for injunction (with prayer for the issuance of a temporary restraining order/preliminary
injunction), damages and accounting of payments against PDCP. The complaint sought to stop the
foreclosure sale on the ground that PDCP waived its right to foreclose the mortgage on their property
when it filed the BP 22 cases against Sammy.

On April 2, 1997, the RTC5 ruled in favor of petitioners. It held that PDCP had three options when
Sammy defaulted in the payment of his loan: enforcement of the promissory note in a collection case,
enforcement of the checks under the Negotiable Instruments Law and/or BP 22, or foreclosure of
mortgage. The remedies were alternative and the choice of one excluded the others. Thus, PDCP was
deemed to have waived its right to foreclose on the property of petitioners when it elected to sue
Sammy for violation of BP 22.6

PDCP appealed to the Court of Appeals (CA). On February 8, 2005, the CA7 reversed the RTC. It opined
that PDCP was not barred from exercising its right to foreclose on the property of petitioners despite
suing Sammy for violation of BP 22. The purpose of BP 22 was to punish the act of issuing a worthless
check, not to force a debtor to pay his debt.8

Hence, this appeal9 where petitioners argue that, when Sammy was sued for six counts of violation of
BP 22, PDCP should have been deemed to have simultaneously filed for collection of the amount
represented by the checks. The civil aspect of the case was naturally an action for collection of Sammy's
obligation to PDCP. PDCP clearly elected a remedy. PDCP should not be allowed to pursue another, like
foreclosure of mortgage.

The argument is not convincing.

First, petitioners anchor their position on Supreme Court Circular 57-97, which provides for the rules and
guidelines in the filing and prosecution of criminal cases under BP 22. Pertinent portions of Circular 57-
97 provide:

1. The criminal action for violation of [BP] 22 shall be deemed to necessarily include the corresponding
civil action, and no reservation to file such civil action separately shall be allowed or recognized.
2. Upon the filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the
filing fees based upon the amount of the check involved, which shall be considered as the actual
damages claimed, in accordance with the filing fees in Section 7 (a) and Section 8 (a), Rule 141 of the
Rules of Court, and last amended by Administrative Circular No. 11-94 effective August 1, 1994. Where
the offended party seeks to enforce against the accused civil liability by way of liquidated, moral,
nominal, temperate or exemplary damages, he shall pay the corresponding filing fees therefore based
on the amounts thereof as alleged either in his complaint or in the information. If not so alleged but any
of these damages are awarded by the court, the amount of such fees shall constitute a first lien on the
judgment.

3. Where the civil action has heretofore been filed separately and trial thereof has not yet commenced,
it may be consolidated with the criminal action upon application with the court trying the latter case. If
the application is granted, the trial of both actions shall proceed in accordance with the pertinent
procedure outlined in Section 2 (a) of Rule 111 governing the proceedings in the actions as thus
consolidated. (emphasis supplied)

Circular 57-97 has been institutionalized as Section 1(b), Rule 111 of the Rules of Court:10

Section 1. Institution of criminal and civil actions. xxx

(b) The criminal action for violation of [BP] 22 shall be deemed to include the corresponding civil action.
No reservation to file such civil action separately shall be allowed.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing
fees based on the amount of the check involved, which shall be considered as the actual damages
claimed. Where the complaint or information also seeks to recover liquidated, moral, nominal,
temperate or exemplary damages, the offended party shall pay additional filing fees based on the
amounts alleged therein. If the amounts are not so alleged but any of these damages are subsequently
awarded by the court, the filing fee based on the amount awarded shall constitute a first lien on the
judgment.

Where the civil action has been filed separately and trial thereof has not yet commenced, it may be
consolidated with the criminal action upon application with the court trying the latter case. If the
application is granted, the trial of both actions shall proceed in accordance with section 2 of this Rule
governing consolidation of the civil and criminal actions. (emphasis supplied)
Sad to say, Circular 57-97 (and, it goes without saying, Section 1(b), Rule 111 of the Rules of Court) was
not yet in force11 when PDCP sued Sammy for violation of BP 22 and when it filed a petition for
extrajudicial foreclosure on the mortgaged property of petitioners on February 8, 1993 and May 3, 1993,
respectively. In Lo Bun Tiong v. Balboa,12 Circular 57-97 was not applied because the collection suit and
the criminal complaints for violation of BP 22 were filed prior to the adoption of Circular 57-97. The
same principle applies here.

Thus, prior to the effectivity of Circular 57-97, the alternative remedies of foreclosure of mortgage and
collection suit were not barred even if a suit for BP 22 had been filed earlier, unless a judgment of
conviction had already been rendered in the BP 22 case finding the accused debtor criminally liable and
ordering him to pay the amount of the check(s).13

In this case, no judgment of conviction (which could have declared the criminal and civil liability of
Sammy) was rendered because Sammy moved for the provisional dismissal of the case. Hence, PDCP
could have still foreclosed on the mortgage or filed a collection suit.

Nonetheless, records show that, during the pendency of the BP 22 case, Sammy had already paid PDCP
the total amount of P1,783,582.14 Thus, to prevent unjust enrichment on the part of the creditor, any
foreclosure by PDCP should only be for the unpaid balance.

Second, it is undisputed that the BP 22 cases were provisionally dismissed at Sammy's instance. In other
words, PDCP was prevented from recovering the whole amount by Sammy himself. To bar PDCP from
foreclosing on petitioners' property for the balance of the indebtedness would be to penalize PDCP for
the act of Sammy. That would not only be illogical and absurd but would also violate elementary rules of
justice and fair play. In sum, PDCP has not yet effectively availed of and fully exhausted its remedy.

While it can be argued that PDCP may revive the BP 22 cases anytime as their dismissal was only
provisional, suffice it to state that the law gives the right of choice to PDCP, not to Sammy or to
petitioners.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Third, petitioners should be mindful that, by being third party mortgagors, they agreed that their
property would stand as collateral to the loan of Sammy until the last centavo is paid to PDCP. That is a
risk they willingly assumed. To release the mortgage just because they find it inconvenient would be the
height of injustice against PDCP.
All told, PDCP should not be left without recourse for the unsettled loan of Sammy. Otherwise, an
iniquitous situation will arise where Sammy and petitioners are unjustly enriched at the expense of
PDCP. That we cannot sanction.

So as not to create any misunderstanding, however, the point should be underscored that the creditor's
obvious purpose when it forecloses on mortgaged property is to obtain payment for a loan which the
debtor is unable or unjustifiably refuses to pay. The rationale is the same if the creditor opts to sue the
debtor for collection. Thus, it is but logical that a creditor who obtains a personal judgment against the
debtor on a loan waives his right to foreclose on the mortgage securing the loan. Otherwise, the creditor
becomes guilty of splitting a single cause of action15 for the debtor's inability (or unjustified refusal) to
pay his debt.16 Nemo debet bis vexare pro una et eadem causa. No man shall be twice vexed for one
and the same cause.

In the light of Circular 57-97 and Section 1(b), Rule 111 of the Rules of Court, the same rule applies when
the creditor sues the debtor for BP 22 and thereafter forecloses on the mortgaged property. It is true
that BP 22 is a criminal remedy while foreclosure of mortgage is a civil remedy. It is also true that BP 22
was not enacted to force, much more penalize a person for his inability (or refusal to pay) his debt.17
What BP 22 prohibits and penalizes is the issuance of bum checks because of its pernicious effects on
public interest. Congress, in the exercise of police power, enacted BP 22 in order to maintain public
confidence in commercial transactions.18

At the other end of the spectrum, however, is the fact that a creditor's principal purpose in suing the
debtor for BP 22 is to be able to collect his debt. (Circular 57-97 and Section 1(b), Rule 111 of the Rules
of Court have been drawn up to address this reality.) It is not so much that the debtor should be
imprisoned for issuing a bad check; this is so specially because a conviction for BP 22 does not
necessarily result in imprisonment.19

Thus, we state the rule at present. If the debtor fails (or unjustly refuses) to pay his debt when it falls
due and the debt is secured by a mortgage and by a check, the creditor has three options against the
debtor and the exercise of one will bar the exercise of the others. He may pursue either of the three but
not all or a combination of them.

First, the creditor may file a collection suit against the debtor. This will open up all the properties of the
debtor to attachment and execution, even the mortgaged property itself. Second, the creditor may opt
to foreclose on the mortgaged property. In case the debt is not fully satisfied, he may sue the debtor for
deficiency judgment (not a collection case for the whole indebtedness), in which case, all the properties
of the debtor, other than the mortgaged property, are again opened up for the satisfaction of the
deficiency.20 Lastly, the creditor may opt to sue the debtor for violation of BP 22 if the checks securing
the obligation bounce. Circular 57-97 and Section 1(b), Rule 111 of the Rules of Court both provide that
the criminal action for violation of BP 22 shall be deemed to necessarily include the corresponding civil
action, i.e., a collection suit. No reservation to file such civil action separately shall be allowed or
recognized.

Petitioners would have been correct had it not been for the reasons stated earlier.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioners.

SO ORDERED.
ECOND DIVISION

G.R. No. 150134 October 31, 2007

ERNESTO C. DEL ROSARIO and DAVAO TIMBER CORPORATION, petitioners,

vs.

FAR EAST BANK & TRUST COMPANY1 and PRIVATE DEVELOPMENT CORPORATION OF THE PHILIPPINES,
respondents.

DECISION

CARPIO MORALES, J.:

The Regional Trial Court (RTC) of Makati City, Branch "65" (sic)2 having, by Decision3 of July 10, 2001,
dismissed petitioners' complaint in Civil Case No. 00-540 on the ground of res judicata and splitting of a
cause of action, and by Order of September 24, 20014 denied their motion for reconsideration thereof,
petitioners filed the present petition for review on certiorari.

From the rather lengthy history of the present controversy, a recital of the following material facts
culled from the records is in order.

On May 21, 1974, petitioner Davao Timber Corporation (DATICOR) and respondent Private Development
Corporation of the Philippines (PDCP) entered into a loan agreement under which PDCP extended to
DATICOR a foreign currency loan of US $265,000 and a peso loan of P2.5 million or a total amount of
approximately P4.4 million, computed at the then prevailing rate of exchange of the dollar with the
peso.

The loan agreement provided, among other things, that DATICOR shall pay: (1) a service fee of one
percent (1%) per annum (later increased to six percent [6%] per annum) on the outstanding balance of
the peso loan; (2) 12 percent (12%) per annum interest on the peso loan; and (3) penalty charges of two
percent (2%) per month in case of default.
The loans were secured by real estate mortgages over six parcels of land – one situated in Manila (the
Otis property) which was registered in the name of petitioner Ernesto C. Del Rosario, and five in Mati,
Davao Oriental – and chattel mortgages over pieces of machinery and equipment.

Petitioners paid a total of P3 million to PDCP, which the latter applied to interest, service fees and
penalty charges. This left petitioners, by PDCP's computation, with an outstanding balance on the
principal of more than P10 million as of May 15, 1983.

By March 31, 1982, petitioners had filed a complaint against PDCP before the then Court of First
Instance (CFI) of Manila for violation of the Usury Law, annulment of contract and damages. The case,
docketed as Civil Case No. 82-8088, was dismissed by the CFI.

On appeal, the then Intermediate Appellate Court (IAC) set aside the CFI's dismissal of the complaint and
declared void and of no effect the stipulation of interest in the loan agreement between DATICOR and
PDCP.

PDCP appealed the IAC's decision to this Court where it was docketed as G.R. No. 73198.

In the interim, PDCP assigned a portion of its receivables from petitioners (the receivables) to its co-
respondent Far East Bank and Trust Company (FEBTC) under a Deed of Assignment dated April 10,
19875 for a consideration of P5,435,000. The Deed of Assignment was later amended by two
Supplements.6

FEBTC, as assignee of the receivables, and petitioners later executed a Memorandum of Agreement
(MOA) dated December 8, 1988 whereby petitioners agreed to, as they did pay FEBTC7 the amount of
P6.4 million as full settlement of the receivables.

On September 2, 1992, this Court promulgated its Decision in G.R. No. 731988 affirming in toto the
decision of the IAC. It determined that after deducting the P3 million earlier paid by petitioners to PDCP,
their remaining balance on the principal loan was only P1.4 million.

Petitioners thus filed on April 25, 1994 a Complaint9 for sum of money against PDCP and FEBTC before
the RTC of Makati, mainly to recover the excess payment which they computed to be P5.3 million10 –
P4.335 million from PDCP, and P965,000 from FEBTC. The case, Civil Case No. 94-1610, was raffled to
Branch 132 of the Makati RTC.
On May 31, 1995, Branch 132 of the Makati RTC rendered a decision11 in Civil Case No. 94-1610
ordering PDCP to pay petitioners the sum of P4.035 million,12 to bear interest at 12% per annum from
April 25, 1994 until fully paid; to execute a release or cancellation of the mortgages on the five parcels of
land in Mati, Davao Oriental and on the pieces of machinery and equipment and to return the
corresponding titles to petitioners; and to pay the costs of the suit.

As for the complaint of petitioners against respondent FEBTC, the trial court dismissed it for lack of
cause of action, ratiocinating that the MOA between petitioners and FEBTC was not subject to this
Court's Decision in G.R. No. 73198, FEBTC not being a party thereto.

From the trial court's decision, petitioners and respondent PDCP appealed to the Court of Appeals (CA).
The appeal was docketed as CA-G.R. CV No. 50591.

On May 22, 1998, the CA rendered a decision13 in CA-G.R. CV No. 50591, holding that petitioners'
outstanding obligation, which this Court had determined in G.R. No. 73198 to be P1.4 million, could not
be increased or decreased by any act of the creditor PDCP.

The CA held that when PDCP assigned its receivables, the amount payable to it by DATICOR was the
same amount payable to assignee FEBTC, irrespective of any stipulation that PDCP and FEBTC might
have provided in the Deed of Assignment, DATICOR not having been a party thereto, hence, not bound
by its terms.

Citing Articles 215414 and 216315 of the Civil Code which embody the principle of solutio indebiti, the
CA held that the party bound to refund the excess payment of P5 million16 was FEBTC as it received the
overpayment; and that FEBTC could recover from PDCP the amount of P4.035 million representing its
overpayment for the assigned receivables based on the terms of the Deed of Assignment or on the
general principle of equity.

Noting, however, that DATICOR claimed in its complaint only the amount of P965,000 from FEBTC, the
CA held that it could not grant a relief different from or in excess of that prayed for.

Finally, the CA held that the claim of PDCP against DATICOR for the payment of P1.4 million had no
basis, DATICOR's obligation having already been paid in full, overpaid in fact, when it paid assignee
FEBTC the amount of P6.4 million.
Accordingly, the CA ordered PDCP to execute a release or cancellation of the mortgages it was holding
over the Mati real properties and the machinery and equipment, and to return the corresponding
certificates of title to petitioners. And it ordered FEBTC to pay petitioners the amount of P965,000 with
legal interest from the date of the promulgation of its judgment.

FEBTC's motion for reconsideration of the CA Decision was denied, and so was its subsequent appeal to
this Court.

On April 25, 2000, petitioners filed before the RTC of Makati a Complaint17 against FEBTC to recover the
balance of the excess payment of P4.335 million.18 The case was docketed as Civil Case No. 00-540, the
precursor of the present case and raffled to Branch 143 of the RTC.

In its Answer,19 FEBTC denied responsibility, it submitting that nowhere in the dispositive portion of the
CA Decision in CA-G.R. CV No. 50591 was it held liable to return the whole amount of P5.435 million
representing the consideration for the assignment to it of the receivables, and since petitioners failed to
claim the said whole amount in their original complaint in Civil Case No. 94-1610 as they were merely
claiming the amount of P965,000 from it, they were barred from claiming it.

FEBTC later filed a Third Party Complaint20 against PDCP praying that the latter be made to pay the
P965,000 and the interests adjudged by the CA in favor of petitioners, as well as the P4.335 million and
interests that petitioners were claiming from it. It posited that PDCP should be held liable because it
received a consideration of P5.435 million when it assigned the receivables.

Answering21 the Third Party Complaint, PDCP contended that since petitioners were not seeking the
recovery of the amount of P965,000, the same cannot be recovered via the third party complaint.

PDCP went on to contend that since the final and executory decision in CA-G.R. CV No. 50591 had held
that DATICOR has no cause of action against it for the refund of any part of the excess payment, FEBTC
can no longer re-litigate the same issue.

Moreover, PDCP contended that it was not privy to the MOA which explicitly excluded the receivables
from the effect of the Supreme Court decision, and that the amount of P6.4 million paid by petitioners
to FEBTC was clearly intended as consideration for the release and cancellation of the lien on the Otis
property.
Replying,22 FEBTC pointed out that PDCP cannot deny that it benefited from the assignment of its rights
over the receivables from petitioners. It added that the third party claim being founded on a valid and
justified cause, PDCP's counterclaims lacked factual and legal basis.

Petitioners thereafter filed a Motion for Summary Judgment23 to which FEBTC filed its opposition.24

By Order of March 5, 2001, the trial court denied the motion for summary judgment for lack of merit.25

On July 10, 2001, the trial court issued the assailed Decision dismissing petitioners' complaint on the
ground of res judicata and splitting of cause of action. It recalled that petitioners had filed Civil Case No.
94-1610 to recover the alleged overpayment both from PDCP and FEBTC and to secure the cancellation
and release of their mortgages on real properties, machinery and equipment; that when said case was
appealed, the CA, in its Decision, ordered PDCP to release and cancel the mortgages and FEBTC to pay
P965,000 with interest, which Decision became final and executory on November 23, 1999; and that a
Notice of Satisfaction of Judgment between petitioners and FEBTC was in fact submitted on August 8,
2000, hence, the issue between them was finally settled under the doctrine of res judicata.

The trial court moreover noted that the MOA between petitioners and FEBTC clearly stated that the
"pending litigation before the Supreme Court of the Philippines with respect to the Loan exclusive of the
Receivables assigned to FEBTC shall prevail up to the extent not covered by this Agreement." That
statement in the MOA, the trial court ruled, categorically made only the loan subject to this Court's
Decision in G.R. No. 73198, hence, it was with the parties' full knowledge and consent that petitioners
agreed to pay P6.4 million to FEBTC as consideration for the settlement. The parties cannot thus be
allowed to welsh on their contractual obligations, the trial court concluded.

Respecting the third party claim of FEBTC, the trial court held that FEBTC's payment of the amount of
P1,224,906.67 (P965,000 plus interest) to petitioners was in compliance with the final judgment of the
CA, hence, it could not entertain such claim because the Complaint filed by petitioners merely sought to
recover from FEBTC the alleged overpayment of P4.335 million and attorney's fees of P200,000.

Petitioners' motion for reconsideration26 of the July 10, 2001 decision of the trial court was denied by
Order of September 24, 2001.

Hence, the present petition.

In their Memorandum,27 petitioners proffer that, aside from the issue of whether their complaint is
dismissible on the ground of res judicata and splitting of cause of action, the issues of 1) whether FEBTC
can be held liable for the balance of the overpayment of P4.335 million plus interest which petitioners
previously claimed against PDCP in Civil Case No. 94-1610, and 2) whether PDCP can interpose as
defense the provision in the Deed of Assignment and the MOA that the assignment of the receivables
shall not be affected by this Court's Decision in G.R. No. 73198, be considered.

Stripped of the verbiage, the only issue for this Court's consideration is the propriety of the dismissal of
Civil Case No. 00-540 upon the grounds stated by the trial court. This should be so because a Rule 45
petition, like the one at bar, can raise only questions of law (and that justifies petitioners' elevation of
the case from the trial court directly to this Court) which must be distinctly set forth.28

The petition is bereft of merit.

Section 47 of Rule 39 of the Rules of Court, on the doctrine of res judicata, reads:

Sec. 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

xxxx

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to
any other matter that could have been raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is deemed
to have been adjudged in a former judgment or final order which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto. (Underscoring
supplied)

The above-quoted provision lays down two main rules. Section 49(b) enunciates the first rule of res
judicata known as "bar by prior judgment" or "estoppel by judgment," which states that the judgment or
decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the
litigation and constitutes a bar to a new action or suit involving the same cause of action either before
the same or any other tribunal.29

Stated otherwise, "bar by former judgment" makes the judgment rendered in the first case an absolute
bar to the subsequent action since that judgment is conclusive not only as to the matters offered and
received to sustain it but also as to any other matter which might have been offered for that purpose
and which could have been adjudged therein. 30 It is in this concept that the term res judicata is more
commonly and generally used as a ground for a motion to dismiss in civil cases.31

The second rule of res judicata embodied in Section 47(c), Rule 39 is "conclusiveness of judgment." This
rule provides that any right, fact, or matter in issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in which a judgment or decree is rendered on the
merits is conclusively settled by the judgment therein and cannot again be litigated between the parties
and their privies whether or not the claim or demand, purpose, or subject matter of the two suits is the
same.32 It refers to a situation where the judgment in the prior action operates as an estoppel only as to
the matters actually determined or which were necessarily included therein.33

The case at bar satisfies the four essential requisites of "bar by prior judgment," viz:

(a) finality of the former judgment;

(b) the court which rendered it had jurisdiction over the subject matter and the parties;

(c) it must be a judgment on the merits; and

(d) there must be, between the first and second actions, identity of parties, subject matter and causes of
action.34

There is no doubt that the judgment on appeal relative to Civil Case No. 94-1610 (that rendered in CA-
G.R. CV No. 50591) was a final judgment. Not only did it dispose of the case on the merits; it also
became executory as a consequence of the denial of FEBTC's motion for reconsideration and appeal.35

Neither is there room to doubt that the judgment in Civil Case No. 94-1610 was on the merits for it
determined the rights and liabilities of the parties.36 To recall, it was ruled that: (1) DATICOR overpaid
by P5.3 million; (2) FEBTC was bound to refund the excess payment but because DATICOR's claim against
FEBTC was only P965,000, the court could only grant so much as the relief prayed for; and (3) PDCP has
no further claim against DATICOR because its obligation had already been paid in full.

Right or wrong, that judgment bars another case based upon the same cause of action.37

As to the requisite of identity of parties, subject matter and causes of action, it cannot be gainsaid that
the first case, Civil Case No. 94-1610, was brought by petitioners to recover an alleged overpayment of
P5.3 million –P965,000 from FEBTC and P4.335 million from PDCP.

On the other hand, Civil Case No. 00-540, filed by the same petitioners, was for the recovery of P4.335
million which is admittedly part of the P5.3 million earlier sought to be recovered in Civil Case No. 94-
1610. This time, the action was brought solely against FEBTC which in turn impleaded PDCP as a third
party defendant.

In determining whether causes of action are identical to warrant the application of the rule of res
judicata, the test is to ascertain whether the same evidence which is necessary to sustain the second
action would suffice to authorize a recovery in the first even in cases in which the forms or nature of the
two actions are different.38 Simply stated, if the same facts or evidence would sustain both, the two
actions are considered the same within the rule that the judgment in the former is a bar to the
subsequent action.

It bears remembering that a cause of action is the delict or the wrongful act or omission committed by
the defendant in violation of the primary rights of the plaintiff.39

In the two cases, petitioners imputed to FEBTC the same alleged wrongful act of mistakenly receiving
and refusing to return an amount in excess of what was due it in violation of their right to a refund. The
same facts and evidence presented in the first case, Civil Case No. 94-1610, were the very same facts
and evidence that petitioners presented in Civil Case No. 00-540.

Thus, the same Deed of Assignment between PDCP and FEBTC, the first and second supplements to the
Deed, the MOA between petitioners and FEBTC, and this Court's Decision in G.R. No. 73198 were
submitted in Civil Case No. 00-540.
Notably, the same facts were also pleaded by the parties in support of their allegations for, and defenses
against, the recovery of the P4.335 million. Petitioners, of course, plead the CA Decision as basis for their
subsequent claim for the remainder of their overpayment. It is well established, however, that a party
cannot, by varying the form of action or adopting a different method of presenting his case, or by
pleading justifiable circumstances as herein petitioners are doing, escape the operation of the principle
that one and the same cause of action shall not be twice litigated.40

In fact, authorities tend to widen rather than restrict the doctrine of res judicata on the ground that
public as well as private interest demands the ending of suits by requiring the parties to sue once and
for all in the same case all the special proceedings and remedies to which they are entitled.41

This Court finds well-taken then the pronouncement of the court a quo that to allow the re-litigation of
an issue that was finally settled as between petitioners and FEBTC in the prior case is to allow the
splitting of a cause of action, a ground for dismissal under Section 4 of Rule 2 of the Rules of Court
reading:

SEC. 4. Splitting of a single cause of action; effect of. – If two or more suits are instituted on the basis of
the same cause of action, the filing of one or a judgment upon the merits in any one is available as a
ground for the dismissal of the others. (Emphasis and underscoring supplied)

This rule proscribes a party from dividing a single or indivisible cause of action into several parts or
claims and instituting two or more actions based on it.42 Because the plaintiff cannot divide the grounds
for recovery, he is mandated to set forth in his first action every ground for relief which he claims to
exist and upon which he relies; he cannot be permitted to rely upon them by piecemeal in successive
actions to recover for the same wrong or injury.43

Clearly then, the judgment in Civil Case No. 94-1610 operated as a bar to Civil Case No. 00-540, following
the above-quoted Section 4, Rule 2 of the Rules of Court.

A final word. Petitioners are sternly reminded that both the rules on res judicata and splitting of causes
of action are based on the salutary public policy against unnecessary multiplicity of suits – interest
reipublicae ut sit finis litium.44 Re-litigation of matters already settled by a court's final judgment merely
burdens the courts and the taxpayers, creates uneasiness and confusion, and wastes valuable time and
energy that could be devoted to worthier cases.45

WHEREFORE, the Petition is DENIED. The assailed Decision of the RTC, Branch 143, Makati dismissing
petitioners' complaint in Civil Case No. 00-540 is AFFIRMED.
Costs against petitioners.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 170916 April 27, 2007

CGR CORPORATION herein represented by its President ALBERTO RAMOS, III, HERMAN M. BENEDICTO
and ALBERTO R. BENEDICTO, Petitioners,

vs.

ERNESTO L. TREYES, JR., Respondent

DECISION

CARPIO MORALES, J.:

Assailed via petition for review are issuances of the Regional Trial Court (RTC), Branch 43, Bacolod City,
in Civil Case No. 04-12284, to wit: Order1 dated August 26, 2005 which dismissed petitioners’ complaint
for damages on the ground of prematurity, and Order2 dated January 2, 2006 which denied petitioners’
motion for reconsideration.

In issue is one of law – whether a complainant in a forcible entry case can file an independent action for
damages arising after the act of dispossession had occurred.

CGR Corporation, Herman M. Benedicto and Alberto R. Benedicto (petitioners) claimed to have occupied
37.3033 hectares of public land in Barangay Bulanon, Sagay City, Negros Occidental even before the
notarized separate Fishpond Lease Agreement Nos. 5674,3 56944 and 56955 in their respective favor
were approved in October 2000 by the Secretary of Agriculture for a period of twenty-five (25) years or
until December 31, 2024.
On November 18, 2000, Ernesto L. Treyes, Jr. (respondent) allegedly forcibly and unlawfully entered the
leased properties and once inside barricaded the entrance to the fishponds, set up a barbed wire fence
along the road going to petitioners’ fishponds, and harvested several tons of milkfish, fry and fingerlings
owned by petitioners.

On November 22, 2000, petitioners promptly filed with the Municipal Trial Court (MTC) in Sagay City
separate complaints for Forcible Entry With Temporary Restraining Order And/Or Preliminary Injunction
And Damages, docketed as Civil Case Nos. 1331,6 13327 and 1333,8 against Ernesto M. Treyes, Sr. and
respondent.

In a separate move, petitioners filed in March 2004 with the Bacolod RTC a complaint for damages
against respondent, docketed as Civil Case No, 04-12284, alleging, inter alia,

xxxx

That prior to the issuance of the fishpond lease agreement in favor of the plaintiffs, they had already
been in open and continuous possession of the same parcel of land;

VI

As lessee and in possession of the above[-]described fishpond, plaintiffs have continuously occupied,
cultivated and developed the said fishpond and since then, had been regularly harvesting milkfish,
shrimps, mud crabs and other produce of the fishponds;1a\^/phi1.net

VII

That the yearly income of the fishpond of the plaintiff corporation is at least ₱300,000.00 more or less,
while the yearly income of the fishpond of plaintiff Herman Benedicto, Sr. is at least ₱100,000.00 more
or less, and the yearly income of the fishpond of plaintiff Alberto Benedicto is at least ₱100,000.00 more
or less;
VIII

That sometime last November 18, 2000 or thereabout, defendant Ernesto L. Treyes, Jr. and his armed
men and with the help of the blue guards from the Negros Veterans Security Agency forcibly and
unlawfully entered the fishponds of the plaintiffs and once inside barricaded the entrance of the
fishpond and set up barb wire fence along the road going to plaintiffs fishpond and harvested the
milkfish and carted away several tons of milkfish owned by the plaintiffs;

IX

That on succeeding days, defendant’s men continued their forage on the fishponds of the plaintiffs by
carting and taking away the remaining full grown milkfish, fry and fingerlings and other marine products
in the fishponds. NOT ONLY THAT, even the chapel built by plaintiff CGR Corporation was ransacked and
destroyed and the materials taken away by defendant’s men. Religious icons were also stolen and as an
extreme act of sacrilege, even decapitated the heads of some of these icons;

xxxx

XIII

That the unlawful, forcible and illegal intrusion/destruction of defendant Ernesto Treyes, Jr. and his men
on the fishpond leased and possessed by the plaintiffs is without any authority of law and in violation of
Article 539 of the New Civil Code which states:

"Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed
therein he shall be protected in or restored to said possession by the means established by the laws and
rules of the Court."9 (Underscoring supplied) and praying for the following reliefs:

1) Ordering the defendant to pay plaintiff CGR Corporation the sum of at least ₱900,000.00 and to
plaintiffs Herman and Alberto Benedicto, the sum of at least ₱300,000.00 each by way of actual
damages and such other amounts as proved during the trial;

2) Ordering the defendant to pay the plaintiffs the sum of ₱100,000.00 each as moral damages;
3) Ordering the defendant to pay the plaintiffs the sum of ₱100,000.00 each as exemplary damages;

4) Ordering the defendant to pay the plaintiffs the sum of ₱200,000.00 as attorney’s fees, and to
reimburse plaintiffs with all such sums paid to their counsel by way of appearance fees.10 (Underscoring
supplied)

Respondent filed a Motion to Dismiss11 petitioners’ complaint for damages on three grounds – litis
pendentia, res judicata and forum shopping.

By the assailed Order12 of August 26, 2005, Branch 43 of the Bacolod RTC dismissed petitioners’
complaint on the ground of prematurity, it holding that a complaint for damages may only be
maintained "after a final determination on the forcible entry cases has been made."

Hence, the present petition for review.

The only issue is whether, during the pendency of their separate complaints for forcible entry,
petitioners can independently institute and maintain an action for damages which they claim arose from
incidents occurring after the dispossession by respondent of the premises.

Petitioners meet the issue in the affirmative. Respondents assert otherwise.

The petition is impressed with merit.

Section 17, Rule 70 of the Rules of Court provides:

SEC. 17. Judgment. – If after trial the court finds that the allegations of the complaint are true, it shall
render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears
of rent or as reasonable compensation for the use and occupation of the premises, attorney’s fees and
costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover
his costs. If a counterclaim is established, the court shall render judgment for the sum found in arrears
from either party and award costs as justice requires. (Emphasis supplied)
The recoverable damages in forcible entry and detainer cases thus refer to "rents" or "the reasonable
compensation for the use and occupation of the premises" or "fair rental value of the property" and
attorney’s fees and costs.13

The 2006 case of Dumo v. Espinas14 reiterates the long-established rule that the only form of damages
that may be recovered in an action for forcible entry is the fair rental value or the reasonable
compensation for the use and occupation of the property:

Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral, and
exemplary damages in view of the settled rule that in ejectment cases, the only damage that can be
recovered is the fair rental value or the reasonable compensation for the use and occupation of the
property. Considering that the only issue raised in ejectment is that of rightful possession, damages
which could be recovered are those which the plaintiff could have sustained as a mere possessor, or
those caused by the loss of the use and occupation of the property, and not the damages which he may
have suffered but which have no direct relation to his loss of material possession. x x x15 (Emphasis,
underscoring and italics supplied; citations omitted)

Other damages must thus be claimed in an ordinary action.16

In asserting the negative of the issue, respondent cites the 1999 case of Progressive Development
Corporation, Inc. v. Court of Appeals.17 In this case, Progressive Development Corporation, Inc.
(Progressive), as lessor, repossessed the leased premises from the lessee allegedly pursuant to their
contract of lease whereby it was authorized to do so if the lessee failed to pay monthly rentals. The
lessee filed a case for forcible entry with damages against Progressive before the Metropolitan Trial
Court (MeTC) of Quezon City. During the pendency of the case, the lessee filed an action for damages
before the RTC, drawing Progressive to file a motion to dismiss based on litis pendentia. The RTC denied
the motion.

On appeal by Progressive, the Court of Appeals sustained the RTC order denying the motion to dismiss.

Progressive brought the case to this Court. Citing Section 1, Rule 70 of the Rules of Court, this Court
reversed the lower courts’ ruling, it holding that "all cases for forcible entry or unlawful detainer shall be
filed before the Municipal Trial Court which shall include not only the plea for restoration of possession
but also all claims for damages and costs therefrom." In other words, this Court held that "no claim for
damages arising out of forcible entry or unlawful detainer may be filed separately and independently of
the claim for restoration of possession."18 (Underscoring supplied)
In thus ruling, this Court in Progressive made a comparative study of the therein two complaints, thus:

A comparative study of the two (2) complaints filed by private respondent against petitioner before the
two (2) trial courts shows that not only are the elements of res adjudicata present, at least insofar as the
claim for actual and compensatory damages is concerned, but also that the claim for damages–moral
and exemplary in addition to actual and compensatory–constitutes splitting a single cause of action.
Since this runs counter to the rule against multiplicity of suits, the dismissal of the second action
becomes imperative.

The complaint for forcible entry contains the following pertinent allegations –

2.01 On 02 January 1989, plaintiff entered into a contract of lease with defendant PDC over a property
designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated at the corner of
EDSA corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a period of ten (10) years from
02 January 1989 to 30 April 1998.

2.02 Immediately after having acquired actual physical possession of the Subject Premises, plaintiff
established and now operates thereon the now famous Seafood Market Restaurant. Since then, plaintiff
had been in actual, continuous, and peaceful physical possession of the Subject Premises until 31
October 1992.

xxxx

3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation and
enjoyment of the Subject Premises to the exclusion of all others, including defendants herein.

3.03 Defendants’ resort to strong arms tactics to forcibly wrest possession of the Subject Premises from
plaintiff and maintain possession thereof through the use of force, threat, strategy and intimidation by
the use of superior number of men and arms amounts to the taking of the law into their own hands.

3.04 Thus, defendants’ act of unlawfully evicting out plaintiff from the Subject Premises it is leasing from
defendant PDC and depriving it of possession thereof through the use of force, threat, strategy and
intimidation should be condemned and declared illegal for being contrary to public order and policy.
3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be ordered
to vacate the Subject Premises and restore possession thereof, together with its contents to plaintiff.

xxxx

4.07 Considering that defendants’ act of forcibly grabbing possession of the Subject Premises from
plaintiff is illegal and null and void, defendant should be adjudged liable to plaintiff for all the
aforedescribed damages which plaintiff incurred as a result thereof.

The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:

4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period of ten
years or from January 2, 1989 up to April 30, 1998 over a property designated as Ground Floor, Seafood
Market (hereinafter referred to as Subject Premises) situated at the corner of EDSA corner McArthur
Street, Araneta Center, Cubao, Quezon City. A copy of the lease contract is attached hereto as Annex
"A."

5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises, and
established thereon the now famous "Seafood Market Restaurant."

xxxx

7. On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of
possession or any lawful court order and with the aid of approximately forty (40) armed security guards
and policemen under the supervision of defendant Tejam, forcibly entered the subject premises through
force, intimidation, threats and stealth and relying on brute force and in a thunderboltish manner and
against plaintiff’s will, unceremoniously drew away all of plaintiffs men out of the subject premises,
thereby depriving herein plaintiff of its actual, physical and natural possession of the subject premises.
The illegal high-handed manner of gestapo like take-over by defendants of subject premises is more
particularly described as follows: x x x x

8. To date, defendants continue to illegally possess and hold the Subject Premises, including all the
multi-million improvements, fixtures and equipment therein owned by plaintiff, all to the damage and
prejudice of plaintiff. The actuations of defendants constitute an unlawful appropriation, seizure and
taking of property against the will and consent of plaintiff. Worse, defendants are threatening to sell at
public auction and without the consent, of plaintiff and without lawful authority, the multi-million
fixtures and equipment of plaintiff and at prices way below the market value thereof. Plaintiff hereby
attaches as Annex "B" the letter from defendants dated August 6, 1993 addressed to plaintiff, informing
the latter that the former intends to sell at an auction on August 19, 1993 at 2:00 p.m. properties of the
plaintiff presently in defendants’ possession.

xxxx

12. Defendant’s unlawful takeover of the premises constitutes a violation of its obligation under Art.
1654 of the New Civil Code requiring the lessor to maintain the lessee in peaceful and adequate
enjoyment of the lease for the entire duration of the contract. Hence, plaintiff has filed the present suit
for the recovery of damages under Art. 1659 of the New Civil Code x x x x19 (Emphasis in the original;
underscoring supplied)

Analyzing the two complaints, this Court, still in Progressive, observed:

Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged
unlawful entry by petitioner into the leased premises out of which three (3) reliefs (denominated by
private respondent as its causes of action) arose: (a) the restoration by the lessor (petitioner herein) of
the possession of the leased premises to the lessee, (b) the claim for actual damages due to the losses
suffered by private respondent such as the deterioration of perishable foodstuffs stored inside the
premises and the deprivation of the use of the premises causing loss of expected profits; and, (c) the
claim for attorney’s fees and costs of suit.

On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral
damages of P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of
P20,000.00 and compensatory damages of P1,000,000.00 representing unrealized profits; and, (c)
P200,000.00 for attorney’s fees and costs, all based on the alleged forcible takeover of the leased
premises by petitioner. Since actual and compensatory damages were already prayed for in the forcible
entry case before the MeTC, it is obvious that this cannot be relitigated in the damage suit before the
RTC by reason of res adjudicata.

The other claims for moral and exemplary damages cannot also succeed considering that these sprung
from the main incident being heard before the MeTC. x x x20 (Italics in the original; Emphasis and
underscoring supplied)
It bears noting, however, that as reflected in the earlier-quoted allegations in the complaint for damages
of herein petitioners, their claim for damages have no direct relation to their loss of possession of the
premises. It had to do with respondent’s alleged harvesting and carting away several tons of milkfish
and other marine products in their fishponds, ransacking and destroying of a chapel built by petitioner
CGR Corporation, and stealing religious icons and even decapitating the heads of some of them, after
the act of dispossession had occurred.

Surely, one of the elements of litis pendentia - that the identity between the pending actions, with
respect to the parties, rights asserted and reliefs prayed for, is such that any judgment rendered on one
action will, regardless of which is successful, amount to res judicata in the action under consideration - is
not present, hence, it may not be invoked to dismiss petitioners’ complaint for damages.21

Res judicata may not apply because the court in a forcible entry case has no jurisdiction over claims for
damages other than the use and occupation of the premises and attorney’s fees.22

Neither may forum-shopping justify a dismissal of the complaint for damages, the elements of litis
pendentia not being present, or where a final judgment in the forcible entry case will not amount to res
judicata in the former.23

Petitioners’ filing of an independent action for damages other than those sustained as a result of their
dispossession or those caused by the loss of their use and occupation of their properties could not thus
be considered as splitting of a cause of action.

WHEREFORE, the Orders dated August 26, 2005 and January 2, 2006 issued by the Regional Trial Court,
Branch 43, Bacolod City, in Civil Case No. 04-12284 are REVERSED and SET ASIDE.

The Regional Trial Court, Branch 43, Bacolod City, is directed to REINSTATE Civil Case No. 04-12284 to its
docket and to conduct proceedings thereon with dispatch.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice