Republic of the Philippines Petitioners claim that on the same date, Ang caused the preparation of a deed of sale

SUPREME COURT over the subject lot to which document Gabina Machoca, being illiterate, affixed her
Manila
SECOND DIVISION
G.R. Nos. 75109-10 June 28, 1989
BIENVENIDA MACHOCA ARCADIO VDA. DE CRUZO, ELENA
MACHOCA ARCADIO VDA. DE PINTON, INOCENTA MACHOCA
ARCADIO VDA. DE PLIEGO, ISIDORA MACHOCA ARCADIO DE
PLIEGO (Deceased) represented by daughter Natividad Pliego de Ceballos and
ARISTON "RICARDO" MACHOCA ARCADIO (Deceased) represented by
daughter Virginia Arcadio de Evangelista: Represented by INOCENTA
MACHOCA ARCADIO VDA. DE PLIEGO, petitioners,  DEED OF AGREEMENT
vs.
HON. GLICERIO V. CARRIAGA, JR., FRANKLIN ANG and MELECIO
SUAREZ (Deceased) represented by the surviving spouse, Pilar de los
Reyes, respondents.
Placidtrank B. Osorio for petitioners.
Donatilo C. Macamay for respondents.
REGALADO, J.:
This is an appeal from the order 1 of respondent Judge Glicerio V. Carriaga, Jr., dated
February 26, 1986, dismissing petitioners' complaint in Special Civil Action No. OZ-
0751 of the Regional Trial Court, Branch XV, Ozamiz City, on the ground of res
judicata.
Lot No. 1131 of the Misamis Cadastre, subject matter of this case, was originally
registered in the name of Gabina Machoca, as her paraphernal property, under
Original Certificate of Title No. 682. 2 Petitioners herein are the children of the late
spouses Leonardo Arcadio and said Gabina Machoca.
On February 4, 1954, Gabina Machoca mortgaged Lot No. 1131 for P 425.00 to
private respondent Franklin Ang and delivered to him her aforesaid certificate of title
in connection therewith.
thumb-mark in the belief that this second instrument was similar to the deed of
mortgage executed by her on February 4, 1954. When Gabina went home, her
children, herein petitioners, informed her that the second document was not a deed of
mortgage but a contract of sale.
On the following day, October 5, 1954, Gabina went back to Ang and demanded the
reformation of the aforesaid instrument. Franklin Ang, instead of reforming the
instrument, prepared a deed of agreements 3 which, by reason of its importance, is
herein quoted in full:
City of Ozamiz 1954
KNOW ALL MEN BY THESE PRESENTS:
That I, FRANKLIN ANG, of legal age, married and with residence
and postal address at Gango, City of Ozamiz, Philippines,
VENDEE in the Deed of Sale executed by the Vendor, GAVINA
MACHOCA, as recorded by Notary Public Manuel C. Manago in
Doc. No. 284, Page No. 58, Book No. 1, Series of 1954, hereby
grants and obligates himself (sic) to resell the property therein sold
within a period of three (3) years from and after the date of the said
instrument, for the same price of SIX HUNDRED PESOS ( P
600.00 ), Philippine Currency, to the said VENDOR: PROVIDED,
however, That if the Vendor shall fail to exercise her right to
redeem as herein granted within the stipulated period, then this
conveyance shall be deemed to be absolute and irrevocable.
IN WITNESS WHEREOF, the party herein hereto have (sic) set
his hands (sic) at Ozamiz City, Philippines, on this 5th day of
October, 1954.
(SGD) FR
Pursuant to the provisions of said deed of agreement, Gabina's right to repurchase the
property was to expire on October 4, 1957, that is, three years from October 4, 1954
when the deed of sale was executed.

On October 4, 1954, Gabina again borrowed an additional sum of P 175.00 from

Ang as a result of which her total obligation to the latter was in the sum of P 600.00.
As early as June 10, 1955, however, Ang caused the registration of the deed of sale,
resulting in the subsequent cancellation of Original Certificate of Title No. 682 and
the consequent issuance of Transfer Certificate of Title No. T-161 for the same
property in the name of Franklin Ang. 4
On June 24, 1963, no redemption having been made, Ang sold said Lot No. 1131 to
herein private respondent Melecio Suarez who then obtained Transfer Certificate of
Title No. T-945 therefore in his name. 5 Gabina Machoca died on April 21, 1966
leaving herein petitioners as her only heirs.
It appears that petitioners remained in possession of the disputed land until March
14, 1977 when herein private respondents Melecio Suarez and Pilar de los Reyes
filed an action against Pedro, Inocenta and Lazaro, all surnamed Pliego before the
City Court of the City of Ozamiz, docketed as Civil Case No. C-1 6 thereof, for
unlawful detainer with damages. On July 21, 1978, the city court rendered a
decision 7 declaring the plaintiffs therein to be the real owners of Lot No. 1131 and
ordering the defendants to vacate the premises and pay the costs. 8 The appeal from
said decision by the defendants therein to the Court of Appeals in CA-G.R. No.
66511-R was dismissed, which dismissal became final and executory, hence
judgment was entered by the Court of Appeals on July 10, 1981. 9Consequently, a
writ of execution and an order of demolition 10 were issued by the city court on
September 17, 1981 and October 12, 1983, respectively, in Civil Case No. C-1
Disgressing backward in time from the foregoing incidents, the records reveal that
during the pendency of the aforesaid unlawful detainer case (Civil Case No. C-1),
herein petitioners filed on September 6, 1977 a petition for prohibition, Civil Case
No. OZ-665 of the erstwhile Court of First Instance of Mizamis Occidental, Branch
II, Ozamiz City, against City Court Judge Ceferino Ong and herein private
respondents to restrain Judge Ong from further proceeding with the trial in Civil
Case No. C-1 for alleged lack of jurisdiction. The petition was dismissed on March
15, 1978 and no appeal was taken by said petitioners. 11
It further appears that likewise during the pendency of Civil Case No. C-1,
petitioners filed a complaint, dated June 7, 1977, with the same Court of First
Instance, Branch II, at Ozamiz City, involving Lot No. 1131 and docketed as Civil
Case No. OZ-648, against Franklin Ang, Bonifacio Longayan, Melecio Suarez and
Pilar de los Reyes, for "removal of clouds of title and declaring title of defendants as
null and void or cancelled, or reconveyance and damages." 12 On December 18,
1984, the complaint was dismissed for failure to prosecute. 13 Petitioners moved for
the reconsideration of the order but the motion was denied. A second motion for
reconsideration was likewise denied. 14No appeal having been made, the order of
dismissal became final.
Finally, on December 14, 1985, the same petitioners filed Special Civil Case No.
OZ-0751 with the Regional Trial Court, Branch XV, Ozamiz City, for conventional
redemption and damages against herein private respondents over the same subject
lot. Upon motion of the defendants therein, 15 the complaint was dismissed by the
court on February 26, 1986 on the ground of res judicata. 16
Hence, this petition assailing said dismissal order.
The main substantive issue posed for resolution is whether or not the petitioners can
still exercise the right to redeem Lot No. 1131. A corollary issue is whether or not
the private deed of agreement has converted the deed of sale into an equitable
mortgage.
Petitioners submit that the deed of sale, in relation to the deed of agreement executed
on October 4, 1954, should be considered as an equitable mortgage because (a) the
petitioners have been in continuous possession of the subject lot up to the present
time; and (b) the price of P 600.00 is unusually inadequate considering that the land
is along the road going to the airport of Ozamiz City, is only about three kilometers
from the center of the city, and has an area of 3,408 square meters. It is likewise
contended that petitioners have the right to redeem the property, there have been no
foreclosure proceedings as yet, aside from the fact that private respondent Ang acted
in evident bad faith and with fraud when he obtained title to the lot in his name prior
to the expiration of the stipulated redemption period.
On the other hand, private respondents maintain that the action for conventional
redemption (Civil Case No. OZ-0751) is already barred by the order of dismissal
rendered in the action for removal of clouds on the title (Civil Case No. OZ-648),
since both cases involved the same subject matter and raised the same issues between
the same parties; and, further, that petitioners may no longer redeem the property for
failure to exercise the right within the stipulated period.
We shall first resolve the procedural objections, which auspiciously present the
necessity to clarify the doctrine of res judicata  17 and its implications.
The principle of res judicata in actions in personam is found in Section 49 (b) and
(c), Rule 39 of the Rules of Court which provides:
Sec. 49. Effect of judgments. The effect of a judgment or final
order rendered by a court or judge of the Philippines, having
jurisdiction to pronounce the judgment or order, may be as follows:
xxx
(b) In other cases the judgment or 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;
(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 which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein
or necessary thereto.
The doctrine of res judicata thus lays down two main rules which may be stated as
follows: (1) 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; and (2) 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. These two main rules mark the distinction between the principles governing
the two typical cases in which a judgment may operate as evidence. In speaking of
these cases, the first general rule above stated, and which corresponds to the
aforequoted paragraph (b) of Section 49, is referred to as "bar by former judgment"
while the second general rule, which is embodied in paragraph (c) of the same
section, is known as "conclusiveness of judgment. 18
Stated otherwise, when we speak of resjudicata in its concept as a "bar by former
judgment," the judgment rendered in the first case is an absolute bar to the
subsequent action since said judgment is conclusive not only as to the matters
offered and received to sustain that judgment but also as to any other matter which
might have been offered for that purpose and which could have been adjudged
therein. This is the concept in which the term res judicata is more commonly and
generally used and in which it is understood as the bar by prior judgment constituting
a ground for a motion to dismiss in civil cases. 19
On the other hand, the less familiar concept or less terminological usage of res
judicata as a rule on conclusiveness of judgment refers to the situation where the
judgment in the prior action operates as an estoppel only as to the matters actually
determined therein or which were necessarily included therein. Consequently, since
other admissible and relevant matters which the parties in the second action could
properly offer are not concluded by the said judgment, the same is not a bar to or a
ground for dismissal of the second action.
At bottom, the other elements being virtually the same, the fundamental difference
between the rule of res judicataas a bar by former judgment and as merely a rule on
the conclusiveness of judgment is that, in the first, there is an identity in the cause of
action in both cases involved whereas, in the second, the cause of action in the first
case is different from that in the second case.
The diversity in results, in the instances where there is identity of cause of action in
the two cases and those wherein there is no such identity, is not a caprice of mere
mechanistic considerations or taxonomic niceties. In the latter situation, where the
second case is based on a cause of action different from the first, the constituent
elements of the second cause of action, the specie of proof necessary to establish the
same, and the relief which may be granted in such second action are consequently at
variance with those obtaining or sought in the first action. As a logical and rational
consequence, therefore, only the findings in the first judgment are conclusive and
deemed established if raised in and for purposes of the second action which,
therefore, may proceed independently of the anterior case. However, where the same
cause of action is involved in both cases, the foregoing considerations cannot apply
since discrete facts and results would not generally arise from the same procedural
and evidentiary foundations which inhere in the same cause of action. Even if diverse
reliefs should be awarded due to contingencies in the results of proof, the judgment
in the first action bars the second since the defendant admittedly committed one and
the same wrong for which he should not be twice tried under the time-honored rule
of non bis in idem.
Now, it has been a consistent rule, to cite just a few representative cases, 20 that the
following requisites must concur in order that a prior judgment may bar a subsequent
action, viz: (1) the former judgment or order must be final; (2) it must be a judgment
or order on the merits, that is, it was rendered after a consideration of the evidence or
stipulations submitted by the parties at the trial of the case; (3) it must have been
rendered by a court having jurisdiction over the subject matter and the parties; and
(4) there must be, between the first and second actions, identity of parties, of subject
matter and of cause of action.
There is no question that the order of dismissal rendered in the prior action, Civil
Case No. OZ-648, had become final for failure of herein petitioners to appeal the
same after their motions for reconsideration were denied. Furthermore, while the
dismissal was for failure to prosecute, it had the effect of an adjudication on the
merits, and operates as res judicata, 21 since the court did not direct that the dismissal
was without prejudice. 22
The fact remains that Civil Case No. OZ-648 for removal of clouds on title has, as
parties, the same set of plaintiffs and defendants as Special Civil Case No. OZ-0751
for conventional redemption and damages, and both cases involve Lot No. 1131
only.
Petitioners submit, however, that res judicata will nevertheless not apply since there
is no identity of causes of action. It is their theory that since the issue of redemption
was not raised in Civil Case No. OZ-648, it is paragraph (c) of Section 49, Rule 39
that applies, that is, the rule on conclusiveness of judgment, hence the dismissal of
said former action does not constitute res judicata to bar Special Civil Case No. OZ-
0751. We find no merit in such submission.
Petitioners appear to labor under an erroneous conceptualization of what constitutes
a cause of action. They postulate that the causes of action in the cases involved are
not identical, thus: "In Civil Case C-1, the cause of action is physical possession. In
Civil Case OZ-648, the cause of action is removal of clouds of title. In Civil Case
OZ-0751, the cause of action is conventional redemption ...." 23
It is elementary that, in adjective law, 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. 24 In all these cases, petitioners have imputed to private respondents and
their predecessor in interest the same alleged wrongful act, that is, acts of evident bad
faith and fraud which supposedly divested petitioner's mother of her rights and title
to the property in dispute. There is, consequently, an identical cause of action
claimed by petitioners in these cases.
A well-entrenched rule declares that a party cannot, by varying the form of action or
adopting a different method of presenting his case, escape the operation of the
principle that one and the same cause of action shall not be twice litigated. 25 In fact,
authorities tend to widen rather than to restrict the doctrine of res judicata on the
ground that public interest, as well as private interest, demand 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. 26
In determining whether causes of action are identical so as to warrant application of
the rule of res judicata, the test most commonly stated is to ascertain whether the
same evidence which is necessary to sustain the second action would have been
sufficient to authorize a recovery in the first, 27 even if the forms or nature of the two
actions be different. 28 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; otherwise it is not. It has been said that this method is
the best and most accurate test as to whether a former judgment is a bar in
subsequent proceedings between the same parties, and it has even been designated as
infallible. 29
In their motion to dismiss filed in Special Civil Case No. OZ-0751, private
respondents made a comparative analysis of the reliefs prayed for therein and those
in Civil Case No. OZ-648 which became the criterion in the court's order of
dismissal. A perusal thereof reveals that both actions seek to have the deed of
agreement of October 5, 1954 considered as a mere equitable mortgage and to have
the titles issued in the name of private respondents declared null and void on the
ground of fraud. Although ostensibly of different forms, the inescapable conclusion
is that the parties are in effect litigating for the same thing and seeking the same
relief, that is, to recover possession and ownership of Lot No. 1131. It is of no
moment that the later remedy is for conventional redemption while the former case
was for removal of clouds on the title, since both actions are anchored on exactly the
same cause of action, are based on identical facts, and even claim the same relief.
The present petition is, therefore, although presented in a different form, barred by
the former decision in the case for removal of clouds on the title.
We do not intend, however, to have the adjudication of this case go off purely on
procedural points. Even assuming that res judicata would not bar Special Civil Case
No. OZ-0751, the instant petition will nevertheless not prosper.
It must be remembered that after the execution of the deed of sale on October 4,
1954, a second document was made wherein Franklin Ang undertook to resell the
property, if Gabina Machoca elects to redeem the same, within three years from the
date of the deed of sale. With respect, therefore, to the last transaction entered into by
the parties, there were two documents involved, one of which is the deed of sale and
the other, the right to repurchase. However, We find and so hold that there is
no pacto de retro sale in this case, within the contemplation of the Civil Code which
provides:
Art. 1601. Conventional redemption shall take place when the
vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may been agreed upon.
In Villarica, et al. vs. The Court of appeals, et al., 30 We had the occasion to interpret
this provision of law, to wit:
The right of repurchase is not a right granted the vendor by the
vendee in a subsequent instrument, but is a right reserved by the
vendor in the same instrument of sale as one of the stipulations of
the contract. Once the instrument of absolute sale is executed, the
vendor can no longer reserve the right to repurchase, and any right
thereafter granted the vendor by the vendee in a separate
instrument cannot be a right of repurchase but some other right like
the option to buy in the instant case.
We have similarly held in a prior case that an agreement to repurchase becomes a
promise to sell when made after an absolute sale because where the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely. 31
Clearly, therefore, an option to buy or a promise to sell is different and distinct from
the right of repurchase which must be reserved by the vendor, by stipulation to that
effect, in the contract of sale.
Hence, there having been an absolute sale of the land, respondent Ang was acting
well within the ambit of his now inviolable right to register the land in his own name,
notwithstanding the unexpired stipulated period of redemption in the deed of
agreement.
Granting, for the sake of argument, that the transaction actually involves a pacto de
retro sale. petitioners failure to exercise their right of redemption within the
stipulated period dictates that the instant petition must necessarily fail. The averment
that petitioners were forestalled by respondent Ang from redeeming the property
appears to be a frivolous afterthought since the former were not without recourse.
There were several legal remedies available to them which, if duly resorted to, could
have worked favorably for their cause. As it is, their silent acquiescence for an
inexplicable length of time worked greatly to their disadvantage. Not only did
petitioners fail to repurchase the property within the stipulated period but they
continued to sleep on their rights even beyond the allowable statutory period for the
enforcement of such right of redemption. They are now barred by laches. Laches, in
a general sense, is failure 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; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or
declined to assert it. 32
Petitioners' feigned ignorance regarding the registration of the property in the name
of respondent spouses, even disregarding the constructive notice thereof to them
under the law, is belied by the fact that petitioner Inocenta Pliego and Pedro Pliego
signed a written commitment that "if Pilar Suarez will use their land for the
construction of their house, we are ready and agreed (sic) to transfer our house to
another place." 33 This instrument was never refuted, aside from the categorical
admission of the petitioners during the trial of the ejectment case that private
respondents were already enjoying the fruits of the land since 1963. 34 If petitioners
were not disturbed in their possession until the ejectment case was filed, it could only
have been out of sheer generosity and tolerance of private respondent spouses.
Treading on the same supposition that there existed such a right to repurchase,
petitioners insist that the pacto de retro sale is, for all intents and purposes, an
equitable mortage on the pretext that they have been in continuous possession of the
land from the time of the execution of the document. This again is a result of the
distorted notion that petitioners' possession is in the concept of that of an owner.
Petitioners cannot be credited with good faith in insinuating that their mother,
Gabina Machoca, was deceived into believing that the deed of agreement was a
mortgage contract similar to the first document she executed. As earlier explained,
after the second deed was executed and Gabina Machoca showed the same to herein
petitioners, it was the latter who advised her that the contract be reformed, as a
consequence of which the separate deed of agreement of October 5, 1954 was
executed. It would be safe to conclude then that petitioners had approved of and
consented to the provisions of both contracts. It will readily be noted that the deed of
agreement specifically provided: "That if the Vendor shall fail to exercise her right to
redeem as herein granted within the stipulated period, then this conveyance shall be
deemed to be absolute and irrevocable." The contract, not being contrary to law,
morals and public policy, is binding and enforceable against Gabina Machoca and
her successors in interest. Petitioners cannot now be heard to claim otherwise after
having been remiss in their obligations. They are further estopped from asserting that
the parties intended differently, contrary to what the written contracts provide, in
violation of the parol evidence rule.
Furthermore, the inadequacy of the price does not on that account alone support the
conclusion that the land was not sold to private respondent Ang, since the parties
entered into a conventional, and not a forced, sale of the property and both parties
were in a position to form an independent judgment of the transaction. 35 From the
legal viewpoint, even if the property was sold for a comparatively low price, but the
seller did nothing about it for a number of years, the contract of sale is not
invalid. 36 Besides, in a contract of sale with right of repurchase, the price is usually
less than in absolute sales since in the former the vendor expects to reacquire or
redeem the property sold, 37hence the inadequacy of the price is not an overriding
determinant to set aside the sale.38 The same rationale obtains where, as in this case,
there was a separate agreement to resell the property to the original vendor.
Anent the imputation of evident bad faith and fraud to respondent Ang for obtaining
title to the land in his own name prior to the expiration of the agreed period, the
records do not yield the requisite proof that he was so motivated or had deliberately
resorted to fraudulent deception. In the absence of concrete evidence of bad faith or
fraud, neither of which can be presumed, We cannot hold otherwise. Besides, it is of
essence of a contract of sale with pacto de retro that the vendee shall immediately
acquire title to and possession of the land sold, subject only to the vendor's right of
redemption. With much more reason does this hold true where a deed of absolute
sale was merely complemented by a subsequently executed and separate agreement
of resale.
WHEREFORE, the order appealed from is hereby AFFIRMED. The temporary
restraining order issued pursuant to the resolution of August 3, 1987 is hereby
LIFTED and SET ASIDE.
SO ORDERED.
 Republic of the Philippines injunction against respondent Epifanio V. Chavez (Chavez), docketed as Civil Case
Supreme Court No. 129. The complaint alleged that Chavez, by force, strategy and/or stealth,
Baguio City entered on April 29, 1996 the premises of Hacienda Bigaa's properties covered by
  Transfer Certificate of Title (TCT) Nos. 44695 and 56120 by cutting through a
  section of the barbed wire fence surrounding the properties and destroying the lock
  of one of its gates, subsequently building a house on the property, and occupying the
  lots without the prior consent and against the will of Hacienda Bigaa.
SECOND DIVISION  
  The records show that the lots were originally covered by TCT No.
  722 owned by Ayala y Cia[5] and/or Alfonso, Jacobo and Enrique Zobel, with an area
HACIENDA BIGAA, INC., G.R. No. 174160 of 9,652.583 hectares, known as Hacienda Calatagan. Ayala and/or the
Petitioner,   Zobels expanded TCT No. 722 to cover an additional 2,000 hectares of land
  Present: consisting, among others, of beach, foreshore and bay areas, and navigable waters
    (excess areas), making it appear that these excess areas are part of Hacienda
-       versus - CARPIO, J., Chairperson, Calatagan's TCT No. 722. The Ayalas and/or the Zobels later ordered the subdivision
  BRION, of the hacienda, including these excess areas, and sold the subdivided lots to third
  DEL CASTILLO, parties.[6]
  ABAD, and  
EPIFANIO V. CHAVEZ (deceased), PEREZ, JJ. Among the buyers or transferees of the expanded and subdivided areas was
substituted by SANTIAGO V.   Hacienda Bigaa which caused the issuance of titles TCT Nos. 44695 and 56120
CHAVEZ, Promulgated: under its name covering the purchased subdivided areas. Thus, in his answer before
Respondent. -- - April 20, 2010 the MTC of Calatagan, then defendant (now respondent) Epifanio V. Chavez alleged
x----------------------------------------------------------------------------------------x that then plaintiff (now petitioner) Hacienda Bigaa is the successor-in-interest of
  Ayala y Cia, Hacienda Calatagan, Alfonso Zobel, Jacobo Zobel and Enrique Zobel
D E C I S I O N the original titular owners of TCT No. 722.
   
BRION, J.: Portions of the same lands foreshore lands were leased out by the Republic,
  through the Bureau of Fisheries, to qualified applicants in whose favor fishpond
  permits were issued. The government-issued fishpond permits pertaining to lands
This petition for review on certiorari[1] challenges the Court of Appeals covered by titles derived from TCT No. 722 of Ayala y Cia and/or the Zobels, gave
(CA) decision of May 31, 2001 [2] and resolution of August 2, 2006 [3] in CA-G.R. SP rise to ownership and/or possessory disputes between the owners of Hacienda
No. 46176, affirming in toto the judgments of both the Municipal Trial Court (MTC) Calatagan and their privies and/or successors-in-interest, on the one hand, and the
of Calatagan and the Regional Trial Court (RTC) of Batangas dismissing the Republic or its lessees or fishpond permittees, on the other.
complaint for forcible entry in Civil Case No. 129.  
  Suits were filed in various courts in Batangas for the recovery of the areas
  in excess of the area originally covered by TCT No. 722, which suits ultimately
  reached the Supreme Court. In the Court's 1965 decisions in Dizon v.
  Rodriguez[7] (for quieting of title) and Republic v. Ayala y Cia and/or Hacienda
THE FACTS Calatagan, et al.[8] (for annulment of titles), the excess areas of TCT No. 722 were
  categorically declared as unregisterable lands of the public domain such that any
We summarize below the factual antecedents of the present case based on title covering these excess areas are necessarily null and void. In these cases, the
the records before us. Ayalas and the Zobels were found to be mere usurpers of public domain areas, and
  all subdivision titles issued to them or their privies and covering these areas were
On June 5, 1996, petitioner Hacienda Bigaa, Inc. (Hacienda Bigaa) filed invalidated; the wrongfully registered public domain areas reverted to the
with the Municipal Trial Court (MTC) of Calatagan, Batangas a complaint[4] for Republic. In Dizon, the Court declared as void the Zobels' TCT No. 2739 and its
ejectment (forcible entry) and damages with application for writ of preliminary derivative titles covering subdivision Lots 1 and 49 areas sold to the Dizons as areas
in excess of TCT No. 722 and are properly part of the public domain. In Ayala y
Cia, the Court invalidated TCT No. 9550 and all other subdivision titles issued in
favor of Ayala y Cia and/or the Zobels of Hacienda Calatagan over the areas outside
its private land covered by TCT No. 722. These areas, including the lots covered by
TCT No. 9550, reverted to public dominion.[9]
 
The pronouncement in the above cases led to the Court's 1988 decision
in Republic v. De los Angeles,[10] a case covering the same excess areas under a
reinvindicatory claim of the Republic aimed at recovering lands usurped by the
Ayalas and the Zobels and at placing the Republics lessees and fishpond permittees
in possession. The Court effectively held that as owner of the excess lands, the
Republic has the right to place its lessees and fishpond permittees among them Zoila
de Chavez, predecessor-in-interest of Chavez in possession. The Court invalidated
TCT Nos. 3699 and 9262 for being among the other subdivision titles declared void
and ordered reverted to public dominion.
 
To return to the forcible entry case, then defendant (now respondent)
Chavez alleged in his answer before the MTC of Calatagan that his mother, Zoila de
Chavez (who died intestate on September 14, 1979) was a fishpond permittee/lessee
under Fishpond Permit Nos. F-4572-0 and F-24735 issued by the Bureau of Fisheries
on April 21, 1959 and June 3, 1966, respectively; that the areas covered by the
permits are the same parcels of land which he presently occupies as Zoila's
successor-in-interest and which Hacienda Bigaa also claims.
 
Chavez likewise asserted that Hacienda Bigaa is the successor-in-interest of
Ayala y Cia, Hacienda Calatagan, Alfonso Zobel, Jacobo Zobel and Enrique Zobel
who owned land with an area of 9,652.583 hectares, covered by TCT No. 722 in the
Registry of Deeds of Batangas; that Ayala y Cia, the Zobels, or Hacienda Calatagan,
illegally expanded the original area of TCT No. 722 by 2,000 hectares; that suits
were filed to recover the expanded area; that these suits reached the Supreme Court
which declared that these excess areas are part of the public domain and ordered their
reversion to the Republic; that the Supreme Court likewise declared certain TCTs
covering the subdivision lots outside the area of TCT No. 722 and issued to
transferees as null and void; therefore, Hacienda Bigaa's titles TCT Nos. 44695 and
56120 carry no probative value as they are of dubious origins and have been
nullified by the Supreme Court.[11]
 
Chavez further argued that the suit is barred by prior judgment in two prior
cases (1) Civil Case No. 78, a suit for unlawful detainer filed by the Zobels against
Chavezs predecessor-in-interest, Zoila de Chavez, before the then Justice of the
Peace Court (now Municipal Trial Court) of Calatagan, Batangas; and (2) Civil Case
No. 653, a case of accion reinvindicatoria with prayer for preliminary mandatory
injunction filed by the Republic, Zoila de Chavez, and other lessees or fishpond
permittees of the Republic, against Enrique Zobel (Hacienda Bigaa's predecessor-in-
interest) before the then Court of First Instance of Batangas. This case reached this
Court as G.R. No. L-30240 entitled Republic of the Philippines v. De los Angeles,
Enrique Zobel, et al.[12] and was decided in 1988.Chavez asserts that the subject
matter and the issues involved in these cases are squarely similar and/or identical to
the subject matter and issues involved in the present forcible entry suit; the rulings in
these two cases, therefore constitute res judicata with respect to the present case.
 
The MTC held a preliminary conference where the parties stipulated and
identified the issues in the forcible entry case, viz: (1) who between the parties has
a better right of possession over the premises in question; (2) whether there is res
judicata; and (3) whether the parties are entitled to damages. [13] These are essentially
the same basic issues that are before us in the present petition.
The MTC, the RTC and the CAs Decision
 
The MTC rendered a decision [14] dismissing Hacienda Bigaa's complaint,
holding that the disputed lots form part of the areas illegally expanded and made to
appear to be covered by TCT No. 722 of Hacienda Bigaa's predecessors-in-interest
(Ayala y Cia and/or the Zobels of Hacienda Calatagan); hence, the Hacienda's title
are null and void. In so ruling, the MTC applied this Court's pronouncements in the
antecedent cases of Dizon v. Rodriguez,[15] Republic v. Ayala y Cia and/or Hacienda
Calatagan, Zobel, et al.,[16] and Republic v. De los Angeles.[17]
 
The MTC added that since Hacienda Bigaa did not present proof to counter
Chavez's claim that the disputed lots form part of the illegally expanded areas of
Hacienda Calatagan, these lots are deemed to be the same lots litigated in the
previous cases. The MTC also found prior possession in favor of Chavez, as revealed
by the antecedent cases particularly, De los Angeles where Chavezs mother, Zoila de
Chavez, had been ousted by the Zobels from the fishpond lots she occupied. The
MTC reasoned out that Zoila could not have been ousted from the premises had she
not been in prior possession. Since Epifanio succeeded Zoila in the possession of the
property, he inherited the latters prior possession and cannot now be ousted by
Hacienda Bigaa.
 
The MTC likewise rejected Hacienda Bigaa's contention that the
subdivision titles covering the disputed lots TCT Nos. 44695 and 56120 which were
not specifically canceled by the previous decisions of the Court should be given
probative value. The MTC ruled that the subsequent issuance of a certificate of title
in favor of the plaintiff does not vest title on it as the lands belong to the public
domain and cannot be registered. [18] The MTC stressed that the titles of Hacienda
Bigaa were among the other subdivision titles declared void in the case of Ayala y
Cia as areas not legitimately covered by TCT No. 722 and which are therefore part
of the public domain. As ordered in the three antecedent cases of Dizon,[19] Ayala y
Cia,[20] and De los Angeles,[21] they should revert to the Republic. The MTC opined
that Hacienda Bigaa has the burden of proving that the subject lots are not part of the
illegally expanded areas; Hacienda Bigaa failed to discharge this duty when it did not
present proof to controvert Chavez's allegation that the lots covered by Haciendas
TCTs are among the lots litigated in the cited cases. The MTC reiterated the
following ruling of the Court in Republic v. De los Angeles:
  
x x x [F]or almost 23 years now execution of the 1965
final judgment in G.R. No. L-20950, ordering the cancellation of
the subdivision titles covering the expanded areas outside the
private lands of Hacienda Calatagan, is being frustrated by
respondent Zobel, the Ayala and/or Hacienda Calatagan. As a
consequence, the mass usurpation of lands of public domain
consisting of portions of the territorial sea, the foreshore, beach
and navigable water bordering the Balayan Bay, Pagaspas Bay and
the China Sea, still remain unabated. The efforts of Ayala and
Zobel to prevent execution of said final judgment are evident from
the heretofore-mentioned technical maneuvers they have resorted
to.
 
Clearly, the burden of proof lies on respondent Zobel and other
transferees to show that his subdivision titles are not among the
unlawful expanded subdivision titles declared null and void by the
said 1965 judgment. Respondent Zobel not only did not
controvert the Republic's assertion that his titles are embraced
within the phrase other subdivision titles ordered canceled but
failed to show that the subdivision titles in his name cover lands
within the original area covered by Ayala's TCT No. 722
(derived from OCT No. 20) and not part of the beach,
foreshore and territorial sea belonging and ordered reverted to
public dominion in the aforesaid 1965 judgment. [22] x x x
(Emphasis supplied.)
 
Based on the above disquisition and taking into account the consistent
efforts of Hacienda Bigaa's predecessors-in-interest in thwarting the execution of the
Court's decision in the antecedent cases, the MTC declared that the Chavezes, as the
Republics lessees/permittees, should have been in possession long ago. The MTC
held:
 
Thus, the court holds that the land now in litigation forms part of
the public dominion which properly belongs to the State. Suffice it
to say that when the defendant [Epifanio V. Chavez] entered
and occupied the same on April 29, 1996, it was in
representation of the State being the successor-in-interest of
Zoila de Chavez, a government fishpond permittee and/or
lessee. It should be recounted that Zoila de Chavez was in actual
physical possession of the land until she was ousted by Enrique
Zobel by bulldozing and flattening the area.
The recovery of this public land in favor of the State is long
overdue. Zoila de Chavez or her successor-in-interest should
have been in actual and adequate possession and occupation
thereof long time ago by virtue of the Supreme Court decisions
anent the matter in 1965 which were reiterated in 1988 had not
the plaintiff and its predecessors-in-interest succeeded in
defeating the enforcement of the said decisions. To allow the
plaintiff to retain possession of these usurped public lands by
ousting the government's fishpond permittees and/or lessees such
as the defendant is to further frustrate the decisions of the Supreme
Court on the matter. (Emphasis supplied.)
 
 
The MTC finally ruled that the elements of res judicata are present. The
forcible entry case before it shared an identity of parties with Civil Case No. 78 for
unlawful detainer and Civil Case No. 653 (the Delos Angeles case) of accion
reinvindicatoria because all of these cases involve the predecessors-in-interest of the
present parties. In Civil Case No. 78, the plaintiff was Enrique Zobel, predecessor of
Hacienda Bigaa, and the defendant was Zoila de Chavez, mother and predecessor of
Epifanio V. Chavez. In Civil Case No. 653 which reached and was decided by this
Court in 1988 as Republic vs. De los Angeles, Zoila de Chavez was one of the
plaintiffs and Enrique Zobel was one of the defendants. [23] The MTC also
found identity of subject matter because the forcible entry case shared with the
previous cases the same subject matter, i.e., the same lands adjudged by the Supreme
Court as part of the public domain usurped by the Zobels, et al. through their
illegally expanded titles.[24] As to identity of causes of action, the MTC held that
although the previous cases were for unlawful detainer and accion
reinvindicatoria while the case before it was for forcible entry, an identity of issues
existed because all these cases involved conflicting claims of ownership, occupation
and possession of the property which have long been settled by the Supreme
Court. It recognized that under the concept of conclusiveness of judgment, res
judicata merely requires an identity of issue, not an absolute identity of causes of
action.[25]
 
On October 1, 1996, Hacienda Bigaa appealed the MTC's decision to the
Regional Trial Court (RTC) of Batangas[26] which affirmed in toto the appealed
decision.
 
On February 16, 1998, Hacienda Bigaa filed its petition for review [27] with
the Court of Appeals (CA), docketed as CA-G.R. SP No. 46716. The CA in its
decision of June 1, 2001 dismissed the petition for review, totally affirming the RTC
and MTC decisions.[28] Hacienda Bigaa timely filed a motion for
reconsideration. However, while the motion was pending, Associate Justice Salvador
J. Valdez, Jr., the ponente of the decision sought to be reconsidered, retired from the
Judiciary. As a result, the motion slipped into hibernation for five years. [29]
The CA, on August 2, 2006, this time through Associate Justice Juan Q.
Enriquez, Jr., rendered its resolution on the motion for reconsideration. [30] It denied
reconsideration on the reasoning that the grounds and arguments raised were mere
iterations of those already raised in the petition for review.
 
THE PETITION
 
Hacienda Bigaa is now before us via a petition for review under Rule 45 of
the Rules of Court to assail the CA ruling. Among other things, it argues that the
CA's Resolution is patently erroneous because the grounds and arguments raised in
its motion for reconsideration were not mere reiterations; it claims, as one of the
grounds in its motion for reconsideration, that the final determination of the scope
and extent of the area allegedly in excess of that covered by TCT No. 722 of
Ayala y Cia was made only after the petition for review was filed on February 16,
1998.
 
In its petition, Hacienda Bigaa raises the following issues of law:
 
I. WHETHER THE REGISTERED OWNER OF LAND IN
POSSESSION OF A TORRENS CERTIFICATE OF
TITLE MUST ENJOY THE OWNERSHIP AND
POSSESSION, AMONG OTHERS, OF THE LAND
COVERED THEREBY, WHERE THE SAID TITLE
HAS NOT BEEN DECLARED NULL AND VOID,
SUCH THAT THE TITLE MUST BE GIVEN
PROBATIVE VALUE.
II. WHETHER IT IS PETITIONER HACIENDA BIGAA OR
ZOILA DE CHAVEZ (OR HER SUCCESSOR,
RESPONDENT EPIFANIO V. CHAVEZ) WHO HAS A
BETTER RIGHT OF POSSESSION OVER THE
SUBJECT LOTS.
 
 
THE COURT'S RULING
 
We find the petition unmeritorious.
 
We note at the outset that the objection on the delineation of the scope and extent of
the excess areas of TCT No. 722 came too late in the day; it is an issue that the
Hacienda admits to have raised for the first time when it sought reconsideration of
the CA decision. We significantly note, too, that this issue involves a question of fact
whose determination is improper in a Rule 45 proceeding before this Court.
 
Thus, to our mind, the only real questions appropriate for resolution at this
stage of the case are: (1) Do the TCTs of Hacienda Bigaa have probative value in
determining the issues of ownership and possession of the disputed lots? (2) Is
Chavez as successor-in-interest of government lessee or fishpond permittee Zoila de
Chavez entitled to possession of these lots? In these lights, the resolution of this case
hinges on the question of better title who, between the petitioner and the respondent,
has the better right of possession of the disputed lots.
 
Are these issues misplaced in a forcible entry case?
 
To answer this, we hark back to the origins of the present case a complaint
for forcible entry that the MTC of Calatagan, Batangas dismissed. Both the RTC
and the CA subsequently affirmed this dismissal. As a forcible entry suit, the
threshold question presented is: was the prior possession of the then plaintiff (now
petitioner) Hacienda Bigaa over the disputed lots sufficiently established to give it
cause for the ejectment of then defendant (now respondent) Epifanio Chavez?
 
We recall in this regard that the MTC issued a pre-trial order identifying the
issues of (1) who has the better right of possession; and (2) res judicata.[31] On the
issue of possession, the MTC found the need to determine the question of title or
ownership in passing upon the question of possession after Chavez raised the issue of
ownership at that level. As a general rule in forcible entry cases, ownership or title is
inconsequential; the primordial issue is possession de facto and not possession de
jure. The court, however, may tackle the issue of ownership or title, if raised, if this
issue is indispensable in resolving the issue of possession. [32] Since Chavez raised the
question of ownership or title in his answer, the issue of ownership became a
material consideration in the lower court's inquiry into the character, nature and
extent of the parties claimed possession.
The MTC tackled the issue of prior possession by taking judicial notice of
our factual determination in De los Angeles that Zobel of Hacienda Calatagan
Hacienda Bigaa's predecessor-in-interest had ousted Zoila de Chavez Chavez's
predecessor-in-interest from the lots she occupied as a holder of government-issued
fishpond permits. The MTC in this regard held
[T]he court holds that the land now in litigation forms part
of the public dominion which properly belongs to the State. Suffice
it to say that when [respondent Chavez] entered and occupied the
[premises] on April 29, 1996, it was in representation of the
State being the successor-in-interest of Zoila de Chavez, a
government fishpond permittee and/or lessee. It should be
recounted that Zoila de Chavez was in actual physical possession
of the land until she was ousted by Enrique Zobel by
bulldozing and flattening the area. (Emphasis supplied.)
 
Zoila de Chavez's ouster from the premises became the basis of the MTCs
conclusion that she had prior possession as she could not have been ousted from the
premises had she not been in prior possession. This point was reiterated in the
present petition by Chavez who died pending the resolution of this case and has been
substituted by his brother, Santiago V. Chavez. [33] The respondents comment before
us states:[34]
  
Of note, as hereafter shown, [in the case of Republic vs.
De los Angeles, G.R. No. L-30240, March 25, 1988], the Supreme
Court explicitly recognized the priority of possession of the
respondent [Chavez] over the subject lots:
 
[Respondent therein] Zobel had
ousted Zoila de Chavez, a government
fishpond permittee, from a portion of subject
fishpond lot described as Lot 33 of Plan Swo-
30999 (also known as Lots 55 and 56 of
subdivision TCT No. 3699) by bulldozing the
same, and [threatening] to eject fishpond
permittees Zoila de Chavez, Guillermo Mercado,
Deogracias Mercado, and Rosendo Ibaez from
their respective fishpond lots described as Lots 4,
5, 6, and 7, and Lots 55 and 56, of Plan Swo-
30999, embraced in the void subdivision titles
TCT No. 6399 and TCT No. 9262 claimed by
said respondent. Thus, on August 2, 1967, the
Republic filed an Amended Complaint captioned
Accion Reinvindicatoria with Preliminary
Injunction against respondent Zobel and the
Register of Deeds of Batangas, docketed as Civil
Case No. 653, for cancellation of Zobel's void
subdivision titles TCT No. 3699 and TCT No.
9262 and the reconveyance of the same to the
government; to place aforenamed fishpond
permittees in peaceful and adequate possession
thereof; to require respondent Zobel to pay back
rentals to the Republic, and to enjoin said
respondent from usurping and exercising further
acts of dominion and ownership over the subject
land of public domain.[35] (Emphasis supplied.)
 
This argument on the direct issue of prior possession is separate from the issue of
ownership that Chavez raised as an issue determinative of possession. The issue of
ownership shifts our determination to who, between the parties, has title and the
concomitant right of possession to the disputed lots.
 
The issue of possession, as it
relates with the ownership of
the disputed property, has
been conclusively resolved in
the antecedent cases.
 
As framed above, the case before us inevitably brings to memory the antecedent
decided cases touching on the ownership of the vast tract of land in Calatagan,
Batangas, covered by Transfer Certificate of Title (TCT) No. 722 in the name/s of
Ayala y Cia, Alfonso Zobel, Jacobo Zobel and Enrique Zobel and/or Hacienda
Calatagan the predecessors-in-interest of petitioner Hacienda Bigaa. We ruled in the
antecedent cases of Dizon,[36] Ayala y Cia,[37] and De los Angeles,[38] that: (1) all
expanded subdivision titles issued in the name of Ayala y Cia, the Zobels and/or
Hacienda Calatagan covering areas beyond the true extent of TCT No. 722 are null
and void because they cover areas belonging to the public domain; (2) Ayala y Cia
and the Zobels of Hacienda Calatagan are mere usurpers of these public domain
areas; and that (3) these areas must revert to the Republic. Significantly, we
declared in De los Angeles that the Republic, as the rightful owner of the
expanded areas portions of the public domain has the right to place its lessees
and permittees (among them Zoila de Chavez) in possession of the fishpond lots
whose ownership and possession were in issue in the case.
 
These antecedent cases lay to rest the issues of ownership and of possession
as an attribute thereof, which we both ruled to be in favor of the Republic and its
lessees or permittees.
 
The present case is a stark repetition of scenarios in these cases. The protagonists
remain virtually the same with petitioner Hacienda Bigaa taking the place of its
predecessors-in-interest Ayala y Cia and/or the Zobels of Hacienda Calatagan, and
respondent Epifanio V. Chavez taking the place of his predecessor-in-interest Zoila
de Chavez whose possession was under bona fide authority from the
Republic. Considering that in this case the disputed lots are among those litigated in
the antecedent cases and the issues of ownership and possession are again in issue,
the principle of res judicata inevitably must be considered and applied, if warranted.
 
The doctrine of res judicata is set forth in Section 47 of Rule 39 of the
Rules of Court, which in its relevant part 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:
 
x x x x
 
(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.
This provision comprehends two distinct concepts of res judicata: (1) bar by former
judgment and (2) conclusiveness of judgment. Under the first
concept, res judicata absolutely bars any subsequent action when the following
requisites concur:  (a) the former judgment or order was final; (b) it adjudged the
pertinent issue or issues on their merits; (c) it was rendered by a court that had
jurisdiction over the subject matter and the parties; and (d) between the first and the
second actions, there was identity of parties, of subject matter, and of causes of
action.[39]
 
Where no identity of causes of action but only identity of
issues exists, res judicata comes under the second concept i.e.,
under conclusiveness of judgment.  Under this concept, the rule bars the re-
litigation of particular facts or issues involving the same parties even if raised
under different claims or causes of action.[40] Conclusiveness of judgment finds
application when a fact or question has been squarely put in issue, judicially passed
upon, and adjudged in a former suit by a court of competent jurisdiction. The fact or
question settled by final judgment or order binds the parties to that action (and
persons in privity with them or their successors-in-interest), and continues to bind
them while the judgment or order remains standing and unreversed by proper
authority on a timely motion or petition; the conclusively settled fact or question
furthermore cannot again be litigated in any future or other action between the same
parties or their privies and successors-in-interest, in the same or in any other court of
concurrent jurisdiction, either for the same or for a different cause of action.  Thus,
only the identities of parties and issues are required for the operation of the principle
of conclusiveness of judgment.[41]
While conclusiveness of judgment does not have the same barring effect as that of
a bar by former judgment that proscribes subsequent actions, the former nonetheless
estops the parties from raising in a later case the issues or points that were raised and
controverted, and were determinative of the ruling in the earlier case. [42] In other
words, the dictum laid down in the earlier final judgment or order becomes
conclusive and continues to be binding between the same parties, their privies and
successors-in-interest, as long as the facts on which that judgment was predicated
continue to be the facts of the case or incident before the court in a later case;  the
binding effect and enforceability of that earlier dictum can no longer be re-litigated
in a later case since the issue has already been resolved and finally laid to rest in the
earlier case.[43]
a.    Identity of Parties
 
As already stated above, the parties to the present case are virtually the
same as those in the antecedent cases. Specifically in De los Angeles, the parties
were Enrique Zobel, the predecessor-in-interest of petitioner Hacienda Bigaa, and
Zoila de Chavez, the mother and predecessor-in-interest of Chavez.
 
b.    Identity of Subject Matter
Hacienda Bigaa and Chavez are litigating the same properties subject of the
antecedent cases inasmuch as they claim better right of possession to parcels of land
covered by subdivision titles derived from Hacienda Calatagan's TCT No. 722 and
by government-issued fishpond permits. Specifically in De los Angeles, the Zobels
and Zoila de Chavez litigated the disputed lots covered by subdivision titles in
Zobels name and by fishpond permits the Republic issued in favor of de Chavez.
 
In ruling that the subject lots are the same lots litigated in the previously decided
cases, the courts below based their findings on De los Angeles that in turn was
guided by our rulings in Dizon and Ayala y Cia. For emphasis, we reiterate our
ruling in De los Angeles: all areas the Ayalas and/or the Zobels made to appear
to be covered by TCT No. 722 are owned by the Republic because they form
part of the public domain; specifically, portions of the navigable water or of the
foreshores of the bay converted into fishponds are parts of the public domain
that cannot be sold by the Ayalas and/or the Zobels to third parties.
In his answer before the MTC, Chavez asserted that the areas covered by the
fishpond permits of Zoila de Chavez are the same parcels of land that he now
occupies as Zoila's successor-in-interest. Given the rulings in the antecedent cases
that Chavez invoked, Hacienda Bigaa never bothered to object to or to rebut this
allegation to show that the presently disputed lots are not part of the expanded areas
that, apart from the specifically described titles, Ayala y Cia described as other
subdivision titles covering unregisterable lands of the public domain that must revert
to the Republic.[44] Hacienda Bigaa should have objected as we held in De los
Angeles that the onus is on Ayala and the Zobels Hacienda Bigaas predecessors-
in-interest to show that their titles do not cover the expanded areas whose titles
were declared null and void.[45] We find no cogent reason to depart from our past
rulings in the antecedent cases, and from the ruling of the courts below in this case
that the lots claimed by Hacienda Bigaa are the same lots covered by our rulings in
the antecedent cases.
 
c.     Identity of Issues
 
This case and the antecedent cases all involve the issue of ownership or
better right of possession. In Ayala y Cia, we affirmed an RTC decision that
decreed:
WHEREFORE, judgment is hereby rendered as follows:
(a) Declaring as null and void Transfer Certificate of Title
No. T-9550 (or Exhibit 24) of the Register of Deeds of the
 Province of Batangas and other subdivision titles issued in favor
of Ayala y Cia and;or Hacienda de Calatagan over the areas
outside its private land covered by TCT No. 722, which, including
the lots in T-9550 (lots 360, 362, 363 and 182) are hereby reverted
to public dominion.[46] (Emphasis supplied, italics in the original.)
Consequently, lots and their titles derived from the Ayalas and the Zobels TCT No.
722 not shown to be within the original coverage of this title are conclusively public
domain areas and their titles will be struck down as nullities.
Thus, De los Angeles[47] effectively annulled the subdivision titles disputed
in the case for being among the other subdivision titles declared void for covering
public domain areas, and ordered their reversion to the Republic. De los
Angeles recognized, too, the right of the Republic's lessees and public fishpond
permittees (among them Zoila de Chavez, mother and predecessor-in-interest of
Chavez) to possess the fishpond lots in question because they derive their right
of possession from the Republic the rightful owner of these lots.
We reject, based on these discussions, Hacienda Bigaa's position that there
could be no res judicata in this case because the present suit is for forcible entry
while the antecedent cases adverted were based on different causes of action i.e.,
quieting of title, annulment of titles and accion reinvindicatoria. For, res
judicata, under the concept of conclusiveness of judgment, operates even if no
absolute identity of causes of action exists. Res judicata, in its conclusiveness of
judgment concept, merely requires identity of issues. We thus agree with the uniform
view of the lower courts the MTC, RTC and the CA on the application of res
judicata to the present case.
 
Hacienda Bigaa's Titles
Carry No Probative Value
 
Hacienda Bigaa contends that the rulings in the antecedent cases on the nullity of its
subdivision titles should not apply to the present case because the titles TCT Nos.
44695 and 56120 have not been specifically declared void by court order and must
be given probative value. It likewise posits that Chavez failed to introduce evidence
before the MTC that the land subject matter of the suit is the same land covered by
the decision of the Supreme Court in the antecedent cases.
 
We reject this contention in light of our holding in the Ayala y Cia and De los
Angeles cases that apart from those expressly litigated and annulled, all other
subdivision titles over the excess areas of Hacienda Calatagan must be nullified for
covering unregisterable lands of the public domain that must revert to the Republic.
[48]
 To reiterate, lots and their titles derived from the Ayalas and the Zobels TCT
No. 722 not shown to be within the original coverage of this title are conclusively
public domain areas and their titles will be struck down as nullities. What could
have saved Hacienda Bigaa, as successor-in-interest of the Ayalas and the Zobels, is
competent evidence that the subdivision titles in its possession do not fall within the
excess areas of TCT No. 722 that are null and void because they are lands of the
public domain. Hacienda Bigaa however failed to discharge this burden.
 
Therefore, the Court of Appeals, citing Ayala y Cia and De los Angeles, correctly
held that
x x x [S]uffice it to state that as heretofore shown, the Supreme
Court took cognizance of the fact that Zoila de Chavez's fishpond
permit is within the land covered by the cited
decision. Moreover, the Supreme Court has shifted the burden of
proof in this regard to Zobel or Ayala y Cia when it declared
that, Clearly, the burden of proof lies on respondent Zobel and
other transferees to show that his subdivision titles are not
among the unlawful expanded subdivision titles declared null
and void by the said 1965 judgment.[49] (Emphasis supplied.)
 
In any event, Hacienda Bigaa can never have a better right of possession
over the subject lots above that of the Republic because the lots pertain to the public
domain. All lands of the public domain are owned by the State the Republic. Thus,
all attributes of ownership, including the right to possess and use these lands, accrue
to the Republic. Granting Hacienda Bigaa the right to possess the subject premises
would be equivalent to condoning an illegal act by allowing it to perpetuate an
affront and an offense against the State i.e., occupying and claiming as its own lands
of public dominion that are not susceptible of private ownership and appropriation.
[50]
 Hacienda Bigaa like its predecessors-in-interests, the Ayalas and the Zobels is a
mere usurper in these public lands. The registration in Hacienda Bigaa's name of the
disputed lots does not give it a better right than what it had prior to the registration;
[51]
 the issuance of the titles in its favor does not redeem it from the status of a
usurper. We so held in Ayala y Cia and we reiterated this elementary principle of law
in De los Angeles.[52] The registration of lands of the public domain under
the Torrens system, by itself, cannot convert public lands into private lands.[53]
 
As our last word, we find it particularly relevant to state here that we issued
on October 6, 2008 a Resolution in relation with the execution of our decision in the
antecedent cases of Ayala y Cia and De los Angeles.[54] In this Resolution, we
emphasized that the decision we consistently affirmed ordered the following: (1) the
nullification of all subdivision titles that were issued in favor of Ayala y Cia and/or
Hacienda Calatagan (and their successors-in-interest) over the areas outside its
private land covered by TCT No. 722; and (2) the declaration that all lands or
areas covered by these nullified titles are reverted to the public domain. This should
write finis to Hacienda Bigaas claim that its titles are beyond the reach of our
decision in the antecedent cases.
 
In sum, we find no reversible errors of law in the appealed decision of the Court of
Appeals.
 
WHEREFORE, we DENY the present petition and AFFIRM the Court of Appeals
decision of May 31, 2001 and resolution of August 2, 2006. We
accordingly DISMISS WITH FINALITY the complaint for forcible entry in Civil
Case No. 129 before the Municipal Trial Court of Calatagan.
 
SO ORDERED.
 
 THIRD DIVISION
[G.R. No. 116825. March 26, 1998]
SAN LORENZO VILLAGE ASSOCIATION, INC., petitioner, vs. COURT OF
APPEALS; Hon. Judge ROBERTO C. DIOKNO, Presiding Judge,
RTC, Makati, Branch 62 and ALMEDA DEVELOPMENT &
EQUIPMENT CORPORATION, respondents.
DECISION
ROMERO, J.:
This petition for review on certiorari assails the decision[1]J. Francisco;
Barcelona and Hofilea, J.J. concurring.1 of the Court of Appeals denying the petition
for certiorari filed by the San Lorenzo Village Association, Inc. which sought the
reversal of the orders dated March 31 and October 15, 1992, of the Regional Trial
Court of Makati, Branch 62.[2] The lower court had denied the motion to dismiss the
petition for cancellation of the restrictions annotated in Transfer Certificate of Title
No. 47348 of the Registry of Deeds of Makati, Metro Manila.
Petitioner San Lorenzo Village Association, Inc. (SLVAI) and San Lorenzo
Company, Inc. were the respondents in the aforesaid petition filed on December 13,
1991 before the lower court by private respondent Almeda Development and
Equipment Corporation (ADEC). For clarity, the pertinent portions of that petition in
Civil Case No. 91-3450 are hereby quoted as follows:
3. The petitioner is the owner of that parcel of land with building and other
improvements situated at Pasay Road, San Lorenzo Village, Makati, Metro Manila,
embraced in Transfer Certificate of Title No. 47348 of the Registry of Deeds of
Makati, Metro Manila, more particularly described as follows:
x x x x x x x x x x x x.
The petitioners ownership thereto is evidenced by the Deed of Sale executed by
Ponciano L. Almeda, married to Eufemia Perez-Almeda, and the petitioner on
September 15, 1991, entered as Doc. No. 218; Page No. 45; Book No. VIII; Series of
1991, evidenced by its copy hereto attached as Annex `A.
4. As the owner of the said parcel of land together with the building and other
improvements thereon, the petitioner has the right to enjoy and dispose of said
property without limitation except those established by law (Art. 428, Civil Code).
x x x x x x x x x x x x.
5. In Transfer Certificate of Title No. 47448 (sic), there appears Entry No. 59599,
reading in part as follows:
`The owner of this lot or his successor in interest is required to be and is
automatically a member of the San Lorenzo Village Association. The lot may not be
subdivided. The lot shall only be used for residential purposes. Only one single
storey or one (duplex) house may be constructed on a single lot, although separate
servants quarter or garage may be built. The property is subject to an easement of
two meters within the lot and adjacent to the rear and sides thereof not fronting a
street for the purpose of drainage, sewage, water and other public facilities as may be
necessary and desirable.
All buildings on the lot must be of strong materials. Building shall not be higher than
5 meters above the ground directly beneath the point in question. All building plans
must be approved by the Association before construction begins. All buildings
including garage, servants quarter (porte cocheres) must be constructed x x x not less
than 3 meters from boundary bordering a wall, not including pedestrian paths, and
not less than 2 meters from the other boundaries of this lot. Sewage disposal must be
by means of septic tank or into a sewage system.
Walls on the perimeter of this property shall not exceed 2 meters in height, except
that no restriction as to height applies to walls made of live vegetation.
Evidenced by TCT No. 47348 and Entry NO. 59599 (Memorandum of
Encumbrances) thereof marked as Annexes `B and `B-1, respectively.
6. The condition prevailing along Pasay Road (San Lorenzo Village) on July 10,
1958, the date when the restrictions were imposed by the San Lorenzo Company,
Inc. to lot and house owners in San Lorenzo Village and on July 11, 1958, when the
Deed of Restrictions was annotated on TCT No. 60143/T-577 (the certificate of title
from where TCT No. 47448 originated), is no longer the same compared today. At
that time, houses located along Pasay Road (San Lorenzo Village) were used purely
for residential purposes. Today, what are found along Pasay Road (San Lorenzo
Village) are commercial/industrial buildings such as the matter of security and
garage (sic) collections are taken care of by their buyers. Accordingly, the San
Lorenzo Village Association, Inc. is no longer relevant in so far as the building and
lot owners along Pasay Road (San Lorenzo Village) are concerned.
7. The aforementioned annotation in TCT No. 47348 in (sic) an unlawful limitation
to the rights of the petitioner protected by the Constitution and prescribed in Art. 428
of the Civil Code.
7.1 The petitioner does not intend to be a member of the San Lorenzo
Village Association, Inc.
7.2 The petitioner has its own security guards and garbage trucks.
7.3 The petitioner can effectively protect its ownership and possession
without the assistance and intervention of the San Lorenzo Village
Association, Inc.
7.4 The petitioner intends to construct a taller building on the lot.
8. While in Sec. 30, Presidential Decree No. 957, it is provided that -
`SEC. 30. Organization of Homeowners Association. - The owner or developer of a
subdivision project or condominium project shall initiate the organization of a
homeowners association among the buyers and residents of the projects for the
purpose of promoting and protecting their mutual interest and assist in their
community development.
there is no law compelling lot and house buyers to be a member of the San Lorenzo
Company, Inc. and restricting the petitioner to construct a taller building on its lot.
9. As stated above, there is compelling reason for the cancellation of the restrictions
imposed at the back of TCT No. 47348.
10. If there is no vested right in existing law which can be repealed or judicial
interpretation which can be changed, there is no reason why a Deed of Restrictions
annotated in a certificate of title cannot be cancelled.
11. To cancel the aforementioned annotation in TCT No. 47348 and to enforce its
right, the petitioner was compelled to engage the services of a lawyer for a fee and to
institute this action incurring and will incur litigation expenses. [3]
ADEC prayed for the issuance of a temporary restraining order directing the
San Lorenzo Company, Inc. and its agents to cease and desist from making the
petitioner a member of the San Lorenzo Village Association, Inc. and prohibiting the
petitioner from constructing a taller building on its lot and the San Lorenzo Village
Association, Inc. from collecting membership fee and monthly dues and other
assessments. It likewise prayed that the Register of Deeds of Makati be ordered to
cancel Entry No. 59599 in TCT No. 47348 and that respondents pay actual damages
of P30,000.00, attorneys fees of P30,000.00 plus P500 allowance per attendance in
court hearings and the costs of suit.
Therein private respondent SLVAI filed a motion to dismiss the petition on the
grounds of lack of cause of action and lack of ADECs personality to sue. It alleged
that ADEC was not a registered owner of the parcel of land covered by TCT No.
47348; that the sale of the property by Ponciano L. Almeda to ADEC could not bind
third parties; that ADEC had no reason to pray for the cancellation of Entry No.
59599 not being the owner of the land nor a member of SLVAI but simply a stranger
that had no demandable right against the SLVAI.[4]
ADEC opposed the motion to dismiss contending that it had a cause of action
against SLVAI because as the (new) owner of the lot involved, it cannot be
compelled to become a member of the SLVAI for to do so would unduly limit its use
of the property. Citing Philippine Suburban Development Corporation v. Auditor
General,[5] it asserted that it had the capacity and personality to sue because actual
notice of the sale was equivalent to registration.[6]
On March 31, 1992, the lower court issued an Order denying the motion to
dismiss, holding as follows:
This Court agrees with the plaintiff that it has the capacity and legal personality to
file this case. Plaintiff has shown its interest in the subject property, basing its claims
on a Deed of Sale dated September 11, 1990. As successor in interest of the original
registered owner, plaintiff step (sic) into the shoes of the latter, consequently it can
sue and be sued.
SLVAI filed a motion for the reconsideration of that Order [7] alleging that third
persons were not bound by the deed of sale of the property entered into between
ADEC and Ponciano Almeda, as said deed of sale was not registered. As such,
ADEC had no cause of action against it. Furthermore, Almeda, not having paid the
association dues and garbage fees, he was sued before the Regional Trial Court of
Pasig, Branch 151, where the same deed of sale was presented to prevent the
scheduled auction sale through a third-party claim. In quashing the third-party claim,
then Judge Eutropio Migrio ruled that the title to the property being still in the name
of defendant Almeda, whatever transaction he had entered into would not be binding
upon the plaintiff.
In its opposition to the motion for reconsideration, ADEC contended that said
motion was pro forma as it merely reiterated the arguments in the motion to dismiss.
Citing Article 709 of the Civil Code which states that (t)he titles of ownership, or
other rights over immovable property, which are not duly inscribed or annotated in
the Registry of Property shall not prejudice third persons, ADEC averred that within
the context of that law, the SLVAI was not a third person because it merely caused
the annotation on the title of a property of certain restraints or impositions on the
exercise of ownership by the registered owner. It added that SLVAI had no interest
in the property in question except to compel the owner thereof to be automatically a
member of the San Lorenzo Village Association and to pay the consequential dues or
fees and other expenses therefor. As such, SLVAI and San Lorenzo Village
Company, Inc., were included in the case only as parties who had caused the
annotation or inscription of the entry in question which limits or restricts the exercise
of ownership over the aforesaid land, and who may be affected thereby, directly or
indirectly, by its cancellation, in the same manner that the Register of Deeds of
Makati has also been impleaded as the public official who is charged with the duty of
registering or canceling the subject annotation or inscription.[8]
In its reply to the opposition, SLVAI countered that the motion for
reconsideration was not pro forma as the lower court failed to consider the
provisions of Article 709 of the Civil Code and Section 50 of the Land Registration
Act. It alleged that the term third persons in Article 709 was broad enough to cover
everybody who did not participate in the disputed act, contract or deed. It asserted
that, while it had a lien over unpaid association dues and garbage fees, ADEC was
not the real party in interest in the suit for cancellation of restrictions on the title that
was still in the name of Almeda and therefore the case should have been dismissed
outright for lack of cause of action. Moreover, while ADEC claimed to be the owner
of the property, it had not explained why it had not registered the deed of sale and
secured a separate title to the property.[9]
On October 15, 1992, the lower court issued the Order denying the motion for
reconsideration as follows:
Article 709 of the New Civil Code x x x as the basis of this Motion for
Reconsideration finds no application in this case. As correctly pointed out by
petitioner the `third persons mentioned in Article 709, are those persons who may
have adverse interests in the property itself either in the concept of an owner, or a
vendee or a mortgagee, or otherwise, but definitely not that of one who has merely
caused the annotation on the title of the property of certain restraints or impositions
on the exercise of ownership by the registered owner. Moreover, when respondent
San Lorenzo Village Association, Inc. convey (sic) the property to Ponciano Almeda,
the original owner, the latter has all the rights as an owner, including the right to sell,
which he did in favor of the petitioner.
As successor in interest, petitioner can validly exercise the right to sue which the
original owner could lawfully do for the protection of the right as an attribute of
ownership.[10]
SLVAI questioned the lower courts Orders before the Court of Appeals through
a petition for certiorari with prayer for the issuance of a temporary restraining
order. It presented before said appellate court the issue of whether or not the petition
filed below by ADEC stated a cause of action or that ADEC was the real party in
interest.[11]
On June 22, 1994, the Court of Appeals promulgated a Decision denying the
petition for certiorari. The Court of Appeals noted that the petition sought to
discredit the material allegation of ADEC that it is the owner of the property covered
by the subject transfer certificate of title. It asserts that such allegation is merely a
conclusion or inference of ADEC and does not grant to the latter the personality to
sue the petitioner nor does such become the source of the right to institute
proceedings in the court below. It held that:
We resolve to deny the petition, reiterating the ruling made by the Supreme Court
in Galeon versus Galeon, 49 SCRA 516, 520:
`It is well settled that in a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is the sufficiency of the
allegations of fact made in the complaint to constitute a cause of action, and not
whether these allegations of fact are true, for said motion must hypothetically admit
the truth of the facts alleged in the complaint; x x x The test of the sufficiency of the
facts is whether or not, accepting the veracity of the facts alleged, the court could
render a valid judgment upon the same in accordance with the prayer of the
complaint.
As such, the allegation of ADEC that it is the owner of the property on the strength
of the deed of sale should be deemed hypothetically admitted, giving it capacity to
file the proceedings below. The trial court was correct in saying that `[p]laintiff has
shown its interest in the subject property, . . . As successor in interest of the
registered owner, plaintiff step (sic) into the shoes of the latter, consequently, it can
sue and be sued. (Order, March 31, 1992; Rollo, page 36).
The arguments advanced by petitioner as to whether or not ADEC validly acquired
title to the property is one which is a matter more by way of defense and which may
be properly threshed out during the trial. What the Supreme Court likewise espoused
in the Galeon case, page 520is apropos on this issue:
`The uniform ruling of this Court is that the trial court may not inquire into the truth
of the allegations, and find them to be false before a hearing is had on the merits of
the cause. If the court finds the allegations to be sufficient but doubts their veracity,
it is incumbent upon said court to deny the motion to dismiss and require the
defendant to answer. The veracity of the assertions could be asserted at the trial on
the merits.[12]
SLVAI filed a motion for the reconsideration of that Decision but it was denied
on August 26, 1994. Hence, it is now before this Court on a petition for review
on certiorari raising the following issues:
1. THE COURT OF APPEALS ERRED IN FINDING THAT THE ALLEGATION
IN THE COMPLAINT OF PRIVATE RESPONDENT THAT IT IS THE `OWNER
OF THE SUBJECT PROPERTY ON THE BASIS OF A DEED OF ABSOLUTE
SALE `IS DEEMED HYPOTHETICALLY ADMITTED GIVING IT CAPACITY
TO FILE THE PROCEEDINGS BELOW, CITING GALEON VS. GALEON, 49
SCRA 516, BECAUSE HYPOTHETICAL ADMISSION OF FACT DOES NOT
EXTEND TO INFERENCES OR CONCLUSIONS DRAWN FROM SUCH FACT
EVEN ALLEGED IN THE COMPLAINT AS HELD IN DE DIOS V. BRISTOL, L-
25530, JANUARY 12, 1974.
2. ASSUMING ARGUENDO THAT PRIVATE RESPONDENT IS THE `OWNER
OF THE SUBJECT PROPERTY, THE SAME IS STILL INSUFFICIENT TO
MAKE OUT A CAUSE OF ACTION BECAUSE THE DEED OF RESTRICTIONS
SOUGHT TO BE CANCELLED BY PRIVATE RESPONDENT REQUIRES
THAT THE CANCELLATION THEREOF BE INITIATED BY `MEMBERS WHO
ARE THE REGISTERED OWNERS OF THE LOTS IN THE VILLAGE AND BY
THEIR TWO THIRDS VOTE.
3. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT IS NOT THE REAL PARTY-IN-INTEREST.
These contentions boil down to the sole issue of whether or not the petition
below alleges a cause of action against petitioner that the lower court may be deemed
to have correctly denied the motion to dismiss the same petition.
The Rules of Court requires that the complaint must make a concise statement
of the ultimate facts or the essential facts constituting the plaintiffs cause of action. A
fact is essential if it cannot be stricken out without leaving the statement of the cause
of action insufficient.[13] A complaint states a cause of action where it contains the
three (3) essential elements of a cause of action, namely: (1) the legal right of the
plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of
the defendant in violation of said legal right. If these elements are absent, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state
a cause of action. If the allegations are vague, indefinite, or in the form of
conclusions, the defendants recourse is not a motion to dismiss but a bill of
particulars.[14]
A motion to dismiss on the ground of failure to state a cause of action in the
complaint hypothetically admits the truth of the facts alleged therein. However, the
hypothetical admission is limited to the relevant and material facts well pleaded in
the complaint and inferences fairly deductible therefrom. The admission does not
extend to conclusions or interpretations of law; nor does it cover allegations of fact
the falsity of which is subject to judicial notice. [15] As this Court held in De Dios v.
Bristol Laboratories (Phils.), Inc.:
x x x. For the purpose, the motion to dismiss must hypothetically admit the truth of
the facts alleged in the complaint. The admission, however, is limited only to all
material and relevant facts which are well pleaded in the complaint. Thus, it has been
ruled that a demurrer admits only such matters of fact as are sufficiently pleaded; that
the demurrer does not admit the truth of mere epithets charging fraud; nor allegations
of legal conclusions; nor an erroneous statement of law. The admission of the truth
of material and relevant facts well pleaded does not extend to render a demurrer an
admission of inferences or conclusions drawn therefrom, even if alleged in the
pleading; nor mere inferences or conclusions from facts not stated; nor conclusions
of law; nor matters of evidence; nor surplusage and irrelevant matter. x x x.[16]
However, it should be pointed out at the outset that it is not lack or absence of
cause of action that is a ground for dismissal of the complaint, but rather, that the
complaint states no cause of action.[17]
De Dios did indeed hold that a movant to dismiss on the ground of failure of the
complaint to state a cause of action is burdened with the implied admission of the
truth of all material and relevant facts which are well pleaded in the complaint, but
not of mere epithets charging fraud, or legal conclusions, or mere inferences, or
matters of evidence. Said case gave examples of allegations not within the
hypothetical-admission rule, to wit: malicious and unjustified institution of an action;
acting maliciously and for the purpose of political persecution and vengeance, with
intent of circumventing a constitutional provision; usurping the office of Senator of
the Philippines; that the master had breached the contract, or discharged an employee
in a wrongful, illegal, unlawful, unjust manner, etc.
The above ruling, however, does not apply to the case at bar. In the instant case,
the complaint asserts that plaintiff purchased the property in question from the
person admittedly holding title thereto. It then infers that by this mode, it became the
successor-in-interest of the vendor, if not indeed the owner of the property. Hence,
the restrictions in the title should be nullified not only because it is contrary to law
but also because the conditions under which they were imposed had ceased to exist.
In fact, the averments in the complaint like the title of ADECs vendor, the
execution of the sale by said vendor to ADEC, the latters status as the vendors
successor-in-interest, and the altered physical environment along Pasay Road, are
allegations well within the hypothetical-admission principle. These averments satisfy
the three (3) elements of a cause of action. In other words, the complaint did state a
cause of action.
In view of such, SLVAI cannot successfully invoke the ground that the
complaint fails to state a cause of action in its motion to dismiss.
Putting it differently, what SLVAI essentially puts at issue is whether
substantively, ADEC, as plaintiff in the case below, possesses a tenable right of
action. As discussed, said issue is not a ground for a motion to dismiss. As a matter
of law, neither are the efficacy of the sale to pass title to the property, and
consequently, ADECs acquisition of the status of successor-in-interest, specific
mandatory modes to challenge the restrictions in question, or the change in the
physical environment along Pasay Road, grounds for a motion to dismiss under Rule
16 of the Rules of Court. Instead, the aforementioned issues may be properly raised
in the Answer.
 Regarding the third issue of whether ADEC is a real party in interest, said issue
is likewise not a proper ground for a motion to dismiss. Certainly, as successor-in-
interest of the original vendor, who is the unquestioned title holder, ADEC has the
prerogative to assert all the latters rights, including the impugnation of the
restrictions on the title. The tenability of the grounds for that impugnation, while
proper under the pleadings, should be threshed out at the trial on the merits.
The only other issue raised is that even assuming ADEC became owner of the
property, it cannot seek cancellation because, under SLVAIs rules, the cancellation
process can only be initiated by members of the SLVAI who are the registered
owners of the lots in the village and by their two-thirds vote. However, those rules
were not dealt with in the complaint at all. They may thus be raised only by way of
defense in the Answer, but not as ground for a motion to dismiss available as cause
for dismissal of the action at this early stage.
Finally, even assuming that the allegation of the facts constituting ADECs
cause of action is not as clear and categorical as would otherwise be desired, any
uncertainty thereby arising should be so resolved as to enable a full inquiry into the
merits of the action. Such a course would preclude that multiplicity of suits which
the law abhors, and conduce to the definitive determination and termination of the
dispute. On the other hand, the abortion of the action on account of the alleged fatal
flaws of the complaint would obviously be indecisive; it would not end the
controversy, since the institution of another action upon a revised complaint would
not be foreclosed.
WHEREFORE, the petition should be DISMISSED and the challenged
decision of the Court of Appeals should be AFFIRMED.
SO ORDERED.

THIRD DIVISION
[G.R. No. 139371. April 4, 2001]
INDIANA AEROSPACE UNIVERSITY, petitioner, vs. COMMISSION ON
HIGHER EDUCATION (CHED), respondent.
DECISION
PANGANIBAN, J.:
When the delayed filing of an answer causes no prejudice to the plaintiff,
default orders should be avoided. Inasmuch as herein respondent was improvidently
declared in default, its Petition for Certiorari to annul its default may be given due
course. The act of the Commission on Higher Education enjoining petitioner from
using the word university in it corporate name and ordering it to revert to its
authorized name does not violate its proprietary rights or constitute irreparable
damage to the school. Indeed, petitioner has no vested right to misrepresent itself to
the public. An injunction is a remedy in equity and should not be used to perpetuate a
falsehood.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, challenging the July 21, 1999 Decision [1] of the Court of Appeals (CA) in CA-
GR SP No. 51346. The appellate court directed the Regional Trial Court (RTC) of
Makati City, Branch 136, to cease and desist from proceeding with Civil Case No.
98-811 and to dismiss the Complaint for Damages filed by the Indiana Aerospace
University against the Commission on Higher Education (CHED). The dispositive
portion of the CA Decision reads as follows:
WHEREFORE, in the light of the foregoing consideration, and pursuant to pertinent
existing laws and jurisprudence on the matter, [the trial court] is hereby DIRECTED
to cease and desist from proceeding with Civil case No. 98-811 and to order the
dismissal of [petitioners] Petition dated March 31, 1999 in Civil Case No. 98-911 for
lack of merit and valid cause of action.[2]
The Facts
The facts of this case we are summarized by the CA, as follows:
Sometime in October 1996, Dr. Reynaldo B. Vera, Chairman, Technical Panel for
Engineering, Architecture, and Maritime Education (TPRAM) of [CHED], received
a letter dated October 18, 1998 (Annex C) from Douglas R. Macias, Chairman,
Board of Aeronautical Engineering, Professional Regulat[ory] Commission (PRC)
and Chairman, Technical Committee for Aeronautical Engineering (TPRAME)
inquiring whether [petitioner] had already acquired [u]niversity status in view of the
latters advertisement in [the] Manila Bulletin.
In a letter dated October 24, 1996, Dr. Vera formally referred the aforesaid letter to
Chairman Alcala with a request that the concerned Regional Office of [CHED] be
directed to conduct appropriate investigation on the alleged misrepresentation by
[petitioner]. Thereafter, [CHED] referred the matter to its Regional Director in Cebu
City, requesting said office to conduct an investigation and submit its report. The
[R]eport submitted in January 1997, stated in substance:
xxx xxx xxx
To recall it was in the month of May 1996, [that] Director Ma. Lilia Gaduyon met
the school [p]resident in the regional office and verbally talked[with] and advised
them not to use University when it first came out in an advertisement column of a
local daily newspaper in Cebu City. It was explained that there was a violation
[committed by] his institution [when it used] the term university unless the school
ha[d] complied [with] the basic requirement of being a university as prescribed in
CHED Memorandum Order No. 48, s. 1996.
x x x x x x x x x.
As a consequence of said Report, [respondents] Legal Affairs Service was requested
to take legal action against [petitioner]. Subsequently, on February 3, 1997,
[respondent] directed [petitioner] to desist from using the term University, including
the use of the same in any of its alleged branches. In the course of it investigation,
[respondent] was able to verify from the Securities and Exchange Commission
(SEC) that [petitioner had] filed a proposal to amend its corporate name from Indiana
School of Aeronautics to Indiana Aerospace University, which was supposedly
favorably recommended by the Department of Education, Culture and Sports
(DECS) per its Indorsement dated 17 July 1995, and on [that] basis, SEC issued to
[petitioner] Certificate of Registration No. AS-083-002689 dated August 7,
1995. Surprisingly, however, it ought to be noted, that SEC Chairman Perfecto R.
Yasay, Jr. wrote the following letter to the [c]hairman of [respondent]:
Hon. Angel C. Alcala
Chairman
Commission on Higher Education
DAP Bldg., San Miguel Avenue
Ortigas Center, Pasig City
Dear Chairman Alcala:
This refers to your letter dated September 18, 1997 requesting this Commission to
make appropriate changes in the Articles of Incorporation of Indiana School of
aeronautics, Inc. due to its unauthorized use of the term University in its corporate
name.
Relative thereto, please be informed that our records show that the above-mentioned
corporation has not filed any amended articles of incorporation that changed its
corporate name to include the term University.
In the case the corporation submit[s] an application for change of name, your Cease
and Desist Order shall be considered accordingly.
Very truly yours,
(SGD.) PERFECTO R. YASAY, JR.
Chairman
In reaction to [respondents] order for [petitioner] to desist from using the word
University, Jovenal Toring, [c]hairman and [f]ounder of [petitioner] wrote a letter
dated February 24, 1997 (Annex G) appealing for reconsideration of [respondents]
Order, with a promise to follow the provisions of CMO No. 48, pertinent portions of
which have been quoted in the Petition, to wit:
On 07 August 1995, in line with the call of the government to go for global
competitiveness and our vision to help in the development of aerospace technology,
the Board of Directors applied with the SEC for the amendment of Article I of the
Articles of Incorporation to read as Indiana Aerospace University instead of Indiana
School of Aeronautics, Inc.
x x x x x x x x x
In view thereof, we would like to appeal to you Fr. Delagoza to please reconsider
your order of February 3, 1997, otherwise the school will encounter financial
difficulties and suffer damages which will eventually result in the mass dislocation of
xxx thousand[s] of students. The undersigned, being the [c]hairman and [f]ounder,
will try our very best to follow the provisions of CHED MEMO No. 48, series of
1996 that took effect last June 18, 1996.
x x x x x x x x x
Thank you very much for giving me a copy of said CHED MEMO order No.
48. More power and God Bless You.
x x x x x x x x x.
The appeal of [petitioner] was however rejected by [respondent] in its decision dated
July 30, 1998 and the [the latter] ordered the former to cease and desist from using
the word University. However, prior to said date, on April 2, 1998, [petitioner] filed
a Complaint for Damages with prayer for Writ of preliminary and Mandatory
Injunction and Temporary Restraining Order against [respondent], docketed as Civil
Case No. 98-811 before public respondent judge.
On April 7, 1998, [respondent] filed a Special Appearance with Motion to Dismiss,
based on 1) improper venue; 2) lack of authority of the person instituting the action;
and 3) lack of cause of action. On April 17, 1998, [petitioner] filed its Opposition to
the Motion to Dismiss [on] grounds stated therein, to which [respondent] filed a
Reply on April 21, 1998, reiterating the same arguments in its Motion to
Dismiss. After due hearing, [petitioner] formally offered its evidence on July 23,
1998 while [respondent] made a formal offer of evidence on July 28, 1998 to which
[petitioner] filed its Comments/Objections and finally, [respondent] submitted its
Memorandum relative thereto on October 1, 1998.
Public respondent judge, in an Order dated August 14, 1998, denied [respondents]
Motion to Dismiss and at the same time, issued a Writ of preliminary Injunction in
favor of [petitioner]. [Respondent], in the same Order, was directed to file its Answer
within fifteen (15)days from receipt of said Order, which was August 15, 1998.
x x x x x x x x x
WHEREFORE, and in consideration of all the foregoing [respondents] Motion to
Dismiss is hereby denied, and the [respondent] is directed to file its [A]nswer to the
[C]omplaint within fifteen (15) days from receipt of this Order.
In the meantime, [respondent], its officials, employees and all parties acting under its
authority are hereby enjoined to observe the following during the pendency of this
case.
1. Not to publish or circulate any announcement in the newspaper, radio or television
regarding its Cease and Desist Order against xxx [petitioner];
2. Not to enforce the Cease and Desist Order issued against xxx [petitioner];
3. To maintain the status quo by not withholding the issuance of yearly school
permits and special order to all graduates.
Let a writ of preliminary Injunction to that effect issue upon posting by [petitioner]
of an injunction bond in the amount of One Hundred Thousand Pesos (P100,000.00),
and subject to the approval of the Court.
SO ORDERED.
On September 22, 1998, [petitioner] filed before public respondent a Motion To
Declare [Respondent] in [D]efault pursuant to Section 3, Rule 9 in relation to Section
4, Rule 16 of the Rules of Court, as amended, and at the same time praying [for] the
Motion to [S]et for [H]earing on October 30, 1998 at 8:30 a.m. On the same date,
[respondent] filed a Motion For Extension of Time to File its Answer, x x x until
November 18, 1998. On November 17, 1998, [respondent] filed its [A]nswer.
[Petitioner], on November 11, 1998 filed its Opposition to the Motion for Extension
of Time to File [Respondents] Answer and on November 9, 1998, a Motion to
Expunge [Respondents] answer and at the same time praying that its [M]otion be
heard on November 27, 1998 at 9:00 a.m. On even date, public respondent judge
issued an Order directing the Office of the Solicitor General to file within a period of
ten (10) days from date its written Opposition to the Motion to Expunge
[Respondents] answer and within the same period to file a written [N]otice of
[A]ppearance in the case. Unable to file their written Opposition to the Motion to
Expunge within the period given by public respondent, the OSG filed a Motion to
Admit Written Opposition stating the reasons for the same, attaching thereto the
Opposition with [F]ormal [E]ntry of [A]ppearance.
In an Order dated December 9, 1998, (Annex A), public respondent judge ruled on
[Petitioners ] Motion to Declare [Respondent in Default], to wit:
WHEREFORE, and in view of all the foregoing, the present motion is
granted. [Petitioner] is hereby directed to present its evidence ex-parte before the
[b]ranch [c]lerk of [c]ourt, who is designated as [c]ommissioner for the purpose,
within ten (10) days from receipt of this [O]rder, and for the latter to submit his
report within twenty (20) days from the date the case is submitted for decision.
SO ORDERED.[3]
On February 23, 1999, respondent filed with the CA a Petition for certiorari,
arguing that the RTC had committed grave abuse of discretion (a) in denying the
formers Motion to Dismiss, (b) in issuing a Writ of Preliminary Injunction, and (c) in
declaring respondent in default despite its filing an Answer.
Ruling of the Court of Appeals
The CA ruled that petitioner had no cause of action against
respondent. Petitioner failed to show any evidence that it had been granted university
status by respondent as required under existing law and CHED rules and
regulations. A certificate of incorporation under an Unauthorized name does not
confer upon petitioner the right to use the word university in its name. The evidence
submitted by respondent showed that the Securities and Exchange Commission
(SEC) had denied that petitioner had ever amended its Articles of Incorporation to
include university in its corporate name. For its part, the Department of Education,
Culture and Sports (DECS) denied having issued the alleged Certification dated May
18, 1998, indorsing the change in petitioners corporate name. Besides, neither the
Corporation Code nor the SEC Charter vests the latter with the authority to confer
university status on a corporation that it regulates.
For the same reason, the appellate court also ruled that the Writ of Preliminary
Injunction had improvidently been issued. The doubtful right claimed by petitioner is
subordinate to the public interest to protect unsuspecting students and their parents
from the unauthorized operation and misrepresentation of an educational institution.
Respondent should not have been declared in default, because its answer had
been filed long before the RTC ruled upon petitioners Motion to declare respondent
in default. Thus, respondent had not obstinately refused to file an Answer; on the
contrary, its failure to do so on time was due to excusable negligence. Declaring it in
default did not serve the ends of justice, but only prevented it from pursuing the
merits of its case.
Hence, this Petition.[4]
Issues
Petitioner alleges that the appellate court committed the following reversible
errors:
A. In giving due course to respondent CHEDs Petition for Certiorari filed
way beyond the 60-day reglementary period prescribed by Section 4,
Rule 65 of the Rules of Court;
B. In not requiring Respondent CHED to first file a motion to Set Aside
the Order of Default dated December 9, 1998; and
 C. In ordering the dismissal of Civil Case No. 98-811.[5]
In its Memorandum, petitioner adds that the CA erred in dissolving the Writ of
Preliminary Injunction issued by the RTC. We shall take up these issues in the
following order: (1) timeliness of the certiorari petition, (2) validity of the default
order, (3) validity of the preliminary injunction, and (4) dismissal of the Complaint.
This Courts Ruling
The Petition is partly meritorious.
First Issue: Timeliness of Certiorari
Petitioner claims that the Petition for certiorari of respondent should have been
dismissed by the CA, because it was filed out of time and was not preceded by a
motion for reconsideration in the RTC. The copy of the Order of August 14, 1998
had been served at respondents office on August 15, 1998, but its Answer was filed
only after 180 days which, according to petitioner, could not be considered a
reasonable period. On the other hand, the Office of the Solicitor General (OSG)
argues that the Order is null and void and, hence, may be assailed at any time.
We hold that respondents Petition for Certiorari was seasonably filed. In
computing its timeliness, what should have been considered was not the Order of
August 14, 1998, but the date when respondent received the December 9, 1998 Order
declaring it in default. Since it received this Order only on January 13, 1999, and
filed its Petition for Certiorari on February 23, 1999, it obviously complied with the
sixty-day reglementary period stated in Section 4, Rule 65 of the 1997 Rules of
Court. Moreover, the August 14, 1998 Order was not a proper subject of certiorari or
appeal, since it was merely an interlocutory order.
Exhaustion of Available Remedies
Petitioner also contends that certiorari cannot prosper in this case, because
respondent did not file a motion for reconsideration before filing its Petition for
Certiorari with the CA. Respondent counters that reconsideration should be
dispensed with, because the December 9, 1998 Order is a patent nullity.
The general rule is that, in order to give the lower court the opportunity to
correct itself, a motion for reconsideration is a prerequisite to certiorari. It also basic
that petitioner must exhaust all other available remedies before resorting to
certiorari. This rule, however, is subject to certain exceptions such as any of the
following: (1) the issues raised are purely legal in nature, (2) public interest is
involved, (3) extreme urgency is obvious or (4) special circumstances warrant
immediate or more direct action.[6] It is patently clear that the regulation or
administration of educational institutions, especially on the tertiary level, is invested
with public interest. Hence, the haste with which the solicitor general raised these
issues before the appellate court is understandable. For the reason mentioned, we rule
that respondents Petition for Certiorari did not require prior resort to a motion for
reconsideration.
Second Issue: Validity of the Default Order
Petitioner avers the RTC was justified in declaring respondent in default,
because the August 14, 1998 Order directing the filing of an answer had been served
on August 25, 1998. And as late as October 30, 1998, respondent could only file a
Motion for Extension of Time, which the trial court denied because of the expiry of
the fifteen-day period. Petitioner adds that respondents proper remedy would have
been a Motion to Set Aside the Order of Default, pursuant to Section 3(b), Rule 9 of
the Rules of Court.
Respondent, in turn, avers that certiorari was the only plain, speedy and
adequate remedy in the ordinary course of law, because the default Order had
improvidently been issued.
We agree with respondent. Lina v. Court of Appeals[7] discussed the remedies
available to a defendant declared in default, as follows: (1) a motion to set aside the
order of default under Section 3(b), Rule 9 of the Rules of Court, if the default was
discovered before judgment could be rendered; (2) a motion for new trial under
Section 1(a) of Rule 37, if the default was discovered after judgment but while
appeal is still available; (3) a petition for relief under Rule 38, if judgment has
become final and executory; and (4) an appeal from the judgment under Section 1,
Rule 41, even if no petition to set aside the order of default has been resorted to.
These remedies, however, are available only to a defendant who has been
validly declared in default. Such defendant irreparably loses the right to participate in
the trial. On the other hand, a defendant improvidently declared in default may retain
and exercise such right after the order of default and the subsequent judgment by
default are annulled, and the case remanded to the court of origin. The former is
limited to the remedy set forth in section 2, paragraph 3 of Rule 41 of the pre 1997
Rules of Court, and can therefore contest only the judgment by default on the
designated ground that it is contrary to evidence or law. The latter, however, has the
following options: to resort to this same remedy; to interpose a petition for certiorari
seeking the nullification of the order of default, even before the promulgation of a
judgment by default; or in the event that judgment has been rendered, to have such
order and judgment declared void.
 In prohibiting appeals from interlocutory orders, the law does not intend to
accord executory force to such writs, particularly when the effect would be to cause
irreparable damage. If in the course of trial, a judge proceeds without or in excess of
jurisdiction, this rule prohibiting an appeal does not leave the aggrieved party
without any remedy.[8] In a case like this, a special civil action of certiorari is the
plain, speedy and adequate remedy.
Herein respondent controverts the judgment by default, not on the ground that it
is unsubstantiated by evidence or that it is contrary to law, but on the ground that it is
intrinsically void for having been rendered pursuant to a patently invalid order of
default.[9]
Grave Abuse of Discretion
Petitioner claims that in issuing the default Order, the RTC did not act with
grave abuse of discretion, because respondent had failed to file its answer within
fifteen days after receiving the August 14, 1998 Order.
We disagree. Quite the contrary, the trial court gravely abused its discretion
when it declared respondent in default despite the latters filing of an Answer.
[10]
 Placing respondent in default thereafter served no practical purpose.
Petitioner was lax in calling the attention of the Court to the fifteen-day period
for filing an answer. It moved to declare respondent in default only on September 20,
1998, when the filing period had expired on August 30, 1998. The only conclusion in
this case is that petitioner has not been prejudiced by the delay. The same leniency
can also be accorded to the RTC, which declared respondent in default only on
December 9, 1998, or twenty-two days after the latter had filed its Answer on
November 17, 1998. Defendants Answer should be admitted, because it had been
filed before it was declared in default, and no prejudice was caused to plaintiff. The
hornbook rule is that default judgments are generally disfavored.[11]
While there are instances when a party may be properly declared in default,
these cases should be deemed exceptions to the rule and should be resorted to only in
clear cases of obstinate refusal or inordinate neglect in complying with the orders of
the court.[12] In the present case, however, no such refusal or neglect can be attributed
to respondent.
It appears that respondent failed to file its Answer because of excusable
negligence. Atty. Joel Voltaire Mayo, director of the Legal Affairs Services of
CHED, had to relinquish his position in accordance with the Memorandum dated
July 7, 1998, requiring all non-CESO eligibles holding non-career positions to vacate
their respective offices. It was only on September 25, 1998, after CHED Special
Order No. 63 had been issued, when he resumed his former position. Respondent
also presented a meritorious defense in its Answer -- that it was duty-bound to pursue
that state policy of protecting, fostering and promoting the right of all citizens to
affordable quality education at all levels. In stark contrast, petitioner neither qualified
for nor was ever conferred university status by respondent.
Judges, as a rule, should avoid issuing default orders that deny litigants the
chance to be heard. Instead, the former should give the latter every opportunity to
present their conflicting claims on the merits of the controversy, as much as possible
avoiding any resort to procedural technicalities.[13]
Third Issue: Preliminary Injunction
Petitioner contends that the RTC validly issued the Writ of Preliminary
Injunction. According to the trial court, respondents actions adversely affected
petitioners interests, faculty and students. In fact, the very existence of petitioner as a
business concern would have been jeopardized had its proprietary rights not been
protected.
We disagree. We concur with the CA that the trial court acted with grave abuse
of discretion in issuing the Writ of Preliminary Injunction against
respondent. Petitioner failed to establish a clear right to continue representing itself
to the public as a university. Indeed, it has no vested right to misrepresent
itself.Before an injunction can be issued, it is essential that (1) there must be a
right in esse to be protected, and (2) the act against which the injunction is to be
directed must have violated such right. [14] The establishment and the operation of
schools are subject to prior authorization from the government. No school may claim
to be a university unless it has first complied with the prerequisites provided in
Section 34 of the Manual of Regulations for Private Schools. Section 3, Rule 58 of
the Rules of Court, limits the grant of preliminary injunction to cases in which the
plaintiff is clearly entitled to the relief prayed for.
We also agree with the finding of the CA that the act sought to be enjoined by
petitioner is not violative of the latters rights. Respondents Cease and Desist Order of
July 30, 1997 merely restrained petitioner from using the term university in its
name. It was not ordered to close, but merely to revert to its authorized name; hence,
its proprietary rights were not violated.
Fourth Issue: Dismissal of the Complaint
Petitioner claims that the CA went beyond its limited jurisdiction under Rule 65
when it reversed the trial court and dismissed the Complaint on the ground that
petitioner had failed to state a cause of action. The RTC had yet to conduct trial, but
the CA already determined the factual issue regarding petitioners acquisition of
university status, a determination that is not permitted in certiorari proceedings.
 The CA ruled that the trial court gravely abused its discretion in denying
respondents Motion to dismiss on the ground of lack of cause of action because of
petitioners lack of legal authority or right to use the word university. Said appellate
court:
x x x. No matter how we interpret the Corporation Code and the law granting the
Securities and Exchange Commission its powers and duties, there is nothing there
which grants it the power or authority to confer University Status to an educational
institution. Fundamental is the rule that when there is no power granted, none
exist[s], not even implied ones for there is none from where to infer. The mere fact of
securing an alleged Certificate of Incorporation under an unauthorized name does not
confer the right to use such name.
But what makes the conclusion of [the trial court] even anomalous, to say the least, is
that no less than the Chairman of the SEC in his letter to the [respondent] (Exh. J)
expressly said that [petitioner] never filed any Amended Articles of Incorporation so
as to have a change of corporate name to include the term university. Worse, the
records officer of DECS issued a Certification dated May 18, 1998 (Annex AA) to
the effect that there was no Indorsement made by that office addressed to the SEC or
the Proposed Amended Article of Incorporation of Indiana Aeronautics. x x x.
respondent was quoted as saying in the March 28, 1998 issue of the
newspaper Today that petitioner had been ordered closed by the respondent for
illegal advertisement, fraud and misrepresentation of itself as a university. Such acts,
according to the RTC undermined the publics confidence in petitioner as an
educational institution.[18] This was a clear statement of a sufficient cause of action.
When a motion to dismiss is grounded on the failure to state a cause of action, a
ruling thereon should be based only on the facts alleged in the complaint. [19] The
court must pass upon this issue based solely on such allegations, assuming them to
be true. For it to do otherwise would be a procedural error and a denial of plaintiffs
right to due process.[20]
WHEREFORE, the Petition is hereby GRANTED IN PART, and the assailed
Decision MODIFIED. The trial court is DIRECTED to SET ASIDE the Order of
default of December 9, 1998; to ADMIT the Answer dated November 5, 1998;
to LIFT the preliminary injunction; and to CONTINUE, with all deliberate speed, the
proceedings in Civil Case No. 98-811.
SO ORDERED.

Under such clear pattern of deceitful maneuvering to circumvent the requirement for
acquiring University Status, it is [a] patently reversible error for [the trial court] to
hold that [petitioner] has a right to use the word University which must be
protected. Dismissal of [petitioners] Complaint for lack of a valid cause of action
should have been the proper action taken by [the trial court] judge.[15]

writ of certiorari is not intended to correct every controversial interlocutory

ruling; it is resorted to only to correct a grave abuse of discretion or a whimsical
exercise of judgment equivalent to lack of jurisdiction. Its function is limited to
keeping an inferior court within its jurisdiction and to relieve persons from arbitrary
acts -- acts which courts or judges have no power or authority in law to perform.  It is
not designed to correct erroneous findings and conclusionsmade by the court.[16]
In the case at bar, we find no grave abuse of discretion in the RTCs denial of
the Motion to Dismiss, as contained in the August 14, 1998 Order. The CA erred in
ruling other wise. The trial court stated in its Decision that petitioner was an
educational institution, originally registered with the Securities and Exchange
Commission as the Indiana School of Aeronautics, Inc. That name was subsequently
changed to Indiana Aerospace University after the Department of Education, Culture
and Sports had interposed no objection to such change. [17]
Respondent issued a formal Cease and Desist Order directing petitioner to stop
using the word university in its corporate name. The former also published an
announcement in the March 21, 1998 issue of Freeman, a local newspaper in Cebu
City, that there was no institution of learning by that name. The counsel of
 SECOND DIVISION
[G.R. No. 110480. June 29, 2001]
BANGKO SILANGAN DEVELOPMENT BANK, petitioner, vs. COURT OF
APPEALS, JUDGE PABLO D. ATIENZA, in his capacity as Presiding
Judge of Branch 14, Regional Trial Court, Fourth Judicial Region,
Nasugbu, Batangas and LEONIDA UMANDAL-BAUSAS, respondents.
DECISION
DE LEON, JR., J.:
Challenged in this petition for review on certiorari is the Decision[1] dated
February 26,1993 of the Court of Appeals in CA-G.R. No. SP-29659 which affirmed
the Resolution[2] dated September 10, 1992 of the Regional Trial Court of Batangas,
Branch 14, Nasugbu, Batangas in Civil Case No. 221. The said Regional Trial Court
(RTC) denied the motion to dismiss filed by petitioner Bangko Silangan
Development Bank (BSDB), Nasugbu Branch, Batangas.
The motion to dismiss was based on the ground of litis pendentia
allegedly arising from the same controversy, subject of Civil Case No.91-56185,
then pending before the Regional Trial Court of Manila.
The antecedent facts are as follows:
Private respondent Leonida Umandal-Bausas had been maintaining Savings
Account No.04-3652 as depositor of petitioner BSDB, Nasugbu Branch, Batangas
since 1985. As of April 1990, she had Fifteen Thousand Pesos (P15,000.00)
deposited under her Savings Account No. 04-3652. On April 23, 1990, respondent
Leonida Umandal-Bausas attempted to withdraw Five Thousand Pesos (P5,000.00)
from that savings account but, to her surprise, the bank teller told her that the
withdrawal could not be done because her brother, Antonio Umandal, had already
withdrawn on April 16, 1990 the amount of Fifteen Thousand Pesos (P15,000.00)
allegedly with her written authorization and that her remaining balance was only
Eight Hundred Pesos (P800.00). Respondent Bausas then inquired about the
withdrawal slip and found that the signatures appearing thereon were not hers and
neither that of her brother.[3]
Dismayed by the turn of events, respondent Bausas sought the assistance of a
family friend, Edmundo Villadolid, who was then the President-Manager of the
Rural Bank of Nasugbu, Batangas. On the following day, Villadolid sent petitioner
BSDB a letter, dated April 24, 1990, together with an affidavit executed by
respondent Bausas. In substance, Villadolid in his letter, informed petitioner BSDB
of the "sad experience" of respondent Bausas, a daughter of his kumadre, whose
savings passbook had since been withheld by the petitioner bank which allowed the
withdrawal of the amount of Fifteen Thousand Pesos (P15,000.00) from her savings
account without verifying whether the withdrawal was duly authorized by respondent
Bausas. Claiming that the withdrawal smacked of "foul play" and "dubious exercise
of unwarranted banking operation", Villadolid warned the petitioner bank that he
would be constrained to elevate the matter to "higher authorities" should there be no
"reasonable and convincing results at the earliest (sic) possible".[4]
Upon receipt of the letter, petitioner BSDB caused an investigation on the
matter through its auditor, Benedicto I. Ramirez. On May 4, 1990, Ramirez
submitted a report, a portion of which reads:
"Savings ledger No. 3652 under the name Leonida B. Umandal shows a FIFTEEN
THOUSAND PESO (P15,000.00) withdrawal made last April 16. Said withdrawal is
evidenced by a withdrawal slip bearing the signatures of both the depositor, Leonida
B. Umandal and her representative, Antonio Umandal, which are genuine. Both
Leonida B. Umandal and her brother Antonio Umandal, who dropped by to
complaint (sic) sometime after April 22, 1990, denied having signed said withdrawal
slip as per statements gathered from the officers and staff of Nasugbu Branch. Said
withdrawal was processed in accordance with the standard operating procedure.[5]
Subsequently, on May 15, 1990, Villadolid requested the Central Bank of the
Philippines to intervene and conduct an investigation on petitioner BSDB's banking
operations on account of the petitioner bank's "indifference" in the conduct of its
investigation on the unauthorized withdrawal from respondent Bausas' savings
account. This was subsequently referred by the Central Bank to petitioner BSDB's
Head Office in Batangas City.
On May 31, 1990, Villadolid wrote petitioner BSDB another letter, a copy of
which was furnished the Central Bank. He reminded the petitioner bank that it had
been forty-five (45) days since the failed withdrawal and that, notwithstanding the
attempt of respondent Bausas' father to thresh out the matter with Sofronio Comia,
petitioner bank's officer-in-charge, no concrete results and/or remedies" has been
arrived at. He warned that if, within five (5) days, the petitioner bank would continue
its "insulting treatment" on the matter, respondent Bausas would be constrained to
hire the services of a lawyer in order that the proper charges would be filed against
the petitioner bank.[6]
In a letter dated June 6, 1990, petitioner BSDB, through Alberto Buquid,
informed respondent Bausas that the investigation it had conducted on the matter
revealed that on April 16, 1990, her brother, Antonio Umandal, bearing her passbook
under Savings Account No. 04-3652 and the withdrawal slip to which her signature
was affixed, withdrew the amount of Fifteen Thousand Pesos (P15,000.00). The
petitioner bank asserted that it observed the usual procedure in bank transactions - it
made the proper verification, posted the withdrawal on the passbook and the bank
ledger, and approved the withdrawal.[7]
As a result of that information, respondent Bausas sought the help of the
National Bureau of Investigation (NBI) in Region IV, Batangas City. After an
investigation, a case was filed with the Office of the Provincial Prosecutor of
Batangas on February 21, 1993 and docketed therein as Investigation Slip (I.S.) No.
91-37.[8]
It appears that respondent Bausas sought another venue for airing her complaint
- the press. Thus, in the September 17, 1990 issue of the People's Journal
Tonight, the following headline appeared: "Bank Money Withdrawn w/o Depositor's
Knowledge".[9] Aside from that publication, respondent Bausas and Villadolid
reproduced by xerox machine the said news item and posted the xerox copies in
conspicuous places within the municipal hall of Nasugbu.
Aggrieved, on February 22, 1991, petitioner BSDB filed in the RTC of Manila
a complaint for damages[10] against respondent Bausas, Villadolid, the Philippine
Journalists, Inc., Zacarias Nuguid, Jr. (publisher), Alfredo M. Marquez (managing
editor), Franklin Cabaluna (news editor), Benjamin Ayllon (city editor) and Raul S.
Beltran (reporter). Docketed as Civil Case No. 91-56185 in the RTC of Manila,
Branch 24, the complaint alleged that the "series of publications" were "clearly
defamatory and libelous", and that the publication constituted the crime defined and
penalized under Article 353 of the Revised Penal Code that damaged the "goodwill,
integrity and good reputation" of the 21-year old bank.[11] Petitioner BSDB prayed for
compensatory damages of One Hundred Thousand Pesos (P100,000.00), moral
damages of One Million Five Hundred Thousand Pesos (P1,500,000.00), exemplary
damages of Seven Hundred Thousand Pesos (P700,000.00), and attorney's fees of
Two Hundred Thousand Pesos (P200,000.00).
[12]
In their answer with compulsory counterclaim,  In Civil Case No. 91-56185
respondent Bausas and Villadolid alleged that the withdrawal slip was a forgery and
that Villadolid's actions were moved by a "sense of moral duty" to respondent
Bausas and her family. They raised lack of actual malice as a defense and interposed
a compulsory counterclaim for One Million Pesos (P1,000,000.00) in moral
damages, Two Hundred Fifty Thousand Pesos (P250,000.00) in litigation expenses
and other damages, Five Hundred Thousand Pesos (P500,000.00) in exemplary
damages, and Fifty Thousand Pesos (P50,000.00) plus Two Thousand Pesos
(P2,000.00) per appearance as attorney's fees.
While Civil Case No.91-56185 was pending in the RTC of Manila, or on
February 13, 1992, respondent Bausas, joined by her husband Ricardo, filed Civil
Case No. 221, a complaint for a sum of money, with damages, against petitioner
BSDB before the RTC of Batangas, Branch 14 in Nasugbu, Batangas.The complaint
specifically prayed that petitioner BSDB be ordered to pay them (a) Fifteen
Thousand Pesos (P15,000.00) "plus whatever balance" remained of her deposit,
including accrued interests thereon; (b) Twenty Thousand Pesos (P20,000.00) as
litigation expenses and/or damages; and (c) Ten Thousand Pesos (P10,000.00) as
attorney's fees plus One Thousand Pesos (P1,000.00) per hearing attended by their
lawyer.[13]
Instead of filing a responsive pleading to the complaint, petitioner BSDB filed a
motion to dismiss,[14] alleging that (a) there was another action pending between the
same parties for the same case (sic); (b) the action caused the splitting of the cause of
action raised in the answer and counterclaim in Civil Case No. 91-56185; (c) the
action violated the principle of multiplicity of suits, and; (d) the filing of the
complaint constituted forum-shopping.
On September 10, 1982, the RTC of Batangas [15] issued a Resolution[16] denying
the motion to dismiss.
Petitioner BSDB then filed a motion for reconsideration [17] which the RTC of
Batangas, however, denied in an Order[18] dated November 19, 1992.
Petitioner BSDB elevated the matter to the Court of Appeals via a petition for
certiorari, prohibition and mandamus,[19] seeking the reversal of the said Resolution
and Order of the RTC of Batangas.
On February 26, 1993, the Court of Appeals rendered the now assailed
Decision dismissing petitioner BSDB's petition for certiorari, prohibition and
mandamus and upholding the denial of its motion to dismiss Civil Case No. 221.
[20]
 The appellate court held that an order denying a motion to dismiss, being
interlocutory, cannot be the subject of a petition for certiorari.
Besides, the principle of litis pendentia invoked by petitioner BSDB is not
applicable to the case at bar. The appellate court correctly found and declared that:
"In the present case, while concededly, certain pieces of evidence may be identical
(to) both Civil Case No. 91-56185 and Civil Case No. 221, it cannot be said
however, that exactly the same evidence will support the decisions in both. In Civil
Case No. 91-56185 pending before the Regional Trial Court of Manila, the issues
raised are (1) whether the publication in the September 17, 1990 issue of the People's
Journal Tonight is false and libelous and the action is directed, not only against
private respondent Leonida Umandal-Bausas but also against the publisher and
editorial staff of the publication concerned; and (2) whether Leonida Umandal-
Bausas acted with malice in causing the posting of xerox copies of said publication at
conspicuous places at the Municipal Building of Nasugbu, Batangas. In Civil Case
No. 221, however, the primary issue, shown (sic) of unessential trimmings, is
whether or not petitioner Bank could be held liable to Leonida Umandal-Bausas for
the withdrawal from her savings account in the amount of P15,000.00.
Private respondent Bausas did not invoke as a permissive counterclaim in Civil Case
No. 91-56185, that petitioner indemnify her of her savings deposit which she claims
to have been withdrawn by someone else without her authority.
We therefore rule that the court a quo did not commit an abuse of discretion in
denying petitioner's motion to dismiss in Civil Case No. 221 on the ground of litis
pendentia."[21]
Petitioner BSDB's motion for reconsideration [22] thereof was denied in a
Resolution,[23] dated June 7, 1993, of the appellate court.
Hence, the instant petition wherein petitioner BSDB raises the following
assignment of errors:
I before the Court of Appeals is not the proper remedy to question the denial of its
THE RESPONDENT COURT ERRED WHEN IT HELD THAT THE PETITION
FOR CERTIORARI, PROHIBITION AND MANDAMUS SEEKING TO
NULLIFY AND SET ASIDE THE ORDER OF THE RESPONDENT JUDGE
DENYING PETITIONER'S MOTION TO DISMISS "DOES NOT FALL WITHIN
THE AMBIT OF THE EXCEPTION TO THE GENERAL RULE THAT AN
ORDER DENYING A MOTION TO DISMISS IS NOT AN INTERLOCUTORY
ORDER AND CANNOT BE THE SUBJECT OF A PETITION FOR
CERTIORARI.
II
THE RESPONDENT COURT COMMITTED AN ERROR REVIEWABLE ON
APPEAL BY CERTIORARI WHEN IT DENIED DUE COURSE TO THE
PETITION AND TO HAVE DISMISSED THE SAME BECAUSE OF ITS
FINDING THAT THERE IS NO LITIS PENDENTIA BETWEEN CIVIL CASE
NO. 221 AND CIVIL CASE NO. 91-56185.
Petitioner argues that respondent RTC of Batangas acted without or in excess of
jurisdiction or was guilty of grave abuse of discretion when it refused to dismiss
Civil Case No. 221 despite the pendency of Civil Case No. 91-56185 in the RTC of
Manila. It insists that litis pendentia barred the proceedings in Civil Case No. 221
because the special and affirmative defenses raised by respondent Bausas in Civil
Case No. 91-56185 are really the same cause of action which she relied upon in Civil
Case No. 221. For that matter, it claimed that respondent trial court abetted the
possibility of conflicting decisions between two (2) co-equal and coordinate courts
that may in the end sow confusion and chaos that would take years to untangle and
settle.[24]
Private respondent, on the other hand, counters that an order denying a motion
to dismiss is interlocutory, and hence, cannot be the subject of a petition for
certiorari. She claims that the remedy of petitioner bank should be to proceed with
the trial and, in the event of an adverse decision, interpose an appeal to the proper
forum.
As regards petitioner's claim of litis pendentia, respondent Bausas contends
that the issue in Civil Case No. 91-56185 is whether or not she and Villadolid acted
with malice in publishing the allegedly libelous letters so as to warrant their liability
for damages whereas the issue in Civil Case No. 221 which is an action for collection
of a sum of money, is whether or not there was an unauthorized withdrawal of her
savings deposit that would warrant the petitioner's liability therefor.
The petition, not being meritorious, the same should be, as it is hereby, denied.
The petition for certiorari, prohibition and mandamus interposed by petitioner
motion to dismiss in Civil Case No. 221. The Resolution and Order of the RTC of
Batangas denying the motion to dismiss are merely interlocutory.An interlocutory
order does not terminate nor finally dispose of the case, but leaves something to be
done by the court before the case is finally decided on the merits. [25] It is always
under the control of the court and may be modified or rescinded upon sufficient
grounds shown at any time before final judgment.This proceeds from the court's
inherent power to control its process and orders so as to make them conformable to
law and justice. The only limitation is that the judge cannot act with grave abuse of
discretion, or that no injustice results thereby. [26] These limitations were not
transgressed by the trial court in the case at bar when it denied the petitioner's motion
to dismiss. The alleged "chaos and confusion" arising from conflicting decisions that
petitioner purportedly seeks to avert by the dismissal of Civil Case No. 221 are
actually far-fetched and contrived considering that any adverse decision of the CTA
can be made the subject of a proper appeal.
Our recent ruling in Espao, Sr. vs. Court of Appeals[27] applies to the case at
bar, to wit:
"We find occasion here to state the rule, once more, that an order denying a motion
to dismiss is merely interlocutory and therefore not appealable, nor can it be the
subject of a petition for review on certiorari. Such order may only be reviewed in the
ordinary course of law by an appeal from the judgment after trial. The ordinary
procedure to be followed in that event is to file an answer, go to trial, and if the
decision is adverse, reiterate the issue on appeal from the final judgment. This is
exactly what petitioner should have done in this case after his prayer for the
dismissal of Civil Case No. 21-88 was denied by the trial court. Although the special
civil action for certiorari may be availed of in case there is grave abuse of discretion
or lack of jurisdiction on the part of the lower court, that vitiating error is indubitably
not present in the instant case."
Moreover, litis pendentia as a ground for the dismissal of a civil action refers to
a situation wherein another action is pending between the same parties for the same
cause of action and that the second action becomes unnecessary and vexatious.
[28]
 More particularly, it must conform to the following requisites: (a) identity of
parties, or at least such parties who represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) identity with respect to the two (2) preceding particulars in the two (2)
cases is such that any judgment that may be rendered in the pending case, regardless
of which party is successful, would amount to res judicata in the other case.[29]
The trial court was correct when it opined that -
"xxx[T]here has never been any allegation in the answer that would tend to show that
the herein plaintiff intended to collect her deposit of P15,000.00 from the defendant-
bank which is the subject matter of the instant complaint. Even the complaint above-
cited filed in the Regional Trial Court of Manila, the same solely deals on the alleged
damages suffered by the defendant-bank, Bangko Silangan Development Bank in the
alleged publication. On ground No. 2, the court finds that the counterclaim
interposed by the plaintiff in the instant case in Civil Case No. 91-51685 before the
Regional Trial Court of Manila is solely for moral damages, litigation expenses;
attorney's fees and exemplary damages. Nothing about the claim for the
reimbursement or release of the P15,000.00, subject matter of the instant case is ever
made therein.
Since the instant case is entirely different from the case now pending before the court
of Regional Trial Court of Manila, the court views that there is no such multiplicity
of suits."[30]
Clearly, the issue in Civil Case No. 221 is whether or not petitioner was
negligent in validating the withdrawal slip and the alleged authority to withdraw of
respondent Bausas' brother so that it could be held responsible for the amount
withdrawn. Basically, that case is a collection suit founded on a contract of bank
deposit.
On the other hand, the issue in Civil Case No. 91-56185 is whether or not the
alleged publications of the incident made by respondent Bausas and Villadolid are
defamatory so as to warrant petitioner's entitlement to damages.
What is essential in litis pendentia is the identity and similarity of the issues
under consideration.[31] There being no similarity of issues in Civil Cases No. 91-
56185 and 221, the filing of the latter case was not barred by litis pendentia.
There is neither identity of rights asserted and reliefs sought by the parties in
the two (2) cases. Petitioner asserts its right to be compensated for alleged damage to
its goodwill and reputation in Civil Case No. 91-56185 of the RTC of Manila.
Respondent Bausas, on the other hand, asserts her right to be reimbursed the amount
illegally withdrawn from her savings bank account in Civil Case No. 221 of the RTC
of Batangas. As to the reliefs sought, while both petitioner and respondent Bausas
seek damages, the reasons for such reliefs prayed for are divergent. Thus, there is no
identity of causes of action in the two (2) cases.
The test to determine identity of causes of action is to ascertain whether the
same evidence necessary to sustain the second cause of action is sufficient to
authorize a recovery in the first, even if the form or nature of the two (2) actions are
different from each other. If the same facts or evidence would sustain both, the two
(2) actions are considered the same within the rule that the judgment in the former is
a bar to the subsequent action; otherwise, it is not. This method has been considered
the most accurate test as to whether a former judgment is a bar in subsequent
proceedings between the same parties. It has even been designated as infallible.[32]
While it is true that the two (2) cases are founded on practically the same set of
facts, as correctly observed by the Court of Appeals, it cannot be said that exactly the
same evidence are needed to prove the causes of action in both cases. Thus, in Civil
Case No. 91-56185 of the RTC of Manila, the evidence needed to prove that
petitioner sustained damage to its reputation and goodwill is not the same evidence
needed in Civil Case No. 221 of the RTC of Batangas to prove the allegation that a
substantial amount of respondent Bausas' bank deposit in petitioner's bank was
illegally withdrawn without her consent or authority. The RTC of Batangas and the
Court of Appeals, therefore, did not abuse their discretion in denying petitioner's
motion to dismiss which was based on the ground of litis pendentia..
The petitioner's contention that private respondent is guilty of forum-shopping
must likewise fail.
Forum-shopping is "the act of a party against whom an adverse judgment has
been rendered in one forum, of seeking another (and possibly favorable) opinion in
another forum other than by appeal or special civil action of certiorari, or the
institution of two (2) or more actions or proceedings grounded on the same cause on
the supposition that one or the other court might look with favor upon the
party."[33] Where the elements of litis pendentia are not present or where a final
judgment in one case will not amount to res judicata in the other,[34] there is no
forum-shopping. In the case at bar, there is no forum shopping, inasmuch as earlier
discussed, the cause of action in Civil Case No. 91-56185 is separate and distinct
from the cause of action in Civil Case No. 221.
WHEREFORE, the instant petition for review on certiorari is hereby
DENIED for lack of merit. The challenged Decision of the Court of Appeals is
AFFIRMED; and the Regional Trial Court of Batangas, Branch 14, Nasugbu,
Batangas, is hereby directed to proceed with dispatch to resolve Civil Case No. 221.
SO ORDERED.
 SECOND DIVISION
[G.R. No. 137264. August 1, 2002]
EULOGIO O. YUTINGCO and WONG BEE KUAN, petitioners, vs. HON.
COURT OF APPEALS, HON. SALVADOR S. TENSUAN, in his
capacity as Presiding Judge of the RTC, Makati, Branch 146 and
DEVELOPMENT BANK OF THE PHILIPPINES, respondents.
RESOLUTION
QUISUMBING, J.:
This petition for review seeks the reversal of the resolutions [1] dated November
9, 1998 and January 13, 1999 of the Court of Appeals in CA-G.R. SP No. 49404,
denying the petition for certiorari for having been filed beyond the reglementary
period, as well as the subsequent motion for reconsideration.
The facts of this case are as follows:
Private respondent Development Bank of the Philippines (DBP) filed a
complaint dated November 10, 1997, docketed as Civil Case No. 97-2653, [2] against
petitioners for the collection of a sum of money with prayer for issuance of a writ of
preliminary attachment, with the Regional Trial Court of Makati, Branch 146. DBP
alleged that it granted a credit accommodation for One Hundred Fifty Million Pesos
(P150,000,000) to Nikon Industrial Corporation (Nikon) under the terms and
conditions of the Credit Line Agreement dated December 11, 1996.[3] Pertinent
portion of said agreement reads:
5. The following shall constitute Events of Default under this Agreement:
a. failure to pay an installment on principal or interest on the due date hereof.
xxx
c. Death (in case of natural person), dissolution, bankruptcy,
reorganization, winding-up or liquidation or any other proceedings
analogous to the foregoing or proceedings for the collection of
borrowed money.[4]
xxx
In consideration of the credit accommodation, petitioners, as the controlling
stockholders of Nikon, bound themselves as primary obligors on any availment
thereon. Nikon executed promissory notes as guarantees. [5]
The complaint alleged that Nikon defaulted on the payment of the interest. [6] It
likewise alleged that on September 16, 1997, Nikon with other corporations, filed a
petition for suspension of payments with the Securities and Exchange Commission.
[7]
 Among the controlling stockholders were petitioners, known together as the
EYCO Group of Companies (EYCO). Also, DBP claims that the filing of the petition
for suspension of payments with the SEC constituted another default as stipulated in
paragraph (c) of Section 5 of the agreement. Thus, private respondent sought
petitioners payment of the obligation by virtue of the Continuing Suretyship
Agreement by filing the collection suit docketed as Civil Case No. 97-2653 before
the Regional Trial Court.
On January 14, 1998, respondent Judge Salvador Tensuan granted private
respondents motion and issued a writ of attachment.[8]
On March 11, 1998, petitioners filed a Motion to Dismiss[9] on the ground that
(1) the complaint failed to state a cause of action; (2) a condition precedent for the
filing of the claim was not complied with; and (3) the Court had no jurisdiction over
the subject matter. Petitioners contended that they could not be held liable under the
promissory notes and credit line agreement since EYCO had not yet defaulted on
their obligations. They averred that the mere filing of the petition for suspension of
payments before the SEC did not constitute default and that even assuming that
Nikon was in default, there was yet no extra-judicial demand, a condition precedent
to the filing of the suit before the RTC against petitioners.
On May 7, 1998, respondent Judge issued an order denying the motion to
dismiss, holding thus:
This resolves defendants motion to dismiss vis--vis plaintiffs opposition, reply, and
rejoinder in point.
After going over the exhaustive arguments of both parties, the Court on a clear
perception that the issue of default raised by the defendants is a factual one which
must await trial, hereby denies said motion to dismiss and orders defendants to file
its Answer in accordance with the rules.
SO ORDERED.[10]
To this, petitioners filed a Motion for Reconsideration[11] which was denied by
the respondent Judge in an order dated June 29, 1998, as follows:
For resolution is the defendants Motion to Reconsider the Order dated 07 May 1998
contending that the same failed to resolve the issues raised in their Motion to
Dismiss. Plaintiff opposed the instant motion to which opposition defendants filed a
reply and to the latter plaintiff filed a rejoinder.
After a careful reading of the arguments in support of the instant motion, the Court
finds no sufficient warrant to disturb the questioned Order. Anent the issue of
jurisdiction, the Court must as it hereby declares that it has jurisdiction over the
subject matter of this case inasmuch as the properties attached are in the name of the
defendants who are being sued here in their personal capacity as sureties.
WHEREFORE, premises considered, defendants motion for reconsideration is
hereby denied for lack of merit.
SO ORDERED.[12]
On July 7, 1998, petitioners received a copy of the aforementioned Order dated
7 May 1998. On September 7, 1998, petitioners filed before the Court of Appeals a
Motion for Extension of Time to File Petition for Certiorari [13] under Rule 65 of the
Rules of Court, for an additional period of fifteen (15) days, or until 22 September
1998.
On September 22, 1998, petitioners filed their Petition for Certiorari with
Urgent Prayer for Issuance of a Writ of Temporary Restraining Order and
Preliminary Injunction dated September 21, 1998.[14]
On November 18, 1998, petitioners received a copy of the Resolution dated
November 9, 1998, denying petitioners motion for extension of time to file petition
for certiorari. It held that:
CONSIDERING that Sec. 4, Rule 65 of the 1997 Rules of Civil Procedure fixed the
period for filing a petition for certiorari at sixty (60) days from notice of the
judgment, order or resolution sought to be assailed, petitioners motion for extension
of time of fifteen (15) days within which to file the petition is hereby DENIED.
Consequently, it appearing that the period for filing petition for certiorari expired on
September 7, 1998 and the petition at bar was filed on September 22, 1998, the
petition is hereby DENIED due course and DISMISSED.
SO ORDERED.[15]
Petitioners motion for reconsideration was also denied by the Court of Appeals
in a Resolution dated January 13, 1999,[16] which held that:
xxx
In their motion for reconsideration petitioners invoked substantial justice over
technical rules of procedure. Nonetheless, while it is true that litigation is not a game
of technicalities, it is equally true that every case must be prosecuted in accordance
with the prescribed procedure to insure an orderly and speedy administration of
justice.[17]
ACCORDINGLY, the motion for reconsideration is DENIED for lack of merit.
Now, petitioners aver before this Court that:
I. SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNICAL
RULES OF PROCEDURE.
II. THE PETITION FOR CERTIORARI DATED 21 SEPTEMBER 1999
(sic) IS MERITORIOUS AND RAISES THE ISSUE OF LACK OF
JURISDICTION ON THE PART OF THE REGIONAL TRIAL
COURT A QUO IN DENYING PETITIONERS MOTION TO
DISMISS.[18]
The issues before us are: (1) Should the Court of Appeals have admitted, as a
matter of substantial justice, the Petition for Certiorari? (2) If so, is there merit in the
petition filed with the Court of Appeals?
Prefatorily, note should be taken that while petitioners filed a special civil
action of certiorari before the Court of Appeals, the proceedings before the Regional
Trial Court continued. Petitioners filed, before the RTC, a Motion to Take Judicial
Notice of the Order dated 18 December 1998 of the SEC in SEC Case No. 09-97-
5764 with Motion to Cancel Pre-Trial dated 02 February 1999. Private respondent
opposed it. On account of petitioners Motion to Cancel Pre-trial, respondent judge
issued an Order dated 5 February 1999 re-setting the pre-trial to 12 March
1999. Thereafter, a Reply dated 19 February 1999, a Rejoinder dated 26 February
1999 and a Sur-Rejoinder dated March 8, 1999, were filed. The incident is still
pending before the RTC.
Now, on the first issue before us. The general rule is that rules of procedure
must be faithfully complied with and should not be discarded with the mere
expediency of claiming substantial merit. The rule, however, is not absolute. Under
exceptional circumstances, on the ground of justice and equity, a delay in the filing
of an appeal may be excused.[19] The inquiry on this score therefore basically boils
down to whether there are ample circumstances surrounding the present case to merit
the disregard of the delay in the filing of the petition? If there are none, such delay is
fatal to petitioners plea.
The New Rules on Civil Procedure, Section 4, Rule 65, [20] prescribes a period of
60 days within which to file a petition for certiorari. The 60-day period is deemed
reasonable and sufficient time for a party to mull over and to prepare a petition
asserting grave abuse of discretion by a lower court. The period was specifically set
to avoid any unreasonable delay that would violate the constitutional rights of parties
to a speedy disposition of their case. For these reasons, the 60-day-period ought to be Regional Trial Court of Makati, Branch 146, is ordered to proceed and resolve Civil
considered inextendible. Furthermore, it is a familiar and fundamental rule that a Case No. 97-2653 with dispatch.
motion for extension of time to file a pleading is best left to the sound discretion of
the court and an extension will not be allowed except for good and sufficient reason Costs on petitioners.
and only if the motion is filed before the expiration of the time sought to be SO ORDERED.
extended.Petitioners previous counsel filed the Petition for Certiorari on September
22, 1998,[21] thinking that the Court of Appeals would grant their motion for Bellosillo, (Chairman), Mendoza, and Corona, JJ., concur.
extension for 15 days. They gave as reason for this assumption of leniency the heavy
workload of the law firm.[22] Patently, however, this circumstance alone does not
provide the court sufficient reason to merit allowance of an extension of the 60-day
period to file the petition for certiorari. Heavy workload, which is relative and often
self-serving, ought to be coupled with more compelling reasons such as illness of
counsel or other emergencies that could be substantiated by affidavits of
merit. Standing alone, heavy workload is not sufficient reason to deviate from the
60-day rule. Thus, we are constrained to state that the Court of Appeals did not err in
dismissing the petition for having been filed late.
Petitioners also assert that their petition should not have been dismissed on a
technicality, considering that what was being questioned in their petition for
certiorari before the Court of Appeals, was the propriety of the lower courts denying
their motion to dismiss. But again, we have to stress here and now that as a general
rule, an order denying a motion to dismiss is interlocutory and cannot be the subject
of the extraordinary petition for certiorari or mandamus. Petitioners recourse is to file
an answer and to interpose as defenses the objections raised in their motion to
dismiss, proceed to trial, and in case of an adverse decision, elevate the entire case by
appeal in due course.[23]
Of course, there are exceptions to the aforecited rule. Among them are: (a)
when the trial court issued the order without or in excess of jurisdiction, (b) when
there is patent grave abuse of discretion by the trial court, or (c) when appeal would
not prove to be a speedy and adequate remedy as when an appeal would not
promptly relieve a defendant from the injurious effects of the patently mistaken order
maintaining the plaintiffs baseless action and compelling the defendants to
needlessly go through a protracted trial and clogging the court dockets with another
futile case.[24] In the present case, however, the trial court denied the motion to
dismiss since it perceived the issue therein was one of default, a factual issue which
must await trial.[25] Clearly, petitioners cause is not covered by any of the recognized
exceptions. They should proceed to trial and if the result is unfavorable to them, then
their recourse is to elevate the entire case on appeal in accordance with the rules. For
indeed, while technicalities should not unduly hamper our quest for justice, orderly
procedure is essential to the success of that quest to which all courts are devoted.
Having resolved the first issue in the negative, we need not tarry further on the
second issue.
WHEREFORE, the petition is DENIED. The Resolutions of the Court of
Appeals dated November 9, 1998 and January 13, 1999 are AFFIRMED. The
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 74613             February 27, 1991
SPOUSES DR. FIDEL CALALANG and DRA. MARIA GENER CALALANG,
and FERDINAND CALALANG,petitioners,  her before she died, the death certificate and the necropsy report (Rollo, p. 393).
vs.
INTERMEDIATE APPELLATE COURT (FOURTH CIVIL CASES
DIVISION), and HEIRS OF ERLINDA GRUTA,respondents.
Francisco A. Lava, Jr., for petitioners.
Jose L. Aguilar for private respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks to reverse, nullify and set
aside: (a) the June 28, 1985 decision1 of the Intermediate Appellate Court (now Court
of Appeals) in AC-G.R. No. CV 04384 entitled "Heirs of Erlinda Gruta vs.
Ferdinand Calalang, et al." setting aside the decision of the trial court in Civil Case
No. 83-18019 (for damages) between the same parties. The trial court had dismissed
the case on the ground of lack of cause of action but the Court of Appeals ordered
the case to be remanded to the lower court for further proceedings; and (b) the
resolution dated April 28, 1986 denying the motion for reconsideration.
As gathered from the records, the facts of the case are as follows:
Erlinda Gruta, 15 years old, from the province of Samar, was employed as
househelper in the household of petitioners spouses Dr. Fidel Calalang and Dra.
Maria Gener Calalang and their son Ferdinand Calalang, in Bulacan (Rollo, pp. 357;
393).
On October 31, 1981, Erlinda Gruta died of malathion poisoning. Ferdinand
Calalang, son of the spouses Calalang, who brought Erlinda first to the Calalang's
Clinic and then to Jose Reyes Memorial Hospital where she died, was charged with
murder for allegedly poisoning her (Rollo, pp. 164; 393).
The case was investigated by the National Bureau of Investigation (NBI). Then the
case was referred to the Office of the Provincial Fiscal, Malolos, Bulacan, for
preliminary investigation (Rollo, p. 164).
When the parents of the deceased arrived from Samar and after obtaining the
Necropsy Report from the NBI, a complaint for Murder was filed against Ferdinand
Calalang with the Provincial Fiscal of Malolos, Bulacan. Complainant Juanita Gruta,
mother of the deceased, presented the sworn statement of Dolores Ayuste, the aunt of
the deceased maid who was summoned during the incident and who was able to see
Respondent Ferdinand Calalang never appeared nor presented his counter affidavit,
instead his mother Maria Gener Calalang presented a counter affidavit and two
affidavits of her maids who saw the deceased take a lethal dose of malathion and the
report of Pat. Bernabe (Rollo, p. 394).
After clarificatory questioning, the parties submitted their memoranda and later the
Investigating Fiscal Liberato Reyes dismissed the complaint on the ground of failure
to prove a prima facie case of the offense charged (Rollo, Annex "F" of request, pp.
74-80). Complainant Juanita Gruta did not file a motion for reconsideration nor
appeal to the Ministry (now Department) of Justice.
On June 8, 1983, nearly two (2) years after the death of Erlinda Gruta and over a
year after the resolution of the Assistant Fiscal dated May 27, 1982, dismissing the
murder charge, a complaint for damages was filed by the private respondents against
Ferdinand Calalang impleading the spouses Calalang docketed as Civil Case No. 83-
18019 in the Regional Trial Court of Manila on the claim that they are jointly and
severally liable (Rollo, Annex "A", pp. 42-45; 163) for actual and compensatory
damages in the amount of P50,000.00 for moral damages; P72,000.00 for loss of
earnings; and finally P30,000.00 for attorney's fees aside from incidental expenses of
P10,000.00 (Rollo, Annex "A", p. 44).
Plaintiffs, the heirs of Erlinda Gruta, Rogelio Gruta and Juanita Gruta in
their own rights and co-heirs of the late Erlinda Gruta, are all with capacity
to sue and be sued and are residents of 617 Carbajal Street, Binondo,
Manila; while defendants are likewise with capacity to sue and be sued and
are residents of 41 A. Fernando St., Valenzuela, Metro Manila, where they
all may be served with summons, writs and other court processes;
Erlinda Gruta is a 15 year old girl and one of the children of Rogelio Gruta
and Juanita Gruta;
Erlinda Gruta is now demise, she died on October 31, 1981 at Jose Reyes
Memorial Hospital of poisoning, per necropsy report of the NBI.
Erlinda Gruta at that time of her death was a domestic helper or servant of
Dra. Maria G. Calalang, of Marulas, Valenzuela, Metro Manila, receiving a
salary wage of P200.00 a month;
On October 30, 1981, she was poisoned by defendant Ferdinand Calalang,
son of the other defendants Spouses Calalang, resulting in her death on
October 31, 1981;
The case was investigated by the NBI, after which the case was referred to
the fiscal's office for preliminary investigation;
Subsequently later, a case of Murder by poisoning was filed against
defendant Ferdinand Calalang with the fiscal's office of Bulacan, which was
however dismissed on the alleged ground of failure to prove a prima
faciecase of the offense charged;
As a resulting consequences of the death of Erlinda Gruta, the parents and
relatives suffered actual and compensatory damages in the amount of
P50,000.00 more or less, resulting from burial expenses and others;
Also as a result of the death of Erlinda Gruta, the parents and relatives
suffered mental anguish, wounded feelings, anxiety and shock and for
which plaintiff demand P50,000.00 in Moral Damages from defendants
jointly and solidarily;
The parents of the late Erlinda Gruta, who received the meager salary of
P200.00 a month, lost such earning as a direct result of her untimely death,
which if computed to the age of 30 years old, the parents would be deprived
of at least P72,000.00 in earnings;
In prosecuting this case, plaintiffs obligated themselves to pay their lawyer
the sum of P 30,000.00 contingent attorney's fee and will probably incur
consequential expenses and costs to the tune of P10,000.00 more or less.
WHEREFORE, after hearing, judgment issue:
1. Ordering defendants to jointly and severally pay plaintiffs the sum of
P50,000.00 as actual or compensatory damages;
2. Ordering defendants to jointly and severally pay plaintiffs the sum of P
50,000.00 as Moral Damages;
3. Ordering defendants to jointly and severally pay P72,000.00 as loss of
earnings to the plaintiffs;
4. Ordering defendants to jointly and several pay plaintiff the sum of
P40,000.00 for attorney's fee and consequential expenses and costs;
5. Praying for such other reliefs which are just and equitable under the
premises. (pp. 42-45, Rollo)
On August 2, 1983, petitioners filed their Answer with Affirmative Defenses and
Counterclaim (Annex "B"). As the issues were joined, petitioners submitted a
Request for Admission (Annex "C"), under Rule 26. Private respondents, however,
filed an Opposition to the Motion for Admission (p. 123, CA's Original Record)
which was not resolved by the trial court.
On February 27, 1984, a preliminary hearing was conducted by the trial court on the
affirmative defenses of the defendants. Thereafter, on March 30, 1984, Hon. Judge
Antonio M. Martinez, RTC-Manila, Branch 20, issued an Order dismissing the case,
the dispositive portion of which reads:
WHEREFORE, finding merit to the prayer for dismissal of the case at bar
on the ground of lack of cause of action, based on the affirmative defenses
in the answer, this complaint should be, as it is hereby, DISMISSED.
No pronouncement as to cost.
SO ORDERED.
(Rollo, Annex "D", p. 84)
However, on appeal, the Intermediate Appellate Court rendered its decision dated
June 28, 1986, reversing the order of the lower court, the dispositive portion of
which reads:
WHEREFORE, the order of the trial court dismissing this case, dated
March 30, 1984, is hereby SET ASIDE and the original records are ordered
remanded to the court below for further proceedings. With costs against the
defendants-appellees.
SO ORDERED.
(Rollo, Annex "G", p. 174)
A motion for reconsideration was filed by petitioners on August 1, 1985 (Rollo,
Annex "H", pp. 175-201) and a resolution was rendered on April 28, 1986, denying
the motion for reconsideration (Rollo, Annex "M", pp. 241-245).
Hence, this petition.
Under Section 5, Rule 16 "Any of the grounds for dismissal provided for in this rule,
except improper venue, may be pleaded as an affirmative defense, and preliminary
hearing may be had thereon as if a motion to dismiss had been Med." This is to save
the expense involved in the preparation and trial when the case can be otherwise
disposed of. The preliminary hearing should be conducted as ordinary hearings: the
parties should be allowed to present evidence and the evidence recorded (Asejo vs.
Leonosa, 78 Phil. 467), except when the affirmative defense is based on par. g.,
Section 1, Rule 16 "that the complaint states no cause of action." In determining
sufficiency of cause of action, only the facts alleged in the complaint should be
considered. (De Jesus, et al., vs. Belarmino, et al., 95 Phil. 365; Dimayuga vs.
Dimayuga, 96 Phil. 859).
It is a well-settled rule that in a motion to dismiss based on the failure of the
complaint to state a cause of action, the question submitted for determination is
sufficiency of allegation in the complaint itself. The sufficiency of the cause of
action must appear on the face of the complaint itself in order to sustain a dismissal
on the ground. (Clavano vs. Genato, 80 SCRA 217). This rule applies when the only
affirmative defense is the failure of the complaint to state a cause of action. It does
not apply when the grounds relied upon by way of affirmative defenses state other
matters. Thus the trial court, in the case at bar, did not commit any error in
conducting a preliminary hearing on the affirmative defenses of herein petitioners.
The finding of IAC that there was no preliminary hearing (tsn., February 27, 1984)
has no basis that can be verified from the records. The trial court set the case for
preliminary hearing on February 27, 1984 as per Order dated February 3, 1984: and
the records bear "minutes" of the preliminary hearing conducted on February 27,
1987. The rule that the findings of fact of the Court of Appeals (formerly IAC) are
entitled to great respect is not inflexible. They are subject to some established
exceptions. (Layugan vs. IAC, 167 SCRA 363). And one of these exceptions is when
judgment is based on misapprehension of facts (Castillo vs. CA., G.R. No. 48541,
August 21, 1989). IAC relied solely on the statement of the Clerk of Court that "this
case was decided on the basis of pleadings, memorandum, motion for
reconsideration and opposition. No oral or documentary evidence was presented"
(Decision of IAC, p. 3; Rollo, Annex "G", p. 163) without going to the records of the
case.
A perusal of the preliminary hearing indicates that the cause of action of respondents
(plaintiffs in the Civil Case) is based on the crime of murder allegedly committed by
Ferdinand Calalang.
Court
So you are basing your claim on the murder case?
Atty. Aguilar
Yes, your Honor.
(tsn., February 27,1984, p. 12)
The alleged ambiguity of the cause of action in the complaint was clarified by the
admission of the respondents' counsel. Thus, the trial court concluded:
Court
So you are basing this case on the murder case. That is what I want to make
clear (in) this case, and I wanted to have all the facts clear because your
complaint, based on par. 7, states: subsequently, later, a case of murder by
poisoning was filed against defendant Ferdinand Calalang with the fiscal's
office of Bulacan, which was however dismissed on the alleged ground of
failure to prove a prima facie case of the offense charged; and then on par.
8, states that as a resulting consequence of the death of Erlinda Gruta, her
parents and relatives suffered actual and compensatory damages to the tune
of P50,000 more or less, resulting from burial expenses and others; loss of
income in the amount of P72,000 and in the total amount more or less
P220,000. So we may now have a clear case, that is whether or not it is a
murder case which lead to the filing of civil case for damages. (tsn.,
February 27,1984, pp. 12-13)
Since the only cause of action of the case is based on the criminal act, there is no
reason to implead the Calalang spouses. In their Memorandum in Support of
Affirmative Defenses, the Calalang spouses reiterated that:
. . . the complaint does not show any legal, statutory basis as to why and
under what law are they being included as defendants since the complaint
admits that Ferdinand Calalang has the capacity to sue; the truth is he
Ferdinand Calalang) is of age . . . . (Emphasis supplied) (Memorandum in
Support of Affirmative Defenses, p. 1; Rollo, p. 135)
Thus, We find merit in the finding of the trial court that:
. . . There is no valid legal ground for impleading the spouses Dr. and Mrs.
Maria Calalang. The complaint shows that except for the fact that the
spouses Calalang are said to be the employer of the deceased Erlinda Gruta;
and, that the other defendant Ferdinand Calalang is their son, there is
nothing in the complaint which would connect them to the untimely death
of Erlinda Gruta. . . .
 It is further observed that the complaint alleges that all of the defendants
(Ferdinand Calalang and spouses Calalang) are said to have the "capacity to
sue and be sued." Therefore, if Ferdinand Calalang has the "capacity to sue
and be sued," then the spouses Calalang can no longer be held civilly liable
for any of his misdeeds, if any. . . . There being no legal ground to implead
the defendants-spouses Calalang, the case against them should be
dismissed. (Order, p. 2; Rollo, Annex "D", p. 82)
A close scrutiny of the Order of Dismissal of the Regional Trial Court indicates that
the present case was not dismissed solely on the ground that the complaint failed to
state a cause of action, but also on the ground that there is no valid cause of action
against Ferdinand Calalang, upon considering the "pleadings, memorandum, motion
for reconsideration and opposition" therein.
Generally, the basis of civil liability from crime is the fundamental postulate of our
law that "every person criminally liable for a felony is also civilly liable" (Art. 100,
Revised Penal Code). In other words, criminal liability will give rise to civil liability
only if the same felonious act or omission results in damage or injury to another and
is the direct and proximate cause thereof (Banal vs. Tadeo, Jr., 156 SCRA 325)
In the case at bar, counsel for private respondents admitted that his complaint for
damages is based on the commission of the crime. Stress must be made, however,
that under circumstances, it is a fundamental rule that the facts upon which the civil
liability might arise must exist to warrant the filing of a civil action.
Thus, "the acquittal of the accused from the criminal charge will not necessarily
extinguish the civil liability unlessthe Court declares in the judgment that the fact
from which the civil liability might arise did not exist." (Tan vs. Standard Vacuum
Oil Co., et al., 97 Phil. 672). Similarly, "extinction of the penal action does not carry
with it the extinction of civil liability unless the extinction proceeds from a
declaration in a final judgment that the fact from which the civil might arise did not
exist." (De Mesa vs. Priela, 24 SCRA 582; par. (b), Sec. 2, Rule 111, Rules of Court)
prove its case by evidence which shows the guilt of the defendant beyond reasonable
doubt, while in a civil action it is sufficient for the plaintiff to sustain his cause by
preponderance of evidence only (Ocampo vs. Jenkins, 14 Phil. 681). Therefore, the
insufficiency of evidence to support a murder charge does not imply that there is no
sufficient evidence to support the civil case based on the same alleged act.
It is highly speculative to conclude that the plaintiffs' cause of action would stand or
fall on the strength of the testimony of Dolores Ayuste who was convicted of perjury
on such alleged testimony. A decision should be based on facts not on mere
speculations or beliefs.1âwphi1
Finally, the trial court dismissed the case against Ferdinand Calalang motu
proprio based on the ground that there is no valid cause of action against him. This is
not a ground for dismissal of action under Rule 16; but the failure of the complaint
to state a cause of action. The pleadings, memorandum and motion for
reconsideration and opposition, thereto, might show that there is no valid cause of
action against Ferdinand Calalang; still, the court is not allowed by law to dismiss
the case motu proprio. As long as there is a cause of action in the complaint itself,
procedural due process demands that there must be a hearing on the merits with the
complaint as "prima facie evidence of the facts therein stated." (People vs. Dy, 158
SCRA 111). Therefore, the plaintiffs should be given their day in court to vindicate
their claim to the fullest.
WHEREFORE, the appealed decision remanding this case to the court a quo for
further proceedings is hereby AFFIRMED with the MODIFICATION that the case
against Dr. and Mrs. Fidel Calalang is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera, Padilla, Sarmiento and Regalado JJ., concur.

Verily, the dismissal of this criminal case as found by IAC is only by resolution of
the provincial fiscal and does not proceed from a declaration in a final judgment that
the fact from which the civil case might arise did not exist, so that said case may be
refiled anytime without the effect of double jeopardy. (Rollo, p. 173). We held as
early as the case of People v. Velez, 77 Phil. 1026, that the dismissal of the
information or the criminal action (upon motion of the fiscal) does not affect the
right of the offended party to institute or continue the civil action already instituted
arising from the offense, because such dismissal or extinction of the penal action
does not carry with it the extinction of the civil action. The reason most often given
for this holding is that the two proceedings are not between the same parties.
Different rules as to the competency of witnesses and weight of evidence necessary
to the findings in the two proceedings also exist. In a criminal action the State must
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
 
G.R. No. 79760 June 28, 1993
PERPETUAL SAVINGS BANK, HON. JOSE L. COSCOLLUELA, Presiding
Judge, Regional Trial Court, NCJR, Branch 146, petitioners,  Defendant Jalandoni to secure the loan and the proceeds thereof for
vs.
JOSE ORO B. FAJARDO and EMMANUEL F. DEL MUNDO, respondents.
Yngson & Associates for petitioner.
Cruz, Enverga, Fajardo & Del Mundo for respondents.
FELICIANO, J.:
On 29 December 1982, J.J. Mining and Exploration Corporation ("J.J. Mining")
executed and delivered to petitioner Perpetual Savings Bank ("Bank") a promissory
note in the amount, of P750,000.00 payable in one lump sum upon maturity on 29
January 1984, with interest at 23% per annum. The note also contained, inter alia, a
clause providing for penalty interest at the rate of 3% per month on the amount due,
compounded monthly. The promissory note was executed for J.J. Mining by
respondents Jose Oro B. Fajardo and Emmanuel F. Del Mundo. Messrs. Fajardo and
Del Mundo are said to be officers of J.J. Mining; respondent Del Mundo was
apparently also counsel for J.J. Mining.1
Upon maturity of the promissory note, neither J.J. Mining nor anyone else paid the
amount of the indebtedness, notwithstanding petitioner's repeated written demands
for payment.
On 31 July 1986, petitioner Bank filed a complaint with the Regional Trial Court,
Makati, Metro Manila (Civil Case No. 14501) against J.J. Mining, Jose Emmanuel
Jalandoni and herein respondents Fajardo and Del Mundo, for collection of the
amounts due under the promissory note. In its complaint petitioner Bank alleged,
among other things, the following:
1.6. Defendants Fajardo and Del Mundo are impleaded herein as
agents/or representatives of Defendant Corporation who were
signatories in the Promissory Note or alternatively, in their
personal capacities if it be shown that they contracted the loan fully
knowing that the Defendant Corporation would be unable to pay
the same upon maturity and/or that they used the proceeds of the
loan for their own personal benefit;
1.7. Defendant Jose Jalandoni is impleaded herein in his personal
capacity also as alternative Defendant, as the owner of 94% of the
subscribed capital stock Defendant Corporation if it be shown that
the corporate privilege of Defendant Corporation was used by
his own personal benefit fully knowing that the Defendant
Corporation was with inadequate capital to meet its debts and
thereby evade the obligation under the Promissory Note.
xxx xxx xxx
2.1. On 29 December 1982, Defendant Corporation for value
received thru Defendants Fajardo and Del Mundo, executed and
delivered to Plaintiff a Promissory Note in the sum of Seven
Hundred Fifty Thousand Pesos (P750,000.00) payable in lumpsum
upon maturity, thereof on 29 January 1984 with interest at 23% per
annum from the date thereof;
2.2. Upon maturity of the Promissory Note, Defendants defaulted
and failed to satisfy the entire amount of indebtedness.
xxx xxx xxx
3.1. Per the records of the Securities & Exchange Commission, the
paid-up capital of Defendant Corporation amounts to only
P100,000.00, broken down as follows:
Name and Address Amount Amount
of Stockholders Subsribed Paid
1. Jose Emmanuel Jalandoni P368,000.00 P92,000.00
44 San Mateo
Bo. Capitolyo
Pasig, Rizal
 2. Maria Theresa Jalandoni 8,000.00 2,000.00
44 San Mateo
Bo. Capitolyo,
Pasig, Rizal
3. Florentino Ampil 8,000.00 2,000.00
Biñan, Laguna
4. Rafael Hocson 8,000.00 2,000.00
Biñan, Laguna
5. Tranquilino Mendiola 8,000.00 2,000.00
Mandaluyong, Rizal ———— ————
P400,000.00 P100,000.00
(Copy of the Articles of Incorporation of Defendant Corporation is
herewith attached as Annex "E" and made an integral part hereof.)
3.2. Pursuant to such records, Defendant Jalandoni and his spouse
Maria Theresa Jalandoni own 94 % of the total shares of stock of
Defendant Corporation giving them total control of the
corporation;
3.3. Despite the fact that the paid up capital of Defendant
Corporation was only P100,000.00 it managed to borrow
P750,000.00 from Plaintiff Bank secured only by shares of stocks
of Pamana Mining Corp. also owned by Defendant Jalandoni.
(Copy of Pledge of Shares of Stock is herewith attached as
ANNEX "F" and made an integral part hereof.)
x x x           x x x          x x x
Respondents Fajardo and Del Mundo filed a Motion to Dismiss on the ground that
the complaint had failed to state a cause of action against them. Petitioner Bank filed
an Opposition to the Motion to Dismiss, citing paragraph 1.6 of its complaint and
invoking, among other things, Section 13, Rule 3 of the Rules of Court, provides
that:
Alternative defendants.— Where the plaintiff is uncertain against
which of several persons he is entitled to relief, he may join any or
all of them as defendants in the alternative, although aright to relief
against one may be inconsistent with a right to relief against the
other.
Respondents in turn filed a Reply to petitioner Bank's Opposition.
The Regional Trial Court then resolved respondents' Motion to Dismiss by issuing an
Order dated 9 October 1986 denying that Motion "considering that the grounds
raised by [respondents] Emmanuel F. Del Mundo and Jose V. Fajardo in their motion
to dismiss are not indubitable."2
Respondents Del Mundo and Fajardo moved for reconsideration of the trial court's
Order. After additional pleadings and counter-pleadings, the trial court denied the
Motion for Reconsideration.
Respondents Fajardo and Del Mundo then went directly to this Court on Petition
for Certiorari (G.R. No. 77100, entitled "Jose Oro B. Fajardo and Emmanuel E. Del
Mundo v. Hon. Jose Coscolluela, etc., et al."). On 23 February 1987, however, this
Court resolved to refer the case to the Court of Appeals.
Before the Court of Appeals, respondents Fajardo and Del Mundo basically alleged
that petitioner Bank's complaint did not set forth any cause of action as against them
personally, and that Section 13, Rule 3 of the Rules of Court on alternative
defendants was not applicable to the case at bar. On 25 August 1987, the Court of
Appeals rendered a Decision which granted respondents' Petition and reversed and
set aside the trial court's Orders which had denied respondents' Motion to Dismiss
and Motion for Reconsideration, and dismissed petitioner Bank's complaint in Civil
Case No. 14501.
In the present Petition for Review on Certiorari brought by the Bank now
represented by a Liquidator, the parties have raised the following issues for our
consideration:
1. Did the complaint filed in Civil Case No. 14501 state a cause of
action against respondents Fajardo and Del Mundo, as
distinguished from J.J. Mining, on whose behalf they had
purported to act?
2. Is the rule on alternative defendants set out in Section 13, Rule 3
of the Rules of Court applicable to the case at bar?
These two (2) issues are obviously related one to the other and need to be addressed
together.
Paragraph 1.6 of petitioner Bank's complaint is quoted again in full for convenience:
1.6 Defendants Fajardo and Del Mundo are impleaded herein as agents/or
representatives of Defendant Corporation who were signatories in the Promissory
Note or alternatively, in their personal capacities if it be shown that they contracted
the loan fully knowing that the Defendant Corporation would be unable to pay the
same upon maturity, and/or that they used the proceeds of the loan for their own
personal benefit.
xxx xxx xxx
(Emphasis supplied)
Examination of paragraph 1.6 shows that petitioner Bank there seeks to distinguish
between (a) respondents Fajardo and Del Mundo in their capacity as "agents and/or
representative of" J.J. Mining; and (b) respondents Fajardo and Del Mundo in their
individual and personal capacities. As noted earlier, the text of the promissory note
shows that respondents Fajardo and Del Mundo had signed for and in behalf of J.J.
Mining.
If it be assumed that respondents Fajardo and Del Mundo were properly authorized,
and acted within the scope of their authority, to sign for and in behalf of J.J. Mining
when the latter borrowed P750,000 from petitioner Bank and signed the promissory
note in that connection, then it is J.J. Mining as maker of the note which is directly
liable to petitioner Bank for repayment of such loan, and not Messrs. Fajardo and
Del Mundo who merely acted for J.J. Mining in that transaction.3 This follows from
the elementary proposition that J.J. Mining, the borrowing corporation, has a
personality separate and distinct from the persons who have been duly authorized to
represent the corporation in that particular transaction.
If it be assumed, upon other hand, that when Fajardo and Del Mundo purported to act
for and in behalf of J.J. Mining in executing the promissory note here involved, were
either not authorized at all to do so or somehow acted in excess of their authority as
agents or representatives of J.J. Mining, then in principle Fajardo and Del Mundo
would be personally liable upon the promisorry note, instead of the borrower
corporation.4 J.J. Mining as a separate juridical person would not be so liable, unless
it be shown that J.J. Mining actually received all or part of the proceeds of the loan
and (presumably) benefited from such loan proceeds, and to that extent, had
impliedly ratified the transaction.5
Respondents Fajardo and Del Mundo were, in the same complaint, and in the
alternative, sued in their personal and individual capacities. In this respect, the
complaint alleges two (2) distinguishable bases for sustaining the suit. Firstly,
Fajardo and Del Mundo are being sued as tort-feasors who contracted the loan
although they allegedly knew that the apparent principal obligor, J.J. Mining, would
never be able to pay the loan upon maturity. The cause of action here is basically
fraudulent inducement, concealment or misrepresentation exercised upon petitioner
Bank which was misled into granting and releasing the loan.6 The second basis for
suing Fajardo and Del Mundo in their personal and individual capacities is that they
allegedly used the proceeds of the loan for their own personal benefit, rather than for
the benefit of the borrower corporation.7 In respect of these twin, related, bases for
personal liability to the creditor, the Bank stated in paragraph 2.1 of its complaint
that J.J. Mining had "received value" "thru [respondents] Fajardo and Del Mundo."
Thus, the Bank has alleged that the proceeds of the loan were delivered to the
borrower corporation by delivering them to respondents Fajardo and Del Mundo.
The Bank has also stressed, in paragraph 3.1 of its complaint, that the paid-up capital
of the borrower corporation, was only P100,000.00 which, according to petitioner
Bank, was obviously disproportionately small compared to the P750,000.00
borrowed from the Bank.
Analysis of the allegations of the petitioner Bank's complaint thus shows, firstly, that
the defendants who are being sued in the alternative are the following:
(a) the borrowing corporation, J.J. Mining; and
(b) respondents Fajardo and Del Mundo in their personal and
individual capacities,
and, secondly, that two (2) alternative but related grounds for holding Fajardo and
Del Mundo responsible to petitioner Bank, personally and individually, have been
pleaded by the Bank. There is, as previously noted, a third possible basis for seeking
to hold Fajardo and Del Mundo liable in their personal capacities: that they acted
without or in excess of their authority as agents or representatives of the borrower
corporation. This third basis, however, was not explicitly set out by the Bank in its
complaint. The complaint did not directly allege that respondents Fajardo and Del
Mundo had acted without or in excess of their authority as agents and representatives
of J.J. Mining, in executing the Promissory Note for J.J. Mining and receiving the
proceeds thereof. However, such an allegation may be said to have
been implicitly made along with the allegation that respondents had knowingly
induced petitioner to grant the loan though J.J. Mining had no capacity to pay, or
with the allegation that respondents had converted the loan proceeds to their personal
benefit.
The familiar test for determining whether a complaint did or did not state a cause of
action against the defendants is whether or not, admitting hypothetically the truth of
the allegations of fact made in the complaint, a judge may validly grant the relief
demanded in the complaint. In Rava Development Corporation v. Court of
Appeals,8 the Court elaborated on this established standard in the following manner:
The rule is that a defendant moving to dismiss a complaint on the
ground of lack of cause of action is regarded as having
hypothetically admitted all the averments thereof. The test of the
sufficiency of the facts found in a petition as constituting a cause
of action is whether or not, admitting the facts alleged, the court
 can render a valid judgment upon the same in accordance with the
prayer thereof (Consolidated Bank and Trust Corp. v. Court of
Appeals, 197 SCRA 663 [1991]).
In determining the existence of a cause of action, only the
statements in the complaint may properly be considered. It is error
for the court to take cognizance of external facts or hold
preliminary hearings to determine their existence. If the allegation
in a complaint furnish sufficient basis by which the complaint may
be maintained, the same should not be dismissed regardless of the
defenses that may be assessed by the defendants (supra).
A careful review of the records of this case reveals that the
allegations set forth in the complaint sufficiently establish a cause
of action. The following are the requisites for the existence of a
cause of action: (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 the
said defendants constituting a violation of the plaintiff's right or a
breach of the obligation of the defendant to the plaintiff (Heirs of
Ildefonso Coscolluela, Sr., Inc. v. Rico General Insurance
Corporation, 179 SCRA 511 [1989])."9 (Emphasis supplied)
In its Decision, the Court of Appeals said, among other things, that petitioner Bank's
complaint did not state a cause of action against respondents Fajardo and Del Mundo
in their personal and individual capacities for the reason that no evidence had been
presented to support such alleged liability on the "so called alternative cause of
action." The Court of Appeals said:
Petitioners' participation, if any, in the execution of the promissory
note in question, is that merely of agents and/or representatives of
defendant corporation. Their alleged liability in the so-called
alternative cause of action is predicted on hearsay and/or third-
hand information. According to private respondent, herein
petitioners "must have known" the capital structure of the
corporation and therefore, they are guilty of fraud because through
false representations they succeeded in inducing plaintiff-
respondent to grant or release the loan with full knowledge on their
part that defendant corporation was in no position to comply with
the obligation it had assumed.
But what is the factual basis of private-respondents allegations.
Saved for its allegation in its Opposition to defendants-petitioners
Motion to Dismiss that the latter "must have known" the capital
structure of the corporation and its allegation in the complaint
that "if it be shown" that defendants-petitioners "contracted the
loan fully knowing that defendant corporation would be unable to
pay the same upon maturity", there is no evidence on
record showing that defendants-petitioners had such a knowledge
of the financial incapacity of defendant corporation to meet its
financial obligations at its maturity. Private respondents'
allegation in the complaint are based on pure speculations and
fantasies and nothing more." 10 (Emphasis supplied)
We consider that the Court of Appeals here was in reversible error. It was quite
premature for the Court of Appeals to consider evidence (or lack of evidence)
outside the four corners of the complaint and to reach the above conclusion, since the
fraud consisting of false representations has yet to be proved by petitioner Bank in
the course of the trial before the court a quo. By the same token, respondents'
innocence and non-utilization, or fraud and conversion, of the loan proceeds for their
private and personal benefit are precisely defenses to be proved by respondents in the
course of the trial. Evidently, the Court of Appeals overlooked the fact that the trial
has yet to begin; for it assumed as real and established the defenses which need to be
proved during that trial.
Having examined the record here carefully, and while the complaint filed in the trial
court is not exactly a model of draftmanship, we consider that it substantially meets
the established test and that the complaint does state cause(s) of action not only
against the borrower corporation, J.J. Mining, but also against respondents Fajardo
and Del Mundo in their personal and individual capacities.
Turning to the applicability of Section 13, Rule 3 of the Rules of Court to the
complaint in the case at bar, the Court observes that the Court of Appeals found that
Section not applicable to the present case. The Court of Appeals said on this point:
Private respondent [petitioner Bank] also invokes the rule on
alternative defendants found in Section 13, Rule 3 of the Revised
Rules of Court which state:
xxx xxx xxx
But private respondents was never "uncertain" against which of
several persons it is entitled to relief. As shown in paragraph 2.1 of
the complaint which were previously cited, it was dead sure, as
night follows day, that the "defendant corporation for value
received thru" petitioners, "executed and delivered to plaintiff a
promissory note" for the amount P750,000.00. 11
 We believe that here, too, the Court of Appeals was in error. Firstly, the
state of mind of petitioner Bank — whether it was "uncertain" or whether it
was "dead sure as night follows day" against which of several defendants it
is entitled to relief — is, of course, immaterial, except to the extent that
such state of minds is externalized by the allegations of the complaint.
Petitioner Bank, in paragraph 1.6 in relation to paragraphs 2.1 and 2.2 of its
complaint, had pleaded, with sufficient clarity, its claimed rights against
alternative defendants: the borrower corporation and respondents Fajardo
and Del Mundo. That the rights pleaded against the borrower corporation
are prima facie inconsistent with the rights pleaded against respondents
Fajardo and Del Mundo, is also clear: either the borrower corporation alone
is liable; or respondents Fajardo and Del Mundo are alone liable in lieu of
J.J. Mining; or respondents Fajardo and Del Mundo are solidarily liable
with J.J. Mining.

To bolster its position, petitioner Bank in its Memorandum filed with this Court
referred to certain additional circumstances which are, of course, more properly
alleged and proved before the trial court:

1. that, at the present, J.J. Mining is no longer a going concern "its

office and assets nowhere to be found;" and

2. that J.J. Mining has outstanding obligations to different banks

which, like petitioner Bank, are undergoing liquidation — i.e.,
Admiral Savings and Loan Bank; Development Bank of Rizal; and
petitioner Bank — in the aggregate principal amount (as of 1984)
of P2,750,000.00; that in the transactions with all three (3) banks,
the signatories of the promisorry notes were the two (2)
respondents in the case at bar, Messrs. Fajardo and Del Mundo. 12

The essential thing is that petitioner Bank must be given an opportunity to prove its
allegations in all necessary detail at the trial on the merits. There the respondents will
have the opportunity to controvert and refute petitioner's detailed assertions. 13

WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 25
August 1987 in C.A.-G.R. SP No. 11547 is hereby REVERSED and SET ASIDE.
The Orders of the trial court dated 9 October 1986 and 22 December 1986 in Civil
Case No. 14501 are hereby REINSTATED. This case is hereby REMANDED to the
trial court for further proceedings not inconsistent with this Decision. Costs against
respondents.

SO ORDERED.

Bidin, Davide, Jr., Romero and Melo, JJ., concur.

 THIRD DIVISION do not show compliance with one of the conditions precedent to the exercise of the
power of eminent domain by a local government unit as enunciated in Section 19 of
R.A. 7160[5] which provides in part that:

[G.R. No. 109173. July 5, 1996] A local government unit may, through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain x x x; Provided, however, That the
power of eminent domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not accepted x x x . [Italics
CITY OF CEBU, petitioner, vs. THE COURT OF APPEALS (SIXTEENTH supplied.]
DIVISION), HON. JUDGE RODOLFO BELLAFLOR and MERLITA
CARDENO, respondents. Petitioner sought to establish compliance with the abovecited requirement by
alleging in its Comment and Opposition to private respondents Motion to Dismiss,
RESOLUTION the following facts:
FRANCISCO, J.:
7. To further pursue its desire to acquire the property concerned, the plaintiff made
on October 28,1991, another offer to Mrs. Cardeno, through her lawyer, Atty. Omar
One of the basic tenets of procedural law is a liberal interpretation of the Rules Redula, for the purchase of her property in the amount of Four Hundred Seventy
of Court in order to promote their object and to assist the parties in obtaining just, Eight Thousand (P478,000.00) Pesos. x x x;
speedy, and inexpensive determination of every action and proceeding. [1] Time and
again, this Court has stressed that the primordial concern of rules of procedure is to
8. The said offer was again refused, thus the resort by the plaintiff to expropriation. [6]
secure substantial justice. Otherwise stated, they are but a means to an end. Hence, a
rigid and technical enforcement of these rules which overrides the ends of justice
shall not be countenanced. Substance cannot be subordinated to procedure when to The RTC nevertheless dismissed the complaint and ruled as follows:
do so would deprive a party of his day in court on the basis solely of a technicality.
[2]
 The case before us illustrates how a stringent application of procedural rules, when "The allegations in the complaint which is (sic) relevant to the seemingly or apparent
uncalled for, can result in a contravention of the foregoing principle and the compliance of (sic) that condition precedent is found in paragraph VII thereto (sic)
consequent subversion of justice. which reads:
The antecedent facts are undisputed. Private respondent Merlita Cardeno is the
That repeated negotiations had been made with the defendant to have the
owner of a parcel of land with an area of 2,019 square meters located at Sitio Sto.
aforementioned property purchased by the plaintiff through negotiated sale without
Nino, Alaska-Mambaling and covered by Transfer Certificate of Title No.
resorting to expropriation, but said negotiations failed.
116692. On February 25,1992, the petitioner, City of Cebu, filed a complaint for
eminent domain against private respondent with Branch II of the Regional Trial
Court (RTC) of Cebu City seeking to expropriate the said parcel of land. The The import or meaning of the said allegation in paragraph VII of the complaint
complaint was initiated pursuant to Resolution No. 404 and Ordinance No.1418, aforequoted to the mind of the Court does not convey or connote the same meaning
dated February 17,1992, of the Sangguniang Panlungsod of Cebu City authorizing or import or even approximate, the condition precedent required,
the City Mayor to expropriate the said parcel of land for the purpose of providing a
socialized housing project for the landless and low-income city residents. [3] Unless a valid and definite offer has been previously made to the owner and such
offer was not accepted.
Private respondent filed a motion to dismiss the said complaint on the ground
of lack of cause of action. She asseverated that the allegations contained in paragraph
"The Court is of the opinion that the City of Cebu has not complied with the
VII of the complaint, to wit:
condition precedent, hence, the complaint does not state a cause of action. [7]
That repeated negotiations had been made with the defendant to have the
aforementioned property purchased by the plaintiff through negotiated sale without
resorting to expropriation, but said negotiations failed.[4]
 Furthermore, in disregarding petitioners allegations in its Comment and
Opposition, the RTC invoked the oft-cited rule that where the ground for dismissal is
that the complaint states no cause of action, its sufficiency can only be determined
from the facts alleged in the complaint and no other.[8]
Aggrieved, petitioner filed a special civil action for certiorari before the Court
of Appeals which, however, affirmed the above ruling of the RTC. According to the
Court of Appeals, an allegation of repeated negotiations made with the private
respondent for the purchase of her property by the petitioner, cannot by any stretch
of imagination, be equated or likened to the clear and specific requirement that the
petitioner should have previously made a valid and definite offer to purchase. [9] It
further added that the term negotiation which necessarily implies uncertainty, it
consisting of acts the purpose of which is to arrive at a conclusion, may not be
perceived to mean the valid and definite offer contemplated by law.[10]
Petitioners contention that it could have presented evidence in the course of the
trial to prove full compliance with Section 19 of R.A. No.7160 had the RTC not
dismissed the case outrightly, fell on deaf ears. [11] The Court of Appeals declared it
procedurally unacceptable to ascertain the existence of a cause of action from any
source other than the allegations in petitioners complaint.
An offshoot of the foregoing is the instant petition for review
on certiorari which has essentially become a battle of semantics being waged before
this Court. While petitioner reiterates that paragraph VII of the complaint sufficiently
states compliance with the requirement of a valid and definite offer, private
respondent insists that the term negotiations is too broad to be equated with the said
requirement.[12] Elaborating, private respondent posited that by definition,
negotiations run the whole range of acts preparatory to concluding an agreement,
from the preliminary correspondence; the fixing of the terms of the agreement; the
price; the mode of payment; obligations of (sic) the parties may conceive as
necessary to their agreement.[13] Thus, negotiations by itself may pertain to any of the
foregoing and does not automatically mean the making of a valid and definite offer.
At the outset, it must be said that without necessarily delving into the parties
semantical arguments, this Court finds that the complaint does in fact state a cause of
action. What may perhaps be conceded is only the relative ambiguity of the
allegations in paragraph VII of the complaint. However, as We have previously held,
a complaint should not be dismissed upon a mere ambiguity, indefiniteness or
uncertainty of the cause of action stated therein for these are not grounds for a
motion to dismiss but rather for a bill of particulars.[14] And,
x x x though the allegations in the complaint are ambiguous, indefinite or uncertain
but, nevertheless, a cause of action can, in any manner, be made out therefrom, and
the plaintiff would be entitled to recover in any aspect of the facts or any
combination of the facts alleged, if they were to be proved, then the motion to
dismiss should be denied.[15]
In other words, a complaint should not be dismissed for insufficiency unless it
appears clearly from the face of the complaint that the plaintiff is not entitled to any
relief under any state of facts which could be proved within the facts alleged therein.
[16]
The error of both the RTC and respondent Court of Appeals in holding that the
complaint failed to state a cause of action stems from their inflexible application of
the rule that: when the motion to dismiss is based on the ground that the complaint
states no cause of action, no evidence may be allowed and the issue should only be
determined in the light of the allegations of the complaint. [17] However, this rule is
not without exceptions. In the case of Tan v. Director of Forestry,[18] this Court
departed from the aforementioned rule and held that, x x x although the evidence of
the parties were on the question of granting or denying the petitioner-appellants
application for a writ of preliminary injunction, the trial court correctly applied said
evidence in the resolution of the motion to dismiss. [19] Likewise, in Marcopper
Mining Corporation v. Garcia,[20] we sanctioned the act of the trial court in
considering, in addition to the complaint, other pleadings submitted by the parties in
deciding whether or not the complaint should be dismissed for lack of cause of
action. This Court deemed such course of action but logical where the trial court had
the opportunity to examine the merits of the complaint, the answer with
counterclaim, the petitioners answer to the counterclaim and its answer to the request
for admission.[21] The same liberality should be applied in the instant case where an
examination of petitioners Comment and Opposition to private respondents Motion
to Dismiss leaves no room for doubt that petitioner had indeed made a valid and
definite offer to private respondent as required by law.
Furthermore, a closer scrutiny reveals that even on the face of the complaint
alone, there is extant a cause of action. Petitioner avers in paragraph I thereof that,
"x x x. Under R.A. 7160, Sec. 9 thereof, the City of Cebu is legally vested with the
power of eminent domain and pursuant thereto is filing this petition/complaint as
authorized by Ordinance No.1418 passed by the Sangguniang Panlungsod on
February 17,1992, a photocopy of which is herein attached as Annex A, and made
an integral part of this complaint. x x x[22] [Italics supplied.]
All documents attached to a complaint, the due execution and genuineness of
which are not denied under oath by the defendant, must be considered as part of the
complaint without need of introducing evidence thereon. [23] Additionally, the general
rule is that a motion to dismiss hypothetically admits the truth of the facts alleged in
the complaint.[24] Thus, Ordinance No.1418, with all its provisions, is not only
incorporated into the complaint for eminent domain filed by petitioner, but is also
deemed admitted by private respondent. A perusal of the copy of said ordinance
which has been annexed to the complaint shows that the fact of petitioners having
made a previous valid and definite offer to private respondent is categorically stated
therein. Thus, the second whereas clause of the said ordinance provides as follows:
WHEREAS, the city government has made a valid and definite offer to purchase
subject lot(s) for the public use aforementioned but the registered owner Mrs. Merlita
Cardeno has rejected such offer.[25]

The foregoing should now put to rest the long drawn argument over the alleged
failure of the complaint to state a cause of action. There is no longer any room for
doubt that as alleged in the complaint, and as admitted by private respondent, the
petitioner had in fact complied with the condition precedent of a valid and definite
offer set forth in Sec. 19 of R.A. 7160.
And as a fitting finale to this controversy, the principle enunciated in both
the Tan and Marcopper cases is here reiterated:

The rules of procedure are not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure substantial justice. If a technical and rigid
enforcement of the rules is made their aim would be defeated. Where the rules are
merely secondary in importance are made to override the ends of justice; the
technical rules had been misapplied to the prejudice of the substantial right of a
party, said rigid application cannot be countenanced. [26]

The aforequoted doctrine finds compelling application in the case at bench. For

as correctly averred by petitioner, nothing else was acomplished by the dismissal of
the complaint for eminent domain but a considerable delay in the proceedings. The
dismissal of the complaint did not bar petitioner from filing another eminent domain
case and from correcting its alleged error by the mere expedient of changing
paragraph VII thereof. Indeed, precious time has been wasted while the salutary
objectives of Ordinance No. 1418 of the City of Cebu have been put on hold by a
quarrel over technical matters.
WHEREFORE, the petition is hereby GRANTED and the decision appealed
from is REVERSED and SET ASIDE. The case is ordered remanded to the RTC
which shall proceed to the hearing and final determination thereof.
SO ORDERED.