PILAR T. DEL ROSARIO, MARIANO V. DEL ROSARIO and SALVADOR V. DEL ROSARIO vs. HON. DAMIAN L. JIMENEZ, as Judge of the Municipal Court of Quezon City, Branch III,

SANCHO R. JACINTO and DOMINGO BASCARA,G.R. No. L-17468 July 31, 1963

FACTS:Jacinto et. al. commenced an action for forcible entry against del Rosario, et al. at the municipal

court of Quezon City. The forcible entry case involve a two parcel of land claimed to be owned by Jacinto et. al. through purchase from the previous registered owner, J.M. Tuazon & Co., Inc.

Del Rosario, et al, on their answer, claim prior possession before the purchase of the plaintiff and alleged that owned the land through purchase from one Macaria Fulgencio and her husband Carlos Javier.

While the action is still pending, del Rosario, et al commenced an action for "reconveyance and/or recovery" of the same properties against appellees in the Court of First Instance of Rizal and filed a motion in the municipal court to suspend proceedings in the summary action before it until after the termination of the case in the Court of First Instance.

In November 6 it denied the motion to suspend proceedings. Appellants moved to reconsider and were turned down on November 27, 1958, respectively. These are the four orders subject of appellants' petition for certiorari and mandamus, which was dismissed by the Court of First Instance of Rizal and now on appeal before us.

ISSUE:Whether or not the pending action for forcible entry should be dismissed.

RULING:With respect to the other order - that denying appellant's motion to suspend proceedings - it is

enough to point out, first, that the action for "reconveyance and/or recovery" in the Court of First Instance of Rizal, which appellants claim should take precedence, was filed by them when the forcible entry case was already pending, and was obviously intended to delay the proceedings therein; and secondly, that the issue involved in the later action, which is one of title, is not prejudicial to the determination of the issue of summary possession. The very petition for mandamus and certiorari the dismissal of which is the subject of this appeal is likewise dilatory in nature, as shown by the fact that it is only one of the numerous actions previously resorted to by appellants and decided unfavorably to them. There was special civil action No. 5318, Court of First Instance of Rizal, Branch VI, dismissed by Judge Andres Reyes for lack of jurisdiction and then refiled in Branch V (Quezon City), but again dismissed by Judge Nicasio Yatco on July 2, 1959; and subsequently, there was special civil action No. 5500, Court of First Instance of Rizal, dismissed by Judge Felix R. Domingo on July 8, 1959. Both of these actions were instituted after the ejectment case was filed by herein appellees and sought to suspend the trial thereof. There must be an end to the litigious rigmarole pursued by appellants.

ANASTACIO T. TEODORO, JR. vs. ARMANDO MIRASOLG.R. No. L-8934. May 18, 1956

FACTS: Teodoro and Mirasol entered into a two-year lease contract, which would expire on October 1,

1952 and could be renewed for another two years upon written consent of both parties.On October 15, 1952, Mirasol wrote to Teadoro that the lease already expired. He gave Teodoro

notice of termination since Teodoro lost interest in renewing the lease.Teodoro filed an action for specific performance and/or declaratory relief in CFI alleging that it is

not true that he lost interest since Mirasol allowed him to renew the lease; that Mirasol is barred from

denying it; and that he has already paid. Teodoro prayed that the court fix the extended period of lease to 2 years and that Mirasol be required to pay P10,000 moral damage.

Mirasol filed a motion to dismiss alleging that the court has no jurisdiction; that there is a pending unlawful detainer case in MTC between the parties; and that Teadoro's claim is barred by Statute of Frauds.

Teadoro replied that the unlawful detainer suit in MTC was filed after plaintiff's action in CFI and that the former must be dismissed. Besides, Teodoro is claiming for moral damages, which the CFI must determine.

CFI dismissed the case and denied Teodoro's motion for reconsideration since the issue on extension of lease can be resolved in the ejectment case even if it was filed later, as ruled in Lim v Lim.

Teodoro argues before SC that there is no identity between unlawful detainer case and his case since this one is for specific performance or for declaratory relief and that this suit includes a claim for moral damages, both of which the CFI can only decide, not the MTC.ISSUE:

Whether or not the action for declaratory relief is proper.RULING:

It is to be noted that the Rules do not require as a ground for dismissal of a complaint that there is a prior pending action. They provide that there is a pending action, not a pending prior action. The fact that the unlawful detainer suit was of a later date is no bar to the dismissal of the present action. We find, therefore, no error in the ruling of the court a quo that Plaintiff’s action should be dismissed on the ground of the pendency of another more appropriate action between the same parties and for the same cause.

Action for declaratory relief is meant only for those cases where a contract is desired to be construed prior to its breach because of an impending controversy and that the parties may be informed of their rights. Here, the lease contract had already expired and there has already been a breach; hence, the action for declaratory relief is no longer proper.

Even if proper, there is no longer any need for the action since the matter could be threshed out in the unlawful detainer suit.

The claim for damages is merely an incident of the main question of whether or not plaintiff should be allowed to continue the lease for two years more. He may not assert it in the action for declaratory relief, as an excuse or reason for continuing his suit.

DOTMATRIX TRADING as represented by its proprietors, namely ROMY YAP CHUA, RENATO ROLLAN and ROLANDO D. CADIZ vs. ROMMEL B. LEGASPI under the name and style of BIG J FARMS and RBL

FARMG.R. No. 155622 October 26, 2009

FACTS:Dotmatrix Trading are engaged in the business of buying and selling of commodities, including

day-old chicks. Rommel B. Legaspi was the Dotmatrix’s supplier of day-old chicks from September to December 2001. Sometime in 2002, Legaspi sent a demand letter to the petitioners for the payment of delivered day-old chicks. Dotmatrix replied with a demand for delivery of an alleged deficiency or return of the over-payment made. Failing to satisfy each other's demands, both parties went to court.On June 11, 2002, Dotmatrix Trading filed a complaint against the Legaspi before RTC-Tarlac for the return of the over-payment made, plus damages. On June 19, 2002, Legaspi filed before RTC-Malolos a complaint for the collection of balance and damages against theDotmatrix.

Upon receipt of the summons and complaint, the Legaspi filed a motion to dismiss the case before RTC-Tarlac on the ground of litis pendentia. RTC-Tarlac granted the motion to dismiss. Petitioners elevated the case to the SC on a pure question of law.

ISSUE:Whether or not the case before RTC-Tarlac - filed ahead of the case before RTC-Malolos - should

be dismissed on the ground of litis pendentia.RULING:

SC dismissed the petition. The rule on litis pendentia does not require that the case later in time should yield to the earlier case; what is required merely is that there be another pending action, not a prior pending action. Neither is it required that the party be served with summons before lis pendens can apply; it is the filing of the action, not the receipt of summons, which determines priority in date.

SC held further that the case before RTC-Malolos is the appropriate case to determine the rights of the parties. The case in Tarlac is purely preemptive. Another compelling reason is the stage of the case. Trial on the merits has already been conducted in the case before RTC-Malolos, with the petitioners given the full opportunity to present evidence on their defense. To dismiss it at this point would result in needless delay in the resolution of the parties’ dispute and bring them back to square one.

The elements of litis pendentia (pending suit) are:1. The parties in the two actions are the same. 2. There is a substantial identity in the causes of action and in the reliefs sought.3. Any judgment that may be rendered in one case, regardless of which party is successful, would

amount to res judicata in the other.Under this established jurisprudence on litis pendentia, the following considerations predominate in

the ascending order of importance in determining which action should prevail: (1) the date of filing, with preference generally given to the first action filed to be retained; (2) whether the action sought to be dismissed was filed merely to preempt the later action or to anticipate its filing and lay the basis for its dismissal; and (3) whether the action is the appropriate vehicle for litigating the issues between the parties.

PHILIPPINE NATIONAL BANK vs. GATEWAY PROPERTY HOLDINGS, INC (GPHI).G.R. No. 181485 February 15, 2012

FACTS:This case involves two civil cases, Civil Case No. TM-1022 (Annulment of the Real Estate

Mortgage) and Civil Case No. TM-1108 (Annulment of the Foreclosure Sale).GPHI was a subsidiary company of Gateway Electronics Company (GEC). In 1995 and 1996, GEC

obtained long term loans from the Land Bank of the Philippines (LBP) in the amount of P600,000,000.00. The loans were secured by mortgages executed by GEC over its various properties. Subsequently, LBP offered to provide additional funds to GEC by inviting other banking institutions to lend money therefor. LBP allegedly agreed to submit the properties mortgaged to it by GEC as part of the latter’s assets that will be covered by a Mortgage Trust Indenture (MTI), ensuring that "all participating banks in the loan syndicate will have equal security position."

Due to difficulties in paying its obligations, GEC then requested PNB to convert its long-term loans into a Convertible Omnibus Credit Line. In a letter dated August 13, 1997 addressed to Israel F. Maducdoc, the Senior Vice President of GEC, PNB approved such a conversion subject to certain conditions. As part of the requirements of PNB, GPHI was made a co-borrower in the agreement and was obligated to execute in favor of PNB a real estate mortgage over two parcels of land.

In March 1998, LBP allegedly refused to abide by its undertaking to share the mortgaged properties of GEC with the consortium of creditor banks. GPHI learned of PNB’s supposedly underhanded registration of the real estate mortgage with intent to foreclose the same. GPHI filed a complaint and prayed that upon receipt of the complaint by the trial court, a temporary restraining order (TRO) be issued to enjoin PNB from foreclosing on the properties of GPHI.

It appears that the RTC did not issue a TRO in favor of GPHI, which lead to the foreclosure of the property.

GPHI filed a Petition for Annulment of Foreclosure of Mortgage with Application for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.

On September 11, 2001, PNB filed a Motion to Dismiss the above petition, and contended that there was another action pending between the same parties for the same cause of action. Essentially, PNB argued that GPHI resorted to a splitting of a cause of action by first filing a complaint for the annulment of the contract of real estate mortgage and then filing a petition for the annulment of the subsequent foreclosure of the mortgage. PNB further alleged that the subsequent petition of GPHI failed to state a cause of action. On December 20, 2001, the RTC ordered the dismissal of Civil Case No. TM-1108.ISSUE:

Whether or not the requisites of litis pendentia exist to warrant the dismissal of Civil Case No. TM-1108.RULING:

There is litis pendentia or another action pendente lite if the following requisites are present: (a) identity of parties, or at least such parties as 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) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration.

The crux of the controversy in the instant case is whether there is an identity of causes of action in Civil Case Nos. TM-1022 and TM-1108.

As regards identity of causes of action, the test often used in determining whether causes of action are identical 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, even if the forms or nature of the two actions be different. If the same facts or evidence would sustain both actions, 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

In the case at bar, a perusal of the allegations in Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) reveal that the said cases invoke the same fundamental issue, i.e., the temporary nature of the security that was to be provided by the mortgaged properties of GPHI.

In essence, the cause of action of GPHI in both cases is the alleged act of PNB of reneging on a prior agreement or understanding with GEC and GPHI vis-à-vis the constitution, purpose and consequences of the real estate mortgage over the properties of GPHI. While the reliefs sought in Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) are seemingly different, the ultimate question that the trial court would have to resolve in both cases is whether the real estate mortgage over the properties of GPHI was actually intended to secure the loan obligations of GEC to PNB so much so that PNB can legally foreclose on the mortgaged properties should GEC fail to settle its loan obligations. In this regard, GPHI made reference to the letter of PNB dated August 13, 1997 and the Amendment to the Credit Agreement between GEC, GPHI and PNB as the primary documents upon which GPHI based its arguments regarding the supposed intention of the parties in both Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) Thus, the same documentary evidence would necessarily sustain both cases.

PHILIPPINE NATIONAL BANK vs. GATEWAY PROPERTY HOLDINGS, INC (GPHI).G.R. No. 181485 February 15, 2012

FACTS:This case involves two civil cases, Civil Case No. TM-1022 (Annulment of the Real Estate

Mortgage) and Civil Case No. TM-1108 (Annulment of the Foreclosure Sale).GPHI was a subsidiary company of Gateway Electronics Company (GEC). In 1995 and 1996, GEC

obtained long term loans from the Land Bank of the Philippines (LBP) in the amount of P600,000,000.00. The loans were secured by mortgages executed by GEC over its various properties. Subsequently, LBP offered to provide additional funds to GEC by inviting other banking institutions to lend money therefor. LBP allegedly agreed to submit the properties mortgaged to it by GEC as part of the latter’s assets that will be covered by a Mortgage Trust Indenture (MTI), ensuring that "all participating banks in the loan syndicate will have equal security position."

Due to difficulties in paying its obligations, GEC then requested PNB to convert its long-term loans into a Convertible Omnibus Credit Line. In a letter dated August 13, 1997 addressed to Israel F. Maducdoc, the Senior Vice President of GEC, PNB approved such a conversion subject to certain conditions. As part of the requirements of PNB, GPHI was made a co-borrower in the agreement and was obligated to execute in favor of PNB a real estate mortgage over two parcels of land.

In March 1998, LBP allegedly refused to abide by its undertaking to share the mortgaged properties of GEC with the consortium of creditor banks. GPHI learned of PNB’s supposedly underhanded registration of the real estate mortgage with intent to foreclose the same. GPHI filed a complaint and prayed that upon receipt of the complaint by the trial court, a temporary restraining order (TRO) be issued to enjoin PNB from foreclosing on the properties of GPHI.

It appears that the RTC did not issue a TRO in favor of GPHI, which lead to the foreclosure of the property.

GPHI filed a Petition for Annulment of Foreclosure of Mortgage with Application for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.

On September 11, 2001, PNB filed a Motion to Dismiss the above petition, and contended that there was another action pending between the same parties for the same cause of action. Essentially, PNB argued that GPHI resorted to a splitting of a cause of action by first filing a complaint for the annulment of the contract of real estate mortgage and then filing a petition for the annulment of the subsequent foreclosure of the mortgage. PNB further alleged that the subsequent petition of GPHI failed to state a cause of action. On December 20, 2001, the RTC ordered the dismissal of Civil Case No. TM-1108.ISSUE:

Whether or not the requisites of litis pendentia exist to warrant the dismissal of Civil Case No. TM-1108.RULING:

There is litis pendentia or another action pendente lite if the following requisites are present: (a) identity of parties, or at least such parties as 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) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration.

The crux of the controversy in the instant case is whether there is an identity of causes of action in Civil Case Nos. TM-1022 and TM-1108.

As regards identity of causes of action, the test often used in determining whether causes of action are identical 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, even if the forms or nature of the two actions be different. If the same facts or evidence would sustain both actions, 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

In the case at bar, a perusal of the allegations in Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) reveal that the said cases invoke the same fundamental issue, i.e., the temporary nature of the security that was to be provided by the mortgaged properties of GPHI.

In essence, the cause of action of GPHI in both cases is the alleged act of PNB of reneging on a prior agreement or understanding with GEC and GPHI vis-à-vis the constitution, purpose and consequences of the real estate mortgage over the properties of GPHI. While the reliefs sought in Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) are seemingly different, the ultimate question that the trial court would have to resolve in both cases is whether the real estate mortgage over the properties of GPHI was actually intended to secure the loan obligations of GEC to PNB so much so that PNB can legally foreclose on the mortgaged properties should GEC fail to settle its loan obligations. In this regard, GPHI made reference to the letter of PNB dated August 13, 1997 and the Amendment to the Credit Agreement between GEC, GPHI and PNB as the primary documents upon which GPHI based its arguments regarding the supposed intention of the parties in both Civil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the Foreclosure Sale) Thus, the same documentary evidence would necessarily sustain both cases.

OROPEZA MARKETING CORPORATION, ROGACIANO OROPEZA and IMELDA S. OROPEZA vs. ALLIED BANKING CORPORATION

G.R. No. 129788. December 3, 2002FACTS:

Allied Bank extended a loan of P780,000 to OMC and the spouses Rogaciano and Imelda Oropeza. To secure this obligation, petitioners executed a Promissory Note in Allied Bank’s favor. As additional security for the loan, they also executed a Real Estate Mortgage over their properties.

Due to financial constraints, petitioners defaulted and reneged on their obligation. Thus, Allied Bank filed a collection suit with an application for a writ of preliminary attachment RTC of Davao City, Branch.

While its application for a writ of attachment was pending, Allied Bank discovered that the Oropeza spouses had executed an Absolute Deed of Sale with Assumption of Mortgage in favor of Solid Gold Commercial Corporation, covering most of petitioner spouses’ real properties, including those mortgaged to Allied Bank.

Allied Bank then filed a complaint for the annulment of said Deed of Sale before the RTC of Davao City. Allied Bank likewise instituted a separate criminal complaint for fraudulent insolvency against petitioner spouses before the RTC of Davao City.

In the meantime, the court granted Allied Bank’s application for attachment and fixed the amount of the attachment bond at P2,378,224.10. Allied Bank, however, failed to submit an attachment bond and instead moved that the service of the summons upon petitioner be held in abeyance.

On October 26, 1992, the RTC rendered judgment declaring the Deed of Sale with Assumption of Mortgage valid binding and not tainted with fraud. Allied Bank appealed to the Court of Appeals., the lower court hearing collection suit, dismissed respondent’s complaint on the ground of litis pendentia, Dissatisfied with this turn of events, respondent elevated the case to the appellate court. On appeal, the CA reversed the decision of the trial court.ISSUE:

Whether or not there is conclusiveness of judgment.RULING:

Res judicata literally means “a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.” Res judicata lays the rule that an existing final judgment or decree

rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. The principle of res judicata has two aspects, namely: (a) “bar by prior judgment” as enunciated in Rule 39, Section 49 (b) of the 1997 Rules of Civil Procedure; and (b) “conclusiveness of judgment” which is contained in Rule 39, Section 47 (c).

There is “bar by prior judgment” when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of action before the same or any other tribunal.

But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the concept of res judicata known as “conclusiveness of judgment.” Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment 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, demand, purpose, or subject matter of the two actions is the same.

The test to determine the identity of causes of action is to consider whether the same evidence would sustain both causes of action. We find that in Civil Case No. 19325-88, Allied Bank will have to present evidence showing the existence of the loan and petitioners’ failure to comply with their bounden duty to pay such loan in accordance with the terms of the promissory note executed by petitioners. However, in Civil Case No. 19634-89, respondent’s evidence must establish and prove its allegations to the effect that: (a) petitioners secured a loan from it; (b) said loan was secured by a promissory note and a mortgage over properties owned by the Oropezas; (c) petitioners failed to pay their debt; and (d) petitioners sold the mortgaged properties with intent to defraud respondent bank.

There being substantial identity of parties but no identity of causes of action, the applicable aspect of res judicata in the instant case is “conclusiveness of judgment.” There is conclusiveness of judgment only as to the matters actually determined by the trial court in Civil Case No. 19634-89, as affirmed by the Court of Appeals in CA-G.R. CV No. 41986. These include the findings that: (1) the promissory note relied upon by respondent bank is spurious; and (2) that the loan obligation of the Oropeza spouses has been settled and paid.

REPUBLIC OF THE PHILIPPINES (CIVIL AERONAUTICS ADMINISTRATION) vs. RAMON YU, TEOFISTA VILLAMALA, LOURDES YU and YU SE PENG

G.R. No. 157557 March 10, 2006FACTS:

In Valdehueza v. Republic (1966), SC affirmed the judgment of expropriation of Lot No. 939 in Lahug, Cebu City, and ruled that Francisca Valdehueza, et al., were not entitled to recover possession of the lot but only to demand its fair market value.

On October 1, 1992, Yu, et al. filed a complaint for reversion of the expropriated property. RP denied respondents’ right to reacquire title and ownership over the lot on the ground of res judicata, lack of cause of action and forum-shopping. On appeal, the CA ruled that there was no res judicata and remanded the case to the trial court.ISSUE:

Whether or not the action is barred by res judicata.

RULING:Res judicata has two concepts:(1) "bar by prior judgment" as enunciated in Rule 39, Section 47

(b) of the Rules of Civil Procedure; and (2) "conclusiveness of judgment" in Rule 39, Section 47 (c).There is "bar by prior judgment" when, as between the first case where the judgment was

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

Conclusiveness of judgment clearly exists in the present case, because respondents again seek to enforce a right based on a sale which has been nullified by a final and executory judgment. Recall that the question of validity of the sale had long been settled. The same question, therefore, cannot be raised again even in a different proceeding involving the same parties.

The doctrine of res judicata provides that a final judgment on the merits rendered by a court of competent jurisdiction, is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. Considering that the sale on which respondents based their right to reversion has long been nullified, they have not an iota of right over the property and thus, have no legal personality to bring forth the action for reversion of expropriated property. Lack of legal personality to sue means that the respondents are not the real parties-in-interest. This is a ground for the dismissal of the case, related to the ground that the complaint evidently states no cause of action.

Consequently, the second issue is now mooted and made academic by our determination of res judicata in this case.

CAROLINA P. RAMIREZ, FERDINAND P. RAMIREZ, FRANCIS P. RAMIREZ, FREDERIC P. RAMIREZ, and the Intestate Estate of FRANCISCO RAMIREZ, Jr. vs. Hon. COURT OF APPEALS, Hon. JUAN A. BIGORNIA, Jr., in his capacity as Presiding Judge of the Regional Trial Court of Ilagan, Isabela, Branch 18 and Spouses

LORETO CLARAVALL and VICTORIA H. CLARAVALLG.R. No. 133841 August 15, 2003

FACTS:On December 29, 1965, spouses Loreto Claravall and Victoria Claravall executed a deed of sale in

favor of the spouses Francisco Ramirez, Jr. and Carolina Ramirez covering a parcel of land, including improvements thereon, situated in Ilagan, Isabela. On even date, another instrument was executed granting the spouses Claravall an option to repurchase the property within a period of two years from December 29, 1965 but not earlier nor later than the month of December, 1967.

At the expiration of the two-year period, the Claravalls failed to redeem the property, prompting them to file a complaint against the spouses Francisco Ramirez, Jr. and Carolina Ramirez to compel the latter to sell the property back to them.

After trial, judgment was rendered in favor of the spouses Ramirez which was, on appeal, affirmed by the CA. On review, however, SC, finding that the Deed of Absolute Sale with option to repurchase executed by private respondents in favor of the spouses Ramirez was one of equitable mortgage, reversed the decision of the appellate.

The decision of this Court having become final and executory, possession of the property was turned over to private respondents after they settled their obligation to the spouses Ramirez.

Following the death of Francisco Ramirez, Jr. or on November 21, 1994, private respondents filed a complaint before the RTC of Ilagan for accounting and damages against Ramirez’s Intestate Estate. The complaint alleged that the spouses Ramirez acted fraudulently and in bad faith in refusing and obstructing the redemption of the property by private respondents from January 1, 1968 up to December 31, 1993 during which petitioners were receiving rentals from the tenants of the property which must be accounted for and returned to private respondents

Petitioners filed a motion to dismiss alleging that "since the issue of rentals was raised in the civil case for redemption of property, but not favorably acted upon in favor of private respondents, the latter are barred from raising anew the same issue in another litigation.ISSUE:

Whether or not the second action is barred res judicata.RULING:

The fourth of the following requisites of res judicata, to wit: (1) the former judgment must be final; (2) it must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be between the first and second action identity of parties, identity of subject matter, and identity of causes of action,27 is not present, there being no identity of causes of action between the two cases. For while the cause of action in Civil Case No. 2043 arose from the spouses Ramirez’salleged refusal to allow redemption of the property, one of the causes of action in Civil Case No. 834 arose from the alleged damage to the improvements on the property attributed to petitioners before it was turned over to the sheriff upon execution of the final judgment in the first case. In fine, Civil Case No. 834 is not barred by the judgment in Civil Case No. 2043.

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

DEEDS OF LAS PIÑAS CITYG.R. No. 170750 April 7, 2009

FACTS:In October 1997, Heirs of Tomas Dolleton, Heraclio Orcullo, Remedios San Pedro, et al., Heirs of

Bernardo Millama, et al., Heirs of Agapito Villanueva, et al., Heirs of Hilarion Garcia, et al., Serafina SP Argana, et al., and Heirs of Mariano Villanueva, et al. filed before the RTC separate Complaints for Quieting of Title and/or Recovery of Ownership and Possession with Preliminary Injunction/Restraining Order and Damages against respondents Fil-Estate Management Inc., Spouses Arturo E. Dy and Susan Dy, Megatop Realty Development, Inc., and the Register of Deeds of Las Piñas. The Complaints, which were later consolidated.

The eight Complaints were similarly worded and contained substantially identical allegations. Petitioners claimed in their Complaints that they had been in continuous, open, and exclusive possession of the afore-described parcels of land (subject properties) for more than 90 years until they were forcibly ousted by armed men hired by respondents in 1991.

Petitioners thus sought from the RTC that an order be issued enjoining respondents from making any developments on the subject properties

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

Respondents argued that the Complaints sought the annulment of the certificates of title that were issued in their names. Section 32 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides that the decree of registration and the certificate of title issued pursuant thereto can only be nullified on the ground of fraud within one year after the entry of such

decree of registration. Respondents’ TCTs could be traced back to the decree/s of registration entered in 1966/1967, which resulted in the issuance of OCT No. 6122 in the name of Jose Velasquez, respondents’ predecessor-in-interest. Hence, the filing of the Complaints only in October 1997 was made beyond the prescription period for assailing a decree of registration and/or the certificate of title issued pursuant thereto. Additionally, petitioners’ Complaints were actions for reconveyance of the subject properties based on implied trust, the filing of which prescribes after 10 years from the time said properties were first registered under the Torrens system, in accordance with Articles 1144 and 1456 of the Civil Code. Since the subject properties were first registered in 1966/1967, then the actions for their reconveyance, instituted only in 1997 or 30 years later, should be dismissed on the ground of prescription. ISSUE:

Whether or not the case should be dismissed on the ground of prescription.RULING:

Complaints are not barred by prescription and laches.The affirmative defense of prescription does not automatically warrant the dismissal of a

complaint under Rule 16 of the Rules of Civil Procedure. An allegation of prescription can effectively be used in a motion to dismiss only when the Complaint on its face shows that indeed the action has already prescribed. If the issue of prescription is one involving evidentiary matters requiring a full-blown trial on the merits, it cannot be determined in a motion to dismiss. In the case at bar, respondents must first be able to establish by evidence that the subject properties are indeed covered by their certificates of title before they can argue that any remedy assailing the registration of said properties or the issuance of the certificates of title over the same in the names of respondents or their predecessors-in-interest has prescribed.

CONRADO O. LASQUITE and TEODORA I. ANDRADE vs. VICTORY HILLS, INC.G.R. No. 175375 June 23, 2009

FACTS:On May 4, 1971, Jose Manahan executed a Deed of Quitclaim/Assignment of Rights over a

parcel of land designated as Lot No. 3050 at Barrio Ampid, San Mateo, Rizal in favor of Conrado O. Lasquite. Lasquite applied for a free patent over the lot, and pending approval of the application, sold half of the land to Juanito L. Andrade on January 11, 1981. Upon the grant of the patent application, OCT Nos. NP-197 and NP-198 were issued in the names of Andrade and Lasquite, respectively, on June 18, 1981.

Upon issuance of the OCT, several person protested. The Prescillas claimed that they have been in possession in concepto de dueno of Lot No. 3050. They alleged that Lasquite forged the signature of Jose M. Manahan in the Deed of Quitclaim/Assignment of Rights since the latter has died on April 11, 1968. The Manahans, in the otherhand, asserted title over Lot No. 3050 as successors of Jose S. Manahan whom they claimed to have died on October 12, 1947. The two cases then were consolidated. It also appears that on January 11, 1994, respondent Victory Hills, Inc. (Victory Hills) also intervened in Civil Case No. 548-SM. Victory Hills likewise claimed to be the owner of the subject lot. Victory Hills traced its title to Lot No. 3050 to OCT No. 380 which was allegedly registered on January 4, 1937 to Jose H. Manahan by virtue of Homestead Patent No. H-19562 dated December 14, 1936.

The Rizal RTC, on July 2, 2002, promulgated a Decision which upheld the title of petitioners to Lot No. 3050. It decreed:

The trial court disregarded OCT No. 380 and ruled that it was spurious as it lacked the signature of then Secretary of Agriculture and Commerce Eulogio Rodriguez. The RTC also ruled that the complaints for reconveyance of the Precillas, the Manahans and Victory Hills, which were all founded on extrinsic fraud, had prescribed since more than four (4) years have elapsed since the land was registered before they filed cases in court.

The Prescillas, the Manahans and Victory Hills interposed an appeal to the Court of Appeals. On November 8, 2006, the appellate court set aside the ruling of the RTC and declared Victory Hills the absolute owner of Lot No. 3050. ISSUE:

Whether or not respondent’s claim had prescribed.RULING:

Relevant to the issue of prescription, we have ruled that to determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is material. An action for reconveyance based on an implied trust prescribes in 10 years. The reference point of the 10-year prescriptive period is the date of registration of the deed or the issuance of the title. The prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the property. However, if the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible.

The records reveal that it was only on January 11, 1994 or nearly 13 years after OCT Nos. NP-197 and NP-198 were issued that respondent filed a Motion for Leave to Admit Complaint in Intervention and Complaint in Intervention before the RTC of Rizal. Nevertheless, respondent claimed to be in actual possession in concepto de dueno of a sizeable portion of Lot No. 3050. Thus, the action assumed the nature of a suit to quiet title; hence, imprescriptible.

However, in our view, respondent Victory Hills has failed to show its entitlement to a reconveyance of the land subject of the action.

HEIRS OF LORETO C. MARAMAG, represented by surviving spouse VICENTA PANGILINAN MARAMAG vs. EVA VERNA DE GUZMAN MARAMAG, ODESSA DE GUZMAN MARAMAG, KARL BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE MARAMAG, THE INSULAR LIFE ASSURANCE COMPANY, LTD., and GREAT

PACIFIC LIFE ASSURANCE CORPORATIONG.R. No. 181132 June 5, 2009

FACTS:Petitioners were the legitimate wife and children of Loreto Maramag (Loreto), while

respondents were Loreto’s illegitimate family.Loreto designated respondents as beneficiaries in his life insurance policies from Insular Life

Assurance Company, Ltd. (Insular) and Great Pacific Life Assurance Corporation (Grepalife). Petitioners insituted in the RTC a petition for revocation and/or reduction of insurance proceeds

for being void and/or inofficious, with prayer for a temporary restraining order (TRO) and a writ of preliminary injunction.

Pursuant to the motion to dismiss incorporated in Insular and Grepalife’s respective answers, the TC dismissed the complaint with respect to the illegitimate children, who are the the designated primary beneficiaries in the life insurance policies, for lack of cause action. However, trial court ruled that the action may proceed against the concubine, Insular Life, and Grepalife.

Insular and Grepalife filed their respective motions for reconsideration, arguing, in the main, that the petition failed to state a cause of action against them.

TC granted, and dismissed the case against them. In doing so, the TC court considered the allegations found in Insular’s answer.

CA dismissed petitioners’appeal for lack of jurisdiction, holding that the decision of the trial court dismissing the complaint for failure to state a cause of action involved a pure question of law. Further, it found that due to petitioners’ failure to timely file a motion for reconsideration, the dismissal against Insular and Grepalife had already attained finality.

ISSUE:Whether or not the trial court erred in granting the motion to dismiss.

RULING:The petition should be denied.A cause of action is the act or omission by which a party violates a right of another. A complaint

states a cause of action when it contains the three (3) elements of a cause of action—(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 the legal right. If any of these elements is absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.

When a motion to dismiss is premised on this ground, the ruling thereon should be based only on the facts alleged in the complaint. The court must resolve the issue on the strength of such allegations, assuming them to be true. The test of sufficiency of a cause of action rests on whether, hypothetically admitting the facts alleged in the complaint to be true, the court can render a valid judgment upon the same, in accordance with the prayer in the complaint. This is the general rule.

However, this rule is subject to well-recognized exceptions, such that there is no hypothetical admission of the veracity of the allegations if:

1. the falsity of the allegations is subject to judicial notice;2. such allegations are legally impossible;3. the allegations refer to facts which are inadmissible in evidence;4. by the record or document in the pleading, the allegations appear unfounded; or5. there is evidence which has been presented to the court by stipulation of the parties or in the course of the hearings related to the case. In this case, it is clear from the petition filed before the trial court that, although petitioners are

the legitimate heirs of Loreto, they were not named as beneficiaries in the insurance policies issued by Insular and Grepalife. The basis of petitioners’ claim is that Eva, being a concubine of Loreto and a suspect in his murder, is disqualified from being designated as beneficiary of the insurance policies, and that Eva’s children with Loreto, being illegitimate children, are entitled to a lesser share of the proceeds of the policies. They also argued that pursuant to Section 12 of the Insurance Code, Eva’s share in the proceeds should be forfeited in their favor, the former having brought about the death of Loreto. Thus, they prayed that the share of Eva and portions of the shares of Loreto’s illegitimate children should be awarded to them, being the legitimate heirs of Loreto entitled to their respective legitimes.

DANFOSS, INC.vs. CONTINENTAL CEMENT CORPORATIONG.R. No. 143788 September 9, 2005

FACTS: Mechatronics Instruments and Controls, Inc. (MINCI) is an agent of Danfoss, Inc.’s products here

in the Philippines. On September 1997, CCC ordered two unit 132 KW Danfoss Brand Frequency Converter/Inverter from MINCI to be used in the Finish Mill of its Cement Plant in Bulacan. In the terms of conditions of the original purchase order, the two unit Frequency Converter shall be delivered by Danfoss within 8 to 10 weeks from the opening of the letter of credit. The letter of credit opened by CCC in favour of Danfoss on September 9, 1997. On September 17, 1997, MINCI informed CCC that its order are already ready for shipment and MINCI requested to amend the letter of credit changing the port of origin/loading from Singapore to Denmark (Singapore is the Asian Regional Office of Danfoss, the Head Office of the company is Denmark). CCC complied and the port of origin in the letter of credit was changed. On November 6, 1997, MINCI relayed to CCC that Danfoss Inc. was still checking the status of their order. CCC replied that every delay in the delivery of the order will cause loss to their company, so CCC requested for early work out and immediate shipment to avoid further loss.

But, on November 9, 1997, Danfoss Inc. informed MINCI through fax, that the reason for the delivery problems was that some of the supplied components for the new VLT 5000 series (this may be a part of the converter which is the subject thing in this case or a machine to create the converter) did not meet the agreed quality standard. So, Danfoss was canvassing for another supplier for the said VLT 5000 series. In the fax, there was no clear message as to when normal production will resume. Upon receiving the relayed information, CCC surmised that Danfoss would not be able to deliver their order. There was also no definite commitment of the delivery from Danfoss and MINCI, so CCC informed MINCI that they intend to cancel its order. The order was cancelled on November 13, 1997. Hence the complaint for damages filed by CCC with the RTC of Quezon City against Danfoss and MINCI on November 5, 1998. In reply, Danfoss filed a motion to dismiss the complaint. CCC alleged that due to the “impending” delay in the delivery of its order, it suffered more than P8 million and was compelled to look for another supplier. Danfoss claims that the case should be dismissed on the ground that it did not state a cause of action.ISSUE:

Whether or not there was a cause of action in the complaint filed by CCC against Danfoss.RULING:

No, there was no cause of action in the complaint for damages filed by CCC. “In order to sustain a dismissal on the ground of lack of cause of action, the insufficiency must appear on the face of the complaint. And the test of the sufficiency of the facts alleged in the complaint to constitute a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment thereon in accordance with the prayer of the complaint. For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. The RTC erred in ruling that “the issue of whether or not the defendants incurred delay in the delivery of the equipment within the period stipulated was a debatable question.” How could Danfoss be liable for damages when Danfoss had not yet breached his obligation to deliver the order of CCC, aside from the fact that the obligation was already negated when CCC cancelled the order before the prestation became due and demandable? Thus, there was no breach and there was no damage caused by Danfoss. The principle of anticipatory breach cannot be applied here because the obligation was single and indivisible – to deliver two units of frequency converter by November 19, 1997. There was no showing that Danfoss refused to deliver, and on the contrary, Danfoss made an effort to make good in its obligation by looking for other suppliers who could provide the parts needed to make the timely delivery of the order. Thus, the case was prematurely filed. CCC’s fear that Danfoss might not be able to deliver its order on time was not the cause of action referred to by the Rules and jurisprudence.

CEROFERR REALTY CORPORATION vs. COURT OF APPEALS and ERNESTO D. SANTIAGOG.R. No. 139539 February 5, 2002

FACTS:Ceroferr Realty Corporation filed with the RTC a complaint against Ernesto D. Santiago Santiago,

to enjoin Santiago from claiming possession and ownership over Lot No. 68 of the Tala Estate Subdivision and to prevent Santiago from making use of the vacant lot as a jeepney .

In his answer, Santiago alleged that the vacant lot referred to in the complaint was within Lot No. 90 of the Tala Estate Subdivision and he was not claiming any portion of Lot No. 68.

There was a verification survey, followed by a relocation survey, whereby it would appear that the vacant lot is inside Lot No. 68. The outcome of the survey, however, was vigorously objected to by Santiago who insisted that the area is inside his lot.

On May 14, 1996, the trial court dismissed the case for lack of cause of action and lack of jurisdiction. The court held that plaintiff was in effect impugning the title of defendant which could not be done in the case for damages and injunction before it. The court cited the hoary rule that a Torens certificate of title cannot be the subject of collateral attack but can only be challenged through a direct proceeding.

On March 26, 1999, the Court of Appeals promulgated a decision dismissing the appeal. On May 13, 1999, petitioner filed with the Court of Appeals a motion for reconsideration of the decision. On July 29, 1999, the Court of Appeals denied petitioner’s motion for reconsideration for lack of merit.

From this ruling, plaintiff appealed to this court insisting that the complaint stated a valid cause of action which was determinable from the face thereof, and that, in any event, the trial court could proceed to try and decide the case before it since, under present law, there is now no substantial distinction between the general jurisdiction vested in a regional trial court and its limited jurisdiction when acting as a land registration court.ISSUE:

Whether or not Ceroferr’s complaint states a sufficient cause of action.RULING:

A complaint states a cause of action only when it has its three indispensable elements, namely: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages. If these elements are not extant, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.

These elements are present in the case at bar.The complaint alleged that petitioner Ceroferr owned Lot 68 covered by TCT No. RT-90200

(334555). Petitioner Ceroferr used a portion of Lot 68 as a jeepney terminal. The complaint further alleged that respondent Santiago claimed the portion of Lot 68 used as a jeepney terminal since he claimed that the jeepney terminal was within Lot 90 owned by him.

KENNETH O. NADELA, vs. THE CITY OF CEBU and METRO CEBU DEVELOPMENT PROJECTG.R. No. 149627. September 18, 2003

FACTS:Kenneth O. Nadela filed an action before the RTC of Cebu City for recovery of ownership and

possession of a parcel of land. Nadela alleged that for more than thirty (30) years, he and his predecessors-in-interest have been in actual, adverse, peaceful and continuous possession in the concept of owner of an unregistered parcel of agricultural land situated at Brgy. Inayawan, Cebu City

He merely tolerated respondents’ act of dumping garbage on his property believing that it will not be prejudicial to his interest. In utter disregard of his rights, MCDP blocked the approval of the survey plan of the subject property. Consequently, the Bureau of Land deferred action on the said plan.MCDP placed and stationed some security guards in the subject property, thereby preventing him from entering and exercising his right of ownership and possession over the property.

City of Cebu filed a Motion to Dismiss on the ground that petitioner has no cause of action since (1) the suit is against the State and there is no allegation that it has given its consent; and (2) the Complaint itself shows that the case is premature since petitioner admitted that he is in possession in the concept of owner of an unregistered parcel of land.

Respondent MCDP, represented by the Solicitor General, also filed a Motion to Dismiss on the following grounds: (1) the Complaint states no cause of action as the land involved is a public land and thus belongs to the State, petitioner being a mere claimant thereof; (2) petitioner failed to exhaust

available administrative remedies; and (3) petitioner’s suit is barred under the doctrine of state immunity from suit.ISSUE:

Whether or not the action fails to state a cause of action.RULING:

The test of the sufficiency of the facts to constitute a cause of action is whether admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer of the complaint. In answering the query, only the facts asserted in the complaint must be taken into account without modification although with reasonable inferences therefrom. Nevertheless, in Tan v. Director of Forestry and Santiago v. Pioneer Savings and Loan Bank, evidence submitted by the parties during a hearing in an application for a writ of preliminary injunction was considered by the court in resolving the motion to dismiss. In Llanto v. Ali Dimaporo, this Court held that the trial court can properly dismiss a complaint on a motion to dismiss due to lack of cause of action even without a hearing, by taking into consideration the discussion in said motion and the opposition thereto. In Marcopper Mining Corporation v. Garcia, this Court ruled that the trial court did not err in considering other pleadings, aside from the complaint, in deciding whether or not the complaint should be dismissed for lack of cause of action.

EDWIN N. TRIBIANA vs. LOURDES M. TRIBIANAG.R. No. 137359. September 13, 2004

FACTS:Edwin Tribiana and Lourdes Tribiana are husband and wife. Lourdes filed a petition for habeas

corpus before the RTC claiming that Edwin left their conjugal home with their daughter Khriza Mae 1 year and 4. Edwin moved to dismiss Lourdes petition on the ground that it failed to allege that earnest efforts at a compromise. Lourdes filed her opposition to Edwin’s motion to dismiss that there were prior efforts at a compromise but failed. Lourdes attached the Certification to file Action from their barangay. RTC denied Edwin’s motion to dismiss and reiterated a previous order requiring Edwin and his mother to bring Khriza Mae before the RTC. Edwin filed with the CA a petition for prohibition and certiorari. The CA denied Edwin’s petition and also the motion for reconsideration.ISSUE:

Whether or not the Trial Court and the Appellate Court, should have dismissed the petition for habeas corpus on the ground of failure to comply with the condition precedent under art. 151 of Family Code.RULING:

It is true that the petition for habeas corpus filed by Lourdes failed to allege that she resorted to compromise proceedings before filing the petition. However, in her opposition to Edwin’s motion to dismiss, Lourdes attached a Barangay Certification to File Action dated 1 May 1998. Edwin does not dispute the authenticity of the Barangay Certification and its contents. This effectively established that the parties tried to compromise but were unsuccessful in their efforts. However, Edwin would have the petition dismissed despite the existence of the Barangay Certification, which he does not even dispute.

Evidently, Lourdes has complied with the condition precedent under Article 151 of the Family Code. A dismissal under Section 1(j) of Rule 16 is warranted only if there is a failure to comply with a condition precedent. Given that the alleged defect is a mere failure to allege compliance with a condition precedent, the proper solution is not an outright dismissal of the action, but an amendment under Section 1 of Rule 10 of the 1997 Rules of Civil Procedure. It would have been a different matter if Edwin had asserted that no efforts to arrive at a compromise have been made at all.

In addition, the failure of a party to comply with a condition precedent is not a jurisdictional defect. Such defect does not place the controversy beyond the court’s power to resolve. If a party fails

to raise such defect in a motion to dismiss, such defect is deemed waived. Such defect is curable by amendment as a matter of right without leave of court, if made before the filing of a responsive pleading. A motion to dismiss is not a responsive pleading. More importantly, an amendment alleging compliance with a condition precedent is not a jurisdictional matter. Neither does it alter the cause of action of a petition for habeas corpus. We have held that in cases where the defect consists of the failure to state compliance with a condition precedent, the trial court should order the amendment of the complaint. Courts should be liberal in allowing amendments to pleadings to avoid multiplicity of suits and to present the real controversies between the parties.

NATIONAL IRRIGATION ADMINISTRATION vs. LEONCIO C. ENCISOG.R. No. 142571 May 5, 2006

FACTS:In1984, NIA commenced the widening of the Binahaan River in Brgy. Cansamada, Dagami, Leyte.

This project was divided into small sections where contractors are assigned to work on specific sections without formal contracts. When the works for the assigned sections are completed to NIA’s satisfaction, NIA will then prepare the requisite contract and other pertinent documents so that the contractor can collect payment.

Enciso, doing business as a contractor under the name LCE Construction, worked on a portion of the river from "station 16 + 400 to station 16 + 900". His first billing of P227,165.90 was paid by NIA. However, his second and final billing of P259,154.01 was denied on the ground that the work done on the right side of the river was not accomplished.

Encisco finally instituted a complaint for collection of a sum of money with the RTC of Makati City. NIA filed a motion to dismiss on grounds of non-exhaustion of administrative remedies and lack of cause of action. The RTC denied the motion and proceeded to trial.

The RTC rendered judgment holding NIA liable. Both parties went up to the CA. For its part, NIA contended that the trial court erred in denying its motion to dismiss and thereafter holding it liable to respondent. On the other hand, Encisco interposed that the trial court erred in failing to hold NIA’s co-defendants personally liable for damages and in adjudging NIA solely liable based on the face value of the work accomplished in 1985. The CA, however, found no reversible error in the appealed decision and affirmed it.ISSUE:

Whether or not the case should be dismissed on the ground of non-exhaustion of administrative remedies.RULING:

The issue should have been resolved in the affirmative. The action must been filed at the COAExhaustion of administrative remedies is a doctrine of long standing and courts have clear

guidelines on the matter. Paat vs. Court of Appeals wrote:This Court in a long line of cases has consistently held that before a party is allowed to seek the

intervention of the court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted first before court’s judicial power can be sought. The premature invocation of court’s intervention is fatal to one’s cause of action. Accordingly, absent any finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of action. This doctrine of exhaustion of administrative remedies was not without its practical and legal reasons, for one thing, availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies. It is no less true to state that the courts of justice for reasons of comity and convenience will shy away from a dispute until the system of administrative redress has

been completed and complied with so as to give the administrative agency concerned every opportunity to correct its error and to dispose of the case. However, we are not amiss to reiterate that the principle of exhaustion of administrative remedies as tested by a battery of cases is not an ironclad rule. This doctrine is a relative one and its flexibility is called upon by the peculiarity and uniqueness of the factual and circumstantial settings of a case. Hence, it is disregarded (1) when there is a violation of due process, (2) when the issue involved is purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter, (7) when to require exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a nullification of a claim, (9) when the subject matter is a private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention.

NIA had timely raised this ground to dismiss the action before the RTC, and since there is no showing that respondent’s case falls under any one of the accepted exceptions, petitioner’s motion to dismiss should have been granted, forthwith dismissing the case for lack of cause of action.

ROYALES vs. INTERMEDIATE APPELLATE COURTG.R. No. L-65072 January 31, 1984

Facts:The spouses Apolinar R. Royales and Presentacion Gregorio are lessees of a residential house

owned by Planas. Planas instituted before the then City Court an ejectment suit against petitioners. The trial court rendered a decision wherein petitioners where to immediately vacate the house and restore possession thereof to Planas.

After the decision became final and executory, Planas filed a motion for execution and the same was granted. The same was however restrained by the RTC upon the filing by the petitioners a petition for certiorari and prohibition with preliminary injunction, assailing that said decision on ground of lack of jurisdiction, allegedly arising from failure of respondent Planas to submit the dispute to the Barangay Lupon for conciliation as required by P.D. 1508.

The RTC decided declaring the judgment of the trial court null and void for having been rendered without jurisdiction. Planas appealed to the IAC which decided confirming the decision of the City Court. Hence, this petition for review.Issue:

Whether or not the noncompliance of the condition prescribed by P.D. 1508, jurisdiction of the court was not acquired.Ruling:

In disputes covered by P.D. 1508, as in the case at bar, the barangay conciliation process is a pre-condition for the filing of an action in court. While petitioners could have prevented the trial court from exercising jurisdiction over the case by seasonably taking exception thereto, they instead invoked the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more, they participated in the trial of the case. Upon this premise, petitioners cannot now be allowed belatedly to adopt inconsistent posture by attacking the jurisdiction of the court to which they had submitted themselves voluntarily.

PETRA VDA. DE BORROMEO vs. HON. JULIAN B. POGOY, Municipality/City Trial Court of Cebu City, and ATTY. RICARDO REYES

G.R. No. L-63277. November 29, 1983FACTS:

The intestate estate of Vito Borromeo is the owner of a building, which was being rented out to Petra Vda. de Borromeo. On a relevant date, private respondent Atty. Ricardo Reyes, administrator of the estate, sent a letter to Petra Vda. de Borromeo for the payment of overdue rentals as well as to vacate the premises thereafter. Petra Vda. de Borromeo failed to pay. With less than a year from the demand letter, Atty. Ricardo Reyes instituted an action against Petra Vda. de Borromeo for unlawful detainer. Petra Vda. de Borromeo moves for the dismissal of the case for want of jurisdiction as she asserts that conciliation proceedings should have first been instituted with the Lupon Barangay.ISSUE:

Whether or not the action must have first been instituted with the Lupon Barangay.RULING:

Be that as it may, the instant petition should be dismissed. Under Section 4(a) of PD No. 1508, referral of a dispute to the Barangay Lupon is required only where the parties thereto are "individuals." An "individual" means "a single human being as contrasted with a social group or institution." Obviously, the law applies only to cases involving natural persons, and not where any of the parties is a juridical person such as a corporation, partnership, corporation sole, testate or intestate, estate, etc.

NAPOLEON GEGARE vs. HON. COURT OF APPEALS (ELEVENTH DIVISION) AND ARMIE ELMAG.R. No. 83907. September 13, 1989.

FACTS:This case involves a small piece of land. The decision was to cut it into two between the parties.

However, Gegare wants the whole lot. Elma is happy with his half. The center of controversy is Lot 5989 originally titled in the name of Paulino Elma. A reversion case was filed by the RP against Paulino Elma in the CFI of South Cotabato wherein it declared the title of Paulino Elma null and void and the same was ordered cancelled. The lot was reverted to the mass of public domain subject to disposition and giving preferential right to its actual occupant, Napoleon Gegare. Thereafter, the writ of execution was issued by the SC and the title of Elma to the property was cancelled.

Both Gegare and Elma filed an application for this lot in the Board of Liquidators in 1975. On June 15, 1976, Resolution No. 606, Series of 1976 was passed by the Board disposing of the lot in favor of Gegare by way of a negotiated sale. Elma protested against the application of Gegare but the same was denied by the Board. Upon MR by Elma, Mr. Garlit submitted a report to the Manila office recommending division of the lot to the parties. Nevertheless, on March 13, 1981, the Board denied the protest because the case had already been decided by the court.On August 14, 1981, the Board passed Resolution No. 272, Series of 1981 approving said recommendation by dividing the lot equally between the parties at 135.5 square meters each to be disposed to them by negotiated sale. Both parties appealed to the Office of the President but in a decision dated March 25, 1984, both appeals were dismissed. A motion for reconsideration filed by petitioner was denied on May 29,1984.

Private respondent paid for the value of 1/2 of the lot and applied for the issuance of a patent. In Resolution No. 185, Series of 1985 adopted on October 7, 1985, the Board gave due course to the application of private respondent and for the issuance of a patent to 1/2 portion of the lot. Petitioner was also advised to file his application and pay for his portion. Thus, Miscellaneous Sales Patent No. 4261 and Original Certificate of Title No. P-5139 were issued to private respondent.On November 27, 1985, petitioner filed an action for "Annulment and Cancellation of Partition of Lot 5989, Ts-217, situated at Dadiangas, General Santos City and Annulment of Resolutions No. 272 and 185 and/or to Declare them Null and Void" against private respondent and the Board. The suit was docketed as Civil Case No. 3270 in the Regional Trial Court of General Santos City.

On February 11, 1985, private respondent filed a motion to dismiss the complaint on the ground of lack of conciliation efforts pursuant to Section 6 of Presidential Decree No. 1508. The motion was granted in an order dated March 18, 1986.ISSUE:

Whether or not the action should be dismissedRULING:

True it is that the Board is a government instrumentality but the petitioner and private respondent who are also contending parties in the case are residents of the same barangay so Section 6 of Presidential Decree No. 1508 should apply to them as it provides---

Section 6. Conciliation, pre-condition to filing of complaint. No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated.

The purpose of this confrontation is to enable the parties to settle their differences amicably. If the other only contending party is the government or its instrumentality or subdivision the case falls within the exception but when it is only one of the contending parties, a confrontation should still be undertaken among the other parties.

TERESITA MONTOYA vs. TERESITA ESCAYO, JOY ESCAYO, AIDA GANANCIAL, MARY ANN CAPE, CECILIA CORREJADO, ERLINDA PAYPON and ROSALIE VERDE, AND NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 82211-12 March 21, 1989FACTS:

The private respondents were all formerly employed as salesgirls in the petitioner's store, the "Terry's Dry Goods Store," in Bacolod City. On different dates, they separately filed complaints for the collection of sums of money against the petitioner for alleged unpaid overtime pay, holiday pay, 13th month pay, ECOLA, and service leave pay: for violation of the minimum wage law, illegal dismissal, and attorney's fees. The complaints, which were originally treated as separate cases, were subsequently consolidated on account of the similarity in their nature. On August 1, 1984, the petitioner-employer moved for the dismissal of the complaints, claiming that among others, the private respondents failed to refer the dispute to the Lupong Tagapayapa for possible settlement and to secure the certification required from the Lupon Chairman prior to the filing of the cases with the Labor Arbiter. These actions were allegedly violative of the provisions of P.D. No. 1508, which apply to the parties who are all residents of Bacolod City.ISSUE:

Whether or not the action should be dismissedRULING

Requiring conciliation of labor disputes before the barangay courts would defeat the very salutary purposes of the law. Instead of simplifying labor proceedings designed at expeditious settlement or referral to the proper court or office to decide it finally, the position taken by the petitioner would only duplicate the conciliation proceedings and unduly delay the disposition of the labor case. The fallacy of the petitioner's submission can readily be seen by following it to its logical conclusion. For then, if the procedure suggested is complied with, the private respondent would have to lodge first their complaint with the barangay court, and then if not settled there, they would have to go to the labor relations division at the Regional Office of Region VI of the Department of Labor and Employment, in Bacolod City, for another round of conciliation proceedings. Failing there, their long

travail would continue to the Office of the Labor Arbiter, then to the NLRC, and finally to us. This suggested procedure would destroy the salutary purposes of P.D. 1508 and of The Labor Code Of The Philippines. And labor would then be given another unnecessary obstacle to hurdle. We reject the petitioner's submission. It does violence to the constitutionally mandated policy of the State to afford full protection to labor.

Finally, it is already well-settled that the ordinary rules on procedure are merely suppletory in character vis-a-vis labor disputes which are primarily governed by labor laws. And "(A)ll doubts in the implementation and interpretation of this Code (Labor), including its implementing rules and regulations, shall be resolved in favor of labor.

ANGEL L. BOLEYLEY vs. HON. CLARENCE J. VILLANUEVA, Presiding Judge, Branch 7, Regional Trial Court, Baguio City, and ALBERT S. SURLA

G.R. No. 128734. September 14, 1999FACTS:

On August 7, 1996, Angel L. Boleyley filed with the RTC, Baguio City, a complaint against Albert Surla for collection of a sum of mone.On September 13, 1996, Albert S. Surla filed with the trial court a motion to dismiss the complaint on the ground that petitioner did not comply with the Revised Katarungan Pambarangay Law requiring as a condition for the filing of a complaint in court referral of the matter to the barangay lupon chairman or the pangkat, for conciliation or settlement.

On September 17, 1997, petitioner filed an opposition to motion to dismiss on the ground that private respondent was not a resident of Baguio City so that the dispute involving the parties was not within the authority of the lupon to bring together for conciliation or settlement. ISSUE

Whether or not petitioner was bound to refer the dispute to the barangay lupon or pangkat for conciliation or settlement before he could file an action for collection with the regional trial court. RULING:

In the complaint filed by petitioner with the Regional Trial Court, Baguio City, he stated that:"COMPLAINT"COMES NOW the plaintiff by his undersigned counsel and to this Honorable Court respectfully alleges: "1.) That plaintiff is of legal age, married, Filipino and a resident of No. 100 Imelda Village, Baguio City while defendant is also of legal age, Filipino and with postal office address at C-4 Ina Mansion, Kisad Road, Baguio City where he may be served with summons and other legal processes;"

From the above allegations, it is obvious that the parties do not reside in the same city or municipality, and hence, the dispute is excepted from the requirement of referral to the barangay lupon or pangkat for conciliation or settlement prior to filing with the court.

Nevertheless, the complaint clearly implies that the parties do not reside in the same city or municipality.

The venue of the action is not affected by the filing of defendant’s (respondent’s) motion to dismiss stating that he also resided in Baguio City. That is not decisive to determine the proper venue.Consequently, we rule that there is no need of prior referral of the dispute to the barangay lupon or pangkat in the absence of showing in the complaint itself that the parties reside in the same city or municipality.

CALIFORNIA AND HAWAIIAN SUGAR COMPANY; PACIFIC GULF MARINE, INC.; and C.F. SHARP & COMPANY vs. PIONEER INSURANCE AND SURETY CORPORATION

G.R. No. 139273. November 28, 2000FACTS:

On November 27, 1990, the vessel MV “SUGAR ISLANDER” arrived at the port of Manila carrying a cargo of soybean meal in bulk consigned to several consignees, one of which was the Metro Manila Feed Millers Association. Discharging of cargo from vessel to barges commenced on November 30, 1990. From the barges, the cargo was allegedly offloaded, rebagged and reloaded on consignee’s delivery trucks. Respondent, however, claims that when the cargo was weighed on a licensed truck scale a shortage of 255.051 metric tons valued at P1,621,171.16 was discovered. The above-mentioned shipment was insured with private respondent against all risk in the amount of P19,976,404.00. Due to the alleged refusal of petitioners to settle their respective liabilities, respondent, as insurer, paid the consignee Metro Manila Feed Miller’s Association. On March 26, 1992, as alleged subrogee of Metro, private respondent filed a complaint for damages against herein petitioners. Within the reglementary period to file an Answer, petitioners filed a Motion to Dismiss the complaint on the ground that respondent’s claim is premature, the same being arbitrable. Private respondent filed its Opposition thereto and petitioners filed their Reply to Opposition.

On November 11, 1992, RTC issued an Order deferring the hearing on the Motion to Dismiss until the trial and directing petitioners to file their Answer. Petitioners then moved to reconsider said Order which was, however, denied by [the RTC] on the ground that the reason relied upon by herein petitioners in its Motion to Dismiss and Motion for Reconsideration [was] a matter of defense which they must prove with their evidence.

On August 20, 1993, petitioners filed their Answer with Counterclaim and Crossclaim alleging therein that plaintiff, herein respondent, did not comply with the arbitration clause of the charter party; hence, the complaint was allegedly prematurely filed. The trial court set the case for pre-trial on November 26, 1993.

On November 15 and 16, 1993, petitioners filed a Motion to Defer Pre-Trial and Motion to Set for Preliminary Hearing the Affirmative Defense of Lack of Cause of Action for Failure to comply with Arbitration Clause, respectively. Private respondent did not file an Opposition to the said Motion to Set for Preliminary Hearing. On December 28, 1993, [the RTC] issued an Order denying the Motion to Set for Preliminary Hearing. On February 2, 1994 petitioners filed a Motion for Reconsideration of the Order dated December 28, 1993. On February 11, 1994, [the RTC] issued an Order denying petitioners’ Motion for Reconsideration.ISSUE:

Whether or not a preliminary hearing on defenses is still possible.RULING:

Yes, affirmative defense may be raised.Still in effect when the case was before the trial court, Section 5, Rule 16 of the pre-1997 Rules

of Court, reads:“Sec. 5. Pleading grounds as affirmative defenses. - Any of the grounds for dismissal provided for in this Rule, except improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to dismiss had been filed.”

Respondent argues that the above provision cannot be applied, because petitioners have already filed a Motion to Dismiss.

We disagree. Respondent relies on the amendments introduced in the 1997 Rules on Civil Procedure ("1997 Rules”), but ignores equally relevant provisions thereof, as well as the clear intendment of the pre-1997 Rules. True, Section 6, Rule 16 of the 1997 Rules, specifically provides that a preliminary hearing on the affirmative defenses may be allowed only when no motion to dismiss has been filed. Section 6, however, must be viewed in the light of Section 3 of the same Rule, which requires courts to resolve a motion to dismiss and prohibits them from deferring its resolution on the ground of indubitability. Clearly then, Section 6 disallows a preliminary hearing of affirmative defenses once a motion to dismiss has been filed because such defense should have already been resolved. In the

present case, however, the trial court did not categorically resolve petitioners’ Motion to Dismiss, but merely deferred resolution thereof.

Indeed, the present Rules are consistent with Section 5, Rule 16 of the pre-1997 Rules of Court, because both presuppose that no motion to dismiss had been filed; or in the case of the pre-1997 Rules, if one has been filed, it has not been unconditionally denied. Hence, the ground invoked may still be pleaded as an affirmative defense even if the defendant’s Motion to Dismiss has been filed but not definitely resolved, or if it has been deferred as it could be under the pre-1997 Rules.