PHILIPPINE TELEGRAPH & TELEPHONE

CORP., petitioner, vs. SMART COMMUNICATIONS, INC., respondent.

DECISION

JARDELEZA, J p:
Since 1979, the National Telecommunications Commission (NTC) has been
the lead government agency in charge of regulating the telecommunications industry.
The Public Telecommunications Policy Act of the Philippines 1 (RA 7925) gave the
NTC the authority to approve or adopt access charge arrangements between two
public telecommunication entities. The issues here are whether the NTC has primary
jurisdiction over questions involving access charge stipulations in a bilateral
interconnection agreement, and whether regular courts can restrain the NTC from
reviewing the negotiated access charges.
I
Petitioner Philippine Telegraph & Telephone Corporation (PT&T) and
respondent Smart Communications, Inc. (Smart) entered into an Agreement 2dated
June 23, 1997 for the interconnection of their telecommunication facilities. The
Agreement provided for the interconnection of Smart's Cellular Mobile Telephone
System (CMTS), Local Exchange Carrier (LEC) and Paging services with PT&T's LEC
service. Starting 1999, however, PT&T had difficulty meeting its financial obligations
to Smart. 3 Thus, on November 28, 2003, the parties amended the Agreement, which
extended the payment period and allowed PT&T to settle its obligations on installment
basis. The amended Agreement also specified, among others, that Smart's access
charge to PT&T would increase from P1.00 to P2.00 once PT&T's unpaid balance
reaches P4 Million and that PT&T's access charge to Smart would be reduced from
P8.69 to P6.50. Upon full payment, PT&T's access charge would be further reduced
to P4.50. 4
On April 4, 2005, Smart sent a letter informing PT&T that it increased the
access charge from P1.00 to P2.00 starting April 1, 2005 in accordance with the
amended Agreement. However, on September 2, 2005, PT&T sent a letter
to Smart claiming that the latter overcharged PT&T on outbound calls to Smart's
CMTS. 5 PT&T cited the NTC resolution in a separate dispute between Smart and
Digitel, where the NTC ultimately disallowed the access charges imposed by Smart for
being discriminatory and less favorable than terms offered to other public
telecommunication entities (PTEs). Accordingly, PT&T demanded a refund of
P12,681,795.13 from Smart. 6
Thereafter, on September 15, 2005, PT&T filed a letter-complaint with the NTC
raising the issue that the access charges imposed by Smart were allegedly
"discriminatory and not in conformity with those of other carriers." 7 On January 20,
2006, the NTC ordered Smart and PT&T to attend mediation conferences in order to
thresh out the issues. 8 After the mediation efforts failed, the NTC directed the parties
to file their respective pleadings, after which it would consider the case submitted for
resolution. But before the parties were able to submit the pleadings, Smart filed a
complaint with the Regional Trial Court of Makati City (RTC) against PT&T on April 7,
2006. 9 Smart alleged that PT&T was in breach of its contractual obligation when it
failed to pay its outstanding debt and denied its liability to Smart.
Accordingly, Smart prayed that PT&T be ordered to pay the sum of P1,387,742.33
representing its unpaid obligation and to comply with the amended
Agreement. 10 Smart also asked the RTC to issue a temporary restraining order
against the NTC and PT&T, which the RTC granted on April 25, 2006. 11
In its answer to the complaint, 12 PT&T sought for the dismissal of the civil
case on the grounds of lack of jurisdiction, non-observance of the doctrine of primary
jurisdiction, exhaustion of administrative remedies, litis pendentia and res judicata. It
also prayed that the restraining order be immediately set aside. After several hearings,
the RTC issued a writ of preliminary injunction in favor of Smart. 13 The RTC
reasoned that allowing the NTC to proceed and adjudicate access charges would
violate Smart's contractual rights. The RTC also denied PT&T's motion to dismiss,
finding that the nature of the civil case was incapable of pecuniary estimation which
squarely falls within its jurisdiction. 14 It added that the NTC has no jurisdiction to
adjudicate breaches of contract and award damages.
PT&T elevated the case to the Court of Appeals through a petition for certiorari.
The Court of Appeals held that the RTC did not commit grave abuse of discretion and,
consequently, denied the petition. 15 It found that the RTC had jurisdiction over the
case because it involved an action for specific performance, i.e., PT&T's compliance
with the Agreement, and is therefore incapable of pecuniary estimation. And insofar
as the dispute involved an alleged breach of contract, there was no need to refer the
matter to the NTC because it had no jurisdiction over breach of contract cases.
After its motion for reconsideration was denied by the Court of Appeals, PT&T
filed this petition for review 17 seeking to overturn the RTC's order of injunction and
non-dismissal of Smart's complaint. PT&T principally argues that the NTC has primary
jurisdiction over the determination of access charges. PT&T characterizes the NTC
case as one involving the validity of interconnection rates, as opposed to one involving
purely a breach of contract and claim for damages cognizable by the RTC. PT&T adds
that the writ of preliminary injunction issued by the RTC against NTC constitutes
interference with a co-equal body. Smart counters by claiming that the dispute was
purely contractual; hence, it properly falls within the jurisdiction of the RTC. Although
the Agreement contained technical terms, Smart's position is that the NTC has no
jurisdiction over bilateral interconnection agreements voluntarily negotiated and
entered into by PTEs.
II
Like the Court of Appeals below, Smart relies on the argument that its
complaint before the RTC is one which is incapable of pecuniary estimation and,
accordingly, falls within the RTC's jurisdiction. Smart's theory is that, because it is
seeking to enforce the Agreement, the action falls within the ruling of Boiser v. Court
of Appeals 18 that the regular courts, not the NTC, have jurisdiction over cases
involving breach of contract and damages. Invoking the freedom to contract and non-
impairment clause, Smart posits that "[t]he specialized knowledge and expertise of the
NTC is not indispensable or even necessary in this case since . . . [Smart] simply
seeks to enforce and implement the contractual agreement between the parties and
their rights and obligations in relation thereto." 19 Responding to PT&T's claim that it
is seeking the NTC intervention only to resolve the issue on validity of the rates of
charges between the two PTEs, Smart downplays this by stating that there is no
dispute on the applicable rates since these were already stated in the Agreement. 20
We cannot agree with Smart's position. While it is true that regional trial courts,
as courts of general jurisdiction, can take cognizance of cases that are incapable of
pecuniary estimation — including actions for breach of contract and damages — the
fact that the interconnection agreement betweenSmart and PT&T involved access
charges warrants a more nuanced analysis.
RA 7925 recognizes and encourages bilateral negotiations between PTEs, but
it does not strictly adopt a laissez-faire policy. It imposes strictures that restrain within
reason how PTEs conduct their business. 21 The law aims to foster a healthy
competitive environment by striking a balance between the freedom of PTEs to make
business decisions and to interact with one another on the one hand and the
affordability of rates on the other. 22However, one can speak of healthy competition
only between equals. Thus, consistent with Section 19, 23 Article XII of the
Constitution, RA 7925 seeks to break up the monopoly in the telecommunications
industry by gradually dismantling the barriers to entry and granting new industry
entrants protection against dominant carriers through equitable access charges and
equal access clauses in interconnection agreements and through the strict policing of
predatory pricing by dominant carriers. 24 Specifically, Section 18 of RA
7925 regulates access charge arrangements between two PTEs:
Access Charge/Revenue Sharing. — The access
charge/revenue sharing arrangements between all interconnecting
carriers shall be negotiated between the parties and the agreement
between the parties shall be submitted to the Commission. In the event
the parties fail to agree thereon within a reasonable period of time, the
dispute shall be submitted to the Commission for resolution.
In adopting or approving an access charge formula or revenue
sharing agreement between two or more carriers, particularly, but not
limited to a local exchange, interconnecting with a mobile radio,
interexchange long distance carrier, or international carrier, the
Commission shall ensure equity, reciprocity and fairness among
the parties concerned. In so approving the rates for
interconnection between the telecommunications carriers, the
Commission shall take into consideration the costs of the facilities
needed to complete the interconnection, the need to provide the
cross-subsidy to local exchange carriers to enable them to fulfill
the primary national objective of increasing telephone density in
 the country and assure a rate of return on the local exchange
network investment that is at parity with those earned by other
segments of the telecommunications industry: Provided, That
international carriers and mobile radio operators which are mandated to
provide local exchange services, shall not be exempt from the
requirement to provide the cross-subsidy when they interconnect with
the local exchanges of other carriers: Provided, further, That the local
exchanges which they will additionally operate, shall equally be entitled
to the cross-subsidy from other international carriers, mobile radio
operators, or inter-exchange carriers interconnecting with them.
(Emphasis supplied.) DETACa
The first paragraph mandates that any agreement pertaining to access charges
must be submitted to the NTC for approval; in case the parties fail to agree, the matter
shall be resolved by the NTC. Smart contends that the NTC's authority under the
second paragraph of Section 18 is limited to instances where the parties fail to agree
on the rates. This interpretation is incorrect. There is no indication that —
and Smart has not pointed to any significant reason why — the second paragraph of
Section 18 should be construed as limited to the latter instances. On the contrary, We
observe that Congress deliberately used the word "approve," in conjunction with
"adopt," in describing the action that the NTC may take. The plain dictionary meaning
of approve is "to express often formally agreement with and support of or
commendation of as meeting a standard." 25 This presupposes that something has
been submitted to the NTC, as the approving authority, contrasted with the NTC
adopting its own formula. Under Section 18, it is either the access charge formula or
revenue-sharing arrangement that is submitted to the NTC for approval. Smart and
PT&T's Agreement, insofar as it specifies the access charge rates for the
interconnection of their networks, falls within the coverage of the provision. Therefore,
the Agreement should have been submitted to the NTC for its review and approval in
accordance with the second paragraph of Section 18. Conspicuously, however,
neitherSmart nor PT&T claims that the access charges in the Agreement have been
submitted to, much less approved, by the NTC. This further justifies the intervention
of the NTC.
It is clear that the law did not intend the approval to simply be a ministerial
function. The second paragraph of Section 18 enumerates the guidelines to be
considered by the NTC before it approves the access charges. Thus, the NTC must
be satisfied that the access charge formula is fair and reasonable based on factors
such as cost, public necessity and industry returns; otherwise, it has the discretion to
disapprove the rates in the event that it finds that they fall short of the statutory
standards. 26 Evidently, the proceeding under Section 18 is quasi-judicial in nature.
Any action by the NTC would particularly and immediately affect the rights of the
interconnecting PTEs — in this case, Smart and PT&T — rather than being applicable
to all PTEs throughout the Philippines. 27 The NTC, therefore, correctly treated the
dispute as adversarial and gave both Smart and PT&T the opportunity to be heard.
The mere fact that Smart and PT&T negotiated and executed a bilateral
interconnection agreement does not take their stipulations on access charges out of
the NTC's regulatory reach. This has to be so in order to further one of the declared
policies of RA 7925 of expanding the telecommunications network by improving and
extending basic services in unserved and underserved areas at affordable rates. 28 A
contrary ruling would severely limit the NTC's ability to discharge its twin mandates of
protecting consumers and promoting consumer welfare, 29 and would go against the
trend towards greater delegation of judicial authority to administrative agencies in
matters requiring technical knowledge. 30 Smart cannot rely on the non-impairment
clause because it is a limit on the exercise of legislative power and not of judicial or
quasi-judicial power. 31 As discussed in the preceding paragraph, the approval of the
access charge formula under Section 18 is a quasi-judicial function.
The foregoing interpretation is equally supported by the structure of RA 7925.
Congress gave the NTC broad powers over interconnection matters in order to
achieve the goal of universal accessibility. Apart from the authority to approve or adopt
interconnection rates, the NTC can even "[m]andate a fair and reasonable
interconnection of facilities of authorized public network operators and other providers
of telecommunications services through appropriate modalities of interconnection and
at a reasonable and fair level of charges, which make provision for the cross subsidy
to unprofitable local exchange service areas so as to promote telephone density and
provide the most extensive access to basic telecommunications services available at
affordable rates to the public." 32 Such extensive powers may generally be traced to
the Constitution, which recognizes the vital role of communication and information in
nation-building. 33 In Philippine Long Distance Telephone Co. (PLDT) v. National
Telecommunications Commission, 34 we explained why the NTC may regulate — in
that case, mandate — interconnection between PTEs:
The interconnection which has been required of PLDT is a form
of "intervention" with property rights [recognized by Article XII, Section 6
of the Constitution] dictated by "the objective of government to promote
the rapid expansion of telecommunications services in all areas of the
Philippines, . . . to maximize the use of telecommunications facilities
available, . . . in recognition of the vital role of communications in nation
building . . . and to ensure that all users of the public telecommunications
service have access to all other users of the service wherever they may
be within the Philippines at an acceptable standard of service and at
reasonable cost" (DOTC Circular No. 90-248). Undoubtedly, the
encompassing objective is the common good. The NTC, as the
regulatory agency of the State, merely exercised its delegated authority
to regulate the use of telecommunications networks when it decreed
interconnection.
xxx xxx xxx
The decisive considerations are public need, public interest, and
the common good. . . . Article II, Section 24 of the 1987 Constitution,
recognizes the vital role of communication and information in nation
building. It is likewise a State policy to provide the environment for the
emergence ofcommunications structures suitable to the balanced flow
of information into, out of, and across the country (Article XVI, Section
 10, . . .). A modern and dependable communications network rendering
efficient and reasonably priced services is also indispensable for
accelerated economic recovery and development. To these public and
national interests, public utility companies must bow and
yield. 35 (Emphasis omitted.)
The same reasoning obtains here. Access charges directly affect the State's
goal of making basic telecommunications services accessible to everyone at
affordable rates. If the access charges are too high, the cost to end-users may well be
prohibitive. Smart cannot simply invoke the freedom of contract to shield it from the
intervention of the NTC, especially when the law itself sanctions the agency's
intervention. As correctly pointed out by PT&T, "[b]ecause petitioner and respondent
are public utility PTEs subject to regulation by the NTC, their freedom to enter into
contracts is not absolute but subject to the police power of the State, especially when
it comes to matters affecting public interest and convenience." 36 aDSIHc
The case relied upon by Smart, Boiser, finds no application here for the simple
reason that the dispute in that case did not involve access charges.Boiser arose from
PLDT's alleged failure to observe the 30-day pre-disconnection notice requirement
stated in the parties' Interconnecting Agreement. In holding that regular courts had
jurisdiction, we said that "[t]here is nothing in the Commission's powers which
authorizes it to adjudicate breach of contract cases, much less to award moral and
exemplary damages." 37 In stark contrast, jurisdiction over negotiated access charge
formulas, such asSmart and PT&T's Agreement, has been allocated to the NTC by
express provision of law.
In fine, Section 18 of RA 7925 authorizes the NTC to determine the equity,
reciprocity and fairness of the access charges stipulated in Smart and PT&T's
Agreement. This does not, however, completely deprive the RTC of its jurisdiction
over the complaint filed by Smart. The Agreement has other stipulations which do not
require the NTC's expertise. But insofar as Smart's complaint involved the
enforcement of, as well as the collection of sums based on the rates subject of the
NTC proceedings, the RTC cannot proceed with the civil case until the NTC has finally
determined if the access charges are fair and reasonable. Hence, the more prudent
course of action for the RTC would have been to hold the civil action in abeyance until
after a determination of the NTC case. Indeed, logic and the doctrine of primary
jurisdiction dictate such move. In San Miguel Properties, Inc. v. Perez, 38 we held
that:
The doctrine of primary jurisdiction has been increasingly called
into play on matters demanding the special competence of
administrative agencies even if such matters are at the same time within
the jurisdiction of the courts. A case that requires for its determination
the expertise, specialized skills, and knowledge of some administrative
board or commission because it involves technical matters or intricate
questions of fact, relief must first be obtained in an appropriate
administrative proceeding before a remedy will be supplied by the courts
although the matter comes within the jurisdiction of the courts. The
application of the doctrine does not call for the dismissal of the case in
 the court but only for its suspension until after the matters within the
competence of the administrative body are threshed out and
determined.
To accord with the doctrine of primary jurisdiction, the courts
cannot and will not determine a controversy involving a question
within the competence of an administrative tribunal, the
controversy having been so placed within the special competence
of the administrative tribunal under a regulatory scheme. In that
instance, the judicial process is suspended pending referral to the
administrative body for its view on the matter in dispute.
Consequently, if the courts cannot resolve a question that is within the
legal competence of an administrative body prior to the resolution of that
question by the latter, especially where the question demands the
exercise of sound administrative discretion requiring the special
knowledge, experience, and services of the administrative agency to
ascertain technical and intricate matters of fact, and a uniformity of ruling
is essential to comply with the purposes of the regulatory statute
administered, suspension or dismissal of the action is
proper. 39 (Emphasis supplied; citations omitted.)
Here, it would be more proper for the RTC to yield its jurisdiction in favor of the
NTC since the determination of a central issue, i.e., the matter of access charges,
requires the special competence and expertise of the latter. "In this era of clogged
court dockets, administrative boards or commissions with special knowledge,
experience and capability to promptly hear and determine disputes on technical
matters or intricate questions of facts, subject to judicial review in case of grave abuse
of discretion, are well-nigh indispensable. Between the power lodged in an
administrative body and a court, therefore, the unmistakable trend is to refer it to the
former." 40 ETHIDa
III
Under Rule 58, Section 2 of the 1997 Rules of Civil Procedure, the court where
the action is pending may grant the provisional remedy of preliminary injunction.
Generally, trial courts have the ancillary jurisdiction to issue writs of preliminary
injunction in cases falling within its jurisdiction, including civil actions that are incapable
of pecuniary estimation 41 and claims for sum of money exceeding
P400,000.00, 42 among others. There are, however, exceptions to this rule, such as
when Congress, in the exercise of its power to apportion jurisdiction, 43 restricts the
authority of regular courts to issue injunctive reliefs. For example, the Labor
Code prohibits any court from issuing injunctions in cases involving or arising from
labor disputes. 44Similarly, Republic Act No. 8975 45 (RA 8975) provides that no
court, other than the Supreme Court, may issue provisional injunctive reliefs which
would adversely affect the expeditious implementation and completion of government
infrastructure projects. 46 Another well-recognized exception is that courts could not
interfere with the judgments, orders, or decrees of a court of concurrent or coordinate
jurisdiction. 47 This rule of non-interference applies not only to courts of law having
equal rank but also to quasi-judicial agencies statutorily at par with such courts. 48
 The NTC was created pursuant to Executive Order No. 546 49 (EO 546),
promulgated on July 23, 1979. It assumed the functions formerly assigned to the
Board of Communications and the Telecommunications Control Bureau and was
placed under the administrative supervision of the Ministry of Public Works.
Meanwhile, the Board of Communications previously exercised the authority which
originally pertained to the Public Service Commission (PSC). 50 Under Executive
Order No. 125, 51 issued in January 1987, the NTC became an attached agency of
the Department of Transportation andCommunications.
Section 16 of EO 546 provides that, with respect to the NTC's quasi-judicial
functions, its decisions shall be appealable in the same manner as the decisions of
the Board of Communications had been appealed. The rulings and decisions of the
Board were, in turn, appealable in the same manner as the rulings and decisions of
the PSC. 52 Under Section 35 of the Public Service Act, the Supreme Court had
jurisdiction to review any order, ruling, or decision of the PSC. 53 In Iloilo Commercial
and Ice Company v. Public Service Commission, 54 we categorically held that courts
of first instance have no power to issue a restraining order directed to the PSC. 55 In
that case, the PSC instructed the city fiscal to file a criminal action against the owner
and manager of Iloilo Commercial and Ice Company for allegedly operating a public
utility without the required certificate of public convenience. The company brought a
complaint in the Court of First Instance of Iloilo for an injunction to restrain the PSC
from proceeding against the company and its officers. The Court, speaking through
Justice Malcolm, said:
The Public Service Law, Act No. 3108, as amended, creates a
Public Service Commission which is vested with the powers and duties
therein specified. The Public Service Commissioners are given the rank,
prerogatives, and privileges of Judges of First Instance. Any order made
by the commission may be reviewed on the application of any person or
public service affected thereby, by certiorari, in appropriate cases or by
petition, to the Supreme Court, and the Supreme Court is given
jurisdiction to review any order of the Commission and to modify or set
it aside (sec. 35).
. . . In the absence of a specific delegation of jurisdiction to
Courts of First Instance to grant injunctive relief against orders of
the Public Service Commission, it would appear that no court,
other than the Supreme Court, possesses such jurisdiction. To
hold otherwise would amount to a presumption of power in favor
of one branch of the judiciary, as against another branch of equal
rank. If every Court of First Instance had the right to interfere with the
Public Service Commission in the due performance of its functions,
unutterable confusion would result. The remedy at law is adequate, and
consists either in making the proper defense in the criminal action or in
the Ice Company following the procedure provided in the Public Service
Law. An injunction is not the proper remedy, since other and exclusive
remedies are prescribed by law. 56 (Emphasis supplied.)
 The above ruling is deemed to have been modified by Batas Pambansa
Blg. 129, which granted the Court of Appeals exclusive appellate jurisdiction over "all
final judgments, resolutions, orders or awards of Regional Trial Courts and quasi-
judicial agencies, instrumentalities, boards or commission" except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution
and the Labor Code. 57 In this regard, Rule 43 of the Rules of Court provides that an
appeal from any award, judgment or resolution of or authorized by a quasi-judicial
agency in the exercise of its quasi-judicial functions, including the NTC, shall be
through a petition for review with the Court of Appeals. 58
In view of the legislative history of the NTC, it is clear that Congress intended
NTC, in respect of its quasi-judicial or adjudicatory functions, to be co-equal with
regional trial courts. Hence, the RTC cannot interfere with the NTC's exercise of its
quasi-judicial powers without breaching the rule of non-interference with tribunals of
concurrent or coordinate jurisdiction. In this case, the NTC was already in the process
of resolving the issue of whether the access charges stipulated in the Agreement were
fair and equitable pursuant to its mandate under RA 7925 when the RTC issued the
assailed writ of preliminary injunction. Mediation conferences had been conducted
and, failing to arrive at a settlement, the NTC had ordered the parties to submit their
respective pleadings. Simply put, the NTC had already assumed jurisdiction over the
issue involving access charges. Undeniably, the RTC exceeded its jurisdiction when
it restrained the NTC from exercising its statutory authority over the dispute.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated
February 18, 2009, as well as the Resolution dated July 23, 2009, of the Court of
Appeals in CA-G.R. SP No. 97737 are SET ASIDE. The writ of preliminary injunction
issued by the Regional Trial Court, Branch 146, Makati City isDISSOLVED. The
Regional Trial Court, Branch 146, Makati City is further directed to SUSPEND its
proceedings until the National Telecommunications Commission makes a final
determination on the issue involving access charges.
SO ORDERED.
(Philippine Telegraph & Telephone Corp. v. Smart Communications, Inc., G.R.
No. 189026, [November 9, 2016])

RULE 2

SECOND DIVISION

[G.R. No. 174333. April 20, 2016.]

PILIPINAS SHELL FOUNDATION, INC. and SHELL PHILIPPINES

EXPLORATION B.V., petitioners, vs. TOMAS M. FREDELUCES,
MARCOS B. CORPUZ, JR., REYNALDO M. SAMONTE, NORMA M.
SAMONTE, AMBROCIO VILLANUEVA, SALVACION A. BON, RAMIRO
A. BON, LUZVIMINDA B. ANDILLO, LUDIVICO F. BON, ELMO
 AREGLO, ROSE A. SAN PEDRO, DANTE U. SANTOS, SR., MIGUEL
SANTOS, EFREN U. SANTOS, RIC U. SANTOS, SIMON MARCE, JR.,
JOEL F. SALINEL, BEBIANA SAN PEDRO, AND MARINA
SANTOS, respondents.

DECISION

LEONEN, J p:
When a motion to dismiss is filed, only allegations of ultimate facts are
hypothetically admitted. Allegations of evidentiary facts and conclusions of law, as well
as allegations whose falsity is subject to judicial notice, those which are legally
impossible, inadmissible in evidence, or unfounded, are disregarded.
This resolves a Petition for Review on Certiorari 1 assailing the Court of
Appeals Decision 2 and Resolution 3 in CA-G.R. CV No. 74791. Except for
respondent Tomas M. Fredeluces, the Court of Appeals reinstated the Complaint 4 for
damages filed by respondents Marcos B. Corpuz, Jr., Reynaldo M. Samonte, Norma
M. Samonte, Ambrocio Villanueva, Salvacion A. Bon, Ramiro A. Bon, Luzviminda B.
Andillo, Ludivico F. Bon, Elmo Areglo, Rose A. San Pedro, Dante U. Santos, Sr.,
Miguel Santos, Efren U. Santos, Ric U. Santos, Simon Marce, Jr., Joel F. Salinel,
Bebiana San Pedro, and Marina Santos against
petitioners Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration
B.V. 5 The Court of Appeals remanded the case to Branch 72 of the Regional Trial
Court of Olongapo City, which had earlier dismissed the Complaint for damages on
the grounds of litis pendentia, failure to state a cause of action, and lack of cause of
action. 6
With respect to Tomas M. Fredeluces, the Court of Appeals affirmed the
dismissal of the Complaint on the ground of lack of cause of action. 7
Pursuant to Presidential Decree No. 87, otherwise known as the Oil
Exploration and Development Act of 1972, the Republic of the Philippines entered into
Service Contract No. 38 and engaged the services of Shell Philippines Exploration
B.V. "for the exploration, development[,] and production of petroleum resources in an
. . . area offshore northwest of . . . Palawan[.]" 8 The service contractors eventually
discovered in offshore Malampaya-Camago at least 2.5 trillion cubic feet of natural
gas deposits. 9
Exploration and development of the Malampaya-Camago natural gas reservoir
required the construction and operation of a shallow water platform off the coast of
Palawan. The water platform further required a concrete gravity structure that would
sit on the seabed, and a topside or the platform's deck which would sit on top of the
concrete gravity structure. 10
The topside was constructed in Singapore. As for the concrete gravity
structure, Shell Philippines Exploration B.V. searched for possible construction sites
here in the Philippines. Subsequently identified as a possible construction site was
Subic, Zambales, and Shell Philippines Exploration B.V. met with representatives of
the Subic Bay Metropolitan Authority. 11
The Subic Bay Metropolitan Authority proposed a 40-hectare site in Sitio
Agusuhin as a possible construction site for the concrete gravity structure. 12 The site
formed part of the military reservation of the former naval base of the United States in
Subic, which, under Republic Act No. 7227,13 became part of the Subic Special
Economic Zone. 14
Results of a socio-economic survey commissioned by Shell Philippines
Exploration B.V. showed that there were about 200 households living at or near the
proposed construction site. Together with the Subic Bay Metropolitan Authority
and Pilipinas Shell Foundation, Inc., Shell Philippines Exploration B.V. established
contact with the occupants of Sitio Agusuhin. It was ultimately determined that 80
households would have to be relocated to nearby areas within the Subic Seaport
Economic Free Zone to carry out the project. 15
In May 1998, the Subic Bay Metropolitan Authority and Shell Philippines
Exploration B.V. entered into a Lease and Development Agreement for the
construction of the concrete gravity structure in Sitio Agusuhin. The Subic Bay
Metropolitan Authority undertook to relocate the affected households,
while Shell Philippines Exploration B.V. undertook to give financial assistance to
them. 16
The undertakings of Shell Philippines Exploration B.V. were implemented
through Pilipinas Shell Foundation, Inc. By the end of May
1998, PilipinasShell Foundation, Inc. concluded agreements with some of the affected
households. In exchange for financial assistance, some of the claimants voluntarily
dismantled their houses and relocated to nearby areas within the Subic Seaport
Economic Free Zone. Other claims, however, were denied byShell Philippines
Exploration B.V. for the claimant's failure to show that he or she resided in Sitio
Agusuhin prior to the construction project. 17 CAIHTE
With the assistance of the Subic Sangguniang Bayan, a Compensation
Community Relations Study Group was organized to re-evaluate the claims that had
been previously denied by Shell Philippines Exploration B.V. 18 In the meantime, the
construction of the concrete gravity structure was completed, and the shallow water
platform was successfully installed in Palawan on June 2, 2000. 19 Shell Philippines
Exploration B.V. turned over Sitio Agusuhin to the Subic Bay Metropolitan Authority,
cleared, leveled, and elevated, together with improvements "consisting of a finger pier,
a fence and gate, a drainage system[,] and a berthing facility for ferry sea crafts or
similar vessels along the southern bank of the basin." 20
On December 1, 2000, a Complaint for damages was filed
against Shell Philippines Exploration B.V. and Pilipinas Shell Foundation, Inc. before
the Regional Trial Court of Olongapo City. 21 Tomas M. Fredeluces, Marcos B.
Corpuz, Jr., Reynaldo M. Samonte, Norma M. Samonte, Ambrocio Villanueva,
Salvacion A. Bon, Ramiro A. Bon, Luzviminda B. Andillo, Ludivico F. Bon, Elmo
Areglo, Rose A. San Pedro, Dante U. Santos, Sr., Miguel Santos, Efren U. Santos,
Ric U. Santos, Simon Marce, Jr., Joel F. Salinel, Bebiana San Pedro, and Marina
Santos (Fredeluces, et al.) alleged that having resided in the area even prior to 1998,
they were lawful residents of Sitio Agusuhin. 22 They allegedly constructed their
houses and introduced improvements in Sitio Agusuhin, such as fruit trees and other
seasonal plants. 23
However, "[f]or the direct benefit of the defendants [Shell Philippines
Exploration B.V. and Pilipinas Shell Foundation, Inc.]," 24 Fredeluces, et al. were
"effectively evicted" 25 from their homes in "total disregard" 26 of their rights.
Admitting that some of the claimants were given financial assistance,Fredeluces, et
al. alleged that the amounts given were "insufficient to compensate the damages they
sustained[.]" 27 Worse, they were allegedly "pressured, coerced or . . . 'sweet
talked'" 28 into signing quitclaims and waivers.
"In arbitrarily and unlawfully evicting [Fredeluces, et al.] from their place of
abode and livelihood," 29 Shell Philippines Exploration B.V.
and PilipinasShell Foundation, Inc. allegedly failed to act with justice, "did not give . .
. [Fredeluces, et al.] their due[,] and acted in bad faith." 30 The actions
of ShellPhilippines Exploration B.V. and Pilipinas Shell Foundation, Inc. were
allegedly contrary to law, for which they should pay Fredeluces, et al. the following
amounts representing actual damages: aScITE
1. Tomas Fredeluces P27,000,000.00
2. Marcos Corpuz, Jr. 905,000.00
3. Reynaldo Samonte 2,000,000.00
4. Norma Samonte 2,000,000.00
5. Ambrocio Villanueva 1,700,000.00
6. Salvacion Bon 750,000.00
7. Ramiro Bon 1,000,000.00
8. Luzviminda Andillo 500,000.00
9. Ludivico Bon 500,000.00
10. Elmo Areglo 1,000,000.00
11. Rose San Pedro 500,000.00
12. Dante Santos, Sr. 12,000,000.00
13. Miguel Santos 4,000,000.00
14. Efren Santos 5,000,000.00
15. Ric Santos 1,000,000.00
16. Simon Marce, Jr. 4,000,000.00
17. Joel Salinel (no amount)
18. Bebiana San Pedro 1,500,000.00
19. Marina Santos 3,000,000.00
–––––––––––––––
TOTAL P68,255,000.00 31
=============

In addition to their allegations, Fredeluces, et al. moved that they be allowed to

litigate as paupers considering that "[t]he gross income of each of [them] and the
members of their [families] do not exceed P3,000.00[,]" 32 and that none of them
allegedly owned real property. 33
Instead of answering the Complaint, Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. moved to dismiss 34 the complaint based on the
grounds of litis pendentia, failure to state a cause of action, and lack of cause of
action. 35
Shell Philippines Exploration B.V. and Pilipinas Shell Foundation, Inc. alleged
that five (5) of the plaintiffs — namely, Dante U. Santos, Sr., Efren U. Santos, Miguel
Santos, Ric U. Santos, and Bebiana San Pedro — earlier filed against them a
Complaint 36 for sum of money. 37 This Complaint, filed on October 9, 2000 also
before the Regional Trial Court of Olongapo City, allegedly prayed for payment of
disturbance compensation for their eviction from Sitio Agusuhin for the construction of
the concrete gravity structure. 38 Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. argued that the Complaint for sum of money and
the Complaint for damages had substantially similar causes of action and relief
sought, rendering the subsequently filed Complaint for damages dismissible on the
ground of litis pendentia. 39
According to Shell Philippines Exploration B.V. and Pilipinas Shell Foundation,
Inc., Fredeluces, et al. were praying for payment of damages corresponding to the
value of the land they previously occupied, a right that did not belong to them because
they never owned the land in Sitio Agusuhin. 40 Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. emphasized that Sitio Agusuhin belonged to the
Subic Bay Metropolitan Authority pursuant to Republic Act No. 7227; hence, lands in
Sitio Agusuhin are government property not subject to private ownership. 41In
addition, Fredeluces, et al.'s claims for the value of the improvements they introduced
in Sitio Agusuhin were allegedly paid as evidenced by the quitclaims they had
signed. 42 Consequently, the Complaint for damages failed to state a cause of
action. 43
With respect to Tomas M. Fredeluces and Ludivico F. Bon, Shell Philippines
Exploration B.V. and Pilipinas Shell Foundation, Inc. alleged that these plaintiffs never
resided in Sitio Agusuhin. 44 Tomas M. Fredeluces and Ludivico F. Bon were not
entitled to any compensation and, therefore, lacked a cause of action
against Shell Philippines Exploration B.V. and Pilipinas Shell Foundation, Inc. 45
Fredeluces, et al. opposed the Motion to Dismiss and prayed for its
denial. 46 In their Opposition, 47 Fredeluces, et al. argued that Shell Philippines
Exploration B.V. and Pilipinas Shell Foundation, Inc., in filing their Motion to Dismiss,
hypothetically admitted the factual allegations in their Complaint. Corollarily, the trial
court may not inquire into the truth of the allegations and may only resolve the Motion
to Dismiss based on the facts as alleged in the Complaint. 48
Countering the first ground of the Motion to Dismiss, Dante U. Santos, Efren U.
Santos, Miguel Santos, Ric U. Santos, and Bebiana San Pedro claimed that they were
not aware of their inclusion as plaintiffs in the earlier filed Complaint for sum of money.
In any case, they had allegedly revoked the Special Power of Attorney that they
executed in favor of Atty. Renato H. Collado before the lawyer filed the Complaint for
sum of money on their behalf. It follows that the Complaint for sum of money was filed
without their authority and should be deemed not to have been filed. Litis pendentia,
therefore, should not apply. 49
Fredeluces, et al. expressly admitted that they never owned Sitio
Agusuhin. 50 Nevertheless, they contended that they "were peacefully settled in the
area and [had] introduced improvements" 51 when Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. "summarily evicted" 52 them. It is for their
"unlawful eviction" 53 from, not ownership of, Sitio Agusuhin for which Fredeluces, et
al. demand payment of damages. 54
Although admitting that they executed quitclaims in favor of Shell Philippines
Exploration B.V. and Pilipinas Shell Foundation, Inc., Fredeluces, et al. specifically
alleged that they were pressured, coerced, or "sweet-talked" into signing them. 55 In
effect, Fredeluces, et al. assailed the validity of these quitclaims for lack of consent,
an issue requiring the presentation of evidence during trial. 56 Fredeluces, et al.
similarly argued that the issue of residence of Tomas M. Fredeluces and Ludivico F.
Bon required the presentation of evidence during trial. 57 HEITAD
On April 20, 2001, the Motion to Dismiss was heard. 58 Subsequently, in the
Order 59 dated June 7, 2001, Branch 72 of the Regional Trial Court of Olongapo City
granted the Motion to Dismiss and ruled in favor of Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. 60
Between the Complaint for sum of money and the Complaint for damages, the
trial court found identity of parties, causes of action, and reliefs sought. 61 The trial
court said that Dante U. Santos, Efren U. Santos, Miguel Santos, Ric U. Santos, and
Bebiana San Pedro "cannot feign ignorance that they were not aware that they were
included as party plaintiffs in the [Complaint for sum of money]" 62 because "they
actively secured copies of . . . Certificates of Occupancy" 63 in Sitio Agusuhin, which
were annexed to the earlier filed Complaint.
The trial court likewise held that the Complaint for damages failed to state a
cause of action. According to the trial court, Fredeluces, et al. based the amount of
actual damages they sought on the fair market values of the parcels of land they
occupied and of the improvements introduced on the property. Fredeluces, et al.
effectively prayed for payment of just compensation, a relief they cannot avail
themselves of because they do not own the land in Sitio Agusuhin. 64
As for the quitclaims, the trial court held that they were valid since Fredeluces,
et al. voluntarily executed them. Fredeluces, et al. even voluntarily vacated Sitio
Agusuhin after they received financial assistance from Shell Philippines Exploration
B.V. and Pilipinas Shell Foundation, Inc. 65
In resolving the issue of whether Tomas M. Fredeluces and Ludivico F. Bon
were former residents of Sitio Agusuhin, the trial court relied on the Affidavit 66 of a
certain Robert Hadji (Hadji), a former resident of Sitio Agusuhin
and Pilipinas Shell Foundation, Inc.'s Community Coordinator in the site. Hadji stated
in his Affidavit that Tomas M. Fredeluces and Ludivico F. Bon never resided in Sitio
Agusuhin. 67 While the resolution of the issue would generally require presentation of
evidence during trial, the trial court said that Fredeluces, et al. did not even bother to
attend the hearing of the Motion to Dismiss on April 20, 2001 to present evidence
contrary to the allegations of Shell Philippines Exploration B.V.
and Pilipinas Shell Foundation, Inc. 68Failing to present such contrary evidence,
Tomas M. Fredeluces and Ludivico F. Bon should be deemed non-residents of Sitio
Agusuhin and, therefore, were not entitled to any compensation. 69
The dispositive portion of the Order dated June 7, 2001 reads:
WHEREFORE, in view of the foregoing, the Motion to Dismiss
filed by the defendants dated April 5, 2001 is hereby granted. The case
is ordered DISMISSED.
SO ORDERED. 70
Fredeluces, et al. filed a Notice of Appeal before the Court of Appeals on June
28, 2001. 71 The parties subsequently filed their respective appeal briefs, 72 both
reiterating the arguments they had made before the trial court.
In contrast with the trial court, the Court of Appeals appreciated in evidence a
Revocation of Special Power of Attorney allegedly executed by Dante U. Santos,
Efren U. Santos, Miguel Santos, Ric U. Santos, and Bebiana San Pedro. 73 The
Complaint for sum of money was, thus, filed without their authority, and there was
no litis pendentia so as to bar the filing of the Complaint for damages on December 1,
2000.
Despite Fredeluces, et al.'s admission that they did not own the parcels of land
they occupied in Sitio Agusuhin, the Court of Appeals nonetheless held
that Fredeluces, et al. may file a complaint for damages for having been "adversely
affected by [Shell Philippines Exploration B.V.'s] construction works." 74 Fredeluces,
et al. may likewise repudiate the quitclaims they executed. 75
As to the issue of residence, the Court of Appeals found that Ludivico F. Bon
formerly resided in Sitio Agusuhin. The Court of Appeals relied on the Report
submitted by the Compensation Community Relations Study Group where Ludivico F.
Bon was listed as one of the beneficiaries. 76 As for Tomas M. Fredeluces, he was
not listed on the Report; thus, he was not entitled to any financial assistance. 77
Thus, the Court of Appeals partially granted the appeal in the Decision dated
January 25, 2006, the dispositive portion of which reads:
WHEREFORE, except with respect to appellant
Tomas Fredeluces, appellants' complaint is ordered REINSTATED and
the case is, accordingly,REMANDED to the trial court for further
proceedings.
SO. . . .
. . . . ORDERED. 78 (Emphasis in the original)
Shell Philippines Exploration B.V. and Pilipinas Shell Foundation, Inc. filed a
Motion for Partial Reconsideration and/or Clarification, 79 which the Court of Appeals
denied in the Resolution dated August 16, 2006. 80
 Assailing the Court of Appeals' January 25, 2006 Decision and August 16, 2006
Resolution, petitioners Pilipinas Shell Foundation, Inc. and ShellPhilippines
Exploration B.V. filed a Petition for Review on Certiorari before this
Court. 81 Respondents Tomas M. Fredeluces, Marcos B. Corpuz, Jr., Reynaldo M.
Samonte, Norma M. Samonte, Ambrocio Villanueva, Salvacion A. Bon, Ramiro A.
Bon, Luzviminda B. Andillo, Ludivico F. Bon, Elmo Areglo, Rose A. San Pedro, Dante
U. Santos, Sr., Miguel Santos, Efren U. Santos, Ric U. Santos, Simon Marce, Jr., Joel
F. Salinel, Bebiana San Pedro, and Marina Santos filed their Comment, 82 to which
petitioners replied. 83
Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration B.V. maintain
that litis pendentia barred the filing of the Complaint for damages.Litis
pendentia eventually ripened into res judicata when the Decision on the Complaint for
sum of money became final and executory. 84 ATICcS
Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration B.V. allege
that the earlier filed Complaint for sum of money, where Dante U. Santos, Efren U.
Santos, Miguel Santos, Ric U. Santos, and Bebiana San Pedro were likewise plaintiffs,
was dismissed by the trial court 85 on the ground of failure to state a cause of
action. 86 This ruling was affirmed by the Court of Appeals in the Decision 87 dated
February 27, 2004, and an Entry of Judgment88 was issued on April 1, 2004.
Considering that the Complaint for sum of money and the Complaint for
damages share substantially identical parties, causes of action, and reliefs
sought, 89 Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration B.V.
argue that the February 27, 2004 Court of Appeals Decision became res judicata so
as to bar the proceedings before this Court. 90
Even assuming that Dante U. Santos, Efren U. Santos, Miguel Santos, Ric U.
Santos, and Bebiana San Pedro signed the Revocation and Cancellation of Special
Power of Attorney, Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration
B.V. argue that the five (5) respondents should be deemed not to have revoked the
authority to file the Complaint for sum of money. 91 Dante U. Santos, Efren U. Santos,
Miguel Santos, Ric U. Santos, and Bebiana San Pedro never informed the trial court
that they were included as plaintiffs in the Complaint for sum of money. 92 Further,
Bebiana San Pedro did not sign the Revocation and Cancellation of Special Power of
Attorney. 93 Dante U. Santos, Efren U. Santos, Miguel Santos, Ric U. Santos, and
Bebiana San Pedro remain guilty of forum shopping. 94
Apart from the existence of litis pendentia, Pilipinas Shell Foundation, Inc.
and Shell Philippines Exploration B.V. insist that the Complaint for damages failed to
state a cause of action. 95 According to Pilipinas Shell Foundation, Inc.
and Shell Philippines Exploration B.V., Fredeluces, et al. failed to allege specific acts
from which it may be inferred that Pilipinas Shell Foundation, Inc.
and Shell Philippines Exploration B.V. violated the law or acted in bad faith. 96 Instead
of alleging ultimate facts, Fredeluces, et al. repeatedly made conclusions of law in
their Complaint for damages, such as that they were "lawful residents" 97 of Sitio
Agusuhin, or that Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration
B.V. "arbitrarily and unlawfully evict[ed] [Fredeluces, et al.] from their place of abode
and livelihood[.]" 98 Fredeluces, et al. failed to specifically allege the acts from which
they inferred that they were lawful residents of Sitio Agusuhin or that they were
unlawfully evicted. 99 Their Complaint for damages was, therefore, correctly
dismissed. 100
Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration B.V. argue
that the Court of Appeals erred in limiting itself with the allegations of the Complaint
for damages when it ruled that Fredeluces, et al. had the right to demand for
compensation from Pilipinas Shell Foundation, Inc. and ShellPhilippines Exploration
B.V. The rule that the allegations of the complaint are hypothetically admitted when a
motion to dismiss is filed is subject to exceptions. Annexes to the complaint as well as
matters of judicial notice may be considered in dismissing a complaint on the ground
of failure to state a cause of action. 101
One matter of judicial notice is that the Subic Bay Metropolitan Authority,
not Fredeluces, et al., own Sitio Agusuhin, 102 pursuant to Republic Act No. 7227.
Not being owners, Fredeluces, et al. may not demand compensation based on the
value of the properties they formerly occupied. 103 They were possessors in bad faith
who, under Article 449 104 of the Civil Code, are not entitled to any indemnity with
respect to improvements they have introduced in Sitio Agusuhin. 105 Assuming
that Fredeluces, et al. are entitled to compensation for the improvements they
introduced in Sitio Agusuhin, their claims have been paid as evidenced by the
quitclaims they executed. 106
With respect to Tomas M. Fredeluces and Ludivico F.
Bon, Pilipinas Shell Foundation, Inc. and Shell Philippines Exploration B.V. maintain
that they are non-residents of Sitio Agusuhin and, therefore, are not entitled to any
financial assistance. 107
Lastly, the Complaint for damages should be deemed not to have been filed
because Fredeluces, et al. failed to pay the required filing fees. 108
In their five-page Comment, with the last page being the signature
page, Fredeluces, et al. quoted heavily from the Court of Appeals Decision to argue
that litis pendentia does not exist in this case; that their Complaint for damages
sufficiently stated a cause of action; and that they have sufficiently proven that they
are pauper litigants. 109
On the issue of litis pendentia, Dante U. Santos, Efren U. Santos, Miguel
Santos, Ric U. Santos, and Bebiana San Pedro maintain that the Complaint for sum
of money was filed without their authority considering that they executed the
Revocation and Cancellation of Special Power of Attorney before the Complaint for
sum of money was filed. 110
On the issue of failure to state a cause of action, Fredeluces, et al. insist on the
application of the general rule that only matters alleged in the Complaint may be
considered in resolving motions to dismiss. 111 They fail to explain why the
exceptions to the rule do not apply in this case.
 On the issue of failure to pay filing fees, Fredeluces, et al. claim that they are
pauper litigants as evidenced by Certifications from the Municipal Assessor of
Subic. 112 TIADCc
The issues for this Court's resolution are:
First, whether respondents Fredeluces, et al.'s Complaint for damages should
be dismissed on the ground of litis pendentia; and,
Second, whether the Complaint for damages should be dismissed on the
ground of failure to state a cause of action.
We grant the Petition. The Complaint for damages should have been
dismissed as to respondent Bebiana San Pedro on the ground of litis pendentia. As
for the rest of respondents, their Complaint failed to state a cause of action.
I
Only one suit may be instituted for a single cause of action. 113 Hence, any
suit subsequently filed for the same cause of action becomes unnecessary and
vexatious. 114 When there is more than one suit pending between the same parties
for the same cause of action, litis pendentia exists and a motion to dismiss may be
filed on this ground. Rule 16, Section 1 (e) of the Rules of Court provides:
SECTION 1. Grounds. — Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:
xxx xxx xxx
(e) That there is another action pending between the same
parties for the same cause[.]
Litis pendentia in Latin means "a pending suit." 115 Occasionally referred to
as lis pendens 116 or auter action pendant, 117 litis pendentia has the following
elements: first, "[i]dentity of parties, or at least such parties as those representing the
same interests in both actions;" 118 second, "[i]dentity of rights asserted and reliefs
prayed for, the reliefs being founded on the same facts;" 119 and third, "[i]dentity with
respect to the two preceding particulars in the two cases, 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." 120
The first element of litis pendentia — identity of parties — is absent with respect
to respondents Dante U. Santos, Efren U. Santos, Miguel Santos, and Ric U. Santos.
They executed on September 4, 2000 121 the Revocation and Cancellation of Special
Power of Attorney and withdrew the authority they had earlier granted Atty. Renato M.
Collado to file a case in their behalf. Moreover, the Court of Appeals found that their
signatures do not appear on the Verification and Certification against Forum Shopping
appended to the Complaint for sum of money filed on October 9, 2000.
With the Complaint for sum of money having been filed without the authority of
respondents Dante U. Santos, Efren U. Santos, Miguel Santos, and Ric U. Santos,
they should be deemed non-plaintiffs in the Complaint for sum of money.
 Consequently, the pendency of the Complaint for sum of money did not bar them from
filing the Complaint for damages on December 1, 2000.
The same cannot be said for respondent Bebiana San Pedro. Respondent
Bebiana San Pedro was guilty of forum shopping, repetitively filing complaints
asserting "the same essential facts and circumstances, and all raising substantially
the same issues" 122 against the same defendants.
Respondent Bebiana San Pedro was a party plaintiff both in the Complaint for
sum of money and in the Complaint for damages. Unlike respondents Dante U.
Santos, Efren U. Santos, Miguel Santos, and Ric U. Santos, respondent Bebiana San
Pedro did not sign any document similar to the Revocation and Cancellation of Special
Power of Attorney. Thus, she did not revoke the authority of Atty. Renato H. Collado
to file the Complaint for sum of money on her behalf. The Complaint for sum of money
was filed with her authority and was pending when the Complaint for damages was
subsequently filed before the same trial court.
The second element of litis pendentia likewise exists with respect to
respondent Bebiana San Pedro. There is substantial identity of rights asserted and
reliefs sought between the Complaint for sum of money and the Complaint for
damages.
"A cause of action is the act or omission by which a party violates a right of
another." 123 For a cause of action to exist, there must be "a right existing in favor of
the plaintiff;" 124 "a corresponding obligation on the part of the defendant to respect
such right;" 125 and, "an act or omission of the defendant which constitutes a violation
of the plaintiff's right which defendant had the duty to respect." 126
The following allegations show that the Complaint for sum of money and the
Complaint for damages similarly assert the supposed right of respondents as
possessors of parcels of land they previously occupied in Sitio Agusuhin:
Complaint for sum of money filed on Complaint for damages filed on
October 9, 2000 December 1, 2000

2. That plaintiffs are the 3. The plaintiffs are lawful

possessor and long-time occupants
under claim of ownership of certain
parcels of land situated in Sitio
Agusuhin, Cawag, Subic Zambales; . . .
....
4. That plaintiffs are in
possession of the following areas which
were expropriated by the defendants,
and their corresponding values[:]
[Name: Bibiana [sic] San Pedro
Area occupied: 20,000 sq.m.
Amount: 1,500,000.00
residents at Sitio Agusuhin, Bgy.
Cawag, Subic, Zambales. They have
settled in this place long prior to 1998.
They have put up their residence in
this area and constructed their
residential structures of various kind.
They have put in various
improvements, like fruit trees and
devoted the area to seasonal plants.
The place was a community by
itself. 128
Disturbance compensation:
80,000.00]. 127

The Complaints similarly allege that petitioners had an obligation to respect the
supposed right of respondents when petitioners commenced the construction of the
concrete gravity structure:
Complaint for sum of money filed on Complaint for damages filed on
October 9, 2000 December 1, 2000

3. That sometime in 1998, the 4. About 1998, the defendants,

defendant Pilipinas Shell Foundation, upon agreement drawn up with the
Inc. thru its exploration and Subic Bay Metropolitan Authority,
development arm Shell Philippines used this area as a launching site of its
Exploration, expropriated some 325,000 exploration project for Shell CGS
square meters of land belonging to the Project (Malampaya project). The
plaintiffs for the construction of the project site required the use of 400,000
Malampaya Concrete Gravity Structure square meters of land.
under the helm of Shell Philippines
Exploration's Malampaya deepwater gas 5. The area in the actual
power project, the value of the occupation and use by the plaintiffs
expropriated parcels of land belonging were inside the 400,000 square meter
to plaintiffs amounted to TWENTY- site used by the plaintiffs. 130
FIVE MILLION FOUR HUNDRED
NINETY-FIVE THOUSAND PESOS
(P25,495,000.00) computed at
SEVENTY FIVE PESOS (P75.00) per
square meter plus a disturbance fee of
EIGHTY THOUSAND PESOS
(P80,000) per occupant. This is the
amount paid by the defendant
Corporation to the other lucky occupants
similarly situated as the plaintiffs[.] 129

The Complaints allege a similar violative act: petitioners allegedly failed to

sufficiently compensate respondents for their eviction from Sitio Agusuhin:
Complaint for sum of money filed on Complaint for damages filed on
October 9, 2000 December 1, 2000

5. That the defendant 6. For the direct benefit of the

Corporation thru Mr[.] David Greer,
after occupying and actually completing
the construction works on the aforesaid
parcels of land, reneged on its verbal
promise to compensate the plaintiffs for
defendants, the plaintiffs were
effectively evicted starting in May
1998. There was a total disregard of
the rights of the plaintiffs; although,
the defendants tried to work out an
the value of their lands which were
expropriated by the former, for which
reason the latter requested the assistance
of counsel who sent a letter to the
defendant dated March 15, 2000; . . .
....
9. That despite several and
repeated demands from the plaintiff, and
defendants['] repeated assurances of
payment thru defendant Mr. Greer,
several meetings and submissions of
numerous requirements as requested by
the latter, the defendants failed and
refused, and continuously fail and refuse
to settle the abovementioned valid and
legal claims of the plaintiffs, which
constrained plaintiffs['] counsel to send
another letter dated April 15, 2000; . . .
10. That after the plaintiffs[']
counsel received defendants['] reply
letter dated May 30, 2000, nothing was
heard of from the defendants again[.] 131
acceptable compensation package for
the plaintiffs, which, however, failed.
7. Some of the plaintiffs were
paid some amount, others were not.
For those who accepted some amounts,
the payment were insufficient to
compensate the damages they
sustained, but they have to accept said
amount for them to somehow start
their life.
....
9. In arbitrarily and unlawfully
evicting the plaintiffs from their place
of abode and livelihood, the defendants
did not [sic] with justice, they did not
give to the plaintiffs their due and
acted in bad faith. The said action
taken on the plaintiffs was contrary to
law, in the process, they willfully and
negligently caused damage to the
plaintiff[s] . . . .
10. The damages suffered by the
plaintiffs by their eviction from the
area are in the following amounts —
[Name of Plaintiffs: San Pedro, B
Actual Damages: P1,500,000.00]. 132

As for the reliefs sought, respondents Dante Santos, Efren Santos, Miguel
Santos, Ric Santos, and Bebiana San Pedro, in the Complaint for sum of money,
prayed for amounts equivalent to the "value of their lands[,]" 133 while respondents,
in their Complaint for damages, prayed for actual damages suffered by them. 134 In
both Complaints, respondent Bebiana San Pedro prayed that she be paid
P1,500,000.00 in addition to the prayer for payment of moral damages, exemplary
damages, and attorney's fees. 135 Respondent Bebiana San Pedro sought
substantially identical reliefs in the Complaint for sum of money and the Complaint for
damages.
Because of the substantial identity of parties, causes of action, and reliefs
sought in the Complaint for sum of money and Complaint for damages, all the
elements of litis pendentia are present with respect to respondent Bebiana San Pedro.
Judgment in any of the Complaints would be res judicatain the other, i.e., a final and
executory judgment in any of the Complaints would be "conclusive of the rights of the
parties or their privies . . . on the points and matters in issue in the first
suit." 136 AIDSTE
A final and executory judgment has been rendered on the Complaint for sum
of money. In the Order 137 dated October 3, 2001, Branch 72 of the Regional Trial
Court, 138 Olongapo City dismissed the Complaint for sum of money on the ground
of failure to state a cause of action. 139 The trial court, the same branch that decided
the Complaint for damages, held that respondents had no right to demand
compensation equivalent to the value of the parcels of land they previously occupied
because they never possessed the properties in the concept of an
owner. 140 Moreover, despite being possessors in bad faith, respondents received
compensation from petitioners. 141 Specifically, respondent Bebiana San Pedro
received P100,000.00 as evidenced by the quitclaim she had signed. 142 She may
not ask for compensation anew.
The trial court Order dated October 3, 2001 was upheld on appeal in the
Decision dated February 27, 2004. 143 The Court of Appeals subsequently issued the
Entry of Judgment declaring the Decision dated February 27, 2004 final and executory
as of April 1, 2004. 144
Since the Complaint for sum of money and the Complaint for damages assert
substantially identical causes of action and seek similar reliefs, the Decision dated
February 27, 2004 binds respondent Bebiana San Pedro. The Decision dated
February 27, 2004 is res judicata with respect to the right of respondent Bebiana San
Pedro to recover compensation for vacating Sitio Agusuhin. 145 That respondent
Bebiana San Pedro received P100,000.00 from petitioners as disturbance
compensation, 146 and that she voluntarily signed a quitclaim to waive any claims she
might have over the parcel of land she occupied in Sitio Agusuhin, are conclusive
upon this Court. 147
In sum, respondents Dante U. Santos, Efren U. Santos, Miguel Santos, and
Ric U. Santos revoked the authority to file the Complaint for sum of money on their
behalf. As for the four (4) respondents, there was no pending Complaint for sum of
money when the Complaint for damages was subsequently filed. The trial court,
therefore, erred in dismissing their Complaint for damages on the ground of litis
pendentia.
As for respondent Bebiana San Pedro, the Complaint for sum of money was
filed with her authority. The Complaint for sum of money was pending when the
Complaint for damages was filed. With both Complaints having substantially identical
parties, causes of action, and reliefs sought, litis pendentia was present. As a ground
for filing a motion to dismiss, litis pendentia ripened to res judicata when the Court of
Appeals Decision on the Complaint for sum of money became final and executory.
The trial court did not err in dismissing the Complaint for damages as to respondent
Bebiana San Pedro on the ground of litis pendentia. SDAaTC
II
The trial court and the Court of Appeals differed as to whether the Complaint
for damages should be dismissed. The Complaint for damages was initially dismissed
on the ground of failure to state a cause of action, but the Court of Appeals reversed
and remanded the Complaint to the trial court for further proceedings.
The ground of failure to state a cause of action is based on Rule 16, Section 1
(g) of the Rules of Court:
SECTION 1. Grounds. — Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:
xxx xxx xxx
(g) That the pleading asserting the claim states no cause of
action[.]
Failure to state a cause of action goes into the sufficiency of the allegation of
the cause of action in the complaint. "When the facts alleged in the complaint show
that the defendant has committed acts constituting a delict or wrong by which he
violates the rights of the plaintiff, causing [the plaintiff] loss or injury, there is sufficient
allegation of a cause of action. Otherwise, there is none." 148
In this respect, a pleading sufficiently states a cause of action if it "contain[s] in
a methodical and logical form, a plain, concise[,] and direct statement of the ultimate
facts on which the party pleading relies for his [or her] claim[.]" 149 Ultimate facts are
the "important and substantial facts which either directly form the basis of the primary
right and duty, or which directly make up the wrongful acts or omissions of the
defendant." 150Allegations of evidentiary facts 151 and conclusions of law 152 in a
pleading are omitted for they are unnecessary in determining whether the court has
jurisdiction to take cognizance of the action.
In filing a motion to dismiss on the ground of failure to state a cause of action,
a defendant "hypothetically admits the truth of the facts alleged in the
complaint." 153 Since allegations of evidentiary facts and conclusions of law are
omitted in pleadings, "[t]he hypothetical admission is . . . limited to the relevant and
material facts well pleaded in the complaint and inferences fairly deducible
therefrom." 154 However, it is mandatory 155 that courts "consider other facts within
the range of judicial notice, as well as relevant laws and jurisprudence" 156 in
resolving motions to dismiss.
There are exceptions to the rule on hypothetical admission. In Dabuco v. Court
of Appeals: 157
There is no hypothetical admission of the veracity of allegations if their
falsity is subject to judicial notice, or if such allegations are legally
impossible, or if these refer to facts which are inadmissible in evidence,
or if by the record or document included in the pleading these allegations
appear unfounded. Also, inquiry is not confined to the complaint if there
is evidence which has been presented to the court by stipulation of the
parties, or in the course of hearings related to the case. 158 (Citations
omitted)
 Even assuming the truth of the ultimate facts alleged in the Complaint for
damages, the Complaint states no cause of action. Respondents may have resided in
Sitio Agusuhin, constructed their houses, and planted fruit trees in the area. However,
they failed to allege any circumstance showing that they had occupied Sitio Agusuhin
under claim of ownership for the required number of years. In their Opposition to the
Motion to Dismiss, respondents admitted that they do not own Sitio Agusuhin. 159 The
property belongs to the Subic Bay Metropolitan Authority, pursuant to Republic Act
No. 7227; hence, it is a government property the possession of which, however long,
"never confers title [to] the possessor[.]" 160
It follows that respondents may not ask compensation equivalent to the value
of the parcels of land they previously occupied in Sitio Agusuhin. The right to demand
compensation for deprivation of property belongs to the owner. 161
Moreover, respondents may not claim damages equivalent to the value of the
structures they built and the improvements they introduced in Sitio Agusuhin. Having
admitted that they do not own Sitio Agusuhin, they were possessors in bad
faith 162 who lose whatever they built, planted, or sown on the land of another without
right to indemnity. 163
Specifically with respect to respondents Tomas M. Fredeluces and Ludivico F.
Bon, the allegation that they resided in Sitio Agusuhin prior to the construction of the
concrete gravity structure may not be hypothetically admitted. Based on the evidence
available during the hearing of the Motion to Dismiss on April 20, 2001, respondents
Tomas M. Fredeluces and Ludivico F. Bon were indeed non-residents of Sitio
Agusuhin prior to the construction of the concrete gravity structure.
Respondents' own evidence — the Report of the Compensation Community
Relations Study Group attached to the Opposition to the Motion to Dismiss — declared
respondent Tomas M. Fredeluces a non-resident of Sitio Agusuhin. 164 Moreover, as
certified by the Punong Barangay of Barangay Cawag, none of the other residents of
Sitio Agusuhin recognized respondent Tomas M. Fredeluces as a fellow resident. 165
As for respondent Ludivico F. Bon, the Office of the Punong Barangay of
Barangay Matain, Subic, Zambales certified that he was a resident of Barangay
Matain, not of Sitio Agusuhin. 166 This was corroborated by
Hadji, Pilipinas Shell Foundation, Inc.'s Community Coordinator, in his Affidavit. 167
These pieces of evidence were never controverted by respondents Tomas
M. Fredeluces and Ludivico F. Bon in their Opposition to or during the hearing of the
Motion to Dismiss. Therefore, respondents Tomas M. Fredeluces and Ludivico F. Bon
should be deemed to have admitted that they never resided in Sitio Agusuhin prior to
the construction of the concrete gravity structure.
Respondents nevertheless argue that they are entitled to damages because of
their unlawful and summary eviction from Sitio Agusuhin. Their own allegations,
however, belie their claim that they were unlawfully and summarily evicted. As alleged
in their Complaint, petitioners "tried to work out an acceptable compensation package
for the [respondents.]" 168 Also alleged in the Complaint 169 and as evidenced by
 quitclaims and the Final Report on the Compensation Claims, some of the
respondents received the following amounts as compensation from petitioners:
Luzviminda B. Andillo P17,000.00 170
Salvacion A. Bon 150,000.00 171
Ramiro A. Bon 100,000.00 172
Elmo Areglo 270,000.00 173
Rose A. San Pedro 103,500.00 174
Dante U. Santos, Sr. 200,000.00 175
Efren U. Santos 270,000.00 176
Miguel Santos 150,000.00 177
Ric U. Santos 35,000.00 178
Simon Marce, Jr. 100,000.00 179
Joel F. Salinel 125,000.00 180
Bebiana San Pedro 140,000.00 181
Marcos B. Corpuz, Jr. 200,000.00 182
Reynaldo M. Samonte 100,000.00 183
Ambrocio Villanueva 150,000.00 184

In receiving the previously enumerated amounts, respondents declared in their

respective quitclaims that they waived, released, and abandoned any claims that they
might have had over the parcels of land they occupied in Sitio Agusuhin as well as the
improvements they introduced in the property.
Quitclaims are contracts in the nature of a compromise where parties make
concessions, a lawful device to avoid litigation. 185 That respondents perceived the
amounts they received as "insufficient" 186 does not make the quitclaims invalid.
As for the allegation that respondents were "pressured, coerced[,] or. . . 'sweet-
talked'" 187 into receiving compensation, this is a conclusion of law that may not be
hypothetically admitted. The circumstances of fraud and mistake must be stated with
particularity. 188 Nothing in the Complaint for damages show how respondents were
particularly "pressured, coerced[,] or. . . 'sweet-talked'" by petitioners into receiving
compensation. As found by the trial court, respondents voluntarily vacated Sitio
Agusuhin. 189
All told, the Motion to Dismiss was correctly granted on the ground of failure to
state a cause of action. acEHCD
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The
Decision dated January 25, 2006 and the Resolution dated August 16, 2006 of the
Court of Appeals in CA-G.R. CV No. 74791 are REVERSED and SET ASIDE. The
Complaint filed before Branch 72 of the Regional Trial Court, Olongapo City, docketed
as Civil Case No. 04-0-2001, is hereby ordered DISMISSED.
SO ORDERED.
||| (Pilipinas Shell Foundation, Inc. v. Fredeluces, G.R. No. 174333, [April 20, 2016])
 GEORGE LEONARD S. UMALE, petitioner, vs. CANOGA PARK DEVELOPMENT
CORPORATION, respondent.

DECISION

BRION, J p:

Before us is a petition for review on certiorari 1 filed by George Leonard

S. Umale (petitioner), challenging the August 20, 2004 Decision 2 of the Court of
Appeals (CA) in CA-G.R. SP. No. 78836 and its subsequent February 23, 2005
Resolution 3 that denied his motion for reconsideration. The CA reversed the
Decision 4 of the Regional Trial Court (RTC)-Branch 68, Pasig City, that
dismissed Canoga Park Development Corporation's complaint for unlawful detainer
on the ground of litis pendentia. aAEHCI
ANTECEDENTS
On January 4, 2000, the parties entered into a Contract of Lease 5 whereby
the petitioner agreed to lease, for a period of two (2) years starting from January 16,
2000, an eight hundred sixty (860)-square-meter prime lot located in Ortigas Center,
Pasig City owned by the respondent. The respondent acquired the subject lot from
Ortigas & Co. Ltd. Partnership through a Deed of Absolute Sale, subject to the
following conditions: (1) that no shopping arcades or retail stores, restaurants, etc.
shall be allowed to be established on the property, except with the prior written consent
from Ortigas & Co. Ltd. Partnership and (2) that the respondent and/or its successors-
in-interest shall become member/s of the Ortigas Center Association,
Inc.(Association), and shall abide by its rules and regulations. 6
On October 10, 2000, before the lease contract expired, the respondent filed
an unlawful detainer case against the petitioner before the Metropolitan Trial
Court (MTC)-Branch 68, Pasig City, docketed as Civil Case No. 8084. 7 The
respondent used as a ground for ejectment the petitioner's violation of stipulations in
the lease contract regarding the use of the property. Under this contract, the petitioner
shall use the leased lot as a parking space for light vehicles and as a site for a small
drivers' canteen, 8 and may not utilize the subject premises for other purposes without
the respondent's prior written consent. 9 The petitioner, however, constructed
restaurant buildings and other commercial establishments on the lot, without first
securing the required written consent from the respondent, and the necessary permits
from the Association and the Ortigas & Co. Ltd. Partnership. The petitioner also
subleased the property to various merchants-tenants in violation of the lease contract.
The MTC-Branch 68 decided the ejectment case in favor of the respondent. On
appeal, the RTC-Branch 155, Pasig City affirmed in toto the MTC-Branch 68
decision. 10 The case, however, was re-raffled to the RTC-Branch 267, Pasig City
because the Presiding Judge of the RTC-Branch 155, upon motion, inhibited himself
from resolving the petitioner's motion for reconsideration. 11 The RTC-Branch 267
granted the petitioner's motion, thereby reversing and setting aside the MTC-Branch
68 decision. Accordingly, Civil Case No. 8084 was dismissed for being prematurely
filed. 12 Thus, the respondent filed a petition for review with the CA on April 10,
2002. 13
During the pendency of the petition for review, the respondent filed on May 3,
2002 another case for unlawful detainer against the petitioner before the MTC-Branch
71, Pasig City. The case was docketed as Civil Case No. 9210. 14 This time, the
respondent used as a ground for ejectment the expiration of the parties' lease contract.
On December 4, 2002, the MTC-Branch 71 rendered a decision 15 in favor of
the respondent, the dispositive portion of which read, as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
[referring to the respondent] and against the defendant and all persons
claiming rights under him, as follows:
1. Defendant and all persons claiming rights under him are ordered
to peacefully vacate the premises located at Lot 9, Block 5,
San Miguel Avenue, Ortigas Center, Pasig City, covered by
Transfer Certificate of Title No. 488797 of the Registry of
Deeds of Pasig City and to surrender the possession thereof
to the plaintiff;
2. Defendant is ordered to pay unto plaintiff the following:
a. Damages for the use of the property after the expiration
of the lease contract therefor in the amount of One
Hundred Fifty Thousand Pesos (P150,000.00) a
month, beginning 16 January 2002 until he and all
those claiming rights under him have vacated and
peacefully turned over the subject premises to the
plaintiff; and
b. One Hundred Thousand Pesos (P100,000.00) as and for
attorney's fees together with costs of suit.
3. With respect to the commercial units built by [the] defendant on
the subject land, he is hereby ordered to remove the same
from the subject land and to restore the subject land in the
same condition as it was received unto the plaintiff, at his
exclusive account, failing which the same shall be removed
by the plaintiff, with expenses therefor chargeable to the
defendant.
On appeal, the RTC-Branch 68 reversed and set aside the decision of the MTC-
Branch 71, and dismissed Civil Case No. 9210 on the ground of litis pendentia. 16 The
petitioner, however, was still ordered to pay rent in the amount of seventy-one
thousand five hundred pesos (P71,500.00) per month beginning January 16, 2002,
which amount is the monthly rent stipulated in the lease contract. TSEAaD
 Aggrieved by the reversal, the respondent filed a Petition for Review under Rule
42 of the Rules of Court with the CA. The respondent argued that there exists no litis
pendentia between Civil Case Nos. 8084 and 9210 because the two cases involved
different grounds for ejectment, i.e., the first case was filed because of violations of
the lease contract, while the second case was filed due to the expiration of the lease
contract. The respondent emphasized that the second case was filed based on an
event or a cause not yet in existence at the time of the filing of the first case. 17 The
lease contract expired on January 15, 2002, 18 while the first case was filed on
October 10, 2000.
On August 20, 2004, the CA nullified and set aside the assailed decision of the
RTC-Branch 68, and ruled that there was no litis pendentia because the two civil
cases have different causes of action. The decision of the MTC-Branch 71 was
ordered reinstated. Subsequently, the petitioner's motion for reconsideration was
denied; hence, the filing of the present petition for review on certiorari.
In presenting his case before this Court, the petitioner insists that litis
pendentia exists between the two ejectment cases filed against him because of their
identity with one another and that any judgment on the first case will amount to res
judicata on the other. The petitioner argues that the respondent reiterated the ground
of violations of the lease contract, with the additional ground of the expiration of the
lease contract in the second ejectment case. Also, the petitioner alleges that all of the
elements of litis pendentia are present in this case, thus, he prays for the reversal and
setting aside of the assailed CA decision and resolution, and for the dismissal of the
complaint in Civil Case No. 9210 on the ground of litis pendentia and/or forum
shopping.
THE COURT'S RULING
We disagree with the petitioner and find that there is no litis pendentia.
As a ground for the dismissal of a civil action, litis pendentia refers to a situation
where two actions are pending between the same parties for the same cause of action,
so that one of them becomes unnecessary and vexatious. 19
Litis pendentia exists when the following requisites are present: identity of the
parties in the two actions; substantial identity in the causes of action and in the reliefs
sought by the parties; and the identity between the two actions should be such that
any judgment that may be rendered in one case, regardless of which party is
successful, would amount to res judicata in the other. 20
In the present case, the parties' bone of contention is whether Civil Case Nos.
8084 and 9210 involve the same cause of action. The petitioner argues that the
causes of action are similar, while the respondent argues otherwise. If an identity, or
substantial identity, of the causes of action in both cases exist, then the second
complaint for unlawful detainer may be dismissed on the ground of litis pendentia.
We rule that Civil Case Nos. 8084 and 9210 involve different causes of
action.
 Generally, a suit may only be instituted for a single cause of action. 21 If two or
more suits are instituted on the basis of the same cause of action, the filing of one or
a judgment on the merits in any one is ground for the dismissal of the others. 22
Several tests exist to ascertain whether two suits relate to a single or common
cause of action, such as whether the same evidence would support and sustain both
the first and second causes of action 23 (also known as the "same evidence"
test), 24 or whether the defenses in one case may be used to substantiate the
complaint in the other. 25 Also fundamental is the test of determining whether the
cause of action in the second case existed at the time of the filing of the first
complaint. 26
Of the three tests cited, the third one is especially applicable to the present
case, i.e., whether the cause of action in the second case existed at the time of the
filing of the first complaint — and to which we answer in the negative. The facts clearly
show that the filing of the first ejectment case was grounded on the petitioner's
violation of stipulations in the lease contract, while the filing of the second case was
based on the expiration of the lease contract. At the time the respondent filed the first
ejectment complaint on October 10, 2000, the lease contract between the parties was
still in effect. The lease was fixed for a period of two (2) years, from January 16, 2000,
and in the absence of a renewal agreed upon by the parties, the lease remained
effective until January 15, 2002. It was only at the expiration of the lease contract that
the cause of action in the second ejectment complaint accrued and made available to
the respondent as a ground for ejecting the petitioner. Thus, the cause of action in the
second case was not yet in existence at the time of filing of the first ejectment
case. CacHES
In response to the petitioner's contention that the similarity of Civil Case Nos.
8084 and 9210 rests on the reiteration in the second case of the cause of action in the
first case, we rule that the restatement does not result in substantial identity between
the two cases. Even if the respondent alleged violations of the lease contract as a
ground for ejectment in the second complaint, the main basis for ejecting the petitioner
in the second case was the expiration of the lease contract. If not for this subsequent
development, the respondent could no longer file a second complaint for unlawful
detainer because an ejectment complaint may only be filed within one year after the
accrual of the cause of action, 27 which, in the second case, was the expiration of the
lease contract.
Also, contrary to petitioner's assertion, there can be no conflict between the
decisions rendered in Civil Case Nos. 8084 and 9210 because the MTC-Branch 71
decided the latter case on the sole issue of whether the lease contract between the
parties had expired. Although alleged by the respondent in its complaint, the MTC-
Branch 71 did not rule on the alleged violations of the lease contract committed by the
petitioner. We note that the damages awarded by the MTC-Branch 71 in Civil Case
No. 9210 were for those incurred after the expiration of the lease contract, 28 not for
those incurred prior thereto.
Similarly, we do not find the respondent guilty of forum shopping in filing Civil
Case No. 9210, the second civil case. To determine whether a party violated the rule
 against forum shopping, the test applied is whether the elements of litis pendentia are
present or whether a final judgment in one case will amount to res judicata in
another. 29 Considering our pronouncement that not all the requisites of litis
pendentia are present in this case, the CA did not err in declaring that the respondent
committed no forum shopping. Also, a close reading of the Verification and
Certification of Non-Forum Shopping 30 (attached to the second ejectment complaint)
shows that the respondent did disclose that it had filed a former complaint for unlawful
detainer against the petitioner. Thus, the respondent cannot be said to have
committed a willful and deliberate forum shopping.
WHEREFORE, the instant petition is DENIED. The assailed Decision dated
August 20, 2004 and Resolution dated February 23, 2005 of the Court of Appeals in
CA-G.R. SP. No. 78836 are AFFIRMED.
SO ORDERED.
||| (Umale v. Canoga Park Development Corp., G.R. No. 167246, [July 20, 2011], 669
PHIL 427-437)

ZUNIGA-SANTOS

RIVIERA GOLF CLUB, INC., petitioner, vs. CCA HOLDINGS,

B.V., respondent.

DECISION

BRION, J p:
Before the Court is the petition for review on certiorari 1 filed
by Riviera Golf Club, Inc. (Riviera Golf) assailing the January 11, 2006 decision 2 and
the July 5, 2006 resolution 3 of the Court of Appeals (CA) in CA-G.R. CV No. 83824.
Background Facts
Riviera Golf, a domestic corporation, is the owner of Riviera Golf Club (Club),
a 36-hole golf course and recreational facility in Silang, Cavite. On October 11,
1996, Riviera Golf entered into a Management Agreement with CCA Holdings,
B.V. (CCA Holdings), a foreign corporation, for the management and operation of the
Club.
The Management Agreement was for a period of five (5) years. Under this
agreement, Riviera Golf would pay CCA Holdings a monthly Base Management Fee
of 5.5% of the Adjusted Gross Revenue equivalent to US$16,500.00 per month,
adjusted to 4.5% per month from the opening date, plus an incentive Management
Fee of 10% of the Gross Operating Profit.
 The parties also entered into a co-terminous Royalty Agreement that would
allow Riviera Golf and the Club's developer, Armed Forces of the Philippines'
Retirement and Separation Benefits System (AFP-RSBS), to use CCA Holdings'
name and facilities to market the Club's shares. In consideration of the license to
use CCA Holdings' name, Riviera Golf and AFP-RSBS will pay CCA Holdings a gross
licensing fee of 1% on all membership fees paid in the sale of shares, an additional
gross licensing fee of 4% on all club shares, and 7% on non-golf memberships sold.
Riviera Golf initially paid the agreed fees, but defaulted in its payment of the
licensing fees and the reimbursement claims in September 1997.Riviera Golf likewise
failed to pay the monthly management and incentive fees in June 1999,
prompting CCA Holdings to demand the amounts due under both agreements.
On October 29, 1999, Riviera Golf sent CCA Holdings a letter informing the
latter that it was pre-terminating the Management Agreement purportedly to alleviate
the financial crisis that the AFP-RSBS was experiencing. The Royalty Agreement was
also deemed pre-terminated. DcHSEa
CCA Holdings protested the termination of the agreement and demanded
that Riviera Golf settle its unpaid management and royalty fees. RivieraGolf however
refused on the ground that CCA Holdings violated the terms of the agreement.
In April 2001, CCA Holdings filed before the Regional Trial Court (RTC),
Branch 146, Makati City, a complaint for sum of money with damages docketed as
Civil Case No. 01-611 (first complaint) against Riviera Golf. During the pendency of
the case, the parties tried to extrajudicially settle their differences and executed a
Compromise Agreement.
On April 25, 2002, the RTC rendered a decision 4 approving the parties'
Compromise Agreement. Paragraph 4 of the agreement reads:
4) It is understood that the execution of this compromise
agreement or the payment of the aforementioned sum of money shall
not be construed as a waiver of or with prejudice to plaintiff's
rights/cause of action, if any, arising from or relative to the pre-
termination of the parties' Management and Royalty Agreements by
the defendant subject to whatever claims and defenses may have
relative thereto; (Emphasis supplied.)
Subsequently, or on November 22, 2002, CCA Holdings again sent a letter
to Riviera Golf, this time, demanding the sum of US$390,768.00 representing the
projected net income or expected business profits it was supposed to derive for the
unexpired two-year term of the Management Agreement. As its demands went
unheeded, CCA Holdings filed another complaint for sum of money and damages
docketed as Civil Case No. 03399(second complaint) before Branch 57 of the RTC of
Makati City.
Noting that the first and second complaints involve the same parties, the same
subject matter, and the same causes of action, Riviera Golf filed on August 6, 2003,
a Motion to Dismiss on the grounds of res judicata and violation of the rule against
splitting of causes of action. CCA holdings opposed the motion contending that there
is no splitting of causes of action since the two cases are entirely independent of each
other. CCA Holdings also justified its belated filing of the second complaint, arguing
that the needed financial records were in Riviera Golf's possession.
The RTC Ruling
The RTC, Branch 57, Makati City granted the motion to dismiss, holding that
the first and second complaints have identical causes of action and subject matter.
Since the claims in Civil Case No. 01-611 and Civil Case No. 03-399 arose from
alleged violations of the terms and conditions of the Management and Royalty
Agreements, the rules on res judicata and splitting of causes of action apply.
The RTC also noted that CCA Holdings had every opportunity to raise the issue
of pre-termination when it filed Civil Case No. 01-611. That CCAHoldings did not do
so and opted instead to reserve it for future litigation only show that it was speculating
on the results of the litigation.
The RTC likewise pointed out that the reservation clause or the "non-waiver
clause" that the parties inserted in the Compromise Agreement was qualified by the
phrase subject to whatever claims and defenses the defendant may have relative
thereto. The RTC held that the defenses that RivieraGolf could raise are not limited
only to those relating to the legality of the pre-termination of the agreements, but could
also include all other claims and defenses such as res judicata and splitting of a single
cause of action.
CCA Holdings appealed the dismissal of its complaint to the CA.
The CA Ruling
In its decision dated January 11, 2006, the CA set aside the order granting the
motion to dismiss, and remanded the case to the RTC for adjudication on the merits.
The CA held that res judicata and splitting of a single cause of action were not
committed based on the following reasons:
First, there is no identity of causes of action in the two civil cases. The
test to determine the identity of causes of action is to ascertain whether the same
evidence is necessary to sustain the two suits. In this case, the sets of evidence in the
two complaints were different.
Second, there is no splitting of a single cause of
action because Riviera Golf violated separate primary rights of CCA Holdings under
the management contract.
Third, Riviera Golf recognized CCA Holdings' right to seek
damages arising from or relative to the premature termination of the Management
Agreement. This view is evident from the literal interpretation of paragraph 4 (or the
"non waiver clause") of the parties' compromise agreement.
Riviera Golf moved for the reconsideration of the decision, but the CA denied
its motion in its resolution of July 5, 2006; hence, the present recourse to us pursuant
to Rule 45 of the Rules of Court.
The Petition
 Riviera Golf asks the Court to set aside the CA decision, contending that the
appellate court committed a grave error in not holding that the filing of the second
complaint amounted to res judicata and splitting of a single cause of
action. Riviera Golf submits that based on the allegations in the two complaints, the
facts that are necessary to support the second case (Civil Case No. 03-399) would
have been sufficient to authorize recovery in the first case (Civil Case No. 01-
611). SCaITA
Moreover, the documentary evidence that CCA Holdings submitted to support
both complaints are also the same. Thus, both civil cases involve not only the same
facts and the same subject matter, but also the same cause of action, i.e., breach of
the Management and Royalty Agreements.
Riviera Golf also argued that although there seems to be several rights
violated, there is only one delict or wrong committed and consequently, only one
cause of action that should have been alleged in a single complaint. Since the
alleged breach of contract in this case was already total at the time of the filing
of Civil Case No. 01-611, the filing of the second complaint for the recovery of
damages for the pre-termination of the Management and Royalty Agreements
constitutes splitting a single cause of action that is expressly prohibited by the Rules
of Court.
Riviera Golf likewise disagrees with the CA's interpretation of the non-waiver
clause. It argues that the phrase if any and the condition that the causes of action
are subject to whatever claims and defenses the defendant may have relative
thereto in the non-waiver clause limited its recognition ofCCA Holdings' rights and
causes of action. It also maintains that the filing of the motion to dismiss based on res
judicata and splitting of causes of action clearly falls within the non-waiver clause's
limitation.
The Case for the Respondent
CCA Holdings reiterates that there was absolutely no identity of subject matter
and causes of action because the first case sought the payment for the services it
already rendered, while the second case sought the recovery of damages
representing the projected net income that it failed to realize by reason of the unilateral
and premature termination of the Management and Royalty Agreements. Thus, the
principles of res judicata and splitting of a single cause of action do not apply.
Even assuming that the prohibition against res judicata operates in this
case, CCA Holdings contends that Riviera Golf is already estopped from questioning
the filing of the second complaint in view of the non-waiver clause inserted in the
compromise agreement.
The Issues
As defined by the parties, the issues before us are limited to:
1. Whether the CCA Holdings violated the prohibitions against res judicata and
splitting a single cause of action when it filed the claim for damages for
unrealized profits; and
 2. Whether the CA's interpretation of paragraph 4 of the compromise
agreement is correct. If in the affirmative, whether the parties may
stipulate on an agreement violating the prohibitions against res
judicata and splitting a single cause of action.
Our Ruling
We find the petition meritorious.
The Second Complaint is Barred by Res Judicata
Res judicata is defined as a matter adjudged; a thing judicially acted upon or
decided; or a thing or matter settled by judgment. Under this rule, a final judgment or
decree on the merits by a court of competent jurisdiction is conclusive as to the rights
of the parties or their privies in all later suits, and on all points and matters determined
in the former suit. 5
The concept of res judicata is embodied in Section 47 (b) and (c) of Rule 39 of
the Rules of Court, which 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:
(a) In case of a judgment or final order against a specific thing or
in respect to the probate of a will, or the administration of the estate of a
deceased person, or in respect to the personal, political, or legal
condition or status of a particular person or his relationship to another,
the judgment or final order is conclusive upon the title to the thing, the
will or administration, or the condition, status or relationship of the
person; however, the probate of a will or granting of letters of
administration shall only be prima facie evidence of the death of the
testator or intestate;
(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.
Res judicata requires the concurrence of the following requisites: (1) the former
judgment must be final; (2) it must have been rendered by a court having jurisdiction
of 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 actions (a) identity of parties, (b) identity
of subject matter, and (c) identity of causes of action. 6
All the Elements of Res Judicata are Present
There is no dispute as to the presence of the first three elements in the present
case. The decision in Civil Case No. 01-611 is a final judgment on the merits rendered
by a court which had jurisdiction over the subject matter and over the parties. Since a
judicial compromise operates as an adjudication on the merits, it has the force of law
and the effect of res judicata. 7 aTHCSE
With respect to the fourth element, a careful examination of the allegations in
the two complaints shows that the cases involve the same parties and the same
subject matter. While Civil Case No. 01-611 is for the collection of unpaid
management and royalty fees, and Civil Case No. 03-399 on the other hand, is for
recovery of damages for the premature termination of the parties' agreements, both
cases were nevertheless filed on the basis of the same Management and Royalty
Agreements. Thus, we agree that these two cases refer to the same subject matter.
The Court is also convinced that there is identity of causes of action between
the first and the second complaints.
A cause of action may give rise to several reliefs, but only one action can be
filed. 8 A single cause of action or entire claim or demand cannot be split up or divided
into two or more different actions. The rule on prohibiting the splitting of a single cause
of action is clear. Section 4, Rule 2 of theRules of Court expressly states:
Section 4. Splitting a single cause of action; effect of. — If two or
more suits are instituted on the basis of the same cause of action, the
filing of one or a judgment upon the merits in any one is available as a
ground for the dismissal of the others.
In both Civil Case No. 01-611 and Civil Case No. 03-
399, CCA Holdings imputed the same wrongful act — the alleged violations of the
terms and conditions of the Management and Royalty Agreements. In Civil Case
No. 01-611, CCA Holdings' cause of action rests on Riviera Golf's failure to pay the
licensing fees, reimbursement claims, and monthly management and incentive fees.
In Civil Case No. 03-399 on the other hand, CCA Holdings' cause of action hinges on
the damages it allegedly incurred as a result of Riviera Golf's premature termination
of the Management and Royalty Agreements(i.e., the expected business profits it was
supposed to derive for the unexpired two-year term of the Management Agreement).
Although differing in form, these two cases are ultimately anchored on Riviera Golf's
breach of the Management and Royalty Agreements. Thus, we conclude that they
have identical causes of action.
Same Evidence Support and Establish Both
the Present and the Former Cause of Action
It is a settled rule that the application of the doctrine of res judicata to identical
causes of action does not depend on the similarity or differences in the forms of the
two actions. A party cannot, by varying the form of the action or by adopting a different
method of presenting his case, escape the operation of the doctrine of res
judicata. 9 The test of identity of causes of action rests on whether the same evidence
would support and establish the former and the present causes of action. 10
 We held in Esperas v. The Court of Appeals 11 that the ultimate test in
determining the presence of identity of cause of action is to consider whether the same
evidence would support the cause of action in both the first and the second cases.
Under the same evidence test, when the same evidence support and establish both
the present and the former causes of action, there is likely an identity of causes of
action. 12
The pleadings and record of the present case show that there is a glaring
similarity in the documentary evidence submitted to prove the claims under the
two complaints. The pieces of evidence both in the collection of unpaid management
and royalty fees, and the recovery of damages for the expected business profits aim
at establishing the breach of the Management and Royalty Agreements.
Furthermore, the evidence in the first complaint will have to be reexamined to
support the cause of action in the second complaint. We specifically note that at least
four (4) documents were presented in both actions, namely:
(1) the Management Agreement between Riviera Golf and CCA Holdings;
(2) the Royalty Agreement between Riviera Golf and CCA Holdings;
(3) the Fees Receivable Report of CCA Holdings as of October 1999,
amounting to USD97,122.00; and
(4) the letter dated October 29, 1999, stating the termination of the
Management Agreement.
Based on the allegations in the two complaints, the facts that are necessary to
support the second complaint would have been sufficient to allowCCA Holdings to
recover in the first complaint. The similarity in the pieces of evidence in these two
cases therefore strongly suggests the identity of their causes of action.
We held in this regard in Stilianopulos v. The City of Legaspi: 13
The underlying objectives or reliefs sought in both the quieting-
of-title and the annulment-of-title cases are essentially the same —
adjudication of the ownership of the disputed lot and nullification of one
of the two certificates of title. Thus, it becomes readily apparent that the
same evidence or set of facts as those considered in the quieting-of-title
case would also be used in this Petition.
The difference in form and nature of the two actions is immaterial
and is not a reason to exempt petitioner from the effects of res judicata.
The philosophy behind this rule prohibits the parties from litigating the
same issue more than once. When a right or fact has been judicially tried
and determined by a court of competent jurisdiction or an opportunity for
such trial has been given, the judgment of the court, as long as it remains
unreversed, should be conclusive upon the parties and those in privity
with them. Verily, there should be an end to litigation by the same parties
and their privies over a subject, once it is fully and fairly adjudicated.
(Citations omitted.)
At the Time the First Complaint was Filed
the Breach of the Agreements was Already Total
We likewise note that the non-payment of fees and the premature termination
of the contract occurred as early as 1999. In other words, the violation of both the
Management and Royalty Agreements preceded the filing of the first complaint.
Consequently, when CCA Holdings filed its first complaint in 2001, the breach of the
agreements was already complete and total; and the ground for the recovery of
damages was available and in existence. Thus, allowing CCA Holdings now to file two
separate and independent claims anchored on the same breach of contract (i.e.,
breach of the Management and Royalty Agreements), constitutes a blatant disregard
of our prohibition against res judicata and splitting of a single cause of action.
In contracts providing several obligations, each obligation may give rise to a
single and independent cause of action. But if several obligations have matured,
or if the entire contract is breached at the time of the filing of the complaint, all
obligations are integrated into one cause of action. Hence, the claim arising from
such cause of action that is not included in the complaint is barred forever. The Court's
explanation in Blossom and Company, Inc. v. Manila Gas Corporation, 14 citing US
jurisprudence on the matter, is instructive, viz.:
34 Corpus Juris, p. 839, it is said:
As a general rule[,] a contract to do several things at
several times in its nature, so as to authorize successive
actions; and a judgment recovered for a single breach of a
continuing contract or covenant is no bar to a suit for a
subsequent breach thereof. But where the covenant or
contract is entire, and the breach total, there can be only
one action, and [the] plaintiff must therein recover all his
damages.
In the case of Rhoelm v. Horst, 178 U. U., 1; 44 Law. ed., 953, that court
said:
An unqualified and positive refusal to perform a contract,
though the performance thereof is not yet due, may, if the
renunciation goes to the whole contract, be treated as a
complete breach which will entitle the injured party to bring
his action at once.
In the present case, CCA Holdings' claim for the unpaid management and
royalty fees as well as the damages for its expected business profits constituted an
indivisible demand. Verily, CCA Holdings should have included and alleged the
recovery of damages for its expected business profits as a second cause of action in
Civil Case No. 01-611. CCA Holdings cannot be permitted to split up a single cause
of action and make that single cause of action the basis of several suits. IDSEAH
All told, the Court finds that the filing of the second complaint is barred by res
judicata.
The "Non-Waiver Clause" Stipulated
in the Compromise Agreement is Null and Void
CCA Holdings contends that Riviera Golf is already estopped from questioning
the filing of the second complaint because the non-waiver clause of the Compromise
Agreement recognized CCA Holdings' prerogative to seek damages arising from the
premature termination of the Management Agreement.
We do not see any merit in this contention.
A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced. 15Like any
other contract, a compromise agreement must be consistent with the requisites and
principles of contracts. While it is true that the agreement is binding between the
parties and becomes the law between them, it is also a rule that to be valid, a
compromise agreement must not be contrary to law, morals, good customs, and public
policy. 16
In the present case, a reading of paragraph 4 of the Compromise Agreement
shows that it allows the filing of complaints based on the same cause of action (i.e.,
breach of the Management and Royalty Agreements), to wit:
4) It is understood that the execution of this compromise
agreement or the payment of the aforementioned sum of money shall
not be construed as a waiver of or with prejudice to plaintiff's
rights/cause of action, if any, arising from or relative to the
pretermination of the parties' Management and Royalty
Agreements by the defendant subject to whatever claims and defenses
may have relative thereto; (Emphasis supplied.)
Since paragraph 4 allows the splitting of causes of action and res judicata, this
provision of the Compromise Agreement should be invalidated for being repugnant to
our public policy.
The well-settled rule is that the principle or rule of res judicata is primarily one
of public policy. It is based on the policy against multiplicity of suits,17 whose primary
objective is to avoid unduly burdening the dockets of the courts.
Speaking through Justice J.B.L. Reyes, the Court in Aguila v. J.M. Tuason &
Co., Inc. 18 held that:
Public policy is firmly set against unnecessary multiplicity
of suits; the rule of res judicata, like that against splitting causes
of action, are all applications of the same policy, that matters once
settled by a Court's final judgment should not thereafter be invoked
against. Relitigation of issues already settled merely burdens the Courts
and the taxpayers, creates uneasiness and confusion, and wastes
valuable time and energy that could be devoted to worthier cases. As
the Roman maxim goes, Non bis in idem. 19 (Emphasis supplied.)
Because it is contrary to our policy against multiplicity of suits, we cannot
uphold paragraph 4 of the Compromise Agreement to be valid, for we would then
 render legitimate the splitting of causes of action and negate the prohibition
against res judicata. Under Article 1409 of the Civil Code,contracts which are contrary
to public policy and those expressly prohibited or declared void by law are considered
inexistent and void from the beginning.
In sum, we declare paragraph 4 of the Compromise Agreement null and void
for being contrary to public policy.
WHEREFORE, premises considered, we GRANT the petition. The decision
dated January 11, 2006, of the Court of Appeals in CA-G.R. CV No. 83824 is
hereby REVERSED and SET ASIDE. Accordingly, the decision dated September 29,
2004, of the Regional Trial Court, Branch 57, Makati City, in Civil Case No. 03-399
is REINSTATED.
SO ORDERED.
||| (Riviera Golf Club, Inc. v. CCA Holdings, B.V., G.R. No. 173783 , [June 17, 2015])

GUILLERMO SALVADOR, REMEDIOS CASTRO, represented by PAZ

"CHIT" CASTRO, LEONILA GUEVARRA, FELIPE MARIANO,
RICARDO DE GUZMAN, VIRGILIO JIMENEZ, represented by JOSIE
JIMENEZ, ASUNCION JUAMIZ, ROLANDO BATANG, CARMENCITA
SAMSON, AUGUSTO TORTOSA, represented by FERNANDO
TORTOSA, SUSANA MORANTE, LUZVIMINDA BULARAN, LUZ
OROZCO, JOSE SAPICO, LEONARDO PALAD, ABEL BAKING,
represented by ABELINA BAKING, GRACIANO ARNALDO,
represented by LUDY ARNALDO, JUDITH HIDALGO, and IGMIDIO
JUSTINIANO, CIRIACO MIJARES, represented by FREDEZWINDA
MIJARES, JENNIFER MORANTE, TERESITA DIALA, and ANITA P.
SALAR, petitioners, vs. PATRICIA, INC., respondent.

THE CITY OF MANILA and CIRIACO C. MIJARES, intervenors-

appellees.

DECISION

BERSAMIN, J p:
Jurisdiction over a real action is determined based on the allegations in the
complaint of the assessed value of the property involved. The silence of the complaint
on such value is ground to dismiss the action for lack of jurisdiction because the trial
court is not given the basis for making the determination. DETACa
The Case
For review is the decision promulgated on June 25, 2010 1 and the resolution
promulgated on February 16, 2011 in CA-G.R. CV No. 86735, 2whereby the Court of
Appeals (CA) dismissed the petitioners' complaint in Civil Case No. 96-81167, thereby
respectively reversing and setting aside the decision rendered on May 30, 2005 by
the Regional Trial Court (RTC), Branch 32, in Manila, 3 and denying their motion for
reconsideration.
Antecedents
The CA adopted the summary by the RTC of the relevant factual and
procedural antecedents, as follows:
This is an action for injunction and quieting of title to determine
who owns the property occupied by the plaintiffs and intervenor, Ciriano
C. Mijares. HEITAD
Additionally, to prevent the defendant Patricia, Inc., from evicting
the plaintiffs from their respective improvements along Juan Luna
Street, plaintiffs applied for a preliminary injunction in their Complaint
pending the quieting of title on the merits.
The complaint was amended to include different branches of the
Metropolitan Trial Courts of Manila. A Complaint-in-Intervention was
filed by the City of Manila as owner of the land occupied by the plaintiffs.
Another Complaint-in-Intervention by Ciriano Mijares was also filed
alleging that he was similarly situated as the other plaintiffs.
A preliminary injunction was granted and served on all the
defendants.
Based on the allegations of the parties involved, the main issue
to be resolved is whether the improvements of the plaintiffs stand on
land that belongs to Patricia, Inc., or the City of Manila. Who owns the
same? Is it covered by a Certificate of Title?
All parties agreed and admitted in evidence by stipulation as to
the authenticity of the following documents:
(1) Transfer Certificate of Title No. 44247 in the
name of the City of Manila;
(2) Transfer Certificate of Title No. 35727 in the
name of Patricia, Inc.;
(3) Approved Plan PSD-38540; and
(4) Approved Subdivision Plan PCS-3290 for
Ricardo Manotok.
The issue as to whether TCT 35727 should be cancelled as
prayed for by the plaintiffs and intervenor, Ciriano C. Mijares is laid to
rest by agreement of the parties that this particular document is genuine
and duly executed. Nonetheless, the cancellation of a Transfer
Certificate of Title should be in a separate action before another forum.
 Since the Transfer Certificates of Title of both Patricia, Inc. and
the City of Manila are admitted as genuine, the question now is: Where
are the boundaries based on the description in the respective titles? 4
To resolve the question about the boundaries of the properties of the City of
Manila and respondent Patricia, Inc., the RTC appointed, with the concurrence of the
parties, three geodetic engineers as commissioners, namely: Engr. Rosario Mercado,
Engr. Ernesto Pamular and Engr. Delfin Bumanlag. 5 These commissioners ultimately
submitted their reports. aDSIHc
On May 30, 2005, the RTC rendered judgment in favor of the petitioners and
against Patricia, Inc., permanently enjoining the latter from doing any act that would
evict the former from their respective premises, and from collecting any rentals from
them. The RTC deemed it more sound to side with two of the commissioners who had
found that the land belonged to the City of Manila, and disposed:
WHEREFORE, it is hereby ORDERED:
1. Defendant Patricia, Inc. and other person/s
claiming under it, are PERMANENTLY ENJOINED to
REFRAIN and DESIST from any act of EVICTION OR
EJECTMENT of the PLAINTIFFS in the premises they
occupy;
2. Defendant Patricia, Inc. STOP
COLLECTING any rentals from the plaintiffs who may
seek reimbursement of previous payments in a separate
action subject to the ownership of the City of Manila and;
3. Attorney's fees of P10,000.00 to each plaintiff
and intervenor, Ciriano Mijares; P20,000.00 to the City of
Manila. (emphasis ours)
No pronouncement as to costs.
SO ORDERED. 6
Decision of the CA
On appeal, the CA, in CA-G.R. CV No. 86735, reversed the RTC's
judgment, 7 and dismissed the complaint. The CA declared that the petitioners were
without the necessary interest, either legal or equitable title, to maintain a suit for
quieting of title; castigated the RTC for acting like a mere rubber stamp of the majority
of the commissioners; opined that the RTC should have conducted hearings on the
reports of the commissioners; ruled as highly improper the adjudication of the
boundary dispute in an action for quieting of title; and decreed:
WHEREFORE, premises considered, We
hereby REVERSE and SET ASIDE the decision dated May 30, 2005 of
the Regional Trial Court of Manila, Branch 32. Civil Case No. 96-81167
is hereby DISMISSED for utter want of merit. Accordingly, the
questioned order enjoining Patricia and all other person/s acting on its
stead (sic) to refrain and desist from evicting or ejecting
 plaintiffs/appellees in Patricia's own land and from collecting rentals
isLIFTED effective immediately.
No costs.
SO ORDERED. 8
The CA denied the motions for reconsideration of the petitioners and intervenor
Mijares through the assailed resolution of February 16, 2011. 9
Hence, this appeal by the petitioners. ATICcS
Issues
The petitioners maintain that the CA erred in dismissing the complaint, arguing
that the parties had openly raised and litigated the boundary issue in the RTC, and
had thereby amended the complaint to conform to the evidence pursuant to Section
5, Rule 10 of the Rules of Court; that they had the sufficient interest to bring the suit
for quieting of title because they had built their improvements on the property; and that
the RTC correctly relied on the reports of the majority of the commissioners.
On its part, the City of Manila urges the Court to reinstate the decision of the
RTC. It reprises the grounds relied upon by the petitioners, particularly the application
of Section 5, Rule 10 of the Rules of Court. 10
In response, Patricia, Inc. counters that the boundary dispute, which the
allegations of the complaint eventually boiled down to, was not proper in the action for
quieting of title under Rule 63, Rules of Court; and that Section 5, Rule 10 of the Rules
of Court did not apply to vest the authority to resolve the boundary dispute in the
RTC. 11
In other words, did the CA err in dismissing the petitioners' complaint?
Ruling of the Court
The appeal lacks merit.
1.
Jurisdiction over a real action depends on
the assessed value of the property involved
as alleged in the complaint
The complaint was ostensibly for the separate causes of action for injunction
and for quieting of title. As such, the allegations that would support both causes of
action must be properly stated in the complaint. One of the important allegations would
be those vesting jurisdiction in the trial court.
The power of a court to hear and decide a controversy is called its jurisdiction,
which includes the power to determine whether or not it has the authority to hear and
determine the controversy presented, and the right to decide whether or not the
statement of facts that confer jurisdiction exists, as well as all other matters that arise
in the case legitimately before the court. Jurisdiction imports the power and authority
to declare the law, to expound or to apply the laws exclusive of the idea of the power
to make the laws, to hear and determine issues of law and of fact, the power to hear,
determine, and pronounce judgment on the issues before the court, and the power to
inquire into the facts, to apply the law, and to pronounce the judgment. 12
But judicial power is to be distinguished from jurisdiction in that the former
cannot exist without the latter and must of necessity be exercised within the scope of
the latter, not beyond it. 13 ETHIDa
Jurisdiction is a matter of substantive law because it is conferred only by law,
as distinguished from venue, which is a purely procedural matter. The conferring law
may be the Constitution, or the statute organizing the court or tribunal, or the special
or general statute defining the jurisdiction of an existing court or tribunal, but it must
be in force at the time of the commencement of the action. 14 Jurisdiction cannot be
presumed or implied, but must appear clearly from the law or it will not be held to
exist, 15 but it may be conferred on a court or tribunal by necessary implication as well
as by express terms. 16 It cannot be conferred by the agreement of the parties; 17 or
by the court's acquiescence; 18 or by the erroneous belief of the court that it had
jurisdiction; 19 or by the waiver of objections; 20 or by the silence of the parties. 21
The three essential elements of jurisdiction are: one, that the court must have
cognizance of the class of cases to which the one to be adjudged belongs; two, that
the proper parties must be present; and, three, that the point decided must be, in
substance and effect, within the issue. The test for determining jurisdiction is ordinarily
the nature of the case as made by the complaint and the relief sought; and the primary
and essential nature of the suit, not its incidental character, determines the jurisdiction
of the court relative to it. 22
Jurisdiction may be classified into original and appellate, the former being the
power to take judicial cognizance of a case instituted for judicial action for the first time
under conditions provided by law, and the latter being the authority of a court higher
in rank to re-examine the final order or judgment of a lower court that tried the case
elevated for judicial review. Considering that the two classes of jurisdiction are
exclusive of each other, one must be expressly conferred by law. One does not flow,
nor is inferred, from the other. 23
Jurisdiction is to be distinguished from its exercise. 24 When there is
jurisdiction over the person and subject matter, the decision of all other questions
arising in the case is but an exercise of that jurisdiction. 25 Considering that
jurisdiction over the subject matter determines the power of a court or tribunal to hear
and determine a particular case, its existence does not depend upon the regularity of
its exercise by the court or tribunal. 26 The test of jurisdiction is whether or not the
court or tribunal had the power to enter on the inquiry, not whether or not its
conclusions in the course thereof were correct, for the power to decide necessarily
carries with it the power to decide wrongly as well as rightly. In a manner of speaking,
the lack of the power to act at all results in a judgment that is void; while the lack of
the power to render an erroneous decision results in a judgment that is valid until set
aside. 27 That the decision is erroneous does not divest the court or tribunal that
rendered it of the jurisdiction conferred by law to try the case. 28Hence, if the court or
tribunal has jurisdiction over the civil action, whatever error may be attributed to it is
simply one of judgment, not of jurisdiction; appeal, not certiorari, lies to correct the
error. 29 TIADCc
The exclusive original jurisdiction of the RTC in civil cases is conferred and
provided for in Section 19 of Batas Pambansa Blg. 129 (Judiciary Reorganization Act
of 1980), viz.:
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is
incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of,
real property, or any interest therein, except actions for forcible entry into
and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts;
(3) In all actions in admiralty and maritime jurisdiction where he
demand or claim exceeds twenty thousand pesos (P20,000.00);
(4) In all matters of probate, both testate and intestate, where the
gross value of the estate exceeds twenty thousand pesos (P20,000.00);
(5) In all actions involving the contract of marriage and marital
relations;
(6) In all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising judicial or quasi-judicial functions;
(7) In all civil actions and special proceedings falling within the
exclusive original jurisdiction of a Juvenile and Domestic Relations Court
and of the Courts of Agrarian Relations as now provided by law; and
(8) In all other cases in which the demand, exclusive of interest
and costs or the value of the property in controversy, amounts to more
than twenty thousand pesos (P20,000.00).
For the purpose of determining jurisdiction, the trial court must interpret and
apply the law on jurisdiction in relation to the averments or allegations of ultimate facts
in the complaint regardless of whether or not the plaintiff is entitled to recover upon all
or some of the claims asserted therein. 30 Based on the foregoing provision of law,
therefore, the RTC had jurisdiction over the cause of action for injunction because it
was one in which the subject of the litigation was incapable of pecuniary estimation.
But the same was not true in the case of the cause of action for the quieting of title,
which had the nature of a real action — that is, an action that involves the issue of
ownership or possession of real property, or any interest in real property 31 — in view
of the expansion of the jurisdiction of the first level courts under Republic Act No. 7691,
which amended Section 33 (3) of Batas Pambansa Blg. 129 effective on April 15,
1994, 32 to now pertinently provide as follows: cSEDTC
 Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts in Civil Cases. —
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts shall exercise:
xxx xxx xxx
(3) Exclusive original jurisdiction in all civil actions which
involve title to, possession of, real property, or any interest therein
where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil actions
in Metro Manila, where such assessed value does not
exceeds (sic) Fifty thousand pesos (P50,000.00) exclusive of
interest, damages of whatever kind, attorneys fees, litigation
expenses and costs: . . .
As such, the determination of which trial court had the exclusive original jurisdiction
over the real action is dependent on the assessed value of the property in dispute.
An action to quiet title is to be brought as a special civil action under Rule 63 of
the Rules of Court. Although Section 1 of Rule 63 specifies the forum to be "the
appropriate Regional Trial Court," 33 the specification does not override the statutory
provision on jurisdiction. This the Court has pointed out in Malana v. Tappa, 34 to wit:
To determine which court has jurisdiction over the actions
identified in the second paragraph of Section 1, Rule 63 of the Rules of
Court, said provision must be read together with those of the Judiciary
Reorganization Act of 1980, as amended.
It is important to note that Section 1, Rule 63 of the Rules of
Court does not categorically require that an action to quiet title be filed
before the RTC. It repeatedly uses the word "may" — that an action for
quieting of title "may be brought under [the] Rule" on petitions for
declaratory relief, and a person desiring to file a petition for declaratory
relief "may . . . bring an action in the appropriate Regional Trial Court."
The use of the word "may" in a statute denotes that the provision is
merely permissive and indicates a mere possibility, an opportunity or an
option.
In contrast, the mandatory provision of the Judiciary
Reorganization Act of 1980, as amended, uses the word shall and
explicitly requires the MTC to exercise exclusive original
jurisdiction over all civil actions which involve title to or possession of
real property where the assessed value does not exceed P20,000.00,
thus:
xxx xxx xxx
As found by the RTC, the assessed value of the subject property
as stated in Tax Declaration No. 02-48386 is only P410.00; therefore,
petitioners Complaint involving title to and possession of the said
 property is within the exclusive original jurisdiction of the MTC, not the
RTC. 35 AIDSTE
The complaint of the petitioners did not contain any averment of the assessed
value of the property. Such failure left the trial court bereft of any basis to determine
which court could validly take cognizance of the cause of action for quieting of title.
Thus, the RTC could not proceed with the case and render judgment for lack of
jurisdiction. Although neither the parties nor the lower courts raised jurisdiction of the
trial court in the proceedings, the issue did not simply vanish because the Court can
hereby motu proprio consider and resolve it now by virtue of jurisdiction being
conferred only by law, and could not be vested by any act or omission of any party. 36
2.
The joinder of the action for injunction
and the action to quiet title
was disallowed by the Rules of Court
Another noticeable area of stumble for the petitioners related to their having
joined two causes of action, i.e., injunction and quieting of title, despite the first being
an ordinary suit and the latter a special civil action under Rule 63. Section 5, Rule 2
of the Rules of Court disallowed the joinder,viz.:
Section 5. Joinder of causes of action. — A party may in one
pleading assert, in the alternative or otherwise, as many causes of action
as he may have against an opposing party, subject to the following
conditions:
(a) The party joining the causes of action shall comply with the
rules on joinder of parties;
(b) The joinder shall not include special civil actions or
actions governed by special rules;
(c) Where the causes of action are between the same parties but
pertain to different venues or jurisdictions, the joinder may be allowed in
the Regional Trial Court provided one of the causes of action falls within
the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for
recovery of money, the aggregate amount claimed shall be the test of
jurisdiction.
Consequently, the RTC should have severed the causes of action, either upon
motion or motu proprio, and tried them separately, assuming it had jurisdiction over
both. Such severance was pursuant to Section 6, Rule 2 of the Rules of Court, which
expressly provides:
Section 6. Misjoinder of causes of action. — Misjoinder of causes
of action is not a ground for dismissal of an action. A misjoined cause of
action may, on motion of a party or on the initiative of the court, be
severed and proceeded with separately. (n)
 The refusal of the petitioners to accept the severance would have led to the
dismissal of the case conformably with the mandate of Section, Rule 17 of the Rules
of Court, to wit: SDAaTC
Section 3. Dismissal due to fault of plaintiff. — If, for no justifiable
cause, the plaintiff fails to appear on the date of the presentation of his
evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order
of the court, the complaint may be dismissed upon motion of the
defendant or upon the court's own motion, without prejudice to the right
of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication
upon the merits, unless otherwise declared by the court. (3a)
3.
The petitioners did not show that they were
real parties in interest to demand
either injunction or quieting of title
Even assuming that the RTC had jurisdiction over the cause of action for
quieting of title, the petitioners failed to allege and prove their interest to maintain the
suit. Hence, the dismissal of this cause of action was warranted.
An action to quiet title or remove the clouds over the title is a special civil action
governed by the second paragraph of Section 1, Rule 63 of theRules of
Court. Specifically, an action for quieting of title is essentially a common law remedy
grounded on equity. The competent court is tasked to determine the respective rights
of the complainant and other claimants, not only to put things in their proper place, to
make the one who has no rights to said immovable respect and not disturb the other,
but also for the benefit of both, so that he who has the right would see every cloud of
doubt over the property dissipated, and he could afterwards without fear introduce the
improvements he may desire, to use, and even to abuse the property as he deems
best. But "for an action to quiet title to prosper, two indispensable requisites must
concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy. 37
The first requisite is based on Article 477 of the Civil Code which requires that
the plaintiff must have legal or equitable title to, or interest in the real property which
is the subject matter of the action. Legal title denotes registered ownership, while
equitable title means beneficial ownership, 38meaning a title derived through a valid
contract or relation, and based on recognized equitable principles; the right in the
party, to whom it belongs, to have the legal title transferred to him. 39
To determine whether the petitioners as plaintiffs had the requisite interest to
bring the suit, a resort to the allegations of the complaint is necessary. In that regard,
the complaint pertinently alleged as follows: AaCTcI
 THE CAUSE OF ACTION
5. Plaintiffs are occupants of a parcel of land situated at Juan
Luna Street, Gagalangin, Tondo (hereinafter "subject property");
6. Plaintiffs and their predecessor-in-interest have been in open
and notorious possession of the subject property for more than thirty
(30) years;
7. Plaintiffs have constructed in good faith their houses and other
improvements on the subject property;
8. The subject property is declared an Area for Priority
Development (APD) under Presidential Decree No. 1967, as amended;
9. Defendant is claiming ownership of the subject property by
virtue of Transfer Certificate of Title (TCT) No. 35727 of the Registry of
Deeds for the City of Manila. . . .
10. Defendant's claim of ownership over the subject property is
without any legal or factual basis because, assuming but not conceding
that the TCT No. 35727 covers the subject property, the parcel of land
covered by and embraced in TCT No. 35727 has already been sold and
conveyed by defendant and, under the law, TCT No. 35727 should have
been cancelled;
11. By virtue of TCT No. 35727, defendant is evicting, is about to
evict or threatening to evict the plaintiffs from the said parcel of land;
12. Because of the prior sales and conveyances, even assuming
but not conceding that the subject property is covered by and embraced
in Transfer Certificate of Title No. 35727, defendant cannot lawfully evict
the plaintiffs from the subject property since it no longer owns the subject
property;
13. Any attempted eviction of the plaintiffs from the subject
property would be without legal basis and consequently, would only be
acts of harassment which are contrary to morals, good customs and
public policy and therefore, plaintiffs are entitled to enjoin the defendant
from further harassing them;
14. Plaintiffs recently discovered that the subject property is
owned by the City of Manila and covered by and embraced in Transfer
Certificate of Title No. 44247, a copy of which is attached hereto as
Annex "B", of the Registry of Deeds for the City of Manila;
15. TCT No. 35727 which is apparently valid and effective is in
truth and in fact invalid, ineffective, voidable or unenforceable, and
constitutes a cloud on the rights and interests of the plaintiffs over the
subject property; acEHCD
16. Plaintiffs are entitled to the removal of such cloud on their
rights and interests over the subject property;
 17. Even assuming, but not admitting, that defendant owns the
subject property, it cannot evict the plaintiffs from the subject property
because plaintiffs' right to possess the subject property is protected by
Presidential Decree No. 2016.
18. Even assuming, but not admitting, that defendant owns the
subject property, it cannot evict the plaintiffs from the subject property
without reimbursing the plaintiffs for the cost of the improvements made
upon the subject property;
19. Because of defendant's unwarranted claim of ownership over
the subject property and its attempt to evict or disposses the plaintiffs
from the subject property, plaintiffs experienced mental anguish, serious
anxiety, social humiliation, sleepless nights and loss of appetite for
which defendant should be ordered to pay each plaintiff the amount of
P20,000.00 as moral damages;
20. Because of defendant's unwarranted claim of ownership over
the subject property and its attempt to evict or disposses the plaintiffs
from the subject property, plaintiffs were constrained to litigate to protect
their rights and interests, and hire services of a lawyer, for which they
should each be awarded the amount of P10,000.00.
21. The plaintiffs and the defendants are not required to undergo
conciliation proceeding before the Katarungan Pambarangay prior to the
filing of this action. 40
The petitioners did not claim ownership of the land itself, and did not show their
authority or other legal basis on which they had anchored their alleged lawful
occupation and superior possession of the property. On the contrary, they only
contended that their continued possession of the property had been for more than 30
years; that they had built their houses in good faith; and that the area had been
declared an Area for Priority Development (APD) under Presidential Decree No. 1967,
as amended. Yet, none of such reasons validly clothed them with the necessary
interest to maintain the action for quieting of title. For one, the authenticity of the title
of the City of Manila and Patricia, Inc. was not disputed but was even admitted by
them during trial. As such, they could not expect to have any right in the property other
than that of occupants whose possession was only tolerated by the owners and rightful
possessors. This was because land covered by a Torrens title cannot be acquired by
prescription or by adverse possession. 41 Moreover, they would not be builders
entitled to the protection of the Civil Code as builders in good faith. Worse for them,
as alleged in the respondent's comments, 42 which they did not deny, they had been
lessees of Patricia, Inc. Such circumstances indicated that they had no claim to
possession in good faith, their occupation not being in the concept of owners. EcTCAD
At this juncture, the Court observes that the fact that the area was declared an
area for priority development (APD) under Presidential Decree No. 1967, as
amended, did not provide sufficient interest to the petitioners. When an area is
declared as an APD, the occupants would enjoy the benefits provided for
in Presidential Decree No. 1517 (Proclaiming Urban Land Reform in the Philippines
and Providing for the Implementing Machinery Thereof). In Frilles v. Yambao, 43 the
Court has summarized the salient features of Presidential Decree No. 1517, thus:
P.D. No. 1517, which took effect on June 11, 1978, seeks to
protect the rights of bona-fide tenants in urban lands by prohibiting their
ejectment therefrom under certain conditions, and by according them
preferential right to purchase the land occupied by them. The law covers
all urban and urbanizable lands which have been proclaimed as urban
land reform zones by the President of the Philippines. If a particular
property is within a declared Area for Priority Development and Urban
Land Reform Zone, the qualified lessee of the said property in that
area can avail of the right of first refusal to purchase the same in
accordance with Section 6 of the same law. Only legitimate tenants
who have resided for ten years or more on specific parcels of
land situated in declared Urban Land Reform Zones or Urban Zones,
and who have built their homes thereon, have the right not to be
dispossessed therefrom and the right of first refusal to purchase
the property under reasonable terms and conditions to be
determined by the appropriate government agency. [Bold emphasis
supplied]
Presidential Decree No. 1517 only granted to the occupants of APDs the right
of first refusal, but such grant was true only if and when the owner of the property
decided to sell the property. Only then would the right of first refusal accrue.
Consequently, the right of first refusal remained contingent, and was for that reason
insufficient to vest any title, legal or equitable, in the petitioners.
Moreover, the CA's adverse judgment dismissing their complaint as far as the
action to quiet title was concerned was correct. The main requirement for the action
to be brought is that there is a deed, claim, encumbrance, or proceeding casting cloud
on the plaintiffs' title that is alleged and shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy, the eliminates the
existence of the requirement. Their admission of the genuineness and authenticity
of Patricia, Inc.'s title negated the existence of such deed, instrument, encumbrance
or proceeding that was invalid, and thus the action must necessarily fail.
4.
The petitioners did not have
a cause of action for injunction
The petitioners did not also make out a case for injunction in their favor.
The nature of the remedy of injunction and the requirements for the issuance
of the injunctive writ have been expounded in Philippine Economic Zone Authority v.
Carantes, 44 as follows: SDHTEC
Injunction is a judicial writ, process or proceeding whereby a party
is directed either to do a particular act, in which case it is called a
mandatory injunction or to refrain from doing a particular act, in which
case it is called a prohibitory injunction. As a main action, injunction
 seeks to permanently enjoin the defendant through a final injunction
issued by the court and contained in the judgment. Section 9, Rule 58
of the 1997 Rules of Civil Procedure, as amended, provides:
SEC. 9. When final injunction granted. — If after the
trial of the action it appears that the applicant is entitled to
have the act or acts complained of permanently enjoined,
the court shall grant a final injunction perpetually
restraining the party or person enjoined from the
commission or continuance of the act or acts or confirming
the preliminary mandatory injunction.
Two (2) requisites must concur for injunction to issue: (1) there
must be a right to be protected and (2) the acts against which the
injunction is to be directed are violative of said right. Particularly, in
actions involving realty, preliminary injunction will lie only after the
plaintiff has fully established his title or right thereto by a proper action
for the purpose. [Emphasis Supplied]
Accordingly, the petitioners must prove the existence of a right to be protected.
The records show, however, that they did not have any right to be protected because
they had established only the existence of the boundary dispute between Patricia, Inc.
and the City of Manila. Any violation of the boundary by Patricia, Inc., if any, would
give rise to the right of action in favor of the City of Manila only. The dispute did not
concern the petitioners at all.
5.
Section 5, Rule 10 of the Rules of Court
did not save the day for the petitioners
The invocation of Section 5, Rule 10 of the Rules of Court in order to enable
the raising of the boundary dispute was unwarranted. First of all, a boundary dispute
should not be litigated in an action for the quieting of title due to the limited scope of
the action. The action for the quieting of title is a tool specifically used to remove of
any cloud upon, doubt, or uncertainty affecting title to real property; 45 it should not
be used for any other purpose. And, secondly, the boundary dispute would essentially
seek to alter or modify either the Torrens title of the City of Manila or that of Patricia,
Inc., but any alteration or modification either way should be initiated only by direct
proceedings, not as an issue incidentally raised by the parties herein. To allow the
boundary dispute to be litigated in the action for quieting of title would violate Section
48 46 of the Property Registration Decree by virtue of its prohibition against collateral
attacks on Torrens titles. A collateral attack takes place when, in another action to
obtain a different relief, the certificate of title is assailed as an incident in said
action. 47 This is exactly what the petitioners sought to do herein, seeking to modify
or otherwise cancel Patricia, Inc.'s title. HSAcaE
WHEREFORE, the Court AFFIRMS the decision promulgated on June 25,
2010 by the Court of Appeals in CA-G.R. CV No. 86735; and ORDERS the petitioners
to pay the costs of suit.
 SO ORDERED.
||| (Salvador v. Patricia, Inc., G.R. No. 195834, [November 9, 2016])

SPS. VICTOR & MILAGROS PEREZ and CRISTINA AGRAVIADOR

AVISO, petitioners, vs. ANTONIO HERMANO, respondent.

DECISION

CHICO-NAZARIO, J p:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
Resolution 1 of the Court of Appeals dismissing petitioners' original action
for certiorari under Rule 65 for being filed out of time. Assailed as well is the
Resolution 2 dismissing petitioners' motion for reconsideration.
The pertinent facts of the case are as follows:
On 27 April 1998, petitioners Cristina Agraviador Aviso and spouses Victor and
Milagros Perez filed a civil case for Enforcement of Contract and Damages with Prayer
for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction
against Zescon Land, Inc. and/or its President Zenie Sales-Contreras, Atty. Perlita Vitan-
Ele and against respondent herein Antonio Hermano before the Regional Trial Court
(RTC) of Quezon City, Branch 224. 3On 15 May 1998, respondent (then
defendant) Hermano filed his Answer with Compulsory Counterclaim. On 17 January
2000, respondent Hermano filed a "Motion with Leave to Dismiss the Complaint or
Ordered Severed for Separate Trial" which was granted by the trial court in an Order
dated 28 February 2000.
This Order was received by petitioners on 21 March 2000. On 23 March 2000, petitioners
moved for reconsideration which was denied by the trial court on 25 May 2000 and
received by petitioners on 18 June 2000. On 17 August 2000, petitioners filed an original
action for certiorari before the Court of Appeals imputing grave abuse of discretion on the
part of the trial court in dismissing the complaint against respondent Hermano.
On 19 October 2000, the Court of Appeals rendered the first assailed Resolution
dismissing the petition for certiorari "for having been filed beyond the reglementary period
pursuant to Section 4, Rule 65 of the 1997 Rules on Civil Procedure, as amended." On
02 March 2001, the second assailed Resolution was promulgated dismissing petitioners'
motion for reconsideration, the Court of Appeals holding that:
From the time petitioners received the assailed Order on March 21, 2000
and filed their motion for reconsideration, four (4) days had elapsed. On
June 18, 2000, petitioners received the denial of their motion for
reconsideration. When the instant petition was filed on August 17, 2000,
a total of 63 days had elapsed. TDCcAE
 A.M. No. 00-2-03-50 further amending Section 4, Rule 65 of the New
Rules on Civil Procedure states that the petition shall be filed not later than
sixty (60) days from notice of the judgment, Order or Resolution and in
case a motion for reconsideration or new trial is timely filed, whether such
motion is required or not, the 60-day period shall be counted from notice
of the denial of said motion.
Viewed from its light, the assailed Orders had already attained finality, and
are now beyond the power of this Court to review. 4
Aggrieved by the foregoing ruling, petitioners are now before us assigning the following
—
MANIFEST AND/OR SERIOUS ERROR COMMITTED BY THE
HONORABLE COURT OF APPEALS IN THE COMPUTATION OF THE
PERIOD WITHIN WHICH THE PETITIONERS FILED THEIR PETITION
FOR CERTIORARI BEFORE IT AND CONSEQUENTLY COMMITTED
GRAVE ABUSE OF DISCRETION IN THE APPRECIATION OF FACTS
AND/OR MISAPPREHENSION OF FACTS, WITH ITS FINDING OF
FACT NOT BEING BORNE BY THE RECORD OR EVIDENCE, AND
THUS ITS CONCLUSION IS ENTIRELY BASELESS. 5
According to petitioners, following the amendment introduced by A.M. No. 00-2-03-SC to
Section 4, Rule 65 of the 1997 Rules on Civil Procedure, their petition was filed on the
60th day, thus, within the reglementary period. Respondent insists, on the other hand,
that the petition was filed on the 61st day while the Court of Appeals had declared that
the petition was filed on the 63rd day.
We agree in the position taken by petitioners.
Admittedly, at the time petitioners filed their petition for certiorari on 17 August 2000, the
rule then prevailing was Section 4, Rule 65 of the 1997 Rules on Civil Procedure, as
amended by Circular No. 39-98 effective 01 September 1998, which provides:
Sec. 4. Where petition filed. — The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution sought to
be assailed in the Supreme Court, or if it relates to the acts or omissions
of a lower court or of a corporation, board, officer or person in the Regional
Trial Court exercising jurisdiction over the territorial area as defined by
the. Supreme Court. It may also be filed in the Court of Appeals whether
or not the same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or
omissions of a quasi-judicial agency, and unless otherwise provided by
law or these Rules, the petition shall be filed in and cognizable only by the
Court of Appeals.
If the petitioner had filed a motion for new trial or reconsideration in due
time after notice of said judgment, order, or resolution, the period herein
fixed shall be interrupted. If the motion is denied, the aggrieved party may
file the petition within the remaining period, but which shall not be less
 than five (5) days in any event, reckoned from notice of such denial. No
extension of time to file the petition shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days. (Emphasis
supplied)
However, on 01 September 2000, during the pendency of the case before the Court of
Appeals, Section 4 was amended anew by A.M. No. 00-2-03-SC 6which now provides:
Sec. 4. When and where petition filed. — The petition shall be filed not
later than sixty (60) days from notice of the judgment, order or
resolution. In case a motion for reconsideration or new trial is timely filed,
whether such motion is required or not, the sixty (60) day period shall be
counted from notice of the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts
or omissions of a lower court or of a corporation, board, officer or person,
in the Regional Trial Court exercising jurisdiction over the territorial area
as defined by the Supreme Court. It may also be filed in the Court of
Appeals whether or not the same is in aid of its appellate jurisdiction, or in
the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves
the acts or omissions of a quasi-judicial agency, unless otherwise
provided by law or these rules, the petition shall be filed in and cognizable
only by the Court of Appeals.
No extension of time to file the petition shall be granted except for
compelling reason and in no case exceeding fifteen (15) days. (Emphasis
supplied)
Under this amendment, the 60-day period within which to file the petition starts to run
from receipt of notice of the denial of the motion for reconsideration, if one is filed. 7
In Narzoles v. National Labor Relations Commission, 8 we described this latest
amendment as curative in nature as it remedied the confusion brought about by Circular
No. 39-98 because, "historically, i.e., even before the 1997 revision to the Rules of Civil
Procedure, a party had a fresh period from receipt of the order denying the motion for
reconsideration to file a petition for certiorari." Curative statutes, which are enacted to
cure defects in a prior law or to validate legal proceedings which would otherwise be void
for want of conformity with certain legal requirements, by their very essence, are
retroactive. 9And, being a procedural rule, we held in Sps. Ma. Carmen and Victor
Javellana v. Hon. Presiding Judge Benito Legarda 10 that "procedural laws are
construed to be applicable to actions pending and undetermined at the time of their
passage, and are deemed retroactive in that sense and to that extent." DEacIT
Consequently, petitioners had a fresh period of 60 days from the time they received the
Order of the trial court denying their motion for reconsideration on 18 June 2000. When
they filed their petition with the Court of Appeals on 17 August 2000, exactly 60 days had
elapsed following the rule that in computing a period, the first day shall be excluded and
the last day included. 11 Hence, there can be no doubt that the petition was filed within
the reglementary period for doing so and it was reversible error on the part of the Court
of Appeals in not giving said petition due course. However, instead of remanding the case
to the Court of Appeals which would only unduly prolong the disposition of the substantive
issue raised, we shall resolve the petition originally filed therein.
Petitioners brought to the Court of Appeals on petition for certiorari under Rule 65 the
lone issue of:
WHETHER OR NOT THE PUBLIC RESPONDENT [Hon. Emilio L.
Leachon, Jr., Presiding Judge, RTC, Branch 224, Quezon City] HAD
PLAINLY AND MANIFESTLY ACTED WITH GRAVE ABUSE OF
DISCRETION, IN EXCESS OF JURISDICTION, TANTAMOUNT TO
LACK OF JURISDICTION, IN DISMISSING THE COMPLAINT AS
AGAINST RESPONDENT ANTONIO HERMANO IN CIVIL CASE NO. Q-
98-34211. 12
Petitioners assert that respondent Hermano should not have been dismissed from the
complaint because: (1) He did not file a motion to dismiss under Rule 16 of the Rules of
Court and, in fact, his "Motion with Leave to Dismiss the Complaint or Ordered Severed
for Separate Trial" was filed almost two years after he filed his Answer to the complaint;
(2) There was no misjoinder of causes of action in this case; and (3) There was no
misjoinder of parties.
The case filed by petitioners against respondent Hermano and the other defendants,
namely Zescon Land, Inc. and/or its President Zenie Sales-Contreras and Atty. Perlita
Vitan-Ele, was one for "Enforcement of Contract and Damages with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction"
docketed as Civil Case No. Q-98-34211 and raffled to Branch 224.

Petitioners presented three causes of action in their complaint, the first for enforcement
of contract to sell entered into between petitioners and Zescon Land, Inc., the second for
annulment or rescission of two contracts of mortgage entered into between petitioners
and respondent Hermano and the third for damages against all defendants.
For the first cause of action, petitioners allege that sometime in November 1997, they
entered into a Contract to Sell with Zescon Land, Inc., through Zenie Sales-Contreras, for
the purchase of five (5) parcels of land in the total amount of Nineteen Million One
Hundred Four Thousand Pesos (P19,104,000.00). As part of their agreement, a portion
of the purchase price would be paid to them as down payment, another portion to be
given to them as cash advance upon the execution of the contract and another portion to
be used by the buyer, Zescon Land, Inc., to pay for loans earlier contracted by petitioners
which loans were secured by mortgages. aACHDS
Re-pleading the foregoing in their second cause of action, petitioners contend that "in a
tricky machination and simultaneous with the execution of the aforesaid Contract to Sell,"
they were made to sign other documents, two of which were Mortgage deeds over the
same five properties in favor of respondent Hermano, whom they had never met. It was
allegedly explained to them by Sales-Contreras that the mortgage contracts would merely
serve to facilitate the payment of the price as agreed upon in their Contract to Sell.
Petitioners claim that it was never their intention to mortgage their property to
respondent Hermano and that they have never received a single centavo from
mortgaging their property to him. Petitioners acknowledge, however, that
respondent Hermano was responsible for discharging their obligations under the first
mortgage and for having the titles over the subject lands released, albeit not to them but
to respondent Hermano. They seek a TRO against respondent Hermano who had
informed them that he would be foreclosing the subject properties.
In their third cause of action, petitioners pray for damages against all the defendants
alleging that:
Due to the failure and refusal, without any valid justification and reason,
by defendants Zescon and Contreras to comply with their obligations
under the Contract to Sell, including their failure and refusal to pay the
sums stipulated therein, and in misleading and misrepresenting the
plaintiffs into mortgaging their properties to defendant Antonio Hermano,
who in turn had not paid the plaintiffs the proceeds thereof, putting them
in imminent danger of losing the same, plaintiffs had suffered, and
continue to suffer, sleepless nights. . . .
By reason of defendants Zescon and Contreras's failure and refusal to
pay the sums stipulated in the Contract to Sell, and of defendant
AntonioHermano's not having paid plaintiffs the proceeds of the mortgage
agreements, plaintiffs had been deprived of the beneficial use of the
proceeds and stood to lose, as they continue to lose, by way of unearned
profits at least P1,000,000.00. 13
In his Answer with (Compulsory) Counterclaim dated 15 May 1998,
respondent Hermano denied petitioners' allegations. 14 Then, on 19 February 1999,
respondent Hermano filed a civil case entitled "Judicial Foreclosure of Real Estate
Mortgage" against petitioner Aviso docketed as Civil Case No. Q-99-36914 and raffled to
Branch 216 of the RTC of Quezon City. On 17 January 2000, respondent Hermano filed
a "Motion With Leave To Dismiss The Complaint Against Defendant Antonio Hermano,
Or Ordered Severed For Separate Trial" before Branch 224. In said motion,
respondent Hermano argued that there was a mis-joinder of causes of action under Rule
2, Section 6 of the Rules of Court. To quote respondent Hermano:
3. In the instant case, the plaintiffs' action for the Enforcement of Contract
and Damages with Prayer for The Issuance of a Temporary Restraining
Order And/Or Preliminary Injunction against Zescon Land, Inc., and/or its
President Zenie Sales Contreras, may not, under Rule 2, Section 6 of the
1997 Rules of Civil Procedure, join defendant Hermano as party
defendant to annul and/or rescind the Real Estate Mortgages of subject
properties. There is a misjoinder of parties defendants under a different
transaction or cause of action; that under the said Rule 2, Section 6, upon
motion of defendantHermano in the instant case, the complaint against
defendant Hermano can be severed and tried separately; . . . 15
Over petitioners' opposition to said motion, the same was granted by the trial court in its
Order dated 28 February 2000 on the justification that:
 . . . [D]efendant having filed a special civil action for judicial foreclosure of
mortgage and now pending before RTC Branch 216, he should be
dropped as one of the defendants in this case and whatever claims
plaintiffs may have against defendant Hermano, they can set it up by way
of an answer to said judicial foreclosure. 16
And, in an Order dated 25 May 2000, the trial court resolved petitioners' motion for
reconsideration by dismissing the same, to wit:
After going over the arguments of the parties, the Court believes that
defendant Hermano has nothing to do with the transaction which the
plaintiffs entered into with defendant Zescon Land, Inc. Besides, the said
motion raised matters and defenses previously considered and passed
upon by the Court. 17
It is these two Orders that were brought up by petitioners to the Court of Appeals on
petition for Certiorari under Rule 65. The pivotal issue to be resolved, therefore, is
whether or not respondent trial court committed grave abuse of discretion in dismissing
the complaint against respondent Hermano in Civil Case No. Q-98-34211. TcIHDa
As far as we can glean from the Orders of the trial court, respondent Hermano was
dropped from the complaint on the ground of misjoinder of causes of action. Petitioners,
on the other hand, insist that there was no misjoinder in this case.
To better understand the present controversy, it is vital to revisit the rules on joinder of
causes of action as exhaustively discussed in Republic v.Hernandez, 18 thus:
By a joinder of actions, or more properly, a joinder of causes of action, is
meant the uniting of two or more demands or rights of action in one action;
the statement of more than one cause of action in a declaration. It is the
union of two or more civil causes of action, each of which could be made
the basis of a separate suit, in the same complaint, declaration or petition.
A plaintiff may under certain circumstances join several distinct demands,
controversies or rights of action in one declaration, complaint or
petition. ADCEaH
As can easily be inferred from the above definitions, a party is generally
not required to join in one suit several distinct causes of action. The joinder
of separate causes of action, where allowable, is permissive and not
mandatory in the absence of a contrary statutory provision, even though
the causes of action arose from the same factual setting and might under
applicable joinder rules be joined. Modern statutes and rules governing
joinders are intended to avoid a multiplicity of suits and to promote the
efficient administration of justice wherever this may be done without
prejudice to the rights of the litigants. To achieve these ends, they are
liberally construed.
While joinder of causes of action is largely left to the option of a party
litigant, Section 5, Rule 2 of our present Rules allows causes of action to
be joined in one complaint conditioned upon the following requisites: (a) it
 will not violate the rules on jurisdiction, venue and joinder of parties; and
(b) the causes of action arise out of the same contract, transaction or
relation between the parties, or are for demands for money or are of the
same nature and character.
The objectives of the rule or provision are to avoid a multiplicity of suits
where the same parties and subject matter are to be dealt with by effecting
in one action a complete determination of all matters in controversy and
litigation between the parties involving one subject matter, and to expedite
the disposition of litigation at minimum cost. The provision should be
construed so as to avoid such multiplicity, where possible, without
prejudice to the rights of the litigants. Being of a remedial nature, the
provision should be liberally construed, to the end that related
controversies between the same parties may be adjudicated at one time;
and it should be made effectual as far as practicable, with the end in view
of promoting the efficient administration of justice.
The statutory intent behind the provisions on joinder of causes of action is
to encourage joinder of actions which could reasonably be said to involve
kindred rights and wrongs, although the courts have not succeeded in
giving a standard definition of the terms used or in developing a rule of
universal application. The dominant idea is to permit joinder of causes of
action, legal or equitable, where there is some substantial unity between
them. While the rule allows a plaintiff to join as many separate claims as
he may have, there should nevertheless be some unity in the problem
presented and a common question of law and fact involved, subject
always to the restriction thereon regarding jurisdiction, venue and joinder
of parties. Unlimited joinder is not authorized.
Our rule on permissive joinder of causes of action, with the proviso
subjecting it to the correlative rules on jurisdiction, venue and joinder of
parties and requiring a conceptual unity in the problems presented,
effectively disallows unlimited joinder.
Section 6, Rule 2 on misjoinder of causes of action provides:
Sec. 6. Misjoinder of causes of action. — Misjoinder of causes of action is
not a ground for dismissal of an action. A misjoined cause of action may,
on motion of a party or on the initiative of the court, be severed and
proceeded with separately. AEcTaS

There is misjoinder of causes of action when the conditions for joinder under Section 5,
Rule 2 are not met. Section 5 provides:
Sec. 5. Joinder of causes of action. — A party may in one pleading assert,
in the alternative or otherwise, as many causes of action as he may have
against an opposing party, subject to the following conditions:
 (a) The party joining the causes of action shall comply with the rules on
joinder of parties;
(b) The joinder shall not include special civil actions or actions governed
by special rules;
(c) Where the causes of action are between the same parties but pertain
to different venues or jurisdictions, the joinder may be allowed in
the Regional Trial Court provided one of the causes of action falls
within the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery
of money, the aggregate amount claimed shall be the test of
jurisdiction.
As far as can be gathered from the assailed Orders, it is the first condition — on joinder
of parties — that the trial court deemed to be lacking. It is well to remember that the joinder
of causes of action may involve the same parties or different parties. If the joinder involves
different parties, as in this case, there must be a question of fact or of law common to
both parties joined, arising out of the same transaction or series of transaction. 19
In herein case, petitioners have adequately alleged in their complaint that after they had
already agreed to enter into a contract to sell with Zescon Land, Inc., through Sales-
Contreras, the latter also gave them other documents to sign, to wit: A Deed of Absolute
Sale over the same properties but for a lower consideration, two mortgage deeds over
the same properties in favor of respondent Hermano with accompanying notes and
acknowledgment receipts for Ten Million pesos (P10,000,000) each. Petitioners claim that
Zescon Land, Inc., through Sales-Contreras, misled them to mortgage their properties
which they had already agreed to sell to the latter. ITECSH
From the above averments in the complaint, it becomes reasonably apparent that there
are questions of fact and law common to both Zescon Land, Inc., and
respondent Hermano arising from a series of transaction over the same properties. There
is the question of fact, for example, of whether or not Zescon Land, Inc., indeed misled
petitioners to sign the mortgage deeds in favor of respondent Hermano. There is also the
question of which of the four contracts were validly entered into by the parties. Note
that under Article 2085 of the Civil Code, for a mortgage to be valid, it is imperative that
the mortgagor be the absolute owner of the thing mortgaged. Thus,
respondent Hermano will definitely be affected if it is subsequently declared that what
was entered into by petitioners and Zescon Land, Inc., was a Contract of Sale (as
evidenced by the Deed of Absolute Sale signed by them) because this would mean that
the contracts of mortgage were void as petitioners were no longer the absolute owners of
the properties mortgaged. Finally, there is also the question of whether or not Zescon
Land, Inc., as represented by Sales-Contreras, and respondent Hermano committed
fraud against petitioners as to make them liable for damages.
Prescinding from the foregoing, and bearing in mind that the joinder of causes of action
should be liberally construed as to effect in one action a complete determination of all
matters in controversy involving one subject matter, we hold that the trial court committed
grave abuse of discretion in severing from the complaint petitioners' cause of action
against respondent Hermano.
WHEREFORE, premises considered, the Resolution of the Court of Appeals dated 19
October 2000 dismissing petitioners' petition for certiorari and its Resolution dated 02
March 2001 denying petitioners' motion for reconsideration are REVERSED and SET
ASIDE. The petition for certiorari is hereby GRANTED. The Orders of the Regional Trial
Court of Quezon City, Branch 224, dated 28 February 2000 and 25 May 2000 are
ANNULLED and SET ASIDE. The RTC is further ordered to reinstate respondent
Antonio Hermano as one of the defendants in Civil Case No. Q-98-34211. No costs.
SO ORDERED.
||| (Spouses Perez v. Hermano, G.R. No. 147417, [July 8, 2005], 501 PHIL 397-412)