"The complaint stated a cause of action against respondent companies
To recall, there are two (2) sets of affirmative defenses raised below, viz.: (1) the complaint failed to state a cause of action, raised by PEC, Amaia, and Crisanta Realty; and (2) lack of cause of action, raised by ProFriends.
In the Omnibus Order dated February 12, 2020, Judge Gill did not resolve the affirmative defense of lack of cause of action raised by ProFriends. She only resolved the common affirmative defense of PEC, Amaia, and Crisanta Realty that the complaint failed to state a cause of action. And yet, in the assailed Order dated May 22, 2020, the case against ProFriends was also dismissed on the ground that the complaint failed to state a cause of action, the common affirmative defense raised only by PEC, Amaia, and Crisanta Realty.56
It has been repeatedly held, however, that failure to state a cause of action and lack of cause of action are distinct and separate grounds to dismiss a particular action. Zuniga-Santos v. Santos-Gran57 explained that failure to state a cause of action refers to the insufficiency of the allegations in the pleading, while lack of cause of action refers to the insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at the earliest stages of the proceedings through a motion to dismiss under Rule 16 of the 1997 Rules of Court or raised as an affirmative defense in an answer, while dismissal for lack of cause of action may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions or evidence presented by the plaintiff. Asia Brewery, Inc. v. Equitable PCI Bank58 further explained:
Failure to state a cause of action is not the same as lack of cause of action; the terms are not interchangeable. It may be observed that lack of cause of action is not among the grounds that may be raised in a motion to dismiss under Rule 16 of the Rules of Court. The dismissal of a Complaint for lack of cause of action is based on Section 1 of Rule 33, which provides:
Section 1. Demurrer to evidence. - After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.
If the Complaint fails to state a cause of action, a motion to dismiss must be made before a responsive pleading is filed; and the issue can be resolved only on the basis of the allegations in the initiatory pleading. On the other hand, if the Complaint lacks a cause of action, the motion to dismiss must be filed after the plaintiff has rested its case.
In the first situation, the veracity of the allegations is immaterial; however, in the second situation, the judge must determine the veracity of the allegations based on the evidence presented.
x x x x
Hence, in order to resolve whether the Complaint lacked a cause of action, respondent must have presented evidence to dispute the presumption that the signatories validly and intentionally delivered the instrument.
x x x x
The test to determine whether a complaint states a cause of action against the defendants is this: admitting hypothetically the truth of the allegations of fact made in the complaint, may a judge validly grant the relief demanded in the complaint?59 (Emphasis supplied)
Consequently, the trial court erred in dismissing the complaint against ProFriends on ground that the complaint failed to state a cause of action, an affirmative defense it did not raise, and which is completely different from what it actually raised, i.e., lack of cause action. And strictly speaking, lack of cause of action may only be raised after the questions of fact have been resolved on the basis of stipulations or admissions or evidence presented by the plaintiff. Before then, it cannot be raised as a ground for dismissal; much less can the court dismiss the case on that ground.
We now go to the dismissal of the complaint against PEC, Amaia, and Crisanta Realty on the ground that the complaint failed to state a cause of action against them.
A cause of action is defined as an act or omission by which a party violates a right of another.60 A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential elements of a cause of action, namely: (a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (b) an obligation on the part of the named defendant to respect or not to violate such right; and (c) an act or omission on the part of the named defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages. If the allegations of the complaint do not state the concurrence of these elements, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.61
Here, the complaint for declaration of nullity of Deeds of Extrajudicial Settlement of Estate, Deeds of Sale, Cancellation of Titles, and Damages alleges:
1. Plaintiff Frank Colmenar x x x is the legitimate son of the late Francisco Jesus Colmenar (Deceased) and Dorothy Marie Crimmin (Dorothy).62
x x x x
28. Years later, Plaintiff learned of the unfortunate demise of his father.63 x x x
x x x x
29. Upon his death, Deceased left real properties registered under his name, to wit:
(1) An interest in a real property located in General Trias, Cavite, with an area of 130,743 square meters then covered by Transfer Certificate of Title No. 579;
(2) One-half (1/2) interest in a real property located in General Trias, Cavite, with total area of 27,175 square meters then covered by Transfer Certificate of Title No. 572;
(3) One-sixth (1/6) interest in a real property located in General Trias, Cavite with a total land area of 117,476 square meters then covered by Transfer Certificate of Title No. 25848; and
(4) An interest in a real property located in General Trias, Cavite with a total land area of 806 square meters then covered by Transfer Certificate of Title No. 588.
30. Several years later, Plaintiff learned that Defendants Apollo, Jeannie, and Victoria made it appear that they were the heirs of the Deceased in the Extrajudicial Settlement of Estate dated 16 May 2008 involving a real property then covered by Transfer Certificate of Title No. T-579 registered in the name of the Deceased, and a portion of a real property covered by Transfer Certificate of Title No. T-572 registered in the name of the Deceased and Angel Colmenar, both properties being located at General Trias, Province of Cavite.
31. Defendants Apollo, Jeannie, and Victoria committed the same misrepresentations when they executed the Extrajudicial Settlement of the Estates of Deceased Francisco Colmenar and Loida Colmenar dated 8 July 2011 involving a real property then covered by Transfer Certificate of Title No. 579 issued in the name of the Deceased and another real property covered by Transfer Certificate of Title No. 25848 in the name of the Deceased, among others, both properties being located at General Trias, Province of Cavite.
32. Using the foregoing deeds of extrajudicial settlement of estate as authority, Defendants Apollo and Jeannie executed a Deed of Absolute Sale dated 22 May 2013 in favor of Defendant PEC covering a real property then covered by Transfer Certificate of Title No. 579 issued in the name of the Deceased. For her part, Defendant Victoria, executed a Deed of Absolute Sale dated 22 May 2013 in favor of Defendant PEC covering a real property with Transfer Certificate of Title No. 579 issued in the name of the Deceased.
32.1. Subsequently, Defendant PEC sold the property covered by Transfer Certificate of Title No. 579 to Defendant Amaia, which by then was already covered by Transfer Certificate of Title No. 057-2013024578 in the name of Defendant PEC.
33. In the same manner, Defendants Apollo. Jeannie, and Victoria executed a Deed of Sale dated 12 September 2012 in favor of Defendant Crisanta, covering a real property then covered by Transfer Certificate of Title No. 943212 issued in the name of the Deceased and a Deed of Absolute Sale dated 3 January 2012 in favor of Defendant Profriends covering a portion of a real property then covered [by] Transfer Certificate of Title No. 25848 in the name of the Deceased, among others.
34. All the actions of Defendants Apollo, Jeannie and Victoria were made without the knowledge and consent of Plaintiff.ℒαwρhi৷ Worse, said Defendants did the same depriving Plaintiff of his successional rights under Philippine laws as the legitimate son of the Deceased.64
x x x x
47. However, Defendant PEC did not earlier acquire any right or interest over the property since the Deeds of Absolute Sale executed by Defendants Apollo, Jeannie and Victoria are void.
47.1. The said deeds are void since Defendants Apollo, Jeannie, and Victoria had no interest over the property covered by Transfer Certificate of Title No. 579. Hence, they had no right to sell the same to Defendant PEC.
48. Despite not having acquired any right or interest over the property covered by Transfer Certificate of Title No. 579, Defendant PEC still subsequently sold the said property to Defendant Amaia x x x65
x x x x
54. Subsequently, or on 21 September 2012, Defendants Apollo, Jeannie and Victoria executed a deed of sale involving the property covered by Transfer Certificate of Title No. 943212 in favor of Defendant Crisanta.
55. It bears stressing, however, that Defendants Apollo, Jeannie, and Victoria are not [the] heirs of the Deceased. Therefore, they had no right to dispose of the property covered by Transfer Certificate of Title No. 943212 in favor of Defendant Crisanta.66
x x x x
60. Defendants Apollo, Jeannie and Victoria subsequently sold Francisco Colmenar's share in Transfer Certificate of Title No. 25848 to Defendant Profriends.
61. It bears stressing, however, that Defendants Apollo, Jeannie, and Victoria are not [the] heirs of the Deceased. Therefore, they had no right to dispose of the property covered by Transfer Certificate of Title No. 25848 in favor of Defendant Profriends.67
x x x x
64. On account of the Deeds of Extrajudicial Settlement of Estate and void Deeds of Absolute Sale executed by Defendants Apollo, Jeannie, and Victoria, Transfer Certificate of Title Nos. 579, 943212, 25848 were cancelled.
65. To reiterate, however, Defendants Apollo, Jeannie, and Victoria had no right to transfer the properties to Defendant corporations.
66. Consequently, the titles issued by Defendant Registry of Deeds under the name of Defendant Amaia, which originated from the title issued to Defendant PEC, should be cancelled. In the same manner, the titles issued by the Defendant Registry of Deeds to Defendants Crisanta and Profriends are earnestly requested to be cancelled.68
In essence, petitioner essentially avers that: (a) he is the legitimate son and lawful heir of Francisco Jesus Colmenar; (b) his father left real properties in the Philippines, the rights and interests of which would legally pass on to his heirs upon his death; (c) the individual respondents are not the lawful heirs of Francisco Jesus Colmenar, thus, have no claim to the properties left by the latter; (d) the individual respondents, nonetheless, despite being devoid of any right in or authority over the estate of his father, were able to effect a void extrajudicial settlement of his father's estate, and thereafter, a void sale of his father's properties in favor of respondent companies, which, as a consequence, also did not acquire a valid title hereto.
In Asia Brewery, Inc. v. Equitable PCI Bank69 the Court ordained that the test to determine whether a complaint states a cause of action against the defendants is - admitting hypothetically the truth of the allegations of fact made in the complaint, may a judge validly grant the relief demanded in the complaint?
Here, assuming the foregoing allegations to be true, petitioner as legitimate child and lawful heir of Francisco Jesus Colmenar has the right to the relief prayed for. i.e., to declare as void the extrajudicial settlement of estate effected by the individual respondents who, not being lawful heirs of his father, had no legal right to settle the estate; and to declare as void the subsequent deeds of sale executed by these individual respondents in favor of respondent companies which consequently also did not derive any valid title from the individual respondents.
In Unciano v. Gorospe70 the Court underscored the fundamental principle that no one can give what he does not have. In other words, a seller may sell only what he or she owns, or that which he or she does not own but has authority to transfer, and a buyer can acquire only what the seller can legally transfer. As the Court emphasized in Daclag v. Macahilig,71 in a contract of sale, it is essential that the seller is the owner of the property he is selling. Under Article 1458 of the New Civil Code, the principal obligation of a seller is to transfer the ownership of the property sold. Article 1459 of the same provides that the thing must be licit and the vendor must have a right to trar.sfcr the ownership thereof at the time it is delivered. Nool v. Court of Appeals,72 further enunciated Article 1505 of the New Civil Code which provides that "where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell."
Hence, whether respondent companies were buyers in bad faith or had knowledge of the defect in the title of the seller is not the issue nor the trigger that gave rise to the complaint. Petitioner's causes of action hinged on his averment that the individual respondents are not the owners of the properties, hence, they cannot validly sell the same to respondent companies, nor convey any title to the latter by reason of the invalid sale. The spring cannot rise above its source. Needless to state, the trial court cannot inject its own theory to take the place of the actual allegations in the complaint. Besides, where petitioner in this case has no actual or personal knowledge of the good faith or bad faith of the buyers in the purchase of the properties, how could he possibly allege it in the complaint? In any event, good faith or lack of bad faith is a matter of defense for the buyers in this case. It can be pleaded in the answer and proved during the trial.
As enunciated in Sindophil, Inc. v. Republic,73 the presumption that a holder of a Torrens title is an innocent purchaser for value is disputable and may be overcome by contrary evidence, thus:
Sindophil insists that it bought the Trame property from Ty in good faith and that it was an innocent purchaser for value. However, the presumption of good faith and that a holder of a title is an innocent purchaser for value may be overcome by contrary evidence.
Here, the Republic presented evidence that TCT No. 10354, from which Sindophil's TCT No. 132440 was derived, was void. As found by the Regional Trial Court:
Record shows that Certificate of Title No. 6735, wherein the lot claimed by defendant, Marcelo R. Teodoro, lot 3270-B, is derived therefrom, is under the name of the Republic of the Philippines, dated October 17, 1913. Nothing in the subsequent annotations was under the name of any of the defendants and neither the subject TCT No. 10354.
With the Republic having put forward evidence that the Tramo property claimed by Sindophil belongs to the Republic, the burden of evidence shifted to Sindophil to prove that its title to it was valid. Concomitantly, it had the burden of proving that it was indeed a buyer in good faith and for value. As this Court said in Baltazar v. Court of Appeals, "the burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that status" and "[i]n discharging that burden, it is not enough to invoke the ordinary presumption of good faith, i.e., that everyone is presumed to act in good faith. The good faith that is [essential here] is integral with the very status which must be proved." (Emphasis supplied)
In any event, the trial court's reliance on Spouses Castillo v. Heirs of Madrigal74 is utterly misplaced. It is not on all fours with the present case. Spouses Castillo involved a conveyance of property registered in the names of the Castillo Siblings. The conveyance appeared to have been executed by all the registered co-owners, albeit the plaintiffs later disclaimed their participation in the conveyance and sued for recovery of possession and ownership. Meantime the property had already been conveyed from the original buyer to a company who invoked the right of an innocent buyer for value. The Court ruled:
Where the complaint for recovery of ownership and possession of a parcel of land alleges that some of the defendants bought said land from their co-defendants who had a defective title thereto but does not allege that the purchasers were purchasers in bad faith or with notice of the defect in the title of their vendors, there is a failure to state a cause of action. By reason of this failure, private respondent Susana Realty, Inc. is presumed to be an innocent purchaser for value and in good faith, entitled to protection under the law.75
Here, the allegations in the complaint do not speak of co-ownership between petitioner and the individual respondents insofar as the subject properties are concerned. There is no allegation either that the corresponding certificates of title which the respondent individuals transacted with respondent companies bore all the names of the respondent individuals, as well as the name of petitioner himself as their co-owner. Nor is there any allegation that the deeds of sale executed in favor of respondent companies were signed not only by individual respondents but also by petitioner himself, all of them being supposedly co-owners of the properties. On the contrary, the allegations in the complaint, assuming them to be true, are all about the unlawful conveyances of the properties by the respondent individuals who had no right to do so since the true and lawful owner of these properties is petitioner, no other.
All told, the trial court gravely erred when it held that the complaint failed to state a cause of action against respondent companies, and based thereon, dismissed the complaint against them.
WHEREFORE, the petition is GRANTED and the Order dated May 22, 2020 of the Regional Trial Court, Branch 23, Trece Martires, Cavite in Civil Case No. TMCV-062-18 REVERSED and SET ASIDE. The Complaint is REINSTATED as against Philippine Estates Corporation, Crisanta Realty Development Corporation, Amaia Land Corporation, and Property Company of Friends. The trial court is DIRECTED to PROCEED with the resolution of the case with UTMOST DISPATCH.
SO ORDERED."
[ G.R. No. 252467, June 21, 2021 ]
FRANK COLMENAR, IN HIS CAPACITY AS AN HEIR OF THE LATE FRANCISCO COLMENAR,* PETITIONER, VS. APOLLO A. COLMENAR, JEANNIE COLMENAR MENDOZA, VICTORIA JET COLMENAR, PHILIPPINE ESTATES CORPORATION, AMAIA LAND CORPORATION, CRISANTA REALTY DEVELOPMENT CORPORATION, PROPERTY COMPANY OF FRIENDS, AND THE REGISTER OF DEEDS OF THE PROVINCE OF CAVITE, RESPONDENTS.
https://lawphil.net/judjuris/juri2021/jun2021/gr_252467_2021.html
