PAGE 4- AGUSTIN, LINCY JANE L.

III. Civil Procedure

RAMON S. CHING AND PO IING PROPERTIES, INC VS.

FACTS:
Joseph Cheng et al. filed a Complaint against and Stronghold Insurance Company et al.,
and all persons claiming rights or titles from Ramon Ching (Ramon) and his successors-in-
interest. In the said complaint, Cheng et al. alleged that Ramon Ching killed Antonio Ching, the
father of the respondents Cheng. The latter prayed that the court must disqualified Ramon Ching
as heir and from inheriting to the estate of their father; to declare the nullity of transfer of parcel
of land made by Ramon Ching. In addition, to declare the nullity of transfer of stock from
Antonio Ching to Ramon Ching; to declare void the affidavit of settlement of estate executed by
Ramon Ching for being contrary to law and jurisprudence; and to declare void all the illegal
transfer of ownership.
Ramon Ching filed a motion to dismiss against the Chengs bur the Regional Trial Court
denied the formers petition. Later, the Chengs filed an amended complaint, impleading
Metrobank. The amended complaint also added a new cause of action relative to the existence of
a Certificate of Premium Plus Acquisition (CPPA) in the amount of ₱4,000,000.00 originally
issued by PhilBank to Antonio. The Chengs argued that they are the rightful owners of the
CCPA.
Ramon Ching filed again a motion to dismiss against the amended complaint on the
ground of the court’s lack of jurisdiction over the subject matter of the complaint. The former
alleged that disinheritance suit partakes of the nature of a special proceeding. Thus, jurisdiction
pertains to a probate or intestate court and not trial court as an ordinary court.

ISSUE:
Whether or not the nature of the case is a special proceeding.

HELD:
 No.
The case remains to be an ordinary action despite it sought the disinheritance of Ramon
Ching and the release of the CPPA in favor the Chengs. This is because the case was instituted
for protection of the Chengs against the fraudulent acts of Ramon. In addition, there was no will
nor instrument of Antionio’s estate was mentioned.
Under the law, a special proceeding is a remedy by which a party seeks to establish a
status, a right, or a particular fact. It is distinguished from an ordinary civil action where a party
sues another for the enforcement or protection of a right, or the prevention or redress of a wrong.
An action for reconveyance and annulment of title with damages is a civil action, whereas
matters relating to settlement of the estate of a deceased person such as advancement of property
made by the decedent, partake of the nature of a special proceeding, which concomitantly
requires the application of specific rules as provided for in the Rules of Court.
Personal Actions And Real Actions

PAGLAUM MANAGEMENT VS. UNION BANK OF THE PHILIPPINES

FACTS:
Union Bank extended a credit line in favor of Health Tech for ₱ 10,000,000. To secure
this obligation, the PAGLAUM executed Real Estate Mortgages on behalf of Health Tech in
favor of Union Bank. It was stated, however, that in the REM that the venue of all suits and
actions arising out of or in connection with this Mortgage shall be in Makati, Metro Manila or in
the place where any of the Mortgaged Properties is located, at the absolute option of the
Mortgagee, the parties hereto waiving any other venue. Later, the parties agreed that the
proceeding will be in Makati City.
Union Bank extra- judicially foreclosed the mortgaged land since Health Tech failed to
pay its obligation. Consequently, Health Tech filed annulment of sale and titles with damages
and Application for TRO and Writ of Injunction before the RTC of Makati City. The bank filed a
motion to dismiss on the ground of lack of jurisdiction.
However PAGLAUM and Health Tech argue that: (a) the Restructuring Agreement
governs the choice of venue between the parties, and (b) the agreement on the choice of venue
must be interpreted with the convenience of the parties in mind and the view that any obscurity
therein was caused by Union Bank. On the other hand, Union Bank contends that: (a) the
Restructuring Agreement is applicable only to the contract of loan, and not to the Real Estate
Mortgage, and (b) the mortgage contracts explicitly state that the choice of venue exclusively
belongs to it.

ISSUE:
Whether or not Makati City is the proper venue to assail the foreclosure of the subject
real estate mortgage.

HELD:
Yes.
The Court rules that the venue stipulation in the Restructuring Agreement should be
controlling. Under the law, actions affecting title to or possession of real property, or interest
therein, shall be commenced and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated. However this rule shall not
apply Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue.
In the case at bar, the quoted provisions of the Real Estate Mortgages and the later
Restructuring Agreement clearly reveal the intention of the parties to implement a restrictive
venue stipulation, which applies not only to the principal obligation, but also to the mortgages.
The terms "waiving any other venue" plainly shows that the choice of Makati City as the venue
for actions arising out of or in connection with the Restructuring Agreement and the Collateral,
with the Real Estate Mortgages being explicitly defined as such, is exclusive.
 UNITED ALLOY PHILIPPINES CORPORATION VS. UNITED ALLOY COCONUT
PLANTERS BANK
G.R. NO. 175949; JANUARY 30, 2017

FACTS:
UNIALLOY applied a credit line to UCPB for ₱50,000,000.00, this loan was secured by
six promissory notes. In addition, as part of the consideration for the credit accommodation,
UNIALLOY and UCPB also entered into a "lease-purchase" contract wherein the former assured
the latter that it will purchase several real properties which UCPB co-owns with the
Development Bank of the Philippines. Later UNIALLOY failed to pay its obligation thus UCPB
filed a collection case before the RTC of Makati City. On the other hand, UNIALLOY filed a
case against UCPB before the RTC of Cagayan De Oro. UCPB and its co-defendants also filed a
Motion to Dismiss UNIALLOY's complaint for annulment of contract on the grounds of
improper venue.

ISSUE:
Whether or not UNIALLOY’s complaint for annulment of contract should be dismissed
on the ground of improper venue.

HELD:
Yes.
The parties have agreed that, any legal action arising out of or in connection with this
Agreement shall be brought exclusively in the proper courts of Makati City, Metro Manila.
Hence, UniAlloy should have filed its complaint before the RTC of Makati City, and not with the
RTC of Cagayan de Oro City. Under the law, personal actions must be commenced and tried
where the plaintiff or any of the principal plaintiffs resides; where the defendant or any of the
principal defendants resides; or in the case of a resident defendant where he may be found, at the
election of the plaintiff. Nevertheless, the parties may agree in writing to limit the venue of
future actions between them to a specified place.
In the case at bar, even though the LPA is not the subject matter, the proper venue is still
Makati City because the parties have stipulated it. The parties agreed that, as long as the
controversy arises out of or is connected therewith, any legal action should be filed exclusively
before the proper courts of Makati City.
Actions in Rem, in Personam, and Quasi in Rem

BELEN VS. CHAVEZ

FACTS:
Judge W. Green of State of California ordered Spouses Belen to pay Spouses Pacleb an
amount of $56,204.69 for the payment of loan. Spouses Pacleb filed an action for the
enforcement of a foreign judgement before the RTC of Batangas against Spouses Belen. The
former filed an answer alleging that their liability was already extinguished via a release abstract
judgment issued in the collection case abroad.
The RTC of Batangas allowed the presentation of ex parte evidence since Spouses Belen
failed to appear in the scheduled pre- trial. In the meantime, Atty. Alcantara, the counsel of
Spouses Belen died without the RTC being informed. The RTC ruled against Belen and ordered them to
pay Pacleb.

ISSUE:
Whether or not the RTC acquired jurisdiction over Spouses Belen

HELD:
Yes.
The appearance of Atty. Alcantara on behalf of Spouses Belen, and his filing of
numerous pleadings were sufficient to vest jurisdiction over the latter. Through certain acts, Atty.
Alcantara was impliedly authorized by Spouses Belen to appear on their behalf. For instance, in
support of the motion to dismiss the complaint, Atty. Alcantara attached thereto a duly
authenticated copy of the judgment of dismissal and a photocopy of the identification page of
petitioner Domingo Belen’s U.S. passport. In sum, Spouses Belen voluntarily submitted
themselves through Atty. Alcantara to the jurisdiction of RTC of Batangas.
 PLANTERS DEVELOPMENT BANK VS. JULIE CHANDUMAL
G.R. NO. 195619; SEPTEMBER 5, 2012

FACTS:
PDB filed an action for judicial confirmation of notarial rescission and delivery of
possession against Chandumal. Summons was issued and served by deputy sheriff. According to
his return, the Sheriff attempted to personally serve the summons upon Chandumal on three
separate instances but it was unavailing as she was always out of the house on said dates. Hence,
the sheriff caused substituted service of summons by serving the same through Chandumal’s
mother who acknowledged receipt. Chandumal was in default for her failure to file an answer
within the prescribed period. Chandumal then filed an urgent motion to set aside order of default
and to admit attached answer. The RTC denied the Motion and rendered a judgment against
Chandumal. On appeal, Chandumal argued that the RTC failed to acquire jurisdiction over her
person.

ISSUE:
(1) Whether or not there was a valid substituted service of summons.
(2) Whether or not Chandumal voluntarily submitted to the jurisdiction of the trial court.

HELD:
(1) No.
Where the action is in personam and the defendant is in the Philippines, service of
summons may be made through personal service, that is, summons shall be served by handing to
the defendant in person a copy thereof, or if he refuses to receive and sign for it, by tendering it
to him. If the defendant cannot be personally served with summons within a reasonable time, it is
then that substituted service may be made.
In the case at bar, the sheriff’s return failed to justify a resort to substituted service of
summons. The Return of Summons does not specifically show or indicate in detail the actual
exertion of efforts or any positive step taken by the officer or process server in attempting to
serve the summons personally to the defendant. The return merely states the alleged whereabouts
of the defendant without indicating that such information was verified from a person who had
knowledge thereof. Indeed, the sheriff’s return shows a mere perfunctory attempt to cause
personal service of the summons on Chandumal. There was no indication if he even asked
Chandumal’s mother as to her specific whereabouts. The efforts exerted by the sheriff clearly do
not suffice to justify substituted service and his failure to comply with the requisites renders such
service ineffective.
(2) Yes
 Despite that there was no valid substituted service of summons, the Court, nevertheless,
finds that Chandumal voluntarily submitted to the jurisdiction of the trial court. When
Chandumal filed an urgent motion to set aside order of default and to admit attached answer, she
effectively submitted her person to the jurisdiction of the trial court as the filing of a pleading
where one seeks an affirmative relief is equivalent to service of summons and vests the trial court
with jurisdiction over the defendant’s person.
 BIACO VS. PHILIPPINES COUNTRYSIDE RURAL BANK
G.R. NO. 161417; FEBRUARY 8, 2007

FACTS:
Biaco executed a real estate mortgage in favor Philippine Countryside Rural Bank
(PCRB) as a security for the payment of his loans. PCRB foreclosed the mortgage since Baico
failed to settle his loans. The RTC of Misamis Oriental ruled in favor of the bank. However,
Teresa Chaves, wife of Ernest Biaco, sought the annulment of the RTC. She argued that the trial
court failed to acquire jurisdiction because summons were served on her through her husband
without any explanation as to why personal service could not be made. However the bank avers
that service of summons upon the defendant is not necessary in actions quasi in rem it being
sufficient that the court acquire jurisdiction over the res.

ISSUE:
Whether or not the foreclosure of the Real Estate Mortgage is valid.

HELD:
No.
Under the law urisdiction over the res is acquired either (1) by the seizure of the property
under legal process, whereby it is brought into actual custody of the law; or (2) as a result of the
institution of legal proceedings, in which the power of the court is recognized and made
effective.
In the present case, the judicial foreclosure proceeding instituted by respondent PCRB
undoubtedly vested the trial court with jurisdiction over the res. A judicial foreclosure
proceeding is an action quasi in rem. As such, jurisdiction over the person of petitioner is not
required, it being sufficient that the trial court is vested with jurisdiction over the subject matter.
However the Supreme Court held that summons must be served upon the defendant not
for the purpose of vesting the court with jurisdiction but merely for satisfying the due process
requirements.
In the case at bar, Biaco was denied due process and was not able to participate in the
judicial foreclosure proceedings as a consequence. The violation of her constitutional right to due
process arising from want of valid service of summons on her warrants the annulment of the
judgment of the trial court.
 YU VS. PACLEB
G.R. NO. 172172; FEBRUARY 24, 2009

FACTS:
Baltazar Pacleb are registered owners of a parcel of land located in Barrio
Langcaa,Dasmarinas, Cavite .The subject property is covered by 3 documents; a deed of sale
from B. Pacleb to Del Rosario, deed of absolute sale from Del Rosario to Javier and a contract to
sell from Javier to Sps Yu. The sales were notr egistered. Yu filed a complaint for Specific
performance and damages against Javier since Ramon Pacleb tenanted the subject property. The
Court ruled in favor of Spouses Yu.
Ernesto Pacleb alleged that the deed of sale between him and his late first wife and
Rebecca Del Rosario, who is not known to them, could not have been possibly executed and the
documents were all forged. However, Spouses Yu argued that all the deeds of sale since these
were duly notarized. Consequently, the alleged forgery is of no moment since they had no notice
of any claim or interest of some other person in the property despite their diligent inquiry.

ISSUE:
Whether or not Spouses Yu are the owners of the Langcan Property by virtue of the
Decision in Civil Case No. 741-93.

HELD:
No.
The Court held that an action for specific performance is an action for personam. Being a
judgment in personam, Civil Case No. 741-93 is binding only upon the parties properly
impleaded therein and duly heard or given an opportunity to be heard. Therefore, it cannot
Ernesto Pacleb bind since he was not a party therein. Neither can Pacleb be considered as privy
thereto since his signature and that of his late first wife, Angelita Chan, were forged in the deed
of sale. Thus Ernesto Pacleb has a better right over the Langcaan Property as the true owner of
the property.
 B. Payment of docket fees

MANCHESTER DEVELOPMENT V. CA
G.R. NO. 75919; MAY 7, 1987

FACTS:
Manchester Development Corporation filed an action for torts and damages against City
Land Development Corporation et al. However, the amount of damages sought was not specified
in the prayer although the body of the complaint alleges the total amount of over P78 Million as
damages suffered by Manchester Development. Later, Manchester Development through another
counsel with leave of court filed an amended complaint on September 12, 1985 for the inclusion
of Philips Wire and Cable Corporation as co-plaintiff and by emanating any mention of the
amount of damages in the body of the complaint.
The prayer in the original complaint was maintained. The trial court directed Manchester
Development Corporation to rectify the amended complaint by stating the amounts which they
are asking for. It was only then that Manchester specified the amount of damages in the body of
the complaint in the reduced amount of P10,000,000.00. Still no amount of damages were
specified in the prayer. But the amended complaint was admitted. Still the Court of Appeals held
that the basis of assessment of the docket fee should be the amount of damages sought in the
original complaint and not in the amended complaint.

ISSUE:
Whether or not the docket fee should be levied by considering the amount of damages
sought in the Amended complaint.

HELD:
No.
The Court held that the docketing fee should be assessed by considering the amount of
damages as alleged in the original complaint. It is well-settled that, a case is deemed filed only
upon payment of the docket fee regardless of the actual date of filing in court the. However, in
the present case, the trial court did not acquire jurisdiction over the case by the payment of only
P410.00 as docket fee. Neither can the amendment of the complaint thereby vest jurisdiction
upon the Court. For a legal purposes there is no such original complaint that was duly filed
which could be amended. Consequently, the order admitting the amended complaint and all
subsequent proceedings and actions taken by the trial court are null and void.
 SUN INSURANCE OFFICE LTD. VS. ASUNCION
G.R. NOS. 79937-38; FEBRUARY 13, 1989

FACTS:
Tiong filed a complaint in the Regional Trial Court of Quezon City for the refund of
premiums and the issuance of a writ of preliminary attachment against Sun Insurance Office. The
former sought for the amount og P50,000,000.00. Later Tiong filed an amended complaint
stating a claim of not less than Pl0,000,000. 00 as actual compensatory damages. Judge Asuncion
admitted the amended complaint and furnished the Clerk of Court for the reassessment of the
docket fees. Sun Sun Insurance Office filed a petition questioning the said order of Judge
Asuncion.

ISSUE:
Whether or not the Court acquired jurisdiction over the case when the correct and
proper docket fee has not been paid.

HELD:
No.
The Court ruled that the payment of the prescribed docket fee vests the trial court with
the jurisdiction over the subject matte or nature of the action. But if the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive or reglamentary period.
In the case at bar, there was an intent on the part of Tiong to defraud the government of
the docket fee due in the filing of both original and amended complaint. However, a more liberal
interpretation of the rules must be considered. Tiong demonstrated his willingness to abide the
rules by paying the additional docket fees as required. Thus, the Clerk of Court of the court a quo
is instructed to reassess and determine the additional filing fee that should be paid by Tiong
considering the total amount of the claim sought in the original complaint. In addition to the
supplemental complaint as may be gleaned from the allegations and the prayer thereof and to
require Tiong to pay the deficiency, if any, without pronouncement as to costs.
 BALLATAN VS. COURT OF APPEALS
G.R. NO. 125683 MARCH 2, 1999

FACTS:
Ballatan et al. instituted a case for recovery of possession before the Regional Trial Court
of Malabon against Go. The latter filed their answer with third party complaint impleading as
third- party defendant Yao, AIA and Quedding. Ballatan questioned the admission by Court of
Appeals of the third-party complaint by Go against the AIA, Jose Quedding and Li Ching
Yao.the former claimed that that the third-party complaint should not have been considered by
the Court of Appeals for lack of jurisdiction due to third-party plaintiffs' failure to pay the docket
and filing fees before the trial court.

ISSUE:
Whether or not the Court acquired jurisdiction over the third- party complaint despite the
failure of Go to poy the prescribed docket fees.

HELD:
Yes.

As a rule, when an action is filed in court, the complaint must be accompanied the
payment of the requisite docket and filing fees. In real actions, the docket and filing fees are
based on the value of the property and the amount of damages claimed, if any  If the complaint is
filed but the fees are not paid at the time of filing, the court acquires jurisdiction upon full
payment of the fees within a reasonable time as the court may grant, barring prescription.  

However, in the case at bar, the third-party complaint filed by Go was incorporated in
their answer to the complaint. The third-party complaint sought the same remedy as the principal
complaint but added a prayer for attorney's fees and costs without specifying their amounts. Thus
the Court of Appeal did not err in awarding damages despite the Go's failure to specify the
amount prayed for and pay the corresponding additional filing fees thereon. The claim for
attorney's fees refers to damages arising after the filing of the complaint against the Go's. The
additional filing fee on this claim is deemed to constitute a lien on the judgment award.
 HEIRS OF REINOSO, SR. VS. COURT OF APPEALS
G.R. NO. 116121; JULY 18, 2011

FACTS:
The heirs of Reinoso filed a complaint for damages against Tapales and Guballa. The
Regional Trial Court rendered a decision in favor of the heirs of Reinoso and Tapales. But on
appeal, the Court of Appeals set aside and reversed the decision and dismissed the complaint due
to non-payment of docket fees. Also, that since prescription had already set in, petitioners could
no longer pay the required docket fees.

ISSUE:
Whether or not the Court acquired jurisdiction notwithstanding the failure to pay the
proper docket fees within the prescribed period.

HELD:
Yes.
The rule is that payment in full of the docket fees within the prescribed period is
mandatory, as enunciated in the Manchester case. However two years later, the same rule was
relaxed in the Sun Insurance Office case wherein the SC decreed that were the initiatory pleading
is not accompanied by the payment of the docket fee, the court may allow payment of the fee
within a reasonable period of time, but in no case beyond the applicable prescriptive or
reglementary period.
In the case at bar, it cannot be denied that the case was litigated before the trial court and
said court had already rendered a decision. While it was at that level, the matter of non-payment
of docket fees was never an issue. It was only the Court of Appeals which motu propio dismissed
the case for said reason. The heirs are liable for the difference between the actual fees paid and
correct payable docket fees to be assessed by the Clerk which shall constitute a lien on the
judgment.
 IN THE MATTER OF EXEMPTION FROM PAYMENT OF ALL COURT AND
SHERIFF’S FEES OF COOPERATIVES DULY REGISTERED IN ACCORDANCE
WITH RA NO. 9520
A.M. NO. 12-2-03-0, MARCH 13, 2012

FACTS:
Perpetual Help Community Cooperative (PHCCI), through counsel, requests for the
issuance of a court order to clarify and implement the exemption of cooperatives from the
payment of court and sheriff’s fees pursuant to Republic Act No. 6938, as amended by Republic
Act No. 9520, otherwise known as the Philippine Cooperative Act of 2008. PHCCI contends that
as a cooperative it enjoys the exemption provided for under Section 6, Article 61 of Republic Act
No. 9520, which states: (6) Cooperatives shall be exempt from the payment of all court and
sheriff’s fees payable to the Philippine Government for and in connection with all actions
brought under this Code, or where such actions is brought by the Authority before the court, to
enforce the payment of obligations contracted in favor of the cooperative. It avers that despite the
exemptions granted by the aforesaid laws and issuances, PHCCI had been continuously assessed
and required to pay legal and other fees whenever it files cases in court.

ISSUE:
Whether or not cooperatives are exempt from payment of court and sheriff’s fees.

HELD:
No.
The term “all court fees” under Section 6, Article 61 of Republic Act No. 9520 refers to
the totality of “legal fees” imposed under Rule 141 of the Rules of Court as an incident of
instituting an action in court. These fees include filing or docket fees, appeal fees, fees for
issuance of provisional remedies, mediation fees, sheriff’s fees, stenographer’s fees and
commissioner’s fees. With regard to the term “sheriff’s fees,” this Court, in an extended minute
Resolution dated 1 September 2009, held that the exemptions granted to cooperatives under
Section 2, paragraph 6 of Republic Act No. 6938; Section 6, Article 61 of Republic Act No.
9520; and OCA Circular No. 44-2007 clearly do not cover the amount required to defray the
actual travel expenses of the sheriff, process server or other court-authorized person in the
service of summons, subpoena and other court processes issued relative to the trial of the case,
which are neither considered as court and sheriff’s fees nor are amounts payable to the Philippine
Government. In fine, the 1 September 2009 Resolution exempted the cooperatives from court
fees but not from sheriff’s fees/ expenses.
 RICARDO RIZAL VS. LEONCIA NAREDO
G.R. NO. 151898 ; MARCH 14, 2012

FACTS:
Rizal et al. acquired a two hectares of land but Naredo et al. questioned the execution for
they believe that it must be exempt from execution. Although the CFI ordered that the Rizal must
be placed in possession of the subject land, the former did not evict Leoncia Naredo. The parties
then entered into a compromise agreement whereby 3/5 belongs to the petitioners and 2/5 to the
defendants. Ten years after, they assailed the validity of the compromise agreement claiming that
forgery took place. The Regional Trial Court dismissed the case on the ground of prescription
and non-payment of docket of fees.

ISSUE:
Whether or not the case should be dismissed on the ground of prescription and failure to
pay docket fees.

HELD:
Yes.
Failure to observe the requirements under Section 13 of rule 44 of the Rules of Court and
to pay the correct docket fees is fatal to the appeal. Likewise, the action is dismissible for res
judicata and lack of cause of action. The partition of Lot No. 252 was the result of the approved
Compromise Agreement in Civil Case No. 36-C, which was immediately final and executory.
Absent any showing that said Compromise Agreement was vitiated by fraud, mistake or duress,
the court cannot set aside a judgment based on compromise.
However it can be disturbed on the ground of vice of consent or forgery. The court thus
sustain Naredo’s affirmative defenses of res judicata and lack of cause of action, and uphold the
appellate and trial courts' rejection of the petitioners' ostensible attempt to revive the already
stale judgment in Civil Case No. 36-C through an entirely new action for partition.
 C. Cause of Action
Meaning of Cause of Action

MANUEL UBAS, SR. VS. WILSON CHAN

FACTS:
Ubas filed a complaint for sum of money with application for writ of attachment against
Wilson Chan. The former alleged that latter was indebted to him in the amount of P1,500,000.00,
representing the construction material.
Chan filed an answer with motion to dismiss. It seeks to dismiss on the following
grounds: (a) the complaint states no cause of action, considering that the checks do not belong to
him but to Unimasters Conglomeration, Inc. (Unimasters); (b) there is no contract that ever
existed between him and petitioner; and (c) if petitioner even had a right of action at all, the
complaint should not have been filed against him but against Unimasters, a duly registered
construction company which has a separate juridical personality from him. The Trial Court ruled
that Ubas had a cause of action against Chan. However, the Court of Appeals reversed and set
aside the RTC’s ruling, dismissing petitioner’s complaint on the ground of lack of cause of
action.

ISSUE:
Whether or not the complaint should be dismissed for lack of cause of action.

HELD:
No.
Cause of action is defined as the act or omission by which a party violates a right of
another. It is well-settled that the existence of a cause of action is determined by the allegations
in the complaint.
In the case at bar, the cause of action is anchored on his claim that Chan’s personally
entered into a contract with him for the delivery of construction materials amounting to
P1,500,000.00, which was, however, left unpaid.
Ubas also avers that Chan is guilty of fraud in the performance of said obligation because
the subject checks issued to him by the latter were dishonored on the ground of stop payment. As
proof, Ubas offered in evidence, among others, the demand letter he sent to Chan detailing the
serial numbers of the checks that were issued by the latter, including the dates and amounts
thereof. He also offered the dishonored checks which were in his possession.
In addition, Chan neither disputes the fact that he had indeed signed the subject checks
nor denies the demand letter sent to him by Ubas. Nevertheless, he claims that the checks were
not issued to him but to the project engineer of Unimasters who, however, lost the same.
 GOODLAND COMPANY, INC. VS. ASIA UNITED BANK
G.R. NO. 195561; MARCH 14, 2012

FACTS:
Goodland filed a complaint for annulment of mortgage before the Regional Trial Court of
Binan, Laguna on the ground that the REM was falsified and against the agreement that the
blank mortgage would only serve as a comfort document and not to be registered by Asia United
Bank. Smartnet defaulted on its loan obligation which prompted AUB to extra-judicially
foreclose the REM and then was issued a Certificate of Sale registered with the Registry of
Deeds. Goodland filed another case seeking for the annulment of the foreclosure sale in favor of
AUB. However, the latter moved to dismiss both the cases filed by Goodland on the ground of
forum shopping and litis pendentia. Later Goodland filed a third case against AUB including the
President of AUB and the notarizing lawyer whose signature was falsified. The same was
contradicted by AUB but this time, the motion to dismiss on the ground of forum shopping, non-
payment of proper docket fees, and litis pendentia were denied.

ISSUE:
Whether or not Goodland Company committed forum shopping.

HELD:
Yes.
A cause of action is defined as the act or omission by which a party violates the right of
another.
In the case at bar, the cause of action in the earlier Annulment Case is the alleged nullity
of the REM (due to its allegedly falsified or spurious nature) which is allegedly violative of
Goodland’s right to the mortgaged property. It serves as the basis for the prayer for the
nullification of the REM. While, the injunction case involves the same cause of action, inasmuch
as it also invokes the nullity of the REM as the basis for the prayer for the nullification of the
extrajudicial foreclosure and for injunction against consolidation of title.
Although the main relief sought in the Annulment Case (nullification of the REM) is
ostensibly different from the main relief sought in the Injunction Case (nullification of the
extrajudicial foreclosure and injunction against consolidation of title), the cause of action which
serves as the basis for the said reliefs remains the same — the alleged nullity of the REM. Thus,
what is involved here is the third way of committing forum shopping, i.e., filing multiple cases
based on the same cause of action, but with different prayers. As previously held by the Court,
there is still forum shopping even if the reliefs prayed for in the two cases are different, so long
as both cases raise substantially the same issues.
 Elements of Cause of Action

RELUCIO VS. LOPEZ

FACTS:
Angelina Lopez filed a petition for appointment and sole administrator of conjugal
partnership and properties against Alberto Lopez and Imelda Relucio. The former alleged that
Alberto, who is legally married to her, abandoned the latter and their four legitimate children;
that he arrogated unto himself full and exclusive control and administration of the conjugal
properties, spending and using the same for his sole gain and benefit to the total exclusion of the
family. In addition, Alberto, after abandoning his family, maintained an illicit relationship and
cohabited with Imelda.
It was further alleged that Lopez and Imelda, during their period of cohabitation, have
amassed the properties of the family. These properties are in the names of Lopez and Angelina
singly or jointly or their dummies and proxies, have been acquired principally if not solely
through the actual contribution of money, property and industry of Lopez with minimal, if not
nil, actual contribution from Angelina.
Later Angelina filed a Motion to Dismiss on the ground that Angelina has no cause of
action against her.

ISSUE:
Whether or not Angelina has a cause of action against Imelda

HELD:
No.
A cause of action is an act or omission of one party the defendant in violation of the legal
right of the other.The elements of a cause of action are: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) an act or omission on the part
of such defendant in violation of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.

A cause of action is sufficient if a valid judgment may be rendered thereon if the alleged
facts were admitted or proved. In order to sustain a motion to dismiss for lack of cause of action,
the complaint must show that the claim for relief does not exist, rather than that a claim has been
merely defectively stated or is ambiguous, indefinite or uncertain.

In the case at bar, Angelina’s cause of action are all against his husaband. The
administration of the property of the marriage is entirely between Angelina and Alberto, to the
exclusion of all other persons. Angelina alleges that Alberto J. Lopez is her husband. Therefore,
her first cause of action is against Alberto. No relation between Imelda and Angelina that can
possibly support a cause of action. In fact, none of the three elements of a cause of action exists.
With respect to the second cause of action, the accounting of conjugal partnership arises
from or is an incident of marriage. Imelda has nothing to do with the marriage between Angelina
and Alberto J. Lopez. Hence, no cause of action can exist against petitioner on this ground.
While third cause of action is essentially for forfeiture of Alberto’s share in property co-owned
by him and Imelda. It does not involve the issue of validity of the co-ownership between Alberto
J. Lopez and Imelda. Such cause of action, however, pertains to Alberto and not Imelda. Lastly,
Angelina also sought support but support cannot be compelled from a stranger.
 JUANA COMPLEX I HOMEOWNERS ASSOCIATIO, INC. ET AL. VS. FIL-
ESTATE LAND, INC.
G.R. NO. 152272 ; MARCH 5, 2012

FACTS:
Juana Complex I Homeowners Association, Inc. (JCHA) et al. filed a complaint against
against Fil-Estate Land, Inc. (Fil-Estate). The complaint alleged that Filestate excavated, broke
and deliberately ruined La Paz Road that led to SLEX so JCHA, et al. would not be able to pass
through the said road. JCHA reported the matter to the Municipal Government and the Office of
the Municipal Engineer but the latter failed to repair the road to make it passable and safe to
motorists and pedestrians. The homeowners further alleged that the act of Fil-estate in excavating
La Paz Road caused damage, prejudice, inconvenience, annoyance, and loss of precious hours to
them, to the commuters and motorists because traffic was re-routed to narrow streets that caused
terrible traffic congestion and hazard. On the other hand, Fil-Estate, et al. filed a motion to
dismiss arguing that the complaint failed to state a cause of action and that it was improperly
filed as a class suit.

ISSUE:
Whether or not the compliantly sufficiently states a cause of action.

HELD:
Yes.
A complaint states a cause of action when it contains three (3) essential elements of a
cause of action, namely: (1) the legal right of the plaintiff; (2) the correlative obligation of the
defendant; and (3) the act or omission of the defendant in violation of said legal right.
In the present case, the Court finds the allegations in the complaint sufficient to establish
a cause of action. First, JCHA, et al.’s averments in the complaint show a demandable right over
La Paz Road. These are: (1) their right to use the road on the basis of their allegation that they
had been using the road for more than 10 years; and (2) an easement of a right of way has been
constituted over the said roads. There is no other road as wide as La Paz Road existing in the
vicinity. It is the shortest, convenient and safe route towards SLEX Halang that the commuters
and motorists may use. Second, there is an alleged violation of such right committed by Fil-
Estate, et al. when they excavated the road and prevented the commuters and motorists from
using the same. Third, JCHA, et al. consequently suffered injury and that a valid judgment could
have been rendered in accordance with the relief sought therein.
Failure to State Cause of Action

Asia Brewery Inc. and Charlie Go vs. Equitable PCI Bank

FACTS:
Asia Brewery filed a complaint for payment, reimbursement or restitution against
Equitable PCI Bank. The former alleged that that 10 to 16 crossed checks were issued in the
name of Charlie Go. However, none of the checks were received by Go. Instead a certain
Raymond Keh was able to receive the said checks and deposited the same to PCI bank
pretending to be Go.
In its answer, the Bank argued that the complaint failed to state a cause of action and that
Asia Brewery had no cause of action against it, because I) the Complaint failed to indicate that
ABI was a party to any of the instruments. Also, Go never became the holder or owner of the
instruments due to non-delivery and, hence, did not acquire any right or interest.

ISSUE:
Whether or not the complaint must be dismissed for failure to state a cause of action.

HELD:
No.
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. The court held that,
dismissal due to 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. In
the case at bar, the action has not even reached the pre-trial stage. Even assuming that the trial
court merely used the wrong terminology, that it intended to dismiss the Complaint on the
ground of failure to state a cause of action, the Complaint would still have to be reinstated.
 BUTUAN DEVELOPMENT CORPORATION VS. COURT OF APPEALS
G.R. NO. 197358 ; APRIL 5, 2017
FACTS:
After incorporation, Butuan Development Corporation filed a complaint for declaration
of nullity of the real estate mortgage (REM) against Arriola and DORI alleging that the Arriola’s
misrepresented themselves as the owners and directors of the BDC. DORI claims that the case
should be dismissed for failure to state a cause of action, because at the time the REM was
constituted, BDC had not yet existed as a corporation.

ISSUE:
Whether or not the complaint should be dismissed for failure to state cause of action.

HELD:
Yes.
The elements of a cause of action are: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) act or omission on the part of such
defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of damages or
other appropriate relief.
In the case at bar, BDC's complaint sufficiently stated a cause of action for declaration of
nullity of the REM. Basically, BDC alleged in its complaint that it is the owner of the subject
property as evidenced by TCT No. RT-4724, which was issued in its name after it purchased the
subject property, through Satorre, from the Spouses Sering on March 31, 1966. It bears stressing
that a certificate of title issued is an absolute and indefeasible evidence of ownership of the
property in favor of the person whose name appears therein. BDC further alleged that the subject
property was mortgaged to DORI and Libarios without their knowledge or consent and that the
Arriolas were not in any way connected with BDC.
 MIGUEL "LUCKY" GUILLERMO AND AV MANILA CREATIVE
PRODUCTION CO. V. PHILIPPINE INFORMATION AGENCY AND DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS
G.R. NO. 223751; MARCH 15, 2017
FACTS:
Former Secretary Domingo consulted and discussed with Guillermo and AV Manila
Creative Production, Co. allegedly for the urgent need for an advocacy campaign (Campaign) to
counteract the public's negative perception of the performance of the outgoing Arroyo
Administration. Guillermo and AV Manila alleged that because of lack of funds, Guillermo had
to secure financial assistance to deliver the subsequent deliverable items to DPWH and PIA. But
despite several demands, no payments were made.
Guillermo and AV Manila filed a complaint for a sum of money and damages before the
Regional Trial Court of Marikina. The Office of the Solicitor General moved to dismiss the
complaint for failure to state a cause of action and for failure to exhaust administrative remedies.

ISSUE:
Whether or not the complaint should be dismissed for failure to state a cause of action.

HELD:
Yes.
Under the law, a complaint states a cause of action, if it sufficiently avers the existence of
the three (3) essential elements of a cause of action. The elementas are: (a) a right in favor of the
plaintiff; (b) an obligation on the part of the named defendant to respect or not to violate such
right. Lastly, (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.
In the case at bar, the complaint completely ignored the requisites for the validity of
contracts involving expenditure of public funds. The Trial Court could not order the enforcement
of the alleged contract based on the complaint, and the same was properly dismissed for failure
to state a cause of action.
Test of Sufficiency of a Cause of Action

JOSE DIAZ, JR. AND ADELINA MCMULLEN VS. SALVADOR

FACTS:
Diaz and McMullen filed a case for unlawful detainer against Salvador. They alleged that
complaint allege that they are the owner of the subject property. On the other hand, Salvador
countered that his father and the rest of his family have been in open, peaceful, and continuous
possession of the subject property from when Diaz mortgaged it to his father. After 15 years, p
Diaz and McMullen sent a demand letter to Salvador, who refused to vacate the property. This
led the former to file a new case for unlawful detainer. In his Answer, Salvador contended that
the complaint was barred by res judicata in view of the compromise agreement. He also claimed
that he and his predecessor in interest have been occupying the subject property in the concept of
an owner for more than 45 years already.

ISSUE:
Whether or not the complaint stated a sufficient cause of action.

HELD:
No.
Diaz and McMullen are partly correct that there is no identity of cause of action between
the first and second unlawful detainer cases, but not for the reason that Salvador Jr.'s occupation
is akin to forcible entry made through stealth and strategy — an allegation that is nowhere to be
found in the Complaints. The Rules of Court defines cause of action as an act or omission by
which a party violates a right of another. One of the tests to determine the identity of causes of
action so as to warrant application of res judicata is the same evidence rule.
In the case at bar, the refusal to comply with the earlier demand letter sent to Salvador,
Sr. creates a different cause of action different from the one created by the refusal to comply with
the second demand letter by Salvador, Jr. The first deals with possession by mere tolerance while
the second refers to possession by tolerance, which only arose when they neglected to execute
the earlier judgment.