1.
RULE 2: CAUSE OF ACTION
G.R. No. 215910, February 06, 2017 - MANUEL C. UBAS, SR., Petitioner, v. WILSON CHAN,
Respondent.
Problem: Petitioner alleged that respondent, “doing business under the name and style of
UNIMASTER,” was indebted to him in the amount of ₱1,500,000.00, representing the price of
construction materials allegedly purchased by respondent from him .Further, he averred that
respondent had issued three (3) bank checks, payable to “CASH” in the amount of ₱500,000.00
but when petitioner presented the subject checks for encashment, the same were dishonored
due to a stop payment order.Respondent filed an Answer with Motion to Dismiss, seeking the
dismissal of the case on the following ground, among others: the complaint states no cause of
action, considering that the checks do not belong to him but to Unimasters.The Judge dismissed
the case ground of lack of cause of action. It held that respondent was not the proper party
defendant in the case, considering that the drawer of the subject checks was Unimasters,
which, as a corporate entity, has a separate and distinct personality from respondent.Is the
dismissal of the judge correct?
Rulings:
No, the judge erred in dismissing petitioner’s complaint for lack of cause of action.Although the
checks were under the account name of Unimasters, it should be emphasized that the manner
or mode of payment does not alter the nature of the obligation. The source of obligation, as
claimed by petitioner in this case, stems from his contract with respondent. When they agreed
upon the purchase of the construction materials on credit for the amount of ₱1,500,000,00, the
contract between them was perfected. Therefore, even if corporate checks were issued for the
payment of the obligation, the fact remains that the juridical tie between the two (2) parties was
already established during the contract’s perfection stage and, thus, does not preclude the
creditor from proceeding against the debtor during the contract’s consummation stage.
2. Butuan Development Corporation (BDC) Vs. The Twenty-First Division
of the Honorable Court of Appeals, et al.
G.R. No. 197358, April 05, 2017
(BDC), which was then still in the process of incorporation, through its then President
Edmundo Satorre (Satorre), purchased from the Spouses Jose and Socorro Sering (Spouses
Sering) a 7.6923-hectare parcel of land situated in Butuan City (subject property). On May 5,
1998, Max L. Arriola, Jr. (Max Jr.), representing himself as the Chairman of BDC and armed
with a duly notarized Resolution of the BDC Board of Directors therefor, mortgaged the subject
property to De Oro Resources, Inc. (DORI) and its President Louie A. Libarios (Libarios).
On May 13, 2002, Satorre, together with Ma. Laurisse Satorre-Gabor, Liza Therese
Satorre-Balansag, Edmundo C. Satorre II, and Leslie Mae Satorre-King, executed the Articles of
Incorporation of BDC. The Securities and Exchange Commission approved the Articles of
Incorporation and issued the Certificate of Incorporation. BDC filed a complaint for declaration of
nullity of real estate mortgage (REM) with the Regional Trial Court (RTC) of Agusan del Norte
and Butuan City against Max Jr., Libarios, and DORI (collectively, the respondents), et al.
In their Answer, Libarios and DORI denied that the Arriolas misrepresented themselves
as the directors of BDC since, at the time of the execution of the REM, the Arriolas had
possession of the subject property and the owner's duplicate copy of the TCT. As special and
affirmative defense, Libarios and DORI claimed that the complaint filed by BDC should be
dismissed outright for failing to state a cause of action since at the time of the execution of the
REM on May 5, 1998, BDC did not yet exist, having been incorporated only on May 23, 2002,
and, hence, could not have claimed ownership of the subject property.
The RTC issued an order to the effect that the special and affirmative defenses
were dismissed. The respondents then filed a petition for certiorari with the CA, claiming that the
RTC gravely abused its discretion in brushing aside their special and affirmative defense. The
petition was granted and the Complaint was dismissed for failure to state a cause of action.
THE ISSUE
Whether the CA gravely abused its discretion when it set aside the RTC's Orders dated
August 11, 2006 and November 24, 2006, ruling that BDC's complaint failed to state a cause of
action.
THE RULING
Yes. The petition is granted.
In resolving whether the complaint states a cause of action or not, only the facts alleged
in the complaint are considered. The test is whether the court can render a valid judgment on
the complaint based on the facts alleged and the prayer asked for. Only ultimate facts, not legal
conclusions or evidentiary facts, are considered for purposes of applying the test.
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.
What is clear is that the issues of whether the REM constituted over the subject property
is void and whether BDC has a right to the subject property at the time of the execution of the
REM would have been best resolved during the trial.
3.
