CEROFERR REALTY CORPORATION v. COURT OF APPEALS and ERNESTO D.

SANTIAGO
G.R. No. 139539| February 5, 2002 | JUSTICE PARDO

CASE: Two people claiming that the subject land is covered by their Certificate of Title.

DOCTRINE: The rules of procedure require that the complaint must state a concise statement
of the ultimate facts or the essential facts constituting the plaintiffs cause of action. A fact is
essential if it cannot be stricken out without leaving the statement of the cause of action
inadequate. A complaint states a cause of action only when it has its three indispensable
elements, namely: (1) a right in favor of the plaintiff by whatever means and under whatever
law it arises or is created; (2) an obligation on the part of the named defendant to respect or not
to violate such right; and (3) an act or omission on the part of such defendant violative of the
right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which
the latter may maintain an action for recovery of damages. If these elements are not extant, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause
of action.

In this case, petitioner Ceroferrs cause of action has been sufficiently averred in the complaint.
If it were admitted that the right of ownership of petitioner Ceroferr to the peaceful use and
possession of Lot 68 was violated by respondent Santiagos act of encroachment and fencing of
the same, then petitioner Ceroferr would be entitled to damages.

FACTS:

Plaintiff (Ceroferr Realty Corporation) filed with the Regional Trial Court, Quezon City, a
complaint against defendant Ernesto D. Santiago (Santiago), for damages and injunction, with
preliminary injunction. In the complaint, Ceroferr prayed that Santiago and his agents be
enjoined from - claiming possession and ownership over Lot No. 68 of the Tala Estate
Subdivision, Quezon City; that Santiago and his agents be prevented from making use of the
vacant lot as a jeepney terminal; that Santiago be ordered to pay Ceroferr P650.00 daily as lost
income for the use of the lot until possession is restored to the latter; and that Santiago be
directed to pay plaintiff Ceroferr moral, actual and exemplary damages and attorney’s fees, plus
expenses of litigation.

In his answer, defendant Santiago alleged that the vacant lot referred to in the complaint was
within Lot No. 90 of the Tala Estate Subdivision; that he was not claiming any portion of Lot No.
68 claimed by Ceroferr; that he had the legal right to fence Lot No. 90 since this belonged to
him, and he had a permit for the purpose; that Ceroferr had no color of right over Lot No. 90
and, hence, was not entitled to an injunction to prevent Santiago from exercising acts of
ownership thereon; and that the complaint did not state a cause of action.

There was a verification survey, followed by a relocation survey, whereby it would appear that
the vacant lot is inside Lot No. 68. The outcome of the survey, however, was vigorously
objected to by defendant who insisted that the area is inside his lot. Defendant, in his
manifestation dated November 2, 1994, adverted to the report of a geodetic engineer. Mariano
V. Flotildes, to the effect that the disputed portion is inside the boundaries of Lot No. 90 of the
Tala Estate Subdivision which is separate and distinct from Lot No. 68, and that the two lots are
separated by a concrete fence.

It became clear that the case would no longer merely involve a simple case of collection of
damages and injunction which was the main objective of the complaint - but a review of the title
of defendant and that of plaintiff. The defendant filed a motion to dismiss the complaint
premised primarily on his contention that the trial court cannot adjudicate the issue of damages
without passing over the conflicting claims of ownership of the parties over the disputed portion.

RTC:
RTC dismissed the case for lack of cause of action and lack of jurisdiction.

The court held that plaintiff was in effect impugning the title of defendant which could not be
done in the case for damages and injunction before it. The court cited the hoary rule that a
Torens certificate of title cannot be the subject of collateral attack but can only be challenged
through a direct proceeding. It concluded that it could not proceed to decide plaintiffs claim for
damages and injunction for lack of jurisdiction because its judgment would depend upon a
determination of the validity of defendant’s title and the identity of the land covered by it.

CA:
The CA dismissed the appeal for lack of merit.

ISSUES:
Whether or not Ceroferrs complaint states a sufficient cause of action (YES)

SC:
The rules of procedure require that the complaint must state a concise statement of the ultimate
facts or the essential facts constituting the plaintiffs cause of action. A fact is essential if it
cannot be stricken out without leaving the statement of the cause of action inadequate. A
complaint states a cause of action only when it has its three indispensable elements, namely:
(1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such defendant violative of the right of plaintiff or
constituting a breach of the obligation of defendant to the plaintiff for which the latter may
maintain an action for recovery of damages. If these elements are not extant, the complaint
becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.

These elements are present in the case at bar.

The complaint alleged that petitioner Ceroferr owned Lot 68. Petitioner Ceroferr used a portion
of Lot 68 as a jeepney terminal. The complaint further alleged that respondent Santiago claimed
the portion of Lot 68 used as a jeepney terminal since he claimed that the jeepney terminal was
within Lot 90 owned by him and covered by his title issued in his name.

Despite clarification from petitioner Ceroferr that the jeepney terminal was within Lot 68 and not
within Lot 90, respondent Santiago persisted in his plans to have the area fenced. He applied
for and was issued a fencing permit by the Building Official, Quezon City. It was even alleged in
the complaint that respondent- Santiago was preventing petitioner Ceroferr and its agents from
entering the property under threats of bodily harm and destroying existing structures thereon.

A defendant who moves to dismiss the complaint on the ground of lack of cause of
action, as in this case, hypothetically admits all the averments thereof. The test of
sufficiency of the facts found in a complaint as constituting a cause of action is whether or not
admitting the facts alleged the court can render a valid judgment upon the same in accordance
with the prayer thereof. The hypothetical admission extends to the relevant and material facts
well pleaded in the complaint and inferences fairly deducible therefrom. Hence, if the allegations
in the complaint furnish sufficient basis by which the complaint can be maintained, the same
should not be dismissed regardless of the defense that may be assessed by the defendants.

In this case, petitioner Ceroferrs cause of action has been sufficiently averred in the complaint.
If it were admitted that the right of ownership of petitioner Ceroferr to the peaceful use and
possession of Lot 68 was violated by respondent Santiagos act of encroachment and fencing of
the same, then petitioner Ceroferr would be entitled to damages.