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G.R. No.

142619 September 14, 2005

MUNICIPALITY OF TAGUIG, HON. MAYOR RICARDO PAPA, JR. and


ROBERT O. SANTOS, Petitioners,
vs.
THE HON. COURT OF APPEALS, HON. JUDGE RODOLFO BONIFACIO
and BARANGAY HAGONOY, TAGUIG, M.M., Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari filed by petitioners seeking to


annul the Resolution1 dated February 2, 2000 of the Court of Appeals (CA) in
CA-G.R. SP No. 56369 dismissing their case for violation of the rule against
forum shopping and the Resolution2 dated March 20, 2000 denying their
motion for reconsideration.

Petitioners, then Municipality of Taguig, together with the then Mayor


Ricardo Papa, Jr. and Chief of the General Service Office (GSO) Roberto
Santos, and respondent Barangay Hagonoy, Taguig are fighting over the
ownership of the Hagonoy Multi-Purpose Hall in Hagonoy, Taguig, Metro
Manila.

On December 8, 1999, respondent Barangay filed a complaint with the


Regional Trial Court of Pasig for damages with prayer for the issuance of a
writ of preliminary injunction and temporary restraining order (TRO),
docketed as Civil Case No. 67720, against petitioners to prevent the latter
from taking over control and possession of the subject multi-purpose hall. On
the same day, the trial court presided over by Judge Rodolfo Bonifacio issued
a 72-hour TRO against petitioners. On December 10, 1999, the trial court,
after hearing the application for TRO, issued an Order extending the 72-hour
TRO to 20 days.

On December 13, 1999, petitioners filed a petition 3 for certiorari and


prohibition with application for issuance of writ of preliminary injunction in
the CA, docketed as CA- G.R. SP No. 56211 which was raffled to a member of
the Fourteenth Division thereof.

On December 15, 1999, the CA issued a Resolution4 directing the trial

court to cease and desist from further proceeding or hearing Civil Case No.
67720 for 60 days and ordered respondents to file their Comment.

The following day, December 16, 1999, respondent Barangay filed an urgent
motion to lift the cease and desist order issued by the appellate court as well
as its comment on the petition. On the same day, the CA issued a Resolution5
granting respondents motion and admitted the comment. It found that
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respondent Barangay has been in possession of the multi-purpose hall since
1996 and that its continued possession until Civil Case No. 67720 between
petitioners and respondent is finally resolved will not unduly prejudice or
cause injury and damage to petitioners. It then ordered the respondent Judge
to speedily resolve Civil Case No. 67720.

On December 17, 1999, the trial court issued an order granting respondents
application for a writ of preliminary injunction.

On December 22, 1999, petitioners filed with the CA Fourteenth Division a


motion to withdraw6 their petition for certiorari and prohibition (CA-G.R. SP
No. 56211, the first petition).

On the same day, petitioners filed another petition7 for certiorari and
prohibition with application for issuance of writ of preliminary injunction
with the same CA assailing the Order of the trial court dated December 17,
1999 granting respondents application for injunction, which is docketed as
CA-G.R. SP No. 56369 (the second petition) and raffled to a member of the
CAs Fourth Division. Petitioners motion to withdraw the earlier petition was
opposed by respondents.

On February 2, 2000, the CA Fourth Division issued herein assailed


Resolution dismissing the petition for certiorari and prohibition for violation
of the rule against forum shopping. It said:

In this Petition for Certiorari and Prohibition (With application for Issuance of
Writ of Preliminary Injunction), petitioners seek among others, the issuance of
a writ of preliminary injunction enjoining respondent Judge from enforcing
his Order dated 17 December 1999, and from continuing proceedings in Civil
Case No. 67720. The assailed Order issued a writ of preliminary injunction
against petitioners, among others, from proceeding with the taking over,
control and possession of the Hagonoy Multi-Purpose Hall, until further
orders from said court. Earlier, the same petitioners filed a Petition for
certiorari and prohibition (With Application for Issuance of Writ of
Preliminary Injunction) before the Former Fourteenth Division of this Court,
docketed as CA-G.R. SP No. 56211, similarly praying for the issuance of a
preliminary injunction enjoining the same respondent judge from continuing
proceedings in Civil case No. 67720, and for the annulment of his order
dated 10 December 1999, issuing a 17-day extension of the original 72-hour
Temporary Restraining Order issued on 08 December 1999.

Notably, the instant petition was filed while CA GR SP NO. 56211 is still
pending with the former Fourteenth Division of this Court, and only after the
instant petition was filed did petitioners file a motion to withdraw CA-GR SP
No. 56211. Thus, the filing of the instant petition and the execution of the
Verification/Certification attached on page 11 of the rollo of the instant
petition evidently constitute willful and deliberate forum shopping.
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In First Philippine International Bank vs. Court of Appeals, 252 SCRA 259,
citing Words and Phrases, the Supreme Court ruled:

A litigant is open to a charge of "forum shopping" whenever he chooses a


forum with slight connection to factual surrounding of his suit. xxx"

The test for determining whether a party violated a rule against forum
shopping has been laid down in the 1986 case of Buan vs. Lopez, 145 SCRA
34, i.e., forum shopping exists where the elements of litis pendentia are
present or where a final judgment in one case will amount to res judicata in
the other

Consequently, where a litigant sues the same party against whom another
action for the alleged violation of the same right and the enforcement of the
same relief is/are still pending, the defense of litis pendentia in one case is a
bar to the other; and a final judgment in one would constitute res judicata
and thus would cause the dismissal of the other. In either case, forum
shopping could be cited by the other party as a ground for summary dismissal
of the petition, and for the imposition of other sanctions.

The instant petition falls squarely under the foregoing tests. CA-G.R. SP. No.
56211 was filed to secure a writ of preliminary injunction to enjoin
respondent judge from proceeding with Civil Case No. 67720 and to annul
extension of his TRO preventing herein petitioners from taking over, control
and possession of the Hagonoy-Multi-Purpose Hall. The instant petition was
filed to secure a writ of preliminary injunction to enjoin respondent judge
from proceeding with Civil Case No. 67720, and from enforcing his Order
effectively preventing herein petitioners from taking over the control and
possession of the Hagonoy Multi-Purpose Hall until further orders from his
court. In brief, the objective of relief being sought, though pertaining to
different Orders of the same judge, is ultimately the same, i.e., preventing
respondent judge from enjoining herein petitioners from taking over, control
and possession of the Hagonoy Multi-Purpose Hall and from further
proceeding with the case below. In Danville Maritime, Inc. vs. Commission
on Audit, 175 SCRA 201, the highest tribunal ruled that the filing of two
apparently different actions, but with the same objective, constituted forum
shopping. The Former Fourteenth Division itself, in its Resolution dated 16
December 1999, recognized the fact that respondent Barangay has been in
possession of the Multi-Purpose Hall since 1996, which continued possession
would not unduly prejudice or cause injury and damage to petitioners. It
conceded respondents contention that "allowing the respondent judge to
proceed in the case will not render moot and academic whatever action this
Honorable Court may take in this case." Though both CA-G.R. SP No. 56211
and the instant case are for certiorari and prohibition and filed with the same
court, which technically are not covered by the rules on forum shopping, the
fact that CA-G.R. No. 56211 is still pending (as there is no action yet on
petitioners motion to withdraw the same) when the instant petition was
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filed, is enough proof that the instant petition was resorted to circumvent the
law. 8

On February 18, 2000, the CA Fourteenth Division where the first petition is
pending issued a Resolution9 granting petitioners motion to withdraw and
dismissed the petition. It likewise found that the instant petition violated the
rule on forum shopping since petitioners had also filed with the same court
another petition (CA-G.R. SP No. 56369, the second petition) involving
identical parties and issues, and virtually the same facts and circumstances.

Hence, this petition for review.

Petitioners allege that there is no forum shopping committed since the second
petition for certiorari and prohibition was filed after they had filed a motion
to withdraw their first petition citing Executive Secretary vs. Gordon;10 that it
was ruled in the Gordon case that there is no forum shopping when a party
files a case in the lower court even after applying for a similar relief with the
Supreme Court where such party had sought the withdrawal of his case in the
SC in order to seek recourse in the lower court; that there could be no forum
shopping before the same court or when both petitions are filed in the same
court; that the two petitions assailed two different orders of the trial court:
(1) the Order dated December 10, 1999 which extended the initial 72-hour
TRO to 20 days; and (2) the Order dated December 17, 1999 granting the
preliminary injunction against petitioners; that there is no forum shopping
since no decision had been arrived at yet in the first petition nor did the filing
of the second petition increase petitioners chances of winning or securing a
favorable action. Respondents filed their Comment thereto.

The parties filed their respective memoranda as required by the Court.

On August 8, 2003, the Municipality of Taguig filed a Manifestation and


Motion stating that petitioners Ricardo Papa, Jr. and Roberto Santos were the
then Mayor of Taguig and Chief of the GSO of the Municipality, respectively;
that they are no longer occupying these positions because of the election of a
new Mayor and the appointment of a new GSO Chief; that petitioner
Municipality of Taguig now agrees with the position of respondent Barangay
that it is the owner of the multi-purpose hall subject of this case, thus, the
Municipality of Taguig should be disassociated in this case as petitioner and
instead be made one of the respondents; and that the issue on forum
shopping be resolved.

We find no merit in the petition.

Forum shopping exists when, as a result of an adverse opinion in one forum,


a party seeks a favorable opinion (other than by appeal or certiorari) in
another, or when he institutes two or more actions or proceedings grounded

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on the same cause, on the gamble that one or the other court would make a
favorable disposition.11

What is truly important to consider in determining whether forum shopping


exists or not is the vexation caused the courts and parties-litigants by a party
who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered by the
different fora upon the same issues.12

Petitioners allege that forum shopping does not exist where two different
orders were questioned, two distinct causes of action and issues were raised
and two objectives were sought, citing the case of Golangco vs. CA.13

We do not agree as the reliance of petitioners on Golangco is misplaced. We


found no forum shopping in said case because the two petitions, one filed in
the CA and other with us, questioned two unrelated orders of the trial court.
Petitioner filed a petition for certiorari under Rule 65 before the CA assailing
the decision of the trial court dated October 4, 1995, granting the writ of
preliminary injunction prayed for by the wife which enjoined petitioner
husband from seeing their children. The CA dismissed the petition for
violation of forum shopping since petitioner also filed a petition before us
questioning the trial courts Order dated July 21, 1994, granting custody
pendente lite of petitioner husbands children to his wife. We reversed the
finding of the CA that there was forum shopping, thus:

In assailing the October 4, 1995 order, petitioner was actually questioning the
propriety of the issuance of the writ of injunction. He alleged therein that the
trial court acted with grave abuse of discretion in issuing the order since it
disregarded his right to procedural due process. Moreover the said order
restrained him from seeing his children. He, therefore, sought the
reinstatement of the July 21, 1994 order wherein he was given visitation
rights of at least one week in a month.

On the other hand, in the order dated July 21 1994, petitioner specifically
questioned the award of custody of the children to his wife and prayed for
more time to spend with his children.

Thus, it is clear from the foregoing that the issues raised in the two petitions,
that is, first questioning the order dated July 21, 1994 and second, the order
dated October 4, 1995 are distinct and different from one another.14

Unlike in the instant case, although two different orders are being questioned
by petitioners in their separate petitions for certiorari filed with the CA, to
wit: (1) the Order dated December 10, 1999 which extended the initial 72-
hour TRO for another 17 days and (2) the Order dated December 17, 1999
granting the issuance of preliminary injunction against petitioners, the latter
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are asking for the same relief, that is, to prevent respondent judge from
enjoining petitioners from taking over, control and possession of the
Hagonoy Multi-Purpose Hall and from further hearing Civil Case No. 67720.
Notably, the reliefs being asked by petitioners in both petitions are founded
on the same fact that the act sought to be enjoined, which is taking the
control and possession of the multi-purpose hall, had already been
consummated. Thus, the two actions are based on the same cause of action.

Moreover, it bears stressing that the CA Fourteenth Division where the first
petition was pending had earlier issued a Resolution dated December 16,
1999 lifting the cease and desist order it issued against the trial court after
finding that respondent Barangay is in actual possession of the hall since 1996.
In effect, there was already a preliminary finding that there was no merit to
petitioners contention that they are in possession of the multi-purpose hall.
With the filing of the second petition where petitioners are again claiming
that they are in possession and control of the hall, which was assigned by
raffle to another member of the CA belonging to another Division of the
latter, they, in effect, sought to improve their chances of obtaining a more
favorable action by the issuance of a preliminary injunction in their favor.

In fact, there was no need for petitioners to file a separate second petition
where a new case docket number was given since they could have just filed a
supplemental pleading to their first petition since the issue raised in the
second petition, which is the issuance of the preliminary injunction, is but a
continuation of the order assailed in the first petition, the issuance of a TRO,
which can properly be ruled upon by the same Division. In not doing so,
petitioners deliberately sought another forum to grant them the relief that
they wanted.

We likewise find no merit in petitioners claim that since both petitions were
filed in the CA, it is absurd for there to be forum shopping when there is only
one forum involved. In Silahis International Hotel, Inc. vs. NLRC,15 we held:

The labor arbiter ruled that the strike staged by the respondents was illegal.
After receiving notice of a favorable decision, petitioner-hotel dismissed the
respondent-employees for having participated in this illegal strike.
Respondents then filed its appeal from this decision. And within the same
month, the respondents filed their petition for injunction as a new injunction
case.

It is not very difficult to see that the issues in these two cases are interrelated.
Because of this relevant connection, the relief prayed for by the respondents,
i.e., injunction restraining the petitioner from dismissing them, could have
been properly granted or denied in the case on appeal. There was in fact no
reason for the respondents to file a new injunction case before the same
agency.

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By doing this, they effectively sought another forum to grant them relief. The
Court cannot but proscribe this as a species of forum shopping.

In Villanueva vs. Adre, we said that:

There is forum shopping whenever, as a result of an adverse opinion in one


forum, a party seeks a favorable opinion (other than by appeal or certiorari)
in another. The principle applies not only with respect to suits filed in the
courts but also in connection with litigations commenced in the courts while
an administrative proceeding is pending, as in this case, in order to defeat
administrative processes and in anticipation of an unfavorable administrative
ruling and a favorable court ruling.

And in Gabriel vs. Court of Appeals, we added that "filing of multiple


petitions constitutes abuse of the court's processes and improper conduct that
tends to impede, obstruct and degrade the administration of justice and will
be punished as contempt of court."

We have consistently ruled that a party should not be allowed to pursue


simultaneous remedies in two different forums. Although most of the cases
we have ruled upon regarding forum shopping involved petitions in the
courts and administrative agencies, the rule prohibiting it applies equally to
multiple petitions in the same tribunal or agency.

By filing another petition involving the same essential facts and circumstances
in the same agency, as in this case where respondents filed their appeal and
injunction case separately in the NLRC, respondents approached two different
fora in order to increase their chances of obtaining a favorable decision or
action. This practice cannot be tolerated and should be condemned. 16
(Emphasis supplied).
Thus, there is forum shopping in this case even if the petitions for certiorari
and prohibition were both filed in the CA since there are different Divisions
involved.

Petitioners assert that they are in good faith since they specifically informed
the CA of the existence of the first petition in their second petition and that a
motion to withdraw the same had already been filed. They cite the case of
Executive Secretary vs. Gordon17 where we did not find Gordon to have
committed forum shopping when despite the pendency of a petition for
certiorari before us, he filed the exact same petition with the trial court.
Petitioners contend that the similarity of such case with this case is the fact
that the motion to withdraw petition was filed and that Gordons second
petition was filed before the motion to withdraw the first petition was
granted; that unlike in the Gordon case where he filed exactly the same case
before different forum, the instant case involves two different orders subject

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of two petitions, thus forum shopping is less likely to have been committed in
the instant case than in the Gordon case.

We are not persuaded.

In the Gordon case, the filing of then Secretary Gordon of the second petition
with the trial court was "due to the present policy of the Court requiring
parties and their counsel to adhere strictly to the hierarchy of courts and to
obviate any technical objection on this ground." In this case, there was no
valid reason advanced by petitioners in filing the second petition except that
the first petition had been mooted with the issuance of the preliminary
injunction, subject of the second petition. Moreover, in the Gordon case, no
action had as yet been made on the case when he withdrew his earlier
petition filed with us and filed the same case in the trial court. In the instant
case, however, the former Fourteenth Division of the CA where the first
petition was pending had dissolved its earlier cease and desist order issued
against the trial court and ordered the respondent Judge to speedily resolve
Civil Case No. 67720. It bears stressing that petitioners were asking the CA to
prevent respondent judge from enjoining petitioners from taking over,
control and possession of the Hagonoy Multi-Purpose Hall and from further
hearing Civil Case No. 67720. With the filing of the second petition in the
CA, it is evident that they intended to take the chance that the second
petition will be raffled off to another Justice belonging to a different Division
and thus improve their chances of obtaining a writ of preliminary injunction
which was earlier denied by the former Fourteenth Division.

Petitioners argue that the CA should have ordered the consolidation of the
second petition with the first petition instead of dismissing both cases on the
ground of forum shopping.

We do not agree.

Forum shopping is contumacious, as well as an act of malpractice that is


proscribed and condemned as trifling with the courts and abusive of their
processes.18 It is improper conduct that degrades the administration of justice.
As held in Bian Steel Corporation vs. Court of Appeals,19 thus:

Such contemptuous act is penalized by the summary dismissal of both actions


as mandated by paragraph 17 of the Interim Rules and Guidelines issued by
this Court on January 11, 1983 and Supreme Court Circular No. 28-91, to wit:

...

SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE


SUPREME COURT AND THE COURT OF APPEALS TO PREVENT FORUM-
SHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS.

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The attention of the Court has been called to the filing of multiple petitions
and complaints involving the same issues in the Supreme Court, the Court of
Appeals or different Divisions thereof, or any other tribunal or agency, with
the result that said tribunals or agency have to resolve the same issues.

...

3. Penalties.

(a) Any violation of this Circular shall be a cause for the summary dismissal of
the multiple petition or complaint;

...

In Bugnay Construction & Development Corporation vs. Laron, we declared:

Forum-shopping, an act of malpractice, is proscribed and condemned as


trifling with the courts and abusing their processes. It is improper conduct that
degrades the administration of justice. The rule has been formalized in
Paragraph 17 of the Interim Rules and Guidelines issued by this Court of
January 11, 1983, in connection with the implementation of the Judiciary
Reorganization Act x x x. The Rule ordains that (a) violation of the rule shall
constitute a contempt of court and shall be a cause for the summary dismissal
of both petitions, without prejudice to the taking of appropriate action
against the counsel or party concerned.

The rule against forum-shopping has been further strengthened by the


issuance of Supreme Court Administrative Circular No. 04-94. Said circular
formally established the rule that the deliberate filing of multiple complaints
to obtain favorable action constitutes forum-shopping and shall be a ground
for summary dismissal thereof.

Thus, a partys willful and deliberate act of forum shopping is punishable by


summary dismissal of the actions filed.20

WHEREFORE, the petition for review on certiorari is DENIED and the


Resolutions dated February 2, 2000 and March 20, 2000 of the Court of
Appeals are AFFIRMED.

SO ORDERED.

G.R. No. 154554 November 9, 2005

GOODYEAR PHILIPPINES, INC., Petitioner,

vs.

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ANTHONY SY and JOSE L. LEE, Respondents.

DECISION

PANGANIBAN, J.:

complaint must contain a concise statement of the ultimate facts constituting


the plaintiffs cause of action. To determine whether a cause of action is
stated, the test is as follows: admitting arguendo the truth of the facts alleged,
can the court render a

_____________________

* On official leave.

** On medical leave.

valid judgment in accordance with the prayer? If the answer is "no," the
complaint does not state a cause of action and should be dismissed forthwith.
If "yes," then it does and must be given due course.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court,


assailing the June 5, 2002 Decision2 and the August 8, 2002 Resolution3 of
the Court of Appeals (CA) in CA-GR CV No. 61229. The dispositive portion
of the challenged Decision reads as follows:

"WHEREFORE, the instant appeal is GRANTED. The Order dated May 27,
1998 of the Regional Trial Court of Legazpi City, Branch 9, is hereby

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REVERSED and the case is remanded to the court a quo for the appropriate
further proceedings."4

The assailed Resolution denied petitioners Motion for Reconsideration.

The Antecedents

The CA narrated the antecedents of the case as follows:

"The subject of this case involves a motor vehicle, particularly described as:

MAKE: 1984 Isuzu JCR 6-Wheeler

PLATE NUMBER: PEL 685

MOTOR NO.: 6BD1-371305

SERIAL NO.: JCR500BOF-21184

"The vehicle was originally owned by Goodyear Philippines, Inc.


([Goodyear]) which it purchased from Industrial and Transport Equipment,
Inc. in 1983. It had since been in the service of [Goodyear] until April 30,
1986 when it was hijacked. This hijacking was reported to the Philippine
National Police (PNP) which issued out an alert alarm on the said vehicle as a
stolen one. It was later on recovered also in 1986.

"The vehicle was used by [Goodyear] until 1996, when it sold it to Anthony
Sy on September 12, 1996.

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"Sy, in turn, sold it to Jose L. Lee on January 29, 1997. But the latter on
December 4, 1997, filed an action for rescission of contract with damages
against Sy[,] because he could not register the vehicle in his name due to the
certification from the PNP Regional Traffic Management Office in Legazpi
City that it was a stolen vehicle and the alarm covering the same was not
lifted. Instead, the PNP in Legazpi City impounded the vehicle and charged
Lee criminally.

"Upon being informed by Sy of the denial of the registration of the vehicle in


Lees name, [Goodyear] requested on July 10, 1997 the PNP to lift the stolen
vehicle alarm status. This notwithstanding, [Goodyear] was impleaded as
third-party defendant in the third-party complaint filed by Sy on January 9,
1998.

"A motion to dismiss was filed by [Goodyear] on March 24, 1998 on the twin
grounds that the third-party complaint failed to state a cause of action and
even if it did, such cause of action was already extinguished. An opposition
thereto was interposed by Sy on April 17, 1998.

"The Regional Trial Court [(RTC)] resolved to dismiss the third-party


complaint on the basis of the first proffered ground in its challenged Order
dated May 27, 1998. It ratiocinated:

A perusal of the third party complaint does not expressly show any act or
omission committed by the third party defendant which violates a right of the
third party complainant. The third party complaint failed to show that the
vehicle in question belongs to a person other than the third party defendant
at the time the said motor vehicle was sold by the third party defendant to
the third party plaintiff. On the contrary[,] the third party defendant has not
denied having sold to the third party plaintiff the said motor vehicle which
had been in its possession as owner from 1986 to 1996. The fact that the said
motor vehicle was included by the PNP in its alert status as stolen vehicle[,]
resulted only following the report by the third party defendant that it was
hijacked in 1986. But when the said motor vehicle was recovered, the third
party defendant informed the PNP about the said recovery and requested the
lifting of the alert status on it as stolen vehicle.

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If the PNP has not removed the said vehicle from its alert status as a stolen
vehicle, [then] that does not make [Goodyear] not the owner thereof. Hence,
[Goodyear], the third party defendant, is not guilty of any breach resulting
from any flaw in the title over the said vehicle. This is confirmed by the
allegation of the third party plaintiff as answering defendant in paragraph 6
of its Answer with Counterclaim and Affirmative Defenses dated January 9,
1998, hereunder quoted as follows:

"6. Defendant specifically denies the allegations contained in paragraph 9 of


[p]laintiffs complaint, the truth of the matter is that [d]efendant help[ed]
plaintiff in removing the impediments in the registration and transfer of
ownership and that defendant ha[d] no knowledge of any flaw [in] the title
of Goodyear Philippines, Inc."

Under Rules 16, a motion to dismiss may be made on any of the following
grounds:

"g) That the pleading asserting the claim states no cause of action."

WHEREFORE, for failure of the third party complaint to state a cause of


action, the same is hereby ordered DISMISSED."5

Ruling of the Court of Appeals

In granting the appeal, the CA reasoned that the Third-Party Complaint had
stated a cause of action. First, petitioner did not make good its warranty in
the Deed of Sale: to convey the vehicle to Respondent Anthony Sy free from
all liens, encumbrances and legal impediments. The reported hijacking of the
vehicle was a legal impediment that prevented its subsequent sale.

Second, Respondent Sy had a right to protect and a warranty to enforce,


while petitioner had the corresponding obligation to honor that warranty.
The latter caused the impairment of that right, though, when the vehicle it
had sold to him was refused registration, because of the non-lifting of the
alert status issued at its instance. That petitioner had to execute all documents
13 | S U S H I N E T H CIV PRO SET 2
necessary to confer a perfect title to him before he could seek recourse to the
courts was deemed a ludicrous condition precedent, because it could easily
refuse to fulfill that condition in order to obviate the filing of a case against it.

Hence, this Petition.6

The Issues

Petitioner raises the following issues for the Courts consideration:

"I.

Whether or not the Court of Appeals erred in reversing and setting aside the
decision of the Regional Trial Court, dismissing the complaint against
petitioner for lack of a cause of action.

"II.

Whether or not the Court of Appeals erred in failing to find that petitioner
did not breach any warranty in the absence of proof that at the time it sold
the subject vehicle to Sy, petitioner was not the owner thereof.

"III.

Whether or not the Court of Appeals erred in failing to find that the cause of
action, if ever it existed, was already extinguished."7

The foregoing issues actually point to one main question: did the Third-Party
Complaint state a cause of action against petitioner?

14 | S U S H I N E T H CIV PRO SET 2


The Courts Ruling

The Petition has merit.

Main Issue:

Whether a Cause of Action

Was Stated in the Third-Party Complaint

A cause of action is a formal statement of the operative facts that give rise to
a remedial right.8 The question of whether the complaint states a cause of
action is determined by its averments regarding the acts committed by the
defendant.9 Thus, it "must contain a concise statement of the ultimate or
essential facts constituting the plaintiffs cause of action."10 Failure to make a

sufficient allegation of a cause of action in the complaint "warrants its


dismissal."11

Elements of a Cause of Action

A cause of action, which is an act or omission by which a party violates the


right of another,12 has these elements:
"1) the legal right of the plaintiff;
"2) the correlative obligation of the defendant to respect that legal right; and
"3) an act or omission of the defendant that violates such right."13

In determining whether an initiatory pleading states a cause of action, "the


test is as follows: admitting the truth of the facts alleged, can the court render
a valid judgment in accordance with the prayer?"14 To be taken into account
are only the material allegations in the complaint; extraneous facts and
circumstances or other matters aliunde are not considered.15 The court may
consider -- in addition to the complaint -- the appended annexes or
documents, other pleadings of the plaintiff, or admissions in the records.16
15 | S U S H I N E T H CIV PRO SET 2
No Cause of Action Against Petitioner

In the present case, the third element is missing. The Third-Party Complaint
filed by Sy is inadequate, because it did not allege any act or omission that
petitioner had committed in violation of his right to the subject vehicle. The
Complaint capitalized merely on the fact that the vehicle -- according to the
records of the PNP, which was a stranger to the case -- was "a stolen vehicle."
The pleading did not contain "sufficient notice of the cause of action"17
against petitioner.

Without even going into the veracity of its material allegations, the
Complaint is insufficient on its face.18 No connection was laid out between
the owners sale of the vehicle and its impounding by the PNP. That the
police did not lift the alert status did not make petitioner less of an owner.

The Deed of Sale between petitioner and Respondent Sy was attached as


Annex A19 to the Third-Party Complaint filed by the latter against the former.
The Deed stated that petitioner was the absolute owner of the subject
vehicle. No contrary assertion was made in the Complaint. Hence, the trial
court correctly observed that the Complaint had failed to show that, at the
time of its sale to Respondent Sy, the vehicle belonged to a person other than
petitioner.20

To reiterate, the Third-Party Complaint absolutely failed to state an act or


omission of petitioner that had proximately caused injury or prejudice to Sy.
Indeed, based on that pleading alone, the latters claim for relief against
petitioner does not appear to exist.

Warranties Passed On By the Vendor to the Vendee

In a contract of sale, the vendor is bound to transfer the ownership of and to


deliver the thing that is the object of the sale.21 Moreover, the implied
warranties are as follows: first, the vendor has a right to sell the thing at the
time that its ownership is to pass to the vendee, as a result of which the latter
shall from then on have and enjoy the legal and peaceful possession of the
thing;22 and, second, the thing shall be free from any charge or encumbrance
not declared or known to the vendee.23

Upon the execution of the Deed of Sale, petitioner did transfer ownership of
and deliver the vehicle to Respondent Sy.24 No other owner or possessor of
the vehicle had been alleged, and the ownership and possession rights of
petitioner over it had never been contested. The Deed of Sale executed on
16 | S U S H I N E T H CIV PRO SET 2
September 12, 1996 showed that petitioner was the absolute owner.
Therefore, at the time that ownership passed to Sy, petitioner alone had the
right to sell the vehicle.

In the same manner, when he sold the same truck to Jose L. Lee,25
Respondent Sy was exercising his right as absolute owner. Unfortunately,
though, from the time Respondent Lee attempted to register the truck in his
name, he could not have or enjoy the legal and peaceful possession of the
vehicle, because it had been impounded by the PNP, which also opposed its
registration.

The impoundment of the vehicle and the failure to register it were clearly acts
that were not deliberately caused by petitioner, but that resulted solely from
the failure of the PNP to lift the latters own alarm over the vehicle. Pursuant
to Republic Act 6975,26 these matters were purely administrative and
governmental in nature. Petitioner had no authority, much less power, over
the PNP. Hence, the former did not breach its obligation as a vendor to
Respondent Sy; neither did it violate his right for which he could maintain an
action for the recovery of damages. Without this crucial allegation of a breach
or violation, no cause of action exists.27

A warranty is an affirmation of fact or any promise made by a vendor in


relation to the thing sold. As such, a warranty has a natural tendency to
induce the vendee -- relying on that affirmation or promise -- to purchase the
thing.28 The vendor impliedly warrants that that which is being sold is free
from any charge or encumbrance not declared or known to the vendee. The
decisive test is whether the vendor assumes to assert a fact of which the
vendee is ignorant.29

No Lien or Breach of Warranty

In the present case, petitioner did not breach the implied warranty against
hidden encumbrances. The subject vehicle that had earlier been stolen by a
third party was subsequently recovered by the authorities and restored to
petitioner, its rightful owner. Whether Sy had knowledge of the loss and
subsequent recovery, the fact remained that the vehicle continued to be
owned by petitioner, free from any charge or encumbrance whatsoever.

A lien is "a legal right or interest that a creditor has in anothers property,
lasting usually until a debt or duty that it secures is satisfied."30 An
17 | S U S H I N E T H CIV PRO SET 2
encumbrance is "a claim or liability that is attached to property or some other
right and that may lessen its value, such as a lien or mortgage."31 A legal
impediment is a legal "hindrance or obstruction."32

The Third-Party Complaint did not allege that petitioner had a creditor with a
legal right to or interest in the subject vehicle. There was no indication either
of any debt that was secured by the vehicle. In fact, there was not even any
claim, liability or some other right attached to the vehicle that would lessen
its value. Its impoundment, as well as the refusal of its registration, was not
the hindrance or obstruction in the contemplation of law that the vendor
warranted against. Neither of those instances arose from any liability or
obligation that could be satisfied by a legal claim or charge on, or property
right to -- other than an ownership interest in -- the subject vehicle.33

No Notice of Any Breach of Warranty

Gratia argumenti that there was a breach of the implied warranty against
hidden encumbrances, notice of the breach was not given to petitioner within
a reasonable time. Article 1586 of the Civil Code requires that notice be given
after the breach, of which Sy ought to have known. In his Third-Party
Complaint against petitioner, there was no allegation at all that respondent
had given petitioner the requisite notice.34

More important, an action for damages for a breach of implied warranties


must be brought within six months from the delivery of the thing sold.35 The
vehicle was understood to have been delivered to Sy when it was placed in
his control or possession.36 Upon execution of the Deed of Sale on
September 12, 1996, control and possession of the vehicle was transferred to
respondent. That the vehicle had been delivered is bolstered by the fact that
no contrary allegation was raised in the Third-Party Complaint. Whether the
period should be reckoned from the actual or from the constructive delivery
through a public instrument, more than six months had lapsed before the
filing of the Third-Party Complaint.

Finally, the argument that there was a breach of the implied warranty against
eviction does not hold water, for there was never any final judgment based
on either a right prior to the sale; or an act that could be imputed37 to
petitioner and deprive Sy of ownership or possession of the vehicle
purchased.

18 | S U S H I N E T H CIV PRO SET 2


WHEREFORE, the Petition is hereby GRANTED, and the assailed Decision
and Resolution are REVERSED. The May 27, 1998 Order of the Regional Trial
Court is REINSTATED. No costs.

SO ORDERED.

G.R. No. 106922 April 20, 2001

FRANKLIN M. DRILON, AURELIO C. TRAMPE, FERDINAND R. ABESAMIS


and EULOGIO MANANQUIL, petitioners, vs. COURT OF APPEALS, HON.
ERIBERTO U. ROSARIO, JR., in his capacity as Presiding Judge of Branch 66,
Regional Trial Court of Makati and JUAN PONCE ENRILE, respondents.

DE LEON, JR., J.:

Before us is a petition for review of the Decision1 of the Court of Appeals and
Resolution2 dated June 29, 1992 and August 27, 1992 respectively which
affirmed the Order3 dated October 8, 1991 of the Regional Trial Court of
Makati City, Branch 66, in Civil Case No. 90-2327 denying petitioners'
motion to dismiss as well as the Order4 dated January 6, 1992 denying
petitioners' motion for reconsideration.

The facts are as follows:

After the unsuccessful December 1989 coup d' etat, the Department of Justice,
then headed by petitioner Franklin Drilon, referred to the Special Composite
Team of Prosecutors (Team of Prosecutors, for brevity), composed of co-
petitioners Aurelio C. Trampe, Ferdinand R. Abesamis and Eulogio
Mananquil, a letter-complaint from the National Bureau of Investigation
(NBI, for brevity) requesting for the investigation of private respondent Juan
Ponce Enrile for his alleged participation in the said coup attempt.

Finding sufficient basis to continue the inquiry, the Team of Prosecutors issued
a subpoena to private respondent with an order to submit his counter-
affidavit to the letter-complaint. Instead of filing his counter-affidavit, private
respondent filed a Petition for Summary Dismissal of the charge against him.
He also filed an urgent motion praying that he be given a notice of at least
five (5) days before the filing of any information against him to enable him to
take the appropriate legal action. At the same time, private respondent sent
"cautionary letters" to all judges in Quezon City, Manila, Makati and Pasay
City requesting that he be apprised of any information which may be filed
against him and that he be given the opportunity to personally witness the
raffle of the case against him. Said notice also appeared in several newspapers
of general circulation.

19 | S U S H I N E T H CIV PRO SET 2


On February 27, 1990, the Team of Prosecutors filed before the Regional
Trial Court of Quezon City on Information charging private respondent with
the complex crime of rebellion with murder and frustrated murder. The Team
of Prosecutors likewise filed before the Regional Trial Court of Makati City an
Information charging, among others, private respondent with the offense of
obstruction of justice for harboring an alleged felon under Presidential Decree
No. 1829. Private respondent was later arrested and detained overnight at
the NBI headquarters in Taft Avenue, Manila, and, on the following day,
transferred to a detention room at Camp Karingal in Quezon City. The
lawyers of private respondent also discovered that the information against
the latter was first filed on February 21, 1990, but was subsequently
withdrawn for re-filing on February 27, 1990. After a petition for writ of
habeas corpus was filed before this Court entitled Enrile v. Salazar5, we
granted private respondent's provisional liberty upon posting of a cash bond.

On June 5, 1990, in the same case of Enrile v. Salazar, we ordered the


modification of the Information before the RTC of Quezon City to simple
rebellion only in consonance with our ruling in People v. Hernandez6. On
September 13, 1990, in Enrile v. Amin,7 this Court ruled that the filing of a
separate information for obstruction of justice also violated the Hernandez
doctrine and accordingly ordered the quashal of the said information.

As a consequence of our said Order dated September 13, 1990, private


respondent on August 20, 1990 filed a Complaint for damages, docketed as
Civil Case No. 90-2327, before the Regional Trial Court of Makati City while
the rebellion case was still pending litigation. Private respondent's complaint
impleaded as defendants herein petitioners, then Solicitor General Francisco
Chavez and Judge Jaime Salazar. The complaint basically accuses the
petitioners of bad faith in filing the information for rebellion complexed with
murder and frustrated murder. Thus, the complaint alleges:

2.5 The so-called "preliminary investigation" of the charge against plaintiff


was railroaded from the very start. Plaintiff's pleas and motions asking for
strict compliance with the rules of procedure and the norms of fairness and
justice were either ignored or summarily denied by the investigating panel.
Plaintiff, in utter frustration, filed a petition for summary dismissal of the
charge and, anticipating the denial of that as well, also filed an urgent motion
to be given at least five (5) days notice to enable him to take the appropriate
legal action, before the filing of any information against him.

xxx
20 | S U S H I N E T H CIV PRO SET 2
3.1 All of the defendants, in and by all their actuations in connection with the
information for rebellion "complexed" individually, collectively, and with
unity of purposes and intentions, illegally and unjustly caused, directed and
prolonged plaintiff's arrest and detention without bail, through the
expediency of disregarding the Hernandez doctrine prohibiting the
complexing of rebellion with other crimes.

In and by all their aforementioned actuations, all of the defendants


individually, collectively and with unity of purposes and intentions

(a) wilfully, manifestly and maliciously obstructed, defeated, violated,


impeded and impaired plaintiff's constitutional and legal right to due process,
right to be secure in his person against unreasonable and unwarranted arrest,
and right to bail, as enshrined in Sections 1, 2 and 13 of Article 14(1) of the Bill
of Rights of the Constitution;
(b) grossly abused their rights and violated their duties as citizens, as members
of the legal profession, and as public officers;
(c) willfully acted in contravention of the basic standards of good faith and
justice; and
(d) willfully acted in a manner contrary to law, morals and public policy
- all causing great suffering and injury to plaintiff.

3.2 Defendants Chavez, Drilon, Trampe, Abesamis and Mananquil


knowingly, manifestly and maliciously abused and exceeded their duties and
authority as public officials in charge of the enforcement and prosecution of
laws, as well as violated the tenets of good faith and justice in human
relations, by directly and actively advocating and indulging in what these
defendants had publicly admitted and described to be a "legal
experimentation" consisting in the knowing disregard and defiance of the
well-established Hernandez doctrine.

Defendant Drilon and his co-defendants Trampe, Abesamis and Mananquil,


being the head and members, respectively, of the Department of Justice, by
their above-alleged actuations, violated their principal responsibility, as legal
counsel and prosecutors, to administer the criminal justice system in
accordance with the established and accepted laws and processes.

Defendant Drilon, being the Secretary of Justice having supervision, control


and direction over the actuations of co-defendants Trampe, Abesamis and
Mananquil violated the tenets of good faith and justice in human relations
and abused his official duties and authority, by, among others, expressly
instigating, authorizing, ordering and causing the filing of the information for
rebellion "complexed" against the plaintiff.

xxx
21 | S U S H I N E T H CIV PRO SET 2
3.3. Defendants Drilon, Trampe, Abesamis and Mananquil filed or cased the
filing of the information for rebellion "complexed" with manifest bad faith,
deception and duplicity, all in violation of the tenets of good faith and justice
in human relations and in gross abuse of their duties and authority as public
prosecutors "to see that justice is done." (Canon 6, Rule 6.01, Lawyers' Code
of Professional Responsibility).

More particularly, these defendants originally filed or caused the filing of the
information on 21 February 1990 but, for some mysterious reason, the
information was subsequently withdrawn. The initial filing and withdrawal of
the information defendant Chavez admitted these facts during the Supreme
Court hearing on 6 March 1990 were done in total secrecy and without the
knowledge of plaintiff who learned of this incident only after his arrest on 27
February 1990.

Likewise, on or about 27 February 1990, these defendants deliberately misled


plaintiff and his lawyers and induced them to believe that the charge of
rebellion "complexed" was set to be filed against the plaintiff in the Regional
Trial Court of Makati. While plaintiff's attention was diverted to the Regional
Trial Court of Makati, these defendants surreptitiously filed or caused the
filing of main information for rebellion "complexed" in the Regional Trial
Court of Quezon City.

All of the above-named defendants' actuations were meant to conceal from


the public in general and the plaintiff and his counsel in particular, the filing
of the information and to prevent plaintiff and his lawyers from witnessing
the raffle and from questioning the irregularity of the assignment, the validity
of the information, the authority of the court to issue the warrant of arrest,
the obvious lack of probable cause, and, finally, to prevent plaintiff from
posting bail.

xxx

3.5 The defendants' unfounded and malicious persecution of plaintiff,


calculated to malign the person and reputation of the plaintiff, a duly elected
Senator of the country, has caused and continues to cause plaintiff extreme
suffering, mental anguish, moral shock and social humiliation,

22 | S U S H I N E T H CIV PRO SET 2


3.6 The reckless and wanton conduct of the defendants who, as public
officials, are supposed to be the guardians of the democratic institutions and
civil liberties of citizens, in charging, taking cognizance of, and defending a
non-existing crime, and in causing the harassment and persecution of the
plaintiff, should be strongly condemned8

xxx

On October 9, 1990, the petitioners filed a Motion to Dismiss for failure of


the Complaint to state a cause of action. They claimed that there was no
allegation of any actionable wrong constituting a violation of any of the legal
rights of private respondent. In addition, they put up the defense of good
faith and immunity from suit, to wit:

THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST


DEFENDANTS IN THAT:

(A) THE FILING OF THE INFORMATION AGAINST PLAINTIFF FOR THE


CRIME OF REBELLION WITH MURDER AND FRUSTRATED MURDER WAS
INITIATED IN THE HONEST BELIEF THAT IT COULD BE SUSTAINED
UNDER THE FIRST PART OF ARTICLE 48 OF THE REVISED PENAL CODE;
and

(B) DEFENDANTS, ACTING IN GOOD FAITH, WITHOUT MALICE AND


WITHIN THE SCOPE OF THEIR AUTHORITY, CANNOT BE HELD
PERSONALLY LIABLE BY WAY OF DAMAGES FOR ANY ALLEGED INURY
SUFFERED BY PLAINTIFF.9

On October 8, 1991, respondent trial court issued an Order denying the


Motion to Dismiss and requiring petitioners to file their answer and to
present evidence in support of their defenses in a full-blown trial inasmuch as
the defense of good faith and immunity from suit does not appear to be
indubitable.10 Petitioners' motion for reconsideration was likewise denied.

23 | S U S H I N E T H CIV PRO SET 2


Before the Court of Appeals, petitioner Trampe, in his own behalf and in his
own behalf and in behalf of his co-petitioners, filed a petition for certiorari
under Rule 65 of the Revised Rules of Court alleging that the respondent
court committed grave abuse of discretion in denying their motion to dismiss.
On June 29, 1992, respondent appellate court dismissed the petition and the
subsequent motion for reconsideration ruling, thus:

We cannot perceive how respondent court could have acted with grave
abuse of discretion in denying the motion to dismiss. Before respondent court
were two diametrically opposed contentions. Which to believe, respondent
court is at a loss. Hence, respondent court had no alternative but to be
circumspect in acting upon the motion to dismiss. This respondent court
accomplished by requiring petitioners to file their answer where they can raise
the failure of the complaint to state a cause of action as an affirmative
defense. Indeed the better alternative would be to conduct a full blown trial
during which the parties could present their respective evidences to prove
their respective cause of action/defense.11

Hence, this instant petition.

In view of the appointment of petitioner Trampe to the judiciary, petitioner


Abesamis filed a manifestation stating that he would act as counsel for his
own behalf and in behalf of his co-petitioners. In a Resolution dated March 8,
1993, we granted the Manifestation of petitioner Abesamis to substitute for
petitioner Trampe as counsel for himself and his co-petitioners. Respondent
did not file a motion for reconsideration.

Meanwhile, on February 12, 1993, or almost three (3) years after the filing of
the complaint for damages against petitioners, the Regional Trial Court of
Makati dismissed with finality the rebellion charges against private
respondent12.

In their Memorandum,13 petitioners raise the following assignment of errors:

24 | S U S H I N E T H CIV PRO SET 2


THE RESPONDENT COURT HAS DECIDED A QUESTION OF SUBSTANCE
IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THIS HONORABLE COURT BY HOLDING THAT THE
RESPONDENT JUDGE DID NOT ACT WITH GRAVE ABUSE OF
DISCRETION IN DENYING THE MOTION TO DISMISS FILED BY THE
PETITIONERS AND THAT IN ANY EVENT, THE DENIAL OF A MOTION TO
DISMISS IS NOT SUBJECT TO REVIEW BY CERTIORARI.

II

PETITIONER TRAMPE ACTED CORRECTLY IN REPRESENTING AND


APPEARING ON BEHALF OF THE OTHER PETITIONERS IN THE INSTANT
PETITION. MOREOVER, BY HIS LONG SILENCE AND INACTION, PRIVATE
RESPONDENT CANNOT NOW QUESTION THE PERSONALITY OF
PETITIONER TRAMPE TO REPRESENT AND APPEAR ON BEHALF OF THE
OTHER PETITIONERS HEREIN.

Before ruling on the substance of the petition, let us first deal with the legal
personalities of petitioners Trampe and Abesamis to represent themselves and
the rest of the petitioners in the case at bar. Private respondent avers that
Trampe's representation is a nullity for the reason that under the Revised
Administrative Code, it is not the function of the Office of the Chief State
Prosecutor to represent its prosecutors in suits that may be filed against them.
Private respondent likewise argues that Trampe and Abesamis are prohibited
from acting as private counsels for their co-petitioners inasmuch as it violates
Republic Act No. 6713, the "Code of Conduct and Ethical Standards for Public
Officials and Employees."

It must be noted that petitioner Abesamis filed a Manifestation14 before this


Court asking that he be permitted to replace petitioner Trampe as counsel for
the petitioners in view of Trampe's appointment to the judiciary. No
opposition thereto was filed by private respondent. Thus, we granted the
manifestation of petitioner Abesamis to substitute for Trampe as counsel for
and in behalf of himself and his co-petitioners. There being no motion for
reconsideration filed by private respondent, said resolution has become final.
Private respondent did not dispute the legal personality of petitioner Trampe
to represent himself and his co-petitioners in his Comment15 filed before the
Court of Appeals. Private respondent belatedly raised this contention in his
opposition16 to the motion for reconsideration of the appellate court's
decision. Accordingly, private respondent is estopped and legally barred from
25 | S U S H I N E T H CIV PRO SET 2
questioning the representation of petitioners Trampe and later, Abesamis to
act as counsel for themselves and their co-petitioners in this case.

Going now to the crux of the petition, petitioners contend that the complaint
sets forth no cause of action against them. They allege good faith, regularity
in the performance of official duties and lack of ultimate facts constituting an
actionable wrong. On the other hand, private respondent argues that a cause
of action has been sufficiently pleaded and that the defenses of good faith
and performance of official duties are best disposed in a judicial hearing.
Private respondent likewise maintains that the defense of good faith is
irrelevant for the reason that the petitioners are sued under Article 32 of the
New Civil Code where the defense of good faith is irrelevant.

We find merit in the petition.1wphi1.nt

A cause of action is the act or omission by which a party violates a right of


another.17 A cause of action exists if the following elements are present: (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 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.18

The remedy of a party whenever the complaint does not allege a cause of
action is to set up this defense in a motion to dismiss or in the answer. A
motion to dismiss on the ground of failure to state a cause of action in the
complaint hypothetically admits the truth of the facts alleged therein.
However, the hypothetical admission is limited to the "relevant and material
facts well pleaded in the complaint and inferences fairly deductible therefrom.
The admission does not extend to conclusion or interpretations of law; nor
does it cover allegations of fact the falsity of which is subject to judicial
notice."19 In De Dios v. Bristol Laboratories (Phils.), Inc., 20 this Court was
more particular in explaining that:

xxx. For the purpose, the motion to dismiss must hypothetically admit the
truth of the facts alleged in the complaint. The admission, however, is limited
only to all material and relevant facts which are well pleaded in the
26 | S U S H I N E T H CIV PRO SET 2
complaint. Thus, it had been ruled that a demurrer admits only such matters
of fact as are sufficiently pleaded; that the demurrer does not admit the truth
of mere epithets charging fraud; nor allegations of legal conclusions; nor an
erroneous statement of law. The admission of the truth of material and
relevant facts well pleaded does not extend to render a demurrer an
admission of inferences or conclusions drawn therefrom, even if alleged in the
pleading ; nor mere influences or conclusions from facts not stated; nor
conclusions of law; nor matters of evidence; nor surplusage and irrelevant
matter. xxx.

The main question in the instant petition is whether the allegations in the
complaint sufficiently plead a cause of action to hold the petitioners liable for
damages. According to the complaint, the petitioners violated private
respondent's constitutional rights for knowingly and maliciously filing a
legally non-existent offense and for depriving him of his right to be notified
of the filing of the case against him. Inasmuch as private respondent seeks to
hold the petitioners accountable for the damage he has suffered as a result of
the case filed against him, his suit against the petitioners is one for malicious
prosecution. In Drilon v. Court of Appeals,21 where the facts in said case are
basically the same as in the instant case,22 we also labeled the complaint filed
by complainant Homobono Adaza as one for malicious prosecution. It is
defined as an action for damages brought by one against whom a criminal
prosecution, civil suit, or other legal proceeding has been instituted
maliciously and without probable cause, after the termination of such
prosecution, suit, or other proceeding in favor of the defendant therein. The
gist of the action is the putting of legal process in force, regularly, for the
mere purpose of vexation or injury.23 The statutory bases for a civil action
for damages for malicious prosecution are found in the provisions of the New
Civil Code on Human Relations and on damages particularly Articles 19, 20,
21, 26, 29, 32, 33, 35, 2217 and 2219(8).24 A

Complaint for malicious prosecution states a cause of action if it alleges: 1)


that the defendant was himself the prosecutor or that at least he instigated the
prosecution; 2) that the prosecution finally terminated in the plaintiff's
acquittal; 3) that in bringing the action the prosecutor acted without probable
cause; and, 4) that the prosecutor was actuated by malice, i.e., by improper
and sinister motives.25

We have no reason to depart from our ruling in the said Drilon case. It is our
view and we hold that private respondent's complaint fails to state a cause of
action to hold the petitioners liable for malicious prosecution.
27 | S U S H I N E T H CIV PRO SET 2
First, the complaint for damages was filed long before private respondent's
acquittal in the rebellion charge thereby rendering the subject action
premature. At the time the complaint was filed, the criminal action against
private respondent has not yet ended. That the criminal case eventually
resulted in private respondent's acquittal during the pendency of the civil case
for damages is of no moment inasmuch as the latter should be filed only after
the accused is acquitted in the criminal case. To allow private respondent to
file a complaint, for damages based on malicious prosecution, before his
acquittal would stifle the prosecution of criminal cases by the mere
expediency of filing damage suits against the prosecutors.

The complaint for damages cannot be based on the dismissal of the separate
charge for violation of P.D. No. 1829 inasmuch as the complaint does not
contain any allegation to that effect. The complaint actually limits the claim
for damages based on the filing of the rebellion charge against the petitioners.
Hence, it cannot be sustained based on the dismissal of the case for violation
of P.D. No. 1829.

Second, there are no factual allegations in the complaint that can support a
finding that malice and bad faith motivated the petitioners in filing the
information against private respondent. Allegations of bad faith, malice and
other related words without ultimate facts to support the same are mere
conclusions of law that are not deemed admitted in a motion to dismiss for
lack of cause of action. From our reading of the complaint, we find no
ultimate facts to buttress these conclusions of law. In Drilon, this Court held
that;

xxx xxx xxx

Lack of cause of action, as a ground for a motion to dismissmust appear on


the face of the complaint itself, meaning that it must be determined from the
allegations of the complaint and from none other. The infirmity of the
complaint in this regard is only too obvious to have escaped respondent
judge's attention. Paragraph 14 of the complaint which states:

xxx xxx xxx

28 | S U S H I N E T H CIV PRO SET 2


14. The malicious prosecution, nay persecution, of plaintiff for a non-existent
crime had severely injured and besmirched plaintiff's name and reputation
and forever stigmatized his stature as a public figure, thereby causing him
extreme physical suffering, serious anxiety, mental anguish, moral shock and
social humiliation."

is a mere conclusion of law and is not an averment or allegation of ultimate


facts. It does not, therefore, aid in any wise the complaint in setting forth a
valid cause of action against the petitioners.

xxx xxx xxx

The allegations of bad faith and malice in the complaint are based on the
ground that the petitioners knowingly and allegedly maliciously filed the
information for an offense that does not exist in the statute books. But as we
have ruled in Drilon:

In the case under consideration, the decision of the Special Team of


Prosecutors to file the information for rebellion with murder and frustrated
murder against respondent Adaza, among others, cannot be dismissed as the
mere product of whim or caprice on the part of the prosecutors who
conducted the preliminary investigation While it is true that the petitioners
were fully aware of the prevailing jurisprudence enunciated in People v.
Hernandez, which proscribes the complexing of murder and other common
crimes with rebellion, petitioners were of the honest conviction that the
Hernandez Case can be differentiated from the present case. The petitioners
thus argued:

"Of course we are aware of the ruling in People v. Hernandez, 99 Phil 515,
which held that common crimes like murder, arson, etc., are absorbed by
rebellion. However, the Hernandez case is different from the present case
before us. In the Hernandez case, the common crimes of murder, arson, etc.
were found by the fiscal to have been committed as a necessary means to
commit rebellion, or in furtherance thereof. Thus, the fiscal filed an
information for rebellion alleging those common crimes as a necessary means
of committing the offense charged under the second part of Article 48, RPC.

29 | S U S H I N E T H CIV PRO SET 2


We, however, find no occasion to apply the Hernandez ruling since as
intimated above, the crimes of murder and frustrated murder in this case
were absolutely unnecessary to commit rebellion although they were the
natural consequences of the unlawful bombing. Hence, the applicable
provision is the first part of Article 48 of the RPC."

While the Supreme Court in the case of Enrile v. Salazar, addressing the issue
of whether or not the Hernandez doctrine is still good law, in a 10-3 vote,
did not sustain the position espoused by the herein petitioners on the matter,
three justices felt the need to re-study the Hernandez ruling in light of
present-day developments, among whom was then Chief Justice Marcelo
Fernan

xxx

Apparently, not even the Supreme Court then was of one mind in debunking
the theory being advanced by the petitioners in this case, some of whom
were also the petitioners in the Enrile case.

xxx

A doubtful or difficult question of law may become the basis of good faith
and, in this regard, the law always accords to public officials the presumption
of good faith and regularity in the performance of official duties. [Tatad v.
Garcia, Jr., 243 SCRA 436, 463 (1995)] Any person who seeks to establish
otherwise has the burden of proving bad faith or ill-motive. Here, since the
petitioners were of the honest conviction that there was probable cause to
hold respondent Adaza for trial for the crime of rebellion with murder and
frustrated murder, and since Adaza himself, through counsel, did not allege in
his complaint lack of probable cause, we find that the petitioners cannot be
held liable for malicious prosecution. Needless to say, probable cause was not
wanting in the institution of Criminal Case No. Q-90-11855 against Adaza.

As to the requirement that the prosecutor must be impelled by malice in


bringing the unfounded action, suffice it to state that the presence of probable
30 | S U S H I N E T H CIV PRO SET 2
cause signifies, as a legal consequence, the absence of malice. (Albenson
Enterprises Corp., supra.) At the risk of being repetitious, it is evident in this
case that petitioners were not motivated by malicious intent or by a sinister
design to unduly harass private respondent, but only by a well-founded belief
that respondent Adaza can be held for trial for the crime alleged in the
information.

All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100
of the Regional Trial Court against the petitioners does not allege facts
sufficient to constitute a cause of action for malicious prosecution. xxx

xxx

As a result, these general allegations do not help private respondent's action


against petitioners. It is well settled that one cannot be held liable for
allegedly maliciously instituting a prosecution where there is probable cause.
Otherwise stated, a suit for malicious prosecution will lie only in cases where
a legal prosecution has been carried on without probable cause. The reason
for this rule is that it would be a very great discouragement to public justice,
if prosecutors, who had tolerable ground of suspicion, were liable to be sued
at law when their indictment miscarried.26

On the issue of whether the petitioners should be held accountable for


knowingly filing a non-existent offense, this Court has definitely ruled in
Enrile v. Salazar that:

The plaint of petitioner's (herein private respondent) counsel that he is


charged with a crime that does not exist in the statute books, while
technically correct in so far as the Court has ruled that rebellion may not be
complexed with other offenses committed on the occasion thereon, must
therefore be dismissed as a mere flight of rhetoric. Read in the context of
Hernandez, the information does indeed charge the petitioner with a crime
defined and punished by the Revised Penal code: simple rebellion.27

Accordingly, despite its defect, the information filed by petitioners remained


valid inasmuch as it nevertheless charges an offense against the herein private
respondent.
31 | S U S H I N E T H CIV PRO SET 2
With respect to private respondent's second basis for the charge of malicious
prosecution, that is, he was denied by the petitioners the right to be notified
before the criminal information against him, his complaint alleges that:

xxx

More particularly, these defendants originally filed or caused the filing of the
information on 21 February 1990 but, for some mysterious reason, the
information was subsequently withdrawn. The initial filing and withdrawal of
the information defendant Chavez admitted these facts during the Supreme
Court hearing on 6 March 1990 were done in total secrecy and without the
knowledge of plaintiff who learned of this incident only after his arrest on 27
February 1990.

Likewise, on or about 27 February 1990, these defendants deliberately misled


plaintiff and his lawyers and induced them to believe that the charge of
rebellion "complexed" was set to be filed against the plaintiff in the Regional
Trial Court of Makati. While plaintiff's attention was diverted to the Regional
Trial Court of Makati, these defendants surreptitiously filed or caused the
filing of the main information for rebellion "complexed" in the Regional Trial
Court of Quezon City.28

xxx

However, we hold that the said allegations still fail to maintain a cause of
action against the petitioners. To reiterate, a cause of action exists if the
following elements are present: (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 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.29 In the case at bar, we fail to see any right of the
private respondent supposedly violated by the petitioners. Nowhere in the
statute books is a prospective accused given the right to be notified
beforehand of the filing of an information against him. Likewise, the

32 | S U S H I N E T H CIV PRO SET 2


withdrawal of the information and the subsequent re-filing of the same do
not constitute an actionable wrong inasmuch as the filing or re-filing of an
information lies within the discretion of the prosecutor who must act
independently of the affected parties.

Private respondent claims that an appeal or an original action for certiorari is


not the proper remedy for a defendant whose motion to dismiss has been
denied by the trial court for the reason that the order does not terminate the
proceedings, nor finally dispose of the contentions of the parties. In its
decision affirming the trial court's denial of the motion to dismiss, the
appellate court sustained this contention. However, as correctly pointed out
by the petitioners, the rule admits of an exception. Thus, where the denial of
the motion to dismiss by the trial court was tainted with grave abuse of
discretion amounting to lack or excess of jurisdiction, as in the case at bar, the
aggrieved party may assail the order of denial on certiorari.30 A wide
breadth of discretion is granted in certiorari proceedings in the interest of
substantial justice and to prevent a substantial wrong.31 In the Drilon case,
we also held that the denial by the trial court of the motion to dismiss of
herein petitioners based on the same grounds as in the instant petition
constituted grave abuse of discretion for the reason that "this (private
respondent's baseless action) would unjustly compel the petitioners to
needlessly go through a protracted trial and thereby unduly burden the court
with one more futile and inconsequential case."32 The appellate court
therefore erred in not ruling that the trial court committed a grave abuse of
discretion when the latter refused to dismiss the case as against herein
petitioners, notwithstanding the obvious insufficiency of the complaint against
them.

WHEREFORE, the petition is GRANTED. The Decision dated June 29, 1992
of respondent Court of Appeals and its Resolution dated August 27, 1992
which affirmed the Orders of the Respondent Regional trial Court of Makati
City, dated October 8, 1991 and January 6, 1992 are hereby NULLIFIED AND
SET ASIDE. The respondent Regional Trial Court of Makati is hereby ordered
to take no further action in Civil Case No. 90-2327 except to dismiss the
same.

SO ORDERED.

G.R. No. 120287 May 28, 2002


G & S TRANSPORT CORPORATION, petitioner, vs. COURT OF APPEALS,
HON. ENRICO A. LANZANAS, TWO THOUSAND (2000) TRANSPORT
CORPORATION, NISSAN CAR LEASE PHILIPPINES, INC., MANILA
33 | S U S H I N E T H CIV PRO SET 2
INTERNATIONAL AIRPORT AUTHORITY AND GUILLERMO G.
CUNANAN, respondents.

BELLOSILLO, J.:

This resolves the consolidated Petition for Review of the Decision of the
Court of Appeals in CA-G.R. SP No. 36345, "Two Thousand (2000)
Transport Corporation v. Hon. Guillermo L. Loja, Sr., as Judge, RTC, Manila,
Branch 26, and G & S Transport Corporation," and in CA-G.R. SP No. 36356,
"Nissan Car Lease Philippines, Inc. v. Hon. Guillermo L. Loja, Sr., as Judge
RTC of Manila, Branch 26, and G & S Transport Corporation," and Petition
for Certiorari of the Order of the Regional Trial Court, Branch 7, Manila, in
Civil Case No. 95-72586, "G & S Transport Corporation v. Manila
International Airport Authority, Guillermo G. Cunanan, Two Thousand
(2000) Transport Corporation and Nissan Car Lease Philippines, Inc."

Petitioner G & S Transport Corporation (G & S), with the name and style Avis
Rent-A-Car, was the exclusive operator of coupon taxi services at the Ninoy
Aquino International Airport (NAIA) under a five (5)-year contract of
concession with respondent Manila International Airport Authority (MIAA).1
The concession contract expired on 31 January 1994 but was renewed by the
parties on a monthly basis "until such time when a new concessionaire (shall
have been) chosen."2 Under the arrangement, G & S was able to operate the
coupon taxi service uninterruptedly beyond the period of five (5) years
originally awarded by MIAA.1wphi1.nt

On 12 July 1994 MIAA initiated proceedings for public bidding to choose two
(2) concessionaires of the coupon taxi services at the NAIA. Five (5) firms pre-
qualified to join the bidding including petitioner G & S and respondents Two
Thousand (2000) Transport Corporation (2000 TRANSPORT) and Nissan
Car Lease Philippines, Inc. (NISSAN), after complying with the terms of
reference, the instructions to bidders and the invitation to bid.3 On 23
September 1994 MIAA announced the ranking of the bidders on the basis of
the fares per kilometer they each tendered -

34 | S U S H I N E T H CIV PRO SET 2


1. Philippine International Transport Service Cooperative . . . . . . . . . . . . . . .
P16.00 / km

2. 2000 Transport Cooperative . . . . . . . . . . . . . . . P17.00 / km

3. Nissan Car Lease Philippines . . . . . . . . . . . . . . . P18.00 / km

4. G&S Transport Corp. . . . . . . . . . . . . . . . P18.50 / km

5. Hyatt Transport Co., Inc. . . . . . . . . . . . . . . .P24.00 / km4


The highest ranking bidder which offered the lowest rate per kilometer was
Philippine International Transport Service Cooperative but was however
disqualified as the bond it submitted was not a cash bond as required by the
bidding rules.5 Consequently, on 5 December 1994 MIAA selected 2000
TRANSPORT and NISSAN as the winning bidders and issued in their favor the
respective notice of awards of the coupon taxi service concession.6

On 10 January 1995 petitioner G & S filed a complaint for injunction and


mandamus with preliminary injunction and temporary restraining order
against MIAA and its General Manager Guillermo G. Cunanan, 2000
TRANSPORT and NISSAN, which was docketed as Civil Case No. 95-72586
and subsequently raffled to RTC-Br. 26, Manila. The complaint sought to
disqualify 2000 TRANSPORT from the award of the concession contract for
submitting its Articles of Incorporation with the signature of one (1) of its
incorporators allegedly falsified and its income tax returns falsely attested to
by its treasurer, and for the existence of allegedly reasonable grounds to
believe that 2000 TRANSPORT was a dummy corporation for two (2)
Korean nationals. It also asserted that the concession contract should have
been executed in favor of G & S since it was more deserving than both 2000
TRANSPORT and NISSAN in terms of facilities, financial standing,
organizational set-up and capability. G & S subsequently amended the
complaint to state that no new legitimate concessionaire had been properly
chosen as a result of the failure of MIAA to disqualify 2000 TRANSPORT
from the entire process of selecting two (2) coupon taxi service
concessionaires and to allege that G & S remainded to be the only legitimate
service provider, and prayed that the month-to-month renewal of the
concession contract with G & S should instead be enforced until a more
deserving concessionaire would have been selected.

As prayed for in the complaint, the trial court issued a temporary restraining
order enjoining MIAA from awarding to 2000 TRANSPORT and NISSAN the
35 | S U S H I N E T H CIV PRO SET 2
new concessions to operate the NAIA coupon taxi service and from removing
G & S as such concessionaire, and thereafter scheduled for hearing the
application for preliminary injunction.

Meanwhile respondents 2000 TRANSPORT and NISSAN each moved to


dismiss the complaint for failure to state a cause of action and for improper
venue and to lift the temporary restraining order. On 30 January 1995, after
the parties were heard although the motions were still pending, the trial court
granted the writ of preliminary injunction which barred MIAA from doing
any of the acts earlier restrained.

Respondents 2000 TRANSPORT and NISSAN assailed before the Court of


Appeals the issuance of the writ of preliminary injunction through their
respective petitions for certiorari with prayer for temporary restraining order
and preliminary injunction under Rule 65 of the Revised Rules of Court.7
Respondent 2000 TRANSPOT belied the claims that it falsified its Articles of
Incorporation and that it was a dummy corporation. On the other hand,
NISSAN alleged that the complaint of G & S did not state a cause of action
since the allegations concerned exclusively the disqualification of 2000
TRANSPORT.

On 6 February 1995 the appellate court issued a temporary restraining order


prohibiting the enforcement of the writ of preliminary injunction. While the
temporary restraining order was in place, MIAA terminated the month-to-
month renewal of the concession contract with G & S and executed the
concession contracts with the winning bidders 2000 TRANSPORT and
NISSAN which immediately commenced their respective coupon taxi services
at the NAIA.8 The temporary restraining order (issued by the Court of
Appeals) had already expired when the appellate court conducted hearings
on the application of 2000 TRANSPORT and NISSAN for a writ of
preliminary injunction.

On 3 March 1995, upon separate motions of 2000 TRANSPORT and


NISSAN, the presiding judge9 of RTC-Br. 26, Manila, inhibited himself from
hearing Civil Case No. 95-72586. The case was re-raffled and in due time

36 | S U S H I N E T H CIV PRO SET 2


referred to the RTC-Br. 7 which extensively heard the motions to dismiss
separately filed by 2000 TRANSPORT and NISSAN.

On 11 April 1995 the trial court dismissed the complaint in Civil Case No. 95-
72586.10 It ruled that the complaint failed to state a cause of action against
herein respondents and that mandamus was unavailable to compel the award
of the concession contract in favor of G & S since such decision was
discretionary upon the MIAA. On 16 June 1995 the trial court denied
reconsideration of the Order of dismissal.

On 16 May 1995 the Court of Appeals granted the petitions for certiorari of
2000 TRANSPORT and NISSAN in CA-G.R. SP No. 36345 and CA-G.R. SP
No. 36356, set aside the 30 January 1995 Order of the trial court issuing the
writ of preliminary injunction, and prohibited the trial court from "hearing
and taking further cognizance of Civil Case No. 95-72586 except to dismiss
the same."11 The appellate court held that the trial court gravely abused its
discretion when it issued the writ of preliminary injunction since under PD
1818 no court would have jurisdiction to restrain the operation of a public
utility and since the selection of winning bidders was solely the discretion of
the sponsoring government agency. Hence, the instant petition for review
under Rule 45 of the Revised Rules of Court assailing the 16 May 1995
Decision of the Court of Appeals, which was joined with the instant petition
for certiorari under Rule 65, seeking to nullify and set aside the 11 April 1995
Order of the trial court dismissing Civil Case No. 95-72586.

G & S argues in its petition for review that irregularities attending the bidding
for the coupon taxi service at the NAIA warranted the issuance of the writ of
preliminary injunction and that PD 1818 was not applicable to divest the trial
court of jurisdiction to hear the complaint in Civil Case No. 95-72586. G & S
asserts in its petition under Rule 65 that allegations in the complaint that
2000 TRANSPORT falsified its Articles of Incorporation and income tax
returns, and was a dummy corporation for two (2) Korean nationals, and
that irregularities rigged the bidding stated fully a cause of action against
2000 TRANSPORT and NISSAN which would have justified the
disqualification of respondent 2000 TRANSPORT from the bidding and the
continuation of the month-to-month renewal of the concession contract in
favor of G & S. Petitioner also justified resorting to Rule 65 in lieu of an
37 | S U S H I N E T H CIV PRO SET 2
ordinary appeal before the Court of Appeals to question the Order of
dismissal of the trial court on grounds of expediency and necessity for a
speedier remedy than appeal and further explains that joining the petitions
for review and for certiorari in just one (1) pleading was essential to avoid
conflicting rulings in case the petitions were brought separately in different
fora.

To begin with, petitioner could have joined together all his allegations of
error in one petition for review under Rule 45 of the 1997 Rules of Civil
Procedure since only questions of law are raised in the instant casse. At any
rate, there is nothing irregular in joining both petitions for review (Rule 45)
and certiorari (Rule 65) in one pleading for purposes of resolving the issues
raised by petitioner G & S. This procedural step may even avoid inconsistency
of rulings which might result in case the writ of preliminary injunction is
validated but the civil case from which the writ emanated is ordered
dismissed. Although a petition for review under Rule 45 is an appeal process
while a petition for certiorari under Rule 65 is an original action and the rule
is that joinder of causes of action shall not include special civil actions
governed by special rules,12 the conceptual and procedural differences
between them are overshadowed by the more significant probability of
divergent rulings in case the two (2) petitions are not joined which in the end
would only cause difficulties in determining which of the conflicting decisions
should be enforced.

For the same reason, resort to certiorari under Rule 65 before this Court in
lieu of an ordinary appeal to the Court of Appeals to assail the final Order of
dismissal is fully justified by the necessity to bring all the issues before one (1)
forum to ensure harmony of rulings. It must however be emphasized that in
disposing of the issue regarding the propriety and legality of the Order, the
applicable standard will of course be whether the trial court committed grave
abuse of discretion amounting to lack or excess of jurisdiction,13 and the only
reversible errors will be errors of jurisdiction and not errors of judgment.14

We find that the trial court did not abuse its discretion in dismissing the
complaint in Civil Case No. 95-72586 for failure to state a cause of action
against respondents 2000 TRANSPORT and NISSAN. As admitted by
petitioner G & S itself, the trial court used the correct "guidelines by which the
38 | S U S H I N E T H CIV PRO SET 2
failure of the complaint to state a cause of action as a ground in a motion to
dismiss must be considered."15 Concededly therefore the only errors involved
in this petition are mere errors of judgment, if any, and not errors of
jurisdiction for which the instant petition would be the inappropriate mode
for seeking a reversal. The allegations of errors of judgment are in fact fairly
obvious on the face of the instant petition for certiorari under Rule 65.

We nonetheless examine the Order of the trial court in the interest of justice.
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded. Stated
otherwise, may the court render a valid judgment upon the facts alleged
therein?16 Only ultimate facts and not legal conclusions or evidentiary facts
which in the first place should not have been alleged in the complaint are
considered for purposes of applying the test.17 Furthermore, actions which
are prematurely commenced would fall under the objection.18

Petitioner G & S prayed for a permanent injunction to bar the award of the
concession contract to 2000 TRANSPORT and NISSAN; a writ of mandamus
compelling MIAA to grant to it the concession contract; the disqualification of
2000 TRANSPORT from the bidding; the nullification of the entire bidding
process; and the payment of damages which would of course be a mere
consequence of the other relief sought.19 The ultimate facts supposedly
justifying the complaint for injunction and mandamus were -

15. On October 26, 1994, the Manila Standard published a news item
reporting that (2000) Transport has been accused of submitting to MIAA
falsified documents in connection with their bid for the NAIA coupon taxi
service. Investigating this report, plaintiff [G & S] discovered that on October
8, 1994, a certain Meliton Solpot had executed an Affidavit, wherein he
stated that the corporate tax returns submitted by [2000 Transport] to MIAA
during the bidding are (sic) falsified as his purported signatures thereon are
(sic) not his signatures x x x x Plaintiff further discovered that on October 25,
1994, the same Meliton Solpot executed a Sworn Statement before the
National Bureau of Investigation (NBI) alleging that his signatures on the
partnership annual income tax return of [2000 Transport] dated December
1993 and February 3, 1994 as well as those found in the Articles of
Incorporation of [2000 Transport] on file with the Securities and Exchange
39 | S U S H I N E T H CIV PRO SET 2
Commission are (sic) not his genuine signatures x x x x 17. In the meantime,
plaintiff [G & S] was able to secure from the SEC a copy of the Articles of
Incorporation of [2000 Transport]. In said Articles, it clearly appears that one
of the alleged incorporators is a certain Meliton Solpot. It further appears that
the two (2) Korean incorporators who appear to have subscribed to twenty
percent (20%) of the authorized capital stock of the corporation had paid up
eighty percent (80%) of the paid-in capital, thereby indicating that in fact,
and for all intents and purposes, the Korean incorporators were in control of
the corporation x x x x Moreover, plaintiff was also able to secure a copy of
the General Information Sheet for 1994 filed by [2000 Transport] with the
SEC which shows that Sooja Park Lim, a Korean, is the Chairman and
President of [2000 Transport] while Young Kon Jo, a Korean, is the Vice
President of [2000 Transport] x x x x 23. Since [2000 Transport] was not
duly qualified to participate in the bidding and has flagrantly violated the
Constitution, MIAA and Cunanan have neither factual nor legal basis to
declare said defendant as one of the winning bidders, to award to said
defendant, a Contract of Concession for the NAIA coupon taxi service and
allowing it to operate the said service. Furthermore, the participation of a
disqualified bidder in the bidding affects the integrity of the entire bidding
process and renders the same ineffective, null and void. Consequently, MIAA
and Cunanan should be finally and permanently enjoined from awarding to
[2000 Transport and Nissan] a Contract of Concession for the NAIA coupon
taxi service and / or otherwise authorizing or allowing them to operate the
NAIA coupon taxi service x x x x 25. While plaintiff had made the third
lowest bid insofar as the fare is concerned, it certainly is way ahead of all
other bidders, insofar as the other factors stated in the Instruction to Bidders
are concerned. As the present operator and concessionaire of the NAIA
coupon taxi service for the last five (5) years, its existing facilities, financial
standing, organizational set-up, relevant experience, quality, capability and
kind of services offered far outrank any of the other bidders. Thus, assuming,
without conceding, that [2000 Transport] was not disqualified to participate
in the bidding and / or the bidding process is not fatally flawed, plaintiff
should be declared as one of the winning bidders based on these other
factors. The other winning bidder should be determined between [2000
Transport and Nissan] based on these other factors.20

It is clear that the allegations would not call for any relief against respondent
NISSAN. The alleged defects in the bidding process center on the incapacity
and fraudulent act of 2000 TRANSPORT in submitting its Articles of
40 | S U S H I N E T H CIV PRO SET 2
Incorporation with one (1) falsified signature and in being a dummy
corporation for two (2) Korean nationals. Under these set of facts, we see no
basis for declaring NISSAN to be similarly disqualified or for nullifying the
entire bidding process. Indeed it has not been shown that the alleged
irregularities committed by 2000 TRANSPORT were induced by or
participated in by any of the other bidders. No rule would justify
compromising the interests of NISSAN for an act it was not the author of or
even privy to. If at all, liability should attack only to the responsible party for
the alleged prejudice sustained by G & S as a result of the anomalies described
above.

Neither would the allegations authorize us to issue the writ of mandamus


compelling MIAA to award the concession contract in favor of petitioner G &
S. It is a settled rule that mandamus will lie only to compel the performance
of a ministerial duty but does not lie to require anyone to fulfill contractual
obligations.21 Only such duties as are clearly and peremptorily enjoined by
law or by reason of official station are to be enforced by the writ.22 Whether
MIAA will enter into a contract for the provision of a coupon taxi service at
the international airport is entirely and exclusively within its corporate
discretion. It does not involve a duty the performance of which is enjoined
by law and thus this Court cannot direct the exercise of this prerogative.

Indeed the determination of the winning bidders should be left to the sound
judgment of the MIAA which is the agency in the best position to evaluate
the proposals and to decide which bid would most complement the NAIA's
services. The Terms of Reference for Coupon Taxi Service Concession
observed, "[t]he professional transport service plays a very important role in
enhancing and maintaining a good image of the country that will speak of
trust, honesty, efficiency and modernity."23 In this regard only the most
advantageous bids would be selected on the basis of the best bid offer in
relation to the bidders' existing facilities, financial standing, organizational set-
up, relevant experience, quality, capability and kind of services offered.24
The exercise of such discretion is a policy decision that necessitates such
procedures as prior inquiry, investigation, comparison, evaluation and
deliberation.25 This process would necessarily entail the technical expertise of
MIAA which the courts do not possess in order to evaluate the standards
affecting this matter -

41 | S U S H I N E T H CIV PRO SET 2


x x x x courts, as a rule, refuse to interfere with proceedings undertaken by
administrative bodies or officials in the exercise of administrative functions.
This is so because such bodies are generally better equipped technically to
decide administrative questions and that non-legal factors, such as
government policy on the matter, are usually involved in the decision.26

Nor would the allegations, even if admitted to be true, compel a permanent


restraint on the execution of the respective concession contracts of
respondents 2000 TRANSPORT and NISSAN with MIAA. In Bureau Veritas v.
Office of the President27 we ruled that "the discretion to accept or reject a
bid and award contracts is vested in the Government agencies entrusted with
that function." Furthermore, Sec. 1 of PD 1818 (the governing statute in all the
relevant dates alleged in the complaint) distinctly provides that "[n]o court in
the Philippines shall have jurisdiction to issue any restraining order,
preliminary injunction x x x in any case, dispute, or controversy involving x x
x any public utility operated by the government, including among others
public utilities for the transport of the goods or commodities x x x to prohibit
any person or persons x x x from proceeding with, or continuing the
execution or implementation of any such project, or the operation of such
public utility, or pursuing any lawful activity necessary for such execution,
implementation or operation." We stress that the provision expressly deprives
courts of jurisdiction to issue injunctive writs against the implementation or
execution of contracts for the operation of a public utility.28 Undeniably,
both respondent MIAA and the concession contracts it wanted to bid out
involve a public utility which would therefore enjoy the protective mantle of
the decree.

While the rule is that courts may set aside or enjoin the award of a contract
made by a government entity, this may be done only upon a clear showing
of grave abuse of discretion29 or only in cases involving issues definitely
outside the exercise of discretion in technical cases and questions of law.30
We however find nothing of this sort in the allegations of petitioner G & S in
Civil Case No. 95-72586. Even if admitted to be true, the allegations do not
demonstrate grave abuse of discretion nor raise issues definitely outside the
exercise of discretion in technical cases which would survive a motion to

42 | S U S H I N E T H CIV PRO SET 2


dismiss for failure to state cause of action and warrant a trial on the merits of
the complaint.1wphi1.nt

Grave abuse of discretion implies a capricious, arbitrary and whimsical


exercise of power.31 The abuse of discretion must be patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform a
duty enjoined by law, as not to act at all in contemplation of law, or where
the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility.32 In the case at bar, the allegations of G & S in the civil
case do not call for the assumption that MIAA accepted the bid of 2000
TRANSPORT and NISSAN and declared them winning bidders with grave
abuse of discretion.

For one, the claim that 2000 TRANSPORT is a dummy corporation for two
(2) Korean nationals is a legal conclusion from allegations which would not
even compel the adoption of such inference -

It further appears that the two (2) Korean incorporators who appear to have
subscribed to twenty percent (20%) of the authorized capital stock of the
corporation had paid up eighty percent (80%) of the paid-in capital, thereby
indicating that in fact, and for all intents and purposes, the Korean
incorporators were in control of the corporation x x x x Moreover, plaintiff
was also able to secure a copy of the General Information Sheet for 1994 filed
by [2000 Transport] with the SEC which shows that Sooja Park Lim, a
Korean, is the Chairman and President of [2000 Transport] while Young Kon
Jo, a Korean, is the Vice President of [2000 Transport] x x x x

Judicial notice of the Articles of Incorporation referred to in the allegations


and attached as one of the annexes to the instant petition would show that
the two (2) Korean nationals subscribed to only 1,000 shares out of the total
20,000 shares, which were fully paid up by them at P100.00 per share for
P50,000.00 each.33 On its face, the Articles of Incorporation merely showed
the subscription by the two (2) Korean nationals of only five percent (5%) of
the capital stock and the full payment thereof in the total amount of
P100,000.00.

43 | S U S H I N E T H CIV PRO SET 2


Since factual premises as well as legal conclusions which by judicial notice are
determined to be false are not deemed admitted to be true for purposes of
disposing of an objection on the ground of failure to state a cause of
action,34 it was incumbent upon G & S to have alleged additional facts from
which could be inferred that 2000 TRANSPORT was truly a front of the
Korean shareholders.

In the same manner, it is irrelevant that the Korean nationals were the
President and the Vice President, respectively, of 2000 TRANSPORT as
shown in the General Information Sheet on file with the Securities and
Exchange Commission. What is material for purposes of stating a cause of
action are allegations showing that they were such officers during the
operational stages of the coupon taxi service. As we have held in Tatad v.
Garcia35 -

x x x x Private respondent EDSA LRT Corporation, Ltd., to whom the


contract to construct the EDSA LRT III was awarded by public respondent, is
admittedly a foreign corporation "duly incorporated and existing under the
laws of Hong Kong" x x x x What private respondent owns are the rail tracks,
rolling stocks like the coaches, rail station, tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant, not a public utility.
While a franchise is needed to operate these facilities to serve the public, they
do not by themselves constitute a public utility. What constitutes a public
utility is not their ownership but their use to serve the public x x x x The
Constitution, in no uncertain terms, requires a franchise for the operation of a
public utility. However, it does not require a franchise before one can own
the facilities needed to operate a public utility so long as it does not operate
them to serve the public x x x x In law, there is a clear distinction between
the "operation" of a public utility and the ownership of the facilities and
equipment used to serve the public. The exercise of the rights encompassed in
ownership is limited by law so that a property cannot be operated and used
to serve the public as a public utility unless the operator has a franchise x x x
x The right to operate a public utility may exist independently and separately
from the ownership of the facilities thereof. One can own said facilities
without operating them as a public utility, or conversely, one may operate a
public utility without owning the facilities used to serve the public. The

44 | S U S H I N E T H CIV PRO SET 2


devotion of property to serve the public may be done by the owner or by
the person in control thereof who may not necessarily be the owner thereof x
x x x Indeed, a mere owner and lessor of the facilities used by a public utility
is not a public utility x x x x Even the mere formation of a public utility
corporation does not ipso facto characterize the corporation as one operating
a public utility.

Moreover, the allegations that the documents submitted by 2000


TRANSPORT, i.e., Article of Incorporation and income tax returns, contained
one (1) falsified signature even if admitted to be true court not be
characterized as showing grave abuse of discretion on the part of MIAA in
not disqualifying 2000 TRANSPORT from the bidding and in not nullifying
the bidding process. It is clear that under the Terms of Reference for Coupon
Taxi Service Concession the required pre-qualification documents consisted of,
among others, certified true copy of the Article of Incorporation and certified
true copy of the income tax returns of the corporation for the last two (2)
years immediately preceding the date of the bidding.36 MIAA acted within
the bounds of reasonable discretion when it accepted the Articles of
Incorporation and income tax returns of 2000 TRANSPORT since they were
duly verified by the proper administrative agencies. It appears from the
records that 2000 TRANSPORT had long been operating as a corporation
engaged in common carriage so that MIAA had reasonable ground to rely
upon the documents submitted to it to prove the corporate personality and
status as public carrier of the bidder for purposes of the bidding. Moreover,
because of the presumption of regular performance of powers and functions,
MIAA should be deemed to have performed its functions in accordance with
law and duly considered all the relevant documents before pre-qualifying
2000 TRANSPORT.

It goes without saying that the action in Civil Case No. 95-72586 is
premature and consequently fails to state a cause of action. The allegations of
the complaint therein focused on the irregularity in the process of obtaining
corporate personality, that is, the alleged falsification of the Article of
Incorporation of 2000 TRANSPORT, and the misdeed in securing a certificate
of public convenience for operating taxi services when 2000 TRANSPORT
was allegedly a dummy corporation for two (2) Korean nationals. Clearly, in
the absence of any finding of irregularity from the appropriate government
agencies tasked to deal with these concerns, which at all the time relevant to
45 | S U S H I N E T H CIV PRO SET 2
the civil case would be the Securities and Exchange Commission37 and the
Land Transportation Franchising and Regulatory Board,38 courts must defer
to the presumption that these agencies had performed their functions
regularly. The ultimate facts upon which depends the complaint in Civil Case
No. 95-72586 would be matters which fall within the technical competence
of government agencies over which courts could not prematurely rule upon
and enter relief as prayed for in the complaint -

In recent years, it has been the jurisprudential trend to apply the doctrine of
primary jurisdiction in many cases involving matters that demand the special
competence of administrative agencies. It may occur that the Court has
jurisdiction to take cognizance of a particular case, which means that the
matter involved is also judicial in character. However, if the case is such that
its determination requires the expertise, specialized skills and knowledge of
the proper administrative bodies because technical matters or intricate
questions of facts are involved, then relief must first be obtained in an
administrative proceeding before a remedy will be supplied by the courts
even though the matter is within the proper jurisdiction of a court. This is the
doctrine of primary jurisdiction. It applies "where a claim is originally
cognizable in the courts, and comes into play whenever enforcement of the
claim requires the resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an administrative body; in such
case the judicial process is suspended pending referral of such issues to the
administrative body for its view" x x x x "Uniformity and consistency in the
regulation of business entrusted to an administrative agency are secured, and
the limited function of review by the judiciary are more rationally exercised,
by preliminary resort, for ascertaining and interpreting the circumstances
underling legal issues, to agencies that are better equipped than courts by
specialization, by insight gained through experience, and by more flexible
procedure" x x x x39

The propriety of the Order of dismissal of Civil Case No. 95-72586 should
render moot and academic the instant petition for review of the Decision of
the Court of Appeals in CA-G.R. SP No. 36345, "Two Thousand (2000)
Transport Corporation v. Hon. Guillermo L. Loja, Sr., as Judge, RTC of
Manila, Branch 26, and G & S Transport Corporation," and in CA-G.R. SP No.
36356, "Nissan Car Lease Philippines, Inc. v. Hon. Guillermo L. Loja, Sr., as
Judge, RTC of Manila, Branch 26, and G & S Transport Corporation." It is
46 | S U S H I N E T H CIV PRO SET 2
well settled that the issue of propriety of obtaining a preliminary injunction
dies with the main case from which it logically sprang. Such a provisional
remedy, like any other interlocutory order, cannot survive the main case of
which it is but an incident.40 Indeed what more could this Court enjoin
when the complaint has already been dismissed? To be sure, even a ruling
granting the petition at bar would not revive the civil case much less change
our ruling in the petition for certiorari under Rule 65.41 The remedy in
question is precisely termed preliminary since it is meant to restrain acts prior
to the rendition of a judgment or a final order.42

Be that as it may, we find the assailed Decision of the Court of Appeals to be


in accord with law and jurisprudence. For starters, it is well settled that before
a writ of preliminary injunction may be issued, there must be a clear showing
by the complainant that there exists a right to be protected and that the acts
against which the writ is to be directed are violative of established right.43 In
the instant case, it is an undisputed fact that the contract of petitioner G & S
for coupon taxi service with MIAA had already expired and that a new
concessionaire had been chosen. Admittedly there was no existing contractual
relationship between MIAA and petitioner G & S since the former was under
no legal obligation to renew the concession contract. Consequently petitioner
had no right which needed protection by a writ of preliminary injunction.

Furthermore, PD 1818 was clearly applicable to divest the trial court of


authority to issue the injunctive writ against the execution of the concession
contracts with 2000 TRANSPORT and NISSAN. Their respective contracts
involved public utility which were within the protective mantle of the decree.
Moreover, as shown above, the issues raised in the complaint in Civil Case
No. 95-72586 did not involve matters outside the technical competence of
MIAA or veritable questions of law. The contentions of petitioner G & S were
precisely directed towards urging the trial court to substitute its judgment for
that of MIAA in determining to which bidders the concession contracts should
be awarded. Hence, the appellate court correctly nullified the injunctive writ
on the ground that it violated PD 1818.

We also share the view of the Court of Appeals that determination of the
winning bidders is a matter falling within the exclusive jurisdiction of the
sponsoring government agency. While petitioner G & S asserts that MIAA
47 | S U S H I N E T H CIV PRO SET 2
committed grave abuse of discretion in pre-qualifying 2000 TRANSPORT,
there certainly was no cause of action in similarly seeking the nullification of
the winning bid of NISSAN. From the beginning, G & S had no reason to
restrain NISSAN from the fruits of its efforts in winning the bid. Similarly,
MIAA was merely relying upon the Terms of Reference for Coupon Taxi
Service Concession when it pre-qualified 2000 TRANSPORT and proceeded
with the bidding, hence, MIAA could not have abused its discretion in doing
so. On the contrary, it would have been grave abuse of discretion if MIAA
were to suddenly abandon the Terms of Reference if only to accommodate
the objections of G & S.

Be it understood that in the instant proceedings we have confined ourselves


within the parameters of the propriety of the dismissal of Civil Case No. 95-
72586 and the impropriety of the issuance of a writ of preliminary injunction
by the trial court. Hence we are not putting to rest, indeed not by a long shot
on the ground of res judicata, the contentions ardently raised by petitioner G
& S on the absence of qualifications of respondent 2000 TRANSPORT as a
corporate entity to operate a public utility. In the instant case, our emphasis
has been the proper observance of the procedure in the assertion of
grievances which in this regard would be to bring up the alleged irregularities
in the creation and operation of 2000 TRANSPORT to the proper authorities
as discussed above.

It is important to note that the claims of petitioner G & S assume great


importance when argued in the proper forum in light of the sudden desertion
by respondent 2000 TRANSPORT from the instant proceedings without
leaving word on its new address nor advice as to its new counsel or attorney-
in-fact. Without so much as a by-your-leave, 2000 TRANSPORT abandoned
the instant case after filing its comment to the instant petition and ignored all
court processes requiring the submission of a memorandum in its behalf. The
contemptuous conduct of 2000 TRANSPORT has unfortunately wasted our
efforts in trying to deliver the various court orders to its address on record,44
and has embarrassingly caused the imposition of fine upon and the detention
of one (1) of its lawyers for direct contempt of court arising from his failure to
file the memorandum for 2000 TRANSPORT despite repeated warnings.45

48 | S U S H I N E T H CIV PRO SET 2


WHEREFORE, the consolidated Petition for Review under Rule 45 and
Petition for Certiorari under Rule 65 are DENIED and DISMISSED,
respectively. The Decision of the Court of Appeals in CA-G.R. SP No. 36345,
"Two Thousand (2000) Transport Corporation v. Hon. Guillermo L. Loja, Sr.,
as Judge, RTC of Manila, Branch 26, and G & S Transport Corporation," and
in CA-G.R. SP No. 36356, "Nissan Car Lease Philippines, Inc. v. Hon.
Guillermo L. Loja, Sr., as Judge, RTC of Manila, Branch 26, and G & S
Transport Corporation," as well as the Order of the RTC-Br. 7, Manila, in
Civil Case No. 95-72586, "G & S Transport Corporation v. Manila
International Airport Authority, Guillermo G. Cunanan, Two Thousand
(2000) Transport Corporation and Nissan Car Lease Philippines, Inc." is
AFFIRMED. The writ of preliminary injunction issued in Civil Case No. 95-
72586 is SET ASIDE and NULLIFIED, and Civil Case No. 95-72586 is
DISMISSED without prejudice to the filing of the appropriate
complaint/action with the concerned regulatory agencies.1wphi1.nt
Let copy of this Decision be served upon the Land Transportation Franchising
and Regulatory Board and the Securities and Exchange Commission for their
information and appropriate action. No pronouncement as to costs.

SO ORDERED.

49 | S U S H I N E T H CIV PRO SET 2