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630 Phil. 630


[ G.R. No. 180523, March 26, 2010 ]




This case is about the propriety of the trial court's dismissal of the plaintiff's complaint after receiving evidence at a preliminary hearing of the affirmative defenses raised by the defendant.

The Facts and the Case

Carmelita Austria Medina (Medina) owned an 86.4959-hectare land in Anupil, Bamban, Tarlac, covered by Transfer Certificate of Title (TCT) T-31590. On December 16, 1994 she executed a contract to sell the land to respondent Molave Development Corporation (Molave Development), represented by its president, Teofista P. Tinitigan (Tinitigan), for P14 million. Molave Development paid P1 million to Medina upon the signing of the contract and P1.3 million more as first installment. But it refused to pay the rest of the installments on being informed by the Department of Agrarian Reform (DAR) of the existence of alleged tenants on the land.

Two years later or in January 1997, Medina wrote respondent Molave Development a letter, rescinding the contract to sell between them. Molave Development later learned that a month earlier or on December 18, 1996, Medina sold the land to petitioner Doña Rosana Realty and Development Corporation (Doña Rosana Realty) to whom the Register of Deeds issued TCT 288633.

After learning of the sale or on March 3, 1997 respondent Molave Development filed with the Regional Trial Court (RTC) of Capas, Tarlac, an action for specific performance, delivery of possession, and annulment of title in Civil Case 389 against Medina, petitioner Doña Rosana Realty, and its chairman of the board of directors, Sy Ka Kieng. Molave Development claimed that Medina and Doña Rosana Realty conspired to deprive it of the lot and prayed for an award of moral and exemplary damages plus attorney's fees for a total of P1.1 million.

By way of third party complaint, petitioner Doña Rosana Realty sued Medina's nephew, Wilfredo Miranda, and the latter's lawyer, Atty. Delfin Supapo, Jr., for allegedly conniving with Medina in concealing from it the contract to sell that Medina entered into with respondent Molave Development.

The RTC declared Medina in default. Petitioner Doña Rosana Realty, on the other hand, filed an answer and a motion to set the case for preliminary hearing on its special and affirmative defenses. Doña Rosana Realty claimed that it acted in good faith in purchasing the property and that respondent Molave Development was estopped from questioning the sale because it agreed to cancel the contract to sell and, after the complaint was filed, its president, Tinitigan, received from Medina's counsel a P1.3 million partial reimbursement as shown by a receipt dated March 13, 1997.[1]

For its part, Molave Development presented Tinitigan's letter to Medina dated March 15, 1997, informing the latter that she (Tinitigan) was treating the P1.3 million as partial payment for the damages she sought in the pending case before the trial court.

On February 5, 1998 the RTC denied petitioner Doña Rosana Realty's motion to dismiss[2] but, on petition with the Court of Appeals (CA), the latter court directed the RTC to conduct a preliminary hearing on Doña Rosana Realty's special affirmative defense of good faith.[3] The RTC did so and on November 19, 2003 it dismissed the complaint insofar as Doña Rosana Realty and Sy Ka Kieng were concerned.[4] It held that the latter were buyers in good faith and, therefore, respondent Molave Development had no cause of action against them. On July 16, 2004 the trial court denied Molave Development's motion for reconsideration.[5]

On appeal, the CA held that contrary to the ruling of the trial court, respondent Molave Development's complaint in fact stated a cause of action against Medina and petitioner Doña Rosana Realty. The CA thus remanded the case to the RTC for further proceedings.[6] Not satisfied with this ruling, Doña Rosana Realty took recourse to this Court through the present petition.

The Issue Presented

The issue presented in this case is whether or not the CA erred in holding that no ground existed for dismissing respondent Molave Development's complaint against petitioner Doña Rosana Realty given that such complaint stated a cause of action.

The Court's Ruling

The CA held, after closely examining respondent Molave Development's complaint below, that the same in fact stated a cause of action. The complaint alleged that the "circumstances show conspiracy and/or collusion to defraud plaintiffs by defendants."

But the CA seems to have missed the point in the RTC decision. It will be recalled that petitioner Doña Rosana Realty filed a motion with the RTC to hear and resolve its affirmative defenses. The RTC did so and resolved to deny the motion. On a petition filed with the CA, however, the latter court directed the RTC to hear and resolve Doña Rosana Realty's affirmative defense of good faith in buying Medina's property. The RTC complied and, after hearing the evidence of the parties, dismissed the case, holding that Doña Rosana Realty and its president were buyers of the property in good faith and Molave Development did not have a cause of action against them. Clearly, The RTC did not dismiss the case on the ground that the complaint did not state a cause of action, which is an entirely different matter.

Section 1, Rule 16 of the Rules of Civil Procedure provides that the trial court may dismiss a complaint on the ground that the claim or demand set forth in the plaintiff's complaint has been paid, waived, abandoned, or otherwise extinguished. This ground essentially admits the obligation set out in the complaint but points out that such obligation has been extinguished, in this case apparently by abandonment after respondent Molave Development received partial reimbursement from Medina as a consequence of the cancellation of contract to sell between them.

On March 13, 1997, 10 days after it filed its complaint with the RTC, Molave Development acknowledged having received P1.3 million as a consideration for the cancellation of its contract to sell with Medina. The acknowledgment receipt its president signed reads:


This is to acknowledge the receipt of one (1) Allied Bank Check No. 25111954 dated March 4, 1997 in the amount of ONE MILLION THREE HUNDRED THOUSAND (P1,300,000.00) from Ms. Carmelita Austria Medina as partial reimbursement pursuant to the cancelled Contract to Sell (Doc. No. 447; page 190; Book 114; Series of 1994 Notarial Register of Atty. Delfin R. Supapo, Jr.) entered into between Ms. Medina and Molave Dev. Corporation over that parcel of land located at Bamban, Tarlac covered by TCT No. T-31590.[7]

Makati City. March 13, 1997.



Tinitigan of respondent Molave Development of course later asserted that she signed the above receipt because Medina's lawyer would not have released the check to her. But this is not a valid ground for claiming vitiation of consent. If she did not want to agree to the cancellation, she had no business signing the receipt and accepting the check. She could very well have stood her ground and pressed for complete performance of the contract to sell. Having received the P1.3 million, Molave Development's remaining remedy was to pursue a claim for the balance of P1 million that it paid Medina upon the execution of the contract to sell.

Further, as the RTC correctly held, respondent Molave Development failed to overcome the presumption of good faith in favor of petitioner Doña Rosana Realty.[9] The title to the property was unencumbered when it bought the same. And the evidence shows that Doña Rosana Realty learned of the existence of the unregistered contract to sell only after it had bought the land. Indeed, it even filed a third party complaint against Willie Miranda and Atty. Supapo, Jr., for allegedly conniving with Medina in concealing that contract to sell.

The letter of petitioner Doña Rosana Realty's lawyer to the DAR dated September 17, 1996, stating that Medina had retained him to represent her in the tenancy case involving the land cannot serve as notice to Doña Rosana Realty that Medina executed a contract to sell in favor of respondent Molave Development. The letter did not mention such contract. At best, the letter served as notice to Doña Rosana Realty that the land could have a tenancy problem.

In light of the foregoing, the Court holds that respondent Molave Development has no valid claim against petitioner Doña Rosana Realty and its president.

WHEREFORE, the Court REVERSES and SETS ASIDE the September 11, 2007 Decision and November 9, 2007 Resolution of the Court of Appeals in CA-G.R. CV 83599 and REINSTATES the November 19, 2003 Resolution of the Regional Trial Court of Capas, Tarlac, Branch 66, dismissing the complaint against Doña Rosana Realty Development Corporation and Sy Ka Kieng in Civil Case 389.


Carpio, (Chairperson, Second Division), Brion, Del Castillo, and Perez, JJ., concur.

[1] Records, p. 57.

[2] Id. at 108.

[3] CA-G.R. SP 49079. Molave filed a motion for reconsideration but was denied on October 14, 1999 (Records, Vol. I, p. 406).

[4] The Resolution was penned by Judge Alipio C. Yumul (Rollo, p. 128).

[5] Records, Vol. II, p. 896.

[6] Penned by Associate Justice Myrna Dimaranan-Vidal and concurred in by Associate Justices Jose L. Sabio, Jr. and Jose C. Reyes, Jr.

[7] Underscoring supplied.

[8] Records, Vol. I, p. 57.

[9] Records, Vol. II, p. 900.

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