Colmenar vs. Colmenar

A complaint states a cause of action against purchaser-defendants where it alleges that the sellers had no right to convey the properties because they were not lawful heirs of the deceased owner, regardless of whether the complaint specifically alleges that the purchasers acted in bad faith or had notice of the defect in the sellers' title. Good faith is a matter of defense that may be pleaded in the answer and proved at trial, not an element that must be averred in the initiatory pleading.

Frank Colmenar is the legitimate son of the late Francisco Jesus Colmenar, a Filipino-born individual, and Dorothy Marie Crimmin, an American. Their family lived in Cleveland, Ohio. Following the parents' divorce, Francisco Jesus Colmenar returned to the Philippines and had a relationship with a woman named Loida. Apollo, Jeannie, and Victoria Colmenar are children of Francisco Jesus Colmenar from a different wife. Upon Francisco Jesus Colmenar's death, he left several real properties in General Trias, Cavite, all registered in his name. The dispute arose when Apollo, Jeannie, and Victoria executed extrajudicial settlements of estate purporting to be the sole surviving heirs and thereafter sold the properties to respondent corporations.

Frank Colmenar is the second child of Filipino-born Francisco Jesus Colmenar and American Dorothy Marie Crimmin. Their family lived in Cleveland, Ohio. Following his parents' divorce, his father returned to the Philippines. Despite the distance, petitioner remained close to his father, who visited him in Las Vegas, Nevada when petitioner's child was born. During that visit, Francisco Jesus Colmenar confided that he had met a woman named Loida.

Years later, petitioner learned of his father's death. The deceased left real properties in General Trias, Cavite, all registered in his name: an interest in a property covered by TCT No. 579 (130,743 sq. m.); an interest in the property under TCT No. 588 (806 sq. m.); half an interest in the property under TCT No. 572 (27,175 sq. m.); and a 1/6 interest in the property under TCT No. 25848 (117,476 sq. m.). Petitioner also learned that respondents Apollo Colmenar, Jeannie Colmenar Mendoza, and Victoria Jet Colmenar — children of Francisco Jesus Colmenar from a different wife — had executed an Extrajudicial Settlement of Estate dated May 16, 2008 and another dated July 8, 2011, making it appear that they were the surviving heirs of Francisco Jesus Colmenar. By virtue of these deeds, they allocated unto themselves the interests of the deceased in the aforesaid properties.

Thereafter, the individual respondents sold the properties to respondent corporations: the property under TCT No. 25848 to ProFriends on January 3, 2012; the property under TCT No. 572 to Crisanta Realty through a Deed of Absolute Sale dated September 21, 2012; and the property under TCT No. 579 to PEC through a Deed of Sale dated May 22, 2013. PEC subsequently sold this property to Amaia, in whose name TCT No. 057-2013024578 was issued. These sales were made without petitioner's knowledge and consent, effectively depriving him of his successional rights as a legitimate son of the deceased.

Petitioner secured counsel and sent demand letters to the individual respondents, but Apollo's counsel refused to meet, and subsequent demand letters were ignored. On September 11, 2018, petitioner filed a complaint for declaration of nullity of the deeds of extrajudicial settlement of estate, deeds of sale, cancellation of titles, and damages against all respondents. The respondent companies raised affirmative defenses, principally that the complaint failed to state a cause of action against them and that they were innocent purchasers for value. The trial court initially denied the motions to dismiss and motions to hear affirmative defenses on February 12, 2020, finding the issues complex and better resolved at trial. However, after the 2019 Amendments took effect on May 1, 2020, the trial court motu proprio resolved the affirmative defenses and dismissed the complaint against all respondent companies on the ground that the complaint failed to allege that they were purchasers in bad faith or had notice of the defect in the sellers' titles.

• Improper Application of the 2019 Amendments: Petitioner argued that the trial court erred in applying the 2019 Amendments to resolve the affirmative defenses, as Rule 144 expressly proscribes their application to pending actions when, in the opinion of the court, their application would not be feasible or would work injustice.
• Lapse of the 30-Day Period: Petitioner maintained that when Judge Gill resolved the affirmative defenses on May 22, 2020, the 30-day period under Section 12(c), Rule 8 had long expired, as the answers were filed between December 2018 and February 2020, making application of the new rules no longer feasible.
• Pending Motions for Reconsideration: Petitioner argued that Judge Gill had already resolved the affirmative defenses in the February 12, 2020 Omnibus Order, and that PEC, Crisanta Realty, and Amaia had pending motions for reconsideration thereof. Instead of applying the 2019 Amendments, she should have simply resolved those pending motions.
• Deprivation of Substantial Rights: Petitioner asserted that the application of the 2019 Amendments caused him great prejudice by peremptorily depriving him of the opportunity to assert his claim and of his right to seek reconsideration, which Section 12, Rule 15 of the 2019 Amendments prohibits.
• Complaint States a Cause of Action: Petitioner argued that the complaint bore material allegations that he is the lawful heir of Francisco Jesus Colmenar, that the individual respondents were not heirs, and that they had no right to sell the properties. A purchaser may be impleaded if it acquired property from a seller who had no right over the property. The lack of a specific allegation that respondent companies were purchasers in bad faith does not equate to failure to state a cause of action; good faith is a matter of defense.

• Question of Fact: PEC and Crisanta Realty argued that the petition must be dismissed because it raises a question of fact — whether the allegations in the complaint make out a case against respondent companies — which is outside the purview of Rule 45.
• Proper Application of the 2019 Rules: PEC and Crisanta Realty contended that Rule 144 of the 2019 Rules ordains that the same may be applied to all pending proceedings, and that Judge Gill had consistently applied the 2019 Rules in all proceedings before her court.
• Failure to State a Cause of Action: PEC, Crisanta Realty, and Amaia argued that the complaint did not allege that they were purchasers in bad faith or had notice of any defect in the titles. As innocent purchasers for value, they are protected by law and exercised the required diligence in investigating the properties before purchase.
• Hierarchy of Courts: ProFriends argued that petitioner improperly raised a mixed question of fact and law, which is not allowed under Rule 45, and that petitioner should have first gone to the Court of Appeals in consonance with the rule on hierarchy of courts.

• Nature of the Petition: Whether the petition raises pure questions of law.
• Application of the 2019 Amendments: Whether the trial court committed reversible error when it applied the 2019 Amendments to resolve the affirmative defenses pleaded by respondent companies, albeit the case was already pending when the 2019 Amendments took effect.
• Cause of Action: Whether the complaint states a cause of action against respondent companies.

• Nature of the Petition: Yes. The petition raises pure questions of law, as both issues — whether the trial court correctly applied the 2019 Amendments and whether the complaint states a cause of action — require only examination of the law/rules and the complaint's allegations, not re-evaluation of evidence.
• Application of the 2019 Amendments: Yes, the trial court committed reversible error. Rule 144 provides that the 2019 Amendments govern pending proceedings except where their application would not be feasible or would work injustice; here, the 30-day period had lapsed, pending motions for reconsideration remained unresolved, and the application deprived petitioner of his right to be heard and to seek reconsideration.
• Cause of Action: Yes. The complaint states a cause of action against respondent companies, as it sufficiently alleges the three essential elements: petitioner's right as lawful heir, the respondent companies' correlative obligation, and the void conveyances that violated that right. The buyers' good faith is a matter of defense, not an element that must be alleged.

• Nature of the Petition: A question of law exists when the reviewing court can resolve the issues without evaluating evidence; a question of fact requires re-evaluation of witness credibility or the existence and relevance of surrounding circumstances. The first issue — whether the trial court correctly applied the 2019 Amendments — is a question of law, as resolution rests solely on what the law or rules provide. The second issue — whether the complaint states a cause of action — is likewise a question of law, because the Court need only examine the complaint itself, assuming its allegations to be true, without re-evaluating evidence. Direct recourse to the Supreme Court under Rule 45 is therefore proper.

• Application of the 2019 Amendments: Rule 144 provides that the 2019 Amendments govern pending proceedings "except to the extent that in the opinion of the court, their application would not be feasible or would work injustice." Here, the case commenced in September 2018 and was pending when the amendments took effect on May 1, 2020. When Judge Gill resolved the affirmative defenses on May 22, 2020, the 30-day period under Section 12(c), Rule 8 had long expired — ProFriends filed its answer in December 2018, PEC and Crisanta Realty in January 2019, and Amaia on February 27, 2020. Moreover, Judge Gill had already resolved the common affirmative defense of failure to state a cause of action in her February 12, 2020 Omnibus Order, denying the motions to dismiss and motions to hear affirmative defenses because the issues were complex and better threshed out at trial. PEC, Crisanta Realty, and Amaia had pending motions for reconsideration of that Omnibus Order. Instead of applying the 2019 Amendments, Judge Gill could have simply resolved those pending motions. The worst consequence was that petitioner lost his substantial right to be heard on the affirmative defense and his right to seek reconsideration of the dismissal order, both of which were granted under the 1997 Rules but prohibited under the 2019 Amendments. The application was therefore neither feasible nor just.

• Cause of Action: The complaint alleges that petitioner is the legitimate son and lawful heir of Francisco Jesus Colmenar; that the deceased left real properties registered in his name; that the individual respondents are not lawful heirs and had no right to settle the estate or sell the properties; and that they nonetheless executed void extrajudicial settlements and void deeds of sale in favor of respondent companies. Under the test in Asia Brewery, Inc. vs. Equitable PCI Bank, assuming these allegations to be true, petitioner has a right to the relief prayed for — to declare the extrajudicial settlements and deeds of sale void. The principle that no one can give what he does not have applies: the individual respondents, not being owners, could not validly convey title. Whether respondent companies were buyers in bad faith is not the issue that gives rise to the complaint; petitioner's cause of action hinged on the averment that the sellers had no right to sell. Good faith is a matter of defense that can be pleaded in the answer and proved at trial. The trial court's reliance on Spouses Castillo vs. Heirs of Madrigal was misplaced because that case involved co-ownership where the title bore the names of all co-owners and the deeds of sale were signed by all of them, whereas here the complaint alleges the individual respondents had no right whatsoever. Additionally, the trial court erred in dismissing the complaint against ProFriends on the ground of failure to state a cause of action, an affirmative defense ProFriends never raised — it raised lack of cause of action, which is a distinct and separate ground that may only be raised after questions of fact have been resolved on the basis of stipulations, admissions, or evidence.

• Failure to State a Cause of Action vs. Lack of Cause of Action — These are distinct and separate grounds for dismissal. Failure to state a cause of action refers to the insufficiency of the allegations in the pleading, resolved on the face of the initiatory pleading by hypothetically admitting the truth of the allegations; it may be raised at the earliest stages through a motion to dismiss under Rule 16 or as an affirmative defense in the answer. Lack of cause of action refers to the insufficiency of the factual basis for the action, raised after the plaintiff has rested its case through a demurrer to evidence under Rule 33, requiring evaluation of the evidence presented. The terms are not interchangeable. The Court applied this distinction to hold that the trial court erred in dismissing the complaint against ProFriends on the ground of failure to state a cause of action when ProFriends had actually raised lack of cause of action.

• Three Essential Elements of a Cause of Action — A complaint states a cause of action if it sufficiently avers: (a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (b) an obligation on the part of the named defendant to respect or not violate such right; and (c) an act or omission on the part of the named defendant violative of the right of the plaintiff or constituting a breach of the obligation. The Court found all three elements present in the complaint.

• Nemo Dat Quod Non Habet (No One Can Give What He Does Not Have) — A seller may sell only what he or she owns, or that which he or she does not own but has authority to transfer, and a buyer can acquire only what the seller can legally transfer. Under Articles 1458 and 1459 of the Civil Code, the seller must have a right to transfer ownership at the time of delivery. Under Article 1505, a buyer acquires no better title than the seller had, unless the owner is precluded from denying the seller's authority. The Court applied this principle to hold that the individual respondents, not being lawful heirs, had no right to convey the properties.

• Good Faith as a Defense, Not an Element of the Cause of Action — In an action for nullity of sale based on the seller's lack of right to convey, the buyer's good faith or bad faith is a matter of defense that may be pleaded in the answer and proved at trial, not an element that must be alleged in the complaint. Where the plaintiff has no actual or personal knowledge of the buyer's good faith or bad faith, he cannot be expected to allege it. The Court applied this principle to hold that the complaint's omission of allegations regarding the buyers' bad faith did not constitute failure to state a cause of action.

• Prospective Application of Procedural Rules to Pending Cases — Under Rule 144 of the 2019 Rules, the 2019 Amendments govern all pending proceedings, except to the extent that in the opinion of the court, their application would not be feasible or would work injustice, in which case the procedure under which the cases were filed shall govern. The Court applied this exception to hold that the trial court should have desisted from applying Section 12, Rule 8 because the 30-day period had lapsed and the application caused injustice.

• "The spring cannot rise above its source." — This encapsulates the principle that a void sale by a non-owner cannot convey valid title to a buyer, however innocent, and forms the core of the Court's reasoning on why the complaint states a cause of action regardless of the buyers' good faith.

• "Whether respondent companies were buyers in bad faith or had knowledge of the defect in the title of the seller is not the issue nor the trigger that gave rise to the complaint." — This clarifies that the cause of action arises from the sellers' lack of right to convey, not from the buyers' state of mind, and that good faith is a defense rather than an element of the cause of action.

• "Failure to state a cause of action is not the same as lack of cause of action; the terms are not interchangeable." — This is the canonical formulation distinguishing the two grounds for dismissal, frequently cited in subsequent jurisprudence on civil procedure.

• "The 2019 Proposed Amendments to the 1997 Rules of Civil Procedure shall govern all cases filed after their effectivity on May 1, 2020, and also all pending proceedings, except to the extent that in the opinion of the court, their application would not be feasible or would work injustice, in which case the procedure under which the cases were filed shall govern." — This is the controlling provision on retroactive application of the 2019 Amendments, quoted verbatim from Rule 144, establishing the feasibility-and-injustice exception.

• Asia Brewery, Inc. vs. Equitable PCI Bank, 809 Phil. 289 (2017) — Followed. Provides the test for whether a complaint states a cause of action: admitting hypothetically the truth of the allegations, may a judge validly grant the relief demanded? Also distinguishes failure to state a cause of action from lack of cause of action, a distinction central to the Court's ruling on the erroneous dismissal against ProFriends.

• Spouses Castillo vs. Heirs of Madrigal, 275 Phil. 605 (1991) — Distinguished. The trial court relied on this case for the proposition that a complaint fails to state a cause of action where it does not allege that purchasers were in bad faith. The Supreme Court found the case not on all fours because it involved co-ownership where the title bore the names of all co-owners and the deeds of sale were signed by all of them, whereas here the complaint alleges the sellers had no right whatsoever.

• Unciano vs. Gorospe, G.R. No. 221869, August 14, 2019 — Followed. Enunciates the principle that no one can give what he does not have — a seller may sell only what he owns or has authority to transfer.

• Nool vs. Court of Appeals, 342 Phil. 106 (1997) — Followed. Cites Article 1505 of the Civil Code: a buyer acquires no better title than the seller had, unless the owner is precluded from denying the seller's authority to sell.

• Sindophil, Inc. vs. Republic, G.R. No. 204594, November 7, 2018 — Followed. Holds that the presumption that a holder of a Torrens title is an innocent purchaser for value is disputable and may be overcome by contrary evidence, reinforcing that good faith is a matter of defense to be proved at trial.

• Central Realty and Development Corp. vs. Solar Resources, Inc., G.R. No. 229408, November 9, 2020 — Followed. Holds that the issue of whether a trial court correctly applied a specific law or rules to a particular case is a question of law, supporting the Court's jurisdiction under Rule 45.

• Daswani vs. Banco de Oro, 765 Phil. 88 (2015) — Followed. Holds that when only questions of law remain, direct recourse to the Supreme Court under Rule 45 is the proper mode of appeal.

• Rule 144, 2019 Rules of Civil Procedure — Governs the application of the 2019 Amendments to pending cases, providing that they shall govern all pending proceedings except where their application would not be feasible or would work injustice. The Court applied the exception to hold that the trial court should not have applied the 2019 Amendments given the lapsed 30-day period and the injustice caused to petitioner.

• Section 12, Rule 8, 2019 Rules of Civil Procedure — Requires the court to motu proprio resolve affirmative defenses, including failure to state a cause of action, within thirty (30) calendar days from the filing of the answer. The Court found that this provision was applied beyond the prescribed period, rendering its application infeasible.

• Section 12, Rule 15, 2019 Rules of Civil Procedure — Prohibits motions for reconsideration of the court's action on affirmative defenses. The Court noted that this prohibition, combined with the motu proprio dismissal, deprived petitioner of his right to seek reconsideration, compounding the injustice.

• Article 1458, Civil Code — Provides that the principal obligation of the seller is to transfer ownership of the property sold. Applied to show that the individual respondents, not being owners, could not fulfill this obligation.

• Article 1459, Civil Code — Provides that the thing must be licit and the vendor must have a right to transfer ownership at the time it is delivered. Applied to reinforce that the individual respondents had no right to transfer the properties.

• Article 1505, Civil Code — Provides that where goods are sold by a person who is not the owner and who does not sell them under authority or with consent of the owner, the buyer acquires no better title than the seller had, unless the owner is precluded from denying the seller's authority. Applied to support the conclusion that respondent companies derived no valid title from the void sales.

• Section 53, PD 1529 (Property Registration Decree) — Protects innocent purchasers for value under the Torrens system. The trial court relied on this provision, but the Supreme Court held that the protection of innocent purchasers is a matter of defense, not a ground for dismissing the complaint at the outset.

• Rule 45, Rules of Court — Governs petitions for review on certiorari, which shall raise only questions of law. The Court held that the petition raised pure questions of law, making direct recourse proper.

Perlas-Bernabe (Senior Associate Justice), M. Lopez, Rosario, and J. Lopez, JJ., concurred.