An amended complaint that fails to sufficiently allege ultimate facts establishing the plaintiff's right to the subject properties and the invalidity of their transfer, and which seeks reconveyance based on an implied trust more than ten years after the registration of the disputed titles in the defendant's name, is dismissible for failure to state a cause of action and for prescription.

The case originated from a dispute over three parcels of land allegedly owned by petitioner Eliza Zuñiga-Santos. Petitioner claimed these properties were fraudulently transferred to respondent Maria Divina Gracia Santos-Gran, purportedly the petitioner's daughter through a forged birth certificate, by petitioner's second husband, Lamberto C. Santos, using void and voidable documents, specifically a Deed of Sale that could not initially be located.

• Petitioner Eliza Zuñiga-Santos, through her attorney-in-fact Nympha Z. Sales, alleged she was the registered owner of three parcels of land in Montalban, Rizal, covered by TCT Nos. N-5500, 224174, and N-4234, prior to their transfer to respondent Maria Divina Gracia Santos-Gran.
• Petitioner claimed she had a second husband, Lamberto C. Santos, with whom she had no children.
• Petitioner alleged she was forced to care for Lamberto's alleged daughter, Gran, whose birth certificate was purportedly forged to make it appear Gran was petitioner's daughter.
• Petitioner asserted that Lamberto transferred the subject properties to Gran using "void and voidable documents," specifically a Deed of Sale which petitioner initially could not locate.
• Petitioner discovered the transfer of the properties to Gran sometime in November 2005.
• The Amended Complaint prayed for Gran to surrender the properties and pay damages.
• The TCTs attached to the Amended Complaint were already in the name of Gran, with TCT Nos. N-5500 and N-4234 mentioning petitioner as Gran's representative during registration when Gran was a minor.
• The titles in Gran's name were issued on November 26, 1975 (N-4234), January 29, 1976 (N-5500), and July 27, 1992 (224174).
• Petitioner admitted that the property covered by TCT No. 224174 was being used by Gran's mother-in-law.

• Petitioner was the rightful owner of the subject properties before their allegedly fraudulent transfer to respondent Gran.
• The transfer of the properties was effected through void and voidable documents, specifically a Deed of Sale orchestrated by petitioner's second husband, Lamberto C. Santos.
• Respondent Gran's birth certificate was forged to make her appear as petitioner's daughter.
• The action for nullity of void deeds of conveyance is imprescriptible.
• The Deed of Sale, though initially unattached, was later recovered and submitted with the motion for reconsideration before the CA, warranting a remand to the RTC.

• The action filed by the petitioner had prescribed, as an action upon a written contract must be brought within ten (10) years from the time the cause of action accrues, i.e., registration of the documents.
• The Amended Complaint failed to state a cause of action because the void and voidable documents sought to be nullified were not properly identified nor their substance set forth.
• The certificates of title covering the subject properties cannot be collaterally attacked.
• The admission of the contested Deed of Sale at the late stage of motion for reconsideration before the CA would be contrary to Gran's right to due process.

• Whether the Court of Appeals erred in sustaining the dismissal of petitioner's Amended Complaint.
• Whether the Amended Complaint failed to state a cause of action.
• Whether petitioner's cause of action, if any, had already prescribed.

• The Supreme Court denied the petition and affirmed the CA's dismissal of the Amended Complaint, but modified the grounds to (a) failure to state a cause of action, and (b) prescription.
• The Court found that the CA incorrectly based its dismissal on "insufficiency of factual basis," which is a ground for demurrer to evidence after presentation of plaintiff's evidence, not a ground for a motion to dismiss.
• The Amended Complaint failed to state a cause of action because it did not sufficiently allege ultimate facts showing petitioner's ownership or right to the properties; the attached TCTs were in Gran's name, and the allegations of transfer through "voidable and void documents" were mere conclusions of law without supporting factual averments.
• The action for reconveyance based on an implied trust (arising from the alleged fraud) had prescribed, as it must be filed within ten years from the date of registration of the deed or issuance of the title if the plaintiff is not in possession.
• Since petitioner was not in possession of the properties (as Gran or her relatives were), and the titles were registered in Gran's name as early as 1975, 1976, and 1992, the complaint filed in 2006 was beyond the ten-year prescriptive period.

• Failure to State a Cause of Action vs. Lack of Cause of Action — Failure to state a cause of action refers to the insufficiency of allegations in the pleading and is a ground for a motion to dismiss under Rule 16. Lack of cause of action refers to insufficiency of factual basis for the action and is determined after evidence has been presented (e.g., demurrer to evidence). The Court clarified that the CA erred in using "insufficiency of factual basis" as a ground for dismissal at the motion to dismiss stage; the proper ground, as found by the RTC and affirmed by the SC, was failure to state a cause of action.
• Elements of a Cause of Action — A complaint states a cause of action if it avers: (a) a right in favor of the plaintiff; (b) an obligation on the part of the defendant to respect or not violate such right; and (c) an act or omission by the defendant violative of plaintiff's right or constituting a breach of defendant's obligation. The Court found petitioner's Amended Complaint failed to sufficiently state these elements, particularly her right to the properties and the specific facts constituting the fraudulent transfer.
• Ultimate Facts vs. Conclusions of Law — A complaint must allege ultimate facts (essential facts constituting the plaintiff's cause of action), not mere legal conclusions or evidentiary facts. Allegations that a contract is "void" or "voidable" without stating facts showing invalidity are mere conclusions of law. The Court held that petitioner's averments about "voidable and void documents" were insufficient as they were conclusions of law.
• Hypothetical Admission in Motion to Dismiss — While facts alleged in a complaint are hypothetically admitted for purposes of a motion to dismiss, this extends only to relevant and material facts well-pleaded, not to legal conclusions, legally impossible facts, facts inadmissible in evidence, or facts unfounded by record or document included in the pleadings. The Court noted that petitioner's claim of ownership was not supported by the documents attached to her own complaint.
• Implied Trust (Article 1456, Civil Code) — If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The Court applied this doctrine, stating that the alleged fraud in transferring the properties to Gran created an implied trust.
• Prescription of Action for Reconveyance Based on Implied Trust — An action for reconveyance based on an implied trust prescribes in ten (10) years. The reference point is the date of registration of the deed or the issuance of the title if the plaintiff is not in possession of the property. If the plaintiff is in possession, the action is imprescriptible (akin to quieting of title). The Court found that petitioner was not in possession, and the titles were registered in Gran's name decades before the complaint was filed, thus the action had prescribed.

• "Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particular action. The former refers to the insufficiency of the allegations in the pleading, while the latter to the insufficiency of the factual basis for the action."
• "A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact, or conclusions of law. General allegations that a contract is valid or legal, or is just, fair, and reasonable, are mere conclusions of law. Likewise, allegations that a contract is void, voidable, invalid, illegal, ultra vires, or against public policy, without stating facts showing its invalidity, are mere conclusions of law."
• "If there is an actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance based on implied trust prescribes in ten (10) years, the reference point being the date of registration of the deed or the issuance of the title."

• Macaslang v. Zamora — Cited to explain the distinction between "failure to state a cause of action" (insufficiency of pleading, Rule 16) and "failure to prove a cause of action" or lack of cause of action (insufficiency of evidence, demurrer to evidence under Rule 33, formerly Sec. 5, Rule 10). This case underscored that the CA used an incorrect ground for dismissal.
• Abad v. Court of First Instance of Pangasinan — Referenced for the principle that allegations of a contract being void or voidable, without stating facts showing invalidity, are mere conclusions of law and insufficient to state a cause of action. This supported the Court's finding on the inadequacy of petitioner's allegations.
• Spouses Alfredo v. Spouses Borras — Cited for the definition of an action for reconveyance as one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner. This helped frame the nature of petitioner's ultimate claim.
• Spouses Aguirre v. Heirs of Lucas Villanueva — Referenced for the rule on prescription of an action for reconveyance based on implied trust: 10 years from registration/title issuance if plaintiff is out of possession, but imprescriptible if plaintiff is in possession (as an action for quieting of title). This was crucial in determining that petitioner's action had prescribed.
• Balo v. CA — Cited for the elements of a cause of action and the rule that analysis for a motion to dismiss for failure to state a cause of action is confined to the four corners of the complaint.
• Unicapital, Inc. v. Consing, Jr. — Cited for the test in a motion to dismiss for failure to state a cause of action: whether the complaint alleges facts which if true would justify the relief demanded.
• Abacan, Jr. v. Northwestern University, Inc. — Cited for the principle that only ultimate facts, not legal conclusions or evidentiary facts, are considered in determining sufficiency of a cause of action.
• Cañete v. Genuino Ice Company, Inc. — Cited for the definition of essential facts as those that cannot be stricken out without leaving the statement of the cause of action inadequate.
• Drilon v. CA — Cited for the scope of hypothetical admission in a motion to dismiss, which does not extend to legal conclusions or facts unfounded by record.
• Heirs of Sotto v. Palicte — Cited for the rule that hypothetical admission does not apply to legally impossible facts, facts inadmissible in evidence, or facts that appear unfounded by record or document included in the pleadings.

• Rule 16, Section 1(g), Rules of Court — Ground for motion to dismiss: "That the pleading asserting the claim states no cause of action." This was the basis for the RTC's dismissal, which the Supreme Court found correct.
• Rule 8, Section 1, Rules of Court — Requirement that a complaint need only allege ultimate facts or essential facts constituting the plaintiff's cause of action. This was used to assess the sufficiency of petitioner's Amended Complaint.
• Rule 33, Section 1, Rules of Court (Demurrer to Evidence) — Allows a defendant to move for dismissal after plaintiff completes presentation of evidence, on the ground that upon the facts and law plaintiff has shown no right to relief. The Court used this to distinguish "insufficiency of factual basis" (a ground for demurrer) from "failure to state a cause of action."
• Article 1456, Civil Code — "If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes." This article was applied to establish that an implied trust was created due to the alleged fraud, making the action for reconveyance subject to prescription.
• Article 1144, Civil Code — (Indirectly referenced by the RTC and respondent) States that an action upon a written contract must be brought within ten years from the time the right of action accrues. The RTC initially cited this for prescription. The Supreme Court, however, based prescription on the 10-year period for actions on implied trust.
• Article 1409, Par. 2, Civil Code — (Mentioned in petitioner's complaint as violated). Relates to contracts that are inexistent and void from the beginning, such as those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy. Petitioner alleged the transfer violated this, but failed to provide sufficient facts.