Zuñiga-Santos vs. Santos-Gran

A complaint must allege ultimate facts, not mere conclusions of law, to sufficiently state a cause of action; furthermore, an action for reconveyance based on implied trust prescribes in ten years if the plaintiff is not in possession of the disputed property.

Petitioner Eliza Zuñiga-Santos was previously the registered owner of three parcels of land in Montalban, Rizal. She claimed that her second husband, Lamberto, succeeded in transferring these properties to his alleged daughter, respondent Gran, through void and voidable documents. Petitioner sought to annul the sale and recover the properties.

• Original Filing: RTC of San Mateo, Rizal, Branch 76, Civil Case No. 2018-06 (Complaint for Annulment of Sale and Revocation of Title)
• Lower Court Decision: July 6, 2006 — RTC granted respondent's Motion to Dismiss on grounds of failure to state a cause of action, collateral attack on title, and prescription.
• Appeal: CA-G.R. CV No. 87849
• CA Decision: January 10, 2011 — CA affirmed the RTC's dismissal but on the ground of insufficiency of factual basis. The CA held the complaint stated a cause of action and had not prescribed (if based on void deeds), but dismissed it because the unattached Deed of Sale made it impossible to determine if petitioner's signature was forged.
• CA Resolution: June 22, 2011 — CA denied petitioner's Motion for Reconsideration, which attached the missing Deed of Sale for the first time, citing violation of respondent's right to due process.
• SC Action: Petition for Review on Certiorari assailing the CA's Decision and Resolution.

• Petitioner's Claim of Ownership: Petitioner alleged she was the registered owner of three parcels of land covered by TCT Nos. N-5500, 224174, and N-4234 prior to their transfer to Gran.
• The Fraudulent Transfer: Petitioner claimed that her second husband, Lamberto, transferred the properties to Gran (his alleged daughter from another woman) through "void and voidable documents," specifically a Deed of Sale. She alleged Gran's birth certificate was forged to make it appear she was petitioner's daughter.
• Missing Deed of Sale: Despite the sale being the core of her action, petitioner failed to attach a copy of the Deed of Sale to her Amended Complaint, claiming it could not be located despite diligent efforts.
• Discovery and Filing: Petitioner discovered the transfer in November 2005 and filed the complaint on January 9, 2006, praying for the surrender of the properties and damages.
• Respondent's Possession: The complaint implicitly and explicitly showed Gran was in possession of the properties; petitioner prayed for the "surrender" of the properties, and admitted the property under TCT No. 224174 was being used by Gran's mother-in-law.
• Dates of Registration: The new titles in Gran's name were issued on the following dates: TCT No. N-4234 on November 26, 1975; TCT No. N-5500 on January 29, 1976; and TCT No. 224174 on July 27, 1992.

• The CA erred in dismissing the complaint based on insufficiency of factual basis because the absence of the Deed of Sale should not defeat her action, especially since the action was based on void documents which are imprescriptible.
• She subsequently found and attached the Deed of Sale to her Motion for Reconsideration before the CA, which should have warranted a remand for further proceedings.

• The action had prescribed under Article 1144 of the Civil Code, which requires actions upon a written contract to be brought within ten years from the time the cause of action accrues (i.e., from the time of registration).
• 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 was their substance set forth.

• Procedural Issues:
  • Whether the CA erred in dismissing the Amended Complaint on the ground of "insufficiency of factual basis" at the motion to dismiss stage.
• Substantive Issues:
  • Whether the Amended Complaint sufficiently states a cause of action.
  • Whether the action for annulment of sale and revocation of title has prescribed.

• Procedural: The SC ruled the CA erred in dismissing the case based on insufficiency of factual basis. "Insufficiency of factual basis" (lack of cause of action) is a ground for a demurrer to evidence under Rule 33, which is available only after the plaintiff has presented evidence. At the motion to dismiss stage under Rule 16, the proper ground is failure to state a cause of action, which is determined solely by the sufficiency of the pleadings, not by the sufficiency of the evidence.
• Substantive:
  • Failure to State a Cause of Action: The Amended Complaint was correctly dismissed on this ground. A complaint must allege ultimate facts, not mere conclusions of law. Petitioner's allegations that the sale was effected through "voidable and void documents" are mere conclusions of law without any averment of circumstances showing why or how they are void. Additionally, petitioner failed to adequately show her right to the properties, as the TCTs attached to her own complaint were in Gran's name, not hers. The rule of hypothetical admission in a motion to dismiss does not extend to facts that are unfounded by records or documents attached to the pleadings.
  • Prescription: The action had prescribed. Petitioner's action was essentially one for reconveyance based on implied trust under Article 1456 of the Civil Code (property acquired through fraud). When the plaintiff is not in possession of the property, the action for reconveyance prescribes in ten (10) years from the date of registration of the deed or issuance of the title. Because petitioner prayed for the "surrender" of the properties and admitted Gran's possession, the 10-year prescriptive period applies. Counting from the issuance dates of Gran's titles (1975, 1976, and 1992), the filing of the complaint in 2006 was well beyond the 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 the pleading itself (raised via motion to dismiss under Rule 16). Lack of cause of action refers to the insufficiency of the factual basis or evidence (raised via demurrer to evidence under Rule 33 after the plaintiff presents evidence).
• Ultimate Facts vs. Conclusions of Law — A complaint must state ultimate facts essential to the rights of action, distinguished from mere conclusions of law. Allegations that a contract is void, voidable, or invalid, without stating facts showing its invalidity, are mere conclusions of law and insufficient to state a cause of action.
• Hypothetical Admission in Motion to Dismiss — When a motion to dismiss based on failure to state a cause of action is filed, the facts alleged in the complaint are hypothetically admitted. However, this admission extends only to relevant and material facts well pleaded and inferences fairly deductible therefrom. It does not apply to legally impossible facts, facts inadmissible in evidence, or facts unfounded by records or documents attached to the pleadings.
• Prescription of Action for Reconveyance Based on Implied Trust — If the plaintiff is not in possession of the disputed property, the action for reconveyance based on implied trust prescribes in ten (10) years from the date of registration of the deed or issuance of the title. If the real owner remains in possession, the action is imprescriptible (treated as a suit for quieting of title).

• Rule 16, Section 1(g), Rules of Court — Grounds for a motion to dismiss, specifically that the pleading asserting the claim states no cause of action. The SC applied this to affirm the RTC's dismissal.
• Rule 33, Section 1, Rules of Court — Demurrer to evidence. The SC applied this to show that "insufficiency of factual basis" is a ground for demurrer, not a motion to dismiss, thereby reversing the CA's rationale.
• Rule 8, Section 1, Rules of Court — Requires the complaint to allege only ultimate facts constituting the cause of action. The SC applied this to rule that petitioner's complaint was insufficient for merely stating conclusions of law.
• Article 1456, Civil Code — Creates an implied trust when property is acquired through mistake or fraud. The SC applied this to classify petitioner's action as one for reconveyance based on implied trust, triggering the prescriptive period.
• Article 1144, Civil Code — Actions upon a written contract must be brought within ten years. The SC applied the 10-year timeframe to the action for reconveyance based on implied trust.