G.R. No. 116825 March 26, 1998
SAN LORENZO VILLAGE ASSOCIATION, INC., petitioner, vs. COURT OF APPEALS; Hon. Judge ROBERTO C. DIOKNO, Presiding Judge, RTC, Makati, Branch 62 and ALMEDA DEVELOPMENT & EQUIPMENT CORPORATION, respondents.

FACTS

Private respondent Almeda Development and Equipment Corporation (ADEC) filed a petition before the Regional Trial Court (RTC) of Makati for the cancellation of the restrictions annotated on Transfer Certificate of Title (TCT) No. 47348, covering a parcel of land it acquired via a Deed of Sale from Ponciano L. Almeda. The annotation, Entry No. 59599, required the owner to be an automatic member of the petitioner San Lorenzo Village Association, Inc. (SLVAI), restricted the lot to residential use, limited building height and construction, and imposed other conditions. ADEC argued that the conditions along Pasay Road had changed from purely residential to commercial/industrial, making SLVAI irrelevant, and that the annotation unlawfully limited its rights of ownership under Article 428 of the Civil Code. It prayed for a temporary restraining order and damages. SLVAI filed a motion to dismiss on grounds of lack of cause of action and lack of ADEC’s personality to sue, contending that ADEC was not the registered owner as the deed of sale was unregistered and thus could not bind third parties like SLVAI. The RTC denied the motion to dismiss and a subsequent motion for reconsideration. SLVAI then filed a petition for certiorari with the Court of Appeals, which was denied. SLVAI elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the Court of Appeals erred in not finding that the RTC committed grave abuse of discretion in denying SLVAI’s motion to dismiss ADEC’s petition for cancellation of the restrictions on TCT No. 47348.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the RTC did not commit grave abuse of discretion in denying the motion to dismiss. A motion to dismiss based on lack of cause of action hypothetically admits the truth of the material allegations of the complaint. ADEC’s petition sufficiently alleged a cause of action by stating it was the owner of the land (through a deed of sale), that the annotated restrictions limited its ownership rights, and that there had been a change in conditions justifying cancellation. The issue of whether ADEC was the real party-in-interest, being a successor-in-interest to the registered owner, was not a proper ground for a motion to dismiss but a matter to be raised in an Answer and threshed out at trial. The Court also ruled that SLVAI, which merely caused the annotation of restrictions and claimed a lien for unpaid dues, was not a “third person” under Article 709 of the Civil Code in the context of the unregistered deed of sale, as that article protects persons with adverse interests in the property itself, not those asserting a contractual or membership claim. Any uncertainty in the allegations should be resolved in favor of a full inquiry on the merits to avoid multiplicity of suits.