G.R. No. 122947 . July 22, 1999.
TIMOTEO BALUYOT, JAIME BENITO, BENIGNO EUGENIO, ROLANDO GONZALES, FORTUNATO FULGENCIO and CRUZ-NA-LIGAS HOMESITE ASSOCIATION, INC., petitioners, vs. THE HONORABLE COURT OF APPEALS, THE QUEZON CITY GOVERNMENT and UNIVERSITY OF THE PHILIPPINES, respondents.

FACTS

Petitioners, residents and a non-stock corporation of Barangay Cruz-na-Ligas, filed a complaint for specific performance and damages against the University of the Philippines (UP). The complaint was later amended to include the Quezon City government. Petitioners alleged that they and their ascendants had been in open, continuous, and adverse possession since time immemorial of a parcel of land in Sitio Libis, Barrio Cruz-na-Ligas, Quezon City. They cited administrative proceedings that confirmed the rights of the bona fide residents. They further alleged that UP, pursuant to an indorsement from the Office of the President, had agreed to donate about 15.8 hectares directly to the residents. Petitioners claimed they agreed to accept this donation under UP’s terms, but UP backed out and instead negotiated a donation through the Quezon City Government under terms allegedly disadvantageous to the residents. Petitioners had previously filed an amended petition in a pending land registration case (LRC No. 3151) to include a cause of action for specific performance and to restrain UP from donating to Quezon City. A preliminary injunction was granted but later lifted after UP assured that the donation to Quezon City would be for the residents’ benefit. Subsequently, the land registration case was dismissed without prejudice upon petitioners’ manifestation, with the court noting UP’s commitment to donate the property to the residents. UP then executed a Deed of Donation in favor of Quezon City. Petitioners filed the present complaint, alleging that the conditions of the donation were not being complied with for the residents’ benefit. The Regional Trial Court denied private respondents’ motion to dismiss. The Court of Appeals reversed the RTC and dismissed the complaint.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint on the grounds of (1) lack of cause of action, (2) bar by prior judgment, and (3) failure to state a cause of action.

RULING

Yes, the Court of Appeals erred. The Supreme Court reversed the decision and remanded the case to the RTC for trial on the merits.
1. On Lack of Cause of Action: Petitioners have a cause of action as intended third-party beneficiaries of the Deed of Donation between UP and Quezon City. Acceptance by the beneficiary can be express or implied. Petitioners’ acceptance can be inferred from their actions, including their prior agreement to the donation’s terms, their manifestation consenting to the dismissal of the land registration case based on UP’s commitment, and the filing of the present suit to enforce the donation’s conditions for their benefit. The law does not require a formal acceptance for the stipulation to be enforceable by the beneficiaries.
2. On Bar by Prior Judgment: The dismissal of the prior land registration case (LRC No. 3151) does not bar the present complaint. The causes of action and the subject matter are different. The land registration case primarily sought exclusion of the area from UP’s title and involved a 42-hectare claim. The present case is for specific performance to enforce the conditions of the 15.8-hectare donation made under the Deed of Donation. They are distinct claims.
3. On Failure to State a Cause of Action: A motion to dismiss based on this ground hypothetically admits the truth of the material allegations in the complaint. The amended complaint sufficiently alleges facts that, if true, would entitle petitioners to relief as third-party beneficiaries seeking to enforce the donation’s terms. Furthermore, a complaint containing multiple causes of action should not be dismissed if at least one states a sufficient cause of action.