G.R. No. 197923 , June 22, 2015
Ruby Ruth S. Serrano Mahilum, Petitioner, vs. Spouses Edilberto Ilano and Lourdes Ilano, Respondents.

FACTS

Petitioner Ruby Ruth S. Serrano Mahilum is the registered owner of a parcel of land covered by TCT No. 85533. In September 2003, she entrusted the owner’s duplicate copy of the title to Teresa Perez, a purported real estate broker, to assist in obtaining a loan. Perez later claimed the title was lost, leading petitioner to execute an Affidavit of Loss, annotated on the title on October 7, 2004. In June 2006, petitioner learned from the Registry of Deeds that respondents, Spouses Ilano, had presented the owner’s duplicate copy, claiming the property was sold to them. Respondents executed an Affidavit of Non-Loss, annotated on June 28, 2006. Petitioner confronted respondents, who showed her a notarized Agreement with right of repurchase dated December 4, 2003, and an unnotarized and undated Deed of Absolute Sale, both bearing petitioner’s purported signatures. Petitioner denied executing these documents, alleging her signatures were falsified and forged, and demanded the return of the title, which respondents refused. The title remained in petitioner’s name as the sale was not registered.
Petitioner and her husband filed a Complaint for annulment of agreement and deed of absolute sale, specific performance, with damages (Civil Case No. LP-07-0109). Respondents, in their Amended Answer, claimed they purchased the property in good faith from Perez and a companion who introduced herself as Ruby Ruth Serrano, presenting supporting documents. After petitioner rested her case, respondents filed a Demurrer to Evidence, arguing the complaint failed to state a cause of action as it did not allege they were purchasers in bad faith. The Regional Trial Court (RTC) denied the demurrer, holding the issue of good faith required presentation of evidence from both sides. The Court of Appeals (CA) granted respondents’ Petition for Certiorari and Prohibition, nullifying the RTC Orders, ruling the complaint indeed failed to state a cause of action due to the absence of an allegation of respondents’ bad faith. The CA dismissed the complaint. Petitioner filed a Motion for Reconsideration, which was denied.

ISSUE

Whether the Court of Appeals erred in ruling that the complaint failed to state a cause of action against respondents.

RULING

Yes, the Supreme Court reversed the Court of Appeals. The complaint sufficiently stated a cause of action. A cause of action exists if the complaint alleges: (1) a right in favor of the plaintiff, (2) a correlative obligation on the part of the defendant, and (3) an act or omission by the defendant in violation of said right. Petitioner’s complaint alleged she was the registered owner, respondents were in possession of her title under void documents due to forgery, and they refused to return it despite demand. These allegations, if proven, would entitle her to the reliefs sought. The Court emphasized that the rules require only a concise statement of ultimate facts, not detailed allegations of evidence. The complaint’s allegations of forgery and respondents’ refusal to return the title, coupled with the claim for damages based on their “evident bad faith” actuations, were sufficient to constitute a cause of action. The issue of whether respondents were purchasers in good faith is a matter of defense and evidence to be resolved during trial, not via a demurrer to evidence or a motion to dismiss for failure to state a cause of action. The RTC correctly denied the demurrer to allow a full presentation of evidence. The case was remanded to the RTC for proper disposition.