G.R. No. 122947 - Baluyot vs. Court of Appeals

Case Summary (G.R. No. 122947)

Procedural History (summary)

Petitioners filed suit on March 13, 1992 in the Regional Trial Court (RTC), Quezon City, Branch 89, for specific performance and damages, later amending the complaint to implead the Quezon City government. The RTC denied a preliminary injunction (May 15, 1992) and, after various pleadings and interlocutory proceedings, denied respondents’ joint motion to dismiss on April 26, 1995. UP and Quezon City sought relief in the Court of Appeals (CA), which on November 24, 1995 set aside the RTC order and dismissed the complaint for failure to state a cause of action. The petitioners then brought the case to the Supreme Court (G.R. No. 122947), which reversed the CA and remanded the case for trial.

Operative Facts

Petitioners and their ancestors have long occupied and farmed lands in Cruz‑na‑Ligas, claiming open, continuous, adverse possession “in the concept of an owner.” Administrative and quasi‑judicial proceedings dating from 1972–1985 culminated in endorsements and recommendations recognizing the residents’ rights and in negotiations with UP. UP’s Board of Regents approved donation of roughly 9.2 hectares, later increased to approximately 15.8379 hectares to be given for the benefit of Cruz‑na‑Ligas residents. After negotiations, a Deed of Donation in August 1986 conveyed some 15.8379 hectares from UP to Quezon City subject to specific conditions: the Donee (Quezon City) was to perform delineated improvements within 18 months and, after a 3‑year period, transfer the individual lots to qualified residents by donation; UP was to deliver certificates of title to enable registration. Petitioners allege UP failed to deliver titles, later issued Administrative Order No. 21 revoking the donation and purporting to revert the land to UP, and that this conduct deceived petitioners into agreeing to the lifting of injunctions and dismissal of prior actions. Petitioners sought injunctive relief, specific performance of the Deed of Donation (or alternatively recovery of ownership over some 42 hectares alleged to be in their possession), and damages.

Principal Legal Issues Presented

Whether petitioners’ amended complaint alleges a legally sufficient cause of action.
Whether petitioners’ claim for enforcement of the Deed of Donation constitutes an impermissible collateral attack on UP’s registered title.
Whether petitioners may plead ownership by laches/adverse possession or otherwise assert inconsistent claims in the same pleading.
Whether petitioners qualify as third‑party beneficiaries (stipulation pour autrui) entitled to enforce the contract (deed of donation) despite lack of formal privity.

RTC and CA Rulings on Key Legal Points

The RTC denied the preliminary injunction primarily on the ground that petitioners were not parties to the deed of donation and that UP had validly revoked the donation; the court treated that tentative finding as disposing of petitioners’ claim to a clear legal right for injunctive relief. Later, the RTC denied respondents’ motion to dismiss as to certain allegations, finding that petitioners might be entitled to ownership by laches, which required trial. The CA, however, concluded the amended complaint failed to state a cause of action: petitioners neither sought annulment of UP’s title nor reconveyance, their ownership claim would amount to a prohibited collateral attack on registered title, and laches/prescriptive acquisition did not operate in their favor; accordingly, CA dismissed the complaint.

Supreme Court’s Analysis — Cause of Action and Stipulation pour autrui

The Supreme Court analyzed whether the complaint contained the three elements constituting a cause of action: (1) a right in favor of the plaintiffs; (2) a corresponding duty on the defendant; and (3) an act or omission violating that right. The Court found these elements sufficiently alleged. Significantly, the Court held that petitioners had pleaded a stipulation pour autrui under Civil Code Art. 1311 (second paragraph): the Deed of Donation contained express conditions obligating the Donee (Quezon City) to transfer lots to qualified residents; those conditions were part of the contract; the parties (UP and Quezon City) deliberately intended to confer a favor upon the petitioners; the complaint alleged facts from which acceptance by petitioners could be reasonably inferred (conferences, demands for titles); and the parties were not legal representatives of the petitioners. Accordingly, petitioners, as intended beneficiaries, could maintain an action to enforce the stipulation in their favor, subject to the factual question whether acceptance preceded revocation.

Supreme Court’s Analysis — Laches, Prescription, and Collateral Attack

The Court clarified that while prescription or acquisitive prescription is not available to acquire registered land, an equitable defense of laches can bar a registered owner’s action for recovery of possession; however, that defense is inapplicable as a basis to dispose of petitioners’ complaint at the pleading stage when petitioners themselves are not asserting laches as their claim. The Court further held that petitioners could not directly attack UP’s registered title by collateral attack in this action; but the central thrust of petitioners’ complaint was enforcement of a deed containing a stipulation in their favor, not an attempt to annul UP’s registration. The validity of UP’s alleged revocation of the donation is a contested factual and legal question for trial; the RTC’s tentative denial of injunction on revocation grounds did not bar petitioners from litigating that issue on the merits.

Supreme Court’s Analysis — Alternative Causes and Pleading Rules

The Court rejected respondents’ objection that petitioners pleaded inconsistent causes (specific performance of the deed for 15.8 hectares and alternative claims to ownership of some 42 hectares). It invoked Rule 8, Section A(2) of the Rules of Court permitting alternative and hypothetical claims: a pleader may set forth multiple inconsistent or alternative claims, and the insufficiency of one does not render the pleading deficient if another states a valid claim. The Court also noted that the two claims did not involve identically th

Case Syllabus (G.R. No. 122947)

Case Citation and Court

Reported as 370 Phil. 30; 96 OG No. 24, 3713 (June 12, 2000).
G.R. No. 122947, decided July 22, 1999, Second Division.
Decision authored by Justice Mendoza, with Justices Bellosillo (Chairman), Puno, Quisumbing, and Buena concurring.

Parties and Standing

Petitioners: Timoteo Baluyot, Jaime Benito, Benigno Eugenio, Rolando Gonzales, Fortunato Fulgencio and Cruz-na-Ligas Homesite Association, Inc. — residents and members of Barangay Cruz-na-Ligas (also referred to as Krus-na-Ligas) in Diliman, Quezon City.
Respondents: The Honorable Court of Appeals (as appellee in the certiorari review), the Quezon City Government, and the University of the Philippines (UP).
Petitioners are not parties to the original deed of donation but claim status as intended beneficiaries/donees represented by the Association.

Nature of Action and Reliefs Sought

Original complaint filed March 13, 1992 before the Regional Trial Court (RTC) of Quezon City, docketed Civil Case No. Q-92-11663: action for specific performance and damages against UP; later amended to implead Quezon City government as defendant.
Primary prayers included:
- Issuance of writ of preliminary injunction/TRO to preserve status quo and prevent ejectment/demolition of improvements.
- After trial, declaration that the Deed of Donation (Annex Q) is valid and subsisting and enforcement by ordering UP to abide by its terms.
- Adjudication requiring UP to segregate additional riceland/farmlands (42 hectares) as embraced by Barrio Cruz-na-Ligas per prior indorsements and recommendations.
- Monetary reliefs: moral damages P300,000.00; exemplary damages P50,000.00; attorney’s fees P50,000.00; costs of suit; and other equitable reliefs.

Factual Allegations (as pleaded by petitioners)

Petitioners and their ascendants have been in open, peaceful, adverse, and continuous possession in the concept of owner of Sitio Libis, Barrio Cruz-na-Ligas (and other areas within Barrio Cruz-na-Ligas) since memory can no longer recall — in sum at least forty-two (42) hectares.
Since October 1972, claims of petitioners/Association were subject to quasi-judicial and administrative proceedings culminating in indorsements:
- Bureau of Lands indorsement dated May 7, 1975 (Annex D).
- Office of the President indorsement dated February 12, 1985 (Annex E).
- Earlier brief and recommendation dated November 2 and November 7, 1972 (Annexes F and G).
UP, pursuant to the Office of the President indorsement, issued a Reply Indorsement dated September 19, 1984 (Annex H) reflecting UP Board of Regents’ approval in 1979 to donate about 9.2 hectares to Brgy. Krus Na Ligas, which was increased to 15.8 hectares (158,379 square meters) after negotiations; UP alleged failure to formalize donation due to residents’ alleged unreasonable demand for more than 15.8 hectares.
Petitioners’ Association accepted UP’s offer to donate 15.8379 hectares; UP consented to donate directly to the Association for the benefit of qualified residents and Association agreed to comply with donation terms.
UP later negotiated donation through the Quezon City government on terms petitioners regarded as disadvantageous (Annex I).
Association amended its petition in pending LRC No. 3151 (Branch 100, RTC Quezon City) to add cause of action for specific performance and sought preliminary injunction to restrain UP from donating to Quezon City (Annex J).
Branch 100 initially issued preliminary injunction January 24, 1986 (Annex K); later lifted the injunction April 2, 1986 after Association’s conditional agreement based on UP assurances that donation through Quezon City would benefit Cruz-na-Ligas residents (Annex M).
Subsequent proceedings resulted in an order dated June 13, 1986 directing dismissal without pronouncement as to cost, and clarifying the litigation of charging lien between petitioners and oppositors (Annex P).
UP executed a Deed of Donation on August 5, 1986 in favor of Quezon City for the benefit of qualified residents — petitioners/Association did not participate in execution (Annex Q).
Terms/conditions of Deed of Donation included:
- Donation of 15.8379 hectares subject to conditions (e.g., Donee to within 18 months remove boundary structures; relocate families inside donated lot or outside UP campus if relocation outside necessary; construct fence with 10-meter setback adjoining Pook Amorsolo and Peripheral Road; construct drainage canal along boundary; conform to donor’s plans/specifications).
- Donee to, after three (3) years, transfer by donation individual lots occupied by qualified residents subject to Donee’s conditions; transfers during three-year period limited to immediate family members and to be effected by Donee and made known to Donor.
- Costs incidental to the Deed including registration at Donee’s expense; Donee responsible for legitimate obligations to third persons arising from the donation.
Quezon City government prepared groundworks to comply with Deed conditions, but UP allegedly failed to deliver the certificate of title to enable registration by Quezon City and issuance of title in Donee’s name.
Petitioners allege UP continuously and unlawfully refused to deliver certificate of title despite requests and conferences.
Upon expiration of the 18-month period, UP’s President Jose Abueva unilaterally issued Administrative Order No. 21 revoking the deed of donation and declaring reversion of donated property to UP.
Petitioners alleged the revocation/reversion without judicial declaration is illegal and prejudicial because:
- Petitioners were not parties bound by conditions imposed on Quezon City.
- UP insisted donation be coursed through Quezon City.
- Revocation prejudiced third parties who acquired rights under the donation.
Petitioners allege deception; they consented to lifting injunction and dismissal of LRC Case No. 3151 in reliance on UP’s undertaking, which UP allegedly unjustifiably revoked.
Petitioners reiterate claims to ownership of forty-two (42) hectares they and predecessors occupied; these 42 hectares are included in UP’s tax declaration under UP’s name (UP exempt from paying real estate tax — no assessment available).
Allegations of bad faith and deceit by UP entitle petitioners to moral damages P300,000.00; exemplary damages P50,000.00 for public example; and attorney’s fees P50,000.00.

Application for Preliminary Injunction (contents)

Petitioners reproduced material allegations and sought injunctive relief to:
- Restrain UP from ejecting plaintiffs and demolishing improvements on Sitio Libis riceland/farmlands (Annexes R–R3 photographs attached).
- Restrain UP from executing another deed of donation with different terms for benefit of additional occupants who are not bona fide residents.
Allegation that UP had begun ejecting plaintiffs/demolishing improvements for a residential house project; claim of irreparable injury unless restrained.
Petitioners ready to post injunctive bond in reasonable amount.

Trial Court’s Orders and Rulings

May 15, 1992: Trial court denied petitioners’ application for TRO/preliminary injunction.
- Reasoning: Principal action is for specific performance of Deed of Donation; plaintiffs are not parties to the Deed of Donation; plaintiffs had not established a clear legal right to enforcement; Deed of Donation had been validly revoked by UP via Administrative Order No. 21; therefore, injunctive relief denied.
Petitioners moved for reconsideration of the denial of injunction.
Trial court ordered petitioners to amend complaint to implead Quezon City