Case Summary (G.R. No. 112019)
Petitioner, Respondent and Reliefs Sought
Petitioners sued for reconveyance, partition, accounting, declaration of nullity of documents, injunctions and damages, and prayed for issuance of preliminary injunctive relief. They alleged an express trust (or resulting trust) whereby the subject properties were purchased by their parents but titled in the name of respondent Gop in trust, with the understanding that after the parents’ death the properties would be sold and proceeds divided equally among the siblings; petitioners asserted rights as heirs and beneficiaries under succession law.
Key Dates and Procedural Posture
Complaint filed November 13, 2013; amended complaint filed March 11, 2014 (after sale of the Bel Air property); motions to dismiss filed by respondents (Gop and Kanta on November 27, 2013; Union Bank also moved to dismiss; PSB answered); RTC, Branch 59, Makati granted motions to dismiss by resolution dated January 6, 2015 and denied reconsideration March 18, 2015; petition for review under Rule 45 filed with the Supreme Court, which rendered the decision now summarized.
Applicable Law and Legal Sources Invoked
Constitution: 1987 Philippine Constitution, Article XII, Section 7 (prohibition on alien acquisition of private lands, save hereditary succession). Rules of Court: Rule 16 (motions to dismiss and grounds), Rule 41 Section 1 (appealability; order dismissing action without prejudice not appealable), Rule 65 (special civil action for certiorari), Rule 45 (petition for review on certiorari). Civil Code: Article 16 (intestate and testamentary successions governed by national law of decedent). Key jurisprudence cited: Strongworld Construction Corp. v. Perello; Westmont Bank v. Funai Phils., Corp.; Philippine National Bank v. Spouses Rivera; Matthews v. Taylor; cases addressing alien ownership and attempts to circumvent constitutional prohibitions.
RTC Findings and Grounds of Dismissal
The trial court held that the spouses were Indian nationals and, under Article XII, Section 7 of the 1987 Constitution, were prohibited from owning private land in the Philippines and therefore could not transmit rights in the properties by succession. The RTC dismissed the complaint primarily on the grounds that petitioners lacked legal capacity/personality to sue and that the complaint failed to state a cause of action (Rule 16, Section 1(g)). The RTC also referenced lack of cause of action in its disposition.
Issues Presented to the Supreme Court
- Whether petitioners invoked the correct remedy to challenge the RTC dismissal; and 2) Whether the complaint was properly dismissed (i.e., whether the complaint stated a cause of action and whether petitioners had the capacity to sue).
Supreme Court Ruling on Proper Remedy and Hierarchy of Courts
The Supreme Court held that petitioners pursued the wrong remedy. Because the RTC’s dismissal was based on failure to state a cause of action (Rule 16, Section 1(g)) and was therefore a dismissal without prejudice, Section 1(h) of Rule 41 bars an appeal from such an order. The appropriate remedies for an aggrieved party are (a) to refile the complaint or (b) where justified, to file a special civil action under Rule 65. The Court emphasized the distinction between dismissals with prejudice (those specified in Rule 16, Section 5) and dismissals without prejudice (other Rule 16 grounds), and explained that petitioners also contravened the rule on hierarchy of courts by directly invoking the Supreme Court instead of first seeking relief in the Court of Appeals when appropriate.
Supreme Court Ruling on Failure to State a Cause of Action
The Court applied the established test for failure to state a cause of action: whether the complaint alleges facts which, if true, would justify the relief demanded (Hongkong and Shanghai Banking Corp. v. Catalan test as reiterated in Philippine National Bank v. Spouses Rivera). A motion to dismiss admits the truth of material allegations; the inquiry is into sufficiency, not veracity. The Supreme Court concluded that petitioners did not plead a legally cognizable right to the subject properties because the alleged basis of their ownership was succession from parents who were Indian nationals.
Constitutional Bar Against Alien Acquisition and Its Effect on Petitioners’ Claims
Relying on established jurisprudence (including Matthews v. Taylor and other precedents), the Court reiterated that aliens are absolutely disqualified from acquiring, whether actually or beneficially, public or private lands in the Philippines except in constitutionally recognized instances (with narrow exceptions). The Court stressed that equity or implied trust theories cannot be used to circumvent the constitutional prohibition: where an alien cannot lawfully acquire ownership, courts will not recognize a trustee/beneficiary interest that effectively grants the alien rights the Constitution forbids. Because petitioners grounded their claim on their parents’ ownership and succession, and the parents were alleged aliens, petitioners failed to allege a valid legal right under Philippine law.
Succession Law Applicable to Foreign Decedents and the Condominium Claim
The Court also addressed the condominium unit claim. It invoked Article 16 of the Civil Code, which provides that intestate and testamentary successions are governed by the national law of the decedent. Thus, succession to property situated in the Philippines but belonging to a foreign national must be established under the decedent’s national law. Petitioners did not plead or allege that they were heirs under the national law of the Sadhwanis (India). Consequently, even if
...continue readingCase Syllabus (G.R. No. 112019)
Court, Citation, and Nature of Action
- Supreme Court of the Philippines, Second Division; G.R. No. 217365; Decision promulgated August 14, 2019; reported at 859 Phil. 385.
- Petition for review on certiorari under Rule 45 of the Rules of Court challenging RTC Makati City, Branch 59 Resolutions dated January 6, 2015 (Assailed Resolution) and March 18, 2015.
- Relief sought: review of RTC orders that granted motions to dismiss the Complaint for Reconveyance, Partition, Accounting, Declaration of Nullity of Documents, Injunction and Damages with Prayer for Writ of Preliminary Injunction & Temporary Restraining Order.
Caption and Parties
- Petitioners: Heirs of Satramdas V. Sadhwani and Kishnibai S. Sadhwani, represented by Ramchand S. Sadhwani and Rajan S. Sadhwani (identified as the other legitimate children of the Sps. Sadhwani).
- Respondents: Gop S. Sadhwani (son of Sps. Sadhwani), Kanta G. Sadhwani (wife of Gop), Union Bank of the Philippines, Philippine Savings Bank (PSB), and the Register of Deeds of Makati.
- Acting Chairperson designation: J. Caguioa noted as Acting Chairperson per Special Order No. 2688 dated July 30, 2019; opinions concurred in by J. Reyes, Jr., Lazaro-Javier, and Zalameda, JJ.; Carpio (Chairperson), J., on official leave.
Factual Background — Subject Properties and Alleged Trust
- Subject properties: (1) parcel of land at 58 Aries St., Bel Air, Makati (Bel Air Property) and (2) condominium unit 602-A at the Ritz Tower, Ayala Avenue, Makati City (Ritz Condominium Unit).
- Petitioners allege the Sps. Satramdas and Kishnibai S. Sadhwani (Sps. Sadhwani) purchased the subject properties but placed the titles in the name of their son Gop S. Sadhwani, purportedly in trust for the parents and siblings.
- Petitioners assert an alleged express trust agreement and invoke provisions of the Civil Code on succession to claim ownership as heirs and legitimate children.
- Respondent Union Bank and PSB were impleaded because respondent Gop allegedly obtained loans secured by real estate mortgages over the subject properties.
- Petitioners allege an agreement that properties were to be held in trust in Gop’s name for the benefit of the parents during their lifetime and sold after their death with proceeds distributed equally to siblings.
Pleadings, Procedural Steps, and Motions
- Complaint filed November 13, 2013 (Complaint for Reconveyance, Partition, Accounting, Declaration of Nullity of Documents, Injunction and Damages with Prayer for Issuance of Writ of Preliminary Injunction & Temporary Restraining Order).
- Respondents Gop and Kanta filed a motion to dismiss (November 27, 2013) alleging, inter alia: prescription/unenforceability; lack of legal capacity to sue; and failure to state a cause of action.
- Respondent Union Bank also filed a motion to dismiss; PSB filed an answer.
- Petitioners filed an amended complaint on March 11, 2014 following the sale of the Bel Air Property to Sefuel Siy Yap.
- RTC granted motions to dismiss in its January 6, 2015 Assailed Resolution on grounds of lack of legal capacity to sue, failure to state a cause of action, and lack of cause of action; petitioners’ motion for reconsideration denied by RTC on March 18, 2015.
- Petitioners elevated the matter by Rule 45 Petition (petition for review on certiorari) to the Supreme Court.
Issues Presented to the Supreme Court
- Whether petitioners availed of the correct remedy to challenge the dismissal of the Complaint.
- Whether the Complaint was correctly dismissed by the RTC on the asserted grounds.
Respondents’ Primary Contentions in the Records
- Respondents Gop and Kanta: Petition should be dismissed as the wrong mode of appeal because questions of fact were raised; Complaint failed to state a cause of action; petitioners lack personality to sue; petitioners cannot deviate from their pleaded theory of the case; RA 4726 prohibits aliens from owning condominium units.
- Respondent Union Bank: Petition failed to present questions of law as required by Rule 45; in a Rule 16 motion to dismiss based on failure to state a cause of action, the RTC may consider documents attached to the complaint; petitioners lack legal capacity to sue; implied trust was a circumvention of constitutional prohibition on foreign land acquisition; Union Bank should be dropped as a respondent because the mortgage in its favor was extinguished.
- Respondent PSB: Petitioners lack personality and legal capacity to sue because the Sps. Sadhwani were forbidden to own the subject properties; petitioners may not claim interest as heirs of those spouses.
Supreme Court’s Threshold Ruling — Correct Remedy and Hierarchy of Courts
- The Petition was dismissed for lack of merit principally because petitioners availed of the wrong remedy and disregarded the hierarchy of courts.
- Rule 41, Section 1 of the Rules of Court expressly bars appeal from an order dismissing an action without prejudice; the appropriate remedy is an appropriate special civil action under Rule 65.
- The Court distinguished dismissal with prejudice from dismissal without prejudice: dismissals based on Sections 1(f), (h), and (i) of Rule 16 (statute of limitations, extinguishment, statute of frauds) bar refiling (with prejudice); dismissals on other grounds, including Section 1(g) (pleading states no cause of action), are without prejudice and thus not appealable.
- Because the RTC’s dismissal rested on Rule 16, Section 1(g) (pleading states no cause of action) and related findings, the dismissal was without prejudice; hence an appeal was not the available remedy — petitioners should have refiled or sought appropriate Rule 65 relief in the Court of Appeals in observance of the hierarchy of courts.
Rule 16 (Rule on Motion to Dismiss) — Grounds and Effects (as cited)
- Section 1 enumerates grounds timely available for a motion to dismiss before filing an answer; grounds include lack of jurisdiction over person or subject matter, improper venue, plaintiff has no legal capacity to sue, another action pending, cause of action barred by prior judgment/statute of limitations (f), pleading states no cause of action (g), claim paid/waived/extinguished (h), unenforceable under statute of frauds (i), and failure of condition precedent (j).
- Section 5 describes the effect of dismissal based on paragraphs (f), (h), and (i): such dismissal bars refiling (dismissal with prejudice).
- The Court applied these rules to classify the RTC dismissal as based on Section 1(g) — failure to state a cause of action — and therefore dismissal without prejudice.