EN BANC

[G.R. No. L-21957. October 14, 1968.]

LAURO ADAMOS, ORO ADAMOS, DOMINGO ALMEDA,
BENITA ALTO, ADELAIDA BERNARDO, SIMPLICIO
BELISARIO, BERNARDINO CUSTODIO, AMADO
DOMINGUEZ, GREGORIO SAN DIEGO, FELICISIMO G.
FAUSTO, ANGELA GATMAYTAN, BENITA ILAYA,
LEONCIO LISING, MARGARITA V. LISING, EMELING P.
LAHOM, ROSALINA MAGNO, FELICIANO
MISERICORDIA, AUREA MISERICORDIA, ANA
PASCUAL, JOSE PADILLA, ABUNDO PORTO, CARMEN
REYTAS, LILY SANTOS, ELISA B. SISON, INES VITUG,
FLORENTINA VERGARA, now deceased, represented by her
heirs Nicanor Vergara, Hilarion Vergara, Miguel Vergara,
Dolores Vergara and Margarita V. Lising, EMILIA
MENDOZA, CARIDAD B. SISON, ESTER M. SISON,
AUGUSTO M. SISON, MARIA M. DE SISON alias MARIA
DE LEON, ALEJANDRO SISON and CESAR M. SISON,
plaintiffs-appellants, vs. J. M. TUASON & CO., INC., and
GREGORIO ARANETA, INC., defendants-appellees.

Dominador G. Magno for plaintiffs-appellants.

Araneta, Mendoza & Papa and Sison & San Juan for defendants-appellees.
SYLLABUS

1.REMEDIAL LAW; PROCEDURE; MOTION TO DISMISS; FAILURE TO STATE A

CAUSE OF ACTION; INSUFFICIENCY OF CAUSE OF ACTION MUST APPEAR
ON THE FACE OF THE COMPLAINT; SETTLED RULE. — It is a well-settled rule
that in a motion to dismiss based on the ground that the complaint fails to state a cause of
action, the question submitted to the court for determination is the sufficiency of the
allegations in the complaint itself. Whether those allegations are true or not is beside the
point, for their truth is hypothetically admitted by the motion. The issue rather is:
admitting them to be true, may the court render a valid judgment in accordance with the
prayer in the complaint? Stated otherwise, the insuffciency of the cause of action must
appear on the face of the complaint in order to sustain a dismissal on this ground. No
extraneous matter may be considered, nor facts not alleged, which would require
evidence and therefore must be raised as defenses and await the trial (Garcon vs.
Redemptorist Fathers, L-23510, May 30, 1966). So rigid is the norm prescribed that if the
court should doubt the truth of the facts averred it must not dismiss the complaint but
require an answer and proceed to hear the case on the merits (Republic Bank vs.
Cuaderno, L-22399, March 30, 1967).
2.ID.; ID.; ID.; ID.; INSTANT CASE. — In the instant case, the lower court committed
an error by departing from the well-settled rule that the insufficiency of the cause of
action must appear on the face of the complaint and by taking cognizance of facts not
alleged or referred to in the complaint, specifically the so-called rescission of the
compromise agreement on which the plaintiffs' complaint is predicated.
3.ID.; ID.; ID.; IMPROPER VENUE; NOT A PROPER GROUND FOR DISMISSAL
OF A PERSONAL ACTION. — In their brief the defendants as appellees insist on the
ground alleged by them below in support of their motion to dismiss but not passed upon
by the lower court, namely, that venue was improperly laid. We do not agree with the
defendants. All the allegations as well as the prayer in the complaint show that this is not
a real but a personal action - to compel the defendants to execute the corresponding
purchase contracts in favor of the plaintiffs and to pay damages.
DECISION

MAKALINTAL, J p:

This case is before us on regular appeal from the order of the Court of First Instance of
Manila dismissing the complaint in its Civil Case No. 53067.
The plaintiffs, numbering thirty-three (33) in all, instituted this action for "Specific
Performance and Damages," alleging four (4) causes of action against J. M. Tuason &
Co. Inc., and Gregorio Araneta Inc., the latter in its capacity as managing partner and
attorney-in-fact of the former. In the first cause of action the complaint states that the
plaintiffs are in possession of certain residential lots situated in Matalahib and Tatalon,
Quezon City, having purchased the same sometime in 1949 from several persons
collectively designated as the Deudors; that said lots are all embraced and included in a
bigger parcel of land covered by a Torrens title in the name of J. M. Tuason & Co. Inc.;
that after 1949 the same lots claimed by herein plaintiffs became the subject-matter of
several civil cases in the Court of First Instance of Rizal (Quezon City) between the
Deudors and J. M. Tuason & Co. Inc.; that on March 16, 1953 the parties in those cases
entered into a compromise agreement, subsequently embodied in the decision of the
Court, under which the legitimate purchasers of lots from the Deudors, named in a list
attached to the said agreement, among them the plaintiffs, "who are to continue and/or
who are entitled to elect and have elected to buy their respective lots, from the legal
owners who are now the defendants (J. M. Tuason & Co. Inc.) shall be credited (the)
sums already paid by them under their former purchase contracts from their respective
predecessors-in-interest;" that it is likewise provided in the compromise agreement that
the so-called owners (J. M. Tuason & Co. Inc.), now the defendants, shall make new
purchase contracts in favor of the plaintiffs with respect to their respective lots acquired
by them from the Deudors at the current rate then existing at the time of the execution of
the compromise agreement; that the plaintiffs "are . . . willing to buy their respective lots
and/or elect to continue to purchase the same from the defendants and also to sign new
purchase contracts, but the defendants without any legal justification whatsoever,
deliberately refused and failed and still refuse and fail to make new purchase contracts in
favor of the herein plaintiffs up to the present time, notwithstanding verbal and written
demands made by the plaintiffs to the defendants, and in spite of their written and verbal
commitments to plaintiffs."
The third and fourth causes of action, after incorporating by reference the allegations in
the first one, merely deal with the prices at which, according to the plaintiffs, the
defendants should sell the lots to them pursuant to the compromise agreement. The fourth
cause of action contains a claim for damages and attorney's fees.
The relief sought in the complaint, aside from the claim for damages and attorney's fees,
is for the defendants to be ordered "to make new purchase contracts in favor of the
plaintiffs on their respective lots at the current price ranging from P17.00 to P20.00 (per
square meter) at the time of the execution of the compromise agreement."
J. M. Tuason & Co. Inc., and Gregorio Araneta, Inc. filed separate motions to dismiss,
both pleading improper venue and failure to state a cause of action, and the first alleging,
besides, extinctive prescription and misjoinder of parties. Over the plaintiffs' opposition,
the lower court granted the motion and dismissed the complaint on one ground, namely,
failure to state a cause of action. The material portions of the order of dismissal read as
follows:
". . . The compromise agreement upon which the plaintiffs based
their complaint had already been rescinded and set aside. After the
rendition of the decision which was based upon the compromise
agreement, . . . several incidents arose in connection with the
implementation thereof which led to the issuance of two orders by
the Court of First Instance of Rizal, Quezon City Branch, in Civil
Cases Nos. Q-135, Q-139, Q-174 and Q-177.
"In the first order which was dated February 28, 1957, said court
directed those referred collectively as the 'Deudors' in the
compromise agreement, to clear and deliver the peaceful
possession of the 30 'quiñones' to J. M. Tuason & Co., Inc., and
Gregorio Araneta, Inc., within a period of four (4) months from
that date.
"The 'Deudors' moved for the reconsideration of said order while
Gregorio Araneta, Inc. filed a motion alleging that the former had
not delivered the 30 'quiñones' despite the expiration of four
months fixed in the order of February 28, 1957 and praying that
the Sheriff of Quezon City be directed to place movant in
possession of said parcel of land except those portions which were
in the possession of parties named individually in said motion.
"The Court of First Instance of Rizal, Quezon City Branch, denied
the motion for reconsideration of the 'Deudors' and granted the
motion of Gregorio Araneta, Inc. dated August 16, 1957 in an
order dated January 10, 1958, wherein it made the following
pronouncement:
'. . . There is no excuse, therefore, for the
failure of the Deudors to deliver the remaining 30
quiñones, 4 years and 8 months after the execution and
approval of the compromise agreement. The equitable, if
not the legal, solution of the problem is the setting aside
of the compromise agreement of March 16, 1953, so far
as it still remains unimplemented or executory. The
failure to deliver and the continued mushrooming of
houses in the area, despite the compromise, justify the
release of J. M. Tuason & Co., Inc. and Gregorio
Araneta, Inc. from further obligations under the
agreement of March 16, 1953.'
"From the orders of February 28, 1957 and January 10, 1958 the
'Deudors' appealed to the Supreme Court, but on May 30, 1961 it
affirmed them and held among others the following:
'. . . In any event, said paragraph is but a
faithful statement of the law pertinent to the subject,
inasmuch as the period of four (4) months, given to the
Deudors, in said decision, for the delivery of the land of
30 quiñones to which their right to collect P614,925.74
was subject as a suspensive condition — constituted a
resolutory period. When the same expired with said
suspensive condition still unfulfilled, appellants' right to
comply with it was extinguished, and the conditional
obligation of the appellees to pay said sum was
terminated (Article 1193, Civil Code of the Philippines).
(Florencio Deudor, et al. vs. J. M. Tuason & Co., Inc.,
G.R. L-13768, May 30, 1961)'
"Whatever doubt there could still be as to the effect of the ruling in
the abovequoted case on the compromise agreement of March 16,
1953, was dispelled by a subsequent decision of the Supreme
Court in 'J. M. Tuason & Co., Inc., et al. vs. Bienvenido
Sanvictores', G.R. L-16886, promulgated on January 30, 1962
when it stated that —
 
'It is also worthy of note that the compromise
between Deudor and Tuason upon which Sanvictores
predicates his right to buy the lot he occupies, has been
validly rescinded and set aside, as recognized by this
Court in its decision in G.R. No. L-13768, Deudor vs.
 Tuason, promulgated on May 30, 1961.'
"WHEREFORE, the Court is of the opinion and so holds that the
complaint states no cause of action and by virtue thereof is hereby
dismissed without pronouncement as to costs."
The plaintiffs moved to reconsider, were turned down, and came up directly to this Court
on appeal.
It is a well-settled rule that in a motion to dismiss based on the ground that the complaint
fails to state a cause of action, the question submitted to the court for determination is the
sufficiency of the allegations in the complaint itself. Whether those allegations are true or
not is beside the point, for their truth is hypothetically admitted by the motion. The issue
rather is: admitting them to be true, may the court render a valid judgment in accordance
with the prayer in the complaint? Stated otherwise, the insufficiency of the cause of
action must appear on the face of the complaint in order to sustain a dismissal on this
ground. No extraneous matter may be considered, nor facts not alleged, which would
require evidence and therefore must be raised as defenses and await the trial (Garcon vs.
Redemptorist Fathers, L-23510, May 30, 1966). So rigid is the norm prescribed that if the
court should doubt the truth of the facts averred it must not dismiss the complaint but
require an answer and proceed to hear the case on the merits (Republic Bank vs.
Cuaderno, L- 22399, March 30, 1967).
In departing from this rule and taking cognizance of facts not alleged or referred to in the
complaint, specifically the so-called rescission of the compromise agreement on which
the plaintiffs' complaint is predicated, the lower court committed an error. The alleged
rescission, the extent of its effects on the different aspects of that agreement and
specifically on the present claims of the plaintiffs, are matters of defense which should be
properly raised in the answer. It is unsafe to lift the idea of "rescission" from the context
in which it was used in the two cases relied upon by the lower court and apply it here
without a previous inquiry into the facts to determine whether or not it is indeed
applicable.
In their brief the defendants as appellees insist on the other ground alleged by them below
in support of their motion to dismiss but not passed upon by the lower court, namely, that
venue was improperly laid. We do not agree with the defendants. All the allegations as
well as the prayer in the complaint show that this is not a real but a personal action — to
compel the defendants to execute the corresponding purchase contracts in favor of the
plaintiffs and to pay damages. The plaintiffs do not claim ownership of the lots in
question: they recognize the title of the defendant J. Tuason, Inc. They do not ask that
possession be delivered to them, for they allege to be in possession. The case cited by the
defendants (Abao et al. vs. J. M. Tuason & Co., Inc., G.R. L-16796, Jan. 30, 1962) is
therefore not in point. In that case, as stated by this Court in its decision, the "plaintiffs'
action is predicated on the theory that they are occupants, landholders", and 'most' of
them 'owners by purchase' of the residential lots in question; that, in consequence of the
compromise agreement adverted to above, between the Deudors and defendant
corporations, the latter had acknowledged the right and title of the Deudors in and to said
lots; and hence, the right and title of the plaintiffs, as successors-in-interest of the
Deudors; that, by entering into said agreement, defendant corporations had, also, waived
their right to invoke the indefeasibility of the Torrens title in favor of J. M. Tuason &
Co., Inc.; and that defendants have no right, therefore, to oust plaintiffs from the lots
respectively occupied by them and which they claim to be entitled to hold. Obviously,
this action affects, therefore, not only the possession of real property, but, also, the title
thereto. Accordingly, it should have been instituted in the Court of First Instance of the
Province of Rizal in which said property is situated (Section 3, Rule 5 of the Rules
Court)."
WHEREFORE, the order appealed from is set aside, and the case is remanded for further
proceedings, with costs against the defendants- appellees in this instance.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez, Castro, Angeles, Fernando and
Capistrano, JJ., concur.
Zaldivar, J., is on official leave.