THIRD DIVISION

[G.R. No. 117029. March 19, 1997]

PELTAN DEVELOPMENT, INC., PATROCINIO E. MARGOLLES,
EDGARDO C. ESPINOSA, VIRGINIA E. VILLONGCO, LUCIA E.
LAPERAL, NORMA C. ESPINOSA, TERESITA E. CASAL and
ALICE E. SOTTO, petitioners, vs. COURT OF APPEALS,
ALEJANDRO Q. REY and JUAN B. ARAUJO, respondents.
PANGANIBAN, J.:
Facts
Respondents (Rs) are applicants for a free patent over a parcel of
land comprising an area of 197,527 sq m, more or less, situated in
Barrio Tindig na Manga, Las Pias, Metro Manila and had for many
years been occupying and cultivating the aforestated piece of land
until their crops, houses and other improvements they introduced
thereon were illegally bulldozed and destroyed by persons led by
defendant Edgardo Espinosa to forcibly drive them out.
Rs filed their petition for issuance of free patent covering the
aforesaid property with the Bureau of Lands in May 1976, as a result
of which they were issued by the Lands Bureau Survey Authority No.
54 (IV-1) on December 16, 1976.
The processing and eventual approval of Rs free patent application
over the subject and was obstructed and/or held in abeyance,
despite the absence of any opposition thereto, because of the
alleged existence of several supposed certificates of title thereon of
the plaintiffs (Ps), namely:
Peltan Development, Inc. Transfer Certificate of Title No. S-17992.
The aforestated transfer certificates of title of the abovenamed
defendants, Rs discovered, and therefore they hereby allege, were
all derived from an alleged Original Certificate of Title No. 4216
supposedly issued by the Register of Deeds of Rizal and registered
in the name of the Sps. Lorenzo Gana and Maria Juliana Carlos in
1929.
Rs subsequently discovered that the alleged OCT No. 4216 of the
Spouses Lorenzo Gana and Juliana Carlos TCTs of the abovenamed
defendants originated from was FICTITIOUS and/or SPURIOUS.
Being, thus, derived from a FICTITIOUS and/or SPURIOUS OCT, all
the aforestated TCTs of Ps are, logically and imperatively, FAKE,
SPURIOUS and/or NULL AND VOID as well. Hence, they all must
and should be CANCELED, the Rs claimed.
Rs filed for the cancellation of the titles held by the Ps and sought for
damages for the destruction of their properties and payment of
attorneys fees.
Peltan filed a Motion For Preliminary Hearing on Affirmative
Defenses mainly on the ground that the complaint states no cause of
action. It is alleged in the motion that Rs are not the real parties in
interest in the action as they do not assert any present and

subsisting title of ownership over the property in question.

Invoking the case of Gabila vs. Barriga, Peltan contends that the
action being one for cancellation of the certificates of title the
Government, through the Solicitor General not a private
individual like plaintiff Gabila was the real party in interest.
RTC dismissed the complaint.
CA reversed, rejecting the application of the Gabila ruling to the case
at bar since the defendants did not pray for the reversion of title
unlike in the said case.
Issues/Held:
Whether the CA erred in ruling that the respondents has a cause of actionYES.
WoN the respondents are the real parties-in-interest- NO.
Ratio:
It is axiomatic nonetheless that a court has a mandate to apply relevant
statutes and jurisprudence in determining whether the allegations in a
complaint establish a cause of action. While it focuses on the complaint, a
court clearly cannot disregard decisions material to the proper appreciation of
the questions before it. In resolving a motion to dismiss, every court
must take cognizance of decisions this Court has rendered because
they are proper subjects of mandatory judicial notice as provided by
Section 1 of Rule 129 of the Rules of Court.
The said decisions, more importantly, form part of the legal system, and
failure of any court to apply them shall constitute an abdication of its
duty to resolve a dispute in accordance with law, and shall be a ground for
administrative action against an inferior court magistrate.
In resolving the present complaint, therefore, the Court is well aware that a
decision in Margolles vs. CA, rendered on 14 February 1994, upheld the
validity of OCT No. 4216 (and the certificates of title derived therefrom),
the same OCT that the present complaint seeks to nullify for being fictitious
and spurious. Respondent CA, in its assailed Decision dated 29 June 1994,
failed to consider Margolles vs. CA. This we cannot countenance.
In finding that the complaint stated a cause of action, Public Respondent CA
recognized that private respondent had a valid right over the property in
question, based on their actual possession thereof and their pending
application for a free patent thereon. The linchpin of this right, however, is
the validity of OCT No. 4216. In other words, private respondents right
is premised on the allegation that the title of herein petitioners
originated merely from the fictitious and/or spurious OCT No. 4216.
Because it had failed to take cognizance of Margolles vs. CA, the
CA was unable to consider that the legality of OCT No. 4216. As
adverted to earlier, Margolles vs. CA upheld the validity of this title and
the titles derived therefrom by, among others, Petitioner Peltan
Corporation. Clearly, private respondents possession of the land, and
their pending application for a free patent thereon, did not not vest in
them a right superior to the valid title of petitioner originating from OCT

No. 4216. Indeed, private respondents can invoke no right at all against
the petitioners. Accordingly, the first element of a cause of action, i.e.,
plaintiffs right, is not present in the instant case.
In this light, the CAs treatment of the present suit as an accion publiciana to
determine which one among the parties had a better right over the property is
but an exercise in redundancy. As discussed above, the same issue has
been foreclosed by the Supreme Court in Margolles.
The Supreme Court promulgated Margolles ahead of the assailed CA
decision. It was incumbent upon Respondent CA to take judicial notice
thereof and apply it in resolving this case. That the CA did not is clearly
a reversible error.
Furthermore, allowing repeated suits seeking to nullify OCT No. 4216, like
the present case, will bring to naught the principle of indefeasibility of titles
issued under the Torrens system of land registration. Thus, in a
resolution dated 10 August 1994, the First Division of this Court, applying
the Margolles ruling, dismissed a petition for review involving herein
petitioner Peltan Corporation which had raised as issue the validity of OCT
No. 4216. The Court, in the case at bench, can do no less. Subjecting OCT
No. 4216 to further scrutiny, as proposed in the amended complaint, is no
longer an available option.
Are Private Respondents the Real Parties-in-Interest?

The Court also holds that private respondents are not the proper parties to
initiate the present suit. While private respondents did not pray for the
reversion of the land to the government, we agree with the petitioners that
the prayer in the complaint will have the same result of reverting the land to
the government under the Regalian doctrine.
In the case at bar, the plaintiffs own averments negate the existence of any
right to the said land, for it would appear therefrom that whatever right might
have been violated by the defendant belonged to the government, not to the
plaintiff. Plaintiff-appellant argues that although his complaint is captioned as
one for cancellation of title, he has nevertheless stated therein several
causes of action based on his alleged rights of possession and ownership
over the improvements, on defendant-appellees alleged fraudulent
acquisition of the land, and on the damages allegedly incurred by him
(plaintiff-appellant) in relation to the improvements.
WHEREFORE, the petition is GRANTED and the assailed Decision is
REVERSED and SET ASIDE. The complaint of private respondents in Civil
Case No. LP-8852-P is DISMISSED. The notice of lis pendens, annotated in
the titles of petitioners because of Civil Case No. LP-8852-P, is ordered
CANCELED. No costs.
SO ORDERED.