EAGLE REALTY CORPORATION, PETITIONER, VS.

REPUBLIC OF THE PHILIPPINES,

REPRESENTED BY THE ADMINISTRATOR OF THE LAND REGISTRATION AUTHORITY,
NATIONAL TREASURER OF THE PHILIPPINES, HEIRS OF CASIANO DE LEON, MARIA SOCORRO
DE LEON, AND PILARITA M. REYES, RESPONDENTS.

FACTS:

On December 11, 1979, the CFI of Rizal, with Judge Pedro Navarro as presiding judge, rendered
a decision in favor of the spouses Casiano de Leon and Maria Soccoro de Leon in a land registration
proceeding, though there were many oppositors. The said decision (de Leon Decision) was sent
registered mail to the LRC, SolGen, and the counsels of the opposing parties.
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The Heirs of Dionisio Tomas appealed in the said decision but their appeal was
denied. Their petition for review was likewise denied with finality on August 13,
1984.

However, it appears in the records of the LRC that another decision, also
dated Dec 11, 1979, was surreptitiously inserted(Medina Decision). Said decision
regarding the same land was rendered in favor of Martina Medina, who was an
intervenor in the registration proceeding. And an order(Medina Order) for an
issuance of decree was likewise inserted on the record dated February 14, 1980.
Both purportedly appeared to be signed by Judge Navarro.

On May 30, 1983, pursuant to the inserted documents, the Land Registration
Commissioner issued a decree of registration. The Register of Deeds of Pasay issued
OCT 129 in favour of Medina on July 7, 1983.

Later, Medina exchange the said property with one Plarita Reyes through a
Deed of Exchange dated Sept 12, 1983. On Nov 2, 1983, OCT 129 was cancel and
TCT 74216 was issued in favour of Reyes. Reyes then sold the property to Eagle
Realty on March 1, 1984.

When the Heirs of the de Leons deiscovered the existence of OCT 129, the
saent a letter-complaint to the LRC to investigate on the matter. The Chief of the
inspection and investigation commity of the LRC reported that the Medins decision
and order were fake.

On Sept 6, 1984, the Republic of the Philippines, represented by the

Commissioner of Land Registration, filed a complaint for the Annulment of the
Medina Decision and the cancellation of the Decree and Titles against Medina,
Reyes and Eagle. Medina alleged that she bought the property from Casiano de
Leon. Reyes and Eagle alleged that they were purchasers for good faith and for
value. The Heirs of de Leon intervened in the case and prayed that said land be
registered in their name.

On November, 17 1992, RTC ruled in favour of the Heirs of de Leon. On

appeal, the CA affirmed with modification the decision of RTC.

ISSUES:

1. WON the nature of the action is one for annulment of judgement;

2. WON the Republic of the Philippines is a proper party;

3. WON the 1-year prescription is applicable in the instant case;

4. WON Eagle Realty is in good faith;

5. WON the National Treasury is liable to Eagle Realty for assurance fund.
1. The body of the pleading or complaint determines the nature of an action, not its title or heading.
Although denominated as an "Action for Annulment of Judgment and Cancellation of Decree and
Titles," the complaint is not an action for annulment of judgment under Rule 47, but a case for
cancellation of void titles.

2. Indisputably, the government is charged with the duty to preserve the integrity of the Torrens
System and protect the Assurance Fund. The plaintiff instituted the complaint precisely to perform
this duty. The Complaint seeks the cancellation of erroneously issued titles to protect the Assurance
Fund from being made liable by the private respondents for damages in case they fail to recover the
property. The public officer specifically tasked to perform this duty is the Register of Deeds who,
under Section 100 of P.D. No. 1529, is authorized to file an action to annul a certificate of title
erroneously or unlawfully issued.

The LRC is a mere agency of the government, unincorporated, and with no separate juridical
personality from that of the Republic of the Philippines. Naming the Republic of the Philippines as
plaintiff and merely acting as its representative was not even necessary since the Commissioner of
Land Registration himself, as the superior of and exercising control over the Register of Deeds, had
the authority to file the complaint on his own. Under Section 1, Rule 3, an entity specifically
authorized by law to file the action may be a party in a civil action.

Moreover, it should be noted that the private respondents also filed a Complaint-in-Intervention
which was granted by the RTC. The complaint in intervention reiterated the material allegations in
the complaint and prayed for the same reliefs, plus damages. Hence, even if the main action is
dismissed on the ground that the plaintiff had no personality to file the action, the complaint in
intervention will remain.

3. The principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of
the title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void
documents may be annulled. Moreover, elementary is the rule that prescription does not run against
the State and its subdivisions.

4. Case law has it that he who alleges that he is a purchaser in good faith and for value of registered
land bears the onus of proving such statement. This burden is not discharged by involving the
ordinary presumption of good faith. Petitioner failed to discharge this burden.

Indeed, the general rule is that a purchaser may rely on what appears on the face of a certificate of
title. He may be considered a purchaser in good faith even if he simply examines the latest
certificate of title. An exception to this rule is when there exist important facts that would create
suspicion in an otherwise reasonable man (and spur him) to go beyond the present title and to
investigate those that preceded it.

As correctly observed by the public respondent, the property covered by the void titles was
transferred from Medina to petitioner with unusual haste. Only 8 months lapsed since OCT No. 129
was issued on July 7, 1983 until it was transferred to petitioner on February 22, 1984. The property
was transferred to petitioner from Reyes only more than five months after she herself acquired the
property. These circumstances, plus the fact that the subject property is a vast tract of land in a
prime location, should have, at the very least, triggered petitioner's curiosity.

Moreover, petitioner is a corporation engaged in the real estate business. A corporation engaged in
the buying and selling of real estate is expected to exercise a higher standard of care and diligence
in ascertaining the status and condition of the property subject of its business transaction.

5. . Its situation does not come within the ambit of the cases protected by the Assurance Fund. It was
not deprived of land in consequence of bringing it under the operation of the Torrens system
through fraud or in consequence of any error, omission, mistake or misdescription in the certificate
of title. It was simply a victim of unscrupulous individuals. More importantly, it is a condition sine
qua non that the person who brings the action for damages against the Assurance Fund be the
registered owner and, as the holders of transfer certificates of title, that they be innocent
purchasers in good faith and for value.