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THIRD DIVISION Instead of filing an answer, petitioner, on September 14, 1998, filed a

motion to dismiss the complaint on the following grounds: (1) the


[G.R. No. 152947. July 7, 2004] cause of action has prescribed; (2) litis pendentia; and (3) the
complaint fails to state a sufficient cause of action.
EAST ASIA TRADERS, INC., petitioner, vs. REPUBLIC OF THE
PHILIPPINES, represented by the DIRECTOR, LANDS MANAGEMENT
BUREAU, respondent.
On January 11, 2000, the RTC issued an Order denying petitioners
DECISION motion to dismiss for lack of merit. Petitioners motion for
reconsideration was likewise denied in its Order dated May 31, 2000.
SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the


1997 Rules of Civil Procedure, as amended, assailing the Decision[1] Petitioner then filed with the Court of Appeals a petition for
dated November 26, 2001 and the Resolution[2] dated April 9, 2002, certiorari and prohibition (with prayer for issuance of a temporary
both rendered by the Court of Appeals in CA-G.R. SP No. 59627, East restraining order and a writ of preliminary injunction) seeking to
Asia Traders, Inc. vs. Hon. Regional Trial Court (RTC), Tanauan, nullify the trial courts (1) Order dated January 11, 2000 denying
Batangas, Branch 83, and Republic of the Philippines, represented by petitioners motion to dismiss; and (2) Order dated May 31, 2000
the Director of Lands Management Bureau. denying its motion for reconsideration.

The factual antecedents as borne by the records are: On November 26, 2001, the Appellate Court rendered a Decision,
the dispositive portion of which reads:

On December 15, 1986, Galileo Landicho filed with the Bureau of


Lands, District Office at Lemery, Batangas, Free Patent Application WHEREFORE, in view of all the foregoing, the herein Petition for
No. 1427. This application[3] covers Lot No. 4355 consisting of Certiorari and Prohibition with Prayer for the Issuance of Temporary
00.1312 hectare situated in Niogan, Laurel, Batangas. On March 6, Restraining Order and Writ of Preliminary Injunction is DENIED DUE
1987, then Acting District Land Officer Constante Asuncion, COURSE and, accordingly, DISMISSED, for lack of merit. The assailed
approved[4] the application and issued Free Patent No. 1516 in Orders dated January 11, 2000 and May 31, 2000 of the Regional
Landichos name. Subsequently or on January 22, 1988, the Registry Trial Court, Branch 83, Fourth Judicial Region, Tanauan, Batangas, are
of Deeds of Tanauan, Batangas issued to him Original Certificate of UPHELD and REITERATED.
Title (OCT) No. P-3218.

SO ORDERED.
On June 7, 1989, Landicho sold the lot to Teresita Reyes. Forthwith,
Landichos OCT No. P-3218 was cancelled by the same Registry of
Deeds and in lieu thereof, TCT No. 36341 was issued in the name of
Teresita Reyes. In turn, on June 7, 1990, Reyes sold the same lot to
East Asia Traders, Inc., petitioner, represented by its Vice-President,
Betty Roxas Chua. Consequently, the Register of Deeds cancelled TCT
The Court of Appeals ratiocinated as follows:
No. 36341 in the name of Reyes and in lieu thereof, issued TCT No.
38609 in the name of petitioner.

As to the first ground for the petition, petitioner East Asia Traders,
Inc. contends that respondent court committed an error when it
Meanwhile, the Department of Environment and Natural Resources
denied its Motion to Dismiss despite the fact that prescription had
(DENR), pursuant to Section 91 of Commonwealth Act No. 141, as
already set in against the State.
amended,[5] conducted an investigation to ascertain the truth of the
material facts alleged in various free patent applications or whether
they are maintained and preserved in good faith. The investigation
covered several parcels of land, including Lot 4355. The DENR found As alleged in the complaint, Galileo Landichos application for Free
that at the time Landicho applied for a free patent, Lot 4355 was Patent was approved on March 6, 1987 and subsequently registered
inalienable, being a property of public dominion intended to be used under his name. Then, the following year, he sold the same land to
as a national road. Teresita Reyes who, subsequently, sold it to petitioner East Asia
Traders, Inc. Gathered from the foregoing events, it is now the
contention of petitioner that the action for reversion filed by
respondent Republic of the Philippines is already barred by
This prompted the Republic of the Philippines, respondent, through
prescription since it only filed the action for reversion on March 9,
the Director of the Lands Management Bureau to file, on March 9,
1998, eleven (11) years after the registration of the land in
1998, with the Regional Trial Court (RTC), Branch 83, Tanauan,
question.
Batangas, a complaint for reversion and cancellation of Free Patent
No. 1516, OCT No. P-3218 and its derivative titles (TCT No. 36341
and TCT No. 38609), docketed as Civil Case No. CT-98-001.
Impleaded as defendants were petitioner East Asia Traders, Inc., We are not swayed by the argument proffered by the petitioner,
Landicho, Reyes, and the Register of Deeds of Tanauan, Batangas. simply because prescription does not lie against the State. x x x.
And as provided in Article 1113 of the Civil Code: All things which Inc. on June 7, 1990 and its title, T.C.T. No. T-38609 subsequently
are within the commerce of men, are susceptible of prescription, issued, were all unlawful and null and void, as the acquisition,
unless otherwise provided. Property of the State or any of its conveyance, alienation, and transfer of the property were made and
subdivisions not patrimonial in character shall not be the object of executed within five (5) years from the issuance of Landichos free
prescription. patent and title on March 6, 1987, in flagrant violation of Sections
118 and 124 of the Public Land Act (Com. Act No. 141) x x x:

Hence, since the sale of the land subject of this case in favor of
To our mind, respondent Republic could not have been more correct petitioner East Asia Traders, Inc. was null and void and of no legal
when it cited Article 1108 (4) of the Civil Code, which provides that force and effect, it did not acquire any right over the land
prescription, both acquisitive and extinctive, does not run against whatsoever.
the State and its subdivisions. x x x.
Consequently, respondent Regional Trial Court did not act with grave
abuse of discretion amounting to lack or excess of jurisdiction in
issuing its assailed Orders denying petitioners motion to dismiss and
As to the second ground, respondent Republic correctly pointed out
motion for reconsideration in Civil Case No. CT-98-001.
in its complaint that the subject land sought to be retained by
petitioner is inalienable because subsequent investigations
conducted by the DENR disclosed that the land in question was a
private land taken by the government for the construction of a Petitioner then filed a motion for reconsideration but was denied by
national road. Being private land, even if it belongs to the the Appellate Court in its Resolution dated April 9, 2002.
government, the same is not covered by Commonwealth Act No.
141, as amended, otherwise known as the Public Land Act much less
can it be disposed of by the Bureau of Lands by a free patent under
Petitioner, in the instant petition, submits for our resolution the
Chapter VII of said Act, and even assuming that there was re-routing
following issues:
of the national road, the land remains under the control of the
Department of Public Works and Highways (DPWH); and even if the
DPWH does not need the land anymore for road purposes, the same
does not become available for application or appropriation by any I
private party until and unless officially released for that purpose,
and even then the land can be disposed of only by sale or lease
thru public bidding. Thus, the property in question is considered
inalienable land of the public domain. WHETHER OR NOT PRESCRIPTION HAS ALREADY SET IN AGAINST THE
STATE.

What respondent Republic is trying to point out was that the


petitioner, through fraud and/or misrepresentation, was able to II
procure title to the land, as in fact, there was no record of any final
investigation report in the folder of the application, nor was there
any indication written in the summary of the survey data that the WHETHER A PRIVATE LAND, THE SUBJECT MATTER OF THE INSTANT
land in question was claimed during the cadastral survey. As stated PETITION, CAN BE THE PROPER SUBJECT OF REVERSION
by respondent Republic, the object of the complaint it filed was to PROCEEDINGS.
cancel the title issued to defendant Galileo Landicho for being void
ab initio pursuant to Section 91 of the Public Land Act. Apparently,
the Director of Lands was misled into issuing patents over the land;
therefore, the patents and corresponding certificates of title are III
immediately infected with jurisdictional flaw, which warrants the
institution of suits to revert lands to the State. x x x. Hence, its
complaint stated a valid cause of action.
WHETHER OR NOT THE COMPLAINT FILED BY THE RESPONDENT
STATES A CAUSE OF ACTION AGAINST PETITIONER DESPITE ITS
FAILURE TO ALLEGE THEREIN THAT PETITIONER WAS A BUYER IN BAD
With respect to the third ground for the petition, We hold that while FAITH OR HAD KNOWLEDGE OF THE DEFECT OR FLAW IN THE TITLE
it is true that the land in question used to be privately owned, it was OF ITS PREDECESSORS-IN-INTEREST.
converted into public land when it was acquired by the State through
the Department of Public Works and Highways for the construction
of a national road. Respondent Republic maintains that the land
Petitioner contends that respondents action for reversion, filed only
being public land, reserved for a specific public purpose, the same
on March 9, 1998 or more than 11 years after the approval and
cannot be the subject of private ownership as it is beyond the
issuance of a free patent by the Bureau of Lands, is already barred by
commerce of man. Even if the proposed national road was re-routed
prescription. Respondents complaint states no cause of action, not
elsewhere, it did not change the character of the land classified as
only because it failed to allege that Lot 4355 was acquired in bad
public land. x x x:
faith and with notice of defect or irregularity in its title, but also
But more importantly, even assuming, arguendo, that Galileo because the same lot has become a private land and ceased to be
Landichos Free Patent No. (IV-3-A) 1516 and his Original Certificate part of the public domain after the registration of the patent and the
of Title (O.C.T.) No. P-3218 issued on March 6, 1987 were valid, the issuance of the corresponding certificate of title. Moreover, TCT No.
sale to Teresita Reyes of the property on June 7, 1989 and her 38609 issued by the Register of Deeds in its name, being one of the
Transfer Certificate of Title (T.C.T.) No. T-36341 issued pursuant derivative titles of OCT No. P-3218 registered on the basis of a free
thereto, as well as Reyes sale thereof to petitioner East Asia Traders, patent, became indefeasible after the lapse of one year as provided
in Section 32 of P.D. No. 1529 (formerly Act No. 496, 38).[6]
Petitioner then maintains that the Appellate Court should not have
sustained the trial courts denial of the motion to dismiss. It should be noted that the Civil Case No. T-1061 pending before the
RTC of Tanauan, Batangas was not initiated by the Office of the
Solicitor General and therefore, the same is not an action brought by
the plaintiff, Republic of the Philippines. The inclusion of the
In his comment, the Solicitor General asserts that the State, in an Republic of the Philippines as an unwilling co-plaintiff did not make
action for reversion of inalienable land of the public domain, is not the Republic of the Philippines a party in said civil case.
bound by prescription or laches for public policy requires an
unimpeded exercise of its sovereign function. Petitioners defense of
indefeasibility of a certificate of title is not tenable considering that
TCT No. 38609 issued in its name is void ab initio and does not form Further, it is a rule in our jurisdiction that prescription does not lie
part of the Torrens system. The Solicitor General, citing Section 118 against the State for the reversion to the public domain of the lands,
in relation to Section 124 of the Public Land Act, further asserts that which have been fraudulently granted to private individuals.
the sale of the subject lot within the 5-year prohibited period, being
unlawful, nullifies the patent originally issued and justifies the
reversion of the property to the State.
Furthermore, the complaint alleges that the certificates of title on
the property subject matter of the complaint having been procured
through fraud and misrepresentation are null and void and should
Petitioner basically contends before the Court of Appeals that the therefore be cancelled, clearly states plaintiffs cause of action
RTC acted without or in excess of jurisdiction or with grave abuse of against defendants.
discretion when it denied the motion to dismiss the complaint in
Civil Case No. CT-98-001.
Lastly, defendants Galileo Landicho, Teresita Reyes and the Register
of Deeds of Tanauan, Batangas did not file their respective answers
The petition for certiorari and prohibition filed by petitioner with the despite receipt of the summons in this case. Hence, they may be
Court of Appeals is not the proper remedy to assail the denial by the declared in default.
RTC of the motion to dismiss. The Order of the RTC denying the
motion to dismiss is merely interlocutory. An interlocutory order
does not terminate nor finally dispose of the case, but leaves
WHEREFORE, premises considered, the instant Motion to Dismiss is
something to be done by the court before the case is finally decided
hereby DENIED for lack of merit.
on the merits. It is always under the control of the court and may be
modified or rescinded upon sufficient grounds shown at any time
before final judgment. This proceeds from the courts inherent power
to control its process and orders so as to make them conformable to In the interest of justice, defendant East Asia Trading is given a
law and justice. The only limitation is that the judge cannot act with period of ten (10) days from receipt of this Order within which to file
grave abuse of discretion, or that no injustice results thereby.[7] its responsive pleading.

In Indiana Aerospace University vs. Commission on Higher Education, Also, for failure to file their answers, defendants Galileo Landicho,
[8] we held: Teresita Reyes and the Register of Deeds of Tanauan, Batangas are
hereby declared in default.

An order denying a motion to dismiss is interlocutory, and so the


proper remedy in such a case is to appeal after a decision has been SO ORDERED.
rendered. A writ of certiorari is not intended to correct every
controversial interlocutory ruling; it is resorted only to correct a
grave abuse of discretion or a whimsical exercise of judgment
A further ratiocination on the issues raised by petitioner shows that
equivalent to lack of jurisdiction. Its function is limited to keeping an
indeed the petition is bereft of merit.
inferior court within its jurisdiction and to relieve persons from
arbitrary acts acts which courts or judges have no power or authority
in law to perform. It is not designed to correct erroneous findings
and conclusions made by the courts. I

Assuming that certiorari is the proper remedy, we find no grave WHETHER LOT 4355 IS ALIENABLE
abuse of discretion committed by the RTC in denying petitioners
motion to dismiss. In the same vein, the Court of Appeals did not err
in upholding the assailed RTC Order denying the motion to dismiss
reproduced below: We hold that this issue can only be properly determined during the
hearing on the merits of Civil Case No. CT-98-001 wherein both
parties may present their respective evidence. On this point, the
Court of Appeals erred in concluding that Lot 4355 is considered
After a careful examination of the records of this case, as well as the inalienable land of the public domain; and that since the sale of the
contentions of both parties, the court finds no merit to the instant land subject of this case in favor of petitioner East Asia Traders, Inc.
motion to dismiss. is null and void and of no legal force and effect, it did not acquire any
right over the land whatsoever. In reaching this conclusion, the Court would be a procedural error and a denial of petitioners right to due
of Appeals actually decided the entire case summarily, unmindful process.
that the only incident before it for resolution is petitioners motion to
dismiss. In China Road and Bridge Corporation vs. Court of Appeals,[11] we
ruled:

In Paraaque Kings Enterprises, Inc. vs. Court of Appeals,[9] we held


that matters which require presentation and/or determination of It is well settled that in a motion to dismiss based on lack of cause of
facts raised in a motion to dismiss can be best resolved after trial on action, the issue is passed upon on the basis of the allegations
the merits, thus: assuming them to be true. The court does not inquire into the truth
of the allegations and declare them to be false, otherwise it would
x x x, we find no more need to pass upon the question of whether be a procedural error and a denial of due process to the plaintiff.
the complaint states a cause of action for damages or whether the Only the statements in the complaint may be properly considered,
complaint is barred by estoppel or laches. As these matters require and the court cannot take cognizance of external facts or hold
presentation and/or determination of facts, they can be best preliminary hearings to ascertain their existence. To put it simply, the
resolved after trial on the merits. test for determining whether a complaint states or does not state a
cause of action against the defendants is whether or not, admitting
x x x, private respondents cannot be denied their day in court. While, hypothetically the truth of the allegations of fact made in the
in the resolution of a motion to dismiss, the truth of the facts alleged complaint, the judge may validly grant the relief demanded in the
in the complaint are theoretically admitted, such admission is merely complaint.
hypothetical and only for the purpose of resolving the motion. In
case of denial, the movant is not to be deprived of the right to
submit its own case and to submit evidence to rebut the allegation in
the complaint. Neither will the grant of the motion by a trial court We reviewed very carefully respondents allegations in its complaint.
and the ultimate reversal thereof by an appellate court have the In a nutshell, respondent alleged that the defendants (herein
effect of stifling such right. So too, the trial court should be given the petitioner and its predecessors-in-interest) procured their lot is
opportunity to evaluate the evidence, apply the law and decree the inalienable because the DENR investigation disclosed that it was
proper remedy. Hence, we remand the instant case to the trial court intended by the government for the construction of a national road;
to allow private respondents to have their day in court. that defendants titles are null and void and should be cancelled and,
therefore, Lot 4355 should be reverted to the State. These
Clearly, the Court of Appeals should not have ruled outright that Lot allegations are sufficient to constitute a cause of action for reversion.
4355 is inalienable. This could be best resolved only after trial on the
merits. In sum, we hold that petitioners resort to certiorari is misplaced. And
granting that certiorari is the proper remedy, the Court of Appeals
correctly ruled that the RTC, in denying petitioners motion to
dismiss, did not commit any grave abuse of discretion.
II
WHEREFORE, the petition is DENIED. The assailed Decision dated
November 26, 2001 and the Resolution dated April 9, 2002 of the
Court of Appeals in CA-G.R. SP No. 59627 are hereby AFFIRMED with
WHETHER IN FILING THE COMPLAINT FOR REVERSION, THE STATE IS
modification in its ratiocination. Petitioner is hereby directed to file
BARRED BY PRESCRIPTION.
with the trial court its answer to respondents complaint within ten
(10) days from notice.

Basic as a hornbook principle is that prescription does not run


against the government. In Reyes vs. Court of Appeals,[10] we held:

"In so far as the timeliness of the action of the Government is


concerned, it is basic that PRESCRIPTION DOES NOT RUN AGAINST
THE STATE. x x x The case law has also been:

When the government is the real party in interest, and is proceeding


mainly to assert its own rights and recover its own property, there
can be no defense on the ground of laches or limitation.' x x x
VELASCO, JR., J.:
'Public land fraudulently included in patents or certificates of title
may be recovered or reverted to the State in accordance with
ESTATE OF THE LATE G.R. No. 168661
Section 101 of the Public Land Act. Prescription does not lie against
the State in such cases for the Statute of Limitations does not run JESUS S. YUJUICO, represented
against the State. The right of reversion or reconveyance to the
State is not barred by prescription." by ADMINISTRATORS

WHETHER THE COMPLAINT IN CIVIL CASE NO. CT-98-001 STATES A BENEDICTO V. YUJUICO and Present:
CAUSE OF ACTION
EDILBERTO V. YUJUICO; and
When a motion to dismiss is grounded on the failure to state a cause
of action, a ruling thereon should be based only on the facts alleged AUGUSTO Y. CARPIO, QUISUMBING, J., Chairperson,
in the complaint. The court must pass upon this issue based solely
Petitioners, CARPIO MORALES,
on such allegations, assuming them to be true. For to do otherwise
TINGA, Annotations in the title of petitioner Carpio reveal the lot was
mortgaged in favor of Private Development Corporation (PDC), Rizal
VELASCO, JR., and Commercial Banking Corporation (RCBC) and then Philippine
Commercial and Industrial Bank (PCIB) and the Development Bank of
- versus - NACHURA,* JJ. the Philippines (DBP) to secure various loans.

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled


Conveying the Land Reclaimed in the Foreshore and Offshore of the
Manila Bay (The Manila-Cavite Coastal Road Project) as Property of
REPUBLIC OF THE PHILIPPINES Promulgated: the Public Estates Authority as well as Rights and Interests with
Assumptions of Obligations in the Reclamation Contract Covering
and the COURT OF APPEALS, Areas of the Manila Bay between the Republic of the Philippines and
the Construction and Development Corporation of the Philippines
Respondents. October 26, 2007 (1977) was issued. Land reclaimed in the foreshore and offshore
areas of Manila Bay became the properties of the Public Estates
x----------------------------------------------------------------------------------------- Authority (PEA), a government corporation that undertook the
x reclamation of lands or the acquisition of reclaimed lands. On
January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The PEA
also acquired ownership of other parcels of land along the Manila
Bay coast, some of which were subsequently sold to the Manila Bay
DECISION Development Corporation (MBDC), which in turn leased portions to
Uniwide Holdings, Inc.[7]

VELASCO, JR., J.: The PEA undertook the construction of the Manila Coastal Road. As
this was being planned, Yujuico and Carpio discovered that a
verification survey they commissioned showed that the road
directly overlapped their property, and that they owned a portion
In 1973, Fermina Castro filed an application for the registration and of the land sold by the PEA to the MBDC.
confirmation of her title over a parcel of land with an area of 17,343
square meters covered by plan (LRC) Psu-964 located in the On July 24, 1996, Yujuico and Carpio filed before the Paraaque City
Municipality of Paraaque, Province of Rizal (now Paraaque City), in Regional Trial Court (RTC), a complaint for the Removal of Cloud and
the Pasig-Rizal Court of First Instance (CFI), Branch 22. The Annulment of Title with Damages docketed as Civil Case No. 96-0317
application was docketed LRC Case No. N-8239. The application was against the PEA. On May 15, 1998 the parties entered into a
opposed by the Office of the Solicitor General (OSG) on behalf of compromise agreement approved by the trial court in a Resolution
the Director of Lands, and by Mercedes Dizon, a private party. Both dated May 18, 1998. On June 17, 1998, the parties executed a Deed
oppositions were stricken from the records since the opposition of of Exchange of Real Property, pursuant to the compromise
Dizon was filed after the expiration of the period given by the court, agreement, where the PEA property with an area of 1.4007 hectares
and the opposition of the Director of Lands was filed after the entry would be conveyed to Jesus Yujuico and petitioner Carpio in
of the order of general default. After considering the evidence, the exchange for their property with a combined area of 1.7343
trial court rendered its April 26, 1974 Decision. The dispositive hectares.
portion reads:

On July 31, 1998, the incumbent PEA General Manager, Carlos P.


____________________________ Doble, informed the OSG that the new PEA board and management
had reviewed the compromise agreement and had decided to defer
* As per September 3, 2007 raffle. its implementation and hold it in abeyance following the view of
the former PEA General Manager, Atty. Arsenio Yulo, Jr., that the
WHEREFORE, the Court hereby declares the applicant, Fermina compromise agreement did not reflect a condition of the previous
Castro, of legal age, single, Filipino and a resident of 1515 F. PEA Board, requiring the approval of the Office of the President.
Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and The new PEA management then filed a petition for relief from the
absolute owner of the land applied for situated in the Municipality of resolution approving the compromise agreement on the ground of
Paraaque, Province of Rizal, with an area of 17,343 square meters mistake and excusable negligence.
and covered by plan (LRC) Psu-964 and orders the registration of said
parcel of land in her name with her aforementioned personal
circumstances.
The petition was dismissed by the trial court on the ground that it
Once this decision becomes final and executory, let the was filed out of time and that the allegation of mistake and
corresponding order for the issuance of the decree be issued. excusable negligence lacked basis.

The Director of Lands and Mercedes Dizon did not appeal from the The PEA fared no better in the Court of Appeals (CA), as the petition
adverse decision of the Pasig-Rizal CFI. Thus, the order for the was dismissed for failure to pay the required docket fees and for lack
issuance of a decree of registration became final, and Decree No. N- of merit.
150912 was issued by the Land Registration Commission (LRC).[2] The matter was raised to the Supreme Court in Public Estates
Original Certificate of Title (OCT) No. 10215 was issued in the name Authority v. Yujuico[8] but PEAs petition was denied, upholding the
of Fermina Castro by the Register of Deeds for the Province of Rizal trial courts dismissal of the petition for relief for having been filed
on May 29, 1974.[3] out of time. The allegation of fraud in the titling of the subject
property in the name of Fermina Castro was not taken up by the
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was Court.
cancelled. On May 31, 1974,[4] Transfer Certificate of Title (TCT) No.
445863 was issued in Yujuicos name, who subdivided the land into On June 8, 2001, in a Complaint for Annulment and Cancellation of
two lots. TCT No. 446386[5] over Lot 1 was issued in his name, while Decree No. N-150912 and its Derivative Titles, entitled Republic of
TCT No. S-29361[6] over Lot 2 was issued in the name of petitioner the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio
Augusto Y. Carpio. and the Registry of Deeds of Paraaque City docketed as Civil Case No.
01-0222, filed with the Paraaque City RTC, respondent Republic of
Annotations at the back of TCT No. 446386 show that Yujuico had, at the Philippines, through the OSG, alleged that when the land
one time or another, mortgaged the lot to the Philippine registered to Castro was surveyed by Engr. H. Obreto on August 3,
Investments System Organization (PISO) and Citibank, N.A. 1972 and subsequently approved by the LRC on April 23, 1973, the
land was still a portion of Manila Bay as evidenced by Namria in as much as reversion efforts pertaining foreshore lands are
Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: imbued with public interest.
Revised 80-11-2; that Roman Mataverde, the then OIC of the Surveys
Division, Bureau of Lands, informed the OIC of the Legal Division that
[w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E,
Sec.2-A of Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside The dispositive portion of the CA decision reads,
Manila Bay, outside Cad. 299; that then Acting Regional Lands
Director Narciso V. Villapando issued a Report dated November 15,
1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that
then Officer-in-Charge, Assistant Director of Lands, Ernesto C.
Mendiola, submitted his Comment and Recommendation re:
Application for Registration of Title of FERMINA CASTRO, LRC Case WHEREFORE, premises considered, the present appeal is hereby
No. N-8239, dated Dec. 1, 1977, praying that the instant registration GRANTED. The appealed Order dated August 7, 2002 of the trial
case be dismissed; and that Fermina Castro had no registrable rights court in Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE.
over the property. The case is hereby REMANDED to said court for further proceedings
and a full-blown trial on the merits with utmost dispatch.[15]

More significantly, respondent Republic argued that, first, since the Hence, this petition.
subject land was still underwater, it could not be registered in the The Issues
name of Fermina Castro. Second, the land registration court did not Petitioners now raise the following issues before this Court:
have jurisdiction to adjudicate inalienable lands, thus the decision
adjudicating the subject parcel of land to Fermina Castro was void. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND
And third, the titles of Yujuico and Carpio, being derived from a void DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
title, were likewise void.[9] ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE
HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND
On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE
(With Cancellation of Notice of Lis Pendens),[10] on the grounds HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION
that: (1) the cause of action was barred by prior judgment; (2) the CONSIDERING THAT:
claim had been waived, abandoned, or otherwise extinguished; (3) a
condition precedent for the filing of the complaint was not complied
with; and (4) the complaint was not verified and the certification
against forum shopping was not duly executed by the plaintiff or I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL
principal party. COURTS APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN THE
INSTANT CASE IS BASED ON ITS ERRONEOUS ASSUMPTION THAT THE
SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA
BAY.
On November 27, 2001, respondent Republic filed an Opposition[11]
to the motion to dismiss to which defendants filed a Reply[12] on
January 14, 2002, reiterating the grounds for the motion to dismiss.
A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE
PRINCIPLE OF RES JUDICATA NOTWITHSTANDING ALLEGATIONS OF
LACK OF JURISDICTION OF A LAND REGISTRATION COURT,
In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 FORECLOSING ANY FURTHER ATTEMPT BY RESPONDENT THEREIN, AS
was dismissed. The trial court stated that the matter had already IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED JUDICIAL
been decided in LRC Case No. N-8239, and that after 28 years DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND BASED
without being contested, the case had already become final and ON THE SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC
executory. The trial court also found that the OSG had participated in DOMAIN.
the LRC case, and could have questioned the validity of the decision
but did not. Civil Case No. 01-0222 was thus found barred by prior
judgment.
B. THE LAND REGISTRATION COURT HAD JURISDICTION TO
DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE PUBLIC
DOMAIN.
On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic
alleged that the trial court erred in disregarding that appellant had
evidence to prove that the subject parcel of land used to be
foreshore land of the Manila Bay and that the trial court erred in C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY
dismissing Civil Case No. 01-0222 on the ground of res judicata.[14] SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY
DETERMINED OVER THIRTY (30) YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF


The CA observed that shores are properties of the public domain APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED,
intended for public use and, therefore, not registrable and their CONSIDERING THAT THEY ARE ALL PREDICATED ON THE ERRONEOUS
inclusion in a certificate of title does not convert the same into PREMISE THAT IT IS UNDISPUTED THAT THE SUBJECT LAND IS PART
properties of private ownership or confer title upon the registrant. OF THE PUBLIC DOMAIN.

Further, according to the appellate court res judicata does not apply II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND
to lands of public domain, nor does possession of the land LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND
automatically divest the land of its public character. REGISTRATION COURT.

The appellate court explained that rulings of the Supreme Court


have made exceptions in cases where the findings of the Director
of Lands and the Department of Environment and Natural III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED
Resources (DENR) were conflicting as to the true nature of the land PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE IS
UNWARRANTED AND MISLEADING CONSIDERING THAT THE MATTER
OF WHETHER RES JUDICATA APPLIES WITH RESPECT TO THE LAND The situation changed on August 14, 1981 upon effectivity of Batas
REGISTRATION COURTS DECISION IN 1974 WAS NOT IN ISSUE IN SAID Pambansa (BP) Blg. 129 which gave the Intermediate Appellate Court
CASE. the exclusive original jurisdiction over actions for annulment of
judgments of RTCs.

When the 1997 Rules of Civil Procedure became effective on July 1,


A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE. 1997, it incorporated Rule 47 on annulment of judgments or final
orders and resolutions of the RTCs. The two grounds for annulment
under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If
based on extrinsic fraud, the action must be filed within four (4)
B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE years from its discovery, and if based on lack of jurisdiction, before
AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY THE it is barred by laches or estoppel as provided by Section 3, Rule 47.
HONORABLE COURT IN THE PEA CASE. Thus, effective July 1, 1997, any action for reversion of public land
instituted by the Government was already covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of
IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF Decree No. N-150912 and its derivative titles was filed on June 8,
THE RULE ON ORDINARY ESTOPPEL AND LACHES IN THE INSTANT 2001 with the Paraaque City RTC. It is clear therefore that the
CASE AGAINST RESPONDENT. reversion suit was erroneously instituted in the Paraaque RTC and
should have been dismissed for lack of jurisdiction. The proper court
V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND is the CA which is the body mandated by BP Blg. 129 and prescribed
EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE.[16] by Rule 47 to handle annulment of judgments of RTCs.

In Collado v. Court of Appeals,[18] the government, represented by


Essentially, the issues boil down to three: (1) Is a reversion suit the Solicitor General pursuant to Section 9(2) of BP Blg. 129, filed a
proper in this case? (2) Is the present petition estopped by laches? petition for annulment of judgment with the CA. Similarly in the
(3) Did the CA erroneously apply the principle of res judicata? case of Republic v. Court of Appeals,[19] the Solicitor General
correctly filed the annulment of judgment with the said appellate
court.
An action for reversion seeks to restore public land fraudulently
awarded and disposed of to private individuals or corporations to This was not done in this case. The Republic misfiled the reversion
the mass of public domain.[17] This remedy is provided under suit with the Paraaque RTC. It should have been filed with the CA as
Commonwealth Act (CA) No. 141 (Public Land Act) which became required by Rule 47. Evidently, the Paraaque RTC had no jurisdiction
effective on December 1, 1936. Said law recognized the power of over the instant reversion case.
the state to recover lands of public domain. Section 124 of CA No.
141 reads: Assuming that the Paraaque RTC has jurisdiction over the reversion
case, still the lapse of almost three decades in filing the instant
case, the inexplicable lack of action of the Republic and the injury
this would cause constrain us to rule for petitioners. While it may
SEC. 124. Any acquisition, conveyance, alienation, transfer, or other be true that estoppel does not operate against the state or its
contract made or executed in violation of any of the provisions of agents,[20] deviations have been allowed. In Manila Lodge No. 761 v.
Sections one hundred and eighteen, one hundred and twenty, one Court of Appeals, we said:
hundred and twenty one, one hundred and twenty-two, and one
hundred twenty-three of this Act shall be unlawful and null and void
from its execution and shall produce the effect of annulling and
cancelling the grant, title, patent, or permit originally issued, Estoppels against the public are little favored. They should not be
recognized or confirmed, actually or presumptively, and cause the invoked except in rare and unusual circumstances, and may not be
reversion of the property and its improvements to the State. invoked where they would operate to defeat the effective operation
(Emphasis supplied.) of a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases
where the interests of justice clearly require it. Nevertheless, the
Pursuant to Section 124 of the Public Land Act, reversion suits are government must not be allowed to deal dishonorably or
proper in the following instances, to wit: capriciously with its citizens, and must not play an ignoble part or do
a shabby thing; and subject to limitations x x x, the doctrine of
1. Alienations of land acquired under FREE PATENT or HOMESTEAD equitable estoppel may be invoked against public authorities as well
provisions in violation of Section 118, CA No. 141; as against private individuals.[21] (Emphasis supplied.)

2. Conveyances made by non-Christians in violation of Section 120, Equitable estoppel may be invoked against public authorities when
CA No. 141; and as in this case, the lot was already alienated to innocent buyers for
value and the government did not undertake any act to contest the
3. Alienations of lands acquired under CA No. 141 in favor of title for an unreasonable length of time.
persons not qualified under Sections 121, 122, and 123 of CA No.
141. In Republic v. Court of Appeals, where the title of an innocent
purchaser for value who relied on the clean certificates of the title
From the foregoing, an action for reversion to cancel titles derived was sought to be cancelled and the excess land to be reverted to the
from homestead patents or free patents based on transfers and Government, we ruled that [i]t is only fair and reasonable to apply
conveyances in violation of CA No. 141 is filed by the OSG pursuant the equitable principle of estoppel by laches against the government
to its authority under the Administrative Code with the RTC. It is to avoid an injustice to innocent purchasers for value (emphasis
clear therefore that reversion suits were originally utilized to annul supplied).[22] We explained:
titles or patents administratively issued by the Director of the Land
Management Bureau or the Secretary of the DENR. Likewise time-settled is the doctrine that where innocent third
persons, relying on the correctness of the certificate of title, acquire
While CA No. 141 did not specify whether judicial confirmation of rights over the property, courts cannot disregard such rights and
titles by a land registration court can be subject of a reversion suit, order the cancellation of the certificate. Such cancellation would
the government availed of such remedy by filing actions with the impair public confidence in the certificate of title, for everyone
RTC to cancel titles and decrees granted in land registration dealing with property registered under the Torrens system would
applications. have to inquire in every instance whether the title has been regularly
issued or not. This would be contrary to the very purpose of the law, In this petition, the LRC (now LRA), on May 30, 1974, issued Decree
which is to stabilize land titles. Verily, all persons dealing with No. N-150912 in favor of Fermina Castro and OCT No. 10215 was
registered land may safely rely on the correctness of the certificate issued by the Rizal Registrar of Deeds on May 29, 1974. OCT No.
of title issued therefore, and the law or the courts do not oblige 10215 does not show any annotation, lien, or encumbrance on its
them to go behind the certificate in order to investigate again the face. Relying on the clean title, Yujuico bought the same in good faith
true condition of the property. They are only charged with notice of and for value from her. He was issued TCT No. 445863 on May 31,
the liens and encumbrances on the property that are noted on the 1974. There is no allegation that Yujuico was a buyer in bad faith, nor
certificate.[23] did he acquire the land fraudulently. He thus had the protection of
the Torrens System that every subsequent purchaser of registered
land taking a certificate of title for value and in good faith shall hold
the same free from all encumbrances except those noted on the
xxxx certificate and any of the x x x encumbrances which may be
subsisting.[26] The same legal shield redounds to his successors-in-
interest, the Yujuicos and Carpio, more particularly the latter since
Carpio bought the lot from Jesus Y. Yujuico for value and in good
But in the interest of justice and equity, neither may the titleholder faith.
be made to bear the unfavorable effect of the mistake or negligence
of the States agents, in the absence of proof of his complicity in a Likewise protected are the rights of innocent mortgagees for value,
fraud or of manifest damage to third persons. First, the real purpose the PISO, Citibank, N.A., PDC, RCBC, PCIB, and DBP. Even if the
of the Torrens system is mortgagors title was proved fraudulent and the title declared null
1. to quiet title to land to put a stop forever to any question and void, such declaration cannot nullify the mortgage rights of a
as to the legality of the title, except claims that were mortgagee in good faith.[27]
noted in the certificate at the time of the registration or
that may arise subsequent thereto. All told, a reversion suit will no longer be allowed at this stage.
2. Second, as we discussed earlier, estoppel by laches now
bars petitioner from questioning private respondents titles More on the issue of laches. Laches is the failure or neglect, for an
to the subdivision lots. unreasonable and unexplained length of time, to do that which by
3. Third, it was never proven that Private Respondent St. Jude exercising due diligence could or should have been done earlier. It is
was a party to the fraud that led to the increase in the area negligence or omission to assert a right within a reasonable time,
of the property after its subdivision. warranting a presumption that the party entitled thereto has either
Finally, because petitioner even failed to give sufficient proof of abandoned or declined to assert it.[28]
any error that might have been committed by its agents who
had surveyed the property, the presumption of regularity in the
performance of their functions must be respected. Otherwise, When respondent government filed the reversion case in 2001, 27
the integrity of the Torrens system, which petitioner years had already elapsed from the time the late Jesus Yujuico
purportedly aims to protect by filing this case, shall forever be purchased the land from the original owner Castro. After the
sullied by the ineptitude and inefficiency of land registration issuance of OCT No. 10215 to Castro, no further action was taken by
officials, who are ordinarily presumed to have regularly the government to question the issuance of the title to Castro until
performed their duties.[24] the case of Public Estates Authority, brought up in the oral argument
before this Court on September 6, 2000.[29] We then held that
Republic v. Court of Appeals is reinforced by our ruling in Republic v. allegation of fraud in the issuance of the title was not proper for
Umali,[25] where, in a reversion case, we held that even if the consideration and determination at that stage of the case.
original grantee of a patent and title has obtained the same through
fraud, reversion will no longer prosper as the land had become From the undisputed facts of the case, it is easily revealed that
private land and the fraudulent acquisition cannot affect the titles of respondent Republic took its sweet time to nullify Castros title,
innocent purchasers for value. notwithstanding the easy access to ample remedies which were
Considering that innocent purchaser for value Yujuico bought the lot readily available after OCT No. 10215 was registered in the name of
in 1974, and more than 27 years had elapsed before the action for Castro. First, it could have appealed to the CA when the Pasig-Rizal
reversion was filed, then said action is now barred by laches. CFI rendered a decision ordering the registration of title in the name
of applicant Castro on April 26, 1974. Had it done so, it could have
While the general rule is that an action to recover lands of public elevated the matter to this Court if the appellate court affirms the
domain is imprescriptible, said right can be barred by laches or decision of the land registration court. Second, when the entry of
estoppel. Section 32 of PD 1592 recognized the rights of an innocent Decree No. N-150912 was made on May 29, 1974 by the Rizal
purchaser for value over and above the interests of the government. Register of Deeds, the Republic had one (1) year from said date or up
Section 32 provides: to May 28, 1975 to file a petition for the reopening and review of
Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of
actual fraud under section 32 of PD 1592. Again, respondent
Republic did not avail of such remedy. Third, when Jesus Yujuico filed
SEC. 32. Review of decree of registration; Innocent purchaser for a complaint for Removal of Cloud and Annulment of Title with
value. The decree of registration shall not be reopened or revised by Damages against PEA before the Paraaque RTC in Civil Case No. 96-
reason of absence, minority, or other disability of any person 0317, respondent could have persevered to question and nullify
adversely affected thereby, nor by any proceeding in any court for Castros title. Instead, PEA undertook a compromise agreement on
reversing judgments, subject, however, to the right of any person, which the May 18, 1998 Resolution[30] was issued. PEA in effect
including the government and the branches thereof, deprived of land admitted that the disputed land was owned by the predecessors-in-
or of any estate or interest therein by such adjudication or interest of petitioners and their title legal and valid; and impliedly
confirmation of title obtained by actual fraud, to file in the proper waived its right to contest the validity of said title; respondent
Court of First Instance a petition for reopening and review of the Republic even filed the petition for relief from judgment beyond the
decree of registration not later than one year from and after the date time frames allowed by the rules, a fact even acknowledged by this
of the entry of such decree of registration, but in no case shall such Court in Public Estates Authority. Lastly, respondent only filed the
petition be entertained by the court where an innocent purchaser reversion suit on June 8, 2001 after the passage of 27 years from the
for value has acquired the land or an interest therein, whose rights date the decree of registration was issued to Fermina Castro.
may be prejudiced. Whenever the phrase innocent purchaser for
value or an equivalent phrase occurs in this Decree, it shall be Such a Rip Van Winkle, coupled with the signing of the settlement
deemed to include an innocent lessee, mortgagee, or other with PEA, understandably misled petitioners to believe that the
encumbrances for value. (Emphasis supplied.) government no longer had any right or interest in the disputed lot to
the extent that the two lots were even mortgaged to several banks
including a government financing institution. Any nullification of title
at this stage would unsettle and prejudice the rights and obligations
of innocent parties. All told, we are constrained to conclude that disputed land was still under water at the time of its registration was
laches had set in. a non-issue in the said case.

Even granting arguendo that respondent Republic is not precluded Even granting for the sake of argument that Firestone is not squarely
by laches from challenging the title of petitioners in the case at bar, applicable, still we find the reversion suit already barred by res
still we find that the instant action for reversion is already barred by judicata.
res judicata.
For res judicata to serve as an absolute bar to a subsequent action,
Petitioners relying on Firestone Ceramics, Inc. v. Court of the following requisites must concur: (1) there must be a final
Appeals[31] as a precedent to the case at bar contend that the judgment or order;
instant reversion suit is now barred by res judicata. (2) the court rendering it must have jurisdiction over the subject
matter and the parties;
We agree with petitioners. (3) it must be a judgment or order on the merits;
and (4) there must be between the two cases, identity of parties,
The doctrine on precedents is expressed in the latin maximStare subject matter and causes of action.[35]
decisis et non quieta movere. Follow past precedents and do not
disturb what has been settled.[32] In order however that a case can There is no question as to the first, third and last requisites. The
be considered as a precedent to another case which is pending threshold question pertains to the second requisite, whether or not
consideration, the facts of the first case should be similar or the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the subject
analogous to the second case. matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the
Paraaque City RTC, Branch 257 held that the CFI had jurisdiction. The
CA reversed the decision of the Paraaque City RTC based on the
assertion of respondent Republic that the Pasig-Rizal CFI had no
A perusal of the facts of the Firestone case and those of the case at jurisdiction over the subject matter, and that there was a need to
bar reveals that the facts in the two (2) cases are parallel. First, in determine the character of the land in question.
Firestone and in this case, the claimants filed land registration
applications with the CFI; both claimants obtained decrees for
registration of lots applied for and were issued OCTs. Second, in
Firestone, the Republic filed a reversion case alleging that the land The Paraaque City RTC Order dismissing the case for res judicata
covered by the OCT was still inalienable forest land at the time of the must be upheld.
application and hence the Land Registration Court did not acquire
jurisdiction to adjudicate the property to the claimant. In the instant
case, respondent Republic contend that the land applied for by
Yujuico was within Manila Bay at the time of application and The CA, in rejecting the dismissal of the reversion case by the
therefore the CFI had no jurisdiction over the subject matter of the Paraaque RTC, relied on two cases, namely: Municipality of Antipolo
complaint. Third, in Firestone, the validity of the title of the claimant v. Zapanta[36] and Republic v. Vda. De Castillo.[37]
was favorably ruled upon by this Court in G.R. No. 109490 entitled
Patrocinio E. Margolles v. CA. In the case at bar, the validity of the
compromise agreement involving the disputed lot was in effect
upheld when this Court in Public Estates Authority v. Yujuico In Municipality of Antipolo, we held that the land registration court
dismissed the petition of PEA seeking to reinstate the petition for had no jurisdiction to entertain any land registration application if
relief from the May 18, 1998 Resolution approving said compromise the land was public property, thus:
agreement. With the dismissal of the petition, the May 18, 1998
Resolution became final and executory and herein respondent
Republic through PEA was deemed to have recognized Castros title
over the disputed land as legal and valid. In Romero v. Tan,[33] we Since the Land Registration Court had no jurisdiction to entertain the
ruled that a judicial compromise has the effect of res judicata. We application for registration of public property of ANTIPOLO, its
also made clear that a judgment based on a compromise agreement Decision adjudicating the DISPUTED PROPERTY as of private
is a judgment on the merits, wherein the parties have validly entered ownership is null and void. It never attained finality, and can be
into stipulations and the evidence was duly considered by the trial attacked at any time. It was not a bar to the action brought by
court that approved the agreement. In the instant case, the May 18, ANTIPOLO for its annulment by reason of res judicata.
1998 Resolution approving the compromise agreement confirmed
the favorable decision directing the registration of the lot to Castros
name in LRC Case No. N-8239. Similarly, in Firestone, the Margolles
case confirmed the decision rendered in favor of Gana in Land [x x x] the want of jurisdiction by a court over the subject matter
Registration Case No. 672 ordering the issuance of the decree to said renders the judgment void and a mere nullity, and considering that a
applicant. Fourth, in Firestone, the Supreme Court relied on the void judgment is in legal effect no judgment, by which no rights are
letter of then Solicitor General Francisco Chavez that the evidence of divested, from which no rights can be obtained, which neither binds
the Bureau of Lands and the LRC was not sufficient to support an nor bars any one, and under which all acts performed and all claims
action for cancellation of OCT No. 4216. In the instant case, both the flowing out of are void, and considering, further, that the decision,
Solicitor General and the Government Corporate Counsel opined for want of jurisdiction of the court, is not a decision in
that the Yujuico land was not under water and that there appears to contemplation of law, and hence, can never become executory, it
be no sufficient basis for the Government to institute the action for follows that such a void judgment cannot constitute a bar to another
annulment. Fifth, in Firestone, we ruled that the Margolles case had case by reason of res judicata.
long become final, thus the validity of OCT No. 4216 should no
longer be disturbed and should be applied in the instant case
(reversion suit) based on the principle of res judicata or, otherwise,
the rule on conclusiveness of judgment.[34] xxxx

Clearly from the above, Firestone is a precedent case. The Public


Estates Authority had become final and thus the validity of OCT No. It follows that if a person obtains a title under the Public Land Act
10215 issued to Castro could no longer be questioned. which includes, by oversight, lands which cannot be registered under
the Torrens System, or when the Director of Lands did not have
While we said in Public Estates Authority that the court does not jurisdiction over the same because it is a public forest, the grantee
foreclose the right of the Republic from pursuing the proper does not, by virtue of the said certificate of title alone, become the
recourse in a separate proceedings as it may deem warranted, the owner of the land illegally included (Republic vs. Animas, 56 SCRA
statement was obiter dictum since the inquiry on whether or not the 499, 503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769).
[x x x x]

Under these circumstances, the certificate of title may be ordered


cancelled (Republic vs. Animas, et al., supra), and the cancellation
maybe pursued through an ordinary action therefore. This action
cannot be barred by the prior judgment of the land registration
court, since the said court had no jurisdiction over the subject
matter. And if there was no such jurisdiction, then the principle of
res judicata does not apply. [x x x] Certainly, one of the essential
requisites, i.e., jurisdiction over the subject matter, is absent in this
case. (Italics supplied).[38]
The plain import of Municipality of Antipolo is that a land
registration court, the RTC at present, has no jurisdiction over the
subject matter of the application which respondent Republic claims
is public land. This ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction over the subject
matter is conferred by law.[39] Consequently, the proper CFI (now
the RTC) under Section 14 of PD 1529[40] (Property Registration
Decree) has jurisdiction over applications for registration of title to
land.
Section 14 of PD 1592 provides:
SEC. 14. Who may apply.
The following persons may file in the proper Court of First Instance
an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of the THIRD DIVISION
public domain under a bona fide claim of ownership since June 12, SAAD AGRO-INDUSTRIES, INC., G.R. No. 152570
1945, or earlier. (Emphasis supplied.) Petitioner,
Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the
Present:
subject matter of the land registration case filed by Fermina Castro,
petitioners predecessor-in-interest, since jurisdiction over the QUISUMBING, J.,
subject matter is determined by the allegations of the initiatory Chairperson,
pleadingthe application.[41] Settled is the rule that the authority to - versus - CARPIO,
decide a case and not the decision rendered therein is what makes CARPIO MORALES,
up jurisdiction. When there is jurisdiction, the decision of all TINGA, and
questions arising in the case is but an exercise of jurisdiction.[42] VELASCO, JR., JJ.
In our view, it was imprecise to state in Municipality of Antipolo that
REPUBLIC OF THE PHILIPPINES,
the Land Registration Court [has] no jurisdiction to entertain the
application for registration of public property x x x for such court
precisely has the jurisdiction to entertain land registration Respondent.
applications since that is conferred by PD 1529. The applicant in a
land registration case usually claims the land subject matter of the x------------------------------------------------x Promulgated:
application as his/her private property, as in the case of the
application of Castro. Thus, the conclusion of the CA that the Pasig-
Rizal CFI has no jurisdiction over the subject matter of the
PEDRO URGELLO, September 27, 2006
application of Castro has no legal mooring. The land registration
court initially has jurisdiction over the land applied for at the time of
the filing of the application. After trial, the court, in the exercise of Intervenor-Appellant.
its jurisdiction, can determine whether the title to the land applied
for is registrable and can be confirmed. In the event that the subject
matter of the application turns out to be inalienable public land,
then it has no jurisdiction to order the registration of the land and
x---------------------------------------------------------------------------x
perforce must dismiss the application.
Based on our ruling in Antipolo, the threshold question is whether
the land covered by the titles of petitioners is under water and forms
part of Manila Bay at the time of the land registration application in
1974. If the land was within Manila Bay, then res judicata does not
apply. Otherwise, the decision of the land registration court is a bar
to the instant reversion suit. DECISION
After a scrutiny of the case records and pleadings of the parties in
LRC Case No. N-8239 and in the instant petition, we rule that the
land of Fermina Castro is registrable and not part of Manila Bay at
the time of the filing of the land registration application. TINGA, J.:
The trial courts Decision in 1974 easily reveals the basis for its
conclusion that the subject matter was a dry land, thus:
On February 1, 1974, the applicant presented her evidence before
the Deputy Clerk of this Court and among the evidence presented by
her were certain documents which were marked as Exhibits D to J,
inclusive. The applicant testified in her behalf and substantially
declared that: she was 62 years old, single, housekeeper and residing
at 1550 J. The instant petition for review assails the Decision and Resolution of
the Court of Appeals dated 18 July 2001 and 18 March 2002 in CA-
G.R. CV No. 64097, reversing and setting aside the Decision of the The Register of Deeds of Cebu City is hereby ordered to cancel OCT
Regional Trial Court of Cebu, Branch 11, Cebu City in Civil Case No. [No.] 0-6667 and all other transfer certificates of title that may have
CEB-17173. been subsequently issued.

Lot No. 1434, CAD 315[-]D located at Barangay Abugon, Sibonga,


Cebu, subject matter of this case, is hereby REVERTED as part of
The antecedents follow. [the] public domain and to be classified as timberland.[11]

On 18 October 1967, Socorro Orcullo (Orcullo) filed her application Petitioners motion for reconsideration, claiming insufficiency of
for Free Patent for Lot No. 1434 of Cad-315-D, a parcel of land with evidence and failure to consider pertinent laws, proved futile as it
an area of 12.8477 hectares located in Barangay Abugon, Sibonga, was dismissed for lack of merit. The Court of Appeals categorically
Cebu. Thereafter, on 14 February 1971, the Secretary of Agriculture stated that there was a preponderance of evidence showing that the
and Natural Resources issued Free Patent No. 473408 for Lot No. subject lot is within the timberland area.[12]
1434, while the Registry of Deeds for the Province of Cebu issued
Original Certificate of Title (OCT) No. 0-6667 over the said lot.[1] Petitioner now claims that the Court of Appeals erred in relying on
Subsequently, the subject lot was sold[2] to SAAD Agro- Industries, the DENR officers testimony. It claims that the testimony was a mere
Inc. (petitioner) by one of Orcullos heirs. opinion to the effect that if there was no classification yet of an area,
such area should be considered as a public forest. Such opinion was
Sometime in 1995, the Republic of the Philippines, through the premised on the officers construction of a provision of Presidential
Solicitor General, filed a complaint[3] for annulment of title and Decree (P.D.) No. 705, otherwise known as the Revised Forestry
reversion of the lot covered by Free Patent No. 473408 and OCT No. Code,[13] the pertinent portion of which reads:
0-6667 and reversion of Lot No. 1434 of Cad-315-D to the mass of
the public domain, on the ground that the issuance of the said free Those still to be classified under the present system shall continue to
patent and title for Lot No. 1434 was irregular and erroneous, remain as part of the public forest.[14]
following the discovery that the lot is allegedly part of the
timberland and forest reserve of Sibonga, Cebu. The discovery was Petitioner points out that P.D. No. 705 took effect on 19 May 1975,
made after Pedro Urgello filed a letter-complaint with the Regional or long after the issuance of the free patent and title in question.
Executive Thus, the provision stating that all public lands should be considered

Director of the Forest Management Sector, Department of as part of the public forests until a land classification team has
Environment and Natural Resources (DENR) Region VII, Cebu City, declassified them is applicable only after the effectivity of P.D. No.
about the alleged illegal cutting of mangrove trees and construction 705 and cannot be made retroactive to cover and prejudice vested
of dikes within the area covered by Urgellos Fishpond Lease rights acquired prior to the effectivity of said law, petitioner
Agreement.[4] On 14 July 1995, Urgello filed a complaint-in- concludes.[15] It adds that if the subject lot was encompassed by the
intervention against the heirs of Orcullo, adopting the allegations of term public forest, the same should have been designated as a
respondent.[5] However, the heirs failed to file their answer to the Timberland Block, not as Cadastral Lot No. 1434, CAF-315-D, Sibonga
complaint and were thus declared in default.[6] Cadastre which was the designation made by the Republic prior to
1972.[16]
In its Decision[7] dated 15 May 1999, the trial court dismissed the
complaint, finding that respondent failed to show that the subject
lot is part of the timberland or forest reserve or that it has been
Petitioner also questions the Court of Appeals reliance on the land
classified as such before the issuance of the free patent and the
classification map (L.C. Map) presented by respondent. The trial
original title. According to the trial court, the issuance of the free
court had previously declared L.C. Map No. 2961 as inadmissible,
patent and title was regular and in order, and must be accorded full
finding that the plaintiff has not duly proved the authenticity and
faith. Considering the validity of the free patent and the OCT,
contents. According to petitioner, the L.C. Map presented in court is
petitioners purchase of the property was also declared legal and
neither a certified true copy nor one attested to be a true copy by
valid. The trial court also denied the complaint-in-intervention filed
any DENR official having legal custody of the original thereof, and
by Urgello.
thus should not have been made the basis of the cancellation of the
On appeal, the Court of Appeals in its Decision[8] reversed and set free patent and title.[17]
aside the trial courts judgment. It held that timber or forest lands, to
Petitioner further contends that the projection survey conducted by
which the subject lot belongs, are not subject to private ownership,
the DENR to determine if the subject lot falls within the forest area is
unless these are first classified as agricultural lands. Thus, absent any
not clear, precise and conclusive, since the foresters who conducted
declassification of the subject lot from forest to alienable and
the survey used a magnetic box compass, an unreliable and
disposable land for agricultural purposes,[9] the officers erred in
inaccurate instrument, whose results are easily affected by high
approving Orcullos free patent application and in issuing the OCT;
tension wires and stones with iron minerals.[18]
hence, title to the lot must be cancelled.[10] Consequently, the
Court of Appeals invalidated the sale of the lot to petitioner.
Finally, petitioner claims that respondent failed to overcome the
However, it declared that Urgellos Fishpond Lease Agreement may
presumption of regularity of the issuance of the free patent and title
continue until its expiration because lease does not pass title to the
in favor of Socorro Orcullo.
lessee; but thereafter, the lease should not be renewed. Accordingly,
the Court of Appeals decreed: In sum, petitioner asserts that respondent failed to show that the
subject lot is inside the timberland block, thereby casting doubt on
WHEREFORE, the decision appealed from is hereby REVERSED and
the accuracy of the survey conducted by the Bureau of Forestry and
SET ASIDE and another one issued declaring Free Patent No. 473408
the opinions of DENR officers. Since respondent is the original
and the corresponding OCT [No.] 0-6667 as NULL and VOID ab initio.
plaintiff in the reversion case, the burden is on it to prove that the
subject lot is part of the timberland block, petitioner adds.
SAAD Agro-Industries, Inc. is directed to surrender the owners
duplicate copy of OCT [No.] 0-6667 to the Register of Deeds of Cebu
City.
There is merit in the petition.

Under the Regalian doctrine or jura regalia, all lands of the public A: Yes, sir.
domain belong to the State, and the State is the source of any
asserted right to ownership in land and charged with the Q: In other words, nobody knew in the whole DNR before and now
conservation of such patrimony.[19] Under this doctrine, lands not DENR what areas were timberland and what areas are not
otherwise appearing to be clearly within private ownership are timberland in the town of Sibonga prior to 1980?
presumed to belong to the State.[20] In instances where a parcel of
land considered to be inalienable land of the public domain is found
under private ownership, the Government is allowed by law to file
A: Yes, sir, that is why the law states that if there is no classification
an action for reversion,[21] which is an action where the ultimate
should be [sic] considered as the public forest in order to protect the
relief sought is to revert the land to the government under the
resources.[26]
Regalian doctrine. Considering that the land subject of the action
originated from a grant by the government, its cancellation is a Obviously, respondents counsel and witness were referring to P.D.
matter between the grantor and the grantee.[22] No. 705 particularly Section 13 thereof which reads:

It has been held that a complaint for reversion involves a serious SEC. 13. System of Land Classification.The Department Head shall
controversy, involving a question of fraud and misrepresentation study, devise, determine and prescribe the criteria, guidelines and
committed against the government and it is aimed at the return of methods for the proper and accurate classification and survey of all
the disputed portion of the public domain. It seeks to cancel the lands of the public domain into agricultural, industrial or
original certificate of registration, and nullify the original certificate commercial, residential, settlement, mineral, timber or forest, and
of title, including the transfer certificate of title of the successors-in- grazing lands, and into such other classes as now or may hereafter
interest because the same were all procured through fraud and be provided by law, rules and regulations.
misrepresentation.[23] Thus, the State, as the party alleging the
fraud and misrepresentation that attended the application of the In the meantime, the Department Head shall simplify through inter-
free patent, bears that burden of proof. Fraud and bureau action the present system of determining which of the
misrepresentation, as grounds for cancellation of patent and unclassified lands of the public domain are needed for forest
annulment of title, should never be presumed but must be proved purposes and declare them as permanent forest to form part of the
by clear and convincing evidence, mere preponderance of evidence forest reserves. He shall declare those classified and determined not
not even being adequate.[24] to be needed for forest purposes as alienable and disposable lands,
the administrative jurisdiction and management of which shall be
It is but judicious to require the Government, in an action for transferred to the Bureau of Lands: Provided, That mangrove and
reversion, to show the details attending the issuance of title over the other swamps not needed for shore protection and suitable for
alleged inalienable land and explain why such issuance has deprived fishpond purposes shall be released to, and be placed under the
the State of the claimed property. administrative jurisdiction and management of, the Bureau of
Fisheries and Aquatic Resources. Those still to be classified under the
In the instant case, the Solicitor General claimed that Free Patent No.
Present system shall continue to remain as part of the public forest.
473408 and Original Certificate of Title No. 0-6667 were erroneously
(Emphasis supplied.)
and irregularly obtained as the Bureau of Lands (now Lands
Management Bureau) did not acquire jurisdiction over the land Reliance on this provision is highly misplaced. P.D. No. 705 was
subject thereof, nor has it the power and authority to dispose of the promulgated only on 19 May 1975, or four (4) years after the free
same through [a] free patent grant, hence, said patent and title are patent and title were awarded to Orcullo. Thus, it finds no
null and void ab initio.[25] It was incumbent upon respondent to application in the instant case. Prior forestry laws, including P.D. No.
prove that the free patent and original title were truly erroneously 389,[27] which was revised by P.D. No. 705, does not contain a
and irregularly obtained. Unfortunately, respondent failed to do so. similar provision. Article 4 of the Civil Code provides that laws shall
have no retroactive effect unless the contrary is provided. The Court
The Court finds that the findings of the trial court rather than those
does not infer any intention on the part of then President Marcos to
of the appellate court are more in accord with the law and
ordain the retroactive application of Sec. 13 of P.D. No. 705. Thus,
jurisprudence.
even assuming for the nonce that subject parcel was unclassified at
the time Orcullo applied for a free patent thereto, the fact remains
In concluding that the subject parcel of land falls within the
that when the free patent and title were issued thereon in 1971,
timberland or forest reserve, the Court of Appeals relied on the
respondent in essence segregated said parcel from the mass of
testimony of Isabelo R. Montejo that as it had remained unclassified
public domain. Thus, it can no longer be considered unclassified and
until 1980 and consequently became an unclassified forest zone, it
forming part of the public forest as provided in P.D. No. 705.
was incapable of private appropriation. The pertinent portions of
Montejos testimony read:
Respondents main basis for asserting that the subject lot is part of
the timberland or forest reserve is a purported L.C. Map No. 2961.
Q: And in that particular [R]evised Forestry Code, there is that
[28] However, at the hearing on 6 June 1997, the trial court denied
statement that unless classified by a land classification team, an area
admission of the map for the purpose of showing that the subject lot
can never be released.
falls within a timberland reserve after respondent had failed to
submit either a certified true copy or an official publication thereof.
[29] The Court observes that the document adverted to is a mere
A: Yes sir. photocopy of the purported original, and not the blue print as
insisted by respondent.[30] A mere photocopy does not qualify as
competent evidence of the existence of the L.C. Map. Under the best
evidence rule, the original document must be produced, except:
Q: Prior to 1980, there was no classification was [sic] ever of the
lands of the public domain in the town of Sibonga? 1. When the original has been lost or destroyed, or cannot be
produced in court, without bad faith on the part of the offeror;
2. When the original is in the custody or under the control of the individuals had commenced their continuous possession and
party against whom the evidence is offered, and the latter fails to cultivation thereof in good faith, declared that they have the better
produce it after reasonable notice; right. The Court held:

3. When the original consists of numerous accounts or other It is not disputed that the aforesaid Land Classification Project No. 3,
documents which cannot be examined in court without great loss of classifying the 22-hectare area as timberland, was certified by the
time and the fact sought to be established from them is only the Director of Lands only on December 22, 1924, whereas the
general result of the whole; and possession thereof by private respondents and their predecessor-in-
interest commenced as early as 1909. While the Government has the
4. When the original is a public record in the custody of a public right to classify portions of public land, the primary right of a private
officer or is recorded in a public office.[31] individual who possessed and cultivated the land in good faith much
prior to such classification must be recognized and should not be
In this case, respondent claims that the presentation of the original
prejudiced by after-events which could not have been anticipated.
L.C. Map is unnecessary since it is in the custody of a public officer or
Thus, We have held that the Government, in the first instance may,
is recorded in the public office.[32] Evidence, indeed, is admissible
by reservation, decide for itself what portions of public land shall be
when the original of a document is in the custody of a public officer
considered forestry land, unless private interests have intervened
or is recorded in a public office. However, to prove its contents, there
before such reservation is made.[41] (Emphasis supplied.)
is a need to present a certified copy issued by the public officer in
custody thereof.[33] In addition, while the L.C. Map may be Obviously, private interests have intervened before classification was
considered a public document and prima facie evidence of the facts made pursuant to P.D. No. 705. Not only has Orcullo by herself and
stated therein,[34] the map, to be admissible for any purpose, must through her predecessors-in-interest cultivated and possessed the
be evidenced by an official publication thereof or by a copy attested subject lot since 1930, a free patent was also awarded to her and a
by the officer having legal custody of the record.[35] title issued in her name as early as 1971. In fact, it appears that the
issuance of the free patent and certificate of title was regular and in
The rules of admissibility must be applied uniformly. The same rule
order. Orcullo complied with the requisites for the acquisition of free
holds true when the Government is one of the parties. The
patent provided under Commonwealth Act No. 141 (Public Land
Government, when it comes to court to litigate with one of its
Act), as certified by the Director of Lands and approved by the
citizens, must submit to the rules of procedure and its rights and
Secretary of Agriculture and Natural Resources.[42]
privileges at every stage of the proceedings are substantially in every
respect the same as those of its citizens; it cannot have a superior Besides, the records do not show that respondent has considered
advantage. This is so because when a sovereignty submits itself to the lot in question as forest reserve prior to the issuance of Free
the jurisdiction of the court and participates therein, its claims and Patent No. 473408 and OCT No. 0-6667. To declare the land now as
rights are justiciable by every other principle and rule applicable to forest land on the authority of L.C. Map No. 2961 approved only in
the claims and rights of the private parties under similar 1980, and opinions based on the said map, would unduly deprive
circumstances.[36] Failure to abide by the rules on admissibility petitioner of their registered property.
renders the L.C. Map submitted by respondent inadmissible as proof
to show that the subject lot is part of the forest reserve.

Some officers from the CENRO office in Argao, Cebu testified that
they personally saw the subject lot and that it falls within the
timberland or forest reserve. Ultimately, however, the basis of their The Regalian doctrine is well-enshrined not only in the present
declaration is the L.C. Map which respondent failed to present in Constitution, but also in the 1935 and 1973 Constitutions. The Court
accordance with the rules on admissibility. Two foresters in fact has always recognized and upheld the Regalian doctrine as the basic
testified that the subject lot was a mangrove area.[37] The foresters foundation of the State's property regime. Nevertheless, in applying
who conducted the survey may have been competent and their this doctrine, we must not lose sight of the fact that in every claim or
techniques reliable; nevertheless, the observation that mangroves right by the Government against one of its citizens, the paramount
grow in the subject lot is not conclusive as to the nature of the land considerations of fairness and due process must be observed.
at present or at the time the free patent and title were issued. Respondent in this case failed to show that the subject lot is part of
Assuming that the area is covered by mangroves when they surveyed timberland or forest reserve it adverted to. In the face of the
it, there is no proof that it was not planted with trees and crops at uncontroverted status of Free Patent No. 473408 and OCT No. 0-
the time Orcullo applied for free patent. Respondent was also unable 6667 as valid and regular issuances, respondents insistence on the
to establish that the subject lot has very deep and muddy soil or are classification of the lot as part of the forest reserve must be rejected.
mudflats, such that it is unsuitable for fruit and non-fruit bearing
WHEREFORE, the petition is GRANTED. The Decision of the Court of
trees.[38] Yet these are factual matters which the Court does not
Appeals dated 16 July 2001 and the Resolution dated 18 March 2002
generally delve into. As it is, a mere declaration from the said
are REVERSED and SET ASIDE. The Decision of the Regional Trial
officers, without any other supporting evidence, is not sufficient to
Court dated 15 May 1999 dismissing the complaint for reversion and
establish that the area in question is part of the forest reserve.
the complaint-in-intervention is REINSTATED.
Even assuming that the L.C. Map submitted by respondent is
admissible in evidence, still the land in question can hardly be
considered part of the timberland or forest reserve. L.C. Map No.
2961, which purports to be the correct map of the areas demarcated
as permanent forest pursuant of the provisions of P.D. No. 705 as
amended[39] was made only in 1980. Thus, the delineation of the
areas was made nine (9) years after Orcullo was awarded the free
patent over the subject lot.

In Republic v. Court of Appeals,[40] the Court, finding that the


disputed land was classified as timberland 25 years after private
On August 1, 1974, Melchor Caro applied for a free patent before the
Bureau of Lands, District Land Office No. 6-1, covering the said area
of the property which he bought from his father. The application
was, however, opposed by Deogracias de la Cruz. On November 6,
1980, the Regional Director rendered a Decision[4] canceling the said
application, thusly:

This is a claim of Deogracias de la Cruz to Lot No. 4512, Pls-775 of


Calaya, Nueva Valencia, Guimaras, covered by the above-noted
application of Melchor Caro.

In the investigation, respondent claims preferential rights over the


land as he acquired it through sale from his father Gregorio Caro
who had likewise bought the land from Ruperto Cepellano (sic) in
1953. On the other hand, protestant De la Cruz testified that the
land in controversy was bought by him from Cipriano Gallego in
1965; that he thereafter occupied, possessed and improved the land
by planting coconut trees; and that in 1968 he was forcibly driven
out by Gregorio Caro from the land in question.

Verification of the records disclosed that the land which was actually
sold to Gregorio Caro by Ruperto Gepellano (sic) is Assessors Lot No.
160. The description and physical identity of Lot No. 160 is basically
different and distinct from Lot No. 4512, the land in question. This
could be clearly seen in the Certified True Copy of the Sketch Plan
from the Assessors Office of Assessors Lot No. 160 and the Sketch
Plan marked as Exhibit 9 of the Respondent-Applicant. It has been
established that Assessors Lot No. 160 corresponds to Lot No. 4511
[G.R. No. 157536. May 16, 2005]
and not Lot No. 4512 claimed by the protestant. Moreover, Ruperto
Cepellano (sic) in his affidavit testified that what he sold to Gregorio
Caro is a land distinct and different from the land in question.
MELCHOR CARO, petitioner, vs. SUSANA SUCALDITO, respondent.

IN VIEW OF THE FOREGOING FINDINGS, it is ordered that the F.P.A.


DECISION No. (VI-1)8548 of applicant-respondent Melchor Caro be, as hereby
it is, cancelled. Protestant Deogracias de la Cruz if qualified, is given
one hundred twenty (120) days from the finality of this decision to
file an appropriate public land application otherwise he shall lose his
CALLEJO, SR., J.:
preferential right thereto.

This is a petition for review on certiorari under Rule 45 of the Rules


SO ORDERED.[5]
of Court, assailing the Decision[1] of the Court of Appeals (CA) in CA-
G.R. CV No. 45503, affirming the dismissal of Civil Case No. 15529 by
the Regional Trial Court (RTC) of Iloilo City, Branch 39, as well as the
resolution denying the motion for reconsideration thereof. Caro filed a notice of appeal before the Regional Land Office in Iloilo
City, docketed as MNR Case No. 5207. However, the appeal was
dismissed in an Order[6] dated June 29, 1982, on the ground of
failure to file an appeal memorandum within the reglementary
The antecedent facts are as follows:
period therefor.

Gregorio Caro bought a parcel of land known as Assessors Lot No.


On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No.
160 from Ruperto Gepilano as evidenced by a Deed of Sale[2] dated
4512, filed an Application for a Free Patent[7] covering the said lot,
October 21, 1953. The said lot was situated in Sitio Bangyan, Barrio
and was issued Free Patent No. 597599. Consequently, the Register
Calaya, Municipality of Nueva Valencia, Iloilo City, consisting more or
of Deeds of Iloilo City issued Original Certificate of Title (OCT) No. F-
less of 17.9849 hectares. Thereafter, Gregorio Caro sold a portion of
27162 in her favor. Sucaldito then filed a Petition for Writ of
the said lot to his son Melchor Caro, consisting of 70,124 square
Possession[8] before the RTC of Iloilo City, which was granted in an
meters, and now identified as Lot No. 4512 of the Cadastral survey
Order[9] dated May 7, 1984.
of Nueva Valencia, Pls-775. Father and son executed a Deed of
Definite Sale[3] dated January 31, 1973 covering Lot No. 4512.
Thereafter, on February 20, 1984, Caro filed a Complaint[10] against The parties thereafter presented evidence to prove their respective
Sucaldito for Annulment of Title, Decision, Free Patent and/or claims. In a Decision[13] dated December 7, 1993, the trial court
Recovery of Ownership and/or Possession with Damages before the ruled in favor of the respondent and dismissed the petitioners
RTC of Iloilo City. He later filed an amended complaint,[11] alleging complaint. The dispositive portion reads:
that he was the owner of the subject lot, and had been in possession
of the same since 1953 and/or even prior thereto in the concept of
owner, adversely, openly, continuously and notoriously. He further
WHEREFORE, premises considered, the complaint filed by plaintiff is
alleged that the said lot had been declared for tax purposes in his
dismissed. The counterclaim of defendant which is merely the result
name and that of his predecessors-in-interest, and that the
of the filing of the complaint, is likewise dismissed.
corresponding land taxes had been paid therefor. He claimed that
Assessors Lot No. 160 had actually been divided into two lots,
namely, Lot No. 4511 and Lot No. 4512; Sucaldito had actually been
claiming Lot No. 989 (Lot No. 4512), which was located two Costs against the plaintiff.
kilometers away. He lamented that despite the overwhelming
evidence proving his ownership and possession of the said property,
the Bureau of Lands did not award it to him.
SO ORDERED.[14]

Caro further alleged that since the issuance of the free patent over
the subject lot in favor of Sucaldito was wrongful and fraudulent, she Citing the case of Maximo v. Court of First Instance of Capiz, Br. III,
had no right whatsoever over the subject lot. Hence, as a trustee of a [15] the trial court ruled that Caro had no personality to file the
constructive trust, she was obliged to return the same to him as the action for the annulment of the free patent issued in favor of
lawful owner. The complaint contained the following prayer: Sucaldito, which could only be brought by the Solicitor General. It
held that an applicant for a free patent who is not the owner of a
parcel of land cannot bring an action in court to recover the land, for
the court may not usurp the authority of the Director of Lands and
WHEREFORE, it is prayed that judgment be rendered: the Secretary of Agriculture to dispose lands of the public domain
through administrative proceedings under the Public Land Act,[16]
or Commonwealth Act No. 141, as amended. The trial court further
stressed that the remedy of a rival-applicant for a free patent over
1. Ordering the annulment and voiding of the decision of the Bureau
the same land was through administrative channels, not judicial,
of Lands, the free patent and the Original Certificate of Title No. F-
because even if the oppositor succeeds in annulling the title of the
27162 or in the alternative;
applicant, the former does not thereby become the owner of the
land in dispute.[17]

2. Ordering defendant to reconvey the ownership and in the event


she wrests possession from plaintiff then, also the possession of Lot
The trial court also declared that contrary to Caros claims, the
4512 PLS-775 of Nueva Valencia, Guimaras Cadastre, back to
evidence clearly showed that Lot No. 4512, with an area of 70,677
plaintiff;
square meters, was not included in Assessors Lot No. 160, thus:

3. Declaring plaintiff as the lawful owner and possessor of Lot 4512


Assessors Lot 160 is Cadastral Lot 4511, which has an original area of
PLS-775 of Nueva Valencia, Guimaras Cadastre and ordering the
around 17 hectares, more or less, later on, increased to 21 hectares.
issuance of a free patent or a torrens title in favor of plaintiff;
If we add Lot 4512 to Lot 4511 following the contention of the
plaintiff, then the area would be more than 28 hectares. Thus,
belying the claim of plaintiff that Lot 4512 was formerly a part of
4. Ordering defendant to pay the plaintiff P50,000.00 as moral Assessors Lot 160.
damages, P2,000.00 as attorneys fees and P2,000.00 as expenses on
litigation plus exemplary damages in an amount at the discretion of
this Court.
The contention of the plaintiff that the defendant is claiming Lot 989
which is owned by Felix Galabo and located at Brgy. Olacon, is not
well taken, because the identification of the lot as stated in the tax
Plaintiff further prays for such other relief just and equitable in the declaration is not binding and conclusive. What is binding and
premises.[12] conclusive is what is stated in the title of the land and its technical
description. In the technical description as found in the title of the
defendant [Sucaldito], it is clearly stated therein that the lot is Lot
4512 and is located at Brgy. Calaya and not Brgy. Olacon, Nueva
In her answer with counterclaim, Sucaldito interposed, as a special
Valencia, Guimaras.[18]
affirmative defense, the fact that she intervened in the proceedings
on Caros application for a free patent over Lot No. 4512 before the
Bureau of Lands having bought the subject land from De la Cruz.
Moreover, contrary to the allegations of the petitioner, Lot No. 989 Aggrieved by the trial courts ruling, Caro elevated the case to the CA
and Lot No. 4512 were one and the same lot, as per the findings of on the following grounds:
the Bureau of Lands.
I property described in the title actually belongs to another, as in this
case. The petitioner cites Vital v. Anore, et al.[25] to bolster his claim.
The petitioner also cites Director of Lands v. Abanilla[26] where the
Court stressed that any false statement in the application, which is
THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO
an essential condition of the patent or title under Section 91 of
PERSONALITY TO BRING THE ACTION;
Commonwealth Act No. 141, shall ipso facto produce the
cancellation of the concession, title or permit granted.

II

In her comment, the respondent points out that the decision of the
Bureau of Lands itself would show that the petitioner is not the true
THE COURT A QUO ERRED IN RULING THAT EVEN IF THE PLANTIFF and lawful owner of the subject lot; as such, the argument that he
HAS THE PERSONALITY TO BRING THE ACTION STILL HE CANNOT has the legal personality to file the action for annulment of patent
RECOVER THE LOT IN QUESTION, CAD. LOT NO. 4512; based on constructive trust is untenable. The respondent further
contends that the CA did not err in upholding the ruling of the RTC.

III
The petitioner merely reiterated his previous arguments in his Reply
dated December 30, 2003.

THE COURT ERRED IN NOT ORDERING THE DEFENDANT TO


RECONVEY THE LAND IN QUESTION TO PLAINTIFF AND TO PAY
DAMAGES.[19] The Court agrees with the ruling of the RTC and the CA, and holds
that the petitioner has no personality to file a suit for reconveyance
of the subject property.

The CA dismissed the petition in its Decision[20] dated July 31, 2002.
The appellate court agreed with the ruling of the RTC that the
petitioner had no personality to file the action under Section 101 of The Court notes that the petitioners complaint before the RTC prays
Commonwealth Act No. 141, considering further that he was a mere for the annulment of the free patent issued in the respondents favor.
applicant for a free patent. Citing several cases,[21] the appellate Considering that the ultimate relief sought is for the respondent to
court ruled that the findings of fact made by administrative agencies return the subject property to him, it is in reality an action for
which are supported by substantial evidence must be respected, reconveyance. In De Guzman v. Court of Appeals,[27] the Court held
particularly where the question demands the exercise of sound that [t]he essence of an action for reconveyance is that the decree of
administrative discretion requiring special knowledge and registration is respected as incontrovertible but what is sought
experience.[22] instead is the transfer of the property which has been wrongfully or
erroneously registered in another persons name, to its rightful
owner or to one with a better right.[28] Indeed, in an action for
reconveyance filed by a private individual, the property does not go
Caro filed a motion for reconsideration of the said decision, which back to the State.[29]
the appellate court denied in a Resolution[23] dated February 7,
2003.

Reversion, on the other hand, is an action where the ultimate relief


sought is to revert the land back to the government under the
Caro, now the petitioner, assails the ruling of the appellate court on Regalian doctrine. Considering that the land subject of the action
the following grounds: originated from a grant by the government, its cancellation is a
matter between the grantor and the grantee.[30]

THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR


IN HOLDING THAT PETITIONER HAS NO LEGAL PERSONALITY TO FILE Under Section 2, Rule 3 of the Rules of Court,[31] every action must
THIS ACTION; be prosecuted or defended in the name of the real party-in-interest,
or one who stands to be benefited or injured by the judgment in the
suit. Corollarily, legal standing has been defined as a personal and
THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE substantial interest in the case, such that the party has sustained or
APPEAL INTERPOSED BY PETITIONER ON THE GROUND THAT ONLY will sustain direct injury as a result of the challenged act. Interest
THE SOLICITOR GENERAL CAN FILE AN ACTION FOR RECONVEYANCE means a material interest in issue that is affected by the questioned
OF PROPERTY ACQUIRED BY PATENT.[24] act or instrument, as distinguished from a mere incidental interest in
the question involved.[32]

The petitioner insists that contrary to the ruling of the CA, he has the
legal personality to bring and institute the present action against the Clearly then, a suit filed by one who is not a party-in-interest must
respondent, considering that title issued on the basis of a patent is be dismissed. In this case, the petitioner, not being the owner of the
annullable on the ground of fraud. Furthermore, the one-year period disputed property but a mere applicant for a free patent, cannot
within which to file an action to cancel a torrens title under Section thus be considered as a party-in-interest with personality to file an
32 of Presidential Decree No. 1529 does not apply where the action for reconveyance. The Court, citing several of its holdings,
registered owner, or the successor-in-interest, knew that the expounded on this doctrine in Tankiko v. Cezar[33] as follows:
land. Undoubtedly, such interest is a mere expectancy. Even the
private respondents themselves claim that in case of reversion of
Thus, in Lucas v. Durian [102 Phil. 1157 (1957)], the Court affirmed ownership to the State, they only have pre-emptive rights to buy the
the dismissal of a Complaint filed by a party who alleged that the subject property; that their real interest over the said property is
patent was obtained by fraudulent means and, consequently, prayed contingent upon the governments consideration of their application
for the annulment of said patent and the cancellation of a certificate as buyers of the same. It is settled that a suit filed by a person who is
of title. The Court declared that the proper party to bring the action not a party-in-interest must be dismissed.[39]
was the government, to which the property would revert. Likewise
affirming the dismissal of a Complaint for failure to state a cause of
action, the Court in Nebrada v. Heirs of Alivio [104 Phil. 126 (1958)]
noted that the plaintiff, being a mere homestead applicant, was not In fact, Section 101 of Commonwealth Act No. 141 states
the real party-in-interest to institute an action for reconveyance.

Section 101. All actions for the reversion to the government of lands
... of the public domain or improvements thereon shall be instituted by
the Solicitor General or the officer acting in his stead, in the proper
courts, in the name of the Commonwealth [now Republic] of the
Philippines.
Verily, the Court stressed that [i]f the suit is not brought in the name
of or against the real party-in-interest, a motion to dismiss may be
filed on the ground that the complaint states no cause of action
[Travel Wide v. CA, 199 SCRA 205, 209 (1991), per Cruz, J. See also This provision was applied and discussed in Sumail v. Judge of the
Suguister v. Tamayo, 176 SCRA 579, August 21, 1989]. In fact, a final Court of First Instance of Cotabato, et al.,[40] a case on all fours with
judgment may be invalidated if the real parties-in-interest are not the present one, as follows:
included. This was underscored by the Court in Arcelona v. CA [280
SCRA 20, October 2, 1997], in which a final judgment was nullified
because indispensable parties were not impleaded.
Under Section 101 of the above reproduced, only the Solicitor
General or the officer acting in his stead may bring the action for
reversion. Consequently, Sumail may not bring such action or any
In the present dispute, only the State can file a suit for reconveyance action which would have the effect of cancelling a free patent and
of a public land. Therefore, not being the owners of the land but the corresponding certificate of title issued on the basis thereof, with
mere applicants for sales patents thereon, respondents have no the result that the land covered thereby will again form part of the
personality to file the suit. Neither will they be directly affected by public domain. Furthermore, there is another reason for withholding
the judgment in such suit.[34] legal personality from Sumail. He does not claim the land to be his
private property. In fact, by his application for a free patent, he had
formally acknowledged and recognized the land to be a part of the
public domain; this, aside from the declaration made by the
In De la Pea v. Court of Appeals,[35] the Court, in dismissing the cadastral court that lot 3633 was public land. Consequently, even if
petitioners imputation of fraud in securing a free patent and title the parcel were declared reverted to the public domain, Sumail does
over a parcel of land, declared that reconveyance is a remedy not automatically become the owner thereof. He is a mere public
granted only to the owner of the property alleged to be erroneously land applicant like others who may apply for the same.
titled in anothers name.[36] The Court further expounded:

To reiterate, the petitioner is not the proper party to file an action


Persons who have not obtained title to public lands could not for reconveyance that would result in the reversion of the land to the
question the titles legally issued by the State [Reyes v. Rodriguez, 62 government.[41] The petitioner has no personality to recover the
Phil. 771, 776 (1936)]. In such cases, the real party-in-interest is the property as he has not shown that he is the rightful owner thereof.
Republic of the Philippines to whom the property would revert if it is [42]
ever established, after appropriate proceedings, that the free patent
issued to the grantee is indeed vulnerable to annulment on the
ground that the grantee failed to comply with the conditions
imposed by the law. Not being an applicant, much less a grantee, WHEREFORE, premises considered, the petition is DENIED for lack of
petitioner cannot ask for reconveyance.[37] merit. The Decision of the Court of Appeals in CA-G.R. CV No. 45503
and the Resolution dated February 7, 2003 are AFFIRMED.

In VSC Commercial Enterprises, Inc. v. Court of Appeals,[38] where


the private respondents therein were mere lessees of the property
in question, the Court ruled that as mere lessees, they had no
THIRD DIVISION
present substantial and personal interest with respect to issues
involving ownership of the disputed property. The Court went on to
declare:
[G.R. No. 141296. October 7, 2002]

The only interest they have, in the event the petitioners title over the
subject property is cancelled and ownership reverts to the State, is REPUBLIC OF THE PHILIPPINES, Represented by the Regional
the hope that they become qualified buyers of the subject parcel of Executive Director, Region III, Department of Environment and
Natural Resources (DENR), petitioner, vs. HEIRS OF AGUSTIN L. 5. On the basis of said free patent, Original Certificate of Title No.
ANGELES, HEIRS OF CARMEN DE LEON Vda. DE ANGELES, LUZ 194 was issued and registered in the name of the late Agustin L.
GANCAYCO ALVAREZ and the REGISTER OF DEEDS of BALANGA, Angeles.
BATAAN, respondents.

The lot covered by OCT No. 194 is more particularly described, as


DECISION follows:

PANGANIBAN, J.: Lot No. 2744, Cad. 241 Beginning at a point marked 1 of Lot No.
2744 of Cad. 241, being S.85-04E, 481.83m. from BBM No. 1, Cad.
241; thence, N.04-36W., 34-90 m. to point 2; N.11.08W., 84.40m. to
point 3; N.66-27E., 39.65m. to point 4; S.02-02W., 239.83m. to point
Elementary is the rule that prescription and laches will not bar
5; N.03-56W., 67.00m. to point 6; N.06-04W., 39-65m. to point 1,
actions filed by the State to recover its own property acquired
point of beginning.
through fraud by private individuals.

Containing an area of THREE THOUSAND FIVE HUNDRED AND


The Case
SEVENTY EIGHT (3,578) SQUARE METERS.

Before us is a Petition for Review on Certiorari[1] seeking to set aside


All points are marked on the ground by Old Points.
the Order[2] dated September 7, 1999, issued by the Regional Trial
Court (RTC) of Balanga, Bataan in Civil Case No. 6789. The challenged
Order granted, on the ground of prescription, herein respondents
Motion to Dismiss petitioners Complaint for Reversion. Bounded on the W., along Lines 1-2-3 by Lot 2107, Cad. 241; on the
N., along line 3-4 by Lot 2106, Cad. 241; on the E., along line 4-5 by
Public Land; and on SW., along line 5-6 by Lot 2105, Cad. 241; and
along line 6-1 by Lot 2106, Cad. 241.
The decretal portion of the assailed Order reads as follows:

xxxxxxxxx
WHEREFORE, [being] meritorious, the [Motion to Dismiss] is hereby
GRANTED and the instant complaint x x x DISMISSED.[3]

6. On April 16, 1967, Agustin L. Angeles died.

The Facts

xxxxxxxxx

The present proceedings spring from a Complaint[4] filed before the


RTC by the regional executive director of Region III of the
Department of Environment and Natural Resources (DENR). The 7. It appears, however, that the late Agustin L. Angeles, prior to his
Complaint was for the reversion to the State of Lot No. 2744, death, was able to transfer and convey in favor of his sister, Emilia L.
Cadastral 241, Orion Cadastre. Petitioners narration of the facts is as Angeles (now deceased) the one-half (1/2) northern portion of Lot
follows: No. 2744, by means of a Deed of Absolute Sale that was postdated
January 5, 1970, when Agustin L. Angeles was already dead. x x x.

xxxxxxxxx
8. The postdating of the Deed of Absolute Sale to January 5, 1970,
was obviously done to evade the prohibition of any alienation or
encumbrance of the free patent within a period of five (5) years.
3. On July 30, 1963, the late Agustin L. Angeles filed his Free Patent
Application No. 7-1-2021 covering a parcel of land identified as Lot
No. 2744, Cad. 241, Orion Cadastre, situated in Capunitan, Orion,
Bataan, and with an area of 3,578 square meters. 9. Then again, the late Emilia L. Angeles was able to transfer and
convey, by way of a Deed of Absolute Sale dated January 27, 1973,
the same one-half (1/2) northern portion in favor of her daughter,
Luz Gancayco Alvarez.
4. By virtue of the said free patent application, Free Patent No.
265340 was issued in favor of the late Agustin L. Angeles on February
24, 1964.
xxxxxxxxx
10. TCT No. T-43712 was thereafter issued by the Register of Deeds 2.3 Thereafter, Emilia L. Angeles was able to sell, transfer and convey,
who registered the title of the lot, on the basis of a half-half share, in by way of Deed of Absolute Sale dated 27 January 1973 the same
the names of the late Agustin L. Angeles and Luz Gancayco Alvarez. x one-half (1/2) northern portion of Lot 2744 in favor of respondent
x x. Luz Gancayco-Alvarez, her daughter for and in consideration of ONE
THOUSAND FIVE HUNDRED PESOS (P1,500.00). x x x

11. On November 19, 1976, the Samahang Nayon members and


Barangay members of Capunitan, Orion, Bataan, represented by 2.4 By virtue of said Deed of Absolute Sale, Transfer Certificate of
Elvira E. Manabat filed a Protest before the then Bureau of Lands. Title (TCT) No. T-43712 was issued, registered and entered on 5
February 1973 in the name of respondent Luz-Gancayco Alvarez and
the late Agustin L. Angeles by the Register of Deeds of Bataan. Copy
of the TCT No. T-43712 is attached as Annex 4 to the Motion to
12. Consequently, a series of land investigators and ocular
Dismiss.
inspections, with notice to all concerned parties, were ordered to be
conducted by the DENR Regional Office over Free Patent No. 265340.

2.5. Since the issuance of the Free Patent, the late Agustin L. Angeles
and thereafter his heirs, enjoyed open, peaceful, exclusive and
13. In a formal investigation conducted by the DENR, it was found
continuous possession and exercised and continued to exercise all
out that:
the attributes of ownership over Lot 2744. In the same vein,
respondent Luz Gancayco-Angeles, since the time of the deed of
conveyance to her of the one-half (1/2) northern portion of Lot
a. the late Agustin L. Angeles or his predecessors-in-interest, have 2744, enjoyed the same open, peaceful, exclusive and continuous
never occupied nor cultivated Lot No. 2744 prior to and after the possession of the property and has exercised and continued to
issuance of the Free Patent in his name, the same having been in the exercise all attributes of ownership over said one-half (1/2) portion.
actual and continuous occupation by the members of the Samahang
Nayon since the prewar days;
2.6. On 20 May 1998, the complaint for reversion of Lot 2744 was
filed by herein petitioner, more than thirty-four (34) years after the
b. Lot No. 2744 is not an agricultural land but a residential land grant and issuance of the Free Patent in favor of the late Agustin L.
bordering the shoreline of Manila Bay; and that. Angeles and more than twenty-eight (28) years from the time
Agustin L. Angeles sold one-half of the property to his sister, Emilia L.
Angeles.[6]

c. the late Agustin L. Angeles conveyed the 1/2 northern portion of


Lot No. 2744 during the prohibitory period of five (5) years or prior
to his death in favor of the late Emilia L. Angeles. On April 20, 1999, Respondent Luz Gancayco Alvarez filed a Motion
to Dismiss,[7] alleging therein that petitioners cause of action had
been barred by the statute of limitations and should therefore be
deemed abandoned. On May 20, 1999, Respondents Heirs of Agustin
x x x x x x x x x[5] L. Angeles and Heirs of Carmen de Leon vda. de Angeles filed an Ex
Parte Manifestation and Motion[8] adopting the Motion to Dismiss
filed by Alvarez.
Respondents version of the facts, on the other hand, is as follows:

The Lower Courts Ruling


2. Deceased Agustin L. Angeles filed his Free Patent Application No.
7-1-2021 covering a parcel of land identified as Lot No. 2744, Cad.
241, Orion Cadastre, situated in Capunitan, Orion, Bataan, with an Agreeing with private respondents, the court a quo held that the
area of 3,578 square meters on 30 July 1963. Thereafter, Free Patent States cause of action had prescribed, because the Complaint had
No. 265340 was issued and registered in his name on 24 February been filed beyond the prescriptive period of four years from the
1964. issuance of the Original Certificate of Title (OCT). The RTC further
ruled that Respondent Alvarez was an innocent purchaser for value;
her title, being already indefeasible, could therefore no longer be
2.1. Original Certificate of Title (OCT) No. 194 was issued which is revoked or cancelled.[9]
registered in the name of Agustin L. Angeles based on said Free
Patent. x x x
Hence, this Petition.[10]

2.2 Before he died, Agustin L. Angeles was able to sell, transfer and
convey in favor of his sister, Emilia L. Angeles, the one-half (1/2) The Issue
northern portion of Lot No. 2744 for and in consideration of ONE
THOUSAND PESOS (P1,000.00) by means of a Deed of Absolute Sale
dated 5 January 1970. x x x
In its Memorandum, petitioner urges the Court to resolve the
following question:
patents or certificates of title may be recovered or reverted to the
State in accordance with Section 101 of the Public Land Act. The
Whether or not the trial court committed a grave error of law in right of reversion or reconveyance to the State is not barred by
dismissing the complaint for reversion on the ground of prescription. prescription.[20]
[11]

Respondents allege that based on Article 1113[21] of the Civil Code,


The Courts Ruling patrimonial property of the State may be the subject of prescription.
However, the question of whether the land is agricultural,
residential, or patrimonial in character is one of fact, which should
be threshed out during the trial. Hence, the applicability of Ramirez
The Petition is meritorious.
v. Court of Appeals[22] and the commentaries of Sen. Arturo M.
Tolentino on this point cannot be ruled upon now. The same is true
with regard to the question of whether Gancayco-Alvarez is an
Main Issue innocent purchaser for value. The only issue that can be decided
now is legal: whether prescription may as a rule run against the
State.

Does Prescription Run Against the State?

WHEREFORE, the Petition is GRANTED and the assailed Order SET


ASIDE. The Regional Trial Court of Bataan is DIRECTED to hear Civil
In its assailed Order, the court a quo relied on Esconde v. Barlongay,
Case No. 6789 on the merits, with all reasonable speed. No costs.
[12] which held that an action for reconveyance based on fraud must
be filed within four years from the discovery of its cause. Such
discovery shall be deemed to have taken place from the issuance of
the OCT.

We hold, however, that Esconde is inapplicable to the present


appeal. That case involved an action for reconveyance, a legal and
equitable remedy granted to the rightful owner of land that has
been wrongfully or erroneously registered in the name of another.
The purpose of reconveyance is to compel a person, under whose
name the property was wrongfully registered, to transfer or
reconvey it to the rightful owner.[13] Note that in Esconde, the
Complaint for Reconveyance was filed by a private individual.
Furthermore, the property therein had long been the subject of
ordinary land registration and did not involve public land.

On the other hand, the instant case involves a reversion sought by


the State through the Office of the Solicitor General. Petitioners
Complaint for Reversion primarily seeks the cancellation of the
illegally obtained free patent and certificate of title, as well as the
consequent reversion of the subject land which was originally public
in character. In a reconveyance filed by a private individual, the
property does not go back to the State.[14] Clearly then, the facts
and the issues in Esconde differ from those obtaining in the present
case.

True, a title issued on the basis of a free patent is as indefeasible as


one judicially secured.[15] However, this indefeasibility cannot be a
bar to an investigation by the State as to how such title has been
acquired, if the purpose of the investigation is to determine whether
or not fraud has been committed in securing the title.[16] One who
succeeds in fraudulently acquiring title to public land should not be
allowed to benefit from it.[17]

Elementary is the rule that prescription does not run against the
State and its subdivisions.[18] When the government is the real
party in interest, and it is proceeding mainly to assert its own right to
recover its own property, there can as a rule be no defense grounded
on laches or prescription.[19] Public land fraudulently included in
[G.R. No. 157536. May 16, 2005] Plan marked as Exhibit 9 of the Respondent-Applicant. It has been
established that Assessors Lot No. 160 corresponds to Lot No. 4511
and not Lot No. 4512 claimed by the protestant. Moreover, Ruperto
Cepellano (sic) in his affidavit testified that what he sold to Gregorio
MELCHOR CARO, petitioner, vs. SUSANA SUCALDITO, respondent.
Caro is a land distinct and different from the land in question.

DECISION
IN VIEW OF THE FOREGOING FINDINGS, it is ordered that the F.P.A.
No. (VI-1)8548 of applicant-respondent Melchor Caro be, as hereby
it is, cancelled. Protestant Deogracias de la Cruz if qualified, is given
CALLEJO, SR., J.: one hundred twenty (120) days from the finality of this decision to
file an appropriate public land application otherwise he shall lose his
preferential right thereto.

This is a petition for review on certiorari under Rule 45 of the Rules


of Court, assailing the Decision[1] of the Court of Appeals (CA) in CA-
G.R. CV No. 45503, affirming the dismissal of Civil Case No. 15529 by SO ORDERED.[5]
the Regional Trial Court (RTC) of Iloilo City, Branch 39, as well as the
resolution denying the motion for reconsideration thereof.
Caro filed a notice of appeal before the Regional Land Office in Iloilo
City, docketed as MNR Case No. 5207. However, the appeal was
The antecedent facts are as follows: dismissed in an Order[6] dated June 29, 1982, on the ground of
failure to file an appeal memorandum within the reglementary
period therefor.

Gregorio Caro bought a parcel of land known as Assessors Lot No.


160 from Ruperto Gepilano as evidenced by a Deed of Sale[2] dated
October 21, 1953. The said lot was situated in Sitio Bangyan, Barrio On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No.
Calaya, Municipality of Nueva Valencia, Iloilo City, consisting more or 4512, filed an Application for a Free Patent[7] covering the said lot,
less of 17.9849 hectares. Thereafter, Gregorio Caro sold a portion of and was issued Free Patent No. 597599. Consequently, the Register
the said lot to his son Melchor Caro, consisting of 70,124 square of Deeds of Iloilo City issued Original Certificate of Title (OCT) No. F-
meters, and now identified as Lot No. 4512 of the Cadastral survey 27162 in her favor. Sucaldito then filed a Petition for Writ of
of Nueva Valencia, Pls-775. Father and son executed a Deed of Possession[8] before the RTC of Iloilo City, which was granted in an
Definite Sale[3] dated January 31, 1973 covering Lot No. 4512. Order[9] dated May 7, 1984.

On August 1, 1974, Melchor Caro applied for a free patent before the Thereafter, on February 20, 1984, Caro filed a Complaint[10] against
Bureau of Lands, District Land Office No. 6-1, covering the said area Sucaldito for Annulment of Title, Decision, Free Patent and/or
of the property which he bought from his father. The application Recovery of Ownership and/or Possession with Damages before the
was, however, opposed by Deogracias de la Cruz. On November 6, RTC of Iloilo City. He later filed an amended complaint,[11] alleging
1980, the Regional Director rendered a Decision[4] canceling the said that he was the owner of the subject lot, and had been in possession
application, thusly: of the same since 1953 and/or even prior thereto in the concept of
owner, adversely, openly, continuously and notoriously. He further
alleged that the said lot had been declared for tax purposes in his
name and that of his predecessors-in-interest, and that the
This is a claim of Deogracias de la Cruz to Lot No. 4512, Pls-775 of corresponding land taxes had been paid therefor. He claimed that
Calaya, Nueva Valencia, Guimaras, covered by the above-noted Assessors Lot No. 160 had actually been divided into two lots,
application of Melchor Caro. namely, Lot No. 4511 and Lot No. 4512; Sucaldito had actually been
claiming Lot No. 989 (Lot No. 4512), which was located two
kilometers away. He lamented that despite the overwhelming
In the investigation, respondent claims preferential rights over the evidence proving his ownership and possession of the said property,
land as he acquired it through sale from his father Gregorio Caro the Bureau of Lands did not award it to him.
who had likewise bought the land from Ruperto Cepellano (sic) in
1953. On the other hand, protestant De la Cruz testified that the
land in controversy was bought by him from Cipriano Gallego in Caro further alleged that since the issuance of the free patent over
1965; that he thereafter occupied, possessed and improved the land the subject lot in favor of Sucaldito was wrongful and fraudulent, she
by planting coconut trees; and that in 1968 he was forcibly driven had no right whatsoever over the subject lot. Hence, as a trustee of a
out by Gregorio Caro from the land in question. constructive trust, she was obliged to return the same to him as the
lawful owner. The complaint contained the following prayer:

Verification of the records disclosed that the land which was actually
sold to Gregorio Caro by Ruperto Gepellano (sic) is Assessors Lot No. WHEREFORE, it is prayed that judgment be rendered:
160. The description and physical identity of Lot No. 160 is basically
different and distinct from Lot No. 4512, the land in question. This
could be clearly seen in the Certified True Copy of the Sketch Plan
from the Assessors Office of Assessors Lot No. 160 and the Sketch
1. Ordering the annulment and voiding of the decision of the Bureau stressed that the remedy of a rival-applicant for a free patent over
of Lands, the free patent and the Original Certificate of Title No. F- the same land was through administrative channels, not judicial,
27162 or in the alternative; because even if the oppositor succeeds in annulling the title of the
applicant, the former does not thereby become the owner of the
land in dispute.[17]

2. Ordering defendant to reconvey the ownership and in the event


she wrests possession from plaintiff then, also the possession of Lot
4512 PLS-775 of Nueva Valencia, Guimaras Cadastre, back to The trial court also declared that contrary to Caros claims, the
plaintiff; evidence clearly showed that Lot No. 4512, with an area of 70,677
square meters, was not included in Assessors Lot No. 160, thus:

3. Declaring plaintiff as the lawful owner and possessor of Lot 4512


PLS-775 of Nueva Valencia, Guimaras Cadastre and ordering the Assessors Lot 160 is Cadastral Lot 4511, which has an original area of
issuance of a free patent or a torrens title in favor of plaintiff; around 17 hectares, more or less, later on, increased to 21 hectares.
If we add Lot 4512 to Lot 4511 following the contention of the
plaintiff, then the area would be more than 28 hectares. Thus,
belying the claim of plaintiff that Lot 4512 was formerly a part of
4. Ordering defendant to pay the plaintiff P50,000.00 as moral
Assessors Lot 160.
damages, P2,000.00 as attorneys fees and P2,000.00 as expenses on
litigation plus exemplary damages in an amount at the discretion of
this Court.
The contention of the plaintiff that the defendant is claiming Lot 989
which is owned by Felix Galabo and located at Brgy. Olacon, is not
well taken, because the identification of the lot as stated in the tax
Plaintiff further prays for such other relief just and equitable in the
declaration is not binding and conclusive. What is binding and
premises.[12]
conclusive is what is stated in the title of the land and its technical
description. In the technical description as found in the title of the
defendant [Sucaldito], it is clearly stated therein that the lot is Lot
In her answer with counterclaim, Sucaldito interposed, as a special 4512 and is located at Brgy. Calaya and not Brgy. Olacon, Nueva
affirmative defense, the fact that she intervened in the proceedings Valencia, Guimaras.[18]
on Caros application for a free patent over Lot No. 4512 before the
Bureau of Lands having bought the subject land from De la Cruz.
Moreover, contrary to the allegations of the petitioner, Lot No. 989
Aggrieved by the trial courts ruling, Caro elevated the case to the CA
and Lot No. 4512 were one and the same lot, as per the findings of
on the following grounds:
the Bureau of Lands.

I
The parties thereafter presented evidence to prove their respective
claims. In a Decision[13] dated December 7, 1993, the trial court
ruled in favor of the respondent and dismissed the petitioners
complaint. The dispositive portion reads: THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO
PERSONALITY TO BRING THE ACTION;

WHEREFORE, premises considered, the complaint filed by plaintiff is


dismissed. The counterclaim of defendant which is merely the result II
of the filing of the complaint, is likewise dismissed.

THE COURT A QUO ERRED IN RULING THAT EVEN IF THE PLANTIFF


Costs against the plaintiff. HAS THE PERSONALITY TO BRING THE ACTION STILL HE CANNOT
RECOVER THE LOT IN QUESTION, CAD. LOT NO. 4512;

SO ORDERED.[14]
III

Citing the case of Maximo v. Court of First Instance of Capiz, Br. III,
[15] the trial court ruled that Caro had no personality to file the THE COURT ERRED IN NOT ORDERING THE DEFENDANT TO
action for the annulment of the free patent issued in favor of RECONVEY THE LAND IN QUESTION TO PLAINTIFF AND TO PAY
Sucaldito, which could only be brought by the Solicitor General. It DAMAGES.[19]
held that an applicant for a free patent who is not the owner of a
parcel of land cannot bring an action in court to recover the land, for
the court may not usurp the authority of the Director of Lands and
The CA dismissed the petition in its Decision[20] dated July 31, 2002.
the Secretary of Agriculture to dispose lands of the public domain
The appellate court agreed with the ruling of the RTC that the
through administrative proceedings under the Public Land Act,[16]
petitioner had no personality to file the action under Section 101 of
or Commonwealth Act No. 141, as amended. The trial court further
Commonwealth Act No. 141, considering further that he was a mere
applicant for a free patent. Citing several cases,[21] the appellate Considering that the ultimate relief sought is for the respondent to
court ruled that the findings of fact made by administrative agencies return the subject property to him, it is in reality an action for
which are supported by substantial evidence must be respected, reconveyance. In De Guzman v. Court of Appeals,[27] the Court held
particularly where the question demands the exercise of sound that [t]he essence of an action for reconveyance is that the decree of
administrative discretion requiring special knowledge and registration is respected as incontrovertible but what is sought
experience.[22] instead is the transfer of the property which has been wrongfully or
erroneously registered in another persons name, to its rightful
owner or to one with a better right.[28] Indeed, in an action for
reconveyance filed by a private individual, the property does not go
Caro filed a motion for reconsideration of the said decision, which
back to the State.[29]
the appellate court denied in a Resolution[23] dated February 7,
2003.

Reversion, on the other hand, is an action where the ultimate relief


sought is to revert the land back to the government under the
Caro, now the petitioner, assails the ruling of the appellate court on
Regalian doctrine. Considering that the land subject of the action
the following grounds:
originated from a grant by the government, its cancellation is a
matter between the grantor and the grantee.[30]

THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR


IN HOLDING THAT PETITIONER HAS NO LEGAL PERSONALITY TO FILE
Under Section 2, Rule 3 of the Rules of Court,[31] every action must
THIS ACTION;
be prosecuted or defended in the name of the real party-in-interest,
or one who stands to be benefited or injured by the judgment in the
suit. Corollarily, legal standing has been defined as a personal and
THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE substantial interest in the case, such that the party has sustained or
APPEAL INTERPOSED BY PETITIONER ON THE GROUND THAT ONLY will sustain direct injury as a result of the challenged act. Interest
THE SOLICITOR GENERAL CAN FILE AN ACTION FOR RECONVEYANCE means a material interest in issue that is affected by the questioned
OF PROPERTY ACQUIRED BY PATENT.[24] act or instrument, as distinguished from a mere incidental interest in
the question involved.[32]

The petitioner insists that contrary to the ruling of the CA, he has the
legal personality to bring and institute the present action against the Clearly then, a suit filed by one who is not a party-in-interest must
respondent, considering that title issued on the basis of a patent is be dismissed. In this case, the petitioner, not being the owner of the
annullable on the ground of fraud. Furthermore, the one-year period disputed property but a mere applicant for a free patent, cannot
within which to file an action to cancel a torrens title under Section thus be considered as a party-in-interest with personality to file an
32 of Presidential Decree No. 1529 does not apply where the action for reconveyance. The Court, citing several of its holdings,
registered owner, or the successor-in-interest, knew that the expounded on this doctrine in Tankiko v. Cezar[33] as follows:
property described in the title actually belongs to another, as in this
case. The petitioner cites Vital v. Anore, et al.[25] to bolster his claim.
The petitioner also cites Director of Lands v. Abanilla[26] where the
Thus, in Lucas v. Durian [102 Phil. 1157 (1957)], the Court affirmed
Court stressed that any false statement in the application, which is
the dismissal of a Complaint filed by a party who alleged that the
an essential condition of the patent or title under Section 91 of
patent was obtained by fraudulent means and, consequently, prayed
Commonwealth Act No. 141, shall ipso facto produce the
for the annulment of said patent and the cancellation of a certificate
cancellation of the concession, title or permit granted.
of title. The Court declared that the proper party to bring the action
was the government, to which the property would revert. Likewise
affirming the dismissal of a Complaint for failure to state a cause of
In her comment, the respondent points out that the decision of the action, the Court in Nebrada v. Heirs of Alivio [104 Phil. 126 (1958)]
Bureau of Lands itself would show that the petitioner is not the true noted that the plaintiff, being a mere homestead applicant, was not
and lawful owner of the subject lot; as such, the argument that he the real party-in-interest to institute an action for reconveyance.
has the legal personality to file the action for annulment of patent
based on constructive trust is untenable. The respondent further
contends that the CA did not err in upholding the ruling of the RTC.
...

The petitioner merely reiterated his previous arguments in his Reply


Verily, the Court stressed that [i]f the suit is not brought in the name
dated December 30, 2003.
of or against the real party-in-interest, a motion to dismiss may be
filed on the ground that the complaint states no cause of action
[Travel Wide v. CA, 199 SCRA 205, 209 (1991), per Cruz, J. See also
The Court agrees with the ruling of the RTC and the CA, and holds Suguister v. Tamayo, 176 SCRA 579, August 21, 1989]. In fact, a final
that the petitioner has no personality to file a suit for reconveyance judgment may be invalidated if the real parties-in-interest are not
of the subject property. included. This was underscored by the Court in Arcelona v. CA [280
SCRA 20, October 2, 1997], in which a final judgment was nullified
because indispensable parties were not impleaded.

The Court notes that the petitioners complaint before the RTC prays
for the annulment of the free patent issued in the respondents favor.
In the present dispute, only the State can file a suit for reconveyance action which would have the effect of cancelling a free patent and
of a public land. Therefore, not being the owners of the land but the corresponding certificate of title issued on the basis thereof, with
mere applicants for sales patents thereon, respondents have no the result that the land covered thereby will again form part of the
personality to file the suit. Neither will they be directly affected by public domain. Furthermore, there is another reason for withholding
the judgment in such suit.[34] legal personality from Sumail. He does not claim the land to be his
private property. In fact, by his application for a free patent, he had
formally acknowledged and recognized the land to be a part of the
public domain; this, aside from the declaration made by the
In De la Pea v. Court of Appeals,[35] the Court, in dismissing the
cadastral court that lot 3633 was public land. Consequently, even if
petitioners imputation of fraud in securing a free patent and title
the parcel were declared reverted to the public domain, Sumail does
over a parcel of land, declared that reconveyance is a remedy
not automatically become the owner thereof. He is a mere public
granted only to the owner of the property alleged to be erroneously
land applicant like others who may apply for the same.
titled in anothers name.[36] The Court further expounded:

To reiterate, the petitioner is not the proper party to file an action


Persons who have not obtained title to public lands could not
for reconveyance that would result in the reversion of the land to the
question the titles legally issued by the State [Reyes v. Rodriguez, 62
government.[41] The petitioner has no personality to recover the
Phil. 771, 776 (1936)]. In such cases, the real party-in-interest is the
property as he has not shown that he is the rightful owner thereof.
Republic of the Philippines to whom the property would revert if it is
[42]
ever established, after appropriate proceedings, that the free patent
issued to the grantee is indeed vulnerable to annulment on the
ground that the grantee failed to comply with the conditions
imposed by the law. Not being an applicant, much less a grantee, WHEREFORE, premises considered, the petition is DENIED for lack of
petitioner cannot ask for reconveyance.[37] merit. The Decision of the Court of Appeals in CA-G.R. CV No. 45503
and the Resolution dated February 7, 2003 are AFFIRMED.

In VSC Commercial Enterprises, Inc. v. Court of Appeals,[38] where


the private respondents therein were mere lessees of the property FIRST DIVISION
in question, the Court ruled that as mere lessees, they had no
present substantial and personal interest with respect to issues
involving ownership of the disputed property. The Court went on to
[G.R. No. 123231. November 17, 1997]
declare:

HEIRS OF MARCIANO NAGAO, petitioners, vs. COURT OF APPEALS,


The only interest they have, in the event the petitioners title over the
SPOUSES PONCIANO MALLARI and GLORIA BINUYA, SPOUSES ELENA
subject property is cancelled and ownership reverts to the State, is
MALLARI and MELENCIO TULABAN, and REGINA MALLARI,
the hope that they become qualified buyers of the subject parcel of
respondents.
land. Undoubtedly, such interest is a mere expectancy. Even the
private respondents themselves claim that in case of reversion of
ownership to the State, they only have pre-emptive rights to buy the
subject property; that their real interest over the said property is DECISION
contingent upon the governments consideration of their application
as buyers of the same. It is settled that a suit filed by a person who is
not a party-in-interest must be dismissed.[39]
DAVIDE, JR., J.:

In fact, Section 101 of Commonwealth Act No. 141 states


In this petition for review under Rule 45 of the Rules of Court,
petitioners seek the reversal of the decision of the Court of Appeals
in CA-G.R. CV No. 40017[1] which set aside the Order of the Regional
Section 101. All actions for the reversion to the government of lands Trial Court of Gapan, Nueva Ecija, Branch 35 in Civil Case No. 836[2]
of the public domain or improvements thereon shall be instituted by dismissing private respondents complaint[3] which sought the
the Solicitor General or the officer acting in his stead, in the proper declaration of nullity of the Original Certificate of Title (OCT) issued
courts, in the name of the Commonwealth [now Republic] of the pursuant to a Free Patent in the name of petitioners.
Philippines.

The factual antecedents, as succinctly summarized by the Court of


This provision was applied and discussed in Sumail v. Judge of the Appeals, are as follows:
Court of First Instance of Cotabato, et al.,[40] a case on all fours with
the present one, as follows:

Plaintiffs-appellants [private respondents] filed a complaint for the


declaration of nullity of Original Certificate of Title No. P-8265 issued
Under Section 101 of the above reproduced, only the Solicitor in the name of the heirs of Marciano Nagao and covering Cad. Lot.
General or the officer acting in his stead may bring the action for No. 3275. Plaintiff-appellants alleged that the issuance of the said
reversion. Consequently, Sumail may not bring such action or any title was on account of the fraud, deceit, and misrepresentation
committed by defendant Macario Valerio. An information for perjury award of the patent and grant of certificate of title to another
was even filed on November 2, 1983 against defendant Valerio, who person.
unlawfully attested that Lot No. 3275 was not occupied or being
claimed by other persons. Plaintiff-appellants alleged that part of the
subject property was owned by their predecessors-in-interest Rufino
Petitioners motion to reconsider[9] having been denied by the Court
Mallari and Fermina Jamlig and that they were in possession of the
of Appeals in its Resolution of 20 December 1995,[10] petitioners
said land since 1920. They recently discovered that their entire Lot
filed the petition at bar alleging that:
No. 3275 was registered by defendant Valerio under Free Patent No.
(III-2) 001953 and OCT No. P-8265 in the name of the heirs of
Marciano Nagao. They allegedly demanded from defendant Valerio
to execute the necessary document in order that the 2,250 square I
meters owned by them be segregated from the property titled in the
name of the defendants-appellees [petitioners herein]. Defendants-
appellees, however, refused to accede their demands.
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE
ORDER OF DISMISSAL, CONSIDERING THE FACT THAT PRIVATE
RESPONDENTS DO NOT HAVE THE LEGAL PERSONALITY TO CONTEST
A motion to dismiss was filed by defendants-appellees on the THE FINAL AWARD MADE BY THE DIRECTOR OF LANDS, AND CIVIL
following grounds, viz.: COURTS ARE DEVOID OF JURISDICTION AND AUTHORITY TO REVIEW
OR CONTROL SUCH FINAL JUDGMENT.

1. The court has no jurisdiction over the nature of the action;


II

2. Plaintiffs have no cause of action against the defendants, since suit


for annulment of title which actually is a reversion proceedings PRIVATE RESPONDENTS PRINCIPAL CAUSE OF ACTION IN THIS CASE IS
should be instituted by the Solicitor; FOR THE AWARD IN THEIR FAVOR OF 2,250 SQUARE METERS
PORTION OF THAT PARCEL OF LAND COVERED BY OCT NO. P-8265
AND CIVIL COURTS HAVE NO JURISDICTION OVER THE NATURE OF
THE ACTION SINCE IT IS THE DIRECTOR OF LANDS, NOT THE CIVIL
3. Plaintiffs cause of action is barred by the statute of limitations, the
COURTS, WHO IS VESTED WITH JURISDICTION TO DECIDE [TO]
lawsuit having been instituted more than one year, or in fact almost
WHOM TO AWARD DISPOSABLE LANDS OF THE PUBLIC DOMAIN.
fifteen years after the issuance of the title.[4]

III
In its Order of 21 September 1992,[5] the trial court granted
petitioners motion to dismiss on the ground that:

PRIVATE RESPONDENTS HAVE NO CAUSE OF ACTION AGAINST THE


PETITIONERS, SINCE [A] SUIT FOR ANNULMENT OF TITLE WHICH
[The] action to annul the subject certificate of title, which is the
ACTUALLY IS A REVERSION PROCEEDINGS [sic], SHOULD BE
plaintiffs principal cause of action, should be instituted by the
INSTITUTED BY THE SOLICITOR GENERAL.
Solicitor General. (Lopez v. Padilla, 45 SCRA 44; Maximo v. CFI of
Capis (sic), 182 SCRA 420; and Sumali v. Judge of CFI Cotabato, 96
Phil. 946, cited by the defendants).
IV

Private respondents appealed the order of dismissal to respondent


court raising this lone assignment of error: PRIVATE RESPONDENTS CAUSE OF ACTION IS BARRED BY THE
STATUTE OF LIMITATIONS, THE LAWSUIT HAVING BEEN INSTITUTED
MORE THAN ONE YEAR, OR IN FACT ALMOST FIFTEEN YEARS, AFTER
THE ISSUANCE OF THE TITLE.
THE COURT ERRED IN DISMISSING THE CASE AND/OR ALL THE
CAUSES OF ACTION OF THE PLAINTIFF-APPELLANTS.[6]

The Court of appeals correctly set aside the challenged order of the
trial court, but not necessarily for the correct reasons. The trial court
In its decision[7] of 20 September 1995, the Court of Appeals set
sustained the second ground of petitioners motion to dismiss,
aside the challenged order of the trial court and reinstated private
namely, that private respondents had no cause of action since the
respondents complaint. Applying Agne v. Director of Lands,[8]
suit for annulment of title amounted to a reversion proceeding
respondent court distinguished private respondents action from a
which only the Office of the Solicitor general could initiate. The
review of the decree of title on the ground of fraud, and held that
propriety of that ruling was the primary issue before the Court of
the rule on the incontrovertibility of a certificate of title upon the
Appeals, as the trial court did not deem it necessary to rule on the
expiration of one year after the entry of the decree did not apply as
other grounds, viz., (a) lack of jurisdiction over the nature of the
the action for cancellation of the patent and certificate of title issued
action; and (2) that private respondents cause of action was barred
pursuant thereto was instituted on the ground that they were null
by the statute of limitations since the action was filed more than one
and void as the Bureau of Lands had no jurisdiction to issue them,
year after issuance of the title.
the land having been withdrawn from the public domain prior to the
least thirty years immediately preceding the filing of the application
for confirmation of title except when prevented by war or force
The rule is settled that a motion to dismiss a complaint majeure. These shall be conclusively presumed to have performed all
hypothetically admits the truth of the facts alleged therein.[11] In the conditions essential to a Government grant and shall be entitled
their complaint,[12] private respondents specifically alleged that: (a) to a certificate of title under the provisions of this chapter.[13]
they are the heirs of Rufino Mallari and Fermina Jamlig who are part
owners of a parcel of land known as Cad. 324-D, Lot 3275, situated
at Mambangan, San Leonardo, Nueva Ecija; (b) the portion belonging
to private respondents, with an area of 2,250 square meters, was Under Section 48, a subject lot is, for all legal intents and purposes,
covered by tax declarations in their names, occupied and possessed segregated from the public domain, because the beneficiary is
by their predecessors-in-interest since 1920 and continuously conclusively presumed to have performed all the conditions essential
thereafter until the present; (c) their possession has been peaceful, to a Government grant and shall be entitled to a certificate of title
public, continuous, adverse and in the concept of an owner; (d) on or under the provisions of this chapter.
about 18 February 1974, defendant Macario Valerio, in order to
deprive private respondents of their rights over and ownership of
the portion of the lot, committed perjury, for which he is now
Consequently, merely on the basis of the allegations in the
criminally charged in court, by causing the entire Lot 3275 to be
complaint, the lot in question is apparently beyond the jurisdiction
registered under Free Patent No. (III-2) 001953 and the issuance of
of the Director of the Bureau of Lands and could not be the subject
original certificate of Title No. P-8265, both in the name of Marciano
of a Free Patent. Hence, dismissal of private respondents complaint
Nagao, represented by Macario Valerio; (e) on account of the fraud,
was premature and trial on the merits should have been conducted
deceit and misrepresentation committed by Macario Valerio, the
to thresh out evidentiary matters.
grant of the patent and issuance of the title were null and void and
the indefeasibility of a title issued pursuant thereto one year after
did not apply; (f) upon discovery, only recently, of the issuance of the
title in the name of the Heirs of Marciano Nagao, private It would have been entirely different if the action were clearly for
respondents demanded from Macario Valerio the execution of the reversion, in which case, it would have to be instituted by the
necessary documents segregating the 2,250 square meter portion Solicitor General pursuant to Section 101 of C.A. No. 141, which
and transferring the property to them, however Macario refused provides:
without justifiable cause or reason; and (g) as a consequence of
Macarios refusal, they suffered moral damages and were compelled
to incur expenses and secure the services of counsel. Private
SEC. 101. All actions for the reversion to the Government of lands of
respondents then prayed, inter alia, that Original Certificate of Title
the public domain or improvements thereon shall be instituted by
No. P-8265 be declared null and void, or that the 2,250 square meter
the Solicitor General or the officer acting in his stead, in the proper
portion be segregated and the Register of Deeds ordered to issue a
courts, in the name of the [Republic] of the Philippines.
title over said portion in their names, and that petitioners be
ordered to pay actual, moral and other damages, attorneys fees and
litigation expenses.
In light of the above, and at this time, prescription is unavailing
against private respondents action. It is settled that a Free Patent
issued over private land is null and void,[14] and produces no legal
It is then clear from the allegations in the complaint that private
effects whatsoever. Quod nullum est, nullum producit effectum.[15]
respondents claim ownership of the 2,250 square meter portion for
Moreover, private respondents claim of open, public, peaceful,
having possessed it in the concept of an owner, openly, peacefully,
continuous and adverse possession of the 2,250 square meter
publicly, continuously and adversely since 1920. This claim is an
portion since 1920, and its illegal inclusion in the Free Patent of
assertion that the lot is private land, or that even assuming it was
petitioners and in their original certificate of title, gave private
part of the public domain, private respondents had already acquired
respondents a cause of action for quieting of title which is
imperfect title thereto under Section 48(b) of C.A. No. 141,
imprescriptible.[16] The complaint of private respondents may thus
otherwise known as the Public Land Act, as amended by R.A. No.
likewise be considered an action for quieting of title.
1942. This section provides:

The grounds then relied upon in petitioners motion to dismiss are


SECTION 48. The following described citizens of the Philippines,
not indubitable and cannot be impressed with merit. We are not,
occupying lands of the public domain or claiming to own any such
however, foreclosing the presentation of evidence during trial on the
lands or an interest therein, but whose titles have not been
merits that the land in question is not private property and that
perfected or completed, may apply to the Court of First Instance of
private respondents are not entitled to the benefits of Section 48 of
the province where the land is located for confirmation of their
C.A. No. 141.
claims and issuance of a certificate of title therefor, under the Land
Registration Act, to wit:

WHEREFORE, the instant petition is DENIED for lack of merit and the
challenged judgment of the Court of Appeals is AFFIRMED, but for
xxx
the reasons stated above.

(b) Those who by themselves or through their predecessors in


Costs against petitioners.
interest have been in open, continuous, exclusive and notorious
possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at
JUAN TABAYAG, JR.,

Respondent.

G.R. No. 189647

Present:

CARPIO, J.,

Chairperson,

BRION,

PEREZ,

SERENO, and

REYES, JJ.

Promulgated:

February 6, 2012

x------------------------------------------------------------------------------------x

DECISION

Republic of the Philippines


REYES, J.:
Supreme Court

Manila
Nature of the Petition

This is a petition for review on certiorari under Rule 45 of the Rules


SECOND DIVISION of Court filed by Nancy T. Lorzano (petitioner) assailing the Court of
Appeals (CA) Decision[1] dated March 18, 2009 and Resolution[2]
dated September 16, 2009 in CA-G.R. CV No. 87762 entitled Juan
Tabayag, Jr. v. Nancy T. Lorzano.
NANCY T. LORZANO,

Petitioner,

The Antecedent Facts

The instant case stemmed from an amended complaint[3] for


annulment of document and reconveyance filed by Juan Tabayag, Jr.
(respondent) against the petitioner, docketed as Civil Case No. Ir-
- versus - 3286, with the Regional Trial Court (RTC) of Iriga City.
The petitioner and the respondent are two of the children of the late b. Ordering the [petitioner] to reconvey to the heirs of the late
Juan Tabayag (Tabayag) who died on June 2, 1992. Tabayag owned a Juan Tabayag, Sr. the land subject matter of this case[;]
parcel of land situated in Sto. Domingo, Iriga City (subject property).
Right after the burial of their father, the petitioner allegedly
requested from her siblings that she be allowed to take possession
of and receive the income generated by the subject property until c. Declaring the property described in the complaint and in the
after her eldest son could graduate from college. The petitioners spurious deed of sale to be owned in common by the heirs of Juan
siblings acceded to the said request. Tabayag, Sr. as part of their inheritance from said Juan Tabayag, Sr[.];

After the petitioners eldest son finished college, her siblings asked d. Ordering [petitioner] to pay plaintiff the sum of One Hundred
her to return to them the possession of the subject property so that Thousand Pesos (P100,000.00)by way of moral damages;
they could partition it among themselves. However, the petitioner
refused to relinquish her possession of the subject property claiming
that she purchased the subject property from their father as
evidenced by a Deed of Absolute Sale of Real Property[4] executed e. Ordering defendant to pay plaintiff the attorneys fees in the
by the latter on May 25, 1992. sum of Fifteen Thousand Pesos (P15,000.00), based on quantum
meruit;

The respondent claimed that their father did not execute the said
deed of sale. He pointed out that the signature of their father f. Dismissing the counterclaim for lack of merit[;]
appearing in the said deed of sale was a forgery as the same is
markedly different from the real signature of Tabayag.

g. Costs against the defendant.

Further, the respondent asserted that the said deed of sale was
acknowledged before a person who was not a duly commissioned
Notary Public. The deed of sale was acknowledged by the petitioner SO ORDERED.[8]
before a certain Julian P. Cabaes (Cabaes) on May 25, 1992 at Iriga
City. However, as per the Certification[5] issued by the Office of the
Clerk of Court of the RTC on May 16, 2002, Cabaes has never been
commissioned as a Notary Public for and in the Province of
Camarines Sur and in the Cities of Iriga and Naga.
The RTC opined that a cursory comparison between the signature of
Tabayag appearing on the said deed of sale and his signatures
appearing on other documents would clearly yield a conclusion that
The respondent alleged that the petitioner purposely forged the the former was indeed a forgery. Moreover, the RTC asserted that
signature of Tabayag in the said deed of sale to deprive him and their the nullity of the said May 25, 1992 deed of sale all the more
other siblings of their share in the subject property. He then averred becomes glaring considering that the same was purportedly
that the subject property was already covered by Original Certificate acknowledged before a person who is not a duly commissioned
of Title (OCT) No. 1786[6] issued by the Register of Deeds of Iriga Notary Public.
City on January 9, 2001 registered under the name of the petitioner.
OCT No. 1786 was issued pursuant to Free Patent No. 051716 which
was procured by the petitioner on June 24, 1996.
The CA Decision

For her part, the petitioner maintained she is the owner of the
subject parcel of land having purchased the same from Tabayag as Thereafter, the petitioner appealed the decision with the CA. On
evidenced by the May 25, 1992 deed of sale. Further, the petitioner March 18, 2009, the CA rendered the assailed decision affirming in
asserted that the respondent failed to establish that the signature of toto the RTC decision.[9] The CA held that the testimony of a
Tabayag appearing on the said deed of sale was a forgery considering handwriting expert in this case is not indispensable as the similarity
that it was not submitted for examination by a handwriting expert. and dissimilarity between the questioned signature of Tabayag as
compared to other signatures of the latter in other documents could
be determined by a visual comparison.

The RTC Decision

Further, the CA upheld the award of moral damages and attorneys


fees in favor of the respondent as the petitioners conduct caused
On April 28, 2006, the RTC rendered an Amended Decision[7] the great concern and anxiety to the respondent and that the latter had
decretal portion of which reads: to go to court and retain the services of counsel to pursue his rights
and protect his interests.

WHEREFORE, Judgment is hereby rendered[:]


Undaunted, the petitioner instituted the instant petition for review
on certiorari before this Court asserting the following: (1) the
questioned signature of Tabayag in the May 25, 1992 deed of sale
a. Declaring the supposed Deed of Sale null and void and of no could not be declared spurious unless first examined and declared to
legal effect; be so by a handwriting expert; (2) considering that the subject
property was registered under the petitioners name pursuant to a
free patent, reconveyance of the same in favor of the respondent is
improper since only the Government, through the Office of the
Solicitor General (OSG), could assail her title thereto in an action for
reversion; and (3) the respondent is not entitled to an award for questioned signature in order to arrive at a reasonable conclusion as
moral damages and attorneys fees. to its authenticity.[14]

In his Comment,[10] the respondent claimed that the issues raised in For the same reason, we would ordinarily disregard the petitioners
the instant petition are factual in nature and, hence, could not be allegation as to the propriety of the award of moral damages and
passed upon by this Court in a petition for review on certiorari under attorneys fees in favor of the respondent as it is a question of fact.
Rule 45. Likewise, the respondent asserted that the petitioners free Thus, questions on whether or not there was a preponderance of
patent, having been issued on the basis of a falsified document, does evidence to justify the award of damages or whether or not there
not create a right over the subject property in her favor. was a causal connection between the given set of facts and the
damage suffered by the private complainant or whether or not the
act from which civil liability might arise exists are questions of fact.
[15]
Issues

Essentially, the petitioner is questioning the award of moral damages


In sum, the threshold issues for resolution are the following: (a) and attorneys fees in favor of the respondent as the same is
whether the lower courts erred in declaring the May 25, 1992 deed supposedly not fully supported by evidence. However, in the final
of sale a nullity; (b) whether an action for reconveyance is proper in analysis, the question of whether the said award is fully supported
the instant case; and (c) whether the respondent is entitled to an by evidence is a factual question as it would necessitate whether the
award of moral damages and attorneys fees. evidence adduced in support of the same has any probative value.
For a question to be one of law, it must involve no examination of
the probative value of the evidence presented by the litigants or any
of them.[16]

The Courts Ruling


Nevertheless, a review of the amount of moral damages actually
awarded by the lower courts in favor of the respondent is necessary.

First and Third Issues: Nullity of the Deed of Sale and Award of Moral
Damages and Attorneys Fees
Here, the lower courts ordered the petitioner to pay the respondent
moral damages in the amount of P100,000.00. We find the said
amount to be excessive.
This Court shall jointly discuss the first and third issues as the
resolution of the same are interrelated.

Moral damages are not intended to enrich the complainant at the


expense of the defendant. Rather, these are awarded only to enable
Primarily, Section 1, Rule 45 of the Rules of Court categorically states the injured party to obtain means, diversions or amusements that
that the petition filed shall raise only questions of law, which must will serve to alleviate the moral suffering that resulted by reason of
be distinctly set forth. A question of law arises when there is doubt the defendants culpable action. The purpose of such damages is
as to what the law is on a certain state of facts, while there is a essentially indemnity or reparation, not punishment or correction. In
question of fact when the doubt arises as to the truth or falsity of other words, the award thereof is aimed at a restoration within the
the alleged facts. For a question to be one of law, the same must not limits of the possible, of the spiritual status quo ante; therefore, it
involve an examination of the probative value of the evidence must always reasonably approximate the extent of injury and be
presented by the litigants or any of them. The resolution of the issue proportional to the wrong committed.[17]
must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the
evidence presented, the question posed is one of fact.[11]
Accordingly, the amount of moral damages must be reduced to
P30,000.00, an amount reasonably commensurate to the injury
sustained by the respondent.
That the signature of Tabayag in the May 25, 1992 deed of sale was a
forgery is a conclusion derived by the RTC and the CA on a question
of fact. The same is conclusive upon this Court as it involves the
truth or falsehood of an alleged fact, which is a matter not for this Second Issue: Propriety of the Reconveyance of the Subject Property
Court to resolve.[12] Where a petitioner casts doubt on the findings to the Heirs of the late Juan Tabayag
of the lower court as affirmed by the CA regarding the existence of
forgery is a question of fact.[13]

The petitioner asserted that the CA erred in not finding that her
ownership over the subject property was by virtue of a free patent
In any case, the CA aptly ruled that a handwriting expert is not issued by the government and, thus, even assuming that the subject
indispensable to prove that the signature of Tabayag in the deed of sale is invalid, her title and ownership of the subject
questioned deed of sale was indeed a forgery. It is true that the property cannot be divested or much less ordered reconveyed to the
opinion of handwriting experts are not necessarily binding upon the heirs of Tabayag.
court, the experts function being to place before the court data upon
which the court can form its own opinion. Handwriting experts are
usually helpful in the examination of forged documents because of
the technical procedure involved in analyzing them. But resort to Simply put, the petitioner points out that the subject property, being
these experts is not mandatory or indispensable to the examination acquired by her through a grant of free patent from the government,
or the comparison of handwriting. A finding of forgery does not originally belonged to the public domain. As such, the lower courts
depend entirely on the testimonies of handwriting experts, because could not order the reconveyance of the subject property to the
the judge must conduct an independent examination of the heirs of Tabayag as the latter are not the original owners thereof. If
at all, the subject property could only be ordered reverted to the On this point, our ruling in Republic v. Heirs of Felipe Alejaga, Sr.[22]
public domain. is instructive:

An issue cannot be raised for the first time on appeal as it is already True, once a patent is registered and the corresponding certificate of
barred by estoppel. title [is] issued, the land covered by them ceases to be part of the
public domain and becomes private property. Further, the Torrens
Title issued pursuant to the patent becomes indefeasible a year after
the issuance of the latter. However, this indefeasibility of a title does
not attach to titles secured by fraud and misrepresentation. Well-
settled is the doctrine that the registration of a patent under the
This Court notes that the foregoing argument is being raised by the Torrens System does not by itself vest title; it merely confirms the
petitioner for the first time in the instant petition. It is well-settled registrants already existing one. Verily, registration under the Torrens
that no question will be entertained on appeal unless it has been System is not a mode of acquiring ownership.[23] (citations omitted)
raised in the proceedings below. Points of law, theories, issues and
arguments not brought to the attention of the lower court,
administrative agency or quasi-judicial body, need not be considered
by a reviewing court, as they cannot be raised for the first time at
that late stage. Basic considerations of fairness and due process
impel this rule. Any issue raised for the first time on appeal is barred A fraudulently acquired free patent may only be assailed by the
by estoppel.[18] government in an action for reversion.

Accordingly, the petitioners attack on the propriety of the action for


reconveyance in this case ought to be disregarded. However, in order
to obviate any lingering doubt on the resolution of the issues Nonetheless, a free patent that was fraudulently acquired, and the
involved in the instant case, this Court would proceed to discuss the certificate of title issued pursuant to the same, may only be assailed
cogency of the petitioners foregoing argument. by the government in an action for reversion pursuant to Section 101
of the Public Land Act.[24] In Sherwill Development Corporation v.
Sitio Sto. Nio Residents Association, Inc.,[25] this Court pointed out
that:
Title emanating from a free patent fraudulently secured does not
become indefeasible.

It is also to the public interest that one who succeeds in fraudulently


acquiring title to a public land should not be allowed to benefit
therefrom, and the State should, therefore, have an even existing
authority, thru its duly-authorized officers, to inquire into the
The petitioner asserts that the amended complaint for annulment of circumstances surrounding the issuance of any such title, to the end
document, reconveyance and damages that was filed by the that the Republic, thru the Solicitor General or any other officer who
respondent with the RTC is a collateral attack on her title over the may be authorized by law, may file the corresponding action for the
subject property. She avers that, when the said amended compliant reversion of the land involved to the public domain, subject
was filed, more than a year had already lapsed since OCT No. 1786 thereafter to disposal to other qualified persons in accordance with
over the subject property was issued under her name. Thus, the law. In other words, the indefeasibility of a title over land previously
petitioner maintains that her title over the subject property is public is not a bar to an investigation by the Director of Lands as to
already indefeasible and, hence, could not be attacked collaterally. how such title has been acquired, if the purpose of such
investigation is to determine whether or not fraud had been
committed in securing such title in order that the appropriate action
for reversion may be filed by the Government.[26]
We do not agree.

A Free Patent may be issued where the applicant is a natural-born


citizen of the Philippines; is not the owner of more than twelve (12) In Kayaban, et al. v. Republic, et al.,[27] this Court explained the
hectares of land; has continuously occupied and cultivated, either by reason for the rule that only the government, through the OSG,
himself or through his predecessors-in-interest, a tract or tracts of upon the recommendation of the Director of Lands, may bring an
agricultural public land subject to disposition, for at least 30 years action assailing a certificate of title issued pursuant to a fraudulently
prior to the effectivity of Republic Act No. 6940; and has paid the acquired free patent:
real taxes thereon while the same has not been occupied by any
person.[19]

Since it was the Director of Lands who processed and approved the
applications of the appellants and who ordered the issuance of the
Once a patent is registered and the corresponding certificate of title corresponding free patents in their favor in his capacity as
is issued, the land covered thereby ceases to be part of public administrator of the disposable lands of the public domain, the
domain and becomes private property, and the Torrens Title issued action for annulment should have been initiated by him, or at least
pursuant to the patent becomes indefeasible upon the expiration of with his prior authority and consent.[28]
one year from the date of such issuance.[20] However, a title
emanating from a free patent which was secured through fraud does
not become indefeasible, precisely because the patent from whence
the title sprung is itself void and of no effect whatsoever.[21]

An action for reconveyance is proper in this case.


against. So it has been before; so it should continue to be.[34]
(citations omitted)

However, the foregoing rule is not without an exception. A


recognized exception is that situation where plaintiff-claimant seeks
direct reconveyance from defendant public land unlawfully and in
breach of trust titled by him, on the principle of enforcement of a
constructive trust.[29] Here, the respondent, in filing the amended complaint for
annulment of documents, reconveyance and damages, was not
seeking a reconsideration of the granting of the patent or the decree
issued in the registration proceedings. What the respondent sought
A private individual may bring an action for reconveyance of a parcel was the reconveyance of the subject property to the heirs of the late
of land even if the title thereof was issued through a free patent Tabayag on account of the fraud committed by the petitioner. Thus,
since such action does not aim or purport to re-open the registration the lower courts did not err in upholding the respondents right to
proceeding and set aside the decree of registration, but only to show ask for the reconveyance of the subject property. To hold otherwise
that the person who secured the registration of the questioned would be to make the Torrens system a shield for the commission of
property is not the real owner thereof.[30] fraud.

In Roco, et al. v. Gimeda,[31] we stated that if a patent had already That the subject property was not registered under the name of the
been issued through fraud or mistake and has been registered, the heirs of Tabayag prior to the issuance of OCT No. 1786 in the name
remedy of a party who has been injured by the fraudulent of the petitioner would not effectively deny the remedy of
registration is an action for reconveyance, thus: reconveyance to the former. An action for reconveyance is a legal
and equitable remedy granted to the rightful landowner, whose land
was wrongfully or erroneously registered in the name of another, to
compel the registered owner to transfer or reconvey the land to him.
It is to be noted that the petition does not seek for a reconsideration [35]
of the granting of the patent or of the decree issued in the
registration proceeding. The purpose is not to annul the title but to
have it conveyed to plaintiffs. Fraudulent statements were made in
the application for the patent and no notice thereof was given to It cannot be gainsaid that the heirs of Tabayag, by themselves and
plaintiffs, nor knowledge of the petition known to the actual through their predecessors-in-interest, had already acquired a
possessors and occupants of the property. The action is one based vested right over the subject property. An open, continuous, adverse
on fraud and under the law, it can be instituted within four years and public possession of a land of the public domain from time
from the discovery of the fraud. (Art. 1146, Civil Code, as based on immemorial by a private individual personally and through his
Section 3, paragraph 43 of Act No. 190.) It is to be noted that as the predecessors confers an effective title on said possessors whereby
patent here has already been issued, the land has the character of the land ceases to be public, to become private property, at least by
registered property in accordance with the provisions of Section 122 presumption.[36] Hence, the right of the heirs of Tabayag to ask for
of Act No. 496, as amended by Act No. 2332, and the remedy of the the reconveyance of the subject property is irrefutable.
party who has been injured by the fraudulent registration is an
action for reconveyance. (Director of Lands vs. Registered of Deeds,
92 Phil., 826; 49 Off. Gaz. [3] 935; Section 55 of Act No. 496.)[32]
At this juncture, we deem it necessary to reiterate our disquisition in
Naval v. Court of Appeals,[37] thus:

In the same vein, in Quiiano, et al. v. Court of Appeals, et al.,[33] we The fact that petitioner was able to secure a title in her name did not
stressed that: operate to vest ownership upon her of the subject land. Registration
of a piece of land under the Torrens System does not create or vest
title, because it is not a mode of acquiring ownership. A certificate of
title is merely an evidence of ownership or title over the particular
The controlling legal norm was set forth in succinct language by property described therein. It cannot be used to protect a usurper
Justice Tuason in a 1953 decision, Director of Lands v. Register of from the true owner; nor can it be used as a shield for the
Deeds of Rizal. Thus: The sole remedy of the land owner whose commission of fraud; neither does it permit one to enrich himself at
property has been wrongfully or erroneously registered in another's the expense of others. Its issuance in favor of a particular person
name is, after one year from the date of the decree, not to set aside does not foreclose the possibility that the real property may be co-
the decree, as was done in the instant case, but, respecting the owned with persons not named in the certificate, or that it may be
decree as incontrovertible and no longer open to review, to bring an held in trust for another person by the registered owner.[38]
ordinary action in the ordinary court of justice for reconveyance or, if (citations omitted)
the property has passed into the hands of an innocent purchaser for
value, for damages." Such a doctrine goes back to the 1919
landmark decision of Cabanos v. Register of Deeds of Laguna. If it
were otherwise the institution of registration would, to quote from
Justice Torres, serve "as a protecting mantle to cover and shelter bad
faith ...." In the language of the then Justice, later Chief Justice, WHEREFORE, in consideration of the foregoing disquisitions, the
Bengzon: "A different view would encourage fraud and permit one petition is DENIED. The Decision dated March 18, 2009 and
person unjustly to enrich himself at the expense of another." It Resolution dated September 16, 2009 issued by the Court of Appeals
would indeed be a signal failing of any legal system if under the in CA-G.R. CV No. 87762 are hereby AFFIRMED with MODIFICATION.
circumstances disclosed, the aggrieved party is considered as having The petitioner is ordered to pay the respondent moral damages in
lost his right to a property to which he is entitled. It is one thing to the amount of Thirty Thousand Pesos (P30,000.00).
protect an innocent third party; it is entirely a different matter, and
one devoid of justification, if [deceit] would be rewarded by allowing
the perpetrator to enjoy the fruits of his nefarious deed. As clearly
revealed by the undeviating line of decisions coming from this Court, 2.DOLAR V. LUBLUB (2005)
such an undesirable eventuality is precisely sought to be guarded
FACTS:

Petitioner and Serafin Jaranilla were co-owners of a parcel of land


with an area of 4.6 hectares, identified as Lot No. 1, Pcs-06-000744
(Lot No. 1, for brevity), situated in Brgy. Lublub, Municipality of
Dumangas, Iloilo. Said property forms part of Lots No. 4181 and
4183 of the Dumangas Cadastre. Then barangay captain Jose Militar
accepted the donation in behalf of Brgy. Lublub. Sometime in June
1989, petitioner executed another deed [5] donating to Brgy. Lublub,
represented by its incumbent barangay captain, the very same area
he and Serafin Jaranilla had earlier donated to the same donee. The
second deed of donation contained exactly the same conditions
expressly set forth in the first. On May 6, 1998, in the Regional Trial
Court (RTC) at Iloilo City, petitioner filed against Brgy. Lublub a
complaint for Quieting of Title and Recovery of Possession With
Damages involving the 4.6-hectare area he had earlier donated.
Basically, petitioner claimed that the donation in question had
ceased to be effective, the donee barangay having failed to comply
with the conditions of the donation.

ISSUES:

1. Whether or not his action is one for revocation of


donation instead of for quieting of title; whether or not the action
for quieting has prescribed.

2. Whether or not the deed of donation in question is (a)


valid for defective acceptance and/or (b) no longer effective by
reason of the automatic reversion clause therein.

RULING:

The Supreme Court held that the donation being valid and
effective, virtually forecloses any claim which petitioner may have
over the donated property against the donee and other occupants
thereof, and his action to quiet title has no merit. Militar was clothed
with authority to accept the donation for respondent barangay. On
this point, petitioner cites Section 88 of Batas Pambansa Blg. 337
[16] - the law then in force - and Sections 91 and 389 the Local
Government Code of 1991. In gist, these provisions empower the
punongbarangay to enter into contracts for the barangay upon
authorization of the Sangguniang Barangay, or, in the alternative,
theSanggunian may authorize the barangay head to enter into
contracts for the barangay.

When a deed of donation expressly provides for automatic


revocation and reversion of the property donated, the rules on
contract and the general rules on prescription should apply, and not
Article 764 of the Civil Code. Since Article 1306 of said Code
authorizes the parties to a contract to establish such stipulations, . . .
not contrary to law, . . . public order or public policy, we are of the
opinion that, at the very least, that stipulation of the parties
providing for automatic revocation of the deed of donation, without
prior judicial action for that purpose, is valid subject to the
determination of the propriety of the rescission sought. Where such
propriety is sustained, the decision of the court will be merely
declaratory of the revocation, but it is not in itself the revocatory act.
In the case at bench, it cannot be gainsaid that respondent barangay
denied or challenged the purported revocation of the donation