G.R. No.
L-55935 July 30, 1986 The respondent alleged in his answer with counterclaim that he is the sole and
MARCOPPER MINING CORPORATION, petitioner,
vs.
MIGUEL GARCIA and HON. ROSALIO A. DE LEON, in his capacity as Presiding
Judge of the Court of First Instance of Marinduque, respondents.
Gozon, Puno, Elma, Berenguer & San Juan for petitioner.
Manuel S. Laurel for private respondent.
GUTIERREZ, JR., J.:
This is a petition for review of the order of the then Court of First Instance of
Marinduque which dismissed the petitioner's complaint against the private
respondent for "Quieting of Title/Reconveyance and Damages" on the grounds
of lack of cause of action and prescription. The petitioner stated that it was
raising pure questions of law.
On August 16, 1979, petitioner Marcopper Mining Corporation filed a complaint
for quieting of title/reconveyance and damages against private respondent
Miguel Garcia praying that Garcia's Free Patent No. 542586 and Original
Certificate of Title (OCT) No. P-2186 of the Register of Deeds of Marinduque be
declared null and void. It also asked that the Registrar of Deeds be directed to
cancel the OCT and to issue a transfer certificate of title in its favor, and that
petitioner be declared to be the true, lawful, and exclusive owner of the land in
question.
The petitioner alleged in its complaint that it is the owner and present
possessor of the land in question, having acquired it in good faith and for value
on October 2, 1972 from Buenaventura Paez, that the latter, in turn, who had
been in open, continuous, exclusive, adverse and notorious possession,
occupation, cultivation and enjoyment thereof since about 1921 until its sale to
petitioner, inherited the land from his father Arcadio Paez and had consistently
declared it for taxation purposes in his name and religiously paid taxes to the
government; and that private respondent, through fraud, deceit, and
misrepresentation, succeeded in misleading the Director of Lands to believe
that it is still part of the public domain and thus obtained the free patent and
the corresponding OCT in his name.
1
exclusive owner of the land in question as the holder of a free patent and for
which a corresponding certificate of title was issued by the Registrar of Deeds
of Marinduque on October 23, 1973, in his name; that Paez never possessed nor
occupied the land in question in the concept of owner but was just residing in a
small portion of the land purely by mere tolerance of the respondent and that
therefore, petitioner's alleged purchase of the same from Paez is absolutely of
no legal force and effect. Respondent further alleged that Paez had executed an
affidavit of quitclaim before the Inspector of the Bureau of Lands who was
processing the free pattent application, stating categorically that he had
absolutely no claim nor interest in the land, thereby unconditionally admitting
that respondent is the sole and exclusive owner thereof and that since a free
patent covering the said land had been approved and issued in the name of
respondent and the corresponding OCT issued on October 23, 1973, both had
long become final and indefeasible, hence, no longer subject to any question nor
judicial scrutiny.
After the petitioner had filed its answer to the respondent's counterclaim, the
latter filed a request for admission. The petitioner admitted the following facts:
1) It was not able to file any opposition against the issuance of a Free Patent to
the respondent because it had no notice of any such application for free patent
filed by respondent; 2) It did not file any action for cancellation or annulment of
the free patent within one year following its approval because it had no notice
thereof but the petitioner filed an action for the annulment of the free patent
upon its discovery in 1973; 3) Before the OCT was issued to the respondent, it
was not able to file any opposition thereto because it had no notice of such
application by respondent; and 4) It did not file any action for the cancellation
or annulment of the said certificate of title within one year following its
issuance because it had no knowledge of such issuance but it did file an action
for the cancellation of such certificate of title upon its discovery in 1975.
On October 1, 1980, the respondent filed a motion to dismiss based on the
following grounds: a) that the OCT of the respondent had already become
indefeasible and incontrovertible as per admission by the petitioner that said
OCT over the land in question was issued on October 23, 1973; b) that
petitioner's action for reconveyance has prescribed since the action should
have been filed within four years from the issuance of the OCT; c) that even if
the action had not yet prescribed, the petitioner could not avail of the same
since the land in question before the issuance of the OCT is public and
therefore, cannot be the subject of reconveyance; and d) that the petitioner is
guilty of laches and inexcusable negligence in not protecting and asserting its
rights, if any, over the disputed land.
On November 28, 1980, the respondent Court issued the questioned order
dismissing the petitioner's complaint as well as the respondent's counterclaim.
In said order, the respondent court, in part, ruled:
The court on its own has also found, from the complaint and subsequent
pleadings of the parties, that indeed plaintiff and its predecessor-in-interest
absolutely did not take any legal step to assert and protect their rights over
subject land before the issuance of the patent and the corresponding
certificate in the name of defendant; that plaintiff and/or its predecessor-in-
interest never filed an application for the acquisition of subject land under the
Public Land Law; that plaintiff and its said predecessor did not file any action
for cancellation or annulment of defendant's patent and the corresponding
certificate of title within the one-year period allowed therefore, thereby
causing them to become their indefeasible and incontrovertible; that plaintiff
and its said predecessor did not file any action for reconveyance before the
four-year period allowed therefor thereby causing the action to prescribe; that
plaintiff did not pursue to completion the administrative case involving
subject land which it had already filed and commenced in the Bureau of Lands,
thereby rendering it not actionable by the court; that it took plaintiff many
long years to finally file instant action but only after so much time has come
and gone that the action has vanished to inexorable prescription. The court
finds that plaintiff and its predecessor-in-interest were indeed guilty of laches
in the assertion of their rights, if any, over subject land.
Against all the foregoing, plaintiff has put forth nothing but the lame and
unsubstantial excuse that it was not notified of defendant's application for the
free patent as well as of the proceedings which transpired leading to the
granting and registration of the land in defendant's name. In point of fact,
Marcopper was fully aware, and it knew, of steps being taken by herein
defendant to eventually obtain his patent and title thereon.
Plaintiff's claim of ownership over subject land, if any, has long been lost and
forfeited by its own failure, along with its predecessor-in-interest, to
seasonably and diligently assert their rights, if any, over the same. It is
axiomatic. No legal right can ever stem from one's own gross indifference and
inexcusable negligence.
The court therefore finds for defendant in an of the four grounds to dismiss as
stated earlier.
WHEREFORE, premises considered, plaintiff's complaint as well as
defendant's (the latter per Manifestation dated October 24, 1980 of
2
defendant) counterclaim are both DISMISSED, without pronouncement as to
costs.
The issue as to the alleged incompetency of the defendant, which supposedly
occurred after the filing of this case and during its pendency, has now become
moot and academic.
The petitioner appealed to this Court by way of certiorari from the above order,
raising the following questions of law:
I
WHETHER OR NOT THE COMPLAINT, ASSUMING THAT THE ALLEGATIONS
THEREIN ARE TRUE, STATES A VALID CAUSE OF ACTION IN FAVOR OF
PLAINTIFF AGAINST THE DEFENDANT.
II
WHETHER OR NOT POSSESSION FOR MORE THAN THIRTY YEARS HAS
VESTED TITLE OVER THE LAND ON THE PETITIONER AND/OR ITS
PREDECESSOR-IN-INTEREST AS TO SEGREGATE THE LAND FROM THE MASS
OF PUBLIC LAND AND AS SUCH, IT IS NO LONGER DISPOSABLE UNDER THE
PUBLIC LAND ACT BY FREE PATENT SUCH THAT ANY FREE PATENT
FRAUDULENTLY ISSUED TO PRIVATE RESPONDENT OVER SUCH PRIVATE
LAND IS NULL AND VOID.
III
WHETHER OR NOT THE ACTION FOR RECONVEYANCE AGAINST A TRUSTEE
IN AN IMPLIED TRUST PRESCRIBES IN TEN YEARS.
IV
WHETHER OR NOT THE DOCTRINE REQUIRING THAT ADMINISTRATIVE
REMEDIES BE FIRST EXHAUSTED BEFORE A RECOURSE TO THE COURTS OF
JUSTICE MAY BE HAD AND THE LEGAL PROVISION GIVING THE
GOVERNMENT THE EXCLUSIVE AUTHORITY TO SEEK CANCELLATION OF A
TITLE ISSUED IN CONFORMITY WITH A HOMESTEAD PATENT AND
REVERSION OF A LAND TO THE PUBLIC DOMAIN ARE APPLICABLE ONLY TO
LANDS OF THE PUBLIC DOMAIN WHICH HAVE BEEN GRANTED BY VIRTUE
 OF SUCH PATENT IN PURSUANCE OF THE PUBLIC LAND ACT AND ARE NOT
APPLICABLE TO PRIVATE LANDS.
V land confirmed or ratified." The petitioner thereby admitted that until such
WHETHER OR NOT THE DEFENSE OF LACHES MAY BE VALIDLY INVOKED IN
AN ACTION FOR RECONVEYANCE WHERE THE ACTION HAS NOT YET
PRESCRIBED.
In the first issue raised, the petitioner contends that it is a well-settled rule that
when the motion to dismiss is based on the ground that the complaint states no
cause of action, no evidence may be allowed and the issue should only be
determined in the light of the allegations of the complaint. It argues that the
motion hypothetically admits, for purposes of the motion itself the truth of the
allegations of fact made in the complaint, and that the judge may not inquire
into the truth of the allegations, and find them to be false before a hearing is
had on the merits of the case. Therefore, assuming that the facts alleged in the
complaint are true, this would mean that the land is private. The Director of
Lands had no authority to dispose of it and the court should have ordered the
reconveyance of the title to the petitioner.
In the case of Tan v. Director of Forestry (125 SCRA 302, 315), we ruled on the
implications of a motion to dismiss:
A perusal of the records of the case shows that petitioner-appellants
contentions are untenable. As already observed, this case was presented to the
trial court upon a motion to dismiss for failure of the petition to state a claim
upon which relief could be granted (Rule 16 [g], Revised Rules of Court), on the
ground that the timber license relied upon by the petitioner-appellant in his
petition was issued by the Director of Forestry without authority and is
therefore void ab initio. This motion supplanted, the general demurrer in an
action at law and, as a rule admits, for the purpose of the motion, all facts which
are well pleaded. However, while the court must accept as true all well pleaded
facts, the motion does not admit allegations of which the court will take judicial
notice are not true, nor does the rule apply to legally impossible facts, nor to
facts inadmissible in evidence, nor to facts which appear by record or
document included in the pleadings to be unfounded (Vol. 1, Moran's
Comments on the Rules of Court, 1970 ed., p. 505, citing cases).
While the petitioner concludes in the complaint that the land being private,
could not have been the subject of an application for free patent, the petitioner
based this conclusion from its allegation that "By itself and through its
3
predecessors-in-interest, plaintiff has been in possession of subject land for
more than 30 years in the manner prescribed by law, and therefore, it is
entitled pursuant to existing laws to have its ownership in fee simple of the
confirmation, the land remains public.
Furthermore, the petitioner also alleged that "Buenaventura Paez, was the
rightful owner and that it was the latter and his successor-in-interest, the
herein plaintiff (petitioner), by virtue of the subsequent sale and transfer of the
land to it, who had performed and/or possessed the conditions required by the
laws for the issuance of a free patent decree on the land." Thus, the trial court
could not have sustained the petitioner's allegation that the land was private
even for the purpose of the motion to dismiss as this conclusion would be
patently unfounded.
The petitioner also admitted in its complaint that a free patent in respondent's
name had been issued for the land in question, after the latter had succeeded in
making the land inspector and/or functionaries of the Bureau of Lands and
other government agencies believe, among others, that respondent had
performed or fulfilled the conditions prescribed under R.A. 782 and Com. Act
141, as amended, for entitlement to a free patent title. It stated that as a
consequence, a free patent was issued in favor of respondent on August 29,
1973 and the corresponding OCT on October 23, 1973. While petitioner alleged
the above facts, it likewise admitted that it learned of the same only in 1975,
after more than one year from the issuance of the respondent's OCT; and that
the complaint was filed only in 1979 which was clearly more than the four-year
prescriptive period from August 29, 1973 provided by law within which an
action for reconveyance on the ground of fraud may be filed.
Although the petitioner pleaded the existence of an implied trust in its favor, all
of its allegations only attempted to show fraud on the part of the respondent.
Thus, it is obvious that from the complaint itself, the prescriptive period which
is applicable in the case is four years and not ten years as the petitioner
maintains.
Moreover, the rule on a motion to dismiss cited by the petitioner, while correct
as a general rule is not without exceptions.
In the present case, before the trial court issued the questioned order
dismissing petitioner's complaint, it had the opportunity to examine the merits
of the complaint, the answer with counterclaim, the petitioner's answer to the
counterclaim and its answer to the request for admission. It was but logical for
said court to consider all of these pleadings in determining whether or not
there was a sufficient cause of action in the petitioner's complaint. The order of
dismissal was in the nature of a summary judgment.
Again, in the case of Tan v. Director of Forestry, (supra), we ruled:
In Llanto v. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court, thru
Justice Conrado V. Sanchez, held that the trial court can properly dismiss a
complaint on a motion to dismiss due to lack of cause of action even without a
hearing, by taking into consideration the discussion in said motion and the
opposition thereto. ...
xxx xxx xxx
Furthermore, 'even if the complaint stated a valid cause of action, a motion to
dismiss for insufficiency of cause of action will be granted if documentary
evidence admitted by stipulation disclosing facts sufficient to defeat the claim
enabled the court to go beyond disclosure in the complaint' (LOCALS No. 1470,
No. 1469, and No. 1512 of the International Longshoreman's Association v.
Southern Pacific Co., 6 Fed. Rules Service, p. 107; U.S. Circuit Court of Appeals,
Fifth Circuit, Dec. 7, 1952; 131 F. 2d. 605). ...
Moreover, petitioner-appellant cannot invoke the rule that, when the ground
for asking dismissal is that the complaint states no cause of action, its
sufficiency must be determined only from the allegations in the complaint. 'The
rules of procedure are not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure substantial justice. If a technical and
rigid enforcement of the rules is made, their aim would be defeated. Where the
rules are merely secondary in importance are made to override the ends of
justice; the technical rules had been misapplied to the prejudice of the
substantial right of a party, said rigid application cannot be countenanced.' (Vol.
1, Francisco, Civil Procedure, 2 ed., 1973, p. 157, citing cases).
The trial court, therefore, did not err in considering, in addition to the
complaint, other pleadings submitted by the parties in deciding whether or not
the complaint should be dismissed for lack of a cause of action.
The other issues raised y the petitioner deal with the propriety of the dismissal
of the complaint.
4
In the second and fourth assignments of issues, the petitioner contends that
proven possession for more than 30 years shall vest title over the land on the
possessor as to segregate it from the mass of public land such that it is no
longer disposable under the Public Land Act by free patent. It argues that since
by itself and its predecessor-in-interest, it had possessed the land in dispute for
more than 30 years, continuously, openly, and without interference from
anyone, the land has become private. Consequently, the free patent and the
torrens title based upon the patent grant are a nullity because the Director of
Lands has no jurisdiction over private lands. Likewise, the doctrine of
exhaustion of administrative remedies which is applicable only to public lands
cannot be invoked.
The contention are without merit.
As stated earlier, the petitioner in its complaint, impliedly admitted that the
land is public when it alleged that the free patent should have been issued to it
by virtue of the allegedly more than 30 years possession by its predecessor-in-
interest. Furthermore, the petitioner cannot argue that the Director of Lands
had no jurisdiction to issue the free patent to private respondent on the ground
that the land was private. The mere possession of the land for 30 years,
assuming that Paez really possessed the land for this length of time, did not
automatically divest the land of its public character. As we have ruled in the
case of Republic v. Iglesia Ni Cristo, (128 SCRA 44,47-48):
All that has been stated by this Court in the aforementioned cases in
interpreting Section 48 (b) of the Public Land Law (C.A. 141, as amended by
R.A. 1942) applies with equal force in the instant case where the application for
registration of the herein parcel of land was, in essence, sought on the basis of
the alleged open, continuous, exclusive and notorious possession and
occupation of the said land by respondent's predecessors-in-interest under a
bona fide claim of acquisition or ownership for at least thirty (30) years
immediately preceding the filing of the application for registration on August 7,
1979.
Records reveal that no application for confirmation of incomplete or imperfect
title had been filed by respondent's predecessors-in-interest under Section 48
(b) of the Public Land Law. Under the law, the questioned land retains its public
character. The application for registration under Section 14 of the Property
Registration Decree (P.D. 1529) which, among others, recognizes possession of
alienable lands of the public domain in the manner and for the length of time
therein required as basis for registration of title to the land, did not remove the
land from the operational effect of Section 48 (b) of the Public Land Law. It
nevertheless strengthens the conclusion that the land never ceased to be part of
the public domain. ...
Moreover, nowhere in the complaint nor in subsequent pleadings of the
petitioner did it state that it ever applied for a free patent.
The lower court corrctly stated that as a mining corporation the petitioner
could not legally obtain a free patent to the land. The petitioner denies any
knowledge as to whether Paez, from whom it bought the land, ever applied for
a free patent or obtained one, notwithstanding its own admission that before
the alleged sale of the land to it by Paez, it verified from the Bureau of Lands
office in Marinduque and Manila if said land was subject to an application for
free patent. The petitioner cannot maintain that Paez was the rightful owner of
the land, much less the person qualified for the issuance of a free patent for the
latter did not do anything to secure a title or confirm an imperfect one,
assuming that he was entitled to the same.
At the very least, the petitioner should also have pursued its case in the
administrative proceedings it commenced with the Bureau of Lands for the
cancellation of the respondent's patent if it really believed that the latter was
guilty of fraud in the procurement of the patent and that the land truthfully
belonged to Paez, its predecessor-in-interest. The administrative case was filed
before the filing of the complaint in these proceedings. The petitioner failed to
exhaust whatever administrative remedy was available to it at that time. It was,
thus, forced to adopt the position that the land was no longer part of the public
domain over which the Director of Lands may exercise the authority to dispose
of through a free patent.
We, therefore, hold that prior to the award of the free patent to the respondent,
the land in dispute was part of the public domain and the Director of Lands had
the power to dispose of it in the manner provided by law to a qualified
applicant, who in this case was ascertained to be the respondent. Thus, the free
patent issued in the respondent's favor and the corresponding OCT in his name
are both valid and binding not only against petitioner but against the whole
world.
With regard to the third and fifth assignments of issues, the petitioner contends
that since the title over the land was obtained by the private respondent
through fraud and by means of which a title was issued in his name, then the
law creates what is called a "constructive trust" in its favor as the defrauded
party and grants it the right to vindicate the property. An action for
reconveyance based on implied or constructive trust prescribes in ten years.
5
Therefore, the petitioner contends that its action has not yet prescribed since it
filed the same in 1979, within the ten-year prescriptive period reckon from
October 23, 1973, the issuance of the decree of registration; and consequently,
the doctrine of laches will not also apply.
There is nothing in the records to support the contention of the petitioner that
an implied or constructive trust was created in its favor.
An implied or constructive trust presupposes the existence of a defrauded
party who is the rightful owner of the disputed property. In the case at bar,
aside from the fact that the petitioner and its predecessor-in-interest never
applied for a free patent although the petitioner claims that it was entitled to
the same, it also did not allege the existence of any relationship, fiduciary or
otherwise, with the respondent which may justify the creation of an implied
trust. The respondent, therefore, could not have committed fraud against the
petitioner or its predecessor-in-interest. Besides, the petitioner's failure to file
any opposition to the registration of the land in the respondent's favor and its
filing of an action for reconveyance only after almost six years from the date of
said registration cast doubt on the petitioner's right over the property. In the
case of Guerrero v. Court of Appeals (126 SCRA 109,118), we ruled:
It is well-settled that the negligence or omission to assert a right within a
reasonable time warrants not only a presumption that the party entitled to
assert it either had abandoned it or declined to assert it (Heirs of Pedro
Guminpin v. Court of Appeals, 120 SCRA 687) but also casts doubt on the
validity of the claim of ownership (Masagandanga v. Argamora, 109 SCRA 53). ...
There being no implied or constructive trust, the petitioner cannot invoke the
ten-year prescriptive period within which to file an action for reconveyance.
Thus, even assuming that the respondent was indeed guilty of fraud in the
procurement of the free patent and the corresponding OCT in his name and that
the petitioner is the one entitled to the issuance of a patent, then petitioner's
action should have been filed within four (4) years from the issuance of the
respondent's OCT which was on October 23, 1973.
In this case, the petitioner filed the action only on August 16, 1979, after the
lapse of almost six years. Clearly, the petitioner's action has prescribed. Again,
in the case of Guerrero v. Court of appeals, (supra, pp. 118-119), we ruled:
Furthermore, an action for reconveyance of real property resulting from fraud
may be barred by the statute of limitations, which requires that the action shall
be filed within four (4) years from the discovery of the fraud (Balbin v. Medalla,
108 SCRA 666; Alarcon v. Bidin, 120 SCRA 390). Under the circumstances of
this case, such discovery must be deemed to have taken place when the
respondent was issued Transfer Certificate of Title No. 608 on April 16, 1938
because the registration of the deed of sale is considered a constructive notice
to the whole world of its contents, and all interests, legal and equitable,
included therein. (Ramos v. Court of Appeals, 112 SCRA 542)....
The petitioner's delay in the filing of the action and its repeated failure to
oppose the respondent's application both before the Bureau of Lands and the
Register of Deeds also lead us to no other conclusion but that it is guilty of
laches in pursuing whatever right it might have had over the land in dispute.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED
for lack of merit. The questioned order of the lower court is AFFIRMED. Costs
against the petitioner.
SO ORDERED.
6
G.R. No. 117029 March 19, 1997
PELTAN DEVELOPMENT, INC., PATROCINIO E. MARGOLLES, EDGARDO C.
ESPINOSA, VIRGINIA E. VILLONGCO, LUCIA E. LAPERAL, NORMA C. 1
ESPINOSA, TERESITA E. CASAL and ALICE E. SOTTO, petitioners,
vs.
COURT OF APPEALS, ALEJANDRO Q. REY and JUAN B. ARAUJO, respondents.
PANGANIBAN, J.:
In resolving a motion to dismiss for failure to state a cause of action, should the
Court of Appeals invoke a Supreme Court decision promulgated after such
motion was filed by defendants and ruled upon by the trial court? Is such
invocation violative of the rule that motions to dismiss based on lack of cause of
action should be ruled upon only on the basis of the allegations of the
complaint? Who are the real parties-in-interest in an action to cancel a Torrens
certificate of title?
Petitioners challenge the Decision 2 of public respondent 3 in CA-G.R. CV No.
28244 promulgated on June 29, 1994, which ruled as follows: 4
WHEREFORE, the appealed order dated August 22, 1989 is
REVERSED and SET ASIDE. The trial court is ordered to try the case on
plaintiffs' (herein private respondents) complaint/amended complaint against
all defendants (herein petitioners).
Let the original record of the case be returned to the court of
origin.
In a Resolution 5 promulgated on September 2, 1994, Respondent Court denied
petitioners' motion for reconsideration.
The order reversed by public respondent had been issued by the Regional Trial
Court of Pasay City, Branch 112, in Civil Case No. LP-8852-P. The order in part
ruled: 6
Considering the arguments and counter-arguments urged by the parties in this
case, particularly on the nature and effect of the action filed by plaintiffs, the
Court is inclined to grant the Motion to Dismiss filed by defendant Peltan
Development Corporation on the basis of the Supreme Court ruling in Gabila vs.
Barriga, 41 SCRA 131. The ultimate result of the cancellation prayed for by the
plaintiffs, if granted by this Court, would be to revert the property in question
to the public domain. Therefore, the ultimate beneficiary of such cancellation
would be the Government. Since the Government can only be represented by
the Office of the Solicitor General, which has repeatedly refused to institute or
join an action for cancellation of defendant's titles, then, the real party in
interest cannot be said to have instituted the present action. It is the
Government, not the plaintiffs which is the real party in interest. Plaintiffs not
being the real party in interest, they have no cause of action against the
defendants.
WHEREFORE, the Motion to Dismiss is hereby granted and this case is hereby
dismissed, without prejudice to plaintiffs' pursuing administrative relief in the
proper government agencies concerned.
The Facts
The facts, as found by public respondent, are undisputed by the parties, to wit:
7 During the years that plaintiffs were occupying, cultivating, planting and
On February 20, 1981 plaintiffs (herein private respondents) filed against
eleven (11) defendants (herein petitioners) a complaint captioned for
"Cancellation of Titles and Damages". On December 15, 1981, the complaint
was amended by including or impleading as the twelfth defendant the City
Townhouse Development Corporation. Omitting the jurisdictional facts, the
allegations in the amended complaint are quoted hereunder:
II
Plaintiffs are applicants for a free patent over a parcel of land comprising an
area of 197,527 square meters, more or less, situated in Barrio Tindig na
Manga, Las Piñas, Metro Manila.
III
Prior to the filing of their petition for free patent, plaintiffs had for many years
been occupying and cultivating the aforestated piece of land until their crops,
houses and other improvements they introduced thereon were illegally
bulldozed and destroyed by persons led by defendant Edgardo Espinosa . . . .
7
Thereafter, the same persons forcibly and physically drove out plaintiffs
therefrom.
IV
Plaintiffs filed their petition for issuance of free patent covering the aforesaid
property with the Bureau of Lands in May 1976, as a result of which they were
issued by the Lands Bureau Survey Authority No. 54 (IV-1) on December 16,
1976.
V
Accordingly, and on the strength of the aforesaid authority to survey, plaintiffs
had the property surveyed by Geodetic Engineer Regino L. Sobrerinas, Jr. on
December 20-21, 1976.
VI
staying on the aforestated parcel of land, neither . . . one of the defendants was
in possession thereof.
VII
The processing and eventual approval of plaintiffs' free patent application or
petition over the subject piece of land have, however, been obstructed and/or
held in abeyance, despite the absence of any opposition thereto, because of the
alleged existence of several supposed certificates of title thereon, . . . of the
defendants, namely:
Peltan Development, Inc. — Transfer Certificate of Title No. S-17992
xxx xxx xxx
VIII
The aforestated transfer certificates of title of the
abovenamed defendants, plaintiffs discovered, and therefore they hereby
allege, were all derived from an alleged Original Certificate of Title No. 4216
supposedly issued by the Register of Deeds of Rizal and registered in the name
of the Spouses Lorenzo Gana and Maria Juliana Carlos in 1929 allegedly
pursuant to Decree No. 351823 issued by the Court of First Instance of Rizal in
Land Registration Case (LRC) No. 672.
IX
Plaintiffs, however, subsequently discovered, after a thorough research, that the
alleged Original Certificate of Title No. 4216 of the Spouses Lorenzo Gana and
Juliana Carlos — whence all the transfer certificates of title of the . . .
abovenamed defendants originated and/or were derived from — was
FICTITIOUS and/or SPURIOUS . . . .
xxx xxx xxx
X On the basis of the foregoing allegations, the prayer in the amended complaint
Being, thus, derived and/or having originated from a FICTITIOUS and/or
SPURIOUS original certificate of title (OCT No. 4216), as herein above shown,
ALL the aforestated transfer certificates of title of the . . . abovenamed
defendants are, logically and imperatively, FAKE, SPURIOUS and/or NULL
AND VOID as well. Hence, they all must and should be CANCELED.
xxx xxx xxx
XIV
Before they decided to institute this action, plaintiffs informed, indeed they
warned, the defendants that their so-called titles over the parcels of land or
portions thereof covered by plaintiffs' free patent application and/or petition
are either fake, spurious or void for reasons aforestated. But the defendants
simply ignored plaintiffs' admonitions.
XV
Accordingly, plaintiffs were compelled to retain the services of the
undersigned counsel to file this complaint not only because they have been
materially and substantially prejudiced by the existence of defendants'
spurious titles, but also because as citizens and taxpayers of this country they
have a legitimate interest in the disposition of alienable lands of the State, as
well as the right to question any illegitimate, unlawful or spurious award,
8
disposition or registration thereof to protect not just their interest but also the
public.
XVI
Because of the defendant's illegal titling of the parcel of land or portions
thereof covered by plaintiffs' free patent application, and particularly by the
unlawful disturbance of plaintiff's possession thereof and destruction of
plaintiffs' plants and dwellings thereon, which was caused and/or directed by
the defendants Edgardo Espinosa and Pat C. Margolles, said defendants should
be ordered to pay plaintiffs actual or compensatory damages in such amount
as may be proven during the trial of this case. (Original Records, Vol. I, pp.
202-214)
states:
WHEREFORE, it is most respectfully prayed that after hearing, judgment
(should) be rendered:
1. Canceling the transfer certificates of titles of the defendants as specified in
par. VII hereof and/or declaring them null and void for having originated or
being derived from a fictitious, spurious or void original certificates of title.
2. Ordering defendants Edgardo Espinosa and Pat C. Margolles to pay plaintiffs
actual or compensatory damages as may be proven during the trial of this
case. And —
3. Ordering the defendants to pay plaintiffs appropriate amount of exemplary
damages and reasonable amount of attorney's fees, as well as to pay the costs.
Plaintiffs further respectfully pray for such other reliefs just and equitable in
the premises. (Original Records, Vol. I, p. 215)
xxx xxx xxx
On April 3, 1985, defendant Peltan Development Corporation (Peltan, for
brevity) filed a "Motion For Preliminary Hearing on Affirmative Defenses"
mainly on the ground that the complaint states no cause of action against
defendant Peltan. It is alleged in the motion that plaintiffs are not the real
parties in interest in the action as they do not assert any present and
 subsisting title of ownership over the property in question. Invoking the case
of Gabila vs. Barriga, L-28917, promulgated on September 30, 1971, the
defendant Peltan contends that the action being one for cancellation of the
certificates of title the Government, through the Solicitor General — not a
private individual like plaintiff Gabila — was the real party in interest.
On April 27, 1989 plaintiffs filed their opposition to defendant Peltan's
aforesaid motion in which plaintiffs reasserted their cause of action as set forth
in their complaint, and pointed to the trial court the pertinent averments in
their action showing their rights and interests or claims that had been violated
which thus placed them in the status of a real party in interest. Subsequently,
defendant Peltan filed its reply to plaintiffs' opposition, with plaintiffs
submitting their rejoinder thereto. Then finally defendant Peltan filed its
comment on the rejoinder.
On August 22, 1989, the trial court dismissed the complaint. Holding that the
plaintiffs were not the real parties-in-interest, the RTC ruled that they had no
cause of action against the defendants. The order was reversed by public
respondent. Hence, this petition for review.
In a motion filed before this Court on March 8, 1996, petitioners prayed for the
cancellation of the notice of lis pendens annotated on their titles "under Entry
No. 210060/T-12473-A." The notice was caused by Private Respondent
Alejandro Rey because of the pendency of Civil Case No. LP-8852-P, the
dismissal of which is the issue at bench.8
Ruling of the Court of Appeals
As observed earlier, the Court of Appeals reversed and set aside the order of
the Regional Trial Court, holding that the two elements of a cause of action
were present in the complaint, to wit: 1) the plaintiff's primary right and 2) the
delict or wrongful act of the defendant violative of that right. The CA held that
private respondents had a right over the property as shown by the allegation
that they had been occupying the landholding in question and that they had
applied for a free patent thereon; and that petitioners committed a delict
against private respondents by forcibly driving them out of the property, and
delaying the processing and approval of their application for free patent
because of the existence of petitioners' transfer certificates of title derived from
OCT No. 4126. 9 The CA further held that the RTC "should have treated the case
as an accion publiciana to determine who as between the parties plaintiffs and
defendants have a better right of possession." 10
9
Stressing that only the facts alleged in the complaint should have been
considered in resolving the motion to dismiss, Respondent CA held that the trial
court had erred in accepting the allegations of herein petitioners that private
respondents' requests for the Solicitor General to file an action to annul OCT
No. 4216 had been repeatedly denied.
Public respondent also rejected the application of the Gabila 11 ruling to the
case at bar. It reasoned: 12
True, plaintiffs in their complaint prayed inter alia for the cancellation of the
transfer certificates of title of the defendants for being derived from a
spurious or false original certificate of title. Relying on the case of Gabila vs.
Barriga, supra, defendants argued that the ultimate result of a favorable
decision on complaints of such nature is for the lands to revert back to the
ownership of the state, and hence, such actions may only be instituted by the
Government through the Solicitor Generel (sic). This argument is misplaced.
Firstly, unlike the Gabila case, the herein plaintiffs in their complaint did not
assert and pray for reversion. Secondly, the prayer for cancellation of the
defendants' Torrens titles does not negate nor eliminate the presence of the
elements of plaintiffs' cause of action on the basis of the allegations in the
complaint, as already discussed. Thirdly, the prayer of a complaint is not a
material factor in determining the relief grantable, which rests upon the facts
proved (Lacson vs. Diaz, 47 O.G. No. 12 Supp. 377, Aug. 4, 1950, No. L-2839).
Precisely, as a matter of practice, complaints filed in court usually contain a
general prayer "for other relief which may be just and equitable in the
premises" like the complaint in the case at bar. Fourthly, in the Gabila case, the
Supreme Court did not affirm the trial court's dismissal order. Instead, per
dispositive portion of the decision, it ordered the setting aside of the appealed
dismissal order and directing the return of the records of the case to the trial
court with admonition to the party interested to formally implead the Bureau
of Lands with notice to the Solicitor General. Obviously, the posture of
defendants Peltan is not entirely supported by the Gabila case.
The Issues
Petitioners assign the following errors committed by public respondent: 13
a. Ordering the trial court to proceed on private respondents' cause of action
for the nullification of OCT No. 4216 on the ground that it is fake/spurious
when the Supreme Court had already ruled in G.R. No. 109490 and in G.R. No.
112038 that OCT No. 4216 is genuine and valid — and in disregarding and
refusing to pass upon the said squarely applicable decisions of this Honorable
Court;
b. Ordering the trial court to proceed on private respondents' cause of action
for damages for the supposed acts of the private respondents Margolles and
Espinosa despite non-payment of the jurisdictional docket fees when this cause
of action had already prescribed — and in disregarding and refusing to pass
upon the squarely applicable Manchester ruling;
c. In not applying the Gabila ruling to dismiss the subject complaint considering
that respondents do not even pretend to have any title or right to the subject
property to authorize them to ask for a free patent thereon since it is already
(a) private property covered by petitioners' torrens title derived from OCT No.
4216 issued in 1929.
The Court's Ruling
We grant the petition and reverse the public respondent.
What Determines Cause of Action?
It is a well-settled rule that the existence of a cause of action is determined by
the allegations in the complaint. 14 In the resolution of a motion to dismiss
based on failure to state a cause of action, only the facts alleged in the
complaint must be considered. The test in cases like these is whether a court
can render a valid judgment on the complaint based upon the facts alleged and
pursuant to the prayer therein. 15 Hence, it has been held that a motion to
dismiss generally partakes of the nature of a demurrer which hypothetically
admits the truth of the factual allegations made in a complaint. 16
It is axiomatic nonetheless that a court has a mandate to apply relevant statutes
and jurisprudence in determining whether the allegations in a complaint
establish a cause of action. While it focuses on the complaint, a court clearly
cannot disregard decisions material to the proper appreciation of the questions
before it. In resolving a motion to dismiss, every court must take cognizance of
decisions this Court has rendered because they are proper subjects of
mandatory judicial notice as provided by Section 1 of Rule 129 of the Rules of
Court, to wit:
Sec. 1. Judicial notice, when mandatory. — A court shall take
judicial notice, without the introduction of evidence, of the existence and
10
territorial extent of states, their political history, forms of government and
symbols of nationality, the law of nations, the admiralty and maritime courts of
the world and their seals, the political constitution and history of the
Philippines, the official acts of the legislative, executive and judicial departments
of the Philippines, laws of nature, the measure of time, and the geographical
divisions. (Emphasis supplied.)
The said decisions, more importantly, "form part of the legal system," 17 and
failure of any court to apply them shall constitute an abdication of its duty to
resolve a dispute in accordance with law, and shall be a ground for
administrative action against an inferior court magistrate.
In resolving the present complaint, therefore, the Court is well aware that a
decision in Margolles vs. CA, 18 rendered on 14 February 1994, upheld the
validity of OCT No. 4216 (and the certificates of title derived therefrom), the
same OCT that the present complaint seeks to nullify for being "fictitious and
spurious." Respondent CA, in its assailed Decision dated 29 June 1994, failed to
consider Margolles vs. CA. This we cannot countenance.
In finding that the complaint stared a cause of action, Public Respondent CA
recognized that private respondent had a valid right over the property in
question, based on their actual possession thereof and their pending
application for a free patent thereon. The linchpin of this right, however, is the
validity of OCT No. 4216. In other words, private respondents' right is premised
on the allegation that the title of herein petitioners originated merely from the
"fictitious and/or spurious" OCT No. 4216.
Because it had failed to take cognizance of Margolles vs. CA, the CA was unable
to consider that the legality of OCT No. 4216. As adverted to earlier, Margolles
vs. CA upheld the validity of this title and the titles derived therefrom by, among
others, Petitioner Peltan Corporation. Clearly, private respondents' possession
of the land, and their pending application for a free patent thereon, did not not
vest in them a right superior to the valid title of petitioner originating from OCT
No. 4216. Indeed, private respondents can invoke no right at all against the
petitioners. Accordingly, the first element or a cause of action, i.e., plaintiff's
right, is not present in the instant case.
In this light, the CA's treatment of the present suit as an accion publiciana to
determine which one among the parties had a better right over the property is
but an exercise in redundancy. As discussed above, the same issue has been
foreclosed by the Supreme Court in Margolles.
The Supreme Court promulgated Margolles ahead of the assailed CA decision. It Plaintiff-appellant argues that although his complaint is captioned as one for
was incumbent upon Respondent CA to take judicial notice thereof and apply it cancellation of title, he has nevertheless stated therein several causes of action
in resolving this case. That the CA did not is clearly a reversible error. based on his alleged rights of possession and ownership over the
improvements, on defendant-appellees alleged fraudulent acquisition of the
Furthermore, allowing repeated suits seeking to nullify OCT No. 4216, like the land, and on the damages allegedly incurred by him (plaintiff-appellant) in
present case, will bring to naught the principle of indefeasibility of titles issued relation to the improvements. These matters are merely ancillary to the central
under the Torrens system of land registration. 19 Thus, in a resolution 20 dated issue of whether or not defendant-appellee's title should be canceled or
10 August 1994, the First Division of this Court, applying the Margolles ruling, amended, and they may not be leaned upon in an effort to make out a cause of
dismissed a petition for review involving herein petitioner Peltan Corporation action in relation to the said focal issue. Indeed, the principal relief prayed for
which had raised as issue the validity of OCT No. 4216. The Court, in the case at in the amended complaint is the cancellation or amendment of defendant-
bench, can do no less. Subjecting OCT No. 4216 to further scrutiny, as proposed appellee's title. 22
in the amended complaint, is no longer an available option.
Nonpayment of Docket Fees
Are Private Respondents the Real Parties-in-Interest?
As we have already ruled that the private respondents are nor the real parties
The Court also holds that private respondents are not the proper parties to in interest, we find no more need to pass upon the question of nonpayment of
initiate the present suit. The complaint, praying as it did for the cancellation of filing fees.
the transfer certificates of title of petitioners on the ground that they were
derived from a "spurious" OCT No. 4216, assailed in effect the validity of said WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED
title. While private respondents did not pray for the reversion of the land to the and SET ASIDE. The complaint of private respondents in Civil Case No. LP-
government, we agree with the petitioners that the prayer in the complaint will 8852-F is DISMISSED. The notice of lis pendens, annotated in the titles of
have the same result of reverting the land to the government under the petitioners because of Civil Care No. LP-8852-P, is ordered CANCELED. No
Regalian doctrine. 21 Gabila vs. Barriga ruled that only the government is costs.
entitled to this relief. The Court in that case held:
SO ORDERED.
The present motion to dismiss is actually predicated on Section 1(g), Rule 16 of
the Revised Rules of Court, i.e., failure of the complaint to state a cause of action,
for it alleges in paragraph 12 thereof that the plaintiff admits that he has no
right to demand the cancellation or amendment of the defendant's title,
because, even if the said title were canceled or amended, the ownership of the
land embraced therein, or of the portion thereof affected by the amendment,
would revert to the public domain. In his amended complaint the plaintiff
makes no pretense at all that any part of the land covered by the defendant's
title was privately owned by him or by his predecessors-in-interest. Indeed, it is
admitted therein that the said land was at all times a part of the public domain
until December 18, 1964, when the government issued a title thereon in favor of
defendant. Thus, if there is any person or entity to relief, it can only be the
government.

In the case at bar, the plaintiff's own averments negate the existence of such
right, for it would appear therefrom that whatever right might have been
violated by the defendant belonged to the government, not to the plaintiff.

11