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G.R. No.

L-55935 July 30, 1986 The respondent alleged in his answer with counterclaim that he is the sole and
exclusive owner of the land in question as the holder of a free patent and for
MARCOPPER MINING CORPORATION, petitioner, which a corresponding certificate of title was issued by the Registrar of Deeds of
vs. Marinduque on October 23, 1973, in his name; that Paez never possessed nor
MIGUEL GARCIA and HON. ROSALIO A. DE LEON, in his capacity as Presiding occupied the land in question in the concept of owner but was just residing in a
Judge of the Court of First Instance of Marinduque, respondents. 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
Gozon, Puno, Elma, Berenguer & San Juan for petitioner. affidavit of quitclaim before the Inspector of the Bureau of Lands who was
processing the free pattent application, stating categorically that he had
Manuel S. Laurel for private respondent. 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
GUTIERREZ, JR., J.: judicial scrutiny.

This is a petition for review of the order of the then Court of First Instance of After the petitioner had filed its answer to the respondent's counterclaim, the
Marinduque which dismissed the petitioner's complaint against the private latter filed a request for admission. The petitioner admitted the following facts:
respondent for "Quieting of Title/Reconveyance and Damages" on the grounds 1) It was not able to file any opposition against the issuance of a Free Patent to
of lack of cause of action and prescription. The petitioner stated that it was the respondent because it had no notice of any such application for free patent
raising pure questions of law. 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
On August 16, 1979, petitioner Marcopper Mining Corporation filed a complaint thereof but the petitioner filed an action for the annulment of the free patent
for quieting of title/reconveyance and damages against private respondent upon its discovery in 1973; 3) Before the OCT was issued to the respondent, it
Miguel Garcia praying that Garcia's Free Patent No. 542586 and Original was not able to file any opposition thereto because it had no notice of such
Certificate of Title (OCT) No. P-2186 of the Register of Deeds of Marinduque be application by respondent; and 4) It did not file any action for the cancellation or
declared null and void. It also asked that the Registrar of Deeds be directed to annulment of the said certificate of title within one year following its issuance
cancel the OCT and to issue a transfer certificate of title in its favor, and that because it had no knowledge of such issuance but it did file an action for the
petitioner be declared to be the true, lawful, and exclusive owner of the land in 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
The petitioner alleged in its complaint that it is the owner and present possessor following grounds: a) that the OCT of the respondent had already become
of the land in question, having acquired it in good faith and for value on October indefeasible and incontrovertible as per admission by the petitioner that said
2, 1972 from Buenaventura Paez, that the latter, in turn, who had been in open, OCT over the land in question was issued on October 23, 1973; b) that
continuous, exclusive, adverse and notorious possession, occupation, cultivation petitioner's action for reconveyance has prescribed since the action should have
and enjoyment thereof since about 1921 until its sale to petitioner, inherited the been filed within four years from the issuance of the OCT; c) that even if the
land from his father Arcadio Paez and had consistently declared it for taxation action had not yet prescribed, the petitioner could not avail of the same since the
purposes in his name and religiously paid taxes to the government; and that land in question before the issuance of the OCT is public and therefore, cannot
private respondent, through fraud, deceit, and misrepresentation, succeeded in be the subject of reconveyance; and d) that the petitioner is guilty of laches and
misleading the Director of Lands to believe that it is still part of the public domain inexcusable negligence in not protecting and asserting its rights, if any, over the
and thus obtained the free patent and the corresponding OCT in his name. disputed land.

On November 28, 1980, the respondent Court issued the questioned order WHEREFORE, premises considered, plaintiff's complaint as well as defendant's
dismissing the petitioner's complaint as well as the respondent's counterclaim. (the latter per Manifestation dated October 24, 1980 of defendant)
In said order, the respondent court, in part, ruled: counterclaim are both DISMISSED, without pronouncement as to costs.

The court on its own has also found, from the complaint and subsequent The issue as to the alleged incompetency of the defendant, which supposedly
pleadings of the parties, that indeed plaintiff and its predecessor-in-interest occurred after the filing of this case and during its pendency, has now become
absolutely did not take any legal step to assert and protect their rights over moot and academic.
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 The petitioner appealed to this Court by way of certiorari from the above order,
filed an application for the acquisition of subject land under the Public Land raising the following questions of law:
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 I
them to become their indefeasible and incontrovertible; that plaintiff and its
said predecessor did not file any action for reconveyance before the four-year WHETHER OR NOT THE COMPLAINT, ASSUMING THAT THE ALLEGATIONS
period allowed therefor thereby causing the action to prescribe; that plaintiff THEREIN ARE TRUE, STATES A VALID CAUSE OF ACTION IN FAVOR OF
did not pursue to completion the administrative case involving subject land PLAINTIFF AGAINST THE DEFENDANT.
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 II
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 WHETHER OR NOT POSSESSION FOR MORE THAN THIRTY YEARS HAS
their rights, if any, over subject land. VESTED TITLE OVER THE LAND ON THE PETITIONER AND/OR ITS
Against all the foregoing, plaintiff has put forth nothing but the lame and PUBLIC LAND ACT BY FREE PATENT SUCH THAT ANY FREE PATENT
unsubstantial excuse that it was not notified of defendant's application for the FRAUDULENTLY ISSUED TO PRIVATE RESPONDENT OVER SUCH PRIVATE
free patent as well as of the proceedings which transpired leading to the LAND IS NULL AND VOID.
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. III

Plaintiff's claim of ownership over subject land, if any, has long been lost and WHETHER OR NOT THE ACTION FOR RECONVEYANCE AGAINST A TRUSTEE
forfeited by its own failure, along with its predecessor-in-interest, to IN AN IMPLIED TRUST PRESCRIBES IN TEN YEARS.
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 IV
inexcusable negligence.
The court therefore finds for defendant in an of the four grounds to dismiss as REMEDIES BE FIRST EXHAUSTED BEFORE A RECOURSE TO THE COURTS OF

PURSUANCE OF THE PUBLIC LAND ACT AND ARE NOT APPLICABLE TO in-interest, plaintiff has been in possession of subject land for more than 30 years
PRIVATE LANDS. in the manner prescribed by law, and therefore, it is entitled pursuant to existing
laws to have its ownership in fee simple of the land confirmed or ratified." The
V petitioner thereby admitted that until such confirmation, the land remains
AN ACTION FOR RECONVEYANCE WHERE THE ACTION HAS NOT YET Furthermore, the petitioner also alleged that "Buenaventura Paez, was the
PRESCRIBED. 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
In the first issue raised, the petitioner contends that it is a well-settled rule that the issuance of a free patent decree on the land." Thus, the trial court could not
when the motion to dismiss is based on the ground that the complaint states no have sustained the petitioner's allegation that the land was private even for the
cause of action, no evidence may be allowed and the issue should only be purpose of the motion to dismiss as this conclusion would be patently
determined in the light of the allegations of the complaint. It argues that the unfounded.
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 petitioner also admitted in its complaint that a free patent in respondent's
the merits of the case. Therefore, assuming that the facts alleged in the complaint name had been issued for the land in question, after the latter had succeeded in
are true, this would mean that the land is private. The Director of Lands had no making the land inspector and/or functionaries of the Bureau of Lands and other
authority to dispose of it and the court should have ordered the reconveyance of government agencies believe, among others, that respondent had performed or
the title to the petitioner. 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
In the case of Tan v. Director of Forestry (125 SCRA 302, 315), we ruled on the OCT on October 23, 1973. While petitioner alleged the above facts, it likewise
implications of a motion to dismiss: 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
A perusal of the records of the case shows that petitioner-appellants contentions 1979 which was clearly more than the four-year prescriptive period from August
are untenable. As already observed, this case was presented to the trial court 29, 1973 provided by law within which an action for reconveyance on the ground
upon a motion to dismiss for failure of the petition to state a claim upon which of fraud may be filed.
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 Although the petitioner pleaded the existence of an implied trust in its favor, all
issued by the Director of Forestry without authority and is therefore void ab of its allegations only attempted to show fraud on the part of the respondent.
initio. This motion supplanted, the general demurrer in an action at law and, as Thus, it is obvious that from the complaint itself, the prescriptive period which
a rule admits, for the purpose of the motion, all facts which are well pleaded. is applicable in the case is four years and not ten years as the petitioner
However, while the court must accept as true all well pleaded facts, the motion maintains.
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 Moreover, the rule on a motion to dismiss cited by the petitioner, while correct
pleadings to be unfounded (Vol. 1, Moran's Comments on the Rules of Court, as a general rule is not without exceptions.
1970 ed., p. 505, citing cases).
In the present case, before the trial court issued the questioned order dismissing
While the petitioner concludes in the complaint that the land being private, could petitioner's complaint, it had the opportunity to examine the merits of the
not have been the subject of an application for free patent, the petitioner based complaint, the answer with counterclaim, the petitioner's answer to the
this conclusion from its allegation that "By itself and through its predecessors- 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 In the second and fourth assignments of issues, the petitioner contends that
was a sufficient cause of action in the petitioner's complaint. The order of proven possession for more than 30 years shall vest title over the land on the
dismissal was in the nature of a summary judgment. 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
Again, in the case of Tan v. Director of Forestry, (supra), we ruled: 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
In Llanto v. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court, thru based upon the patent grant are a nullity because the Director of Lands has no
Justice Conrado V. Sanchez, held that the trial court can properly dismiss a jurisdiction over private lands. Likewise, the doctrine of exhaustion of
complaint on a motion to dismiss due to lack of cause of action even without a administrative remedies which is applicable only to public lands cannot be
hearing, by taking into consideration the discussion in said motion and the invoked.
opposition thereto. ...
The contention are without merit.
xxx xxx xxx
As stated earlier, the petitioner in its complaint, impliedly admitted that the land
Furthermore, 'even if the complaint stated a valid cause of action, a motion to is public when it alleged that the free patent should have been issued to it by
dismiss for insufficiency of cause of action will be granted if documentary virtue of the allegedly more than 30 years possession by its predecessor-in-
evidence admitted by stipulation disclosing facts sufficient to defeat the claim interest. Furthermore, the petitioner cannot argue that the Director of Lands had
enabled the court to go beyond disclosure in the complaint' (LOCALS No. 1470, no jurisdiction to issue the free patent to private respondent on the ground that
No. 1469, and No. 1512 of the International Longshoreman's Association v. the land was private. The mere possession of the land for 30 years, assuming that
Southern Pacific Co., 6 Fed. Rules Service, p. 107; U.S. Circuit Court of Appeals, Paez really possessed the land for this length of time, did not automatically divest
Fifth Circuit, Dec. 7, 1952; 131 F. 2d. 605). ... the land of its public character. As we have ruled in the case of Republic v. Iglesia
Ni Cristo, (128 SCRA 44,47-48):
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 All that has been stated by this Court in the aforementioned cases in interpreting
must be determined only from the allegations in the complaint. 'The rules of Section 48 (b) of the Public Land Law (C.A. 141, as amended by R.A. 1942) applies
procedure are not to be applied in a very rigid, technical sense; rules of with equal force in the instant case where the application for registration of the
procedure are used only to help secure substantial justice. If a technical and rigid herein parcel of land was, in essence, sought on the basis of the alleged open,
enforcement of the rules is made, their aim would be defeated. Where the rules continuous, exclusive and notorious possession and occupation of the said land
are merely secondary in importance are made to override the ends of justice; the by respondent's predecessors-in-interest under a bona fide claim of acquisition
technical rules had been misapplied to the prejudice of the substantial right of a or ownership for at least thirty (30) years immediately preceding the filing of the
party, said rigid application cannot be countenanced.' (Vol. 1, Francisco, Civil application for registration on August 7, 1979.
Procedure, 2 ed., 1973, p. 157, citing cases).
Records reveal that no application for confirmation of incomplete or imperfect
The trial court, therefore, did not err in considering, in addition to the complaint, title had been filed by respondent's predecessors-in-interest under Section 48
other pleadings submitted by the parties in deciding whether or not the (b) of the Public Land Law. Under the law, the questioned land retains its public
complaint should be dismissed for lack of a cause of action. character. The application for registration under Section 14 of the Property
Registration Decree (P.D. 1529) which, among others, recognizes possession of
The other issues raised y the petitioner deal with the propriety of the dismissal alienable lands of the public domain in the manner and for the length of time
of the complaint. 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 There is nothing in the records to support the contention of the petitioner that
petitioner did it state that it ever applied for a free patent. an implied or constructive trust was created in its favor.

The lower court corrctly stated that as a mining corporation the petitioner could An implied or constructive trust presupposes the existence of a defrauded party
not legally obtain a free patent to the land. The petitioner denies any knowledge who is the rightful owner of the disputed property. In the case at bar, aside from
as to whether Paez, from whom it bought the land, ever applied for a free patent the fact that the petitioner and its predecessor-in-interest never applied for a
or obtained one, notwithstanding its own admission that before the alleged sale free patent although the petitioner claims that it was entitled to the same, it also
of the land to it by Paez, it verified from the Bureau of Lands office in Marinduque did not allege the existence of any relationship, fiduciary or otherwise, with the
and Manila if said land was subject to an application for free patent. The respondent which may justify the creation of an implied trust. The respondent,
petitioner cannot maintain that Paez was the rightful owner of the land, much therefore, could not have committed fraud against the petitioner or its
less the person qualified for the issuance of a free patent for the latter did not do predecessor-in-interest. Besides, the petitioner's failure to file any opposition to
anything to secure a title or confirm an imperfect one, assuming that he was the registration of the land in the respondent's favor and its filing of an action for
entitled to the same. 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
At the very least, the petitioner should also have pursued its case in the of Appeals (126 SCRA 109,118), we ruled:
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 It is well-settled that the negligence or omission to assert a right within a
guilty of fraud in the procurement of the patent and that the land truthfully reasonable time warrants not only a presumption that the party entitled to
belonged to Paez, its predecessor-in-interest. The administrative case was filed assert it either had abandoned it or declined to assert it (Heirs of Pedro Guminpin
before the filing of the complaint in these proceedings. The petitioner failed to v. Court of Appeals, 120 SCRA 687) but also casts doubt on the validity of the
exhaust whatever administrative remedy was available to it at that time. It was, claim of ownership (Masagandanga v. Argamora, 109 SCRA 53). ...
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 There being no implied or constructive trust, the petitioner cannot invoke the
of through a free patent. 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
We, therefore, hold that prior to the award of the free patent to the respondent, procurement of the free patent and the corresponding OCT in his name and that
the land in dispute was part of the public domain and the Director of Lands had the petitioner is the one entitled to the issuance of a patent, then petitioner's
the power to dispose of it in the manner provided by law to a qualified applicant, action should have been filed within four (4) years from the issuance of the
who in this case was ascertained to be the respondent. Thus, the free patent respondent's OCT which was on October 23, 1973.
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. 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
With regard to the third and fifth assignments of issues, the petitioner contends case of Guerrero v. Court of appeals, (supra, pp. 118-119), we ruled:
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 Furthermore, an action for reconveyance of real property resulting from fraud
what is called a "constructive trust" in its favor as the defrauded party and grants may be barred by the statute of limitations, which requires that the action shall
it the right to vindicate the property. An action for reconveyance based on be filed within four (4) years from the discovery of the fraud (Balbin v. Medalla,
implied or constructive trust prescribes in ten years. Therefore, the petitioner 108 SCRA 666; Alarcon v. Bidin, 120 SCRA 390). Under the circumstances of this
contends that its action has not yet prescribed since it filed the same in 1979, case, such discovery must be deemed to have taken place when the respondent
within the ten-year prescriptive period reckon from October 23, 1973, the was issued Transfer Certificate of Title No. 608 on April 16, 1938 because the
issuance of the decree of registration; and consequently, the doctrine of laches registration of the deed of sale is considered a constructive notice to the whole
will not also apply.

world of its contents, and all interests, legal and equitable, included therein. PELTAN DEVELOPMENT, INC., PATROCINIO E. MARGOLLES, EDGARDO C.
(Ramos v. Court of Appeals, 112 SCRA 542).... ESPINOSA, VIRGINIA E. VILLONGCO, LUCIA E. LAPERAL, NORMA C. 1
The petitioner's delay in the filing of the action and its repeated failure to oppose vs.
the respondent's application both before the Bureau of Lands and the Register of COURT OF APPEALS, ALEJANDRO Q. REY and JUAN B. ARAUJO, respondents.
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.

for lack of merit. The questioned order of the lower court is AFFIRMED. Costs
against the petitioner. 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
SO ORDERED. 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

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


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
G.R. No. 117029 March 19, 1997 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 Plaintiffs filed their petition for issuance of free patent covering the aforesaid
the public domain. Therefore, the ultimate beneficiary of such cancellation would property with the Bureau of Lands in May 1976, as a result of which they were
be the Government. Since the Government can only be represented by the Office issued by the Lands Bureau Survey Authority No. 54 (IV-1) on December 16,
of the Solicitor General, which has repeatedly refused to institute or join an 1976.
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 V
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.
Accordingly, and on the strength of the aforesaid authority to survey, plaintiffs
had the property surveyed by Geodetic Engineer Regino L. Sobrerinas, Jr. on
WHEREFORE, the Motion to Dismiss is hereby granted and this case is hereby December 20-21, 1976.
dismissed, without prejudice to plaintiffs' pursuing administrative relief in the
proper government agencies concerned.
The Facts
During the years that plaintiffs were occupying, cultivating, planting and
staying on the aforestated parcel of land, neither . . . one of the defendants was
The facts, as found by public respondent, are undisputed by the parties, to wit: 7 in possession thereof.

On February 20, 1981 plaintiffs (herein private respondents) filed against VII
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 The processing and eventual approval of plaintiffs' free patent application or
Townhouse Development Corporation. Omitting the jurisdictional facts, the petition over the subject piece of land have, however, been obstructed and/or
allegations in the amended complaint are quoted hereunder: 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
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. xxx xxx xxx


Prior to the filing of their petition for free patent, plaintiffs had for many years The aforestated transfer certificates of title of the
been occupying and cultivating the aforestated piece of land until their crops, abovenamed defendants, plaintiffs discovered, and therefore they hereby
houses and other improvements they introduced thereon were illegally allege, were all derived from an alleged Original Certificate of Title No. 4216
bulldozed and destroyed by persons led by defendant Edgardo Espinosa . . . . supposedly issued by the Register of Deeds of Rizal and registered in the name
Thereafter, the same persons forcibly and physically drove out plaintiffs of the Spouses Lorenzo Gana and Maria Juliana Carlos in 1929 allegedly
therefrom. pursuant to Decree No. 351823 issued by the Court of First Instance of Rizal in
Land Registration Case (LRC) No. 672.

Plaintiffs, however, subsequently discovered, after a thorough research, that the and dwellings thereon, which was caused and/or directed by the defendants
alleged Original Certificate of Title No. 4216 of the Spouses Lorenzo Gana and Edgardo Espinosa and Pat C. Margolles, said defendants should be ordered to
Juliana Carlos — whence all the transfer certificates of title of the . . . abovenamed pay plaintiffs actual or compensatory damages in such amount as may be
defendants originated and/or were derived from — was FICTITIOUS and/or proven during the trial of this case. (Original Records, Vol. I, pp. 202-214)
SPURIOUS . . . .
On the basis of the foregoing allegations, the prayer in the amended complaint
xxx xxx xxx states:

X WHEREFORE, it is most respectfully prayed that after hearing, judgment

(should) be rendered:
Being, thus, derived and/or having originated from a FICTITIOUS and/or
SPURIOUS original certificate of title (OCT No. 4216), as herein above shown, 1. Canceling the transfer certificates of titles of the defendants as specified in
ALL the aforestated transfer certificates of title of the . . . abovenamed par. VII hereof and/or declaring them null and void for having originated or
defendants are, logically and imperatively, FAKE, SPURIOUS and/or NULL AND being derived from a fictitious, spurious or void original certificates of title.
VOID as well. Hence, they all must and should be CANCELED.
2. Ordering defendants Edgardo Espinosa and Pat C. Margolles to pay plaintiffs
xxx xxx xxx 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
Before they decided to institute this action, plaintiffs informed, indeed they damages and reasonable amount of attorney's fees, as well as to pay the costs.
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 Plaintiffs further respectfully pray for such other reliefs just and equitable in
are either fake, spurious or void for reasons aforestated. But the defendants the premises. (Original Records, Vol. I, p. 215)
simply ignored plaintiffs' admonitions.
xxx xxx xxx
On April 3, 1985, defendant Peltan Development Corporation (Peltan, for
Accordingly, plaintiffs were compelled to retain the services of the undersigned brevity) filed a "Motion For Preliminary Hearing on Affirmative Defenses"
counsel to file this complaint not only because they have been materially and mainly on the ground that the complaint states no cause of action against
substantially prejudiced by the existence of defendants' spurious titles, but also defendant Peltan. It is alleged in the motion that plaintiffs are not the real
because as citizens and taxpayers of this country they have a legitimate interest parties in interest in the action as they do not assert any present and subsisting
in the disposition of alienable lands of the State, as well as the right to question title of ownership over the property in question. Invoking the case of Gabila vs.
any illegitimate, unlawful or spurious award, disposition or registration thereof Barriga, L-28917, promulgated on September 30, 1971, the defendant Peltan
to protect not just their interest but also the public. contends that the action being one for cancellation of the certificates of title the
Government, through the Solicitor General — not a private individual like
XVI plaintiff Gabila — was the real party in interest.

Because of the defendant's illegal titling of the parcel of land or portions thereof On April 27, 1989 plaintiffs filed their opposition to defendant Peltan's aforesaid
covered by plaintiffs' free patent application, and particularly by the unlawful motion in which plaintiffs reasserted their cause of action as set forth in their
disturbance of plaintiff's possession thereof and destruction of plaintiffs' plants 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 True, plaintiffs in their complaint prayed inter alia for the cancellation of the
placed them in the status of a real party in interest. Subsequently, defendant transfer certificates of title of the defendants for being derived from a spurious
Peltan filed its reply to plaintiffs' opposition, with plaintiffs submitting their or false original certificate of title. Relying on the case of Gabila vs. Barriga,
rejoinder thereto. Then finally defendant Peltan filed its comment on the supra, defendants argued that the ultimate result of a favorable decision on
rejoinder. 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
On August 22, 1989, the trial court dismissed the complaint. Holding that the through the Solicitor Generel (sic). This argument is misplaced. Firstly, unlike
plaintiffs were not the real parties-in-interest, the RTC ruled that they had no the Gabila case, the herein plaintiffs in their complaint did not assert and pray
cause of action against the defendants. The order was reversed by public for reversion. Secondly, the prayer for cancellation of the defendants' Torrens
respondent. Hence, this petition for review. 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
In a motion filed before this Court on March 8, 1996, petitioners prayed for the determining the relief grantable, which rests upon the facts proved (Lacson vs.
cancellation of the notice of lis pendens annotated on their titles "under Entry No. Diaz, 47 O.G. No. 12 Supp. 377, Aug. 4, 1950, No. L-2839). Precisely, as a matter
210060/T-12473-A." The notice was caused by Private Respondent Alejandro of practice, complaints filed in court usually contain a general prayer "for other
Rey because of the pendency of Civil Case No. LP-8852-P, the dismissal of which relief which may be just and equitable in the premises" like the complaint in the
is the issue at bench.8 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
Ruling of the Court of Appeals 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
As observed earlier, the Court of Appeals reversed and set aside the order of the interested to formally implead the Bureau of Lands with notice to the Solicitor
Regional Trial Court, holding that the two elements of a cause of action were General. Obviously, the posture of defendants Peltan is not entirely supported
present in the complaint, to wit: 1) the plaintiff's primary right and 2) the delict by the Gabila case.
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 The Issues
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 Petitioners assign the following errors committed by public respondent: 13
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. a. Ordering the trial court to proceed on private respondents' cause of action for
9 The CA further held that the RTC "should have treated the case as an accion the nullification of OCT No. 4216 on the ground that it is fake/spurious when the
publiciana to determine who as between the parties plaintiffs and defendants Supreme Court had already ruled in G.R. No. 109490 and in G.R. No. 112038 that
have a better right of possession." 10 OCT No. 4216 is genuine and valid — and in disregarding and refusing to pass
upon the said squarely applicable decisions of this Honorable Court;
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 b. Ordering the trial court to proceed on private respondents' cause of action for
court had erred in accepting the allegations of herein petitioners that private damages for the supposed acts of the private respondents Margolles and
respondents' requests for the Solicitor General to file an action to annul OCT No. Espinosa despite non-payment of the jurisdictional docket fees when this cause
4216 had been repeatedly denied. of action had already prescribed — and in disregarding and refusing to pass upon
the squarely applicable Manchester ruling;
Public respondent also rejected the application of the Gabila 11 ruling to the case
at bar. It reasoned: 12 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) In resolving the present complaint, therefore, the Court is well aware that a
private property covered by petitioners' torrens title derived from OCT No. 4216 decision in Margolles vs. CA, 18 rendered on 14 February 1994, upheld the
issued in 1929. 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
The Court's Ruling spurious." Respondent CA, in its assailed Decision dated 29 June 1994, failed to
consider Margolles vs. CA. This we cannot countenance.
We grant the petition and reverse the public respondent.
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
What Determines Cause of Action? 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
It is a well-settled rule that the existence of a cause of action is determined by OCT No. 4216. In other words, private respondents' right is premised on the
the allegations in the complaint. 14 In the resolution of a motion to dismiss based allegation that the title of herein petitioners originated merely from the
on failure to state a cause of action, only the facts alleged in the complaint must "fictitious and/or spurious" OCT No. 4216.
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 Because it had failed to take cognizance of Margolles vs. CA, the CA was unable to
prayer therein. 15 Hence, it has been held that a motion to dismiss generally consider that the legality of OCT No. 4216. As adverted to earlier, Margolles vs.
partakes of the nature of a demurrer which hypothetically admits the truth of the CA upheld the validity of this title and the titles derived therefrom by, among
factual allegations made in a complaint. 16 others, Petitioner Peltan Corporation. Clearly, private respondents' possession
of the land, and their pending application for a free patent thereon, did not not
It is axiomatic nonetheless that a court has a mandate to apply relevant statutes vest in them a right superior to the valid title of petitioner originating from OCT
and jurisprudence in determining whether the allegations in a complaint No. 4216. Indeed, private respondents can invoke no right at all against the
establish a cause of action. While it focuses on the complaint, a court clearly petitioners. Accordingly, the first element or a cause of action, i.e., plaintiff's right,
cannot disregard decisions material to the proper appreciation of the questions is not present in the instant case.
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 In this light, the CA's treatment of the present suit as an accion publiciana to
judicial notice as provided by Section 1 of Rule 129 of the Rules of Court, to wit: 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
Sec. 1. Judicial notice, when mandatory. — A court shall take foreclosed by the Supreme Court in Margolles.
judicial notice, without the introduction of evidence, of the existence and
territorial extent of states, their political history, forms of government and The Supreme Court promulgated Margolles ahead of the assailed CA decision. It
symbols of nationality, the law of nations, the admiralty and maritime courts of was incumbent upon Respondent CA to take judicial notice thereof and apply it
the world and their seals, the political constitution and history of the Philippines, in resolving this case. That the CA did not is clearly a reversible error.
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.) Furthermore, allowing repeated suits seeking to nullify OCT No. 4216, like the
present case, will bring to naught the principle of indefeasibility of titles issued
under the Torrens system of land registration. 19 Thus, in a resolution 20 dated
The said decisions, more importantly, "form part of the legal system," 17 and 10 August 1994, the First Division of this Court, applying the Margolles ruling,
failure of any court to apply them shall constitute an abdication of its duty to dismissed a petition for review involving herein petitioner Peltan Corporation
resolve a dispute in accordance with law, and shall be a ground for which had raised as issue the validity of OCT No. 4216. The Court, in the case at
administrative action against an inferior court magistrate. bench, can do no less. Subjecting OCT No. 4216 to further scrutiny, as proposed
in the amended complaint, is no longer an available option.

Are Private Respondents the Real Parties-in-Interest? As we have already ruled that the private respondents are nor the real parties in
interest, we find no more need to pass upon the question of nonpayment of filing
The Court also holds that private respondents are not the proper parties to fees.
initiate the present suit. The complaint, praying as it did for the cancellation of
the transfer certificates of title of petitioners on the ground that they were WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED
derived from a "spurious" OCT No. 4216, assailed in effect the validity of said and SET ASIDE. The complaint of private respondents in Civil Case No. LP-8852-
title. While private respondents did not pray for the reversion of the land to the F is DISMISSED. The notice of lis pendens, annotated in the titles of petitioners
government, we agree with the petitioners that the prayer in the complaint will because of Civil Care No. LP-8852-P, is ordered CANCELED. No costs.
have the same result of reverting the land to the government under the Regalian
doctrine. 21 Gabila vs. Barriga ruled that only the government is entitled to this SO ORDERED.
relief. The Court in that case held:

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.
Plaintiff-appellant argues that although his complaint is captioned as one for
cancellation of title, he has nevertheless stated therein several causes of action
based on his alleged rights of possession and ownership over the improvements,
on defendant-appellees alleged fraudulent acquisition of the land, and on the
damages allegedly incurred by him (plaintiff-appellant) in relation to the
improvements. These matters are merely ancillary to the central issue of
whether or not defendant-appellee's title should be canceled or amended, and
they may not be leaned upon in an effort to make out a cause of action in relation
to the said focal issue. Indeed, the principal relief prayed for in the amended
complaint is the cancellation or amendment of defendant-appellee's title. 22

Nonpayment of Docket Fees