783 Phil. 579
DEL CASTILLO, J.:
We find [the Republic's] averment to be impressed with merit. The instant case is a cadastral proceeding under the Public Land Laws. The burden of proving that the land is a registrable private land rests upon [Romamban and Parong] in view of the basic presumption that lands of whatever classification belong to the State, x x x. Subject Lot No. 42-E is, therefore, presumed to be public land. To overcome the presumption, it is incumbent upon [Romamban and Parong] to show by clear and convincing evidence that they have been in uninterrupted possession of the same in the concept of an owner for a period of at least thirty (30) years, x x x. However, as has been earlier discussed, since [Romamban and Parong] have already lost their standing in court,[10] the evidence adduced by them in the trial court cannot be admitted to support their claim. This court is thus constrained to rule that the presumption that Lot No. 42-E is a public land has not been overcome. Withal, claimant Diego Lim's Application for Free Patent: (Exh. "1") and Claimant Jorge Josefat's Homestead Application (Exh. "9") which are pending with the Bureau of Lands are competent evidence that subject Lot No. 42-E is indeed part of the public domain, x x x. Necessarily, therefore, the lower court committed reversible error when it awarded subject Lot No. 42-E to [Romamban and Parong].The above Decision became final and executory on February 3, 1989.[12]
IN VIEW OF ALL THE FOREGOING, the decision of the court a quo dated November 20, 1969 is hereby REVERSED and its Order dated April 14, 1970 SET ASIDE. It is hereby further declared that subject Lot No. 42-E is deemed and considered part and parcel of the public domain without prejudice to the right of claimant Diego Lim and claimant Jorge Josefat to pursue their respective applications for free patent and homestead patent, respectively. With costs.
SO ORDERED.[11]
The main issue in this case is whether or not [sic] the plaintiffs can still recover the [sic] possession of the lots from the defendants in this case which is also for the nullification of their titles. The issues of possession and ownership are inextricably intertwined with each other and should be resolved together.Ruling of the Court of Appeals
It is worthy to note that despite the decision of the Court of Appeals setting aside the decision of the then Court of First Instance at Iba, Zambales which awarded Lot 42-E of the Iba Cadastre to Epifanio Romamban and Santiago Y. Parong, no action was filed by the government for the reversion of such lot to the public domain. It is a hornbook doctrine that it is only the State through the Solicitor General that can file an action for reversion x x x which up to the present time is [sic] not yet initiated by the government office concerned. Although the Republic of the Philippines, through the Solicitor General had intervened in this proceeding, it did not pursue its case against the present possessors the defendants, as in fact its complaint in intervention was dismissed on February 19, 1998 x x x for failure x x x to appear in the hearing of this case and for lack of interest to prosecute. Under the factual milieu of this case, the plaintiffs have therefore no legal personality to file the action to revert Lot 42-E of the Iba Cadastre to the public domain which legally pertains to the State through the Office of the Solicitor General.
While the present action is not directly one for reversion but for recovery of possession (accion publiciana), still this Court finds plaintiffs'[18] evidence insufficient to overturn the defendants'[19] evidence as to proof of ownership and possession. Witness and plaintiff Prudencia Lim has not even shown any tax declaration either in her name or that of her deceased brother, Diego Lim and so were not paying taxes on the property. The non-existence of a tax declaration of the subject land in the names of the plaintiffs is also confirmed by witnesses Rodrigo A. Aramay and Arturo Buenaventura. The defendants however have certificates of title in their names transferred from the previous owners. The titles of the defendants until now, have not been invalidated. Such titles as a proof of ownership should therefore be given superior weight and the defendants as the holders thereof should be considered as the owners of the property in controversy until their titles are nullified or modified in an appropriate ordinary action x x x. The defendants were buyers in good faith and they relied on the titles of the vendors, Epifanio Romamban and Santiago Y. Parong which do not show any encumbrance or annotation of an adverse claim or the pendency of an, appeal. The decision of the Court of Appeals in the case of Director of Lands vs. Epifanio Romamban and Santiago Y. Parong (CA-G.R. CV No. 11483 promulgated on January 12, 1989) which declared Lot 42-E, Iba Cadastre to be part and parcel of the public domain, was not annotated in the titles of Epifanio Romamban and Santiago Y. Parong, who were the vendors of the lots now owned and possessed by the defendants. It is a settled doctrinal rule that one who deals with property under the Torrens system need not go beyond the same, but only has to rely on the title x x x. As a consequence of such indubitable proof of ownership, the defendants being the actual possessors, have the right to be respected in their possession (Art. 539, Civil Code of the Philippines).
WHEREFORE, judgment is hereby rendered:
1) Declaring the defendants and their respective transferees to be the absolute owners and lawful possessors of the lots described in their respective certificates of title;
2) Dismissing the plaintiffs' complaint for lack of legal basis;
3) Dismissing the defendants' counterclaim for lack of factual basis there being no evidence submitted by them during the trial; and
4) Dismissing the cross-claims of some of the defendants for being now moot and academic in view of this depision.
SO ORDERED.[20]
The appeal is unmeritorious.Petitioner filed a Motion for Reconsideration,[23] which the CA denied, in its subsequent February 11, 2011 Resolution. Hence, the present Petition.
The main issue to be resolved in the case at bar is whether the lower court erred in dismissing the complaint for accion publiciana with cancellation of deeds of absolute sale and transfer certificates of title.
We rule in the negative.
In the case at bar, it is undisputed that the parcel of land subject of the instant controversy had been subdivided into smaller lots, and then later on, sold to various entities and third parties by Epifanio Romamban and Santiago Parong. As argued by herein defendants-appellees,[21] to whom the subdivided property had been separately sold, there was no circumstance or presence of anything appearing on the face of the certificates of title of the afore-named vendors which excites or arouses suspicion which should then prompt the former to look beyond the said certificates and investigate the title.
The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.
Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. x x x. Even if a decree in a registration proceeding is infected with nullity, still an innocent purchaser for value relying on a Torrens title issued in pursuance thereof is protected.
In Republic of the Philippines vs. Democrito T. Mendoza, et al. citing Republic vs. Agunoy, Sr. et al., the Supreme Court emphatically explained that contested areas and titles which had already passed on to third parties who acquired the same in good faith and for value must be respected and protected, to wit:Finally, it should be borne in mind that the contested areas and titles thereto had already passed on to third parties who acquired the same from the Mendozas in good faith-and for value. When the Mendozas' sales patents were registered, they were brought under the operation of Presidential Decree No. [1529], otherwise known as the Land Registration Decree.The foregoing pronouncement which declares that, "even if the original grantee of a patent and title has obtained the same through fraud, reversion will no longer prosper if such will affect the titles of innocent purchasers for value," was reiterated in Rabaja Ranch Development Corp. vs. AFP Retirement and Separation Benefits System, and We quote the pertinent provisions, thus:
According to Section 103 of the Land Registration Decree, whenever public [land] is by the Government alienated, granted, or conveyed to any person, the same shall be brought under the operation of the said Decree and shall be deemed to [sic] registered lands to -all intents and purposes under the Decree. x x x.
In Republic v. Agunoy, Sr., et al., We refused to revert the land in question to the public domain despite the fact that the free patent thereto was secured by fraud since the same land already passed on to purchasers in good faith and for value -
There can be no debate at all on petitioner's submission that no amount of legal technicality may serve as a solid foundation for the enjoyment of the fruits of fraud. It is thus understandable why petitioner chants the dogma of fraus et jus nunquam cohabitant.
Significantly, however, in the cases cited by petitioner Republic, as well as in those other cases where the doctrine of fraus et jus nunquam cohabitant was applied against a patent and the title procured thru fraud or misrepresentation, we note that the land covered thereby is either apart of the forest zone which is definitely non-disposable, as in Animas, or that said patent and title are still in the name of the person who committed the fraud or misrepresentation, as in Acot, Animas, Republic vs. CA and Del Mundo and Director of Lands vs. Abanilla, et al. and, in either instance, there were yet no innocent third parties standing in the way.In Estate of the Late Jesus S. Yujuico v. Republic, citing Republic v. Court of Appeals, this Court stressed the fact that it was never proven that private respondent St. Jude was a party to the fraud that led to the increase in the area of the property after it was subdivided. In the same case, citing Republic v. Umali, we held that, in a reversion case, even if the original grantee of a patent and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and the fraudulent acquisition cannot affect the titles of innocent purchasers for value.Thus, notwithstanding a final judgment declaring that the property in question forms part of the public domain, a reversion of the said property to the public domain will no longer be allowed at this stage in view of the protection given to innocent purchasers for value which is necessary to uphold a certificate of title's efficacy and conclusiveness.
This conclusion rests very firmly on Section 32 of P.D. No. 1529, which states:
SEC. 32. Review of decree of registration; Innocent purchaser for value. - The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case Shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other person responsible for the fraud.
Settled is the rule that no valid TCT can issue from a void TCT, unless an innocent purchaser for value had intervened. An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right to or interest in the property, for which a full and. fair price is paid by the buyer at the time of the purchase or before receipt of any notice of the claims or interest of some other person in the property. The protection given to innocent purchasers for value is necessary to uphold a certificate of title's efficacy and conclusiveness, which the Torrens system ensures.
Moreover, herein plaintiffs-appellants have no legal standing to bring this instant action. Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted and defended in the name of the real party-in-intefest. The real party-in-interest is the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit.
"Interest," within the meaning of the rule, means material interest, an interest in the issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. Cases construing the real party-in-interest provision can be more easily understood if it is borne in mind that the true meaning of real party-in-interest may be summarized as follows: An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced. To qualify a person to be a real party in interest in whose name an action must be prosecuted, he must appear to be the present real owner of the right sought to be enforced.
In the instant case, herein plaintiffs-appellants had in fact admitted that the application for free patent filed by Diego Lim and Jorge Josefat had not been acted upon when a controversy involving the parcel of land subject of the instant case arose. The mere filing of an application for a free patent does not vest ownership upon the applicant.
It is a well-settled rule that the approval of a sales application merely authorized the applicant to take possession of the land so that he could comply with the requirements prescribed by law before a final patent eould be issued in his favor. Meanwhile, the government still remained the owner thereof, as in fact the application could still be canceled and the land awarded to another applicant should it be shown that the legal requirements had not been complied with. What divests the government of title to the land is the issuance of the sales patent and its subsequent registration with the Register of Deeds. It is the registration and issuance of the certificate of title that segregate public lands from the mass of public domain and convert it into private property. Hence, the lower court did not err in dismissing the complaint below for accion publiciana with cancellation of deeds of absolute sale and transfer certificates of title.
As to the allegation that the decision of the trial court is not valid for its failure to issue the mandatory pre-trial order, We find the same to be devoid of merit. The appellants, in having voluntarily participated in the proceedings below in spite of the alleged absence of a pre-trial order, are now precluded to [sic] challenge the decision through this appeal applying the equitable principle of estoppel.
WHEREFORE, premises considered, the instant appeal is denied. Accordingly, the Decision of the Regional Trial Court of Iba, Zambales dated April 18, 2005 is hereby AFFIRMED.
SO ORDERED.[22] (Emphases in the original)
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT:Petitioner's Arguments(A) CONSIDERED RESPONDENTS CACHO ET AL. ENTITLED TO THE PROTECTION GIVEN TO INNOCENT PURCHASERS FOR VALUE.
(B) DISREGARDED THE FINAL AND EXECUTORY DECISION OF THE COURT OF APPEALS [IN] CA-G.R. CV NO. 11483, WHICH DECLARED THE SUBJECT LOTS PART OF THE PUBLIC DOMAIN.[25]