Evangelista vs. Santiago

The nature of an action is determined by the allegations in the complaint, not its caption; where those allegations assert private ownership and seek to remove allegedly invalid Torrens titles as a cloud, the action is one to quiet title, requiring the plaintiff to allege legal or equitable title or interest, which a Spanish title rendered inadmissible by P.D. No. 892 cannot supply.

Petitioners trace their occupation to Deeds of Assignment executed by Ismael Favila, who claimed to be an heir and successor-in-interest of Don Hermogenes Rodriguez under a Spanish title. Respondent traces his titles to OCT No. 670 issued in 1913 in the name of his mother, Isabel Manahan y Francisco, and three others, later adjudicated to Isabel Manahan Santiago and donated to respondent. P.D. No. 892, effective 16 February 1976, discontinued the Spanish Mortgage Law system and required holders of Spanish titles or grants to apply for Torrens registration within six months, after which Spanish titles could not be used as evidence of land ownership in registration proceedings under the Torrens system.

Petitioners occupied and possessed parcels of land located in Sitio Panayawan, Barangay San Rafael, Montalban (now Rodriguez), Rizal, referred to as the Subject Property, by virtue of Deeds of Assignment dated 15 April 1994 and 02 June 1994 executed by Ismael Favila y Rodriguez. According to the Deeds, the Subject Property was part of a vast tract called "Hacienda Quibiga," which extended to Parañaque, Las Piñas, Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig, Mandaluyong, Quezon City, Caloocan, Bulacan, and Rizal, awarded to Don Hermogenes Rodriguez by the Queen of Spain and evidenced by a Spanish title. Ismael Favila claimed to be one of the heirs and successors-in-interest of Don Hermogenes Rodriguez. Acting as Attorney-in-Fact under a Special Power of Attorney executed by his "mga kapatid" on 25 February 1965, Ismael Favila assigned portions measuring around 500 to 1,000 square meters to petitioners in exchange for labor and work done on the Subject Property by petitioners and their predecessors.

Petitioners later learned that respondent was planning to evict them, and two of them received notices to vacate. Their investigations revealed that the Subject Property was included in TCTs No. 53028, No. 281660, No. N-39258, and No. 205270, all originating from OCT No. 670 and in respondent's name. OCT No. 670 had been issued in the name of respondent's mother, Isabel Manahan y Francisco, and three other individuals pursuant to Decree No. 10248 dated 13 February 1913 in Case No. 8502 of the Court of Land Registration of the Philippine Islands. The whole property covered by OCT No. 670 was subsequently adjudicated in favor of Isabel Manahan Santiago (formerly Isabel Manahan y Francisco); OCT No. 670 was cancelled and TCT No. T-53028 was issued exclusively in her name. On 28 December 1968, Isabel Manahan Santiago executed a Deed of Donation transferring the property to respondent, who subsequently secured TCTs No. 281660, No. N-39258, and No. 205270 in his own name.

On 29 April 1996, petitioners filed with the trial court an action for declaration of nullity of respondent's certificates of title on the basis that OCT No. 670 was fake and spurious. Among the defects alleged were that (a) OCT No. 670 was not signed by a duly authorized officer; (b) material data therein were merely handwritten and in different penmanships; (c) it was not printed on the Official Form used in 1913; (d) it failed to indicate the Survey Plan that was the basis of the Technical Description; (e) Decree No. 10248 was issued only on 11 April 1913 while OCT No. 670 was issued earlier on 13 February 1913; and (f) Decree No. 10248 was issued over a property other than the one described in OCT No. 670, although also located in Rizal.

Respondent filed his Answer with Prayer for Preliminary Hearing on the Affirmative Defenses on 03 July 1996. He claimed that petitioners had no legal capacity to file the Complaint and that it stated no cause of action; that OCT No. 670 was genuine and authentic on its face, making it and all titles derived therefrom incontrovertible, indefeasible, and conclusive; that the Spanish title on which petitioners based their claim was neither indefeasible nor imprescriptible; that P.D. No. 892 required all holders of Spanish titles or grants to apply for registration under the Land Registration Act within six months from its effectivity, after which Spanish titles could no longer be used as evidence of land ownership; and that any action against his certificates of title had prescribed. He also asserted that even if petitioners occupied the Subject Property, they did so as intruders, squatters, and illegal occupants because the property was covered by Torrens certificates in his name and his predecessors-in-interest. Respondent denied knowing or threatening petitioners and noted that they were not included as defendants in Civil Case No. 783, which he had instituted against squatters occupying the Subject Property; in its decision dated 01 July 1992, the trial court held that respondent was the owner of the land involved, and although the decision was appealed, it became final and executory for failure of the defendants-appellants to file their appellants' brief.

The trial court held a preliminary hearing on the affirmative defenses. Petitioners presented their lone witness, Engineer Placido Naval, a supposed expert on land registration laws. In response to questions from Judge Francisco C. Rodriguez, Engineer Naval answered that a parcel of land titled illegally would revert to the State if the Torrens title was cancelled, and that it was the State, through the Office of the Solicitor General, that should file for annulment or cancellation of the title. Respondent presented no evidence and relied on the pleadings and documents he had submitted. After the preliminary hearing, the trial court gave credence to Engineer Naval's testimony, found that the Deeds of Assignment were self-serving, doubted the existence and execution of the Special Power of Attorney because it was not presented, and concluded that the Spanish title had lost evidentiary value under P.D. No. 892 and that petitioners had not shown compliance with that decree.

• Nature of the Action: Petitioners maintained that their Complaint, though captioned as one for declaration of nullity of respondent's certificates of title, was in substance an action to remove a cloud on or to quiet their title over the Subject Property, because they alleged private ownership and possession rather than State ownership.
• Expert Testimony and Evidence: Petitioners argued that the lower court's dismissal was proscribed by the rules of evidence because it was based on Engineer Naval's testimony, which was indisputably not based on facts but a conclusion of law, and because the dismissal was made without ample evidence except respondent's bare allegations.
• P.D. No. 892 Exception: Petitioners argued that the provision of P.D. No. 892 stating that Spanish titles cannot be used as evidence of land ownership in Torrens registration proceedings admits an exception, and that because they alleged actual possession of the Subject Property, they could still present the Spanish title as evidence of ownership under the fourth whereas clause.
• Prescription: Petitioners raised whether an action for quieting of title, specifically where they are in possession of the subject land, can be subject to prescription.

• Lack of Legal Capacity and Cause of Action: Respondent claimed that petitioners had no legal capacity to file the Complaint and that it stated no cause of action, because only the State can file an action for annulment of his certificates of title since cancellation would result in reversion of the Subject Property to the State.
• Validity and Indefeasibility of Torrens Titles: Respondent argued that OCT No. 670 was genuine and authentic on its face, so it and all titles derived therefrom were incontrovertible, indefeasible, and conclusive against petitioners and the whole world; at the very least, the titles were presumed issued by public officials in the regular performance of their duties.
• Spanish Title and P.D. No. 892: Respondent countered that the Spanish title on which petitioners based their claim was neither indefeasible nor imprescriptible, and that P.D. No. 892 required all holders of Spanish titles or grants to apply for registration under the Land Registration Act within six months from its effectivity, after which Spanish titles could no longer be used as evidence of land ownership.
• Prescription: Respondent raised prescription, pointing out that any action against his certificates of title had prescribed, especially as to OCT No. 670, which was issued in 1913 or more than 83 years before the Complaint.
• Possession and Prior Litigation: Respondent asserted that even if petitioners occupied the Subject Property, they were mere intruders, squatters, and illegal occupants without right because the property was covered by Torrens titles in his name and his predecessors-in-interest; he denied knowing or threatening them and cited Civil Case No. 783, where the trial court held him to be the owner and which became final and executory.

• Nature of the Action: Whether petitioners' Complaint, though captioned as an action for declaration of nullity of certificates of title, is in substance an action for removal of a cloud on or quieting of title.
• Cause of Action and Real Party-in-Interest: Whether petitioners had legal or equitable title to, or interest in, the Subject Property sufficient to maintain the action and whether their Complaint stated a cause of action.
• P.D. No. 892 and Spanish Title: Whether P.D. No. 892's bar on using Spanish titles as evidence of land ownership in Torrens registration proceedings admits an exception where petitioners are in actual possession of the Subject Property.
• Prescription: Whether an action for quieting of title, where petitioners are in possession of the subject land, can be subject to prescription.
• Evidentiary Propriety of Dismissal: Whether the trial court's dismissal was proscribed by the rules of evidence because it was based on Engineer Naval's testimony and lacked ample evidence other than respondent's bare allegations.

• Nature of the Action: Yes. The action is one for removal of a cloud on or quieting of title. The caption does not govern; the allegations asserting private ownership and seeking to remove allegedly invalid Torrens titles determine its nature.
• Cause of Action and Real Party-in-Interest: No. Petitioners lacked legal or equitable title or interest; their Complaint failed to state a cause of action. Article 477 of the Civil Code requires such title or interest.
• P.D. No. 892 and Spanish Title: No exception applied. Actual possession does not permit use of the Spanish title after the statutory deadline; P.D. No. 892 bars its use as evidence of ownership, whether in registration or in an action to remove a cloud or quiet title.
• Prescription: Not resolved. Because dismissal for failure to state a cause of action was proper, the issue of prescription need not be addressed.
• Evidentiary Propriety of Dismissal: No, not on the ground relied upon by the trial court; the dismissal is sustained on an independent ground. The trial court erred in resolving factual and evidentiary matters at the preliminary hearing, but the Complaint failed to state a cause of action.

• Nature of the Action: The caption of the pleading is not the governing factor; the allegations determine the nature of the action, and even without a prayer for a specific remedy, courts may grant the proper relief warranted by the facts alleged and evidence introduced. Petitioners alleged that they and their predecessors-in-interest had been in actual, physical, open, continuous, and adverse possession of the Subject Property as owners since time immemorial; that the property was part of Hacienda Quibiga awarded to Don Hermogenes Rodriguez under a Spanish title; that Ismael Favila assigned portions to them; that they still occupied the property when they discovered respondent's Torrens titles; and that they filed the Complaint to prevent eviction. They did not allege that the Subject Property was part of the public domain or that the State owned it. Under Heirs of Ambrocio Kionisala vs. Heirs of Honorio Dacut, an action for reversion requires allegations admitting State ownership and must be instituted by the Solicitor General under Section 101 of C.A. No. 141, while an action for declaration of nullity or quieting requires the plaintiff's pre-existing ownership and the defendant's fraud or mistake. The trial court's reliance on Nagaño vs. Court of Appeals was misplaced because in that case the complaint alleged possession since 1920 and possible acquisition of imperfect title, making dismissal premature. Since petitioners asserted private title and sought to remove respondent's apparently valid but allegedly fake or spurious titles as a cloud, the action is one to remove a cloud on or quiet title under Article 476 of the Civil Code.
• Cause of Action and Real Party-in-Interest: Under Article 477 of the Civil Code, the plaintiff in an action to remove a cloud on or quiet title must have legal or equitable title to, or interest in, the real property. Petitioners claimed title through actual possession since time immemorial and through the Spanish title of Don Hermogenes Rodriguez as assigned by Ismael Favila. These claims are contradictory: possession since time immemorial presumes that the land had never been part of the public domain or had been private property even before the Spanish conquest, in which case the Queen of Spain could not have granted it. Petitioners' title could be traced only as far back as the Spanish title, and as assignees they could acquire no better title than their predecessors-in-interest. P.D. No. 892, effective 16 February 1976, required all holders of Spanish titles or grants to apply for registration under the Land Registration Act within six months, or until 14 August 1976; thereafter, Spanish titles could no longer be used as evidence of land ownership in registration proceedings under the Torrens system. No allegation was made that petitioners' predecessors complied. Registration under the Torrens system does not create or vest title but only confirms and records title already created and vested. Courts cannot accept or indirectly confirm a Spanish title in a quieting action, because that would circumvent P.D. No. 892 and undermine the Torrens system. The fourth whereas clause's requirement of actual possession does not create an exception; it exists because Spanish titles are subject to prescription and an occupant may acquire a better title. Since petitioners alleged no other basis for ownership under the Land Registration Decree or the Public Land Act, they failed to establish legal or equitable title or interest and lacked personality to sue; the Complaint was properly dismissed for failure to state a cause of action.
• P.D. No. 892 and Spanish Title: The fourth whereas clause of P.D. No. 892 states that Spanish titles to lands not yet brought under the Torrens system, being subject to prescription, are ineffective to prove ownership unless accompanied by proof of actual possession. This clause must be read with the whole decree, whose tenor is to discontinue the use of Spanish titles and strip them of probative value as evidence of ownership. It set a deadline of six months from effectivity, or 14 August 1976, for filing applications for registration of all Spanish titles under the Torrens system. After that date, Spanish titles may no longer be presented to prove ownership, regardless of actual possession. Actual possession is required in a timely registration proceeding to discount the possibility that another has acquired a better title by prescription; it does not permit use of a Spanish title after the deadline. Thus, petitioners' actual possession when they filed the Complaint on 29 April 1996 did not exclude them from P.D. No. 892, and their Spanish title remained inadmissible as evidence of ownership in either a land registration proceeding or an action to remove a cloud on or quiet title.
• Prescription: Because the Complaint was properly dismissed for failure to state a cause of action, it was unnecessary to address the issue of prescription of the action.
• Evidentiary Propriety of Dismissal: The affirmative defense that the Complaint stated no cause of action required a hypothetical admission of the facts alleged in the Complaint. The trial court should have limited itself to examining the sufficiency of those allegations and was proscribed from inquiring into their truth or the authenticity of documents referred to or attached to the Complaint. It therefore erred in making findings on the authenticity of the Deeds of Assignment and on the existence and execution of the Special Power of Attorney, matters that could only be resolved after a proper trial on the merits. Nevertheless, the dismissal is sustained on the independent ground that even the hypothetically admitted allegations failed to establish the legal or equitable title required for the action.

• Nature of action determined by allegations, not caption — The caption of a pleading does not govern the nature of the action; the allegations in the complaint determine it, and courts may grant the proper relief warranted by the facts alleged and the evidence introduced even without a prayer for a specific remedy. The Court applied this to treat a complaint captioned for declaration of nullity of certificates of title as an action to remove a cloud on or quiet title.
• Reversion distinguished from declaration of nullity/quieting of title — An action for reversion requires allegations admitting State ownership of the disputed land and must be instituted by the Solicitor General under Section 101 of C.A. No. 141. An action for declaration of nullity or quieting of title requires allegations of the plaintiff's pre-existing ownership and the defendant's fraud or mistake; the real party-in-interest is the plaintiff claiming a pre-existing right, not the State. Because petitioners asserted private title and did not allege public domain, their action was not for reversion.
• Requisites of action to remove cloud on or quiet title — Under Article 476 of the Civil Code, a cloud on title is an outstanding instrument, record, claim, encumbrance, or proceeding that is actually invalid or inoperative but may impair title and has a prima facie appearance of validity. Under Article 477, the plaintiff must have legal or equitable title to, or interest in, the real property. Respondent's Torrens titles appeared valid but were alleged fake or spurious; however, petitioners failed to allege the required legal or equitable title.
• P.D. No. 892 and Spanish titles — P.D. No. 892 discontinued registration under the Spanish Mortgage Law and considered lands recorded under it but not covered by Torrens title as unregistered. It required all holders of Spanish titles or grants to apply for registration under Act No. 496 within six months from effectivity, or until 14 August 1976; thereafter, Spanish titles cannot be used as evidence of land ownership in any registration proceedings under the Torrens system. The Court applied this to bar petitioners' Spanish title and to prevent its indirect confirmation in a quieting action.
• Actual possession under the fourth whereas clause of P.D. No. 892 — The fourth whereas clause's requirement of proof of actual possession does not create an exception to the deadline. It exists because Spanish titles are subject to prescription and a holder may lose ownership to an occupant who possesses for the prescriptive period; actual possession is required in a timely registration proceeding to discount that possibility. Petitioners' actual possession did not allow them to use the Spanish title after 14 August 1976.
• Torrens registration does not create or vest title — Registration proceedings under the Torrens system do not create or vest title but only confirm and record title already created and vested. Because courts cannot accept or indirectly confirm a Spanish title in a quieting action, P.D. No. 892 cannot be circumvented by such an action.
• Possession since time immemorial — Possession since time immemorial carries the presumption that the land had never been part of the public domain or had been private property even before the Spanish conquest. If the Subject Property was already private before the Spanish conquest, the Queen of Spain could not have granted it, so petitioners' reliance on both possession since time immemorial and a Spanish title was contradictory.
• Failure to state a cause of action and hypothetical admission — A motion to dismiss or affirmative defense based on failure to state a cause of action hypothetically admits the truth of the facts alleged in the complaint; the court examines only the sufficiency of the allegations, not their truth. The trial court erred in resolving authenticity issues at the preliminary hearing, but dismissal was sustained because the hypothetically admitted allegations were insufficient.

• "The caption of the pleading should not be the governing factor, but rather the allegations therein should determine the nature of the action, because even without the prayer for a specific remedy, the courts may nevertheless grant the proper relief as may be warranted by the facts alleged in the Complaint and the evidence introduced." — States the controlling rule for determining the nature of an action; the Court used it to treat the complaint as one for removal of a cloud on or quieting of title.
• "According to Article 477 of the Civil Code, the plaintiff, in an action to remove a cloud on or to quiet title, must have legal or equitable title to, or interest in, the real property which is the subject matter of the action." — States the requisite title or interest for a quieting action; the Court relied on it to hold that petitioners lacked personality to sue.
• "Indubitably, P.D. No. 892 divests the Spanish titles of any legal force and effect in establishing ownership over real property." — Articulates the core effect of P.D. No. 892 on Spanish titles; the Court applied it to render petitioners' Spanish title inadmissible as evidence of ownership.
• "Therefore, the fact that petitioners were in actual possession of the Subject Property when they filed the Complaint with the trial court on 29 April 1996 does not exclude them from the application of P.D. No. 892, and their Spanish title remain inadmissible as evidence of their ownership of the Subject Property, whether in a land registration proceeding or in an action to remove a cloud on or to quiet title." — Rejects the claimed actual-possession exception and extends the bar on Spanish titles to quieting actions, the ratio for dismissing the complaint.

• Columbia Pictures, Inc. vs. Court of Appeals, G.R. No. 110318, 28 August 1996, 261 SCRA 144, 161-162 — Cited to distinguish lack of legal capacity to sue from lack of personality to sue; the former refers to a plaintiff's general disability, while the latter means the plaintiff is not the real party-in-interest and is grounded on failure to state a cause of action.
• Garcon vs. Redemptorist Fathers, 123 Phil 1192, 1196-1197 (1966) — Cited for the rule that a motion to dismiss based on lack of cause of action hypothetically admits the truth of the complaint's allegations and tests only their sufficiency; applied in holding the trial court erred in inquiring into factual matters at the preliminary hearing.
• Nagaño vs. Court of Appeals, G.R. No. 123231, 17 November 1997, 282 SCRA 43 — The trial court relied on this case for the proposition that only the State may file an action for cancellation of an illegally issued title. The Supreme Court reviewed and distinguished it, noting that the complaint there alleged possession since 1920 and possible imperfect title, making dismissal premature; reversion must be instituted by the Solicitor General.
• Heirs of Ambrocio Kionisala vs. Heirs of Honorio Dacut, G.R. No. 147379, 27 February 2002, 378 SCRA 206, 214-215 — Cited to distinguish an ordinary civil action for declaration of nullity of titles from an action for reversion; reversion requires allegations admitting State ownership, while nullity requires the plaintiff's pre-existing ownership and the defendant's fraud or mistake.
• Chacon Enterprises vs. Court of Appeals, G.R. No. L-46418, 29 September 1983, 124 SCRA 784 — Cited for the rule that the caption of the pleading is not controlling and the allegations determine the nature of the action; applied to treat the complaint as one for quieting of title.
• Director of Forestry, et al. vs. Hon. Emmanuel M. Muñoz, et al. and Pinagcamaligan Indo-Agro Development Corporation vs. Hon. Macario Peralta, Jr., et al., 132 Phil 637 (1968) — Cited by respondent and relied on in the Court's discussion of Spanish titles being subject to prescription; Spanish titles are neither indefeasible nor imprescriptible and may lose to an occupant who possesses for the prescriptive period.
• O Cho vs. Director of Lands, 75 Phil 890, 892 (1946), citing _Cariño vs. Insular Government, 212 US 449, 53 Law ed., 594; Nelayan, et al. vs. Nelayan, et al., 109 Phil 183 (1960) — Cited for the rule that possession since time immemorial carries the presumption that the land had never been part of the public domain or had been private property even before the Spanish conquest; applied to show the contradiction in petitioners' claim.
• Angeles vs. Samia, 66 Phil 444, 448 — Cited for the rule that registration proceedings under the Torrens system do not create or vest title but only confirm and record title already created and vested; applied to bar indirect confirmation of the Spanish title.
• People vs. Purisima, G.R. Nos. L-42050-66, 20 November 1978, 86 SCRA 542, 559; _Aboitiz Shipping Corp., et al. vs. City of Cebu, G.R. No. L-14526, 31 March 1965, 13 SCRA 449, 453 — Cited for statutory construction: legislative intent must be ascertained from the statute as a whole, and a provision must be read with other provisions; applied to harmonize the fourth whereas clause with the rest of P.D. No. 892.

• Article 476, Civil Code — Defines a cloud on title and authorizes an action to remove such cloud or quiet title. The Court applied it because respondent's certificates of title appeared valid or effective but were alleged to be fake, spurious, or fraudulent and prejudicial to petitioners' claimed title.
• Article 477, Civil Code — Requires the plaintiff in an action to remove a cloud on or quiet title to have legal or equitable title to, or interest in, the real property. The Court applied it to hold that petitioners lacked personality to sue because they failed to establish such title or interest.
• Section 1, Presidential Decree No. 892 — Discontinues the Spanish Mortgage Law system, considers lands recorded under it but not covered by Torrens title as unregistered, and requires all holders of Spanish titles or grants to apply for registration under Act No. 496 within six months from effectivity; thereafter Spanish titles cannot be used as evidence of land ownership in Torrens registration proceedings. The Court applied it to render petitioners' Spanish title inadmissible and to bar its indirect confirmation in a quieting action.
• Fourth whereas clause, Presidential Decree No. 892 — States that Spanish titles to lands not yet brought under the Torrens system, being subject to prescription, are ineffective to prove ownership unless accompanied by proof of actual possession. The Court held this did not create an exception to the deadline; actual possession was required in a timely registration proceeding and did not permit use of the Spanish title after 14 August 1976.
• Section 101, Commonwealth Act No. 141 (Public Land Act) — Provides that all actions for reversion to the Government of lands of the public domain or improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the name of the Republic of the Philippines. The Court cited it to distinguish reversion from petitioners' action, which did not allege State ownership.
• Section 14, Presidential Decree No. 1529 (Land Registration Decree) — Lists who may apply for registration of title, including those with open, continuous, exclusive, and notorious possession and occupation of alienable and disposable public lands under a bona fide claim of ownership since June 12, 1945, or earlier, and those who acquired ownership of private lands by prescription or other manner provided by law. The Court noted that holders of Spanish titles may claim ownership on other bases under this decree, but petitioners alleged none.
• Section 48, Commonwealth Act No. 141 (Public Land Act) — Cited in the Nagaño discussion regarding confirmation of imperfect titles and the conclusive presumption that those who possessed agricultural lands of the public domain under a bona fide claim since June 12, 1945, or earlier have performed all conditions for a government grant. The Court used the Nagaño distinction to reject the trial court's reversion theory.
• Section 1(d) and (g), Rule 16, Rules of Court — Identify lack of legal capacity to sue and failure of the pleading to state a cause of action as grounds for dismissal. The Court cited them in distinguishing lack of legal capacity from lack of personality to sue.

Justices Puno (Chairman), Austria-Martinez, Callejo, Sr., and Tinga concurred.