Figuracion vs. Spouses Libi

A private party who does not claim ownership or possession of public land and whose only interest is the use of the property as access to a public road is not a real party in interest to institute an action for annulment of title or reversion of public land; only the Republic of the Philippines, through the Solicitor General, may institute reversion proceedings under Section 101 of the Public Land Act. The Court further held that a local government unit may validly reconvey an unused portion of expropriated road property to the former owner's successors-in-interest when it has been declared vacant and available for conveyance pursuant to duly enacted Sanggunian resolutions and applicable statutory authority.

Galileo Figuracion owned Lot No. 899-D-2 in Cebu City. In 1948, the Cebu City government expropriated the entire 474-square-meter lot for ₱23,700.00 to construct a portion of N. Escario Street, and was issued TCT No. 49454. Petitioners are the successors-in-interest of Isagani Figuracion, who was in turn the successor-in-interest of Galileo Figuracion. Respondents Spouses Cresenciano and Amelita Libi own the adjacent Lot No. 899-D-1 and had been using a portion of the expropriated lot as access to Escario Street. The Revised Charter of Cebu City (Republic Act No. 3857) and the Local Government Code (Republic Act No. 7160) delegate to the city government authority to close local roads and convey property withdrawn from public servitude.

Galileo Figuracion was the owner of Lot No. 899-D-2, situated in Cebu City. Sometime in 1948, the Cebu City government expropriated the 474-square-meter lot for ₱23,700.00 and converted it into a portion of N. Escario Street, connecting the Capitol Building to Gorordo Avenue and the U.P. Junior College. Cebu City was issued TCT No. 49454 over the expropriated property.

Decades later, in Resolution No. 330 dated March 20, 1989, the Cebu City Sangguniang Panlungsod approved the reconveyance to Isagani Figuracion—successor-in-interest of Galileo Figuracion—of an unused portion of Lot No. 899-D-2, designated as Lot No. 899-D-2-A, consisting of 84 square meters. On the basis of that resolution, Mayor Tomas Osmeña executed a deed of sale dated April 12, 1989 in favor of Isagani Figuracion for ₱40,000.00. TCT No. 49454 in the name of Cebu City was canceled, and TCT No. 113746 was issued to Isagani Figuracion while TCT No. 113747 was issued to Cebu City over the remaining portion.

Upon resurvey over two years later, it was ascertained that the subject lot actually measured 130 square meters. The Sangguniang Panlungsod amended Resolution No. 330 by issuing Resolution No. 2345, approving the reconveyance of the full 130 square meters. Mayor Osmeña executed an amended deed of sale dated January 24, 1992 for ₱65,000.00. The prior titles were canceled and TCT No. 122369 was issued on September 30, 1992 to Isagani Figuracion.

Respondents Spouses Libi, who owned the adjacent Lot No. 899-D-1, had been using the subject lot and refused to vacate it despite demand. Petitioners, as successors-in-interest of Isagani Figuracion, filed a complaint for unlawful detainer against respondents in the MTC, which on June 26, 1995 declared petitioners entitled to possession and ordered respondents to remove the fence they had constructed. That decision was affirmed by the RTC on January 15, 1996 and upheld by the CA on April 30, 1996.

Undaunted, respondents filed a complaint for easement of right of way over the subject lot in the RTC, docketed as Civil Case No. CEB-21193. They twice amended the complaint to implead Cebu City and shifted to a different cause of action—from establishment of a right of way to annulment of Resolutions No. 330 and 2345, the January 24, 1992 deed of sale, and TCT No. 122309, plus damages. In their second amended complaint, respondents alleged that Lot No. 899-D-2 was a road lot and therefore could not be the subject of sale, being outside the commerce of man. They sought neither ownership nor possession of the subject lot but only cancellation of petitioners' private title on the ground that the property formed part of a public road. Cebu City defended the reconveyance, noting the subject lot had not been utilized in the construction of N. Escario Street and had long been vacant. Petitioners, in their answer, argued that the complaint was barred by the prior unlawful detainer judgment and challenged respondents' legal standing.

After trial, the RTC declared Resolutions No. 330 and 2345, the deed of sale, the amended deed of sale, and TCT No. 122309 null and void. Cebu City did not appeal, and respondents did not appeal the denial of their damages claim. Only petitioners appealed to the CA, which affirmed the RTC on March 20, 2002 and denied reconsideration on August 20, 2002, prompting the present petition.

• Res Judicata and Forum Shopping: Petitioner argued that the complaint in Civil Case No. CEB-21193 is barred by res judicata or conclusiveness of judgment arising from the June 26, 1995 MTC decision in the unlawful detainer case, as affirmed by the RTC and CA, and that respondents are guilty of forum shopping.
• Nullity of Annulment Ruling: Petitioner maintained that the CA erred in declaring Resolutions No. 330 and 2345, the deed of sale and amended deed of sale, and TCT No. 122309 null and void.
• Legal Capacity to Sue: Petitioner argued that respondents, as private citizens and ordinary taxpayers, lack the legal capacity to question the reconveyance of the subject lot by Cebu City to petitioners.
• Laches and Prescription: Petitioner contended that the present action is barred by laches and prescription.
• Damages: Petitioner asserted that the CA erred in not awarding damages in their favor as prayed for in their counterclaim.

• Legal Standing: Respondent countered that they have legal capacity to sue as real parties in interest, claiming they stand to be benefited or injured by the judgment because the 130-square-meter portion appropriated to Isagani Figuracion is necessary for their ingress to and egress from Escario Street.
• Inalienability of Public Property: Respondent argued that Lot No. 899-D-2, being a road lot, cannot be the subject of sale as it is outside the commerce of man, and that petitioners' title over the property should therefore be canceled.

• Legal Standing: Whether respondents, who do not claim ownership or possession of the subject lot and whose only interest is its use as access to Escario Street, are real parties in interest to maintain an action for annulment of title that is in substance a reversion proceeding.
• Validity of Reconveyance: Whether the reconveyance of the subject lot by Cebu City to petitioners, pursuant to Sangguniang Panlungsod Resolutions No. 330 and 2345 and the corresponding deeds of sale, is valid.
• Res Judicata and Forum Shopping: Whether the complaint in Civil Case No. CEB-21193 is barred by res judicata or conclusiveness of judgment and whether respondents are guilty of forum shopping.
• Laches and Prescription: Whether the present action is barred by laches and prescription.
• Damages: Whether petitioners are entitled to damages under their counterclaim.

• Legal Standing: No. Respondents are not real parties in interest; their interest in the subject lot is merely tangential—limited to its use as access—and does not vest them with legal standing to sue for reversion of public land, which under Section 101 of the Public Land Act must be instituted by the Solicitor General in the name of the Republic.
• Validity of Reconveyance: The reconveyance is valid. Cebu City validly exercised its delegated authority under the Local Government Code and its Revised Charter to declare the unused portion of the expropriated road lot as available for conveyance, and petitioners, as successors-in-interest of the former owner, had the right to repurchase.
• Res Judicata and Forum Shopping: Dispensed with, the standing issue and validity of reconveyance having been resolved decisively in favor of petitioners.
• Laches and Prescription: Dispensed with on the same ground.
• Damages: Dispensed with on the same ground.

• Legal Standing: The Court identified three critical facts overlooked by both the RTC and the CA: first, respondents sought annulment of TCT No. 122309, the Sangguniang resolutions, and the deeds of sale, but did not themselves claim title to or possession of the subject lot; second, respondents had abandoned their original demand for a right of way over the property in their second amended complaint; and third, the subject lot was part of property expropriated by Cebu City for construction of a city street. In an action for annulment of title, the plaintiff must allege two essential facts: (1) that the plaintiff was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the property. Absent either allegation, the plaintiff is not the proper party to seek cancellation of the defendant's title. Respondents alleged neither. Their second amended complaint explicitly stated that Lot No. 899-D-2 was a road lot and could not be the subject of sale, but they sought only cancellation of petitioners' private title—not ownership or possession for themselves. Because respondents had abandoned their easement claim, and under Section 8, Rule 10 of the Rules of Court an amended complaint supersedes the original, they were left with no cause of action that vested them with a real interest in the property. The Court further held that the action was in essence one for reversion of public land, which requires a positive averment of state ownership and must be instituted by the Solicitor General in the name of the Republic under Section 101 of the Public Land Act. Respondents' interest—use of the property as access to Escario Street—is merely tangential to any issue of ownership and possession, constituting at most a mere expectancy rather than a present substantial interest. The RTC therefore acted without jurisdiction in entertaining the second amended complaint, rendering its decision a nullity.

• Validity of Reconveyance: The Court found it necessary to resolve the validity of the reconveyance rather than leave the parties in limbo. Lot No. 899-D-2-A, being part of property expropriated for construction of N. Escario Street, is property of the public domain, and its reconveyance is subject to strict legal requirements. First, the public property must be alienable. Under Section 10, Chapter II of the Local Government Code and Section 31 of the Revised Charter of Cebu City (Republic Act No. 3857), Congress delegated to the city government the authority to close local roads and convey property withdrawn from public servitude for any purpose for which other city real property may lawfully be used or conveyed. Second, the former owner or successors-in-interest must have the right to repurchase. Citing Fery vs. Municipality of Cabanatuan, the Court explained that when land is expropriated for a particular purpose with the condition that the property returns to the former owner upon abandonment of that purpose, the former owner reacquires the property; but if the decree of expropriation gives fee simple title, non-user does not defeat the title. The Court clarified, through Moreno vs. Mactan-Cebu International Airport Authority and related cases, that where there is preponderant evidence of a right to repurchase, the former owner may exercise that option once the public purpose is abandoned; but where there is insufficient evidence of such right, the former owner may not insist on recovery. In the present case, Cebu City unequivocally repudiated its right to use the subject lot for other public purpose and instead recognized the right of the former owner's successor-in-interest to repurchase. The Sangguniang Panlungsod unanimously issued Resolutions No. 330 and 2345 declaring the subject lot vacant and available for conveyance, constituting clear and positive evidence of the city's intention to return the unused portion by way of sale. The reconveyance was therefore valid.

• Res Judicata and Forum Shopping: The Court dispensed with this issue, having already resolved the petition in favor of petitioners on the standing and validity grounds.

• Laches and Prescription: The Court dispensed with this issue for the same reason.

• Damages: The Court dispensed with this issue for the same reason.

• Real Party in Interest — Under Rule 3, Section 2 of the Rules of Court, a 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" means material interest—an interest in issue and to be affected by the decree—as distinguished from mere interest in the question involved or a mere incidental interest. The interest must be personal, not one based on a desire to vindicate the constitutional right of a third party. Real interest means a present substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or consequential interest. In this case, respondents' interest in using the subject lot as access was merely tangential and insufficient to vest legal standing.

• Reversion Proceedings — Reversion is a proceeding by which the State seeks the return of lands of the public domain or improvements thereon through the cancellation of private title erroneously or fraudulently issued over it. The crucial element that distinguishes reversion from all other actions involving possession or title is the positive averment in the complaint of state ownership of the property in dispute. Under Section 101 of the Public Land Act, all actions for reversion must be instituted by the Solicitor General in the name of the Republic of the Philippines. A suit filed by a person who is not a party in interest must be dismissed.

• Annulment of Title — Requisites — In a case for annulment of title, the plaintiff must allege two essential facts: (1) that the plaintiff was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the property. Absent either allegation, the plaintiff is not the proper party to cause cancellation of the defendant's title.

• Right to Repurchase Expropriated Property — When private land is expropriated for a particular public purpose with the condition that the property returns to the former owner upon abandonment of that purpose, the former owner reacquires the property. If the decree of expropriation gives fee simple title, non-user does not defeat the expropriator's title. Where there is preponderant evidence of a right to repurchase, the former owner may exercise the option once the public purpose is abandoned. Where there is insufficient evidence of such right, the former owner may not insist on recovery even when the public purpose is abandoned.

• Effect of Amended Complaint — Under Section 8, Rule 10 of the Rules of Court, an amended complaint supersedes the original complaint. The original complaint is deemed withdrawn and no longer considered part of the record. Thus, causes of action abandoned in the amended complaint cannot be relied upon to establish standing.

• Local Government Authority Over Roads — Under Section 10, Chapter II of the Local Government Code and the Revised Charter of Cebu City, local government units may permanently close local roads pursuant to an ordinance approved by at least two-thirds of the Sanggunian. Property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local government unit may lawfully be used or conveyed.

• "In a case for annulment of title, the plaintiff must allege two essential facts: (1) that plaintiff was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the property. Absent either of these allegations, the plaintiff is considered not the proper party to cause the cancellation of the title of the defendant." — This passage states the requisites for standing in an annulment of title action, the failure of which was the decisive ground for dismissing respondents' complaint.

• "Reversion is a proceeding by which the State seeks the return of lands of the public domain or the improvements thereon through the cancellation of private title erroneously or fraudulently issued over it. The one crucial element which sets it apart from all other actions involving possession or title to property is the positive averment in the complaint of state ownership of the property in dispute." — This defines the nature and essential element of a reversion proceeding, distinguishing it from other property actions and explaining why private parties without a claim of ownership cannot maintain it.

• "It is not merely a rule of procedure but a requirement of law that reversion be instituted in the name of the Republic of the Philippines." — This passage establishes the mandatory statutory requirement under Section 101 of the Public Land Act that only the Solicitor General may institute reversion proceedings, rendering the RTC's judgment a nullity for lack of jurisdiction.

• "Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the city may be lawfully used or conveyed." — This quotation from the Revised Charter of Cebu City, as emphasized by the Court, establishes the statutory basis for the city's authority to reconvey the unused portion of the expropriated road lot to the former owner's successors-in-interest.

• Katon vs. Palanca, G.R. No. 151149, September 7, 2004 — Cited for the rule that in an action for annulment of title, the plaintiff must allege ownership and illegal dispossession; absent either, the plaintiff is not the proper party.
• East Asia Traders, Inc. vs. Republic of the Philippines, G.R. No. 152947, July 7, 2004 — Cited for the proposition that allegations of inalienability of public land, nullity of title, and prayer for reversion to the State are sufficient to constitute a cause of action for reversion.
• VSC Commercial Enterprises, Inc. vs. Court of Appeals, 442 Phil. 269 (2002) — Cited for the definition of real party in interest and the principle that a mere expectancy or contingent interest does not confer standing; a suit filed by a person who is not a party in interest must be dismissed.
• Fery vs. Municipality of Cabanatuan, 42 Phil. 28 (1921) — Cited as controlling authority on the right to repurchase expropriated property, distinguishing between conditional expropriation (where the land returns to the former owner upon abandonment of purpose) and fee simple title (where non-user does not defeat title).
• Moreno vs. Mactan-Cebu International Airport Authority, 459 Phil. 955 (2003) — Cited for the clarification that where there is preponderant evidence of a right to repurchase, the former owner is entitled to exercise the option once the public purpose is abandoned.
• Mactan-Cebu International Airport Authority vs. Court of Appeals, 399 Phil. 695 (2000); Reyes vs. National Housing Authority, 443 Phil. 603 (2003); Air Transportation Office vs. Gopuco, Jr., G.R. No. 158563, June 30, 2005 — Cited together for the proposition that where there is insufficient evidence of a right to repurchase, former owners may not insist on recovering expropriated properties even when the public purpose is abandoned.
• Dacanay vs. Asistio, Jr., 208 SCRA 404 — Cited by the RTC as basis for respondents' standing; the Supreme Court found the lower courts' reliance misplaced, as the case involved a different perspective on public street clearance.

• Section 101, Commonwealth Act No. 141 (Public Land Act) — Provides that all actions for reversion of lands of the public domain shall be instituted by the Solicitor General in the name of the Republic of the Philippines. Applied to hold that respondents could not institute the reversion action and that the RTC lacked jurisdiction.
• Section 2, Rule 3, Rules of Court — Defines a real party in interest as the party who stands to be benefited or injured by the judgment or entitled to the avails of the suit. Applied to determine that respondents lacked a material, personal, and present substantial interest in the subject lot.
• Section 8, Rule 10, Rules of Court — Provides that an amended complaint supersedes the original, which is deemed withdrawn. Applied to hold that respondents' abandonment of their easement claim in the second amended complaint precluded reliance on that cause of action for standing.
• Section 10, Chapter II, Republic Act No. 7160 (Local Government Code) — Authorizes local government units to permanently close local roads pursuant to an ordinance approved by at least two-thirds of the Sanggunian, and provides that property thus withdrawn from public use may be used or conveyed for any lawful purpose. Applied to uphold Cebu City's authority to reconvey the unused portion of the expropriated road lot.
• Section 31(34), Republic Act No. 3857 (Revised Charter of Cebu City) — Delegates to the Cebu City Council the power to close city roads, streets, and alleys, and provides that property withdrawn from public servitude may be used or conveyed for any purpose for which other city real property may lawfully be used or conveyed. Applied as specific statutory authority for the reconveyance.

Consuelo Ynares-Santiago (Associate Justice, Chairperson, Third Division), Minita V. Chico-Nazario (Associate Justice), Antonio Eduardo B. Nachura (Associate Justice), and Ruben T. Reyes (Associate Justice) concurred. No separate concurring opinions were noted.