Heirs of Enrique Diaz vs. Elinor A. Virata

An action to quiet title under Articles 476 and 477 of the Civil Code requires the plaintiff to have legal or equitable title and the cloud to be invalid in fact; a Torrens certificate of title is indefeasible, cannot be collaterally attacked, and a prior certificate prevails over a subsequent one. A dismissal without prejudice is not a judgment on the merits and does not bar a subsequent action under res judicata, and laches does not apply where the defendant had notice of the plaintiff’s claim.

The dispute concerns registered land in Palico, Imus, Cavite. Antenor Virata acquired two parcels from Miguela Crisologo in 1959, and the lots were later subdivided into eleven parcels covered by Torrens titles in his name. Enrique Diaz and his heirs claimed the same properties as ancestral land possessed since time immemorial. Before the present case, Antenor had sued Fortunata Diaz in Civil Case No. N-501 for recovery of possession; that case was dismissed in 1969 after Antenor died and his heirs failed to substitute him.

Antenor Virata acquired two parcels of land in Palico, Imus, Cavite from Miguela Crisologo in 1959. The parcels were covered by TCTs No. (T-3855) RT-2633 and No. (T-11171) RT-1228. Antenor made installment payments on 5 August 1959, 20 August 1959, 3 September 1959, 3 September 1959, and 22 September 1959. After full payment, Miguela Crisologo’s titles were cancelled and TCTs No. 517 and No. 518 were issued to Antenor. Antenor planted rice on the properties before they were subdivided.

In 1963, Antenor subdivided the properties, and TCTs No. 4983, 4984, 4985, 4986, 5027, 5028, 5029, 5030, 5031, 5032, and 5033 were issued in his name. Antenor died in 1969. On 4 May 1982, Elinor Virata, his niece, was appointed administratrix of his estate by the then Court of First Instance of Cavite City.

Enrique Diaz and his predecessors-in-interest claimed actual and continuous possession of the same properties since time immemorial, publicly recognized as their family’s ancestral land. According to Enrique, their peaceful occupation was uninterrupted until 1962, when Antenor claimed a portion on the ground that he purchased it from Miguela Crisologo, who in turn acquired it from Simeon Marcial; both Crisologo and Marcial allegedly recognized and respected Enrique’s ownership. In March 1992, Enrique filed a claim with the Department of Environment and Natural Resources alleging continuous possession of the lots owned by Antenor. Respondent alleged that this claim created a cloud on Antenor’s titles.

On 13 September 1996, Elinor, as administratrix, filed a complaint with the RTC of Imus, Cavite, docketed as Civil Case No. 1399-96, for declaration of validity of the TCTs in Antenor’s name and for injunctive relief. Enrique answered, denying that Antenor purchased the properties and asserting ancestral possession. He claimed that the driveway and fence were within lots covered by his own TCTs No. T-304191 and No. T-66120. He also invoked the prior Civil Case No. N-501, “Antenor Virata vs. Fortunata Diaz,” for recovery of possession, which had been dismissed in 1969 after Antenor’s death when his heirs failed to substitute him; Enrique argued laches and res judicata.

In January 1997, a relocation survey was conducted by Geodetic Engineer Severino Raymundo, who testified that the driveway was outside Antenor’s property line. Respondent withdrew her application for preliminary injunction and filed an Amended Complaint on 19 February 1997, deleting the injunction allegations and adding prayers for Enrique and his representatives to vacate the properties and for demolition of the fence, concrete house, and improvements. Enrique failed to file a new Answer. He later sought leave to file an Amended Answer based on a Register of Deeds certification concerning the reconstitution of TCT No. (T-11171) RT-1228; the RTC denied the motion on 14 January 1998, ruling that it was a collateral attack on Antenor’s title. Enrique filed a Pre-Trial Brief but failed to appear at the 4 June 1998 pre-trial; the RTC declared him in default on 16 April 1998, then granted reconsideration on 20 April 1998. He later filed a Motion to Dismiss on 13 October 1998, assailing the RTC’s jurisdiction; the RTC denied it on 12 February 1999. Enrique died on 14 October 1999. After petitioners failed to comply with orders for substitution and comment, the RTC on 14 November 2000 submitted the case for decision based on respondent’s evidence.

The RTC found that Antenor purchased the properties from Miguela Crisologo in 1959 after being assured that the titles were clean; that Antenor paid in installments and obtained TCTs No. 517 and No. 518, later subdivided into the eleven titles; and that the relocation survey showed a wall and concrete structure encroaching on Antenor’s property. It noted that defendants manifested they would present a surveyor but failed to do so. The Court of Appeals did not disturb these findings.

• Validity of Antenor’s Titles: Petitioners argued that the Court of Appeals erred in affirming the RTC’s declaration that the subject land titles in Antenor Virata’s name were valid; they relied on a Register of Deeds certification indicating no record of the administrative reconstitution of TCT No. (T-11171) RT-1228 in the name of Miguela Crisologo, which they claimed affected Antenor’s title derived therefrom.
• Collateral Attack / Denial of Defense: Petitioners asserted that they were denied their defense to assail the validity of the subject titles when the RTC denied their Amended Answer.
• Res Judicata: Petitioners maintained that the present action was barred by res judicata because Civil Case No. N-501 involved similar parties, subject matter, and cause of action.
• Laches: Petitioners contended that respondent waited 27 years from the dismissal of Civil Case No. N-501 before filing suit, creating a presumption that she had abandoned or declined to assert her right.
• Jurisdiction: In the earlier Motion to Dismiss, Enrique argued that the RTC lacked jurisdiction because the suit was in the nature of recovery of possession and quieting of title, the issues required determination of technical descriptions and bona fide occupants, and the properties originated from friar estate, making the DENR the sole body to determine the parties’ rights.

• Validity of Antenor’s Titles: Respondent averred that Antenor purchased the two parcels from Miguela Crisologo in 1959 in good faith and for consideration; the titles were cancelled and new titles issued in Antenor’s name, later subdivided into the eleven TCTs.
• Cloud on Title: Respondent alleged that Enrique’s DENR claim and his fencing, construction of a driveway, and occupation of the properties created a cloud prejudicial to Antenor’s titles and caused irreparable injury.
• Collateral Attack: Respondent opposed Enrique’s Motion for Leave to File Amended Answer, contending that the allegation of absence of records of administrative reconstitution of TCT No. (T-11171) RT-1228 constituted a collateral attack on the validity of the title and other titles emanating therefrom, which cannot be allowed in the proceedings.
• Jurisdiction: Respondent maintained that the RTC had competence to hear and resolve the case; the properties having been titled in Antenor’s name on 22 October 1959, they were no longer part of the public domain.
• Reliefs: Respondent sought orders for Enrique and his representatives to vacate and surrender possession, and for removal or demolition of the barbed wire fence, concrete fence, concrete house, and other improvements.

• Validity of Respondent’s Title / Quieting of Title: Whether Antenor Virata’s certificates of title over the subject properties are valid and the only official titles covering them, and whether respondent satisfied the requisites for an action to quiet title.
• Collateral Attack: Whether petitioners’ challenge to the validity of Antenor’s title through an amended answer constitutes a prohibited collateral attack under Section 48 of Presidential Decree No. 1529.
• Res Judicata: Whether the dismissal of Civil Case No. N-501 bars the present action under the principle of res judicata.
• Laches: Whether laches bars respondent from recovering possession of the subject properties.

• Validity of Respondent’s Title / Quieting of Title: Yes. Respondent satisfied the requisites under Articles 476 and 477 of the Civil Code; Antenor’s titles issued in 1959 are valid, indefeasible, and prior to petitioners’ later titles.
• Collateral Attack: No. The challenge was a collateral attack prohibited by Section 48 of Presidential Decree No. 1529; the denial of the Amended Answer had also become final.
• Res Judicata: No. Civil Case No. N-501 was dismissed without prejudice and was not a judgment on the merits.
• Laches: No. Laches did not set in because petitioners had notice of respondent’s claim and the dismissal without prejudice apprised them that a subsequent action was forthcoming.

• Validity of Respondent’s Title / Quieting of Title: Article 476 of the Civil Code allows an action to remove a cloud on title, and Article 477 requires the plaintiff to have legal or equitable title and the cloud to be invalid in fact. The trial court found that Antenor purchased the properties from Miguela Crisologo in 1959, paid in installments, and obtained TCTs No. 517 and No. 518, which were later subdivided into the eleven titles in his name. These findings were affirmed by the Court of Appeals and are final and conclusive on the Supreme Court absent any exception. A Torrens certificate of title is evidence of indefeasible and incontrovertible title, and the person holding a prior certificate is entitled to the land as against one relying on a subsequent certificate. Antenor’s titles were issued as early as 22 October 1959, while Enrique’s certificates were issued only on 7 March 1973 and 6 March 1991. Respondent, as administratrix of Antenor’s estate, thus had legal title, and Enrique’s claim was void.
• Collateral Attack: Section 48 of Presidential Decree No. 1529 provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding. A direct attack is one whose object is to annul or set aside the judgment or enjoin its enforcement; a collateral attack is one made as an incident of an action seeking a different relief. Petitioners sought to attack Antenor’s title through an Amended Answer alleging defects in the reconstitution of Miguela Crisologo’s title, which was a collateral attack. Moreover, the RTC’s denial of the Amended Answer had become final because petitioners did not assail the interlocutory order.
• Res Judicata: Res judicata requires a final former judgment, jurisdiction over the parties and subject matter, a judgment on the merits, and identity of parties, subject matter, and cause of action. Civil Case No. N-501 was dismissed without prejudice by the CFI of Cavite in October 1969 because Antenor’s heirs failed to substitute him. A dismissal without prejudice is not a judgment on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced. The discontinuance of a case not on the merits does not bar another action on the same subject matter. Res judicata therefore did not bar the present action.
• Laches: Laches is the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has abandoned or declined to assert it. While a Torrens title is indefeasible and imprescriptible, a registered owner may lose the right to recover possession by reason of laches. For laches to apply, however, it must be shown that the defendant lacked knowledge or notice that the complainant would assert the right on which the suit is based. Petitioners could not claim lack of knowledge because Antenor had filed Civil Case No. N-501 before 1969, and the dismissal without prejudice apprised them that a subsequent action was forthcoming. The Court of Appeals also noted that the administratrix was appointed only in 1982. Laches therefore did not bar respondent.

• Action to Quiet Title — Under Articles 476 and 477 of the Civil Code, an action to quiet title may be brought when an instrument, record, claim, encumbrance, or proceeding appears valid but is in fact invalid and casts a cloud on the complainant’s title. Two indispensable requisites must concur: (1) the plaintiff has legal or equitable title to or interest in the real property; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity. The Court applied these requisites in favor of respondent, as administratrix of Antenor’s estate, and against Enrique’s claim.
• Indefeasibility of Torrens Title and Prior Certificate Rule — A certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein, and it becomes the best proof of ownership. The person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate. Antenor’s titles issued in 1959 prevailed over Enrique’s certificates issued in 1973 and 1991.
• Prohibition on Collateral Attack on Torrens Title — Section 48 of Presidential Decree No. 1529 provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. An attack is direct when the object is to annul or set aside the judgment or enjoin its enforcement; it is collateral when, in an action to obtain a different relief, an attack on the judgment is made as an incident thereof. Petitioners’ attempt to challenge Antenor’s title through an Amended Answer was a prohibited collateral attack.
• Res Judicata — Res judicata exists when the following elements are present: (a) the former judgment is final; (b) the court which rendered judgment had jurisdiction over the parties and the subject matter; (c) it is a judgment on the merits; and (d) there is identity of parties, subject matter, and cause of action between the first and second actions. A judgment on the merits is one rendered after a determination of which party is right, as distinguished from a judgment rendered upon a preliminary, formal, or merely technical point. A dismissal without prejudice is not a judgment on the merits and does not bar another action on the same subject matter.
• Laches — Laches is the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. Its elements include conduct giving rise to the situation complained of, delay in asserting rights with knowledge or notice, lack of knowledge or notice on the part of the defendant that the complainant would assert the right, and injury or prejudice to the defendant if relief is granted. The Court held that laches did not apply because petitioners had notice of respondent’s claim and the dismissal without prejudice indicated that a subsequent action was forthcoming.
• Finality of Findings of Fact — Findings of fact of the trial court, when affirmed by the Court of Appeals, are final and conclusive upon the Supreme Court, which is not a trier of facts, absent any of the recognized exceptions. The Court applied this rule to the trial court’s findings on Antenor’s acquisition of the properties and the issuance of the titles.

• "An action for quieting of title is a remedy which may be availed of only when by reason of any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby cast on the complainant’s title to real property or any interest therein." — This passage defines the remedy of quieting of title and frames the Court’s analysis of respondent’s cause of action.
• "Verily, for an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy." — This is the Court’s canonical statement of the requisites of an action to quiet title, which respondent was held to have satisfied.
• "Well-established is the principle that the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate. This rule refers to the date of the certificate of title." — This passage states the prior certificate rule that defeated Enrique’s later titles.
• "The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced. In other words, the discontinuance of a case not on the merits does not bar another action on the same subject matter." — This passage is the ratio for rejecting petitioners’ res judicata defense.

• Calacala vs. Republic of the Philippines, G.R. No. 154415, 28 July 2005, 464 SCRA 438 — Cited for the two indispensable requisites of an action to quiet title.
• Evangelista vs. Santiago, G.R. No. 157447, 29 April 2005, 457 SCRA 744 — Cited for the definition of a cloud on title.
• PVC Investment & Management Corporation vs. Borcena and Ravidas, G.R. No. 155225, 23 September 2005, 470 SCRA 685 — Cited for the definition of equitable title.
• Federated Realty Corporation vs. Court of Appeals, G.R. No. 127967, 14 December 2005, 477 SCRA 707 — Cited for the rule that a certificate of title is the best proof of ownership.
• Sarmiento vs. Court of Appeals, G.R. No. 152627, 16 September 2005, 470 SCRA 99 — Cited for the distinction between direct and collateral attacks on a certificate of title.
• Avisado vs. Rumbaua, G.R. No. 137306, 12 March 2001, 354 SCRA 245 — Cited for the elements of res judicata.
• Isaac Delgado vs. Court of Appeals, G.R. No. 137881, 21 December 2004, 447 SCRA 402 — Cited for the rule that a dismissal without prejudice does not bar another action on the same subject matter.
• Vda. de Rigonan vs. Derecho, G.R. No. 159571, 15 July 2005, 463 SCRA 627 — Cited for the definition of laches.
• Santos vs. Santos, 418 Phil. 681 (2001) — Cited for the elements of laches.
• Isabela Colleges, Inc. vs. Heirs of Nieves Tolentino-Rivera, G.R. No. 132677, 20 October 2000, 344 SCRA 95 — Cited for the rule that a registered owner may lose the right to recover possession of registered property by reason of laches.

• Article 476, Civil Code — Provides that whenever there is a cloud on title to real property by reason of an instrument, record, claim, encumbrance, or proceeding that is apparently valid but in truth invalid, ineffective, voidable, or unenforceable, an action may be brought to remove such cloud or quiet the title. The Court used this provision to frame respondent’s action.
• Article 477, Civil Code — Requires the plaintiff in an action to quiet title to have legal or equitable title to, or interest in, the real property subject of the action; the plaintiff need not be in possession. The Court applied this to respondent as administratrix of Antenor’s estate.
• Section 48, Presidential Decree No. 1529 — Provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. The Court applied this to bar petitioners’ Amended Answer attacking Antenor’s title.
• Section 3, Rule 11, 1997 Rules of Civil Procedure — Provides that where an amended complaint is filed, the defendant shall answer within the prescribed period, and an answer earlier filed may serve as the answer to the amended complaint if no new answer is filed. This provision was cited in connection with Enrique’s failure to file a new Answer to the Amended Complaint.
• Batas Pambansa Blg. 129 — Cited by the RTC in denying Enrique’s Motion to Dismiss, which held that questions in the nature of ownership and possession belong exclusively to the RTC.
• Article VIII, Section 13, 1987 Constitution — Cited in the certification that the conclusions in the Decision were reached in consultation before the case was assigned to the writer of the opinion.

• Chief Justice Artemio V. Panganiban (Chairperson)
• Associate Justice Consuelo Ynares-Santiago
• Associate Justice Ma. Alicia Austria-Martinez
• Associate Justice Romeo J. Callejo, Sr.