Heirs of Tomas Dolleton vs. Fil-Estate Management Inc.

A complaint for recovery of ownership and possession sufficiently states a cause of action where it alleges that the plaintiff owned and possessed the subject properties, that the defendant forcibly evicted the plaintiff therefrom, and that the defendant's certificates of title do not in fact cover the subject properties — the question of whether the subject properties are identical to the land covered by the defendant's titles being an evidentiary issue that cannot be resolved on a motion to dismiss.

Petitioners are individuals and groups of heirs claiming ownership by acquisitive prescription over several parcels of land in Magasawang Mangga, Barrio Pugad Lawin, Las Piñas, Rizal, derived from Lot 9, Psu-11411, a 119.8-hectare parcel approved by the Bureau of Lands. Respondents — Fil-Estate Management Inc., Spouses Arturo Dy, Megatop Realty Development, Inc., together with Peaksun Enterprises and Export Corporation and Elena Jao — formed a consortium that acquired certain parcels of land in the same area, holding Transfer Certificates of Title (TCTs) Nos. 9176 through 9182, purportedly derived from Original Certificate of Title (OCT) No. 6122 issued in the name of Jose Velasquez. The subject properties and the land under respondents' titles trace back to a common origin in Lot 9, Psu-11411, but petitioners contended that their properties were not included in the 53-hectare portion (Lot 9, Psu-11411, Amd-2) that was adjudicated to respondents' predecessors-in-interest in prior cases. The Heirs of Jose Velasquez also intervened, claiming an interest in the subject properties arising from the unsettled conjugal partnership of Jose Velasquez and his deceased wife Loreto Tiongkiao.

Petitioners are individuals and groups of heirs — including the Heirs of Tomas Dolleton, Heraclio Orcullo, Remedios San Pedro, the Heirs of Bernardo Millama, the Heirs of Agapito Villanueva, the Heirs of Hilarion Garcia, Serafina SP Argana, and the Heirs of Mariano Villanueva — who claim ownership by acquisitive prescription over several parcels of land located in Magasawang Mangga, Barrio Pugad Lawin, Las Piñas, Rizal. These parcels were derived from Lot 9, Psu-11411, a 119.8-hectare tract approved by the Bureau of Lands. Petitioners alleged that they and their predecessors-in-interest had been in continuous, open, and exclusive possession of the subject properties for more than 90 years, cultivating the land and religiously paying real estate taxes thereon, until they were forcibly ousted by armed men hired by respondents sometime between 1991 and 1994.

Respondents — Fil-Estate Management Inc., Spouses Arturo E. Dy and Susan Dy, and Megatop Realty Development, Inc., together with Peaksun Enterprises and Export Corporation and Elena Jao — formed a consortium that acquired certain parcels of land in the same area. They held TCTs Nos. 9176 through 9182, purportedly derived from OCT No. 6122 issued in the name of Jose Velasquez, respondents' predecessor-in-interest, following decrees of registration entered in 1966 and 1967. Petitioners contended that the subject properties were not covered by respondents' certificates of title and that said TCTs were spurious. Petitioners traced the history of the dispute through two prior Supreme Court cases — Vda. de Cailles vs. Mayuga and Orosa vs. Migrino — which involved Lot 9, Psu-11411, Amd-2, a 53-hectare portion of the 119.8-hectare Lot 9, Psu-11411. In those cases, the Court adjudicated the 53-hectare parcel to Dominador Mayuga, whose rights eventually passed to the consortium through a chain of transfers. Petitioners stressed that their subject properties were not included in the 53-hectare portion adjudicated in those cases, and that respondents' TCTs covered only approximately 26.44 hectares — roughly half of the 53-hectare Lot 9, Psu-11411, Amd-2.

In October 1997, petitioners filed eight separate complaints for quieting of title and/or recovery of ownership and possession with preliminary injunction and damages before the RTC, Branch 253, Las Piñas City. The complaints sought to enjoin respondents from developing the subject properties, to order respondents to vacate and surrender possession, to cancel respondents' TCTs insofar as they might be used to deprive petitioners of their rights, and to award moral and exemplary damages, attorney's fees, and costs. Respondents moved to dismiss on the grounds of prescription, laches, lack of cause of action, and res judicata, arguing that their titles were indefeasible under the Torrens system and that any challenge thereto had long prescribed. On June 11, 1998, the Heirs of Jose Velasquez intervened, alleging that Jose Velasquez had transferred the subject properties without settling the conjugal partnership after his wife's death and without the intervenors' consent, and seeking nullification of respondents' titles insofar as their mother's share was concerned.

The RTC, by Resolution dated September 8, 2000, granted the motion to dismiss in Civil Case No. LP-97-0228, finding that the subject properties were already registered in respondents' names and that petitioners failed to prove their title by clear and convincing evidence. By Resolution dated June 30, 2003, the RTC clarified that the dismissal extended to all eight consolidated cases. The Court of Appeals affirmed both resolutions on September 16, 2005, finding respondents' titles indefeasible and holding that petitioners' actions had prescribed under Section 32 of Presidential Decree No. 1529 and Articles 1144 and 1456 of the Civil Code. The appellate court also noted that, per petitioners' own allegations, the parcels of land covered by respondents' certificates of title were not the subject properties claimed by petitioners, which itself warranted dismissal of the quieting of title actions.

• Cause of Action: Petitioners maintained that their complaints sufficiently stated a cause of action because they alleged ownership by acquisitive prescription, forcible eviction by respondents, and that the subject properties were not covered by respondents' certificates of title — the core issue being whether the subject properties were in fact identical to the land registered under respondents' TCTs.
• Prescription and Laches: Petitioners argued that prescription and laches did not apply because their complaints were in the nature of an accion reivindicatoria — an action for recovery of ownership and possession — which may be availed of within 10 years from dispossession, and the complaints were filed in 1997, well within the prescriptive period given the eviction between 1991 and 1994.
• Res Judicata: Petitioners contended that Vda. de Cailles and Orosa did not bar their complaints because those cases involved Lot 9, Psu-11411, Amd-2 (53 hectares), which was distinct from the subject properties that formed part of the larger 119.8-hectare Lot 9, Psu-11411 but were not included in the 53-hectare adjudicated portion.
• Need for Trial on the Merits: Petitioners asserted that a full-blown hearing was necessary to determine the actual location on the ground of the lots covered by respondents' titles, which they alleged were more than 300 meters away from the consolidated lots of petitioners, characterizing respondents' forcible eviction as landgrabbing.

• Prescription: Respondents argued that the complaints sought annulment of certificates of title issued in their names and were therefore barred under Section 32 of Presidential Decree No. 1529, which requires that an action assailing a decree of registration be filed within one year after its entry. Since the decrees of registration were entered in 1966/1967, the filing of the complaints in October 1997 was beyond the prescriptive period. Respondents further contended that the complaints were actions for reconveyance based on implied trust under Articles 1144 and 1456 of the Civil Code, prescribing after 10 years from first registration.
• Laches: Respondents maintained that petitioners were guilty of laches for failing to oppose the land registration cases or seek nullification of the decrees and certificates of title issued as early as 1966 and 1967, despite alleged possession for 90 years.
• Lack of Cause of Action: Respondents contended that even assuming petitioners proved longtime possession, payment of realty taxes, and submission of a sketch plan, these cannot defeat ownership over parcels of land already registered under the Torrens system in respondents' names.
• Res Judicata: Respondents insisted that the complaints were barred by res judicata under Vda. de Cailles and Orosa, which adjudicated ownership of Lot 9, Psu-11411, Amd-2 to respondents' predecessors-in-interest. Respondents also cited the MTC Decision in Civil Case No. 3271, where the MTC declared that the plaintiffs therein were not in possession of the land belonging to Fil-Estate Management Inc.

• Cause of Action: Whether petitioners' complaints sufficiently stated a cause of action to withstand a motion to dismiss.
• Prescription: Whether petitioners' complaints were barred by prescription under Section 32 of Presidential Decree No. 1529 and Articles 1144 and 1456 of the Civil Code.
• Laches: Whether petitioners' complaints were barred by laches.
• Res Judicata: Whether petitioners' complaints were barred by res judicata or conclusiveness of judgment by virtue of Vda. de Cailles, Orosa, and the MTC Decision in Civil Case No. 3271.

• Cause of Action: Yes. The complaints sufficiently stated a cause of action, as they alleged ownership by acquisitive prescription, forcible eviction by respondents, and that the subject properties were not covered by respondents' certificates of title — the question of identity of the properties being an evidentiary issue requiring trial.
• Prescription: No. Prescription did not bar the complaints, because the actions were in the nature of an accion reivindicatoria prescribable in 10 years from dispossession, and there was no showing prescription had set in when the complaints were filed in 1997; moreover, prescription as an affirmative defense cannot be resolved on a motion to dismiss when it involves evidentiary matters.
• Laches: No. Laches did not bar the complaints, because petitioners would have had no standing to oppose the registration of land they claimed was distinct from their properties, and the elements of laches are evidentiary in nature and cannot be resolved on a motion to dismiss without a hearing.
• Res Judicata: No. Res judicata and conclusiveness of judgment did not apply, because the subject matters in the prior cases — Lot 9, Psu-11411, Amd-2 and the land covered by TCTs Nos. 9176–9181 — were different from the subject properties alleged in petitioners' complaints, and there was no identity of parties.

• Cause of Action: The test for failure to state a cause of action is whether the complaint alleges facts which, if true, would justify the relief demanded — the inquiry is into the sufficiency, not the veracity, of the material allegations. Petitioners alleged ownership by acquisitive prescription, a right to peaceful possession under Article 428 of the Civil Code, and that respondents violated this right by forcibly evicting them through force and intimidation while invoking certificates of title covering other parcels of land. The core issue was whether the subject properties were in fact covered by respondents' TCTs — an initial determination that could not be made on a motion to dismiss. While petitioners' prayer for cancellation of respondents' TCTs was inconsistent with their allegation that the subject properties were not covered by those TCTs, this defect in the prayer did not negate the other proper reliefs sought, namely recovery of possession and damages. A complaint should not be dismissed for lack of cause of action when the claim for relief exists but is defectively stated.

• Prescription: Section 32 of the Property Registration Decree allows reopening of a decree of registration only when a person is deprived of land or an interest therein by actual fraud, and the land fraudulently registered must be the same land of which the person was deprived. An action for reconveyance similarly presupposes that the property wrongfully registered in another's name is the same property to which the plaintiff claims a better right. Since petitioners alleged that the subject properties were distinct from the land registered under respondents' TCTs, neither Section 32 nor Article 1456 applied. The complaints were in the nature of an accion reivindicatoria, prescribable in 10 years from dispossession, and there was no showing that prescription had set in when the complaints were filed in 1997. Furthermore, prescription as an affirmative defense can be resolved on a motion to dismiss only when the complaint on its face shows that the action has prescribed; where the issue of prescription involves evidentiary matters — such as whether the subject properties are covered by respondents' titles — it cannot be determined on a motion to dismiss.

• Laches: Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier. The doctrine presumes that the party guilty of negligence had the opportunity to do what should have been done. Since petitioners claimed the subject properties were distinct from the land registered in respondents' names, petitioners would have had no standing to oppose the registration proceedings or seek nullification of the certificates of title. The elements of laches are evidentiary in nature and must be proven positively; they cannot be established by mere allegations in pleadings or resolved on a motion to dismiss. The RTC did not conduct a hearing to receive evidence on laches, making dismissal on this ground premature.

• Res Judicata: Res judicata as "bar by prior judgment" requires identity of parties, subject matter, and causes of action. "Conclusiveness of judgment" requires identity of parties and subject matter but not of causes of action, and is limited to matters actually and directly controverted and determined in the former suit. Vda. de Cailles and Orosa involved Lot 9, Psu-11411, Amd-2 (53 hectares), while petitioners' complaints involved lots not included in that 53-hectare portion. Petitioners cited those cases precisely to distinguish their properties from the land acquired by respondents. The single statement in the complaints that the subject properties "originated from Psu-11411, Lot 9, Amd-2" was an evident mistake, clarified by later allegations specifying that Lot 9, Psu-11411 consisted of 119.8 hectares while Amd-2 referred to only 53 hectares. Similarly, the MTC Decision in Civil Case No. 3271 involved the land covered by TCTs Nos. 9176–9181, which was different from the subject properties alleged in petitioners' complaints. The Heirs of Agapito Villanueva were not even parties in Civil Case No. 3271. There being no identity of subject matter, res judicata and conclusiveness of judgment did not apply.

• Cause of Action (Three Essential Elements) — A cause of action consists of: (1) a right in favor of the plaintiff; (2) an obligation on the part of the defendant to respect or not violate such right; and (3) an act or omission by the defendant in violation of the plaintiff's right or constituting a breach of the defendant's obligation. The test for failure to state a cause of action is whether the complaint alleges facts which, if true, would justify the relief demanded; the inquiry is into the sufficiency, not the veracity, of the material allegations. A complaint should not be dismissed for lack of cause of action when the claim for relief exists but is defectively stated, ambiguous, indefinite, or uncertain.

• Prescription in Actions Involving Torrens Titles — Section 32 of the Property Registration Decree allows reopening of a decree of registration on the ground of actual fraud within one year from entry of the decree. An action for reconveyance based on implied trust under Article 1456 of the Civil Code prescribes in 10 years. Both remedies presuppose that the land fraudulently or erroneously registered is the same land of which the plaintiff was deprived. Where the plaintiff alleges that the subject properties are distinct from the registered land, neither remedy applies, and the action is properly an accion reivindicatoria prescribable in 10 years from dispossession. Prescription as an affirmative defense cannot be resolved on a motion to dismiss when it involves evidentiary matters requiring a full-blown trial.

• Laches — Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier. The doctrine presumes that the party guilty of negligence had the opportunity to assert the right but failed to do so. Laches is evidentiary in nature and cannot be established by mere allegations in pleadings or resolved on a motion to dismiss; its elements must be proven positively in a hearing.

• Res Judicata (Bar by Prior Judgment and Conclusiveness of Judgment) — "Bar by prior judgment" under Rule 39, Section 47(b) requires identity of parties, subject matter, and causes of action. "Conclusiveness of judgment" under Rule 39, Section 47(c) requires identity of parties and subject matter but not of causes of action, and is limited to matters actually and directly controverted and determined in the former suit. Where the subject matter in the prior case is different from the subject matter in the subsequent case, neither doctrine applies.

• "What petitioners alleged in their Complaints was that while the subject properties were not covered by respondents' certificates of title, nevertheless, respondents forcibly evicted petitioners therefrom. Hence, it is not simply a question of whether petitioners' possession can defeat respondents' title to registered land. Instead, an initial determination has to be made on whether the subject properties were in fact covered by respondents' certificates of title." — This passage articulates the ratio decidendi: the central issue was the identity of the subject properties with the land covered by respondents' titles, an evidentiary question unsuitable for resolution on a motion to dismiss.

• "To sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain." — This states the governing test for motions to dismiss based on failure to state a cause of action, emphasizing sufficiency of allegations over their veracity or precision.

• "In both instances, the land of which a person was deprived should be the same land which was fraudulently or erroneously registered in another person's name, which is not the case herein, if the Court considers the allegations in petitioners' Complaints." — This clarifies the requisites for actions under Section 32 of the Property Registration Decree and Article 1456 of the Civil Code, and explains why they did not apply given petitioners' allegation that the subject properties were distinct from the registered land.

• "Laches is not concerned with the mere lapse of time; rather, the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches." — This defines the opportunity requirement of laches, explaining why petitioners could not be guilty of laches when they had no standing to oppose registration of land they claimed was not theirs.

• Vda. de Cailles vs. Mayuga, G.R. No. 30859, 20 February 1989, 170 SCRA 347 — Distinguished. The Court confirmed ownership of Dominador Mayuga over a 53-hectare parcel (Lot 9, Psu-11411, Amd-2) in Las Piñas. The Court held this case did not bar petitioners' complaints because the subject properties were not included in the 53-hectare adjudicated portion, and there was no identity of subject matter or parties.

• Orosa vs. Migrino, G.R. Nos. 99338-40, 1 February 1993, 218 SCRA 311 — Distinguished. The Court held that Goldenrod, Inc. no longer had any interest to intervene in the execution proceedings of Vda. de Cailles after selling its interest to the consortium. This case was distinguished from petitioners' complaints on the same ground of lack of identity of subject matter.

• Heirs of Benito Navarro vs. Fil-Estate Management Inc., Civil Case No. 3271 (MTC Las Piñas, Branch 79, 17 December 1991) — Distinguished. The MTC declared that the plaintiffs therein were not in possession of the land covered by TCTs Nos. 9176–9181 belonging to Fil-Estate. The Court held this did not bar petitioners' complaints because the subject matter was different, and the Heirs of Agapito Villanueva were not parties in the MTC case.

• Section 2, Rule 2, Rules of Civil Procedure — Defines cause of action as the act or omission by which a party violates the right of another, with three essential elements: (1) a right in favor of the plaintiff; (2) an obligation of the defendant to respect such right; and (3) an act or omission by the defendant violating the plaintiff's right. Applied to determine whether petitioners' complaints sufficiently stated a cause of action.

• Article 428, Civil Code — Provides that the owner has the right to enjoy and dispose of a thing without other limitations than those established by law, and has a right of action against the holder and possessor to recover it. Applied to support petitioners' right as alleged owners to recover possession of the subject properties.

• Section 32, Presidential Decree No. 1529 (Property Registration Decree) — Provides that a decree of registration may be reopened when a person is deprived of land or an interest therein by actual fraud, within one year from entry of the decree. Held inapplicable because the land of which petitioners were deprived was not the same land registered in respondents' names.

• Articles 1144 and 1456, Civil Code — Article 1144 prescribes a 10-year period for actions upon an obligation created by law; Article 1456 establishes the doctrine of implied trust when property is acquired through mistake or fraud. Held inapplicable because petitioners' complaints were not actions for reconveyance based on implied trust, as the subject properties were alleged to be distinct from the registered land.

• Rule 39, Section 47(b) and (c), Rules of Civil Procedure — Defines "bar by prior judgment" (identity of parties, subject matter, and causes of action) and "conclusiveness of judgment" (identity of parties and subject matter, limited to matters actually and directly determined). Applied to determine whether Vda. de Cailles, Orosa, and the MTC Decision in Civil Case No. 3271 barred petitioners' complaints; held inapplicable due to lack of identity of subject matter.

Leonardo A. Quisumbing (designated per Special Order No. 607 to replace Associate Justice Ma. Alicia Austria-Martinez, on official leave), Consuelo Ynares-Santiago, Conchita Carpio Morales (designated to sit as additional member replacing Associate Justice Antonio Eduardo B. Nachura), and Diosdado M. Peralta.