Serapion, Sr. and Serapion, Jr. vs. Ambagan

A private party cannot maintain an action or counterclaim that is essentially for reversion of public land, because Section 101 of C.A. No. 141 reserves that action to the State through the Solicitor General/OSG; and an action for quieting of title must be prosecuted by the real party-in-interest, with a representative's authority to sign the verification and certification against forum shopping duly shown.

The controversy concerns Lot 15326, a parcel in Binangonan, Rizal, claimed by Rodolfo Serapion, Sr. and his son Rodolfo Serapion, Jr. against Napoleon D. Ambagan and Philip Ambagan. The case arises within the Public Land Act's free patent system and the State's power to recover public land through reversion, which Section 101 of C.A. No. 141 lodges with the Solicitor General. Prior DENR proceedings had cancelled free patents previously issued to Napoleon, while Rodolfo, Sr.'s free patent and OCT became the subject of the parties' cross-claims.

Rodolfo Serapion, Sr. and his son Rodolfo Serapion, Jr. filed an Amended Complaint dated August 27, 2008 before the Municipal Trial Court of Binangonan, Rizal, Branch 2, for quieting of title and recovery of possession with damages against Napoleon D. Ambagan, Philip Ambagan, and all persons claiming rights under them. The action concerned Lot 15326, Cad. 609-D, a 2,439-square-meter parcel situated in Tayuman, Binangonan, Rizal, covered by Original Certificate of Title No. M-4863. According to Rodolfo, et al., Napoleon had been the caretaker of the adjacent lot leased by Hinoba-an Mining Exploration Corporation; in time, Napoleon occupied Lot 15326 by demolishing the existing shanty and building another in its place. Napoleon then applied for a free patent over Lot 15326, which Rodolfo, et al. opposed because a title had already been issued to them. In view of their opposition, the Department of Environment and Natural Resources, in DENR Case No. V-5806 dated March 10, 2005, cancelled and revoked Free Patent Nos. (IV-1) 045804-91-1070P and (IV-1) 15053 previously issued to Napoleon. Thereafter, Rodolfo, Sr. donated the property to Rodolfo, Jr., and Transfer Certificate of Title No. M-41673 was issued in the latter's name; Lot 15326 was subsequently subdivided into 11 lots with separate titles. Rodolfo, et al. argued that Napoleon's occupation had been unlawful from the beginning because he and those claiming rights under him were strangers to the lot and had no color of ownership; demands to vacate remained unheeded, settlement efforts proved futile, and they filed the complaint.

Napoleon, et al. answered with a counterclaim, arguing that the Amended Complaint stated no cause of action because the free patent and OCT No. M-4863 issued in Rodolfo, Sr.'s name were void and fraudulent. They claimed that Rodolfo, Sr. did not comply with the strict legal requirements for a free patent application since Napoleon had a pending free patent application two years before Rodolfo, Sr. filed his. They asserted that they were in actual possession of Lot 15326, as confirmed by Land Management Officer II Alice Saubon of DENR Region IV, who conducted an ocular inspection and investigation of the lot in 1995. They further claimed possession that was public, continuous, adverse, and in the concept of an owner for more than 30 years. They also argued that the Amended Complaint's verification and certification against forum shopping was signed solely by Rodolfo, Sr., who was neither the real party-in-interest, because Lot 15326 was already in his son's name, nor properly authorized to file the action. They prayed for annulment of the free patent and OCT No. M-4863 issued in Rodolfo, Sr.'s name, including derivative titles; reconveyance of Lot 15326 in their favor; cancellation of the titles issued in Rodolfo, et al.'s names and issuance of new titles in their names; and damages.

The records show that Rodolfo, Sr.'s free patent and OCT No. M-4863 were issued in 1988, with OCT No. M-4863 registered on June 23, 1988. Napoleon, for his part, began occupying Lot 15326, at the earliest, sometime in 1980, and purchased the same in 1991 from a certain Cornelio Cenina, whose purported ownership remained questionable. Napoleon applied for a free patent as early as 1985, but the free patent was approved only in 1991, or three years after a free patent and OCT were already issued in Rodolfo, Sr.'s name in 1988. Napoleon's free patent was later cancelled and revoked by the DENR in DENR Case No. V-5806, and Napoleon did not appeal that ruling. Rodolfo, Sr. admitted in court that at the time he applied for the free patent in 1987, Lot 15326 was in fact occupied by Napoleon, et al., a fact he did not disclose in his application. The lower courts also found that Rodolfo, Sr. failed to prove that he was authorized to file the Amended Complaint on behalf of Rodolfo, Jr.; the special power of attorney he presented was executed long before the filing of the case, was general in tenor, did not appear in the records of the Clerk of Court of the RTC, was not identified by a witness even though the notarizing lawyer was Rodolfo, Sr.'s counsel on record, and did not refer to the subject Complaint but to an entirely different matter. Rodolfo, Sr. likewise failed to prove actual cultivation and occupation of Lot 15326 or that he formally filed an application for free patent with the DENR.

Before the lower courts, Rodolfo, et al. maintained that their free patent and title were valid and that Napoleon's occupation was unlawful, while Napoleon, et al. maintained that they had prior possession and a prior free patent application. The MTC, RTC, and CA all found that Rodolfo, Sr.'s free patent application was tainted with fraud because he failed to prove continuous occupation and possession and did not disclose Napoleon's occupancy. The CA also found that Napoleon, et al. failed to prove that Lot 15326 was already privately owned by them prior to the issuance of Rodolfo, Sr.'s free patent; by filing his own free patent application, Napoleon effectively admitted that Lot 15326 was still public land whose management and disposition remained with the government through the DENR.

• Rodolfo, et al. (G.R. No. 248505) — Real Party-in-Interest and Authority: Rodolfo, et al. maintained that Rodolfo, Sr. is a party-in-interest with legal standing to prosecute the amended complaint, that they sufficiently proved a cause of action for quieting of title against Napoleon, et al., and that Rodolfo, Sr. was an indispensable party whose interest would be adversely affected by cancellation of his free patent and title.
• Rodolfo, et al. — Validity of Free Patent and Counterclaim: They insisted that the free patent and title issued in Rodolfo, Sr.'s name were issued in the regular performance of duties, remained unrebutted, and had gone through investigation, verification, and ocular inspection. They also argued that the MTC erred in taking cognizance of Napoleon, et al.'s counterclaim, which could only be raised by the OSG in an action for reversion; the counterclaim was permissive, albeit presented as compulsory, and the MTC did not acquire jurisdiction over it for lack of payment of docket fees. Thus, the MTC should not have entertained the counterclaim and should have limited disposition to non-prosecution by the real party-in-interest.
• Napoleon, et al. (G.R. No. 248739) — Standing and Reconveyance: Napoleon, et al. argued that the CA erred in ruling they lacked standing to ask for reconveyance through their counterclaim despite a free patent having been issued in their favor, which converted Lot 15326 into their private ownership. They claimed the MTC's nullification of Rodolfo, Sr.'s free patent and title effectively voided the cancellation of the free patent previously issued in Napoleon's name.
• Napoleon, et al. — Section 48(b) and Reversion: They contended the CA erred in not applying Section 48(b) of C.A. No. 141 because they had been in open, continuous, exclusive, and notorious possession of Lot 15326 since the 1980s or earlier. They also argued that an action for reversion was no longer necessary and practicable since the MTC, RTC, and CA had already found Rodolfo, Sr.'s free patent and title fraudulently issued.

• Rodolfo, et al. (Respondents in G.R. No. 248739) — Counterclaim as Reversion: Rodolfo, et al. contended that the MTC should have dismissed Napoleon, et al.'s counterclaim because, based on its allegations and the CA's ruling, it is an action for reversion that could only be instituted by the OSG.
• Napoleon, et al. (Respondents in G.R. No. 248505) — Standing and Possession: Napoleon, et al. countered that they had standing to seek reconveyance because a free patent was issued in their favor, converting the lot to private ownership; that the nullification of Rodolfo, Sr.'s title effectively voided the cancellation of their own free patent; that Section 48(b) of C.A. No. 141 applied due to their long possession; and that reversion was unnecessary given the fraud findings.

• Standing to Seek Reconveyance (G.R. No. 248739): Whether the CA erred in declaring that Napoleon, et al. did not have standing to ask for the reconveyance of Lot 15326 and that reversion is the proper remedy in this case.
• Dismissal of Rodolfo, et al.'s Complaint and Referral to OSG (G.R. No. 248505): Whether the CA seriously erred in denying Rodolfo, et al.'s petition for review from the RTC Decision affirming the MTC ruling cancelling the free patent and OCT issued in Rodolfo, Sr.'s name, and in referring the case to the OSG for reversion of Lot 15326 in favor of the government.

• Standing to Seek Reconveyance (G.R. No. 248739): No. Napoleon, et al. lacked standing because their counterclaim was essentially an action for reversion, which under Section 101 of C.A. No. 141 may be instituted only by the Solicitor General/OSG in the name of the Republic. The counterclaim was dismissed without prejudice to the State's action.
• Dismissal of Rodolfo, et al.'s Complaint and Referral to OSG (G.R. No. 248505): No. Rodolfo, Sr. was not the real party-in-interest and failed to prove authority to sue on behalf of Rodolfo, Jr.; the CA correctly affirmed the dismissal of the complaint and referred the matter to the OSG for reversion.

• Standing to Seek Reconveyance (G.R. No. 248739): An ordinary civil action for declaration of nullity of free patents and certificates of title is different from an action for reversion. In reversion, the allegations admit State ownership of the disputed land, and the action seeks to cancel or annul a certificate of title and revert public land to the State. Under Section 101 of C.A. No. 141, 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. A private individual may not bring an action for reversion or any action that would have the effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, such that the land covered thereby will again form part of the public domain. If a title originates from a grant of the government, its cancellation is a matter between the grantor and the grantee; only the Solicitor General or the officer acting in his stead, on behalf of the State, may do so. In contrast, a cause of action for declaration of nullity of free patent and certificate of title requires allegations of the plaintiff's ownership of the contested lot prior to the issuance of such free patent and certificate of title, as well as the defendant's fraud or mistake in successfully obtaining these documents of title over the parcel of land claimed by plaintiff. In such a case, the nullity arises strictly not from the fraud or deceit but from the fact that the land is beyond the jurisdiction of the Bureau of Lands to bestow, and whatever patent or certificate of title obtained therefor is consequently void ab initio. The real party-in-interest is not the State but the plaintiff who alleges a preexisting right of ownership over the parcel of land in question even before the grant of title to the defendant. In an action for reconveyance, the free patent and the certificate of title are respected as incontrovertible; what it seeks is the transfer of the property, or the title thereof, which has been wrongfully or erroneously registered in the defendant's name. All that must be alleged are two facts which, admitting them to be true, would entitle the plaintiff to recover the title to the disputed land: (a) that the plaintiff was the owner of the land; and (b) that the defendant had illegally dispossessed him or her of the same. Although partly different from an ordinary action for cancellation of title in that it respects the indefeasibility of a Torrens title, an action for reconveyance similarly requires an allegation that the property is already privately owned, and hence beyond State jurisdiction. In both actions, the party with material interest in filing the action is the one claiming ownership of the private property in question. Here, Napoleon, et al.'s counterclaim essentially admitted that Lot 15326 was part of the public domain by reason of which Napoleon filed his own application for free patent. There was nothing in their allegations, more so in the evidence they presented, showing their possession and occupation of the lot in the character and for the period required by law sufficient to vest in them an imperfect title. The records showed that Napoleon began occupying Lot 15326, at the earliest, only sometime in 1980 and had purchased the same in 1991 from Cornelio Cenina, whose purported ownership remained questionable. While Napoleon may have applied for free patent as early as 1985, the free patent was approved only in 1991, or three years after a free patent and OCT were already issued in Rodolfo, Sr.'s name in 1988. Napoleon's free patent was already cancelled and revoked by the DENR in DENR Case No. V-5806, which Napoleon did not appeal. Prior to the issuance of the patent and its subsequent registration with the Register of Deeds, the title over the lot remained with the State; it is only after registration that the lot is segregated from the mass of public domain and converted into private property. Thus, the CA correctly ruled that Napoleon, et al. had no standing to ask for the declaration of nullity of Rodolfo, Sr.'s free patent and title, and for the reconveyance of Lot 15326. Following Section 101 of C.A. No. 141 and case law, only the State, through the OSG, may properly sue for the cancellation of Rodolfo, Sr.'s free patent and OCT and seek the reversion of Lot 15326 to the public domain. Since Napoleon, et al. are not the real parties-in-interest to sue for reversion, their counterclaim for cancellation of Rodolfo, Sr.'s free patent and title must be dismissed for failure to state a cause of action, without prejudice to the State's right to file the appropriate action for reversion if warranted.
• Dismissal of Rodolfo, et al.'s Complaint and Referral to OSG (G.R. No. 248505): A petition for review on certiorari under Rule 45 shall raise only questions of law. Factual matters are not the proper subject of an appeal by certiorari, and the resolution of factual issues is the function of lower courts, whose findings are generally binding on the Supreme Court. Nonetheless, case law permits review of factual matters in exceptional situations, such as when the findings are contrary to those of the trial courts. The main thrust of Rodolfo, et al.'s arguments required a calibration of the evidence presented, a clear question of fact barred in a Rule 45 petition. In any event, even if the Court evaluated Rodolfo, Sr.'s arguments on the sufficiency of his interest or authority to file the action for quieting of title, it found no compelling reason to disturb the findings and conclusions of the courts a quo, as they were supported by the records, laws, rules, and case law. Section 2, Rule 3 of the Rules of Court requires every action to be prosecuted or defended in the name of the real party-in-interest. A real party-in-interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Interest within the meaning of the Rules means material interest, or an interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved. A real party-in-interest is a litigant whose right or interest stands to benefit or get injured by the judgment of the case. One having no material interest to protect cannot invoke the jurisdiction of the court as the plaintiff in an action; the action is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action. Plaintiffs who are not the real parties-in-interest may be included in a suit pursuant to Section 3, Rule 3 of the Rules of Court, which provides that where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. However, for a representative to properly pursue the action on behalf of the real party-in-interest, the rule requires that the representative must be acting in a fiduciary capacity or one authorized by law or these Rules. An action for quieting of title is essentially a common law remedy grounded on equity. For an action to quiet title to prosper, two indispensable requisites must concur: (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. Legal title denotes registered ownership, while equitable title means beneficial ownership. In the absence of such legal or equitable title, or interest, there is no cloud to be prevented or removed. In an action for quieting of title and recovery of possession, the real party-in-interest is the person claiming title to or interest that is adverse to the one in possession of the real property subject of the action. Here, it was undisputed that Lot 15326 had already been donated by Rodolfo, Sr. to his son and co-plaintiff Rodolfo, Jr., by reason of which OCT No. M-4863, issued in the former's name, was cancelled and TCT No. M-41673 was issued under the name of the latter. Additionally, they judicially admitted that after the donation and issuance of the new title in Rodolfo, Jr.'s name, Lot 15326 was subdivided into 11 lots, with each lot bearing a separate title. The party with the material interest in prosecuting the action for quieting of title and recovery of possession against Napoleon, et al. was Rodolfo, Jr., and not his father Rodolfo, Sr. Since the real party-in-interest was Rodolfo, Jr., it was incumbent upon Rodolfo, Sr. to prove that he was authorized to file the Amended Complaint and sign the verification and certification of non-forum shopping on the former's behalf. Under Sections 4 and 5, Rule 7 of the Rules of Court, the authorization of the affiant to act on behalf of a party must be attached to the pleading, failing in which shall be cause for the dismissal of the case without prejudice. Rodolfo, Sr. failed to present sufficient evidence that Rodolfo, Jr. specifically authorized him to institute the action subject of the present petition since the SPA he presented to prove the said authority appeared highly questionable, was general in tenor, and executed five years prior to the filing of the case. All told, the CA correctly upheld the trial courts' dismissal of the Amended Complaint on the ground that Rodolfo, Sr. was not the real party-in-interest and hence the amended complaint failed to state a cause of action, and he failed to prove his authority to file the case on his son's behalf. Accordingly, all other issues raised by Rodolfo, et al. with respect to the merits of their action for quieting of title were denied for lack of merit.

• Real Party-in-Interest — Under Section 2, Rule 3 of the Rules of Court, a real party-in-interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Interest means material interest, not mere curiosity. Applied: Rodolfo, Jr., as donee and registered owner of Lot 15326, was the real party-in-interest for quieting of title and recovery of possession; Rodolfo, Sr. was not.
• Representative Party and Authorization — Under Section 3, Rule 3, a representative may sue or be sued for a beneficiary if acting in a fiduciary capacity or authorized by law or the Rules. Under Sections 4 and 5, Rule 7, the authorization of the affiant to act on behalf of a party must be attached to the pleading, and failure is cause for dismissal without prejudice. Applied: Rodolfo, Sr.'s SPA was general, questionable, executed five years before filing, and did not specifically authorize the action; dismissal was proper.
• Quieting of Title Requisites — For an action to quiet title to prosper, 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 casting cloud on the title is shown to be invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Applied: Rodolfo, Sr. had no legal or equitable title after donating the lot to his son, so there was no cloud to remove.
• Reversion vs. Declaration of Nullity vs. Reconveyance — Reversion admits State ownership and seeks cancellation or annulment of a certificate of title and reversion of public land to the State; only the Solicitor General/OSG may institute it under Section 101 of C.A. No. 141. Declaration of nullity requires allegations of the plaintiff's ownership prior to the issuance of the free patent and certificate of title, and the defendant's fraud or mistake; nullity arises because the land is beyond the jurisdiction of the Bureau of Lands. Reconveyance respects the patent and certificate of title as incontrovertible and seeks transfer of property or title wrongfully or erroneously registered in the defendant's name; it requires allegations that the plaintiff owned the land and the defendant illegally dispossessed him or her. Applied: Napoleon, et al.'s counterclaim admitted State ownership and sought cancellation/reversion, and they failed to allege or prove prior private ownership, so they lacked standing.
• State Ownership Before Patent Registration — Prior to the issuance of the patent and its subsequent registration with the Register of Deeds, title over the lot remains with the State; only after registration is the lot segregated from the mass of public domain and converted into private property. Applied: Napoleon's free patent was approved only in 1991, after Rodolfo, Sr.'s 1988 free patent and OCT, and was later cancelled; Napoleon, et al. did not establish private ownership.
• Rule 45 Questions of Law — A petition for review on certiorari shall raise only questions of law; factual findings of lower courts are generally binding on the Supreme Court. Exceptions include when the findings are contrary to those of the trial court. Applied: Rodolfo, et al.'s issue involved factual calibration barred by Rule 45, but the Court reviewed the contrary findings on the counterclaim and still found no merit.

• "A real party-in-interest, therefore, is a litigant whose right or interest stands to benefit or get injured by the judgment of the case." — Defines the real party-in-interest rule under Section 2, Rule 3, and supports the dismissal of Rodolfo, Sr.'s complaint because he had donated the lot to his son.
• "In an action for reversion, the pertinent allegations in the complaint would admit State ownership of the disputed land." — States the distinguishing allegation for reversion, which was central to holding that Napoleon, et al.'s counterclaim was essentially a reversion action.
• "Under Section 101 of C.A. No. 141, 'actions for the 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." — Supplies the statutory basis for the ruling that only the State through the OSG may sue for cancellation of the free patent and reversion of Lot 15326.
• "[F]or 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." — Canonical formulation of the requisites of quieting of title, applied to deny Rodolfo, et al.'s cause of action.

• Magallanes vs. Palmer Asia, Inc., 739 Phil. 231 (2014) — Followed for the two requirements of the real party-in-interest rule and the definition of material interest.
• Heirs of Kionisala vs. Heirs of Dacut, 428 Phil. 249 (2002) — Followed for the distinction between an action for reversion, an action for declaration of nullity of free patent and certificate of title, and an action for reconveyance.
• Alvarico vs. Sola, 432 Phil. 792 (2002) — Followed for the rule that a private individual may not bring an action for reversion; only the Solicitor General or the State may do so.
• Mananquil vs. Moico, 699 Phil. 120 (2012) — Followed for the two indispensable requisites of an action for quieting of title.
• Unciano vs. Gorospe, 859 Phil. 466 (2019) — Followed for the rule that prior to the issuance of the patent and its registration, title over the lot remains with the State.
• Angeles vs. Pascual, 673 Phil. 499 (2011) — Followed for the distinction between a question of law and a question of fact and the general binding effect of factual findings on the Supreme Court.
• Heirs of Cullado vs. Gutierrez, G.R. No. 212938, July 30, 2019 — Cited for the requisites of an action for reconveyance.

• Section 2, Rule 3, Rules of Court — Requires every action to be prosecuted or defended in the name of the real party-in-interest. Applied to hold that Rodolfo, Sr. was not the real party-in-interest because Lot 15326 had been donated to Rodolfo, Jr.
• Section 3, Rule 3, Rules of Court — Allows a representative or fiduciary to prosecute or defend an action for a beneficiary, provided the representative is acting in a fiduciary capacity or is authorized by law or the Rules. Applied to require proof of Rodolfo, Sr.'s authority to sue for Rodolfo, Jr.
• Sections 4 and 5, Rule 7, Rules of Court — Govern verification and certification against forum shopping, requiring the authorization of the affiant to act on behalf of a party to be attached to the pleading; failure is cause for dismissal without prejudice. Applied because Rodolfo, Sr. failed to prove specific authorization from Rodolfo, Jr.
• Section 1, Rule 45, Rules of Court — Provides that a petition for review on certiorari shall raise only questions of law. Applied to note that Rodolfo, et al.'s factual arguments were generally barred, though the Court reviewed the contrary findings.
• Section 101, C.A. No. 141 (Public Land Act) — Provides that 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. Applied to hold that only the State through the OSG may sue for cancellation of Rodolfo, Sr.'s free patent and OCT and for reversion of Lot 15326.
• Section 48(b), C.A. No. 141 — Invoked by Napoleon, et al. to claim an imperfect title through open, continuous, exclusive, and notorious possession. The Court found their allegations and evidence insufficient to show possession and occupation in the character and for the period required by law.

Justice Leonen (Chairperson), Justice Lazaro-Javier, Justice M. Lopez, and Justice J. Lopez concurred.