Escheat or Reversion Proceedings

IV.
ESCHEAT OR REVERSION PROCEEDINGS
CASES:
1. RCBC vs Hi-Tri Development Corporation G.R. No. 192413, June 13, 2012
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 192413 June 13, 2012
Rizal Commercial Banking Corporation, Petitioner,

vs.
Hi-Tri Development Corporation and Luz R. Bakunawa, Respondents.
DECISION
SERENO, J.:
Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development Corporation
(Hi-Tri) and Luz R. Bakunawa (Bakunawa). Petitioner seeks to appeal from the 26 November
2009 Decision and 27 May 2010 Resolution of the Court of Appeals (CA), which reversed and
1
set aside the 19 May 2008 Decision and 3 November 2008 Order of the Makati City Regional
Trial Court (RTC) in Civil Case No. 06-244. The case before the RTC involved the Complaint for
2
Escheat filed by the Republic of the Philippines (Republic) pursuant to Act No. 3936, as
amended by Presidential Decree No. 679 (P.D. 679), against certain deposits, credits, and
unclaimed balances held by the branches of various banks in the Philippines. The trial court
declared the amounts, subject of the special proceedings, escheated to the Republic and
ordered them deposited with the Treasurer of the Philippines (Treasurer) and credited in favor of
the Republic. The assailed RTC judgments included an unclaimed balance in the amount of ₱
3
1,019,514.29, maintained by RCBC in its Ermita Business Center branch.
We quote the narration of facts of the CA as follows:

4
x x x Luz [R.] Bakunawa and her husband Manuel, now deceased ("Spouses Bakunawa") are
registered owners of six (6) parcels of land covered by TCT Nos. 324985 and 324986 of the
Quezon City Register of Deeds, and TCT Nos. 103724, 98827, 98828 and 98829 of the
Marikina Register of Deeds. These lots were sequestered by the Presidential Commission on
Good Government [(PCGG)].
Sometime in 1990, a certain Teresita Millan ("Millan"), through her representative, Jerry
Montemayor, offered to buy said lots for "₱ 6,724,085.71", with the promise that she will take
care of clearing whatever preliminary obstacles there may[]be to effect a "completion of the
sale". The Spouses Bakunawa gave to Millan the Owner’s Copies of said TCTs and in turn,
Millan made a down[]payment of "₱ 1,019,514.29" for the intended purchase. However, for one
reason or another, Millan was not able to clear said obstacles. As a result, the Spouses
Bakunawa rescinded the sale and offered to return to Millan her down[]payment of ₱
1,019,514.29. However, Millan refused to accept back the ₱ 1,019,514.29 down[]payment.
Consequently, the Spouses Bakunawa, through their company, the Hi-Tri Development
Corporation ("Hi-Tri") took out on October 28, 1991, a Manager’s Check from RCBC-Ermita in
the amount of ₱ 1,019,514.29, payable to Millan’s company Rosmil Realty and Development
Corporation ("Rosmil") c/o Teresita Millan and used this as one of their basis for a complaint
against Millan and Montemayor which they filed with the Regional Trial Court of Quezon City,
Branch 99, docketed as Civil Case No. Q-91-10719 [in 1991], praying that:
1. That the defendants Teresita Mil[l]an and Jerry Montemayor may be ordered to return
to plaintiffs spouses the Owners’ Copies of Transfer Certificates of Title Nos. 324985,
324986, 103724, 98827, 98828 and 98829;
2. That the defendant Teresita Mil[l]an be correspondingly ordered to receive the amount
of One Million Nineteen Thousand Five Hundred Fourteen Pesos and Twenty Nine
Centavos (₱ 1,019,514.29);
3. That the defendants be ordered to pay to plaintiffs spouses moral damages in the
amount of ₱ 2,000,000.00; and
4. That the defendants be ordered to pay plaintiffs attorney’s fees in the amount of ₱
50,000.00.
Being part and parcel of said complaint, and consistent with their prayer in Civil Case No. Q-91-
10719 that "Teresita Mil[l]an be correspondingly ordered to receive the amount of One Million
Nineteen Thousand Five Hundred Fourteen Pesos and Twenty Nine [Centavos] ("₱
1,019,514.29")["], the Spouses Bakunawa, upon advice of their counsel, retained custody of
RCBC Manager’s Check No. ER 034469 and refrained from canceling or negotiating it.
All throughout the proceedings in Civil Case No. Q-91-10719, especially during negotiations for
a possible settlement of the case, Millan was informed that the Manager’s Check was available
for her withdrawal, she being the payee.
On January 31, 2003, during the pendency of the abovementioned case and without the
knowledge of [Hi-Tri and Spouses Bakunawa], x x x RCBC reported the "₱ 1,019,514.29-credit
existing in favor of Rosmil" to the Bureau of Treasury as among its "unclaimed balances" as of
January 31, 2003. Allegedly, a copy of the Sworn Statement executed by Florentino N.
Mendoza, Manager and Head of RCBC’s Asset Management, Disbursement & Sundry
Department ("AMDSD") was posted within the premises of RCBC-Ermita.
On December 14, 2006, x x x Republic, through the [Office of the Solicitor General (OSG)], filed
with the RTC the action below for Escheat [(Civil Case No. 06-244)].
On April 30, 2008, [Spouses Bakunawa] settled amicably their dispute with Rosmil and Millan.
Instead of only the amount of "₱ 1,019,514.29", [Spouses Bakunawa] agreed to pay Rosmil and
Millan the amount of "₱ 3,000,000.00", [which is] inclusive [of] the amount of ["]₱ 1,019,514.29".
But during negotiations and evidently prior to said settlement, [Manuel Bakunawa, through Hi-
Tri] inquired from RCBC-Ermita the availability of the ₱ 1,019,514.29 under RCBC Manager’s
Check No. ER 034469. [Hi-Tri and Spouses Bakunawa] were however dismayed when they
were informed that the amount was already subject of the escheat proceedings before the RTC.
On April 17, 2008, [Manuel Bakunawa, through Hi-Tri] wrote x x x RCBC, viz:
"We understand that the deposit corresponding to the amount of Php 1,019,514.29 stated in the
Manager’s Check is currently the subject of escheat proceedings pending before Branch 150 of
the Makati Regional Trial Court.
Please note that it was our impression that the deposit would be taken from [Hi-Tri’s] RCBC
bank account once an order to debit is issued upon the payee’s presentation of the Manager’s
Check. Since the payee rejected the negotiated Manager’s Check, presentation of the
Manager’s Check was never made.
Consequently, the deposit that was supposed to be allocated for the payment of the Manager’s
Check was supposed to remain part of the Corporation[’s] RCBC bank account, which,
thereafter, continued to be actively maintained and operated. For this reason, We hereby
demand your confirmation that the amount of Php 1,019,514.29 continues to form part of the
funds in the Corporation’s RCBC bank account, since pay-out of said amount was never
ordered. We wish to point out that if there was any attempt on the part of RCBC to consider the
amount indicated in the Manager’s Check separate from the Corporation’s bank account, RCBC
would have issued a statement to that effect, and repeatedly reminded the Corporation that the
deposit would be considered dormant absent any fund movement. Since the Corporation never
received any statements of account from RCBC to that effect, and more importantly, never
received any single letter from RCBC noting the absence of fund movement and advising the
Corporation that the deposit would be treated as dormant."
On April 28, 2008, [Manuel Bakunawa] sent another letter to x x x RCBC reiterating their
position as above-quoted.
In a letter dated May 19, 2008, x x x RCBC replied and informed [Hi-Tri and Spouses
Bakunawa] that:
"The Bank’s Ermita BC informed Hi-Tri and/or its principals regarding the inclusion of Manager’s
Check No. ER034469 in the escheat proceedings docketed as Civil Case No. 06-244, as well as
the status thereof, between 28 January 2008 and 1 February 2008.
xxx xxx xxx
Contrary to what Hi-Tri hopes for, the funds covered by the Manager’s Check No. ER034469
does not form part of the Bank’s own account. By simple operation of law, the funds covered by
the manager’s check in issue became a deposit/credit susceptible for inclusion in the escheat
case initiated by the OSG and/or Bureau of Treasury.
xxx xxx xxx
Granting arguendo that the Bank was duty-bound to make good the check, the Bank’s obligation
to do so prescribed as early as October 2001."
(Emphases, citations, and annotations were omitted.)
The RTC Ruling
The escheat proceedings before the Makati City RTC continued. On 19 May 2008, the trial court
rendered its assailed Decision declaring the deposits, credits, and unclaimed balances subject
of Civil Case No. 06-244 escheated to the Republic. Among those included in the order of
forfeiture was the amount of ₱ 1,019,514.29 held by RCBC as allocated funds intended for the
payment of the Manager’s Check issued in favor of Rosmil. The trial court ordered the deposit of
the escheated balances with the Treasurer and credited in favor of the Republic. Respondents
claim that they were not able to participate in the trial, as they were not informed of the ongoing
escheat proceedings.
Consequently, respondents filed an Omnibus Motion dated 11 June 2008, seeking the partial
reconsideration of the RTC Decision insofar as it escheated the fund allocated for the payment
of the Manager’s Check. They asked that they be included as party-defendants or, in the
alternative, allowed to intervene in the case and their motion considered as an answer-in-
intervention. Respondents argued that they had meritorious grounds to ask reconsideration of
the Decision or, alternatively, to seek intervention in the case. They alleged that the deposit was
subject of an ongoing dispute (Civil Case No. Q-91-10719) between them and Rosmil since
1991, and that they were interested parties to that case. 5
On 3 November 2008, the RTC issued an Order denying the motion of respondents. The trial
court explained that the Republic had proven compliance with the requirements of publication
and notice, which served as notice to all those who may be affected and prejudiced by the
Complaint for Escheat. The RTC also found that the motion failed to point out the findings and
conclusions that were not supported by the law or the evidence presented, as required by Rule
37 of the Rules of Court. Finally, it ruled that the alternative prayer to intervene was filed out of
time.
The CA Ruling
On 26 November 2009, the CA issued its assailed Decision reversing the 19 May 2008 Decision
and 3 November 2008 Order of the RTC. According to the appellate court, RCBC failed to prove
6
that the latter had communicated with the purchaser of the Manager’s Check (Hi-Tri and/or
Spouses Bakunawa) or the designated payee (Rosmil) immediately before the bank filed its
Sworn Statement on the dormant accounts held therein. The CA ruled that the bank’s failure to
notify respondents deprived them of an opportunity to intervene in the escheat proceedings and
to present evidence to substantiate their claim, in violation of their right to due process.
Furthermore, the CA pronounced that the Makati City RTC Clerk of Court failed to issue
individual notices directed to all persons claiming interest in the unclaimed balances, as well as
to require them to appear after publication and show cause why the unclaimed balances should
not be deposited with the Treasurer of the Philippines. It explained that the jurisdictional
requirement of individual notice by personal service was distinct from the requirement of notice
by publication. Consequently, the CA held that the Decision and Order of the RTC were void for
want of jurisdiction.
Issue
After a perusal of the arguments presented by the parties, we cull the main issues as follows:
I. Whether the Decision and Order of the RTC were void for failure to send separate
notices to respondents by personal service
II. Whether petitioner had the obligation to notify respondents immediately before it filed
its Sworn Statement with the Treasurer
III. Whether or not the allocated funds may be escheated in favor of the Republic
Discussion
Petitioner bank assails the CA judgments insofar as they ruled that notice by personal service
7
upon respondents is a jurisdictional requirement in escheat proceedings. Petitioner contends

that respondents were not the owners of the unclaimed balances and were thus not entitled to
notice from the RTC Clerk of Court. It hinges its claim on the theory that the funds represented
by the Manager’s Check were deemed transferred to the credit of the payee or holder upon its
issuance.
We quote the pertinent provision of Act No. 3936, as amended, on the rule on service of
processes, to wit:
Sec. 3. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall
commence an action or actions in the name of the People of the Republic of the Philippines in
the Court of First Instance of the province or city where the bank, building and loan association
or trust corporation is located, in which shall be joined as parties the bank, building and loan
association or trust corporation and all such creditors or depositors. All or any of such creditors
or depositors or banks, building and loan association or trust corporations may be included in
one action. Service of process in such action or actions shall be made by delivery of a copy of
the complaint and summons to the president, cashier, or managing officer of each defendant
bank, building and loan association or trust corporation and by publication of a copy of such
summons in a newspaper of general circulation, either in English, in Filipino, or in a local dialect,
published in the locality where the bank, building and loan association or trust corporation is
situated, if there be any, and in case there is none, in the City of Manila, at such time as the
court may order. Upon the trial, the court must hear all parties who have appeared therein, and
if it be determined that such unclaimed balances in any defendant bank, building and loan
association or trust corporation are unclaimed as hereinbefore stated, then the court shall
render judgment in favor of the Government of the Republic of the Philippines, declaring that
said unclaimed balances have escheated to the Government of the Republic of the Philippines
and commanding said bank, building and loan association or trust corporation to forthwith
deposit the same with the Treasurer of the Philippines to credit of the Government of the
Republic of the Philippines to be used as the National Assembly may direct.
At the time of issuing summons in the action above provided for, the clerk of court shall also
issue a notice signed by him, giving the title and number of said action, and referring to the
complaint therein, and directed to all persons, other than those named as defendants therein,
claiming any interest in any unclaimed balance mentioned in said complaint, and requiring them
to appear within sixty days after the publication or first publication, if there are several, of such
summons, and show cause, if they have any, why the unclaimed balances involved in said
action should not be deposited with the Treasurer of the Philippines as in this Act provided and
notifying them that if they do not appear and show cause, the Government of the Republic of the
Philippines will apply to the court for the relief demanded in the complaint. A copy of said notice
shall be attached to, and published with the copy of, said summons required to be published as
above, and at the end of the copy of such notice so published, there shall be a statement of the
date of publication, or first publication, if there are several, of said summons and notice. Any
person interested may appear in said action and become a party thereto. Upon the publication
or the completion of the publication, if there are several, of the summons and notice, and the
service of the summons on the defendant banks, building and loan associations or trust
corporations, the court shall have full and complete jurisdiction in the Republic of the Philippines
over the said unclaimed balances and over the persons having or claiming any interest in the
said unclaimed balances, or any of them, and shall have full and complete jurisdiction to hear
and determine the issues herein, and render the appropriate judgment thereon. (Emphasis
supplied.)
Hence, insofar as banks are concerned, service of processes is made by delivery of a copy of
the complaint and summons upon the president, cashier, or managing officer of the defendant
bank. On the other hand, as to depositors or other claimants of the unclaimed balances, service
8
is made by publication of a copy of the summons in a newspaper of general circulation in the

locality where the institution is situated. A notice about the forthcoming escheat proceedings
9
must also be issued and published, directing and requiring all persons who may claim any
interest in the unclaimed balances to appear before the court and show cause why the dormant
accounts should not be deposited with the Treasurer.
Accordingly, the CA committed reversible error when it ruled that the issuance of individual
notices upon respondents was a jurisdictional requirement, and that failure to effect personal
service on them rendered the Decision and the Order of the RTC void for want of jurisdiction.
Escheat proceedings are actions in rem, whereby an action is brought against the thing itself
10
instead of the person. Thus, an action may be instituted and carried to judgment without
11
personal service upon the depositors or other claimants. Jurisdiction is secured by the power of
12
the court over the res. Consequently, a judgment of escheat is conclusive upon persons notified
13
by advertisement, as publication is considered a general and constructive notice to all persons

interested.14
Nevertheless, we find sufficient grounds to affirm the CA on the exclusion of the funds allocated
for the payment of the Manager’s Check in the escheat proceedings.
Escheat proceedings refer to the judicial process in which the state, by virtue of its sovereignty,
steps in and claims abandoned, left vacant, or unclaimed property, without there being an
interested person having a legal claim thereto. In the case of dormant accounts, the state
15
inquires into the status, custody, and ownership of the unclaimed balance to determine whether
the inactivity was brought about by the fact of death or absence of or abandonment by the
depositor. If after the proceedings the property remains without a lawful owner interested to
16
claim it, the property shall be reverted to the state "to forestall an open invitation to self-service
by the first comers." However, if interested parties have come forward and lain claim to the
17
property, the courts shall determine whether the credit or deposit should pass to the claimants
or be forfeited in favor of the state. We emphasize that escheat is not a proceeding to penalize
18
depositors for failing to deposit to or withdraw from their accounts. It is a proceeding whereby
the state compels the surrender to it of unclaimed deposit balances when there is substantial
ground for a belief that they have been abandoned, forgotten, or without an owner. 19
Act No. 3936, as amended, outlines the proper procedure to be followed by banks and other
similar institutions in filing a sworn statement with the Treasurer concerning dormant accounts:
Sec. 2. Immediately after the taking effect of this Act and within the month of January of every
odd year, all banks, building and loan associations, and trust corporations shall forward to the
Treasurer of the Philippines a statement, under oath, of their respective managing officers, of all
credits and deposits held by them in favor of persons known to be dead, or who have not made
further deposits or withdrawals during the preceding ten years or more, arranged in alphabetical
order according to the names of creditors and depositors, and showing:
(a) The names and last known place of residence or post office addresses of the
persons in whose favor such unclaimed balances stand;
(b) The amount and the date of the outstanding unclaimed balance and whether the
same is in money or in security, and if the latter, the nature of the same;
(c) The date when the person in whose favor the unclaimed balance stands died, if
known, or the date when he made his last deposit or withdrawal; and
(d) The interest due on such unclaimed balance, if any, and the amount thereof.
A copy of the above sworn statement shall be posted in a conspicuous place in the premises of
the bank, building and loan association, or trust corporation concerned for at least sixty days
from the date of filing thereof: Provided, That immediately before filing the above sworn
statement, the bank, building and loan association, and trust corporation shall communicate with
the person in whose favor the unclaimed balance stands at his last known place of residence or
post office address.
It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time to
time the existence of unclaimed balances held by banks, building and loan associations, and
trust corporations. (Emphasis supplied.)
As seen in the afore-quoted provision, the law sets a detailed system for notifying depositors of
unclaimed balances. This notification is meant to inform them that their deposit could be
escheated if left unclaimed. Accordingly, before filing a sworn statement, banks and other
similar institutions are under obligation to communicate with owners of dormant accounts. The
purpose of this initial notice is for a bank to determine whether an inactive account has indeed
been unclaimed, abandoned, forgotten, or left without an owner. If the depositor simply does not
wish to touch the funds in the meantime, but still asserts ownership and dominion over the
dormant account, then the bank is no longer obligated to include the account in its sworn
statement. It is not the intent of the law to force depositors into unnecessary litigation and
20
defense of their rights, as the state is only interested in escheating balances that have been
abandoned and left without an owner.
In case the bank complies with the provisions of the law and the unclaimed balances are
eventually escheated to the Republic, the bank "shall not thereafter be liable to any person for
the same and any action which may be brought by any person against in any bank xxx for
unclaimed balances so deposited xxx shall be defended by the Solicitor General without cost to
such bank." Otherwise, should it fail to comply with the legally outlined procedure to the
21
prejudice of the depositor, the bank may not raise the defense provided under Section 5 of Act
No. 3936, as amended.
Petitioner asserts that the CA committed a reversible error when it required RCBC to send prior
22
notices to respondents about the forthcoming escheat proceedings involving the funds allocated
for the payment of the Manager’s Check. It explains that, pursuant to the law, only those "whose
favor such unclaimed balances stand" are entitled to receive notices. Petitioner argues that,
since the funds represented by the Manager’s Check were deemed transferred to the credit of
the payee upon issuance of the check, the proper party entitled to the notices was the payee –
Rosmil – and not respondents. Petitioner then contends that, in any event, it is not liable for
failing to send a separate notice to the payee, because it did not have the address of Rosmil.
Petitioner avers that it was not under any obligation to record the address of the payee of a
Manager’s Check.
In contrast, respondents Hi-Tri and Bakunawa allege that they have a legal interest in the fund
23
allocated for the payment of the Manager’s Check. They reason that, since the funds were part
of the Compromise Agreement between respondents and Rosmil in a separate civil case, the
approval and eventual execution of the agreement effectively reverted the fund to the credit of
respondents. Respondents further posit that their ownership of the funds was evidenced by their
continued custody of the Manager’s Check.
An ordinary check refers to a bill of exchange drawn by a depositor (drawer) on a bank

(drawee), requesting the latter to pay a person named therein (payee) or to the order of the
24
payee or to the bearer, a named sum of money. The issuance of the check does not of itself
25
operate as an assignment of any part of the funds in the bank to the credit of the drawer. Here, 26
the bank becomes liable only after it accepts or certifies the check. After the check is accepted
27
for payment, the bank would then debit the amount to be paid to the holder of the check from
the account of the depositor-drawer.
There are checks of a special type called manager’s or cashier’s checks. These are bills of
exchange drawn by the bank’s manager or cashier, in the name of the bank, against the bank
itself. Typically, a manager’s or a cashier’s check is procured from the bank by allocating a
28
particular amount of funds to be debited from the depositor’s account or by directly paying or
depositing to the bank the value of the check to be drawn. Since the bank issues the check in its
name, with itself as the drawee, the check is deemed accepted in advance. Ordinarily, the
29
check becomes the primary obligation of the issuing bank and constitutes its written promise to
pay upon demand. 30
Nevertheless, the mere issuance of a manager’s check does not ipso facto work as an
automatic transfer of funds to the account of the payee. In case the procurer of the manager’s or
cashier’s check retains custody of the instrument, does not tender it to the intended payee, or
fails to make an effective delivery, we find the following provision on undelivered instruments
under the Negotiable Instruments Law applicable: 31
Sec. 16. Delivery; when effectual; when presumed. – Every contract on a negotiable instrument
is incomplete and revocable until delivery of the instrument for the purpose of giving effect
thereto. As between immediate parties and as regards a remote party other than a holder in due
course, the delivery, in order to be effectual, must be made either by or under the authority of
the party making, drawing, accepting, or indorsing, as the case may be; and, in such case, the
delivery may be shown to have been conditional, or for a special purpose only, and not for the
purpose of transferring the property in the instrument. But where the instrument is in the hands
of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them
liable to him is conclusively presumed. And where the instrument is no longer in the possession
of a party whose signature appears thereon, a valid and intentional delivery by him is presumed
until the contrary is proved. (Emphasis supplied.)
Petitioner acknowledges that the Manager’s Check was procured by respondents, and that the
amount to be paid for the check would be sourced from the deposit account of Hi-Tri. When 32
Rosmil did not accept the Manager’s Check offered by respondents, the latter retained custody
of the instrument instead of cancelling it. As the Manager’s Check neither went to the hands of
Rosmil nor was it further negotiated to other persons, the instrument remained undelivered.
Petitioner does not dispute the fact that respondents retained custody of the instrument. 33
Since there was no delivery, presentment of the check to the bank for payment did not occur.
An order to debit the account of respondents was never made. In fact, petitioner confirms that
the Manager’s Check was never negotiated or presented for payment to its Ermita Branch, and
that the allocated fund is still held by the bank. As a result, the assigned fund is deemed to
34
remain part of the account of Hi-Tri, which procured the Manager’s Check. The doctrine that the
deposit represented by a manager’s check automatically passes to the payee is inapplicable,
because the instrument – although accepted in advance – remains undelivered. Hence,
respondents should have been informed that the deposit had been left inactive for more than 10
years, and that it may be subjected to escheat proceedings if left unclaimed. 1âwphi1
After a careful review of the RTC records, we find that it is no longer necessary to remand the
case for hearing to determine whether the claim of respondents was valid. There was no
contention that they were the procurers of the Manager’s Check. It is undisputed that there was
no effective delivery of the check, rendering the instrument incomplete. In addition, we have
already settled that respondents retained ownership of the funds. As it is obvious from their
foregoing actions that they have not abandoned their claim over the fund, we rule that the
allocated deposit, subject of the Manager’s Check, should be excluded from the escheat
proceedings. We reiterate our pronouncement that the objective of escheat proceedings is state
forfeiture of unclaimed balances. We further note that there is nothing in the records that would
show that the OSG appealed the assailed CA judgments. We take this failure to appeal as an
indication of disinterest in pursuing the escheat proceedings in favor of the Republic.
WHEREFORE the Petition is DENIED. The 26 November 2009 Decision and 27 May 2010
Resolution of the Court of Appeals in CA-G.R. SP No. 107261 are hereby AFFIRMED.
SO ORDERED.
MARIA LOURDES P. A. SERENO

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Senior Associate Justice
Chairperson
ARTURO D. BRION JOSE PORTUGAL PEREZ

Associate Justice Associate Justice
BIENVENIDO L. REYES
Associate Justice
CERTIFICATION
I certify that the conclusions in the above had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. No. 296, The Judiciary Act of 1948, as amended)
Footnotes
1
The Decision and Resolution in CA-G.R. SP No. 107261 were penned by CA Associate
Justice Vicente S.E. Veloso and concurred in by Associate Justices Andres B. Reyes, Jr.
and Marlene Gonzales-Sison.
The Decision and Order in Civil Case No. 06-244 (for Escheat) was penned by Judge
2
Elmo M. Alameda.
3
CA Decision at 1-2 (Hi-Tri Development Corporation v. Republic of the Philippines, CA-
G.R. SP No. 107261, 26 November 2009), rollo, pp. 61-62; RTC Decision at the 18th to
the 19th pp. (unpaged) (Republic of the Philippines v. Allied Banking Corporation, Civil
Case No. 06-244, 19 May 2008), rollo, pp. 210-211.
4
CA Decision at 2-7, supra, rollo, pp. 62-67.
5
Omnibus Motion at 3-7 (Republic of the Philippines v. Allied Banking Corporation, Civil
Case No. 06-244, decided on 19 May 2008), rollo, pp. 217-221. See also RTC Judgment
(Bakunawa v. Milan, Civil Case No. Q-91-10719, 17 June 2008), rollo, pp. 287-289.
6
CA Decision at 14-16, supra note 3, rollo, pp. 74-76.
7
Petition for Review on Certiorari of RCBC at 41-49, rollo, pp. 43-51.
8
Act No. 3936, as amended by P.D. 679, Sec. 3; see also Security Savings Bank v. State
of California, 263 U.S. 282 (1923).
9
Id.
10
Republic v. Court of First Instance, 247-A Phil. 85 (1988).
11
See Ramos v. Ramos, G.R. No. 144294, 11 March 2003, 399 SCRA 43.
12
See Grey v. De la Cruz, 17 Phil. 49 (1910).
13
Id.
14
Id. (citing Hamilton v. Brown, 161 U.S. 256 (1896)).
Black’s Law Dictionary 545 (6th ed. 1990); Act No. 3936, as amended by P.D. 679,
15
Secs. 1 and 3. See generally Republic v. Court of Appeals, 426 Phil. 177 (2002) and
Roth v. Delano, 338 U.S. 226 (1949).
See Act No. 3936, as amended by P.D. 679, Sec. 1 and Security Savings Bank v. State
16
of California, supra note 8. See generally Roth v. Delano, supra.
17
Republic v. Court of Appeals, supra note 15, at 183-184.
18
See generally Roth v. Delano, supra note 15.
See also Anderson National Bank v. Luckett, 321 U.S. 233 (1944), cited in American
19
Express Travel Related Services Co., Inc. v. Kentucky, 641 F.3d 685 (6th Circ. 2011)
(U.S.).
20
See generally Security Savings Bank v. State of California, supra note 8.
21
Act No. 3936, as amended by P.D. 679 (1975), Sec. 5.
22
23
Comment of Respondents at 7-8, rollo, pp. 651-652.
24
Act No. 2031 (1911), otherwise known as the Negotiable Instruments Law, Sec. 185.
25
Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799.
26
Act No. 2031 (1911), otherwise known as the Negotiable Instruments Law, Sec. 189.
27
Id. at Sec. 127.
Bank of the Philippine Islands v. Roxas, G.R. No. 157833, 15 October 2007, 536 SCRA
28
168; International Corporate Bank v. Gueco, 404 Phil. 353 (2001).
29
International Corporate Bank v. Gueco, supra.
Id.; Republic v. Philippine National Bank, 113 Phil. 828 (1961). A manager’s or a
30
cashier’s check may be treated as a promissory note and is the substantial equivalent of
a certified check (Id.; Equitable PCI Bank v. Ong, 533 Phil. 415 (2006); New Pacific
Timber & Supply Co., Inc. v. Seneris, 189 Phil. 517 (1980)). Certification signifies that
the instrument was drawn upon sufficient funds; that funds have been set apart or
assigned for the satisfaction of the check in favor of the payee; and that the funds shall
be so applied when the check is presented for payment (Id.). Here, the deposit
represented by the check is transferred from the credit of the maker to that of the payee
or holder (Id.). Thus, to all intents and purposes, the payee or holder becomes the
depositor of the drawee bank, with rights and duties of one in that situation (Id.).
Act No. 2031 (1911). See also Malloy v. Smith, 265 Md. 460, 290 A.2d 486, 57
31
A.L.R.3d 1076 (Md. Ct. App. 1972)(U.S.) (citing Pikeville Nat. Bank & Trust Co. v.
Shirley, 281 Ky. 150, 135 S.W.2d 426 (Ky Ct. App. 1939)(U.S.))
32
33
Id. at 53, rollo, p. 55.
Letter of RCBC to Hi-Tri at 2, Petition for Review on Certiorari of RCBC, Annex "N,"
34
rollo, p. 180.
2. Republic vs CA & Solano, G.R. No. 143483, January 31, 2002
SECOND DIVISION
G.R. No. 143483 January 31, 2002
REPUBLIC OF THE PHILIPPINES represented by the REGISTER OF DEEDS OF PASAY

CITY, petitioner,
vs.
COURT OF APPEALS (SPECIAL FORMER 3RD DIVISION) AND AMADA H. SOLANO,
assisted by her husband ROMEO SOLANO, respondents.
BELLOSILLO , J.:
This petition for certiorari seeks to nullify two (2) Resolutions of the Court of Appeals dated 12
November 1998 and 4 May 2000 giving due course to the petition for annulment of judgment
filed by private respondent Amada H. Solano on 3 February 1997 and denying petitioner's
motion for reconsideration.
For more than three (3) decades (from 1952 to 1985) private respondent Amada Solano served
as the all-around personal domestic helper of the late Elizabeth Hankins, a widow and a French
national. During Ms. Hankins' lifetime and most especially during the waning years of her life,
respondent Solano was her faithful girl Friday and a constant companion since no close relative
was available to tend to her needs.
In recognition of Solano's faithful and dedicated service, Ms. Hankins executed in her favor two
(2) deeds of donation involving two (2) parcels of land covered by TCT Nos. 7807 and 7808 of
the Registry of Deeds. Private respondent alleged that she misplaced the deeds of donation and
were nowhere to be found.
While the deeds of donation were missing, the Republic filed a petition for the escheat of the
estate of Elizabeth Hankins before the Regional Trial Court of Pasay City. During the
1
proceedings, a motion for intervention was filed by Romeo Solano, spouse of private
respondent, and one Gaudencio Regosa, but on 24 June 1987 the motion was denied by the
trial court for the reason that "they miserably failed to show valid claim or right to the properties
in question." Since it was established that there were no known heirs and persons entitled to the
2
properties of decedent Hankins, the lower court escheated the estate of the decedent in favor of
petitioner Republic of the Philippines.
By virtue of the decision of the trial court, the Registry of Deeds of Pasay City cancelled TCT
Nos. 7807 and 7808 and issued new ones, TCT Nos. 129551 and 129552, both in the name of
Pasay City.
In the meantime, private respondent claimed that she accidentally found the deeds of donation
she had been looking for a long time. In view of this development, respondent Amada Solano
filed on 28 January 1997 a petition before the Court of Appeals for the annulment of the lower
court's decision alleging, among other, that -
3
13.1. The deceased Elizabeth Hankins having donated the subject properties to the
petitioner in 1983 (for TCT No. 7807) and 1984 (for TCT No. 7808), these properties did
not and could not form part of her estate when she died on September 20, 1985.
Consequently, they could not validly be escheated to the Pasay City Government;
13.2. Even assuming arguendo that the properties could be subject of escheat
proceedings, the decision is still legally infirm for escheating the properties to an entity,
the Pasay City Government, which is not authorized by law to be the recipient thereof.
The property should have been escheated in favor of the Republic of the Philippines
under Rule 91, Section 1 of the New Rules of Court x x x x
On 17 March 1997 the Office of the Solicitor General representing public respondents RTC and
the Register of Deeds (herein petitioner) filed an answer setting forth their affirmative defenses,
to wit: (a) lack of jurisdiction over the nature of the action; and, (b) the cause of action was
barred by the statute of limitations.
Finding no cogent reason to justify the dismissal of the petition for annulment, the Court of
Appeals issued on 12 November 1998 the first of its assailed Resolutions giving due course to
the petition for annulment of judgment and setting the date for trial on the merits. In upholding
the theory of respondent Solano, the Appeals Court ruled that -
Herein petitioner invokes lack of jurisdiction over the subject matter on the part of
respondent RTC to entertain the escheat proceedings x x x because the parcels of land
have been earlier donated to herein petitioner in 1983 and 1984 prior to the death of said
Hankins; and therefore, respondent court could not have ordered the escheat of said
properties in favor of the Republic of the Philippines, assign them to respondent Pasay
City government, order the cancellation of the old titles in the name of Hankins and order
the properties registered in the name of respondent Pasay City x x x x The 1997 Rules
of Civil Procedure specifically laid down the grounds of annulment filed before this Court,
to wit: extrinsic fraud and lack of jurisdiction. Jurisdiction over the subject matter is
conferred by law and this jurisdiction is determined by the allegations of the complaint. It
is axiomatic that the averments of the complaint determine the nature of the action and
consequently the jurisdiction of the courts. Thus whether or not the properties in
question are no longer part of the estate of the deceased Hankins at the time of her
death; and, whether or not the alleged donations are valid are issues in the present
petition for annulment which can be resolved only after a full blown trial x x x x
It is for the same reason that respondent’s espousal of the statute of limitations against
herein petition for annulment cannot prosper at this stage of the proceedings. Indeed,
Section 4, Rule 91 of the Revised Rules of Court expressly provides that a person
entitled to the estate must file his claim with the court a quo within five (5) years from the
date of said judgment. However, it is clear to this Court that herein petitioner is not
claiming anything from the estate of the deceased at the time of her death on September
20, 1985; rather she is claiming that the subject parcels of land should not have been
included as part of the estate of the said decedent as she is the owner thereof by virtue
of the deeds of donation in her favor.
In effect, herein petitioner, who alleges to be in possession of the premises in question,
is claiming ownership of the properties in question and the consequent reconveyance
thereof in her favor which cause of action prescribes ten (10) years after the issuance of
title in favor of respondent Pasay City on August 7, 1990. Herein petition was
seasonably filed on February 3, 1997 under Article 1144, to wit:
Art. 1144. The following actions must be brought within ten years from the time
the right of action accrues: (1) Upon a written contract; (2) Upon an obligation
created by law; (3) Upon a judgment.
And Article 1456, to wit:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes. 4
In its Resolution of 4 May 2000 the Court of Appeals denied the motion for reconsideration filed
by public respondents Register of Deeds of Pasay City and the Presiding judge of the lower
court and set the trial on the merits for June 15 and 16, 2000.
In its effort to nullify the Resolutions herein before mentioned, petitioner points out that the Court
of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction (a) in
denying petitioner's affirmative defenses set forth in its answer and motion for reconsideration,
and in setting the case for trial and reception of evidence; and, (b) in giving due course to
private respondent's petition for annulment of decision despite the palpable setting-in of the 5-
year statute of limitations within which to file claims before the court a quo set forth in Rule 91 of
the Revised Rules of Court and Art. 1014 of the Civil Code.
Petitioner argues that the lower court had jurisdiction when it escheated the properties in
question in favor of the city government and the filing of a petition for annulment of judgment on
the ground of subsequent discovery of the deeds of donation did not divest the lower court of its
jurisdiction on the matter. It further contends that Rule 47 of the 1997 Rules of Civil Procedure
only provides for two (2) grounds for the annulment of judgment, namely: extrinsic fraud and
lack of jurisdiction. As such the discovery of the deeds of donation seven (7) years after the
finality of the escheat proceedings is an extraneous matter which is clearly not an instance of
extrinsic fraud nor a ground to oust the lower court of its jurisdiction.
Petitioner also insists that notwithstanding the execution of the deeds of donation in favor of
private respondent, the 5-year statute of limitations within which to file claims before the court a
quo as set forth in Rule 91 of the Revised Rules of Court has set in.
The present controversy revolves around the nature of the parcels of land purportedly donated
to private respondent which will ultimately determine whether the lower court had jurisdiction to
declare the same escheated in favor of the state.
We rule for the petitioner. Escheat is a proceeding, unlike that of succession or assignment,
whereby the state, by virtue of its sovereignty, steps in and claims the real or personal property
of a person who dies intestate leaving no heir. In the absence of a lawful owner, a property is
claimed by the state to forestall an open "invitation to self-service by the first comers." Since
5
escheat is one of the incidents of sovereignty, the state may, and usually does, prescribe the
conditions and limits the time within which a claim to such property may be made. The
procedure by which the escheated property may be recovered is generally prescribed by statue,
and a time limit is imposed within which such action must be brought.
In this jurisdiction, a claimant to an escheated property must file his claim "within five (5) years
from the date of such judgment, such person shall have possession of and title to the same, or if
sold, the municipality or city shall be accountable to him for the proceeds, after deducting the
estate; but a claim not made shall be barred forever." The 5-year period is not a device
6
capriciously conjured by the state to defraud any claimant; on the contrary, it is decidedly
prescribed to encourage would-be claimants to be punctilious in asserting their claims,
otherwise they may lose them forever in a final judgment.
Incidentally, the question may be asked: Does herein private respondent, not being an heir but
allegedly a donee, have the personality to be a claimant within the purview of Sec. 4, Rule 91, of
the Revised Rules of Court? In this regard, we agree with the Solicitor General that the case
of Municipal Council of San Pedro, Laguna v. Colegio de San Jose, Inc., is applicable at least
7
insofar as it concerns the Court's discussion on who is an "interested party" in an escheat

proceeding -
In a special proceeding for escheat under sections 750 and 751 the petitioner is not the
sole and exclusive interested party. Any person alleging to have a direct right or interest
in the property sought to be escheated is likewise an interested party and may appear
and oppose the petition for escheat. In the present case, the Colegio de San Jose, Inc.
and Carlos Young appeared alleging to have a material interest in the Hacienda de San
Pedro Tunasan; the former because it claims to be the exclusive owner of the hacienda,
and the latter because he claims to be the lessee thereof under a contract legally
entered with the former (underscoring supplied).
In the instant petition, the escheat judgment was handed down by the lower court as early as 27
June 1989 but it was only on 28 January 1997, more or less seven (7) years after, when private
respondent decided to contest the escheat judgment in the guise of a petition for annulment of
judgment before the Court of Appeals. Obviously, private respondent's belated assertion of her
right over the escheated properties militates against recovery.
A judgment in escheat proceedings when rendered by a court of competent jurisdiction is

conclusive against all persons with actual or constructive notice, but not against those who are
not parties or privies thereto. As held in Hamilton v. Brown, "a judgment of escheat was held
8
conclusive upon persons notified by advertisement to all persons interested. Absolute lack on
the part of petitioners of any dishonest intent to deprive the appellee of any right, or in any way
injure him, constitutes due process of law, proper notice having been observed." With the lapse
of the 5-year period therefore, private respondent has irretrievably lost her right to claim and the
supposed "discovery of the deeds of donation" is not enough justification to nullify the escheat
judgment which has long attained finality.
In the mind of this Court the subject properties were owned by the decedent during the time that
the escheat proceedings were being conducted and the lower court was not divested of its
jurisdiction to escheat them in favor of Pasay City notwithstanding an allegation that they had
been previously donated. We recall that a motion for intervention was earlier denied by the
escheat court for failure to show "valid claim or right to the properties in question." Where a
9
person comes into an escheat proceeding as a claimant, the burden is on such intervenor to
establish his title to the property and his right to intervene. A fortiori, the certificates of title
covering the subject properties were in the name of the decedent indicating that no transfer of
ownership involving the disputed properties was ever made by the deceased during her lifetime.
In the absence therefore of any clear and convincing proof showing that the subject lands had
been conveyed by Hankins to private respondent Solano, the same still remained, at least
before the escheat, part of the estate of the decedent and the lower court was right not to
assume otherwise. The Court of Appeals therefore cannot perfunctorily presuppose that the
subject properties were no longer part of the decedent's estate at the time the lower court
handed down its decision on the strength of a belated allegation that the same had previously
been disposed of by the owner. It is settled that courts decide only after a close scrutiny of every
piece of evidence and analyze each case with deliberate precision and unadulterated
thoroughness, the judgment not being diluted by speculations, conjectures and unsubstantiated
assertions.
WHEREFORE, the petition is GRANTED. The assailed Resolution of the Court of Appeals
dated 12 November 1998 giving due course to the petition for annulment of judgment, and its
Resolution dated 4 May 2000 denying petitioner's motion for reconsideration, are SET ASIDE.
The decision of the RTC-Br. 114, Pasay City, dated 27 June 1989, is REINSTATED.
SO ORDERED.
Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

Buena J., no part for being a co-signee of res. in question.
Footnotes
1
Raffled to Br. 114, Judge Baltazar R. Dizon, Presiding.
2
CA Records, p. 234.
3
Id., p. 5.
4
CA decision; Rollo, pp. 34-35.
5
Re Thompson’s Estate, 192 F2d 451.
6
Sec. 4, Rule 91, Revised Rules of Court.
7
No. L-45460, 25 February 1938.
8
161 US 256.
9
CA Records, p. 20.
3. Alvarico vs Sola R. No. 138953. June 6, 2002
SECOND DIVISION
[G.R. No. 138953. June 6, 2002
CASTORIO ALVARICO, Petitioner, vs. AMELITA L. SOLA, Respondent.
DECISION
QUISUMBING, J.:
This is a petition for review on certiorari of the decision dated March 23, 1999 of the Court of
Appeals in CA-G.R. CV No. 54624, reversing the decision of the Regional Trial Court of Cebu
City, Branch 10, for reconveyance. Also sought to be reversed is the CA resolution dated June
8, 1999 denying petitioners motion for reconsideration.
The facts of this case are as follows:
Petitioner Castorio Alvarico is the natural father of respondent Amelita Sola while Fermina
Lopez is petitioners aunt, and also Amelitas adoptive mother.
On June 17, 1982, the Bureau of Lands approved and granted the Miscellaneous Sales
Application (MSA) of Fermina over Lot 5, SGS-3451, with an area of 152 sq. m. at the
Waterfront, Cebu City.1 cräläwvirtualibräry
On May 28, 1983,2 Fermina executed a Deed of Self-Adjudication and Transfer of Rights3 over
Lot 5 in favor of Amelita, who agreed to assume all the obligations, duties, and conditions
imposed upon Fermina under MSA Application No. V-81066. The document of transfer was filed
with the Bureau of Lands.4 The pertinent portions of the deed provide:
xxx
That I, FERMINA A. LOPEZ, of legal age, Filipino, widow of Pedro C. Lopez and a resident of
Port San Pedro, Cebu City, Philippines, am the AWARDEE of Lots Nos. 4, 5, 3-B, 3-C and 6-B,
Sgs-3451 And being the winning bidder at the auction sale of these parcels by the Bureau of
Lands held on May 12, 1982, at the price of P150.00 per square meter taking a purchase price
of P282,900.00 for the tract; That I have made as my partial payment the sum of P28,290.00
evidenced by Official Receipt No. 1357764-B representing ten (10%) per cent of my bid, leaving
a balance of P254,610.00 that shall be in not more than ten (10) years at an equal installments
of P25,461.00 beginning June 17, 1983 until the full amount is paid.
the Transferee Mrs. Amelita L. Sola, agrees to assume, all the obligations, duties and conditions
imposed upon the Awardee in relation to the MSA Application No. V-81066 entered in their
records as Sales Entry No. 20476.
[I] hereby declare that I accept this Deed of Self-Adjudication and Transfer of Rights and further
agree to all conditions provided therein.5 cräläwvirtualibräry
Amelita assumed payment of the lot to the Bureau of Lands. She paid a total amount
of P282,900.6 cräläwvirtualibräry
On April 7, 1989, the Bureau of Lands issued an order approving the transfer of rights and
granting the amendment of the application from Fermina to Amelita.7 On May 2, 1989, Original
Certificate of Title (OCT) No. 3439 was issued in favor of Amelita.8 cräläwvirtualibräry
On June 24, 1993,9 herein petitioner filed Civil Case No. CEB-1419110 for reconveyance against
Amelita. He claimed that on January 4, 1984, Fermina donated the land to him11 and
immediately thereafter, he took possession of the same. He averred that the donation to him
had the effect of withdrawing the earlier transfer to Amelita.12 cräläwvirtualibräry
For her part, Amelita maintained that the donation to petitioner is void because Fermina was no
longer the owner of the property when it was allegedly donated to petitioner, the property having
been transferred earlier to her.13 She added that the donation was void because of lack of
approval from the Bureau of Lands, and that she had validly acquired the land as Ferminas
rightful heir. She also denied that she is a trustee of the land for petitioner.14 cräläwvirtualibräry
After trial, the RTC rendered a decision in favor of petitioner, the decretal portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and

against the defendant. Lot 5, Sgs-3451, is hereby declared as lawfully owned by plaintiff and
defendant is directed to reconvey the same to the former.
No pronouncement as to damages and attorneys fees, plaintiff having opted to forego such
claims.
SO ORDERED.15 cräläwvirtualibräry
On appeal, the Court of Appeals in its decision dated March 23, 1999 reversed the RTC. Thus:
WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED and SET
ASIDE. The complaint filed by plaintiff-appellee against defendant-appellant is hereby
DISMISSED.
Costs against plaintiff-appellee.
SO ORDERED.16 cräläwvirtualibräry
Petitioner sought reconsideration, but it was denied by the CA.17 cräläwvirtualibräry
Hence, the instant petition for certiorari seasonably filed on the following grounds:
I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR, REFLECTIVE OF

UNMINDFUL RECKLESSNESS WHICH IS THE VERY OPPOSITE OF JUDICIAL
CIRCUMSPECTION, IN DECLARING THAT THE DEED OF DONATION DATED JANUARY 4,
1984 (ANNEX C) IN FAVOR OF PETITIONER WAS EMBODIED ONLY IN A PRIVATE
DOCUMENT (Page 6, Decision, Annex A), ALTHOUGH, BY A MERE CASUAL LOOK AT THE
DOCUMENT, IT CAN BE READILY DISCERNED THAT IT IS NOTARIZED;
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN APPLYING ON

THE CASE AT BAR THE PRINCIPLE IN LAW THAT IT IS REGISTRATION OF THE SALES
PATENT THAT CONSTITUTE THE OPERATIVE ACT THAT WOULD CONVEY OWNERSHIP
OF THE LAND TO THE APPLICANT (Pp. 3-6, Decision, Annex A) BECAUSE THE LEGAL
CONTROVERSY BETWEEN PETITIONER AND RESPONDENT DOES NOT INVOLVE
CONFLICTING CLAIMS ON SALES PATENT APPLICATIONS;
III.
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND

COMMITTED SERIOUS ERROR IN MAKING A FINDING THAT RESPONDENT ACQUIRED
THE LAND IN QUESTION, IN GOOD FAITH (Page 7, Decision, Annex A), ALTHOUGH THERE
IS NO BASIS NOR NEED TO MAKE SUCH A FINDING; and
IV.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN ENUNCIATING

THAT POSSESSION MENTIONED IN ARTICLE 1544 OF THE NEW CIVIL CODE INCLUDE
SYMBOLIC POSSESSION, UPON WHICH THE APPELLATE COURT BASED ITS
CONCLUSION THAT RESPONDENT WAS FIRST IN POSSESSION BECAUSE THE DEED
OF SELF-ADJUDICATION AND TRANSFER OF RIGHTS IN FAVOR OF RESPONDENT
DATED MAY 28, 1983 WAS EXECUTED MUCH EARLIER THAN THE DEED OF DONATION
IN FAVOR OF PETITIONER DATED JANUARY 4, 1984 (Pages 7-8, Decision, Annex A).18 cräläwvirtualibräry
The crucial issue to be resolved in an action for reconveyance is: Who between petitioner and
respondent has a better claim to the land?
To prove she has a better claim, respondent Amelita Sola submitted a copy of OCT No. 3439 in
her name and her husbands,19 a Deed of Self-Adjudication and Transfer of Rights20 over the
property dated 1983 executed by Fermina in her favor, and a certification from the municipal
treasurer that she had been declaring the land as her and her husbands property for tax
purposes since 1993.21 cräläwvirtualibräry
For his part, petitioner Castorio Alvarico presented a Deed of Donation22 dated January 4, 1984,
showing that the lot was given to him by Fermina and according to him, he immediately took
possession in 1985 and continues in possession up to the present.23 cräläwvirtualibräry
Petitioner further contests the CA ruling that declared as a private document said Deed of
Donation dated January 4, 1984, despite the fact that a certified true and correct copy of the
same was obtained from the Notarial Records Office, Regional Trial Court, Cebu City on June
11, 1993 and acknowledged before Atty. Numeriano Capangpangan, then Notary Public for
Cebu.24cräläwvirtualibräry
Given the circumstances in this case and the contentions of the parties, we find that no
reversible error was committed by the appellate court in holding that herein petitioners complaint
against respondent should be dismissed. The evidence on record and the applicable law
indubitably favor respondent.
Petitioner principally relies on Articles 744 and 1544 of the New Civil Code, which provide:
Art. 744. Donations of the same thing to two or more different donees shall be governed by the
provisions concerning the sale of the same thing to two or more different persons.
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith. (Emphasis supplied.)
Petitioner claims that respondent was in bad faith when she registered the land in her name
and, based on the abovementioned rules, he has a better right over the property because he
was first in material possession in good faith. However, this allegation of bad faith on the part of
Amelita Sola in acquiring the title is devoid of evidentiary support. For one, the execution of
public documents, as in the case of Affidavits of Adjudication, is entitled to the presumption of
regularity, hence convincing evidence is required to assail and controvert them.25 Second, it is
undisputed that OCT No. 3439 was issued in 1989 in the name of Amelita. It requires more than
petitioners bare allegation to defeat the Original Certificate of Title which on its face enjoys the
legal presumption of regularity of issuance.26 A Torrens title, once registered, serves as notice to
the whole world. All persons must take notice and no one can plead ignorance of its
registration.27 cräläwvirtualibräry
Even assuming that respondent Amelita Sola acquired title to the disputed property in bad faith,
only the State can institute reversion proceedings under Sec. 101 of the Public Land Act.28 Thus:
Sec. 101.All actions for reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his
stead, in the proper courts, in the name of the Republic of the Philippines.
In other words, a private individual may not bring an action for reversion or any action which
would have the effect of canceling 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. Only the Solicitor General or the officer acting in his stead may do so.29 Since Amelita
Solas title originated from a grant by the government, its cancellation is a matter between the
grantor and the grantee.30 Clearly then, petitioner has no standing at all to question the validity
of Amelitas title. It follows that he cannot recover the property because, to begin with, he has not
shown that he is the rightful owner thereof.
Anent petitioners contention that it was the intention of Fermina for Amelita to hold the property
in trust for him, we held that if this was really the intention of Fermina, then this should have
been clearly stated in the Deed of Self-Adjudication executed in 1983, in the Deed of Donation
executed in 1984, or in a subsequent instrument. Absent any persuasive proof of that intention
in any written instrument, we are not prepared to accept petitioners bare allegation concerning
the donors state of mind.
WHEREFORE, the appealed decision of the Court of Appeals in CA-G.R. CV No. 54624 is
hereby AFFIRMED. The complaint filed by herein petitioner against respondent in Civil Case
No. CEB-14191 is declared properly DISMISSED. Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, De Leon, Jr., and Corona, JJ., concur.
Endnotes:
1
Rollo, p. 24.
2
May 23, 1983 in the CA decision.
3
Records, pp. 47-48.
4
Rollo, p. 24.
5
Records, p. 47.
6
Rollo, p. 24.
7
Ibid.
8
Ibid.
9
June 23, 1993 in the CA decision.
10
CEB-15191 in other parts of the records.
11
Deed of Donation, Exh. C, Records, pp. 180-181.
12
Rollo, p. 24.
13
Id. at 24-25.
14
Id. at 25.
15
Id. at 49.
16
Id. at 30-31.
17
Id. at 32.
18
Id. at 9-10.
19
Exh. 4, Records p. 56.
20
Exh. 1, Records, pp. 47-48.
21
Exhs. 4-6, Records, pp. 57-65.
22
Exh. C, Records, pp. 180-181.
23
TSN, July 26, 1993, p. 11.
24
Rollo, p. 10.
25
Cacho vs. Court of Appeals, G.R. No. 123361, 269 SCRA 159, 172 (1997).
26
Chan vs. Court of Appeals (Special Seventh Division), G.R. No. 118516, 298 SCRA 713, 729 (1998).
27
Egao vs. Court of Appeals, G.R. No. 79787, 174 SCRA 484, 492 (1989).
28
Urquiaga vs. Court of Appeals, G.R. No. 127833, 301 SCRA 738, 745 (1999).
29
Supra, note 27 at 492-493.
30
De Ocampo vs. Arlos, G.R. No. 135527, 343 SCRA 716, 728 (2000).
4. Caro vs. Sucaldito – 458 SCRA 695
SECOND DIVISION
[G.R. NO. 157536 : May 16, 2005]
MELCHOR CARO, Petitioner, v. SUSANA SUCALDITO, Respondent.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorariunder Rule 45 of the Rules of Court, assailing the
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 45503, affirming the dismissal of Civil
Case No. 15529 by the Regional Trial Court (RTC) of Iloilo City, Branch 39, as well as the
resolution denying the motion for reconsideration thereof.
The antecedent facts are as follows:
Gregorio Caro bought a parcel of land known as Assessor's Lot No. 160 from Ruperto Gepilano
as evidenced by a Deed of Sale2 dated October 21, 1953. The said lot was situated
in Sitio Bangyan, Barrio Calaya, Municipality of Nueva Valencia, Iloilo City, consisting more or
less of 17.9849 hectares. Thereafter, Gregorio Caro sold a portion of the said lot to his son
Melchor Caro, consisting of 70,124 square meters, and now identified as Lot No. 4512 of the
Cadastral survey of Nueva Valencia, Pls-775. Father and son executed a Deed of Definite
Sale3 dated January 31, 1973 covering Lot No. 4512.
On August 1, 1974, Melchor Caro applied for a free patent before the Bureau of Lands, District
Land Office No. 6-1, covering the said area of the property which he bought from his father. The
application was, however, opposed by Deogracias de la Cruz. On November 6, 1980, the
Regional Director rendered a Decision4 canceling the said application, thusly:
This is a claim of Deogracias de la Cruz to Lot No. 4512, Pls-775 of Calaya, Nueva Valencia,
Guimaras, covered by the above-noted application of Melchor Caro.
In the investigation, respondent claims preferential rights over the land as he acquired it through
sale from his father Gregorio Caro who had likewise bought the land from Ruperto Cepellano
(sic) in 1953. On the other hand, protestant De la Cruz testified that the land in controversy was
bought by him from Cipriano Gallego in 1965; that he thereafter occupied, possessed and
improved the land by planting coconut trees; and that in 1968 he was forcibly driven out by
Gregorio Caro from the land in question.
Verification of the records disclosed that the land which was actually sold to Gregorio Caro by
Ruperto Gepellano (sic) is Assessor's Lot No. 160. The description and physical identity of Lot
No. 160 is basically different and distinct from Lot No. 4512, the land in question. This could be
clearly seen in the Certified True Copy of the Sketch Plan from the Assessor's Office of
Assessor's Lot No. 160 and the Sketch Plan marked as Exhibit 9 of the Respondent-Applicant.
It has been established that Assessor's Lot No. 160 corresponds to Lot No. 4511 and not Lot
No. 4512 claimed by the protestant. Moreover, Ruperto Cepellano (sic) in his affidavit testified
that what he sold to Gregorio Caro is a land distinct and different from the land in question.
IN VIEW OF THE FOREGOING FINDINGS, it is ordered that the F.P.A. No. (VI-1)8548 of
applicant-respondent Melchor Caro be, as hereby it is, cancelled. Protestant Deogracias de la
Cruz if qualified, is given one hundred twenty (120) days from the finality of this decision to file
an appropriate public land application otherwise he shall lose his preferential right thereto.
SO ORDERED.5
Caro filed a notice of appeal before the Regional Land Office in Iloilo City, docketed as MNR
Case No. 5207. However, the appeal was dismissed in an Order6 dated June 29, 1982, on the
ground of failure to file an appeal memorandum within the reglementary period therefor.
On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No. 4512, filed an Application for
a Free Patent7 covering the said lot, and was issued Free Patent No. 597599. Consequently, the
Register of Deeds of Iloilo City issued Original Certificate of Title (OCT) No. F-27162 in her
favor. Sucaldito then filed a Petition for Writ of Possession8 before the RTC of Iloilo City, which
was granted in an Order9 dated May 7, 1984.
Thereafter, on February 20, 1984, Caro filed a Complaint10 against Sucaldito for "Annulment of
Title, Decision, Free Patent and/or Recovery of Ownership and/or Possession with Damages"
before the RTC of Iloilo City. He later filed an amended complaint,11 alleging that he was the
owner of the subject lot, and had been in possession of the same "since 1953 and/or even prior
thereto in the concept of owner, adversely, openly, continuously and notoriously." He further
alleged that the said lot had been declared for tax purposes in his name and that of his
predecessors-in-interest, and that the corresponding land taxes had been paid therefor. He
claimed that Assessor's Lot No. 160 had actually been divided into two lots, namely, Lot No.
4511 and Lot No. 4512; Sucaldito had actually been claiming Lot No. 989 (Lot No. 4512), which
was located two kilometers away. He lamented that despite the overwhelming evidence proving
his ownership and possession of the said property, the Bureau of Lands did not award it to him.
Caro further alleged that since the issuance of the free patent over the subject lot in favor of
Sucaldito was wrongful and fraudulent, she had no right whatsoever over the subject lot. Hence,
as a "trustee of a constructive trust," she was obliged to return the same to him as the lawful
owner. The complaint contained the following prayer:
WHEREFORE, it is prayed that judgment be rendered:
1. Ordering the annulment and voiding of the decision of the Bureau of Lands, the free patent
and the Original Certificate of Title No. F-27162 or in the alternative;
2. Ordering defendant to reconvey the ownership and in the event she wrests possession from
plaintiff then, also the possession of Lot 4512 PLS-775 of Nueva Valencia, Guimaras Cadastre,
back to plaintiff;
3. Declaring plaintiff as the lawful owner and possessor of Lot 4512 PLS-775 of Nueva Valencia,
Guimaras Cadastre and ordering the issuance of a free patent or a torrens title in favor of
plaintiff;
4. Ordering defendant to pay the plaintiff P50,000.00 as moral damages, P2,000.00 as

attorney's fees and P2,000.00 as expenses on litigation plus exemplary damages in an amount
at the discretion of this Court.
Plaintiff further prays for such other relief just and equitable in the premises.12
In her answer with counterclaim, Sucaldito interposed, as a special affirmative defense, the fact
that she intervened in the proceedings on Caro's application for a free patent over Lot No. 4512
before the Bureau of Lands having bought the subject land from De la Cruz. Moreover, contrary
to the allegations of the petitioner, Lot No. 989 and Lot No. 4512 were one and the same lot, as
per the findings of the Bureau of Lands.
The parties thereafter presented evidence to prove their respective claims. In a Decision13 dated
December 7, 1993, the trial court ruled in favor of the respondent and dismissed the petitioner's
complaint. The dispositive portion reads:
WHEREFORE, premises considered, the complaint filed by plaintiff is dismissed. The
counterclaim of defendant which is merely the result of the filing of the complaint, is likewise
dismissed.
Costs against the plaintiff.
SO ORDERED.14
Citing the case of Maximo v. Court of First Instance of Capiz, Br. III,15 the trial court ruled that
Caro had no personality to file the action for the annulment of the free patent issued in favor of
Sucaldito, which could only be brought by the Solicitor General. It held that "an applicant for a
free patent who is not the owner of a parcel of land cannot bring an action in court to recover the
land, for the court may not usurp the authority of the Director of Lands and the Secretary of
Agriculture to dispose lands of the public domain through administrative proceedings under the
Public Land Act,"16 or Commonwealth Act No. 141, as amended. The trial court further stressed
that the remedy of a rival-applicant for a free patent over the same land was through
administrative channels, not judicial, because even if the oppositor succeeds in annulling the
title of the applicant, the former does not thereby become the owner of the land in dispute.17
The trial court also declared that contrary to Caro's claims, the evidence clearly showed that Lot
No. 4512, with an area of 70,677 square meters, was not included in Assessor's Lot No. 160,
thus:
Assessor's Lot 160 is Cadastral Lot 4511, which has an original area of around 17 hectares,
more or less, later on, increased to 21 hectares. If we add Lot 4512 to Lot 4511 following the
contention of the plaintiff, then the area would be more than 28 hectares. Thus, belying the
claim of plaintiff that Lot 4512 was formerly a part of Assessor's Lot 160.
The contention of the plaintiff that the defendant is claiming Lot 989 which is owned by Felix
Galabo and located at Brgy. Olacon, is not well taken, because the identification of the lot as
stated in the tax declaration is not binding and conclusive. What is binding and conclusive is
what is stated in the title of the land and its technical description. In the technical description as
found in the title of the defendant [Sucaldito], it is clearly stated therein that the lot is Lot 4512
and is located at Brgy. Calaya and not Brgy. Olacon, Nueva Valencia, Guimaras.18
Aggrieved by the trial court's ruling, Caro elevated the case to the CA on the following grounds:
THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO PERSONALITY TO

BRING THE ACTION;
II
THE COURT A QUO ERRED IN RULING THAT EVEN IF THE PLANTIFF HAS THE
PERSONALITY TO BRING THE ACTION STILL HE CANNOT RECOVER THE LOT IN
QUESTION, CAD. LOT NO. 4512;
III
THE COURT ERRED IN NOT ORDERING THE DEFENDANT TO RECONVEY THE LAND IN
QUESTION TO PLAINTIFF AND TO PAY DAMAGES.19
The CA dismissed the petition in its Decision20 dated July 31, 2002. The appellate court agreed
with the ruling of the RTC that the petitioner had no personality to file the action under Section
101 of Commonwealth Act No. 141, considering further that he was a mere applicant for a free
patent. Citing several cases,21 the appellate court ruled that the findings of fact made by
administrative agencies which are supported by substantial evidence must be respected,
particularly where the question demands the exercise of sound administrative discretion
requiring special knowledge and experience.22
Caro filed a motion for reconsideration of the said decision, which the appellate court denied in
a Resolution23 dated February 7, 2003.
Caro, now the petitioner, assails the ruling of the appellate court on the following grounds:
THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR IN HOLDING THAT

PETITIONER HAS NO LEGAL PERSONALITY TO FILE THIS ACTION;
THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE APPEAL

INTERPOSED BY PETITIONER ON THE GROUND THAT ONLY THE SOLICITOR GENERAL
CAN FILE AN ACTION FOR RECONVEYANCE OF PROPERTY ACQUIRED BY PATENT.24
The petitioner insists that contrary to the ruling of the CA, he has the legal personality to bring
and institute the present action against the respondent, considering that title issued on the basis
of a patent is annullable on the ground of fraud. Furthermore, the one-year period within which
to file an action to cancel a torrens title under Section 32 of Presidential Decree No. 1529 does
not apply where the registered owner, or the successor-in-interest, knew that the property
described in the title actually belongs to another, as in this case. The petitioner cites Vital v.
Anore, et al.25 to bolster his claim. The petitioner also cites Director of Lands v. Abanilla26 where
the Court stressed that any false statement in the application, which is an essential condition of
the patent or title under Section 91 of Commonwealth Act No. 141, "shall ipso facto produce the
cancellation of the concession, title or permit granted."
In her comment, the respondent points out that the decision of the Bureau of Lands itself would
show that the petitioner is not the true and lawful owner of the subject lot; as such, the argument
that he has the legal personality to file the action for annulment of patent based on constructive
trust is untenable. The respondent further contends that the CA did not err in upholding the
ruling of the RTC.
The petitioner merely reiterated his previous arguments in his Reply dated December 30, 2003.
The Court agrees with the ruling of the RTC and the CA, and holds that the petitioner has no
personality to file a suit for reconveyance of the subject property.
The Court notes that the petitioner's complaint before the RTC prays for the annulment of the
free patent issued in the respondent's favor. Considering that the ultimate relief sought is for the
respondent to "return" the subject property to him, it is in reality an action for reconveyance.
In De Guzman v. Court of Appeals,27 the Court held that "[t]he essence of an action for
reconveyance is that the decree of registration is respected as incontrovertible but what is
sought instead is the transfer of the property which has been wrongfully or erroneously
registered in another person's name, to its rightful owner or to one with a better right."28 Indeed,
in an action for reconveyance filed by a private individual, the property does not go back to the
State.29
Reversion, on the other hand, is an action where the ultimate relief sought is to revert the land
back to the government under the Regalian doctrine. Considering that the land subject of the
action originated from a grant by the government, its cancellation is a matter between the
grantor and the grantee.30
Under Section 2, Rule 3 of the Rules of Court,31 every action must be prosecuted or defended in
the name of the real party-in-interest, or one "who stands to be benefited or injured by the
judgment in the suit." Corollarily, legal standing has been defined as a personal and substantial
interest in the case, such that the party has sustained or will sustain direct injury as a result of
the challenged act. Interest means a material interest in issue that is affected by the questioned
act or instrument, as distinguished from a mere incidental interest in the question involved.32
Clearly then, a suit filed by one who is not a party-in-interest must be dismissed. In this case,
the petitioner, not being the owner of the disputed property but a mere applicant for a free
patent, cannot thus be considered as a party-in-interest with personality to file an action for
reconveyance. The Court, citing several of its holdings, expounded on this doctrine in Tankiko v.
Cezar33 as follows:
'Thus, in Lucas v. Durian [102 Phil. 1157 (1957)], the Court affirmed the dismissal of a
Complaint filed by a party who alleged that the patent was obtained by fraudulent means and,
consequently, prayed for the annulment of said patent and the cancellation of a certificate of
title. The Court declared that the proper party to bring the action was the government, to which
the property would revert. Likewise affirming the dismissal of a Complaint for failure to state a
cause of action, the Court in Nebrada v. Heirs of Alivio [104 Phil. 126 (1958)] noted that the
plaintiff, being a mere homestead applicant, was not the real party-in-interest to institute an
action for reconveyance.'
...
Verily, the Court stressed that " - [i]f the suit is not brought in the name of or against the real
party-in-interest, a motion to dismiss may be filed on the ground that the complaint states no
cause of action [Travel Wide v. CA, 199 SCRA 205, 209 (1991), per Cruz, J. See also Suguister
v. Tamayo, 176 SCRA 579, August 21, 1989]. In fact, a final judgment may be invalidated if the
real parties-in-interest are not included. This was underscored by the Court in Arcelona v.
CA [280 SCRA 20, October 2, 1997], in which a final judgment was nullified because
indispensable parties were not impleaded.
In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore,
not being the owners of the land but mere applicants for sales patents thereon, respondents
have no personality to file the suit. Neither will they be directly affected by the judgment in such
suit.34
In De la PeÃ±a v. Court of Appeals,35 the Court, in dismissing the petitioner's imputation of fraud
in securing a free patent and title over a parcel of land, declared that reconveyance is a remedy
granted only to the owner of the property alleged to be erroneously titled in another's
name.36 The Court further expounded:
Persons who have not obtained title to public lands could not question the titles legally issued by
the State [Reyes v. Rodriguez, 62 Phil. 771, 776 (1936)]. In such cases, the real party-in-
interest is the Republic of the Philippines to whom the property would revert if it is ever
established, after appropriate proceedings, that the free patent issued to the grantee is indeed
vulnerable to annulment on the ground that the grantee failed to comply with the conditions
imposed by the law. Not being an applicant, much less a grantee, petitioner cannot ask for
reconveyance.37
In VSC Commercial Enterprises, Inc. v. Court of Appeals,38 where the private respondents
therein were mere lessees of the property in question, the Court ruled that as mere lessees,
they had "no present substantial and personal interest with respect to issues involving
ownership of the disputed property." The Court went on to declare:
'The only interest they have, in the event the petitioner's title over the subject property is
cancelled and ownership reverts to the State, is the hope that they become qualified buyers of
the subject parcel of land. Undoubtedly, such interest is a mere expectancy. Even the private
respondents themselves claim that in case of reversion of ownership to the State, they only
have "pre-emptive rights" to buy the subject property; that their real interest over the said
property is contingent upon the government's consideration of their application as buyers of the
same. It is settled that a suit filed by a person who is not a party-in-interest must be dismissed.39
In fact, Section 101 of Commonwealth Act No. 141 states '
Section 101. All 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 Commonwealth [now Republic] of the Philippines.
This provision was applied and discussed in Sumail v. Judge of the Court of First Instance of
Cotabato, et al.,40 a case on all fours with the present one, as follows:
Under Section 101 of the above reproduced, only the Solicitor General or the officer acting in his
stead may bring the action for reversion. Consequently, Sumail may not bring such action or
any action which would have the effect of cancelling a free patent and the corresponding
certificate of title issued on the basis thereof, with the result that the land covered thereby will
again form part of the public domain. Furthermore, there is another reason for withholding legal
personality from Sumail. He does not claim the land to be his private property. In fact, by his
application for a free patent, he had formally acknowledged and recognized the land to be a part
of the public domain; this, aside from the declaration made by the cadastral court that lot 3633
was public land. Consequently, even if the parcel were declared reverted to the public domain,
Sumail does not automatically become the owner thereof. He is a mere public land applicant like
others who may apply for the same.
To reiterate, the petitioner is not the proper party to file an action for reconveyance that would
result in the reversion of the land to the government.41 The petitioner has no personality to
"recover" the property as he has not shown that he is the rightful owner thereof.42
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Decision of
the Court of Appeals in CA-G.R. CV No. 45503 and the Resolution dated February 7, 2003 are
AFFIRMED.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
Endnotes:
1
Penned by Associate Justice Roberto A. Barrios, with Associate Justices Bienvenido L. Reyes
and Edgardo F. Sundiam, concurring.
2
Records, p. 301.
3
Id. at 302.
4
Id. at 432.
5
Records, p. 432.
6
Id. at 447-449.
7
Id. at 452.
8
Id. at 458-460.
9
Id. at 461-463.
10
Records, pp. 1-4.
11
Id. at 16-20.
12
Records, p. 20.
13
Id. at 523-533.
14
Id. at 533.
15
G.R. No. 61113, 21 February 1990, 182 SCRA 420.
16
CA Rollo, p. 32.
17
Id. at 34.
18
CA Rollo, pp. 35-36.
19
Id. at 45.
20
Id. at 80-87.
Floralde v. Court of Appeals, 337 SCRA 371; Crusaders Broasting System, Inc. v. National
21
Telecommunications Commission, 332 SCRA 819; and Ocampo v. Commission on Elections,

325 SCRA 636. (Id. at 86).
22
Ibid.
23
Rollo, pp. 55-56.
24
Id. at 26.
25
90 Phil. 855 (1952).
26
G.R. No. L-26324, 31 August 1983, 124 SCRA 358.
27
442 Phil. 534 (2002).
28
Id. at 543. (Citations omitted).
Section 122 of the Land Registration Act; See also Republic of the Philippines v. Heirs of
29
Angeles, 439 Phil. 349 (2002).
30
De Guzman v. Court of Appeals, supra.
31
The provision reads in full:
Sec. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit. Unless otherwise authorized by law or these Rules, every
action must be prosecuted or defended in the name of the real party in interest.
Tichangco v. Enriquez, G.R. No. 150629, 30 June 2004, 433 SCRA 324, citing Velarde v.
32
Social Justice Society, 428 SCRA 283 (2004).
33
G.R. No. 131277, 2 February 1999, 302 SCRA 559.
34
Id. at 569-570.
35
G.R. No. 81827, 28 March 1994, 231 SCRA 456.
36
Id. at 461.
37
Supra.
38
G.R. No. 121159, 16 December 2002, 394 SCRA 74.
39
Id. at 79-80. (Citations omitted).
40
96 Phil. 946 (1955).
41
Abejaron v. Besa, Jr., 411 Phil. 552 (2001).
42
De Ocampo v. Arlos, G.R. No. 135527, 19 October 2000, 343 SCRA 716.
5. Manese vs Sulti, G.R. No. 164024, January 29, 2009
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164024 January 29, 2009
LUIS B. MANESE, ANTONIA ELLA, HEIRS OF ROSARIO M. ORDOñEZ, represented by

CESAR ORDOñEZ, SESINANDO PINEDA and AURORA CASTRO, Petitioners,
vs.
SPOUSES DIOSCORO VELASCO and GLICERIA SULIT, MILDRED CHRISTINE L. FLORES
TANTOCO and SYLVIA L. FLORES, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision1 dated April 28, 2004 and the Resolution2 dated June
22, 2004 of the Court of Appeals in CA-G.R. CV No. 68934. The appellate court had affirmed
the Order3 dated June 15, 2000 of the Regional Trial Court (RTC) of Lucena City, Branch 59, in
Civil Case No. 99-129, dismissing the petitioners’ complaint for annulment of title and damages
against the respondents.
The subject matter of the controversy is the alleged foreshore land with an area of about 85,521
square meters, fronting Tayabas Bay in Guisguis, Sariaya, Quezon.4
On October 13, 1971, respondent Dioscoro Velasco was issued Original Certificate of Title No.
P-167835 covering said property by the Register of Deeds of Quezon Province, based on
Homestead Patent No. 133300. On March 22, 1977, Velasco sold the property to respondent
Sylvia Flores, and Transfer Certificate of Title (TCT) No. T-1609236 was issued in her name. On
January 4, 1981, the property was sold by Flores to Mildred Christine Flores-Tantoco and TCT
No. T-1777357 was issued in the latter’s name. Later, the property was divided into seven lots
and TCT Nos. T-177777, T-177778, T-177779, T-177780, T-177781, T-177782, and T-177783
were issued in the name of Mildred Christine Flores-Tantoco. On January 18, 1992, the lots
covered by TCT Nos. T-1777808 and T-1777819 were sold back to Flores such that TCT No. T-
27811210 and TCT No. 27811011 were issued in her name.
Adjacent and contiguous to the alleged foreshore land is the agricultural land owned by
petitioners.
On August 31, 1999, the petitioners filed a Complaint12 for Annulment of Title and Damages
against respondents before the RTC of Lucena City. They alleged that the issuance of the
homestead patent and the series of transfers involving the same property were null and void.
They further alleged that they applied for lease of the foreshore land and the government had
approved in their favor Foreshore, Reclaimed Land or Miscellaneous Lease Application.
Petitioners claimed that they were in open, continuous, exclusive and notorious possession and
use of said foreshore land since 1961. They stated that they had introduced improvements
thereon and planted coconut seedlings (which had grown up into coconut trees) as well as other
fruit-bearing trees and plants. They added that they had subleased the land to several tenants.
Petitioners averred that Dioscoro Velasco was not qualified to become a grantee of a
homestead patent since he never occupied any portion nor introduced any improvements on the
land. They claimed that Velasco was issued a homestead patent because he committed fraud,
misrepresentation, and falsification in connivance with employees of the Bureau of Lands. They
argued that the sale between Velasco and Flores was invalid because it was not approved by
the Secretary of Agriculture and Natural Resources as required under Commonwealth Act No.
141, otherwise known as "The Public Land Act."13 Hence, they claimed that the sale by Flores to
Tantoco was likewise invalid.
On December 2, 1999, respondents moved to dismiss14 the complaint on the following grounds:
(1) petitioners do not have the legal personality to file the complaint since the property forms
part of the public domain and only the Solicitor General could bring an action for reversion or
any action which may have the effect of canceling a free patent and the corresponding
certificate of title issued on the basis of the patent; (2) the sale of the property by Velasco to
Flores is valid even without approval of the Secretary of Agriculture and Natural Resources as
the required approval may be obtained after the sale had been consummated; (3) the certificate
of title issued to Velasco can no longer be reviewed on the ground of fraud since a homestead
patent registered in conformity with the provisions of Act No. 49615 partakes of the nature of a
certificate issued in a judicial proceeding and becomes indefeasible and incontrovertible upon
the expiration of one year from its issuance; and (4) petitioners’ action is barred by laches since
for almost 28 years, they failed to assert their alleged right over said property.
On June 15, 2000, the RTC granted the Motion to Dismiss and ruled that petitioners do not have
the legal personality to file the complaint. It held that the government, not petitioners, is the real
party in interest and, therefore, only the Solicitor General may bring the action in court. The
dispositive portion of the RTC’s Order states:
WHEREFORE, the instant Motion is granted and the plaintiffs[’] complaint dismissed.
SO ORDERED.16
The Court of Appeals affirmed the RTC’s Order, disposing as follows:
WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit. The Order
dated June 15, 2000 of the Regional Trial Court (RTC), Branch 59, Lucena City dismissing
plaintiffs-appellants’ complaint for annulment of title with damages is AFFIRMED and UPHELD.
SO ORDERED.17
Hence, this petition.
Petitioners raise the following issue for our resolution:
[WHETHER OR NOT] THE COURT OF APPEALS ERRED IN DISMISSING THE APPEAL AND
IN AFFIRMING AND UPHOLDING THE ORDER OF DISMISSAL OF THE REGIONAL TRIAL
COURT OF LUCENA, BRANCH 59 THAT THE PETITIONERS DO NOT HAVE THE LEGAL
PERSONALITY TO INSTITUTE THE COMPLAINT FOR CANCELLATION OF OCT NO. P-
16789 ISSUED PURSUANT TO HOMESTEAD PATENT NO. 133300 IN THE NAME OF
DIOSCORO VELASCO AND THE TRANSFER CERTIFICATES OF TITLES SUBSEQUENTLY
ISSUED IN FAVOR OF S[Y]LVIA L. FLORES AND MILDRED CHRISTINE FLORES-
TANTOCO.18
Stated simply, the sole issue in this case is whether or not petitioners are real parties in interest
with authority to file a complaint for annulment of title of foreshore land.
Petitioners concede that under Section 101 of Commonwealth Act No. 141,19 only the Solicitor
General or the officer acting in his stead may institute all actions for reversion in the proper
courts. However, they invoke the principle of equity, arguing that equity and social justice
demand that they be deemed real parties in interest and given a right to present evidence
showing that the land titles of respondents are void.20 Respondents, on the other hand, reiterate
that petitioners are not real parties in interest because they do not represent the State.21
After due consideration of the submissions and arguments of the parties, we are in agreement
that the instant petition lacks merit.
Section 2, Rule 3 of the 1997 Rules of Civil Procedure provides:
SEC. 2. Parties 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. Unless
otherwise authorized by law or these Rules, every action must be prosecuted or
defended in the name of the real party in interest. (Emphasis supplied.)
It is admitted by both parties that the subject matter of controversy is foreshore land, which is
defined as that strip of land that lies between the high and low water marks and is alternatively
wet and dry according to the flow of the tides. It is that part of the land adjacent to the sea,
which is alternately covered and left dry by the ordinary flow of tides. It is part of the alienable
land of the public domain and may be disposed of only by lease and not otherwise. Foreshore
land remains part of the public domain and is outside the commerce of man. It is not capable of
private appropriation.22
Section 101 of Commonwealth Act No. 141 provides:
All 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.
In all actions for the reversion to the Government of lands of the public domain or improvements
thereon, the Republic of the Philippines is the real party in interest. The action shall be instituted
by the Solicitor General or the officer acting in his stead, in behalf of the Republic of the
Philippines.23 Moreover, such action does not prescribe. Prescription and laches will not bar
actions filed by the State to recover its property acquired through fraud by private individuals.24
Based on the foregoing, we rule that petitioners are not the real parties in interest in this case.
We therefore affirm the dismissal by the trial court of the complaint and the ruling of the Court of
Appeals that petitioners must first lodge their complaint with the Bureau of Lands in order that
an administrative investigation may be conducted under Section 9125 of The Public Land Act.
As to petitioners’ contention that they should be deemed real parties in interest based on the
principle of equity, we rule otherwise. Equity, which has been aptly described as "justice outside
legality," is applied only in the absence of, and never against, statutory law or judicial rules of
procedure. Positive rules prevail over all abstract arguments based on equity contra legem.26
WHEREFORE, the petition is DENIED. The assailed Decision dated April 28, 2004 and the
Resolution dated June 22, 2004 of the Court of Appeals in CA-G.R. CV No. 68934
are AFFIRMED.
Costs against petitioners.
SO ORDERED.
LEONARDO A. QUISUMBING
Acting Chief Justice
WE CONCUR:
CONCHITA CARPIO MORALES

Associate Justice
DANTE O. TINGA RENATO C. CORONA*

Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO**
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
Footnotes
* Additional member in lieu of Associate Justice Presbitero J. Velasco, Jr. who is abroad
on official business.
** Additional member in lieu of Associate Justice Arturo D. Brion who is on leave.
1
Rollo, pp. 37-42. Penned by Associate Justice Sergio L. Pestaño, with Associate
Justices Roberto A. Barrios and Vicente Q. Roxas concurring.
2
Id. at 44. Penned by Associate Justice Vicente Q. Roxas, with Associate Justices
Roberto A. Barrios and Aurora S. Lagman concurring.
3
Id. at 45-50.
4
Id. at 37.
5
Records, pp. 11-12.
6
Id. at 14.
7
Id. at 17.
8
Id. at 18.
9
Id. at 19.
10
Id. at 22.
11
Id. at 23.
12
Id. at 1-10.
An Act to Amend and Compile the Laws Relative to Lands of the Public Domain,
13
approved on November 7, 1936.
14
Records, pp. 35-37.
An Act to Provide for the Adjudication and Registration of Titles to Lands in the
15
Philippine Islands, enacted on November 6, 1902 and took effect on January 1, 1903.
16
Rollo, p. 49.
17
Id. at 42.
18
Id. at 103.
19
SEC. 101. All 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.
20
Rollo, p. 31.
21
Id. at 118.
Republic v. Court of Appeals, G.R. No. 126316, June 25, 2004, 432 SCRA 593, 598-
22
599.
Ortigas & Company, Limited Partnership v. Ruiz, No. L-33952, March 9, 1987, 148
23
SCRA 326, 339-340, citing The Director of Lands v. Lim, et al., 91 Phil. 912 (1952).
Republic v. Heirs of Felipe Alejaga, Sr., G.R. No. 146030, December 3, 2002, 393
24
SCRA 361, 374.
25
SEC. 91. The statements made in the application shall be considered as essential
conditions and parts of any concession, title, or permit issued on the basis of such
application, and any false statement therein or omission of facts altering, changing, or
modifying the consideration of the facts set forth in such statements, and any
subsequent modification, alteration, or change of the material facts set forth in the
application shall ipso facto produce the cancellation of the concession, title, or permit
granted. It shall be the duty of the Director of Lands, from time to time and whenever he
may deem it advisable, to make the necessary investigations for the purpose of
ascertaining whether the material facts set out in the application are true, or whether
they continue to exist and are maintained and preserved in good faith, and for the
purposes of such investigation, the Director of Lands is hereby empowered to issue
subpoenas and subpoenas duces tecum and, if necessary, to obtain compulsory
process from the courts. In every investigation made in accordance with this section, the
existence of bad faith, fraud, concealment, or fraudulent and illegal modification of
essential facts shall be presumed if the grantee or possessor of the land shall refuse or
fail to obey a subpoena or subpoena duces tecum lawfully issued by the Director of
Lands or his authorized delegates or agents, or shall refuse or fail to give direct and
specific answers to pertinent questions, and on the basis of such presumption, an order
of cancellation may issue out further proceedings.
Republic v. Court of Appeals, G.R. No. 100709, November 14, 1997, 281 SCRA 639,
26
649, citing Causapin v. Court of Appeals, G.R. No. 107432, July 4, 1994, 233 SCRA
615, 625; Zabat, Jr. v. Court of Appeals, No. L-36958, July 10, 1986, 142 SCRA 587,
591.

Escheat or Reversion Proceedings

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Escheat or Reversion Proceedings

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IV.

ESCHEAT OR REVERSION PROCEEDINGS

Republic of the Philippines

G.R. No. 192413 June 13, 2012

Rizal Commercial Banking Corporation, Petitioner,

1,019,514.29, maintained by RCBC in its Ermita Business Center branch.

We quote the narration of facts of the CA as follows:

xxx xxx xxx

xxx xxx xxx

(Emphases, citations, and annotations were omitted.)

The RTC Ruling

upon respondents is a jurisdictional requirement in escheat proceedings. Petitioner contends

is made by publication of a copy of the summons in a newspaper of general circulation in the

by advertisement, as publication is considered a general and constructive notice to all persons

An ordinary check refers to a bill of exchange drawn by a depositor (drawer) on a bank

MARIA LOURDES P. A. SERENO

ARTURO D. BRION JOSE PORTUGAL PEREZ

of California, supra note 8. See generally Roth v. Delano, supra.

168; International Corporate Bank v. Gueco, 404 Phil. 353 (2001).

2. Republic vs CA & Solano, G.R. No. 143483, January 31, 2002

G.R. No. 143483 January 31, 2002

REPUBLIC OF THE PHILIPPINES represented by the REGISTER OF DEEDS OF PASAY

And Article 1456, to wit:

insofar as it concerns the Court's discussion on who is an "interested party" in an escheat

A judgment in escheat proceedings when rendered by a court of competent jurisdiction is

Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

3. Alvarico vs Sola R. No. 138953. June 6, 2002

[G.R. No. 138953. June 6, 2002

CASTORIO ALVARICO, Petitioner, vs. AMELITA L. SOLA, Respondent.

The facts of this case are as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and

Costs against plaintiff-appellee.

Petitioner sought reconsideration, but it was denied by the CA.17 cräläwvirtualibräry

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR, REFLECTIVE OF

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN APPLYING ON

THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN ENUNCIATING

Bellosillo, (Chairman), Mendoza, De Leon, Jr., and Corona, JJ., concur.

[G.R. NO. 157536 : May 16, 2005]

MELCHOR CARO, Petitioner, v. SUSANA SUCALDITO, Respondent.

CALLEJO, SR., J.:

The antecedent facts are as follows:

WHEREFORE, it is prayed that judgment be rendered:

4. Ordering defendant to pay the plaintiff P50,000.00 as moral damages, P2,000.00 as

Costs against the plaintiff.

THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO PERSONALITY TO

THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR IN HOLDING THAT

THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE APPEAL

In fact, Section 101 of Commonwealth Act No. 141 states '

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Telecommunications Commission, 332 SCRA 819; and Ocampo v. Commission on Elections,

Angeles, 439 Phil. 349 (2002).

Social Justice Society, 428 SCRA 283 (2004).

Republic of the Philippines

G.R. No. 164024 January 29, 2009

LUIS B. MANESE, ANTONIA ELLA, HEIRS OF ROSARIO M. ORDOñEZ, represented by

The Court of Appeals affirmed the RTC’s Order, disposing as follows:

Hence, this petition.

Petitioners raise the following issue for our resolution:

Section 101 of Commonwealth Act No. 141 provides:

Costs against petitioners.

CONCHITA CARPIO MORALES