CANTILLON, Lissy Ann H.

Civil Law Review I

CASE DIGEST No. 9

DOCTRINE: Bad faith; a landowner is considered in bad faith if he does not oppose the
unauthorized construction thereon despite knowledge of the same. It does not, however,
state what form such opposition should take.

Bank of the Philippine Islands vs. Vicente Victor C. Sanchez; G.R. No. 179518 (J.
Velasco, Jr.) (November 19, 2014)

FACTS:
Vicente Victor C. Sanchez Kenneth Nereo Sanchez and Imelda C. V da. De Sanchez owned a
parcel of land located at No. 10 Panay A venue, Quezon City consisting of 900 square
meters. The property was registered under Transfer Certificate of Title No. (TCT) 156254
of the Registry of Deeds of Quezon City.

On October 10, 1988, Jesus V. Garcia, doing business under the name TransAmerican Sales
and Exposition, Inc. (TSEI), wrote a letter to Vicente offering to buy the Subject Property for
One Million Eight Hundred Thousand Pesos (₱1,800,000) under terms and conditions. The
offer was good for only seven (7) days. The period elapsed with the parties failing to come
to an agreement.

Sometime in the third week of October 1988, Felisa Yap (Yap), the widow of Kenneth Nereo
Sanchez, and Garcia had a meeting at the Quezon City Sports Club wherein the parties
agreed to the sale of the subject property under terms and conditions.

Pursuant to this agreement, Yap turned over to Garcia the original owner’s copy of TCT
156254, the copy of the filed Application for Restitution of Title to the property, and copies
of all receipts for the payment of real estate taxes on the property,while Garcia paid Yap
50,000 as earnest money.

Afterwards, Yap required the occupants of the subject property to vacate the same.
Immediately after it was vacated, Garcia, without Yap’s knowledge and consent, took
possession of the lot and installed his own caretaker thereon with strict instructions not to
allow anyone to enter the property. Yap later learned that Garcia had also demolished the
house on the property and advertised the construction and sale of "Trans American
Townhouse V" thereon. The foregoing developments notwithstanding and despite
numerous demands, Garcia failed to pay the balance of the purchase price as agreed upon.
Then, on December 5, 1988, Yap was informed that the checks representing the purchase
price of the subject property were ready but that Vicente must pick up his checks
personally. On December 8, 1988, Vicente came to Manila from Laguna and proceeded to
Garcia’s office to get the checks. However, out of the six (6) checks that were presented to
them, four (4) of them were post-dated, further delaying their overdue payment. In order
to properly document such check payments, the parties executed an Agreement dated
December 8, 1988
In the meantime, on February 19, 1989, Yap and Vicente discovered that Garcia posted an
advertisement inthe classified ads of the Manila Bulletin offering to sell units at the Trans
American Townhouse V situated at the subject property.

Thus, on February 27, 1989, Atty. Yap wrote the Housing and Land Use Regulatory Board
(HLURB) informing the latter of the existing public advertisement of TSEI offering for sale
townhouses illegally constructed on the subject property and urging the HLURB to cancel
any existing permit or license to sell the said townhouse units or to deny any application
therefor.

On March 17, 1989, the HLURB issued a Cease and Desist Order (CDO) enjoining TSEI and
Garcia from further developing and selling the townhouses. 

Then, on August 21, 1989, Yap filed a formal complaint with the Office of the City Building
Official of Quezon City. The complaint was set for hearing on August 30, 1989 with an order
for Garcia and TSEI to produce their building permit. However, both Garciaand TSEI failed
to attend the said hearing.

On July 14, 2004, the RTC rendered a Decision in favor of the Sanchezes as plaintiffs

Upon appeal by the intervenors-appellants, the CA rendered, on November 6, 2006, the

assailed Decision affirming the RTC Decision with modifications

ISSUE:

Whether or not Sanchez negligent and acted in bad faith

HELD:

No. It must be noted that defendant Garcia committed himself that, upon full payment of
the purchase price, he would personally undertake the preparation and execution of the
Extrajudicial Settlement with Sale as well as the reconstitution of the original copy of TCT
No. 156254 on file with the Register of Deeds of Quezon City. Thus, it was inevitably for
plaintiff-appellant/appellee Felisa Yap to surrender to defendant Garcia the owner’s
duplicate copy of the aforesaid title as well as the other documents pertinent for such
documentation and reconstitution. To Our mind, this does not constitute negligence on the
part of the plaintiffs appellants/appellees as the surrender was purely to comply with and
in pursuance to their earlier agreement with the defendants.
Negligence is the omission of that diligence required by the nature of the obligation and
corresponds to the circumstances of the persons, of the time and of the place. The
Sanchezes could not be found negligent as they relied upon the assurances of Garcia after
their oral agreement to sell was negotiated. The Sanchezes trusted Garcia and entrusted to
him—per their oral agreement—the owner’s original duplicate of TCT 156254 in order to
facilitate the documentation required under the terms of agreement for the sale of the
subject lot. It must be pointed out that the parties in this case were not dealing on equal
terms.The Sanchezes had insufficient knowledge in the legalities of transacting with real
estate. This is evidenced by the fact that they already considered an oral agreement for the
sale of real property as sufficient. Had they been knowledgeable in such matters, they
would have known that such oral agreement is unenforceable and instead sought the
production of a written agreement. Moreover, the facts show that the Sanchezes did not
simply surrender possession of the property to TSEI and Garcia, but that such possession
was taken from them without their consent.

Article 453 of the Civil Code relevantly states:

Article 453. If there was bad faith, not only on the part of the person who built,
planted or sowed on the land of another, but also on the part of the owner of
such land, the rights of one and the other shall be the same as though both had
acted in good faith.

It is understood that there is bad faith on the part of the landowner whenever the act was
done with his knowledge and without opposition on his part The second paragraph of the
provision clearly reads that a landowner is considered in bad faith if he does not oppose
the unauthorized construction thereon despite knowledge of the same. It does not,
however, state what form such opposition should take. The fact of the matter is that the
Sanchezes did take action to oppose the construction on their property by writing the
HLURB and the City Building Official of Quezon City. As a result, the HLURB issued two (2)
Cease and Desist Orders and several directives against Garcia/TSEI which, however, were
left unheeded. In addition, the Sanchezes could not be faulted for not having been able to
enjoin the sale of the townhouses by Garcia and TSEI to the intervenors Sps. Caminas,
Maniwang, Tulagan, and Marquez who bought their townhouse units during the
sameperiod that the Sanchezes were demanding the full payment of the subject lot and
were exercising their right of extrajudicial rescission of the Agreement. As the intervenors
asserted having bought the townhouse units in early 1989, it can be seen that the preselling
was done almost immediately after the Sanchezes and Garcia/TSEI agreed on the terms of
the sale of the subject lot, or shortly after Garcia and TSEI had taken over the property and
demolished the old house built thereon. In either case, the pre-selling already commenced
and was continuing when the two postdated checks amounting to the remaining balance of
₱800,000 bounced. And whenthe Sanchezes informed Garcia and TSEI that they were
rescinding the Agreement in early 1989, the intervenors apparently werealready in the
process of closing their deals with TSEI for the purchase of townhouse units. As to the
transactions between FEBTC and Garcia/TSEI and that between VTCI and Garcia/TSEI, it is
suffice to state that the Sanchezes, despite the actions they undertook, were not aware of
the said dealings.

WHEREFORE, judgment is hereby rendered as follows:

1. Directing the Register of Deeds of Quezon City to cancel Transfer Certificate
ofTitle No. 383697 in the name of Trans American Sales and Exposition, Inc. and to
reinstate Transfer Certificate of Title No. 156254 in the name of the [sic] Kenneth
Nereo Sanchez, Vicente Victor Sanchez and Imelda C. Vda. de Sanchez in its original
status prior to the claim of the intervenors-appellants without need to pay any
registration fee, transfer tax, documentary stamp tax and other expenses in relation
to transfer of title.

2. Granting to the Sanchezes the right to inform the Regional Trial Court of Quezon
City, Branch 89 in Civil Case No. Q-90-4690 within thirty (30) days from date of
finality of decision whether or not they will appropriate the townhouses and
improvements on the lot covered by TCT No. 156254 as their own without need to
pay indemnity therefor pursuant to Article 449 of the Civil Code.

In such a case, the intervenors and all their successors-in-interest shall vacate the
subject property and surrender possession thereof to the Sanchezes within Thirty
(30) Daysfrom notice of their decision.

If the Sanchezes opt for the second option, the defendants or intervenors shall
demolish the townhouses and all other improvements on the property at their own
expense within ninety (90) days from notice of the Sanchezes’ decision. If they failto
do so, the Sanchezes can have the same demolished and the expenses of demolition
shall be charged to the intervenors on a pro rata basis based on the respective areas
of their townhouses.

Finally, if the Sanchezes choose the third option, the case shall be remanded to the
RTC to determine the fair market value of the land at the time of the taking thereof
in 1988 and the intervenors-townhouse owners shall pay such value to the
Sanchezes within Thirty (30) days from the finality of the determination of the RTC
of such fair market value;

3. Declaring the legality and validity of the Extrajudicial Rescission effected by the
plaintiffs on the Contract to Sell on the subject property, covered by TCT No. 156254
in their names;

4. Ordering the defendants and all persons acting on their behalf to return to the
plaintiffs the Owner’s Copy of TCT No. 156254, including all the documents
entrusted to them in consideration of their Contract to Sell;
5. Ordering defendants and all persons, including the intervenors and all persons
claiming rights under them to return and surrender to the plaintiffs the peaceful
possession of the subject property covered by TCT No. 156254 located atNo. 10
Panay Avenue, Quezon City in the event plaintiffs Sanchezes decide to appropriate
the townhouses and improvements for their own without need of payment of
indemnity;
6. Ordering the defendants jointly and severally to pay the plaintiffs the sum of One
Hundred Thousand (₱100,000.00) Pesos, Philippine Currency as and by way of
attorney’s fees;

7. Ordering the defendants jointly and severally to pay the plaintiffs the sum of Two
Hundred Thousand (₱200,000.00) Pesos, Philippine Currency as and by way of
moral damages;

8. Ordering the defendants jointly and severally to pay the plaintiffs the sum of Two
Hundred Thousand (₱200,000.00) Pesos, Philippine Currency as and by way
ofexemplary damages to serve as correction or example for the public good;

9. Ordering the defendants jointly and severally to pay the plaintiffs the sum of Two
HundredNinety Thousand (₱290,000.00) Pesos, representing the depreciated cost
of the plaintiffs’ demolished building per their Agreement (Exhibit "D");

10. Dismissing defendants’ counterclaim as well as intervenors’

counterclaims/complaints and answers in intervention against the plaintiffs;

11. Ordering the plaintiffs to return to the defendants, after deducting the damages
herein awarded, the remaining amount on the sum paid by the defendants on the
subject property;

12. Dismissing the counterclaim of plaintiffs against all intervenors except as

awarded to the former in this Decision;

13. Ordering the defendants jointly and severally to return to intervenors, Jose and
Visitacion Caminas, Reynaldo Maniwang, Generoso "Gener" Tulagan, and VTCI, and
Arturo Marquez, the following sum to wit:

1. CAMINAS - ₱650,000.00 (Absolute Deed of Sale dated 14 March 1989);

2. MANIWANG - ₱700,000.00 (Absolute Deed of Sale dated 22 February
1989);
3. TULAGAN - ₱1.4 Million, representing the following:
3.1 ₱600,000.00 – (Contract To Sell dated 21 February 1989);
3.2 ₱800,000.00 – (Conditional Deed of Sale dated 31 January 1989);
4. VTCI - ₱2.1 Million, representing the following:
4.1 ₱700,000.00 – (Absolute Deed of Sale dated 30 October 1989
– Lot 1-K);
4.2 ₱700,000.00 – (Absolute Deed of Sale dated 30 October 1989
 – Lot 1-I);
4.3 ₱700,000.00 – (Absolute Deed of Sale dated 30 October 1989
– Lot 1-F);
5. MARQUEZ - ₱600,000.00 (Contract To Sell dated 8 March 1989);
6. BPI - Declaring the intervention of the Bank without merit.
respectively, representing the fulland/or partial purchase price of their respective
units, all with six (6) percent interest per annum counted from the time of their
filing of their intervention of judicial demand until fully paid.

With costs against defendants.

DOCTRINE: Quieting of title; For an action to quiet title to prosper, two indispensable
requisites must concur: (1) the plaintiff or complainant has a legal or equitable title or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting a cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.

Herminio M. De Guzman vs. Tabangao Realty Inc.,; G.R. No. 154262 (J. Leonardo-De
Castro (February 11, 2015)

FACTS:
Sometime in 1980, Serafin and Josefino de Guzman purchased on credit oil and lubricating
products from FSPC, but they eventually failed to pay for their credit purchases from FSPC.
FSPC filed a complaint for sum of money against Serafin and Josefino before the RTC of
Manila.

After trial, decision was rendered finding Serafin and Josefino liable to pay their
outstanding obligation to FSPC and the judgment became final and executory. On June 30,
1983, FSPC levied upon a parcel of land covered by TCT # 3531 in the name of Spouses
Serafin & Amelia de Guzman. At the public auction, the sheriff awarded the certificate of
sale to Tabangao Realty as the highest bidder and the same was annotated on TCT # 3531
on April 13, 1988.

The Spouses De Guzman did not redeem the subject property within one year from
registration of the Sheriff’s Certificate of Sale on TCT # 3531. On October 19, 2001, upon
the deaths of Spouses De Guzman, their heirs filed a complaint for quieting of title on the
ground that the Sheriff’s Certificate of Sale has lost its effectivity as it had been terminated
and extinguished by prescription, laches and estoppel, since more than 13 years having
elapsed from its registration on April 13, 1988 without the buyer taking any step to
consolidate its ownership and/or take possession of the property.

ISSUE:

Whether or not the action for quieting of title would prosper

HELD:

No. In Baricuatro, Jr. v. Court of Appeals, the Court described the nature of an action for
quieting of title, thus:
Regarding the nature of the action filed before the trial court, quieting of title is a common
law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title
to real property. Originating in equity jurisprudence, its purpose is to secure "x x x an
adjudication that a claim of title to or an interest in property, adverse to that of the
complainant, is invalid, so that the complainant and those claiming under him may be
forever afterward free from any danger of hostile claim." In an action for quieting of title,
the competent court is tasked to determine the respective rights of the complainant and
other claimants, "x x x not only to place things in their proper place, to make the one who
has no rights to said immovable respect and not disturb the other, but also for the benefit
of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvement she may
desire, to use, and even to abuse the property as he deems best x x x." (Citation omitted.)"

Under the Civil Code, the remedy may be availed of under the following circumstances:

Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in fact invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to
real property or any interest therein.

Art. 478. There may also be an action to quiet title or remove a cloud therefrom
when the contract, instrument or other obligation has been extinguished or has
terminated, or has been barred by extinctive prescription.

Article 477 of the Civil Code further provides that the plaintiff in an action to
quiet title must have legal or equitable title to or interest in the real property,
which is the subject matter of the action, but need not be in possession of said
property.

For an action to quiet title to prosper, two indispensable requisites must concur: (1) the
plaintiff or complainant has a legal or equitable title or interest in the real property subject
of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.

Petitioners’ Complaint in Civil Case No. TM-1118 failed to allege these two requisites for an
action to quiet title.

Petitioners alleged in their Complaint that they were the children and only heirs of the
deceased spouses De Guzman and that the subject property was still registered in spouses
De Guzman’s names under TCT No. 3531. However, these allegations are insufficient to
establish petitioners’ title to the subject property.
Equally notable is the absence of any allegation in the Complaint that Serafin and/or
Josefino, as the judgment obligors in Civil Case No. 120680, or their successors-in-interest,
redeemed the subject property from respondent within the one-year redemption period,
which, reckoned from the date of registration of the Sheriff’s Certificate of Sale on TCT No.
3531 on April 13, 1988, expired on April 13, 1989.

It must be remembered that the period of redemption is not a prescriptive period but a
condition precedent provided by law to restrict the right of the person exercising
redemption. If no redemption is made in the manner and within the period prescribed,
Rule 39, Section 33 of the 1997 Rules of Court, as amended.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor to
the property as of the time of the levy. The possession of the property shall be given to the
purchaser or last redemptioner by the same officer unless a third party is actually holding
the property adversely to the judgment obligor.

Based on the allegations in the Complaint and the applicable rules, respondent was already
substituted to and acquired all the rights, title, interest, and claim of the Spouses De
Guzman to the subject property on April 13, 1989, when the one-year redemption period
expired. Upon the deaths of Amelia de Guzman on January 1, 1997 and her husband Serafin
de Guzman on April 23, 2001, they had no more rights, title, interest, and claim to the
subject property to pass on by succession to petitioners as their heirs.

Upon the execution and delivery of said deed the purchaser, or redemptioner, or his
assignee, shall be substituted to and acquire all the right, title, interest and claim of the
judgment debtor to the property as of the time of the levy, except as against the judgment
debtor in possession, in which case the substitution shall be effective as of the date of the
deed. The possession of the property shall be given to the purchaser or last redemptioner
by the same officer unless a third party is actually holding the property adversely to the
judgment debtor. Under the 1964 Rules of Court, the purchaser, or redemptioner, or his
assignee, shall be substituted to and acquire all the rights, title, interest, and claim of the
judgment debtor to the property only after execution and delivery of the deed of
conveyance. Petitioners point out that respondent has yet to secure such a deed.

WHEREFORE, the Petition is DENIED and the Orders dated March 4, 2002 and May 21,
2002 of the RTC, Branch 23, Trece Martires City in Civil Case No. TM-1118 are AFFIRMED.
DOCTRINE: Cloud on title; Cloud on title consists of: (1) any instrument, record, claim,
encumbrance or proceeding; (2) which is apparently valid or effective; (3) but is in truth
and in fact invalid, ineffective, voidable, or unenforceable; and (4) may be prejudicial to the
title sought to be quieted.

Phil-Ville Development and Housing Corporation vs. Bonifacio; G.R. No. 167391(J.
Villarama, Jr.) (June 8, 2011)

FACTS:
Phil-Ville Development and Housing Corporation is the registered owner of three parcels of
land designated as Lots 1-G-1, 1-G-2 and 1-G-3 of the subdivision plan Psd-1-13-006209,
located in Caloocan City. Prior to their subdivision, the lots were collectively designated as
Lot 1-G of the subdivision plan Psd-2731 registered in the name of Phil-Ville under TCT No.
T-148220. Said parcels of land form part of Lot 23-A of the Maysilo Estate originally
covered by Original Certificate of Title (OCT) No. 994 registered on May 3, 1917 in the
name of Isabel Gil de Sola as the judicial administratrix of the estate of Gonzalo Tuason and
thirty-one (31) others. Phil-Ville acquired the lots by purchase from N. Dela Merced and
Sons, Inc. on July 24, 1984.

Earlier, on September 27, 1961, a group claiming to be the heirs of Maria de la Concepcion
Vidal, a co-owner to the extent of 1-189/1000% of the properties covered by OCT Nos. 982,
983, 984, 985 and 994 of the Hacienda Maysilo, filed a petition with the Court of First
Instance (CFI) of Rizal in Land Registration Case No. 4557. They prayed for the substitution
of their names on OCT No. 994 in place of Maria de la Concepcion Vidal. Said petition was
granted by the CFI in an Order dated May 25, 1962.

Afterwards, the alleged heirs of Maria de la Concepcion Vidal filed a petition for the
partition of the properties covered by OCT Nos. 982, 983, 984, 985 and 994. The case was
docketed as Civil Case No. C-424 in the CFI of Rizal, Branch 12, Caloocan City. On December
29, 1965, the CFI granted the petition and appointed three commissioners to determine the
most equitable division of the properties. Said commissioners, however, failed to submit a
recommendation.

Thirty-one (31) years later, on May 22, 1996, Eleuteria Rivera filed a Supplemental
Motion in Civil Case No. C-424, for the partition and segregation of portions of the
properties covered by OCT No. 994. The Regional Trial Court (RTC), Branch 120, of
Caloocan City, through Judge Jaime D. Discaya, to whom the case was transferred, granted
said motion. In an Order dated September 9, 1996, Judge Discaya directed the segregation
of portions of Lots 23, 28-A-1 and 28-A-2 and ordered the Register of Deeds of Caloocan
City to issue to Eleuteria Rivera new certificates of title over them. Three days later, the
Register of Deeds of Caloocan, Yolanda O. Alfonso, issued to Eleuteria Rivera TCT No. C-
314537 covering a portion of Lot 23 with an area of 14,391.54 square meters. On
December 12, 1996, the trial court issued another Order directing the acting Branch Clerk
to issue a Certificate of Finality of the Order dated September 9, 1996.
Thereafter, one Rosauro R. Aquino filed a petition for certiorari contesting said Order of
December 12, 1996 and impugning the partial partition and adjudication to Eleuteria
Rivera of Lots 23, 28-A-1 and 28-A-2 of the Maysilo Estate. The case was docketed as CA-
G.R. SP No. 43034 at the Court of Appeals.

Nonetheless, on June 5, 1997, petitioner filed a complaint for quieting of title and damages
against the surviving heirs of Eleuteria Rivera Vda. de Bonifacio.

In a Decision dated March 24, 2000, the Caloocan RTC ordered the quieting of Phil-Ville’s
titles over Lots 1-G-1, 1-G-2 and 1-G-3, declaring as valid TCT Nos. 270921, 270922 and
270923 in Phil-Ville’s name. 

On October 17, 2002, the Court of Appeals rendered a Decision  in CA-G.R. CV No. 66547,
dismissing the appeal as regards Danilo Bonifacio and Carmen Bernardino. 
Phil-Ville sought reconsideration of the decision, but the Court of Appeals denied its motion
in the assailed Resolution dated March 15, 2005. Hence, this petition.

ISSUE:

Whether TCT No. C-314537 in the name of Eleuteria Rivera constitutes a cloud over
petitioner’s titles over portions of Lot 23-A of the Maysilo Estate.

HELD:

Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or
uncertainty affecting title to real property. Whenever there is a cloud on title to real
property or any interest in real property by reason of any instrument, record, claim,
encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title. In such action, the
competent court is tasked to determine the respective rights of the complainant and the
other claimants, not only to place things in their proper places, and make the claimant, who
has no rights to said immovable, respect and not disturb the one so entitled, but also for the
benefit of both, so that whoever has the right will see every cloud of doubt over the
property dissipated, and he can thereafter fearlessly introduce any desired improvements,
as well as use, and even abuse the property.

In order that an action for quieting of title may prosper, two requisites must concur: (1) the
plaintiff or complainant has a legal or equitable title or interest in the real property subject
of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite
its prima facie appearance of validity or legal efficacy.
As regards the first requisite, we find that petitioner was able to establish its title over the
real properties subject of this action. Petitioner submitted in evidence the Deed of Absolute
Sale by which it acquired the subject property from N. Dela Merced and Sons, Inc., as well
as copies of OCT No. 994 dated May 3, 1917 and all the derivative titles leading to the
issuance of TCT Nos. 270921, 270922 and 270923 in petitioner’s name.

Be that as it may, the second requisite in an action for quieting of title requires that the
deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy. Article 476 of the Civil Code provides:

Art. 476. Whenever there is a cloud on title to real property or any interest therein,
by reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.

Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or
proceeding; (2) which is apparently valid or effective; (3) but is in truth and in fact invalid,
ineffective, voidable, or unenforceable; and (4) may be prejudicial to the title sought to be
quieted. The fourth element is not present in the case at bar.

While it is true that TCT No. C-314537 in the name of Eleuteria Rivera is an instrument that
appeared to be valid but was subsequently shown to be invalid, it does not cover the same
parcels of land that are described in petitioner’s titles. Foremost, Rivera’s title embraces a
land measuring 14,391.54 square meters while petitioner’s lands has an aggregate area of
only 8,694 square meters. On the one hand, it may be argued that petitioner’s land could be
subsumed within Rivera’s 14,391.54-square meter property. Yet, a comparison of the
technical descriptions of the parties’ titles negates an overlapping of their boundaries.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
January 31, 2005 and Resolution dated March 15, 2005 of the Court of Appeals in CA-G.R.
SP No. 62211 are SET ASIDE. The Decision dated March 24, 2000 of the Caloocan RTC in
Civil Case No. C-507 is hereby REINSTATED and UPHELD.
DOCTRINE: Quieting of title; For an action to quiet title to prosper, two indispensable
requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable
title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

Guillermo Salvador vs. Patricia Inc.; G.R. No. 195834 (J. Bersamin) (November 9, 2016)

FACTS:

This is an action for injunction and quieting of title to determine who owns the property
occupied by the plaintiffs and intervenor, Ciriano C. Mijares.

Additionally, to prevent the defendant Patricia Inc., from evicting the plaintiffs from their
respective improvements along Juan Luna Street, plaintiffs applied for a preliminary
injunction in their Complaint pending the quieting of title on the merits.

The complaint was amended to include different branches of the Metropolitan Trial Courts
of Manila. A Complaint-in-Intervention was filed by the City of Manila as owner of the land
occupied by the plaintiffs. Another Complaint-in-Intervention by Ciriano Mijares was also
filed alleging that he was similarly situated as the other plaintiffs.

To resolve the question about the boundaries of the properties of the City of Manila and
respondent Patricia, Inc., the RTC appointed, with the concurrence of the parties, three
geodetic engineers as commissioners, namely: Engr. Rosario Mercado, Engr. Ernesto
Pamular and Engr. Delfin Bumanlag. These commissioners ultimately submitted their
reports.

On May 30, 2005, the RTC rendered judgment in favor of the petitioners and against
Patricia, Inc., permanently enjoining the latter from doing any act that would evict the
former from their respective premises, and from collecting any rentals from them. The RTC
deemed it more sound to side with two of the commissioners who had found that the land
belonged to the City of Manila

On appeal, the CA, in CA-G.R. CV No. 86735, reversed the RTC's judgment, and dismissed
the complaint. The CA declared that the petitioners were without the necessary interest,
either legal or equitable title, to maintain a suit for quieting of title

ISSUE:

Whether or not petitioners may demand quieting of title

HELD:

An action to quiet title or remove the clouds over the title is a special civil action governed
by the second paragraph of Section 1, Rule 63 of the Rules of Court. Specifically, an action
for quieting of title is essentially a common law remedy grounded on equity. The
competent court is tasked to determine the respective rights of the complainant and other
claimants, not only to put things in their proper place, to make the one who has no rights to
said immovable respect and not disturb the other, but also for the benefit of both, so that he
who has the right would see every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements he may desire, to use, and even
to abuse the property as he deems best. But "for an action to quiet title to prosper, two
indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or
an equitable title to or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.

The first requisite is based on Article 477 of the Civil Code which requires that the plaintiff
must have legal or equitable title to, or interest in the real property which is the subject
matter of the action. Legal title denotes registered ownership, while equitable title means
beneficial ownership, meaning a title derived through a valid contract or relation, and
based on recognized equitable principles; the right in the party, to whom it belongs, to have
the legal title transferred to him.

To determine whether the petitioners as plaintiffs had the requisite interest to bring the
suit, a resort to the allegations of the complaint is necessary.

The petitioners did not claim ownership of the land itself, and did not show their authority
or other legal basis on which they had anchored their alleged lawful occupation and
superior possession of the property. On the contrary, they only contended that their
continued possession of the property had been for more than 30 years; that they had built
their houses in good faith; and that the area had been declared an Area for Priority
Development (APD) under Presidential Decree No. 1967, as amended. Yet, none of such
reasons validly clothed them with the necessary interest to maintain the action for quieting
of title. For one, the authenticity of the title of the City of Manila and Patricia, Inc. was not
disputed but was even admitted by them during trial. As such, they could not expect to
have any right in the property other than that of occupants whose possession was only
tolerated by the owners and rightful possessors. This was because land covered by a
Torrens title cannot be acquired by prescription or by adverse possession. Moreover, they
would not be builders entitled to the protection of the Civil Code as builders in good faith.
Worse for them, as alleged in the respondent's comments, which they did not deny, they
had been lessees of Patricia, Inc. Such circumstances indicated that they had no claim to
possession in good faith, their occupation not being in the concept of owners.
Moreover, the CA's adverse judgment dismissing their complaint as far as the action to
quiet title was concerned was correct. The main requirement for the action to be brought is
that there is a deed, claim, encumbrance, or proceeding casting cloud on the plaintiffs' title
that is alleged and shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy, the eliminates the existence of the
requirement. Their admission of the genuineness and authenticity of Patricia, Inc.'s title
negated the existence of such deed, instrument, encumbrance or proceeding that was
invalid, and thus the action must necessarily fail.

WHEREFORE, the Court AFFIRMS the decision promulgated on June 25, 2010 by the Court
of Appeals in CA-G.R. CV No. 86735; and ORDERS the petitioners to pay the costs of suit.