GR 117029; (March, 1997) (Digest)
G.R. No. 117029 March 19, 1997
PELTAN DEVELOPMENT, INC., ET AL., petitioners, vs. COURT OF APPEALS, ALEJANDRO Q. REY and JUAN B. ARAUJO, respondents.
FACTS
Private respondents Alejandro Rey and Juan Araujo, applicants for a free patent over a parcel of land in Las Piñas, filed a complaint for Cancellation of Titles and Damages against petitioners Peltan Development, Inc., et al. They alleged that they had occupied and cultivated the land for years before being forcibly ejected. They sought the cancellation of the petitioners’ Transfer Certificates of Title, claiming these were derived from a fictitious Original Certificate of Title (OCT No. 4216). The Regional Trial Court (RTC) granted the petitioners’ motion to dismiss, citing the Supreme Court ruling in Gabila vs. Barriga. The RTC reasoned that the ultimate beneficiary of the cancellation would be the State, making the Government the real party-in-interest, which was not represented by the Solicitor General. Thus, private respondents had no cause of action.
The Court of Appeals reversed the RTC’s order of dismissal. It held that the Gabila ruling was inapplicable because the complaint alleged the titles were fake and spurious, not merely voidable. The appellate court also invoked the subsequently promulgated case of Margolles vs. Court of Appeals, which it found to be squarely applicable, to support the conclusion that the private respondents, as claimants, had a cause of action.
ISSUE
The primary issue is whether private respondents are the real parties-in-interest with a cause of action to seek the cancellation of the petitioners’ Torrens titles.
RULING
The Supreme Court REVERSED the Court of Appeals and REINSTATED the RTC’s order dismissing the complaint. The Court held that private respondents are not the real parties-in-interest. The core relief sought was the cancellation of certificates of title, which, if granted, would revert the property to the public domain. Under the Regalian doctrine, the State is the owner of all lands of the public domain. Therefore, the ultimate beneficiary of such an action is the Government, which must be represented by the Solicitor General. Since the Solicitor General did not institute or join the suit, the real party-in-interest was absent.
The Court further ruled that the Court of Appeals erred in applying the Margolles case, which was promulgated after the RTC had already resolved the motion to dismiss. A motion to dismiss based on failure to state a cause of action must be resolved solely on the basis of the allegations in the complaint. The appellate court should not have considered a supervening decision that was not part of the factual milieu when the trial court ruled. The allegations in the complaint itself revealed that the private respondents were mere patent applicants, and the cancellation they sought would ultimately benefit the State, not themselves directly. Consequently, they lacked the requisite cause of action.