G.R. No. 121159 December 16, 2002
VSC Commercial Enterprises, Inc., petitioner, vs. COURT OF APPEALS, OSCAR ESTOPACE and JOSE SILAPAN, respondents.

FACTS

On December 12, 1990, private respondents Oscar Estopace and Jose Silapan, who were stallholders at the “Pamilihang Sentral ng Sta. Mesa” for about ten years, filed a complaint against the Register of Deeds of Manila and petitioner VSC Commercial Enterprises, Inc. They alleged that they had been paying market fees to VSC, which claimed to be the registered owner of the market. They came into possession of documents indicating that VSC’s Transfer Certificate of Title No. 153406, which originated from Original Certificate of Title No. 2863, covered lands not in Sta. Mesa, Manila, but in Caloocan, Mariquina Estate, or San Juan. They claimed the title was “fraudulent, spurious and highly questionable” and prayed for its cancellation. They asserted that upon cancellation, the land would revert to the State and be disposable to qualified applicants, and that as stallholders, they would have pre-emptive rights to buy the property. VSC filed a Motion to Dismiss on grounds that the plaintiffs were not real parties in interest, had no cause of action, were estopped from asserting title, and that the claim had prescribed. The Regional Trial Court dismissed the complaint. The Court of Appeals reversed the dismissal and ordered remand for further proceedings. VSC’s motion for reconsideration was denied.

ISSUE

1. Whether private respondents, as lessees, are estopped from questioning their landlord’s (petitioner’s) title to the leased property.
2. Whether private respondents are the real parties in interest to file an action for cancellation of title and reversion of the property to the State.
3. Whether the cause of action had prescribed.

RULING

The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Decision and Resolution of the Court of Appeals, and REINSTATED the Order of the Regional Trial Court dismissing the complaint.
1. Yes, private respondents are estopped from questioning petitioner’s title. The Court held that lessees who have had undisturbed possession for the entire term under the lease are estopped from denying their landlord’s title or asserting a better title in themselves or a third person, including the State, while they remain in possession and until they surrender possession to the landlord. Since a lessor-lessee relationship existed between petitioner and private respondents, the latter are estopped from questioning petitioner’s title, even on the ground that the property belongs to the State.
2. No, private respondents are not the real parties in interest. A real party in interest is one with a present substantial and personal material interest in the suit, not a mere expectancy or future contingent interest. Private respondents, as mere lessees, have no present substantial interest in the ownership of the property. Their interest, as stated in their complaint, is a mere expectancy of acquiring pre-emptive rights to buy the property if it reverts to the State, contingent upon government approval of their application. Only the government, through the Solicitor General, may institute an action for cancellation of title and reversion of public land to the State under the Public Land Act. Private respondents, not claiming the land as their private property, lack the legal personality to bring such an action.
3. The issue on prescription was rendered moot and unnecessary to resolve, given the findings that private respondents were estopped from questioning title and were not real parties in interest.