G.R. No. 175542 & G.R. No. 183205, June 5, 2013
GREEN ACRES HOLDINGS, INC., Petitioner, vs. VICTORIA P. CABRAL, SPS. ENRIQUE T. MORAGA and VICTORIA SORIANO, FILCON READY MIXED, INC., DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB), and REGISTRY OF DEEDS OF BULACAN, MEYCAUAYAN BRANCH, Respondents.

(Consolidated with G.R. No. 183205: VICTORIA P. CABRAL, Petitioner, vs. PROVINCIAL ADJUDICATOR, JOSEPH NOEL C. LONGBOAN I OFFICE OF THE AGRARIAN REFORM ADJUDICATOR, GREEN ACRES HOLDINGS, INC., SPOUSES ENRIQUE T. MORAGA and VICTORIA SORIANO and FILCON READY MIXED, INC., Respondents.)

FACTS

Victoria Cabral was the original owner of an 11,432-square-meter parcel of land in Meycauayan, Bulacan, covered by TCT No. T-73737 (M). The land was placed under the coverage of P.D. No. 27, and on March 23, 1993, three Emancipation Patents (EPs) were issued to the spouses Enrique Moraga and Victoria Soriano (Spouses Moraga). The Spouses Moraga later caused the cancellation of one EP and its conversion to TCT No. 256260 (M). On August 29, 1994, Cabral filed a complaint before the Provincial Agrarian Reform Adjudicator (PARAD) seeking the cancellation of the EPs on grounds of fraud and the land’s classification as non-agricultural. The PARAD denied her petition on December 15, 1995, and Cabral appealed to the DARAB.
While the appeal was pending, the Spouses Moraga subdivided the lot and sold three resulting lots to Filcon Ready Mixed Inc. (Filcon) on June 19, 1996. On April 29, 1999, Green Acres purchased these lots from Filcon. The titles were free from any annotations except a cancelled mortgage. New titles were issued in Green Acres’ name on April 30, 1999, and it constructed a warehouse complex on the properties.
On January 17, 2001, the DARAB resolved Cabral’s appeal, reversing the PARAD. It ordered the cancellation of all titles issued in the names of the Spouses Moraga and Filcon, the restoration of Cabral’s original title, and the surrender of possession to Cabral. Green Acres, upon learning of this decision, wrote to Filcon on March 15, 2001, invoking warranties under their deed of sale. Filcon replied on March 30, 2001, claiming it was also an innocent purchaser for value.
On April 19, 2001, Green Acres filed a Complaint for Quieting of Title, Damages with Application for Preliminary Injunction and Writ of Preliminary Attachment before the RTC of Malolos, Bulacan, against Cabral, the Spouses Moraga, Filcon, the DARAB, and the Registry of Deeds. Green Acres alleged it was a purchaser in good faith and for value without notice of any adverse claim, and that the DARAB decision cast a cloud on its titles. After Green Acres presented its evidence, Cabral filed a Demurrer to Evidence. The RTC granted the demurrer and dismissed the case on November 3, 2004. Green Acres appealed to the CA (CA-G.R. CV No. 85766).
Meanwhile, the DARAB decision became final and executory on April 13, 2005. On July 8, 2005, Cabral filed a Motion for Issuance of Writ of Execution with the PARAD. On January 25, 2006, the PARAD denied the motion, ruling that the DARAB decision only ordered the cancellation of titles in the names of the Spouses Moraga and Filcon, not Green Acres, and that including Green Acres would violate due process as it was not a party to the DARAB case. Cabral filed a motion for reconsideration, which was denied. She then filed a petition for certiorari with the CA (CA-G.R. SP No. 99651). On February 27, 2008, the CA granted Cabral’s petition, annulled the PARAD resolutions, and directed the issuance of a writ of execution against Green Acres. Green Acres’ motion for reconsideration was denied.

ISSUE

The core issue is whether Green Acres, as a subsequent purchaser of the property from Filcon, can be bound by the final and executory DARAB decision ordering the cancellation of the titles of its predecessors-in-interest (the Spouses Moraga and Filcon) and the restoration of the title to the original owner, Cabral, even though Green Acres was not a party to the DARAB proceedings.

RULING

The Supreme Court ruled in favor of Green Acres Holdings, Inc. The Court held that the final and executory DARAB decision of January 17, 2001, is binding only upon the parties to the case and their successors-in-interest who are not purchasers in good faith and for value. Green Acres was not a party to the DARAB case. Furthermore, the Court found that Green Acres was a purchaser in good faith and for value. It purchased the properties from Filcon in 1999 under clean titles, with no annotations of any pending case or adverse claim. There was no evidence that Green Acres had any knowledge of the pending DARAB appeal at the time of purchase. The DARAB decision itself became final only in 2005, years after Green Acres acquired the titles. Therefore, Green Acres’ rights as an innocent purchaser for value are protected. The DARAB decision cannot prejudice Green Acres, and the CA erred in ordering the execution of the DARAB decision against it. The titles of Green Acres, having been acquired lawfully and in good faith, remain valid. The Court set aside the CA decision in CA-G.R. SP No. 99651 and reinstated the PARAD resolutions that denied the execution against Green Acres. The Court also affirmed the dismissal of Green Acres’ complaint for quieting of title by the RTC (as affirmed by the CA in CA-G.R. CV No. 85766), as the cloud on its title—the DARAB decision—was declared ineffective against it, thus rendering the quieting action moot.