NATIONAL SPIRITUAL ASSEMBLY OF THE BAHA’IS OF THE PHILIPPINES, REPRESENTED BY ITS SECRETARY GENERAL, PETITIONER, VS. ALFREDO S. PASCUAL, IN HIS CAPACITY AS THE REGIONAL EXECUTIV…

National Spiritual Assembly of the Baha'is of the Philippines versus Pascual

The Case

This is a petition for review on certiorari brought by the National Spiritual Assembly of the Baha'is of the Philippines against Alfredo S. Pascual, in his capacity as Regional Executive Director of the Department of Environment and Natural Resources, Regional Office Number 2. The petitioner filed a complaint for quieting of title over two parcels of land in Santiago City, claiming ownership and long possession, and seeking to remove as a cloud the adverse decision of the Bureau of Lands. The case matters because it teaches the strict requisites of an action to quiet title and the finality of administrative adjudications, a favorite ground for a motion to dismiss.

Procedural History

The petitioner filed its complaint for quieting of title, injunction, annulment of alias writ of execution, and damages with the Regional Trial Court of Santiago City, Branch 36. The respondent moved to dismiss for failure to state a cause of action. The trial court denied the motion in its order of June 20, 2001, finding that the Bureau of Lands decision was not yet final and executory because the ruling of the Office of the President on appeal was unavailable.

The respondent elevated the matter to the Court of Appeals through a petition for certiorari under Rule 65. The Court of Appeals, in its decision of December 29, 2004, set aside the trial court's order and dismissed the complaint for failure to state a cause of action, holding that the Bureau of Lands decision was final and executory and binding on the petitioner, and that an action to quiet title was not the proper remedy against an administrative ruling. The Court of Appeals denied reconsideration on June 28, 2005. The petitioner then filed the present petition for review on certiorari with the Supreme Court.

Facts

The petitioner claims to be the lawful and absolute owner of Cadastral Lots 3 and 361, together with the building thereon, situated in Victory Sur, Santiago City. It acquired the lots in 1967 by sale from Armando Valdez and Emma Valdez, who in turn acquired them from Marcelina Ordoño. The petitioner alleges it has been in open, continuous, and adverse possession in the concept of an owner for more than thirty years.

On December 4, 1985, the Bureau of Lands issued a decision rejecting the miscellaneous sales applications of the petitioner's predecessors-in-interest, ordering them and all those in privity with them, including the petitioner, to vacate the lots and remove their improvements. A motion for reconsideration was denied on June 30, 1986. The petitioner appealed to the Secretary of the Department of Environment and Natural Resources, who affirmed the decision on February 7, 1989. Recourse to the Office of the President was unavailing, and alias writs of execution were issued on December 10, 1996 and June 6, 2000.

On December 11, 2000, the petitioner filed its complaint, alleging that a cloud existed on its title because of the allegedly invalid Bureau of Lands decision. The respondent moved to dismiss, arguing that the petitioner had no legal right or title to sue since the final and executory decision had ruled that it was not entitled to possess the lots.

Issues

• Whether or not the Court of Appeals committed a reversible error in finding that the trial court gravely abused its discretion in not dismissing the complaint for quieting of title for failure to state a cause of action.
• Whether or not the complaint alleged the indispensable requisites of an action to quiet title under Articles 476 and 477 of the Civil Code.
• Whether or not the final and executory decision of the Bureau of Lands barred the petitioner from challenging its validity through an action to quiet title.

Applicable Provisions

Article 476 of the Civil Code provides:

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.

This provision defines the remedy the petitioner invoked and sets the frame for the requisites the complaint must allege.

Article 477 of the Civil Code provides:

The plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter of the action. He need not be in possession of said property.

This provision supplies the first indispensable requisite, the plaintiff's legal or equitable title or interest, which the Court found lacking in the petitioner.

Ruling

On the first issue, the Court held that the petition lacks merit and that the Court of Appeals committed no reversible error. A cause of action is the act or omission by which a party violates a right of another, and a complaint states a cause of action when it contains three essential elements: a right in favor of the plaintiff, the correlative obligation of the defendant to respect that right, and the act or omission of the defendant violating that right. If any element is absent, the complaint is vulnerable to dismissal for failure to state a cause of action. The test is whether the court can render a valid judgment on the complaint based on the facts alleged and the prayer asked for.

On the second issue, the Court held that under Articles 476 and 477 there are two indispensable requisites in an action to quiet title: that the plaintiff has a legal or equitable title to or interest in the real property, and that a deed, claim, encumbrance, or proceeding is claimed to be casting a cloud on that title. From the allegations of the complaint, the Court found it clear that the petitioner no longer had any legal or equitable title or interest in the lots, because its status as possessor and owner had been settled in the final and executory Bureau of Lands decision affirmed by the Secretary and the Office of the President.

On the third issue, the Court held that decisions and orders of administrative agencies rendered pursuant to their quasi-judicial authority, upon finality, have the force and binding effect of a final judgment under the doctrine of res judicata. The petitioner was therefore barred from challenging the validity of the final and executory decision. A final and executory decision can only be annulled by a petition to annul on the ground of extrinsic fraud and lack of jurisdiction, or by a petition for relief under Rule 38, and the petitioner filed neither. Once a judgment becomes final and executory, it can no longer be disturbed, altered, or modified in any respect, except to correct clerical errors or to make nunc pro tunc entries. The petitioner opted for the wrong remedy and must suffer for it.

Doctrine

An action to quiet title under Articles 476 and 477 of the Civil Code requires two indispensable requisites: the plaintiff must have a legal or equitable title to or interest in the real property, and a deed, claim, encumbrance, or proceeding must be casting a cloud on that title. Absent either requisite, the complaint fails to state a cause of action and is vulnerable to dismissal.

A complaint states a cause of action only when it alleges a right in favor of the plaintiff, the correlative obligation of the defendant to respect that right, and an act or omission of the defendant violating that right. The test is whether the court can render a valid judgment on the complaint based on the facts alleged and the prayer asked for.

Decisions and orders of administrative agencies rendered in the exercise of quasi-judicial authority, upon finality, have the force and binding effect of a final judgment under the doctrine of res judicata. Such a final and executory decision can only be annulled by a petition to annul on the ground of extrinsic fraud and lack of jurisdiction, or by a petition for relief under Rule 38, and not by an action to quiet title.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the decision and resolution of the Court of Appeals, with costs against the petitioner.

Remember This

Memorize the two indispensable requisites of an action to quiet title: a legal or equitable title or interest in the plaintiff, and a cloud cast on that title by an apparently valid but actually invalid claim or proceeding. Examiners use this case to test failure to state a cause of action, the requisites under Articles 476 and 477, and the res judicata effect of final administrative adjudications.