Green Acres v.

Cabral CH XI: Remedies [Quieting of title]

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G.R. No. 175542 5 June 2013 J. Villarama Jr. Therese
Petitioners: Respondents:
Green Acres Holdings, Inc. Victoria P. Cabral
Sps. Enrique T. Moraga and Victoria Soriano (Sps. Moraga)
Filcon Ready Mixed, Inc.
Dept. fo Agrarian Reform Adjudication Board (DARAB)
Registry of Deeds of Bulacan, Meycauayan Branch
Recit Ready Summary

Victoria Cabral was the original owner of a parcel of land in Bulacan with an area of 11,432 sqm. Three emancipation patents were issued
over the said lot in favor of Sps. Moraga. Cabral filed before the PARAD (Provincial Agrargian Reform Adjudicator) for the cancellation of
the said patents. PARAD denied the petition so Cabral appealed to the DARAB. During the pendency of the appeal, the Sps. Moraga
subdivided and sold the lots to Filcon Ready Mixed Inc. Filcon subsequently sold the subject lots to Green Acres. The only annotation
reflected on the title was a cancelled REM in favor of Philippine Commercial International Bank.

However, after the subject lots were sold to Green Acres, DARAB resolved Cabral’s appeal and rendered judgment ordering the cancellation
of the titles issued in the name of Sps. Moraga and Filcon. Green Acres then filed a Complaint for Quieting title while Cabral filed with the
PARAD a Motion for Issuance of Writ of Execution of the DARAB decision. Both the PARAD and CA denied Cabral’s motion hence this
petition.

The SC in this case discussed two issues:

Whether the DARAB decision ordering the cancellation of the titles issued in the names of Sps. Moraga and Filcon may be
enforced against Green Acres – NO

Green Acres was not a party in the proceeding before DARAB. The binding effect of the DARAB decision cannot be extended to Green
Acres by the mere issuance of a writ of execution against it. No one shall be affected by any proceeding to which he is a stranger. As a
general rule, a Torrens Title is irrevocable and indefeasible, and the duty of the court is to see to it that this title is maintained and respected
unless challenged in a direct proceeding. Furthermore, only the dispositive portion of the DARAB decision may be executed. This does not
contain a cancelation of the title of Green Acres but only that of Filcon and Sps. Moraga.

Green Acres is an innocent purchaser for value. It relied on the certificates of title of Filcon where the only annotation was a cancelled real
estate mortgage in favor of PCI Bank. Green Acres was not under any obligation to investigate beyond Filcon’s titles. Cabral’s negligence
was the cause of the controversy in this case as she failed to annotate a notice of lis pendens on the titles of Sps. Moraga and Filcon which
should serve as a notice to future transferees.

Whether the DARAB decision in favor of Cabral constitutes a cloud on Green Acre’s title over the subject properties – YES

Art. 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.

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
(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.

There is no dispute as to the first requisite since Green Acre has legal title over the subject properties. As to the second requisite, a cloud
of title may be determined based on the following:

Cloud of title:
(1) Any instrument record, claim, encumbrance or proceeding
(2) Which is apparently valid or effective
(3) But it is in fact invalid, ineffective, voidable, or unenforceable
(4) May be prejudicial to the title sought to be quieted.

Given the foregoing, it is clear that the DARAB decision in favor of Cabral satisfies all 4 elements of a cloud on title.

The Court ultimately ruled in favor of Green Acres and held that their title was valid and any cloud over the same shall be removed.

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Facts

1. Victoria Cabral was the original owner of a parcel of land in Brgy. Pandayan, Meycauayan, Bulacan with an area of
11,432 sqm. This was placed under PD 27 and thus 3 Emancipation Patents were issued to Sps. Moraga with the
following details:
a. EP No. 496039 – 861 sqm.
b. EP No. 496040 – 2,159 sqm.
c. EP No. 496041 – 8,941 sqm.
2. Sps. Moraga issued the cancellation of the last EP and had it converted to TCT No. 256260 (M)
3. Cabral filed before the PARAD (Provincial Agrargian Reform Adjudicator) for the cancellation of the EP issued to the
Sps. on the grounds that these were obtained through fraud and the land is not suitable for rice and corn production.
4. PARAD denied the petition for the cancellation of the EP. This was appealed by Cabral to the DARAB (Dept. of
Agrarian Reform Adjudication Board).
5. During the pendency of the appeal, the Sps. Moraga subdivided and sold the lots to Filcon Ready Mixed Inc. Filcon
subsequently sold the subject lots to Green Acres. The only annotation reflected on the title was a cancelled REM in
favor of Philippine Commercial International Bank.
6. The titles of Filcon were cancelled and new titles were issued in the name of Green Acres. Thus, Green Acres
constructed a warehouse building complex on the said lots.
7. However, DARAB then resolved Cabral’s appeal and rendered judgment ordering the cancellation of the titles issued
in the names of Sps. Moraga and Filcon.
8. Green Acres filed a Complaint for Quieting of Title, damages with application for Preliminary Injunction and Writ of
Preliminary Attachment. In its complaint, Green Acres alleged that it was a purchaser in good faith and for value
claiming that it had no notice or knowledge of any adverse claim, lien, or encumbrance on the property. Furthermore,
Green Acres assails that it was not a party to the DARAB proceedings nor was it given notice of the same.
9. Cabral then filed with the PARAD a Motion for Issuance of Writ of Execution of the DARAB decision. PARAD however,
denied this motion. Cabral appealed to the CA but such appeal was likewise denied.

Issues Ruling
1. Whether the DARAB decision ordering the cancellation of the titles issued in the 1. No
names of Sps. Moraga and Filcon may be enforced against Green Acres
2. Whether the DARAB decision in favor of Cabral constitutes a cloud on Green 2. Yes
Acre’s title over the subject properties
Rationale + Point/s of contention

1. No, the DARAB decision may not be enforced against Green Acres

Cabral Green Acres

- The issuance of a writ of execution was merely
ministerial under the DARAB rules of procedure
- She is not seeking an amendment of the decision but
the execution of the final decision
- Transfer of the property from Sps. Moraga to Filcon
and eventually to Green Acres occurred after she
filed a case with DARAB
- Green Acres is considered a successor in interest by
title subsequent to the commencement of the action
upon whom the final judgment of the DARAB is
conclusive
- Green Acres is not an innocent purchaser for value
- Cabral, through her motion for execution, seeks
to cancel Green Acres’ titles. The issuance of a
writ may be denied on the ground that it will be
inequitable
- The writ of execution cannot be issued against
one who did not have his day in court
- If granted, the writ of execution will constitute a
collateral attack against title of Green Acres.
- When Green Acres purchased the properties
from Filcon, the properties were covered by
transfer certificates of title, not Emancipation
Patents, without any indication that the titles had
their origins from the application of any agrarian
law

SC
- The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he was not
made a party conforms to the constitutional guarantee of due process of law
- Green Acres was not made a party in the DARAB case. The DARAB decision cannot bind Green Acres.
- The binding effect of the DARAB decision cannot be extended to Green Acres by the mere issuance of a writ of
execution against it. No one shall be affected by any proceeding to which he is a stranger.
- As a general rule, a Torrens Title is irrevocable and indefeasible, and the duty of the court is to see to it that this title
is maintained and respected unless challenged in a direct proceeding.

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 o Seeking cancellation of the titles of Green Acres by a mere Motion for Issuance of Writ of Execution of a
decision rendered in a case where the said titles were not in issue constitutes a collateral attack on them
which cannot be allowed.
- Only the decision of the DARAB in the dispositive portion of the decision can be implemented by a writ of execution
o The dispositive part does not contain any order directing the cancellation of the titles issued in favor of Green
Acres
o To subscribe to Cabral’s motion would be tantamount to modifying or amending a decision which has already
attained finality
- The fact that DARAB ordered cancellation of the title of the Sps. Moraga and Filcon does not automatically make the
titles of Green Acres null and void.
o A void title may be the source of a valid title in the hands of an innocent purchaser for value
o Innocent purchaser for value: one who, relying on the certificate of title, bough the property from the
registered owner, without notice that some other person has right to or interest in the same and pays a full
and fair price for the same at the time of such purchase or before he has notice of the claim or interest of
some other person in the property
o Green Acres is an innocent purchaser for value. It relied on the certificates of title of Filcon where the only
annotation was a cancelled real estate mortgage in favor of PCI Bank. Green Acres was not under any
obligation to investigate beyond Filcon’s titles.
- Cabral’s negligence was the cause of the controversy in this case as she failed to annotate a notice of lis pendens on
the titles of Sps. Moraga and Filcon which should serve as a notice to future transferees.

2. Yes, the DARAB decision in favor of Cabral constitutes a cloud on Green Acre’s title over the subject
properties

- Art. 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.
- Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting the title to real
property.
- Whenever there is a cloud on title an action may be brought to remove such cloud or to quiet the title.
- For an action to quiet title to prosper, two indispensable requisites must concur:
(3) The plaintiff or complainant has a legal or equitable title or interest in the real property subject of the action
(4) 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.
- Furthermore, a cloud on title consists of:
(5) Any instrument record, claim, encumbrance or proceeding
(6) Which is apparently valid or effective
(7) But it is in fact invalid, ineffective, voidable, or unenforceable
(8) May be prejudicial to the title sought to be quieted.
- Given the foregoing, it is clear that the DARAB decision in favor of Cabral satisfies all 4 elements of a cloud on title.
o DARAB decision is both an instrument and a record. It is also a claim which is defined as a cause of action
or demand for money or property since Cabral is asserting her right over the subject lots.
o It is also a proceeding which is defined as a regular and orderly progress in form of law including all
possible steps in an action from its commencement to the execution of judgment.
o DARAB decision is also apparently valid and effective. It is a final decision which has not been reversed,
vacated, or nullified.
o DARAB decision is clearly prejudicial to Green Acres’ titles.
o It is also ineffective and unenforceable against Green Acres.

Disposition

The petition is granted. The titles of Green Acres are declared valid and any cloud over such titles is removed.