CASE DIGEST : Dionisio Mananquil, Laudencia Mananquil-Villamor, Estanislao Mananquil, and Dianita Mananquil-Rabino, represented by Otillo Rabino v. Roberto Moico G.R. No. 180076, November 21, 2012 Supreme Court, Second Division Ponente: Justice Mariano C. Del Castillo

FACTS

Lots 18 and 19 in Dagat-Dagatan, Navotas formed part of land previously expropriated by the government and placed under the Tondo Dagat-Dagatan Foreshore Development Project, where occupants, applicants, and beneficiaries could acquire lots on an installment basis. In October 1984, Lot 18 was awarded to spouses Iluminardo and Prescilla Mananquil under a Conditional Contract to Sell. Lot 19, meanwhile, had been sold to Prescilla in February 1980 by its occupant. The spouses later died in 1991 without children. It was subsequently discovered that Prescilla had a child from a previous marriage, Eulogio Francisco Maypa.

After the spouses' deaths, the supposed heirs of Iluminardo—petitioners Dionisio, Estanislao, Laudencia, and Dianita—executed an Extrajudicial Settlement Among Heirs and adjudicated Lots 18 and 19 to Dianita. They took possession of the properties and leased them to third parties. Later, however, Eulogio Francisco Maypa, together with Eulogio Baltazar Maypa and Brenda Luminugue, claimed to be surviving heirs of Iluminardo and Prescilla. In 1997, they executed an Extrajudicial Settlement of Estate with Waiver of Rights and Sale and a Deed of Absolute Sale in favor of respondent Roberto Moico. Moico then began evicting the Mananquils' tenants and demolishing structures on the properties.

The Mananquils filed an action for quieting of title and injunctive relief before the RTC. The RTC ruled in their favor, issued a permanent injunction against Moico, cancelled the Extrajudicial Settlement and Deed of Absolute Sale executed in his favor, declared the Mananquils entitled to the properties, and awarded damages and attorney's fees. Moico appealed to the Court of Appeals.

The Court of Appeals reversed the RTC. It held that the Mananquils had failed to establish that Iluminardo and Prescilla had perfected their grant or award from the National Housing Authority (NHA) so as to acquire a firm and confirmed title over Lots 18 and 19. The CA noted that the Conditional Contract to Sell contained conditions concerning installment payments, personal use of the property, and prohibitions against selling, assigning, mortgaging, leasing, or subleasing the awarded property. Because the Mananquils failed to establish their legal or equitable interest in the properties, the CA concluded that they could not maintain an action for quieting of title. The Mananquils then appealed to the Supreme Court.

ISSUE

Whether or not the Court of Appeals erred in considering the conditions of the NHA grant and the alleged failure of Iluminardo and Prescilla to perfect their rights over Lots 18 and 19, even though the matter was allegedly not raised as an issue during the trial.

Whether or not the petitioners, as the alleged heirs of Iluminardo Mananquil, possessed sufficient legal or equitable title or interest in Lots 18 and 19 to maintain an action for quieting of title under Articles 476 and 477 of the Civil Code.

Whether or not proof of their heirship alone was sufficient to establish their right to succeed to whatever rights Iluminardo possessed over the properties under the NHA's Tondo Dagat-Dagatan Foreshore Development Project.

HELD

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that an action for quieting of title cannot prosper unless the plaintiff first establishes that he has a legal or equitable title to, or interest in, the property involved. A legal title refers to registered ownership, while an equitable title refers to beneficial ownership. Without such title or interest, there can be no cloud upon the title that the courts can remove or prevent.

The Court explained that an action for quieting of title is an equitable remedy intended to determine the respective rights of parties and remove a cloud caused by an apparently valid but actually invalid or ineffective deed, claim, encumbrance, or proceeding. Under Articles 476 and 477 of the Civil Code, two indispensable requisites must concur: (1) the plaintiff must have a legal or equitable title to or interest in the property; and (2) the deed, claim, encumbrance, or proceeding alleged to constitute a cloud must actually be invalid or inoperative despite its apparent validity. Thus, before examining whether Moico's documents constituted a cloud, the Court first had to determine whether the Mananquils had a legally recognizable interest in the properties.

The Court found that the Mananquils failed to establish such an interest. They presented no certificate of title, award, grant, document, or certification from the NHA or another competent government agency showing that Iluminardo and Prescilla had become registered owners, beneficiaries, or awardees of Lots 18 and 19. They likewise failed to prove that the petitioners were qualified successors or beneficiaries under the Tondo Dagat-Dagatan Foreshore Development Project. They did not present competent NHA witnesses who could testify regarding their alleged right to succeed to Iluminardo's rights.

The Court rejected the petitioners' argument that proof of heirship alone was enough. While Article 777 of the Civil Code provides that the rights to succession are transmitted from the moment of death, the petitioners still had to establish that the rights allegedly possessed by Iluminardo were rights that could legally be transmitted to them. They needed to prove not merely that they were Iluminardo's heirs, but also that the law, regulations, grant, award, or specific terms of the NHA project permitted them to succeed or substitute for Iluminardo as beneficiaries of the properties.

The Court emphasized that the petitioners had to present evidence showing that they were qualified to succeed Iluminardo under the NHA program and that they were not disqualified by nonpayment, prohibitions, lack of qualifications, or other conditions of the government housing project. Their failure to establish these matters meant that they could not demonstrate the necessary legal or equitable interest required to maintain the quieting-of-title action.

The Supreme Court, however, corrected the CA's reasoning on one important point. The CA had concluded that Iluminardo and Prescilla may have violated the conditions of the NHA grant by transferring their rights before the issuance of a certificate of title. The Supreme Court held that this conclusion was speculative because there was no sufficient evidence establishing such a violation. The Court did not affirm the CA on the basis that the spouses had actually violated the conditions of the NHA grant; instead, it affirmed the dismissal because the petitioners themselves failed to prove the legal or equitable interest necessary to sustain their action.

The Court further held that the proper resolution of the case required evidence of either (1) a certificate of title, award, or grant from the NHA or other proper government agency in the name of Iluminardo, or (2) a legally recognized right of the petitioners to succeed to Iluminardo's rights under the terms of the Tondo Dagat-Dagatan Foreshore Development Project. Such evidence could include the applicable law or regulations governing succession, the actual award or grant, or competent testimony from NHA officials. None of these were sufficiently presented by the petitioners.

Accordingly, the Supreme Court held that proof of heirship alone did not establish ownership or an enforceable interest in Lots 18 and 19. Since the Mananquils failed to prove that they were legally entitled to succeed to Iluminardo's rights under the NHA project, they lacked the indispensable legal or equitable interest required for an action to quiet title. The Petition was therefore DENIED, and the March 13, 2007 Decision of the Court of Appeals in CA-G.R. CV No. 81229 was AFFIRMED.