Facts:

The case revolves around Aqualab Philippines, Inc. (hereinafter referred to as "Aqualab") as the petitioner and a multitude of heirs of Marcelino Pagobo, including Pelagio Pagobo, Gonzalo Pagobo, Aniana Pagobo, and others as respondents. The case was decided by the Third Division of the Supreme Court of the Philippines under G.R. No. 182673 on October 5, 2009. The dispute involves two parcels of land—Lots 6727-Q and 6727-Y—located in Punta Engaño, Lapu-Lapu City, Cebu, which were formerly part of a larger lot owned by Juan Pagobo, an ancestor of the respondents. Juan Pagobo passed away on January 18, 1947, and his homestead application continued until it culminated in the issuance of a Homestead Patent in 1969, leading to the issuance of Original Certificate of Title No. RO-2246.

After multiple transactions, the lots in question were sold to various owners, ultimately ending with Aqualab acquiring the titles on May 4, 1988. The respondents filed a complaint on August

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Facts:

Background of the Property and Title History

• The dispute involves Lots 6727-Q and 6727-Y of the Opon Cadastre in Punta EngaAo, Lapu-Lapu City, Mactan Island, Cebu.
• These lots form part of the original Lot 6727, inherited from Juan Pagobo, whose ownership trace goes back to his homestead application processed even after his death in 1947.
• The properties were originally covered by Original Certificate of Title (OCT) RO-2246, issued in Juan Pagobo’s name based on Homestead Patent No. 128470.
• Subsequent subdivision of Lot 6727 into 34 smaller lots (designated 6727-A to 6727-HH) took place after surveys dated 1963 and 1967.

Chain of Conveyances and Subsequent Transfers

• After the issuance of OCT RO-2246 and a duplicate OCT RO-1277 (which was later canceled in 1977), subject Lots 6727-Q and 6727-Y were involved in a series of conveyances:
• Tarcela de Espina purchased the lots, and secured Transfer Certificate of Title (TCT) 3294 in 1970.
• Tarcela de Espina subsequently sold the lots to Rene Espina, who was issued TCTs 17830 and 17831 in 1987.
• Rene Espina sold the lots to Anthony Gaw Kache, receiving TCTs 17918 and 18177, also in 1987.
• Finally, Aqualab Philippines, Inc. acquired the lots from Anthony Gaw Kache and was issued TCTs 18442 and 18443 in 1988.

Respondents’ Allegations and Possession

• Respondents, comprising various heirs of Marcelino, Hilarion, Antonio, Maximo, Donata, Aquilina, Juanito, and Catalina Pagobo (including the heirs of Bernabe Pagobo), allege that:
• They are the absolute and legal owners with a continuous, open, public, and adverse possession dating back to 1936 or earlier.
• Their rightful ownership and possession were disturbed when Aqualab, in 1991, forcibly entered the property without a court order.
• The complaint filed in 1994 by respondents sought partition, nullification of allegedly fraudulent conveyances, cancellation of certificates of title, reconveyance with the right of legal redemption, along with demands for damages and attorney’s fees.
• Respondents asserted that the conveyances contravened the restrictions on alienation contained in the Homestead Patent and the Public Land Act.

Procedural History and Litigation

• The Regional Trial Court (RTC) dismissed the complaint in its September 30, 1997 Order based on the ground of prescription and the assertion that Aqualab was an innocent purchaser for value.
• Aqualab’s dismissal motion was premised on:
• The transfer being executed over 24 years prior to the filing of the complaint.
• The reliance on the legal presumption of good faith due to the correctness of the titles (TCTs) in the chain of conveyance.
• The Court of Appeals (CA) reversed the RTC Order on March 15, 2007 by holding that the sale was null and void, as fraudulent conduct affected the transfers, and remanded the case for partition and damages.
• On April 22, 2008, the CA denied Aqualab’s motion for reconsideration, prompting the present petition for review on certiorari.

Issue:

Procedural and Substantive Issues Raised

• Whether the Court of Appeals committed a radical departure from the usual course of judicial proceedings in deciding the case on the merits, despite the appeal being from a dismissal via a motion to dismiss.
• Whether the RTC’s dismissal of the complaint on the ground of prescription and lack of cause of action was proper.
• Whether the transfers of the disputed lots to Aqualab’s predecessors-in-interest violated the five-year prohibitive period under Section 118 of the Public Land Act and must be nullified.
• Whether Aqualab qualifies as an innocent purchaser for value given the hypothetically admitted possession by the respondents.
• Whether the respondents’ claim is time-barred (prescribed) or still valid due to the continuing possession until it was disturbed.
• Whether the respondents’ complaint constitutes a collateral attack against the titles of Aqualab’s predecessors-in-interest.
• Whether the respondents’ previous admissions regarding the validity of the conveyance affect the merits of their present claims.
• Whether the CA deprived Aqualab of due process by nullifying its title and ownership without a full trial on the merits.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)