G.R. No. 232823 - Spouses Padilla vs. Salovino

In January 2000, spouses Nelson A. Padilla and Clarita E. Padilla (petitioners) filed an application for registration of a parcel of land situated in Lot 12, Block 14, Upper Bicutan, Taguig pursuant to Proclamation No. 172 and Memorandum Order No. 119.
The Land Management Bureau (LMB) approved the application and issued the Deed of Sale dated November 24, 2000.
The Registry of Deeds of Rizal subsequently issued Transfer Certificate of Title (TCT) No. 37273, registering the property in the petitioners’ name.

On March 3, 2014, Filipinas P. Salovino, Helen S. Tan, Norma S. Merida, and Raul S. Padilla (respondents) filed a Complaint for Cancellation of Title, Declaration of Nullity of Instrument with Reconveyance and Damages against the petitioners.
The respondents alleged that:

They were the bona fide residents of the subject property, having occupied it since 1974 as their resettlement site.
Petitioners fraudulently secured the registration and title of the property through misrepresentation, including the false claim of residence.
Petitioners, who also purportedly acquired a lot in Imus, Cavite, were not eligible to acquire the subject property under M.O. No. 119 and Republic Act No. 730 due to their nonresident status.

The cancellation of TCT No. 37273 and its reconveyance to the Republic of the Philippines.
The subsequent award of the property to the respondents, as the bona fide residents, after reconveyance to the State.

The respondents were not the proper or real parties-in-interest.
The complaint was, in substance, an action for reversion—an action that only the State could institute—since it implicitly admitted State ownership of the property.

The Regional Trial Court (RTC) subsequently granted the motion on November 25, 2014, dismissing the complaint on the ground that the action was essentially for reversion.
A motion for reconsideration by the respondents was denied by the RTC on March 12, 2015.
The Court of Appeals (CA), in its October 19, 2016 Decision, reversed the RTC’s dismissal, holding that:

The complaint did not constitute an action for reversion but was an ordinary civil action for nullity of title and for reconveyance.
The trial court should have conducted full hearings to ascertain if fraud or misrepresentation by the petitioners was present.

The CA further issued a July 4, 2017 Resolution denying reconsideration of its ruling.
Petitioners then elevated the matter to the Supreme Court through a Petition for Review on Certiorari, raising specific issues regarding the proper characterization of the respondents’ complaint.

The complaint, by admitting State ownership of the disputed land, inherently constitutes a reversion suit.
As only the State (through the Office of the Solicitor General) may institute reversion proceedings, the respondents lacked legal standing to file the action.

Their complaint was not for reversion but an ordinary civil action for the nullity of the certificate of title and for reconveyance, claiming a pre-existing right of ownership predating the issuance of TCT No. 37273.
They were merely the prioritized and bona fide residents eligible for a land grant under the government’s guidelines implementing Proclamation No. 172 and M.O. No. 119.

Whether the Court of Appeals seriously erred in holding that the respondents’ complaint, which questioned the validity of the Deed of Sale and TCT No. 37273, was not a reversion suit.

The core inquiry revolves around the classification of the action: Is it properly an ordinary civil action for nullity/reconveyance or an action for reversion given the admission of State ownership?

Whether the Court of Appeals seriously erred in setting aside the RTC’s order dismissing the complaint on the ground that the respondents lacked legal standing to file the action.

This raises the broader question of legal personality in reversion suits, specifically whether private individuals (respondents) have the capacity to challenge a title deriving from a government grant.