Facts:
Respondents are the actual occupants and residents of a parcel of land herein referred to as Lot 3714 who introduced improvements thereon and are sales patent applicants of the said lot. They were religiously paying taxes on the property. They filed an action for reconveyance and damages against the petitioners. Apparently, an original certificate of title (OCT) was issued to the petitioners after acquiring said lot from the heirs of the lot’s alleged former owner Patricio Salcedo who acquires his title to the lot by virtue of a decree of registration upon the decision of the cadastral court. Respondents assail the validity of the title of Salcedo by citing the Consing decision of the court that involves the neighboring lot 3715 with the following observation: (1) there is no showing that a decision has been made on the Cadastral proceedings cited by the petitioners with no records thereof in the Land Registration Commission and (2) they found a decision that renders Lot 3715 and Lot 3714 public lands.
RTC decision: Dismissed the petition for lack of merit, recognizing the petitioners as the owner of the property in litigation by virtue of their certificates of title while giving respondents 90 days to vacate the property.
Court of Appeals decision: Set aside the RTC decision allowing respondents to stay within the property pending the final termination of the administrative proceedings for cancellation of petitioner’s title and final terminal of the action for reversion and annulment of title. It also ordered the annotation of lis pendens on the OCT.
Petitioners now insist that the respondents have no capacity to file the complaint because they are not owners of the land but merely an applicant for a patent thereof which makes them not a real party of interest to the case. The CA contends that although the respondents have no capacity to file an action for reconveyance and damages, for reason of equity, it finds the necessity to resolve the issue of possession in the land on question.
Issue:
Whether or not the respondents are the proper parties to initiate the present suit?
Ruling:
The court did not find justification on reason for equity to be appreciated in the case. Equity is only invoked when the plaintiff has a clear right that it seeks to enforce and would be violated if the action filed were to be dismissed for lack of standing. The respondents do not have any enforceable right over their claim to the land for merely an applicant and there is no guarantee that their application will be ruled in their favor. Moreover, they are not the real part of interest by the fact that they admit that they are only applicants and not owners of the land in dispute. Section 101 of the Public Land Act provides that only the State has the right to institute an action for reconveyance of a public land. A "real party in interest" is one who stands to be benefited or injured by the judgment in the suit. To have a legal standing in a suit, the party should have substantial interest in the case in that the party will sustain a direct injury as a result of an act. The interest contemplated here is material interest in issue that will be affected by the decree. The respondents only have an incidental interest not contemplated by law. The SC ruled that the respondents have no legal standing to sue and not the real party of interest in the case. The CA decision was reversed and set aside.
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