FACTS:

The case involves a dispute between the heirs of the Diaz and Virata families. Elinor Virata filed a complaint seeking the validity of certain Transfer Certificates of Title issued in the name of Antenor Virata. Enrique Diaz, the defendant in the case, denied the allegations and asserted his own rights over the subject properties. He raised the defenses of laches and res judicata, referring to a previous case involving the same subject property that was dismissed in 1969.

In another case, petitioner Enrique Diaz filed a complaint against respondent Antonina Crisologo for quieting of title and to settle the boundaries of their respective properties. A relocation survey conducted showed that the disputed driveway was outside Crisologo's property line. Crisologo then sought the withdrawal of the preliminary injunction they filed. An amended complaint was filed, alleging that Diaz had fenced the properties and constructed a house without authorization. The court admitted the amended complaint, and Diaz failed to file a new answer.

In a civil case filed by Antenor Virata against Enrique Diaz, Enrique filed a Motion to Dismiss, arguing that the issues of ownership and possession should be determined by the Department of Environment and Natural Resources (DENR). The trial court denied the motion, and Enrique and his co-defendants filed a Petition for Certiorari and Prohibition with the Court of Appeals. The Court of Appeals dismissed the petition and affirmed the trial court's denial of the motion to dismiss. Enrique passed away, and the plaintiff requested the appointment of an executor or administrator for Enrique's estate. The trial court ordered the defendants to file the necessary pleading for substitution of party.

ISSUES:

1. Whether the court a quo lacked jurisdiction to entertain the issues raised in Civil Case No. 1399-96.

2. Whether the trial court's denial of the Motion to Dismiss constituted a grave abuse of discretion.

3. Whether the titles of Antenor Virata are valid.

4. Whether res judicata applies in this case.

5. Whether the principle of laches is applicable.

6. Whether the award of attorney's fees is proper.

7. Whether Antenor has a legal or equitable title to or interest in the real property subject of the action.

8. Whether the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on Antenor's title is in fact invalid or inoperative.

9. Whether the dismissal of Civil Case No. N-501 without prejudice constituted a judgment on the merits.

10. Whether laches can be invoked as a defense to bar the respondent from recovering possession of the subject properties.

RULING:

1. The Court of Appeals affirmed the trial court's denial of the Motion to Dismiss, ruling that the court a quo had jurisdiction to entertain the issues raised in Civil Case No. 1399-96. The court considered the fact that the defendants had actively participated in the proceedings and had sought reliefs from the court.

2. The Court of Appeals held that the trial court did not commit a grave abuse of discretion in denying the Motion to Dismiss. The court reasoned that the motion was filed only after the defendant filed an Answer to the Complaint, which would countenance dilatory motions.

3. The Court of Appeals ruled that the titles of Antenor Virata are valid. Petitioners' reliance on a certification from the Register of Deeds that there were no records on the administrative reconstitution of the title of Miguela Crisologo, the previous owner, constituted an indirect attack on the titles. The court emphasized that if petitioners believed the titles were spurious, they should have filed appropriate proceedings to contest them.

4. The Court of Appeals ruled that res judicata does not apply in this case. It found that the previous case (Civil Case No. N-501), which was dismissed, was not an adjudication on the merits. Therefore, it was a dismissal without prejudice and did not determine the rights or liabilities of the parties. Additionally, the causes of action and reliefs sought in Civil Case No. N-501 and the present case were different.

5. The Court of Appeals ruled that laches does not apply to registered land covered by the Torrens system. As the registered owner, Antenor had the right to demand the return of the properties at any time, and the possession of petitioners was unauthorized.

6. The Court of Appeals ruled that the award of attorney's fees must be disallowed. The trial court's decision did not provide sufficient findings of fact and law to justify the award. No circumstances were shown to warrant the grant of attorney's fees.

7. Antenor has a legal or equitable title to or interest in the real property subject of the action. The trial court and the appellate court both found that Antenor acquired the subject properties through purchase and payment of installments. Titles were issued in Antenor's name, which were later subdivided into multiple titles. The court held that Antenor's certificates of title, issued as early as 1959, serve as evidence of an indefeasible and incontrovertible title to the property. On the other hand, the titles possessed by Enrique were issued only in 1973 and 1991, and there was no evidence of any muniment of title issued prior to 1959 to prove Enrique's ownership. Therefore, Antenor's titles were upheld and Enrique's claim over the properties was declared void.

8. The deed, claim, encumbrance, or proceeding claimed to be casting a cloud on Antenor's title is in fact invalid. The court ruled that a collateral attack on Antenor's title cannot be allowed. A certificate of title cannot be subject to a collateral attack and can only be altered, modified, or cancelled in a direct proceeding in accordance with the law. In this case, Enrique sought to attack the validity of Antenor's title as an incident of their claim for a different relief. They alleged that there was a vital defect in the reconstitution of Antenor's title. However, the court did not entertain this attack on Antenor's title, as the denial of Enrique's motion to file an amended answer has already reached finality. Therefore, the deed, claim, encumbrance, or proceeding claimed to cast a cloud on Antenor's title was considered invalid.

9. The dismissal of Civil Case No. N-501 without prejudice does not constitute a judgment on the merits. The dismissal indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced.

10. Laches cannot be invoked as a defense to bar the respondent from recovering possession of the subject properties. For laches to apply, it must be shown that there was lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit. In this case, the dismissal of the prior case without prejudice was sufficient to apprise the petitioners that an action to assert respondent's rights was forthcoming.

PRINCIPLES:

• Once a defendant actively participates in the proceedings and seeks reliefs from the court, it is deemed to have submitted itself to the jurisdiction of the court.

• The court may deny a Motion to Dismiss if it is filed only after the defendant files an Answer to the Complaint, as such motion would be considered dilatory.

• An action for quieting of title is a remedy that may be availed of when there is a cloud on the complainant's title to real property or any interest therein due to any apparently valid but actually invalid, ineffective, voidable, or unenforceable instrument, record, claim, encumbrance, or proceeding.

• Res judicata cannot be invoked if the previous and subsequent cases involve different causes of action or subject matter and seek different reliefs.

• Laches does not apply to registered land covered by the Torrens system.

• Attorney's fees may be awarded when there are sufficient findings of fact and law to justify the grant.

• For an action to quiet title to prosper, two indispensable requisites must concur: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

• A certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. It becomes the best proof of ownership of a parcel of land. The person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate.

• A certificate of title cannot be subject to a collateral attack. It can only be altered, modified, or cancelled in a direct proceeding in accordance with the law. An action is deemed an attack on a title when the object of the action or proceeding is to nullify the title and challenge the judgment pursuant to which the title was decreed.

• A judgment on the merits is one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal or merely technical point.

• The dismissal of a case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action.

• Laches is the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it.

• For laches to apply, there must be a lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit.