Assailed in this petition for review is the February 3, 2005 Decision^[1] of the Court of Appeals in CA-G.R. CV No. 79957, which affirmed the March 21, 2003 Order^[2] of the Regional Trial Court of Pasig City, Branch 264, granting the motion for judgment on the pleadings filed by respondents in Civil Case No. 62269.  Likewise questioned is the appellate court's July 6, 2005 Resolution^[3] which denied petitioners' motion for reconsideration.

The undisputed facts show that on August 3, 1992, respondents filed a complaint  for quieting of title and for declaration of nullity of Free Patent No. 495269, Original Certificate of Title (OCT) No. 711 and Transfer Certificate of Title (TCT) No. 186516, against the heirs of Macario Mencias (defendant heirs), namely, Aquilina Mencias, Aurora M. Gabat, Merlyn M. Cadete, Myrna M. Quirante; and the Secretary of the Department of Environment and Natural Resources, the Director of the Land Management Bureau and the Register of Deeds of Marikina.  The complaint was later amended to implead herein petitioner purchasers of the disputed lot and to nullify TCT No. 272191 issued in their name.

The Amended Complaint averred that respondents are the co-owners of a 159,576 square meter parcel of land located in Marikina, Rizal, Metro Manila and covered by TCT No. 257152, issued on June 20, 1969.  Said title was a transfer from TCT No. 22395 in the name of J. Antonio Araneta as trustee of the children of Angela I. Tuason.  Among the lots covered by TCT No. 257152 is the controverted Lot 89 containing an area of 54,197 square meters.^[4]

Sometime in April 1992, respondents learned that the defendant heirs are causing the ejectment of the occupants of a 29,945 square meter portion of Lot 89; and that Macario Mencias was able to obtain Free Patent No. 495269 on July 31, 1971, and OCT No. 711 on August 11, 1971, over said portion.  Upon Macario's death, OCT No. 711 was canceled and TCT No. 186516 was issued to the defendant heirs on July 5, 1990.^[5]  By virtue of a Deed of Sale inscribed on November 14, 1994, TCT No. 186516 was further cancelled and TCT No. 271604 was issued on the same date in favor of New Atlantis Real Estate & Development, Inc., (Corporation) represented by its President, Victor C. Salvador, Jr.  The questioned lot was thereafter sold by the Corporation to petitioners.  TCT No. 271604 was thus cancelled and in lieu thereof, TCT No. 272191 was issued to petitioners on November 17, 1994.^[6]

Respondents contended that Macario's OCT No. 711 and its derivative titles-TCT No. 186516, in the name of defendant heirs and petitioners' TCT NO. 272191, are void because the area they cover is entirely within their (respondents) land, specifically, Lot 89, as shown by the notation in the said titles, i.e., "This survey is covered by F.P.A. No. (III-1) 4496; and "This survey is entirely inside No. 89, II-4755."^[7]   Respondents further averred that since the controverted lot is already a private land, the Director of Lands and the Secretary of Agriculture and Natural Resources, had no jurisdiction to approve Macario's application and to issue Free Patent No. 495269.  The pendency of this action was allegedly inscribed in the defendant heirs' title (TCT No. 186516) on August 4, 1992 and carried over to the petitioners' TCT No. 272191.^[8]

In their Answer,^[9] the defendant heirs contended that Lot 89 was never part of respondents' TCT No. 257152 which originated from OCT No. 730.  Respondents' own exhibits, i.e., the documents purportedly issued by the Bureau of Lands (Exhibits "E" and "F"), show that Lot 89 was covered by OCT No. 734 and not OCT No. 730.  Defendant heirs further stated that respondents' TCT No. 257152 was issued in lieu of TCT No. 22395 which is a mere reconstitution of TCT No. 45046.  Upon verification with the Register of Deeds of Rizal, TCT No. 45046, covers a different parcel of land situated in San Juan, Rizal, and measuring about 356 square meters only.  The defendant heirs also raised the defenses of laches and prescription.

On the other hand, petitioners asserted, inter alia, that they are purchasers in good faith and for value and that they have no knowledge of any defect in the title of the Corporation from whom they purchased the controverted lot.  The notice of lis pendens alleged to have been inscribed in TCT No. 186516 on August 4, 1992 does not appear in the Corporation's title, TCT No. 271604 nor in their title, TCT No. 272191.  Absent said notice, petitioners claim that they cannot be charged with knowledge of any defect in the Corporation's title.  Neither does the note "This survey is covered by F.P.A. No. (III-1) 4496;" and "This survey is entirely inside No. 89, II-4755," serve as sufficient warning to third persons because said notes do not indicate that the property is covered by another title.^[10]

For failure to file their Answer, defendant Aurora M. Gabat,^[11]  public defendants Secretary of the Department of Environment and Natural Resources, Director of Land Management Bureau and the Register of Deeds of Marikina,^[12] were declared in default.

On March 4, 2003, respondents filed a motion for judgment on the pleadings which was granted by the trial court.  It was held that the disputed lot is within Lot 89 covered by respondents' TCT No. 257152, issued on June 20, 1969.   Said lot therefore became a private land long before the Free Patent was issued to Macario on July 31, 1971.  Hence, the titles derived or issued on the basis of said Free Patent are void because Public Land Act applies only to public lands and not private lands.  On the theory that the spring cannot rise higher than its source, the trial court concluded that petitioners cannot be purchasers in good faith considering that their title was derived from Macario who acquired the property by virtue of a void title.  It further ruled that petitioners' defense of good faith must fail because they were forewarned of the notice indicating that the questioned lot is inside Lot 89.  The dispositive portion of the March 21, 2003 order, reads:

WHEREFORE, premises considered, Plaintiffs' [respondents herein] Motion is hereby Granted and judgment rendered as follows:

1. Plaintiffs' Transfer Certificate of Title (TCT) No. 257152 is declared valid and superior to defendants' [petitioners] TCT No. 272191;
2. Free Patent No. 495269 issued by then Secretary of Environment and Natural Resources to Macario Mencias on July 21, 1971 is declared null and void;
3. Original Certificate of Title  (OCT) No. 711, Transfer Certificate of  Title (TCT) No. 271604/T-1358 and Transfer Certificate of Title (TCT) No. 272191, TCT No. 186516 and TCT No. 272191, all derivatives [sic] title of Free Patent 495269 issued by Registry of Deeds of Marikina, are also declared null and void;
4. The Bureau of Lands and Land Registration Administration are directed to enter into their technical files the findings in this order;
5. The Registry of Deeds of Marikina is directed to cancel Transfer Certificate of Title (TCT) NO. 272191 in the names of Edward and Edwin Roco Tan.
   

SO ORDERED.^[13]

Petitioners appealed to the Court of Appeals which affirmed the assailed order of the trial court.  They filed a motion for reconsideration but was denied in a resolution dated July 6, 2005.

Hence, this petition.

The sole issue for resolution is whether a judgment on the pleadings is proper in the instant case.

Section 1. Rule 34 of the Rules of Court, states:

SECTION 1. Judgment on the pleadings. Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading. x x x.

Where a motion for judgment on the pleadings is filed, the essential question is whether there are issues generated by the pleadings.   In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending party's answer to raise an issue.^[14]  The answer would fail to tender an issue, of course, if it does not deny the material allegations in the complaint or admits said material allegations of the adverse party's pleadings by confessing the truthfulness thereof and/or omitting to deal with them at all.   Now, if an answer does in fact specifically deny the material averments of the complaint and/or asserts affirmative defenses (allegations of new matter which, while admitting the material allegations of the complaint expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a judgment on the pleadings would naturally be improper.^[15]

In this case, we find that the trial court erred in rendering judgment on the pleadings because the pleadings filed by the parties generated ostensible issues that necessitate the presentation of evidence.  Respondents' action for declaration of nullity of Free Patent No. 495269 and the titles derived therefrom is based on their claim that the lot titled in the name of petitioners, is a portion of a bigger tract of land previously titled in the name of their (respondents) predecessors-in-interest.  The documents presented in support thereof were the photocopy of respondents' TCT No. 257152 which shows that the land it covers, including lot 89, originated from OCT No. 730; and photocopies of the documents alleged to have been issued by the Bureau of Lands and confirming that the disputed lot is a portion of respondents' Lot 89.  Pertinent portions of the Amended Complaint, state:

5. Sometime in early April, 1992, plaintiff de la Vega was informed by one of the occupants of the above-described lot No. 89 that the heirs of Macario Mencias, the defendants herein, were causing the ejectment of said occupants and claiming to be the owners of an area of 29,945 sq. ms. (sic) which is within, or part of, Lot No. 89 covered by plaintiffs' T.C.T. No. 257152.  It was only then that the plaintiffs heard of Macario Mencias and of his encroaching into plaintiffs' Lot 89.

6. The plaintiffs later learned that, unknown to them, Macario Mencias had applied with the then Bureau of Lands for, and obtained on 31 July 1971, Free Patent No. 495269 which was granted under the signature of the then Secretary of Agriculture and Natural Resources and covering an area of 29,945 sq. ms. (sic) as described in Plan F (III-1) 4496-D.  On 11 August 1971, Original Certificate of Title No. 711 (Rizal) was issued to him based on the said Free Patent, and upon his death, said OCT No. 711 was cancelled and transferred to his heirs, the defendants herein, to whom T.C.T. No. 186516 (Marikina) was issued on 5 July 1990.  The plaintiffs were never notified of said application of Mencias for free patent nor of the issuance of Free Patent No. 495269 and OCT No. 711 to him and T.C.T. No. 186515 to his heirs, the defendants herein. Photocopies of OCT No. 711, which incorporated Free Patent No. 495269, and T.C.T. No. 186516 are hereto appended as Annexes "B" and "C", respectively.

x x x x

8. A letter dated 29 October 1971 of Mr. Amando A. Salvador as Chief of the Survey Division of the then Bureau of Lands and addressed to Macario Mencias, 1st Indorsement, dated 15 February 1974, signed by Mr. Daniel C. Florida as Acting Chief of the Legal Division of the Bureau of Lands, a report dated 17 December 1976 by Mr. Jose B. Isidro as Hearing Officer addressed to the Director of Lands, and the 1st Indorsement, dated 3 January 1977, also addressed to the Director of Lands by Mr. Claudio C. Batiles as the District Land Officer, photocopies of which are appended hereto as Annexes "D", "E", "F" and "G", respectively, unequivocally confirmed that the area of 29,945 sq. ms. (sic) covered by the Free Patent based on Plan F (III-1) 4496-D and issued to Macario Mencias was entirely inside Lot 89 of Plan II-4755, which was covered by T.C.T. No. 22395 in the name of "J Antonio Araneta, Trustee of the children Angela I. Tauson", and since 20 June 1969, by T.C.T. No. 257152 in the plaintiffs' names.

9. There can be no doubt that the area of 29,945 sq. ms. (sic) covered by Free Patent No. 495269, which was incorporated in OCT No. 711 issued to Macario Mencias, was within Lot 89 of Plan II-4755 covered by T.C.T. No. 22395 and, since 20 June 1969, by T.C.T. No. 2597152 (sic) in the plaintiffs' names, because the technical description of said area embodied in the said Free Patent itself and in OCT No. 711 disclosed the following information:

"NOTE: This survey is covered by F.P.A. No. (III-1) 4496.
This survey is entirely inside No. 89, II-4755" (See Annex "B" hereof). (See Annex "B" hereof).

10. In fact the very same notes were carried over in T.C.T. No. 186516 issued to the heirs of Mencias, the defendants herein, thus forewarning all those who dealt or may have dealt with the private defendants regarding the area therein described that there was something anomalous in said title (See Annex "C" hereof).

x x x x

14. The records of the Registry of Deeds of Marikina, Metro Manila, disclosed that TCT No. 186516, Annex "C", was cancelled and T.C.T. No. 271604, covering the same parcel of land covered by T.C.T. No. 186516, was issued on November 14, 1994 by the Register of Deeds of Marikina, Mr. Artemio B. Caña, to the New Atlantis Real Eastate & Dev., Inc. represented by its President, Victor C. Salvador, Jr., based on a sale in its favor inscribed on the same date; and that T.C.T. No. 271604 was thereupon cancelled and in lieu thereof T.C.T. No. 272191 was issued by the said Register of Deeds to private defendants Edward and Edwin Roco Tan on November 17, 1994 based on a sale in their favor inscribed on the same date.  A photocopy of T.C.T. No. 272191 is hereto attached as Annex "H".

x x x x

16. Neither New Atlantis Real Estate & Dev. Inc., nor Edward Roco Tan and Edwin Roco Tan could claim to be purchasers in good faith not only because their titles are void and inexistent and could not possibly have any legal effect whatsoever but also because the "NOTE" cited in paragraphs 9 and 10 above, which likewise appears on T.C.T. No. 272191 itself, discloses the very basis for its nullity.

17. The notice of the pendency of this action (Notice of Lis Pendens) was duly inscribed on T.C.T. No. 186516 on August 4, 1992 under Entry No. 274711, which notice has been carried over to T.C.T. No. 272191, a photocopy of which is hereto appended as Annex "H".

x x x x.^[16]

The foregoing averments were specifically denied by defendant heirs who raised, among others, the affirmative defense that respondents' TCT No. 22395 is void and that lot 89 is not found inside respondents' land.  Thus

11. Lot 89 was never a part of the Mariquina Estate as shown in subdivision plan PSD 29965 as surveyed in December, 1950 up to June, 1951.  This fact is also certified by the Office of the Register of Deeds of Rizal as early as 1967, a photo copy of said certification is hereto attached as Annex "1";

 12. Plaintiffs' own exhibits (Annexes "E", "F", in relation to Annex "A") show that lot 89 was never part of Original Certificate of Title (O.C.T.) No. 730 from which plaintiffs' alleged title was derived (T.C.T. No. 257152, Annex "A").  In Annexes "E" and "F", Lot No. 89 of II-4755 is covered by O.C.T. No. 734 and not 730;

13. T.C. T. No. 257152 is spurious, falsified, hence, null and void.  This certificate of title was issued in lieu of T.C.T. No. 22395/T 389 as per Annex "A" of the Complaint.  T.C.T. No.  22395/T 389 was in turn issued in lieu of T.C.T. No. 45046 as shown in a document (T.C.T. No. 22395) hereto attached as Annex "2";

14. It also appears that T.C.T. No. 22395 is a mere reconstitution of a lost/destroyed T.C.T. No. 45046 as shown on page 3 of T.C.T. No. 257152;

15. Upon verification with the Office of the Register of Deeds of Rizal, T.C.T. No. 45046 covered a different parcel of land situated in San Juan, Rizal and measuring about 356 square meters only, photo copy of which is hereto attached as Annex "3" hereof;

x x x x.^[17]

Petitioners asserted, inter alia, the affirmative defense of good faith and denied the material allegations of the complaint relating to the origin of the title of respondents; and the latter's claim that Lot 89 is covered by TCT No. 257152.  Pertinent portions of the Answer state:

In further support of the Specific Denials and Affirmative Allegations herein set forth, and by way of Affirmative Defenses, defendants allege:

x x x x

4.2      Defendants are innocent purchasers for value of the subject property.  They had no knowledge, actual or constructive, of the alleged defect in their title, Transfer Certificate of Title No. 272191, or of the title of their predecessor-in-interest, the Corporation.

4.2.1   Plaintiff's (sic) notice of lis pendens alleged to have been duly inscribed on TCT No. 186516 on August 4, 1992 under Entry No, 274711 did not appear or was not annotated on the corporation's title, TCT No. 271604, which was issued on November 14, 1994 or long after the alleged inscription was made on the said title.  Attached and made integral part hereof as Annex "A" is a copy of Corporation's title, TCT No. 271604.

4.2.2   Neither did said inscription appear or annotated on defendants' title, TCT No. 272191, which was issued on 17 November 1994.  Attached and made integral part hereof as Annex "B" is a copy of TCT No. 272191.

4.2.3   It bears stressing that if the said inscription was duly made on 4 August 1992 as plaintiffs alleged, the same would have been annotated on TCT Nos. 271604 and 272191 which were issued long after the said entry was allegedly made.  Obviously, if said entry does appear today on TCT No. 272191, it was made only recently or at the earliest, after the latter title was issued on 17 November 1994.  But certainly said entry could not have been possibly made on 4 August 1992.

4.2.4   With the absence of the notice of lis pendens, defendants could not be charged with notice of any defect in their title No. 272191 nor their status as innocent purchasers for value be adversely affected by the same.

4.2.5   Neither does the note, "this survey is covered by F.P.A. No. (III-1) 4496; This survey is entirely inside No. 89 II-4755." serve as sufficient notice to defendants of any defect in their title.  Said note does not indicate or disclose that the subject property is covered by another title.

4.2.6   Moreover, the fact that the subject property was covered by TCT No. 271604 duly issued by the Registry of Deeds in the name of the corporation without any encumbrance, liens or adverse claims annotated thereon negates any possibility that the subject property belongs to any person other than the corporation.^[18]

It is clear from the foregoing that the pleadings filed in the instant case generated the following issues: (1) whether respondents' TCT No. 257152 is valid; (2) whether Lot 89 is covered by TCT No. 257152; and (3) whether petitioners are purchasers in good faith.  This is clearly not a proper case for judgment on the pleadings considering that the Answers tendered factual issues.  The trial court rendered a summary judgment on March 21, 2003 and not a judgment on the pleadings.

In Narra Integrated Corporation v. Court of Appeals,^[19] the Court explained the distinction between a proper case of summary judgment and judgment on the pleadings, in this wise:

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or fictitious character, on the other, are what distinguish a proper case for summary judgment from one for a judgment on the pleadings.  In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending party's answer to raise an issue.  On the other hand, in the case of a summary judgment, issues apparently exist ― i.e. facts are asserted in the complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set out in the answer―but the issues thus arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits, depositions, or admissions. x x x.

In any case, a summary judgment is likewise not warranted in this case as there are genuine issues which call for a full blown trial.  A "genuine issue" is an issue of fact which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.  When the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or question as to the facts, and summary judgment is called for.  The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial. Trial courts have limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact.  When the facts as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the place of trial.^[20]

In the instant case, presentation of evidence is necessary to determine the validity of TCT No. 22395 from which respondents' title (TCT No. 257152) was derived.  As alleged by defendant heirs, TCT No. 22395 was a mere reconstitution of TCT No. 45046, which per verification from the Register of Deeds of Rizal pertain to a different piece of land measuring only about 356 square meters and located in San Juan, Rizal.  These allegations were never refuted by respondents, hence, they cannot be simply brushed aside by the trial court.

Moreover, even assuming that the title of respondents' predecessors-in-interest (TCT No. 22395) is valid, the evidence at this stage is still insufficient to sustain the conclusion of the trial court that Lot 89 is inside respondents' land now covered by TCT No. 257152.  The title appended by respondents in their complaint is a mere photocopy.  Likewise, the document allegedly issued by the Bureau of Lands and presented by respondents to prove that Lot 89 is inside their land are also mere photocopies and not authenticated by said office.  Furthermore, the title referred in the said documents as the origin of TCT No. 257152, is a different title, that is OCT No. 734 and not OCT No. 730.  There is thus a need to present evidence to settle the issues in a full blown trial.

If the evidence show that the Free Patent and the OCT issued to petitioners' predecessors-in-interest is valid and or Lot 89 is not inside TCT No. 257152, then judgment should be rendered in favor of petitioners; and whether the latter acted in good or bad faith will no longer be a decisive issue in this case.  On the other hand, if the title of petitioners' predecessors-in-interest is declared void, the defense of good faith may still be available to petitioners who claim to be purchasers in good faith and for value.   The rule is that a void title may be the source of a valid title in the hands of an innocent purchaser for value.^[21]  An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.^[22]
 
Since good faith is always presumed,^[23] it was premature for the trial court to conclude that petitioners are not purchasers in good faith.  Note that the complaint did not state that the notice of the pendency of this action was inscribed in the title of the Corporation from whom petitioners purchased the property.  Petitioners even denied the presence of said inscription in their own title and in the title of the Corporation.^[24]  Neither the presence of the notation "This survey is covered by F.P.A. No. (III-1) 4496; and This survey is entirely inside No. 89, II-4755," in the title of the Corporation automatically make petitioners purchasers in bad faith.  In the absence of other evidence to explain said notation, bad faith, which is never presumed, cannot be charged against petitioners.   The notation that the disputed lot is covered by Free Patent Application No. (III-1) 4496, will not place the title in dubious light because the same is the number of the application for Free Patent of Macario Mencias,^[25] petitioners' predecessor-in-interest.  The same is true with respect to the notation in the title that the questioned lot is inside Lot 89.  Considering that the title presented is a mere photocopy and that the notes appearing thereon do not indicate that the subject property is covered by any title, the trial court should have directed the parties to substantiate their respective allegations instead of rendering judgment.  Indeed, in determining the propriety of rendering a motion for summary judgment, the lower court should take that view of the evidence most favorable to the party against whom it is directed, giving such party the benefit of all favorable inferences.^[26]

In sum, we find that respondents failed to prove that presentation of evidence may be dispensed with in the present controversy.  The instant case is neither a proper case for rendition of judgment on the pleadings nor of summary judgment.  A full blown trial should therefore be conducted to resolve the issues raised by the parties.

WHEREFORE, in view of all the foregoing, the petition is GRANTED and the  February 3, 2005 Decision and the  July 6, 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 79957 are REVERSED and SET ASIDE.   Let the records of this case be remanded to the Regional Trial Court of Pasig City, Branch 264 for further proceedings.

SO ORDERED.

Panganiban C.J., Austria-Martinez, Callejo, Jr.,  and Chico-Nazario, JJ., concur.

---

^[1] Rollo, pp. 33-57; penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Regalado E. Maambong and Lucenito N. Tagle.

^[2] Records, pp. 768-774; penned by Judge Leoncio M. Janolo, Jr.

^[3] Rollo, p. 60.

^[4] Id. at 63.

^[5] Id. at 64.

^[6] Id. at 67.

^[7] Id. at 66.

^[8] Id. at 66-68.

^[9] Id. at 85-88.

^[10] Id. at 69-84.

^[11] Order dated July 15, 1995, records, p. 147.

^[12] Order dated July 20, 1993, records, p. 87.

^[13] Records, pp. 773-774.

^[14] Wood Technology Corporation v. Equitable Banking Corporation, G.R. No. 153867, February 17, 2005, 451 SCRA 724, 731.

^[15] Mongao v. Pryce Properties Corporation, G.R. No. 156474, August 16, 2005, 467 SCRA 201, 209-210.

^[16] Rollo, pp. 64-68.

^[17] Id. at 86.

^[18] Id. at 76-79.

^[19] 398 Phil. 733, 740 (2000).

^[20] Evadel Realty and Development Corporation v. Soriano, G.R. No. 144291, April 20, 2001, 357 SCRA 395, 401.

^[21] Republic v. Agunoy, Sr., G.R. No. 155394,  February 17, 2005, 451 SCRA 735, 752; Republic v. Court of  Appeals, 365 Phil. 522, 530 (1999).

^[22] Republic v. Court of Appeals, supra at 529.

^[23] Rosencor Development Corporation v. Inquing, G.R. No. 140479, March 8, 2001, 354 SCRA 119, 137.

^[24] Records, pp. 220-221.

^[25] Id. at 61.

^[26] SolidBank Corp. v. Court of Appeals, 439 Phil. 23, 35-36 (2002).