1
G.R. No. 163551 July 18, 2011
DATU KIRAM SAMPACO, substituted by HADJI SORAYA
MACABANDO, Petitioner,
vs.
HADJI SERAD MINGCA LANTUD, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari of the Court of Appeals
Decision dated August 15, 2003 in CA-G.R. CV No. 63801 and its
Resolution dated May 13, 2004, denying petitioners motion for
reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud,
the plaintiff in the lower court, filed an action to quiet title with
damages1 with the Regional Trial Court (RTC) of Lanao del Sur,
Branch 8, Marawi City (trial court), against petitioner Datu Kiram
Sampaco (deceased), the defendant in the lower court, who has
been substituted by his heirs, represented by Hadji Soraya
Sampaco-Macabando.2
Respondent alleged in his Complaint3 that he is the owner in fee
simple of a parcel of residential lot located at Marinaut, Marawi
City, with an area of 897 square meters covered by Original
Certificate of Title (OCT) No. P-658. On August 25, 1984,
petitioner Datu Kiram Sampaco, through his daughter Soraya
Sampaco-Macabando with several armed men, forcibly and
unlawfully entered his property and destroyed the nursery
buildings, cabbage seedlings and other improvements therein
worth 10,000.00. On August 30, 1984, Barangay Captain Hadji
Hassan Abato and his councilmen prepared and issued a
decision4 in writing stating that petitioner Datu Kiram Sampaco
is the owner of the subject parcel of land. Respondent stated
that the acts of petitioner and the said decision of the Barangay
Captain may cast a cloud over or otherwise prejudice his title.
Respondent stated that he and his predecessors-in-interest
have been in open, public and exclusive possession of the
subject property. He prayed that the acts of petitioner and the
decision of Barangay Captain Hadji Hassan Abato and his
councilmen be declared invalid, and that petitioner be ordered
to pay respondent damages in the amount of 10,000.00 and
attorneys fees.
In his Answer,5 defendant Datu Kiram Sampaco, petitioner
herein, denied the material allegations of the Complaint.
Petitioner asserted that he and his predecessors-in-interest are
the ones who had been in open, public, continuous, and
exclusive possession of the property in dispute. Petitioner
alleged that OCT No. P-658 was secured in violation of laws and
through fraud, deception and misrepresentation, considering
that the subject parcel of land is a residential lot and the title
S.
issued is a free patent. Moreover, respondent and his
predecessors-in-interest had never taken actual possession or
occupied the land under litigation. On the contrary, petitioner
has all the evidence of actual possession and ownership of
permanent improvements and other plants on the land in
dispute.
Petitioner filed a counterclaim for actual and moral damages,
and attorney's fees for the unfounded complaint and prayed for
its dismissal. He also sought the cancellation of respondents
OCT No. P-658 and the reconveyance of the subject parcel of
land.
During the trial, respondent Hadji Lantud testified that he
acquired the subject lot from his grandmother, Intumo
Pagsidan, a portion thereof from his grandmothers helper,
Totop Malacop, pursuant to a court decision after litigating with
him.6 Respondent had been residing on the lot for more than 30
years, applied for a title thereto and was issued OCT No. P-
658.7 He paid the corresponding real estate taxes for the
land.8 He planted assorted trees and plants on the lot like
bananas, jackfruits, coconuts and others.9 He testified that he
was not aware of the alleged litigation over the lot before
Barangay Captain Hadji Hassan Abato, although he was
furnished a copy of the decision.10
On the other hand, petitioner Datu Kiram Sampaco testified that
the land under litigation is only a portion of the 1,800 square
meters of land that he inherited in 1952 from his father, Datu
Sampaco Gubat.11 Since then, he had been in adverse
possession and ownership of the subject lot, cultivating and
planting trees and plants through his caretaker Hadji Mustapha
Macawadib.12 In 1962, he mortgaged the land (1,800 square
meters) with the Development Bank of the Philippines, Ozamis
branch.13 He declared the land (1,800 square meters) for
taxation purposes14 and paid real estate taxes, and adduced in
evidence the latest Tax Receipt No. 1756386 dated September
15, 19[9]3.15 Petitioner presented four corroborating witnesses
as regards his possession of the subject property.
After trial on the merits, the trial court rendered a Decision on
March 31, 1999 in favor of petitioner, the dispositive portion of
which reads:
WHEREFORE, premises considered the court is of the opinion
and so holds that the preponderance of evidence is in favor of
the defendant and against the plaintiff. Judgment is hereby
rendered as follows:
1. Dismissing plaintiffs complaint for lack of merit;
2
2. Declaring Original Certificate of Title No. P-658 (Exh. A) null
and void and of no legal effect;
3. Declaring the defendant the absolute or true owner and
possessor of the land in dispute; and
4. Ordering the plaintiff to pay the defendant the sum of
10,000.00 for attorneys fees plus 500.00 per appearance.16
The trial court held that the issuance of respondents title, OCT
No. P-658, was tainted with fraud and irregularities and the title
is, therefore, spurious; hence, it is null and void, and without
any probative value. The finding of fraud was based on: (1) the
Certification issued by Datu Samra Andam, A/Adm. Assistant II,
Natural Resources District No. XII-3, Marawi City, stating that
the data contained in respondents title were verified and had
no record in the said office; (2) the said Certification was not
refuted or rebutted by respondent; (3) while free patents are
normally issued for agricultural lands, respondents title is a free
patent title issued over a residential land as the lot is described
in the Complaint as a residential lot; and (4) Yusoph Lumampa,
an employee of the local Bureau of Lands, to whom respondent
allegedly entrusted the paperwork of the land titling, was not
presented as a witness.
Moreover, the trial court stated that respondent failed to
establish with competent and credible evidence that he was in
prior possession of the subject property. No corroborative
witness was presented to further prove his prior possession.
On the other hand, the trial court stated that petitioner offered
documentary evidence, consisting of a contract of real estate
mortgage of the subject property, tax declarations, an official
tax receipt, and testimonial evidence to prove that he had been
in open, public, continuous, and lawful possession of the subject
property in the concept of owner.
Respondent appealed the decision of the trial court to the Court
of Appeals.
On August 15, 2003, the Court of Appeals rendered a Decision
reversing the decision of the trial court, the dispositive portion
of which reads:
WHEREFORE:
1. The appeal is granted and the appealed judgment is hereby
totally REVERSED.
2. To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud
is confirmed the owner of the parcel of land covered by Original
Certificate of Title No. P-658;
3. The defendant-appellee is ordered to pay 50,000.00 as
attorneys fees to the plaintiff-appellant; and
4. Costs against the defendant-appellee.17
Petitioners motion for reconsideration was denied by the Court
of Appeals in its Resolution18 dated May 13, 2004.
The Court of Appeals held that there is no controversy that
respondent is a holder of a Torrens title; hence, he is the owner
of the subject property. The appellate court stressed that
Section 4719 of the Land Registration Act (Act No. 496) provides
that the certificate of title covering registered land shall be
received as evidence in all courts of the Philippines and shall be
conclusive as to all matters stated therein.
The Court of Appeals stated that the Torrens title has three
attributes: (1) a Torrens title is the best evidence of ownership
over registered land and, unless annulled in an appropriate
proceeding, the title is conclusive on the issue of ownership; (2)
a Torrens title is incontrovertible and indefeasible upon the
expiration of one year from the date of the entry of the decree
of registration;20 and (3) a Torrens title is not subject to
collateral attack.21
The Court of Appeals held that petitioners counterclaim filed on
October 15, 1984 for cancellation of respondents original
certificate of title issued on May 22, 1981 was filed beyond the
statutory one-year period; hence, petitioners title had become
indefeasible, and cannot be affected by the decision made by
Barangay Captain Hadji Hassan Abato and his councilmen.
Moreover, the appellate court held that petitioners prayer for
the cancellation of respondents title, OCT No. P-658, through a
counterclaim included in his Answer is a collateral attack, which
the law does not allow, citing Cimafranca v. Court of
Appeals22 and Natalia Realty Corporation v. Valdez.23
The allegation of fraud in securing OCT No. P-658 on the ground
that the property in dispute is a residential lot and not subject of
a free patent was not given weight by the appellate court as it
was supported only by testimonial evidence that did not show
how (by metes and bounds) and why the property in dispute
could not have been the subject of a free patent. The appellate
court stated that a mere preponderance of evidence is not
adequate to prove fraud;24 it must be established by clear and
convincing evidence.
The Court of Appeals also noted that petitioner claimed that the
subject property is only part of his larger property. Although
petitioner introduced proof of payment of the real estate taxes
of the said property, as well as a previous mortgage of the
property, petitioner did not show that the disputed property is
part of his larger property. Hence, the appellate court stated
3
that under such circumstances, it cannot rule that petitioner
owned the land under litigation, since petitioner failed to show
that it is part of his larger property.
The Court of Appeals did not award actual and moral damages,
because respondent failed to prove the amount of any actual
damages sustained, and the instances enumerated under Article
2219 of the Civil Code warranting the award of moral damages
were not present.
However, the Court of Appeals awarded attorney's fees in the
amount of 50,000.00, considering that respondent was forced
to incur expenses to protect his right through the action to quiet
title.
Petitioner filed this petition raising the following issues:
I ownership of the land described therein, and other matters
THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE
FACT THAT THE TORRENS TITLE INVOLVED HEREIN WAS ISSUED
PURSUANT TO A FREE PATENT WHICH COULD NOT BE VALIDLY
ISSUED OVER A PRIVATE LAND.
II
THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT
THAT AS CERTIFIED TO BY THE BUREAU OF LANDS ITSELF NO
SUCH FREE PATENT OVER THE SUBJECT LAND WAS ISSUED BY IT;
HENCE, SAID FREE PATENT IS SPURIOUS.
III
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF
THE TRIAL COURT THAT THE SUBJECT LOT HAD LONG BEEN
OWNED, POSSESSED AND CULTIVATED BY THE DEFENDANT
(PETITIONER HEREIN) OR HIS PREDECESSORS-IN-INTEREST SINCE
TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE
PETITIONERS COUNTERCLAIM FOR CANCELLATION OF
RESPONDENTS TITLE IS BARRED.
V that the land is residential was made only by respondent, but
THE COURT OF APPEALS ERRED IN RULING THAT THE
COUNTERCLAIM IN THE INSTANT CASE IS A COLLATERAL ATTACK
ON RESPONDENT-PLAINTIFFS TITLE.
VI
THE COURT OF APPEALS ERRED IN DENYING PETITIONERS
MOTION FOR RECONSIDERATION.25
The main issue is whether or not the Court of Appeals erred in
sustaining the validity of OCT No. P-658 and confirming
respondent as owner of the property in dispute.
Petitioner contends that the Court of Appeals erred in
disregarding the fact that the Torrens title was issued to
respondent by virtue of a free patent covering a residential lot
that is private land as it has been acquired by petitioner through
open, public, continuous and lawful possession of the land in
the concept of owner. Petitioner thus prayed for the
cancellation of respondents title and the reconveyance of the
subject property. Hence, the Court of Appeals erred in declaring
that the subject lot belongs to respondent.
The contention is without merit.
The Torrens title is conclusive evidence with respect to the
which can be litigated and decided in land registration
proceedings.26 Tax declarations and tax receipts cannot prevail
over a certificate of title which is an incontrovertible proof of
ownership.27 An original certificate of title issued by the Register
of Deeds under an administrative proceeding is as indefeasible
as a certificate of title issued under judicial
proceedings.28 However, the Court has ruled that indefeasibility
of title does not attach to titles secured by fraud and
misrepresentation.29
In this case, petitioner alleged in his Answer to respondents
Complaint in the trial court that respondents title, OCT No. P-
658, was secured in violation of the law and through fraud,
deception and misrepresentation, because the subject parcel of
land is a residential lot, which cannot be subject of a free
patent, since only agricultural lands are subject of a free patent.
The trial court found that "[t]he lot under litigation as clearly
described in the complaint is a residential lot and a free patent
title thereto cannot validly be issued." This finding was one of
the bases for the trial courts declaration that the issuance of
OCT was tainted with fraud and irregularities and is, therefore,
spurious; thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint
the true classification of the disputed land as residential was not
shown to have been made by the President, upon
recommendation by the Secretary of Environment and Natural
Resources, pursuant to Section 9 of Commonwealth Act No.
141, otherwise known as The Public Land Act.30 Hence, the trial
court erred in concluding that there was fraud in the issuance of
respondents free patent title on the ground that it covered
residential land based only on the Complaint which stated that
the property was residential land when it was not shown that it
4
was the President who classified the disputed property as
residential, and OCT No. P-658 itself stated that the free patent
title covered agricultural land. It has been stated that at present,
not only agricultural lands, but also residential lands, have been
made available by recent legislation for acquisition by free
patent by any natural born Filipino citizen. 31 Nevertheless, the
fact is that in this case, the free patent title was granted over
agricultural land as stated in OCT No. P-658.
Moreover, petitioner contends in his petition that the
Certification32 dated July 24, 1987 issued by Datu Samra I.
Andam, A/Adm. Assistant II, Natural Resources District No. XII-3,
Bureau of Lands, Marawi City, certifying that the data contained
in OCT No. P-658 in respondents name had no records in the
said office, showed that respondents Torrens title was spurious.
The Court holds that the certification, by itself, is insufficient to
prove the alleged fraud. Fraud and misrepresentation, as
grounds for cancellation of patent and annulment of title,
should never be presumed, but must be proved by clear and
convincing evidence, mere preponderance of evidence not
being adequate.33 Fraud is a question of fact which must be
proved.34 The signatory of the certification, Datu Samra Andam,
A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi
City, was not presented in court to testify on the due issuance of
the certification, and to testify on the details of his certification,
particularly the reason why the said office had no records of the
data contained in OCT No. P-658 or to testify on the fact of
fraud, if any.
Thus, the Court holds that the evidence on record is insufficient
to prove that fraud was committed in the issuance of
respondents Torrens title. Hence, respondents Torrens title is a
valid evidence of his ownership of the land in dispute.
On the other hand, petitioner claims ownership of the subject
lot, which is merely a portion of a larger property (1,800 square
meters) that he allegedly inherited from his father in 1952, by
virtue of open, public and continuous possession of the land in
the concept of owner making it petitioners private property.
Hence, petitioner prays for reconveyance of the said property.
Article 434 of the Civil Code governs an action for reconveyance,
thus:
Art. 434. In an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title
and not on the weakness of the defendants claim.
Under Article 434 of the Civil Code, to successfully maintain an
action to recover the ownership of a real property, the person
who claims a better right to it must prove two (2) things: first,
the identity of the land claimed; and second, his title thereto.35
In regard to the first requisite, in an accion reinvindicatoria, the
person who claims that he has a better right to the property
must first fix the identity of the land he is claiming by describing
the location, area and boundaries thereof.36
In this case, petitioner claims that the property in dispute is part
of his larger property. However, petitioner failed to identify his
larger property by providing evidence of the metes and bounds
thereof, so that the same may be compared with the technical
description contained in the title of respondent, which would
have shown whether the disputed property really formed part
of petitioners larger property. The appellate court correctly
held in its Resolution dated May 13, 2004 that petitioners claim
is solely supported by testimonial evidence, which did not
conclusively show the metes and bounds of petitioners larger
property in relation to the metes and bounds of the disputed
property; thus, there is no sufficient evidence on record to
support petitioners claim that the disputed property is part of
his larger property.
In regard to the second requisite of title to property, both
petitioner and respondent separately claim that they are
entitled to ownership of the property by virtue of open, public,
continuous and exclusive possession of the same in the concept
of owner. Petitioner claims that he inherited the subject
property from his father in 1952, while respondent claims that
he acquired the property from his grandmother Intumo
Pagsidan, a portion thereof from his grandmothers helper
Totop Malacop pursuant to a court decision after litigating with
him.37 Respondent has OCT No. P-658 to prove his title to the
subject property, while petitioner merely claims that the
property is already his private land by virtue of his open, public,
continuous possession of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of
reconveyance as he failed to prove the identity of his larger
property in relation to the disputed property, and his claim of
title by virtue of open, public and continuous possession of the
disputed property in the concept of owner is nebulous in the
light of a similar claim by respondent who holds a free patent
title over the subject property. As stated in Ybaez v.
Intermediate Appellate Court,38 it is relatively easy to declare
and claim that one owns and possesses public agricultural land,
but it is entirely a different matter to affirmatively declare and
to prove before a court of law that one actually possessed and
cultivated the entire area to the exclusion of other claimants
who stand on equal footing under the Public Land Act
(Commonwealth Act No. 141, as amended) as any other
pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in
ruling that petitioners counterclaim is time-barred, since the
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one-year prescriptive period does not apply when the person
seeking annulment of title or reconveyance is in possession of
the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago.39Petitioner also contends that the Court of Appeals
erred in ruling that the counterclaim in this case is a collateral
attack on respondents title, citing Cimafranca v. Intermediate
Appellate Court.40 Petitioner cites the case of Heirs of Simplicio
Santiago v. Heirs of Mariano E. Santiago,41 which held that a
counterclaim can be considered a direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate
Appellate Court,42 cited by the Court of Appeals to support its
ruling that the prayer for the cancellation of respondents title
through a counterclaim included in petitioners Answer is a
collateral attack on the said title, is inapplicable to this case. In
Cimafranca, petitioners therein filed a complaint for Partition
and Damages, and respondents therein indirectly attacked the
validity of the title involved in their counterclaim. Hence, the
Court ruled that a Torrens title cannot be attacked collaterally,
and the issue on its validity can be raised only in an action
expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v.
Heirs of Mariano E. Santiago, declared that the one-year
prescriptive period does not apply when the party seeking
annulment of title or reconveyance is in possession of the lot, as
well as distinguished a collateral attack under Section 48 of PD
No. 1529 from a direct attack, and held that a counterclaim may
be considered as a complaint or an independent action and can
be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply
when the person seeking annulment of title or reconveyance is
in possession of the lot. This is because the action partakes of a
suit to quiet title which is imprescriptible. In David v. Malay, we
held that a person in actual possession of a piece of land under
claim of ownership may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, and
his undisturbed possession gives him the continuing right to
seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his
title.
xxxx
Section 48 of P.D. 1529, the Property Registration Decree,
provides that a certificate of title shall not be subject to
collateral attack and cannot be altered, modified, or canceled
except in a direct proceeding. An action is an attack on a title
when the object of the action is to nullify the title, and thus
challenge the judgment or proceeding pursuant to which the
title was decreed. The attack is direct when the object of an
action is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an
attack on the judgment or proceeding is nevertheless made as
an incident thereof.
x x x A counterclaim can be considered a direct attack on the
title. In Development Bank of the Philippines v. Court Appeals,
we ruled on the validity of a certificate of title despite the fact
that the nullity thereof was raised only as a counterclaim. It was
held that a counterclaim is considered a complaint, only this
time, it is the original defendant who becomes the
plaintiff.1avvphi1 It stands on the same footing and is to be
tested by the same rules as if it were an independent action. x x
x43
The above ruling of the court on the definition of collateral
attack under Section 48 of P.D. No. 1529 was reiterated in
Leyson v. Bontuyan,44 Heirs of Enrique Diaz v. Virata,45 Arangote
v. Maglunob,46 and Catores v. Afidchao.47
Based on the foregoing, the Court holds that petitioners
counterclaim for cancellation of respondents title is not a
collateral attack, but a direct attack on the Torrens title of
petitioner. However, the counterclaim seeking for the
cancellation of title and reconveyance of the subject property
has prescribed as petitioner has not proven actual possession
and ownership of the property due to his failure to prove the
identity of his larger property that would show that the disputed
property is a part thereof, and his claim of title to the subject
property by virtue of open, public and continuous possession in
the concept of owner is nebulous in the light of a similar claim
by respondent who holds a Torrens title to the subject property.
Respondents original certificate of title was issued on May 22,
1981, while the counterclaim was filed by petitioner on October
15, 1984, which is clearly beyond the one-year prescriptive
period.
In fine, the Court of Appeals did not err in confirming that
respondent is the owner of the parcel of land covered by OCT
No. P-658.
WHEREFORE, the petition is DENIED. The Court of Appeals
decision dated August 15, 2003, and its Resolution dated May
13, 2004 in CA-G.R. CV No. 63801, are hereby AFFIRMED.
No costs.
SO ORDERED.
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G.R. No. 163566 February 19, 2008 On November 18, 1987,10 respondent filed civil case no. 16516
against Madelene praying that the deed of donation be nullified,
RAYMUNDO and PERLA DE GUZMAN, petitioners,
as well as the subsequent transfers to other parties of the
vs.
PRAXIDES J. AGBAGALA, respondent.
properties covered by the spurious donation.11 An amended
complaint was filed on September 15, 198812 to include the
DECISION transferees13 of the properties including petitioner spouses
Raymundo and Perla de Guzman, who were the transferees of
CORONA, J.:
the land located at Tampac, Aguilar, Pangasinan.14
This is a petition for review on certiorari1 of a decision2 and
Respondent claimed that the deed of donation was fake. This
resolution3 of the Court of Appeals (CA) dated October 14, 2003
was confirmed by the handwriting expert of the National Bureau
and April 20, 2004, respectively, in CA-G.R. CV No. 55238 which
of Investigation, Rogelio G. Azores,15 who examined the
affirmed the decision of the Regional Trial Court (RTC), Lingayen,
document and compared it with several documents bearing the
Pangasinan, Branch 37 dated May 30, 1996 in Civil Case No.
signature of Carmen. He found that the purported signature of
16516.
the late Carmen on the deed of donation was forged.16
The spouses Elias P. Javier and Maria Sison died on May 8, 1942
Petitioners filed their answer dated November 28, 1989. 17 They
and July 1936, respectively, both in Lingayen, Pangasinan. They
claimed that they applied for a free patent over the subject area
were survived by their six children, namely: Conrado Javier,
on August 10, 1987 and on November 26, 1987, they were
respondent Praxides Javier Agbagala, Nicasio Javier, Carmen
issued free patent no. 165790.18 On December 11, 1987,
Javier, Encarnacion Javier Ongnoy4 and Juana Javier. They left 13
Original Certificate of Title (OCT) No. P-30187 was registered in
parcels of land which their children inherited and divided among
their name. During the trial, they also presented a tax
themselves in a public document of extrajudicial partition dated
declaration and realty tax receipts from 1985 to 1990 issued to
June 29, 1948. Five of the parcels of land5 were inherited by
them.19
Carmen. On February 25, 1984, she died single, without any
compulsory heir and survived only by her sisters Encarnacion, In a decision dated May 30, 1996, the RTC declared the deed of
respondent Praxides, Juana and brother Nicasio.6 donation in favor of Madelene null and void ab initio, canceled
the deeds of sale executed by Madelene in favor of the
According to respondent and her daughter, Milagros Agbagala
defendants,20 declared null and void OCT No. P-30187 in the
Gutierrez, one afternoon sometime in mid-1987, a certain
name of petitioners and directed all the defendants to jointly
Rosing Cruz went to their house to borrow P30,000 from
and severally pay respondent P6,000 as attorney's fees and
Milagros. Rosing offered as collateral a document which turned
litigation expenses and each of the defendants to pay
out to be a deed of donation dated January 25, 1977
respondent P1,000 as nominal damages. It further ruled that
purportedly signed by Carmen in favor of her niece Madelene
the properties subject of the annulled documents should revert
Javier Cruz, daughter of Juana and sister-in-law of Rosing.
back to the intestate estate of Carmen.21
Milagros told her (Rosing) that she had no money to lend.
Thereafter, Milagros, upon the request of respondent, went to In a decision promulgated on October 14, 2003, the CA affirmed
the Register of Deeds in Lingayen, Pangasinan to verify the the decision of the RTC. It denied reconsideration in a resolution
existence of such donation. She found out that it was indeed promulgated on April 20, 2004.
duly registered. It was the first time respondent came to know
of such donation and the transfer of Carmen's properties to Hence this petition raising the lone issue of whether OCT No. P-
their niece Madelene.7 30187 was correctly nullified considering that it cannot be the
subject of collateral attack under Section 48 of PD 1529.22
According to Madelene, she lived in her Aunt Carmen's
house8 and had been her companion since she was four years Petitioners argue that at the time of the filing of the amended
old. She transferred to Manila only when she graduated in 1970. complaint on September 15, 1988, OCT No. P-30187 had
On January 25, 1977, Carmen executed the deed of donation in already been issued in their name. Thus this certificate of title
her favor. She was present when all the signatories thereon, can only be nullified in an action directly attacking its validity.
including the notary public, signed the document. From that
Respondent counters that at the time the amended complaint
time on, she received the rentals of the properties covered by
was filed, OCT No. P-30187 (which was issued on December 11,
the donation. Carmen even informed her tenants that
1987) was not yet indefeasible since less than one year had
Madelene would inherit the properties upon her death.9
lapsed. Furthermore, she asserts that the doctrine of
7
indefeasibility does not apply if the free patent is null and
void ab initio.
We agree with respondent.
Sections 32 and 48 of PD 1529 state:
Sec. 32. Review of decree of registration; Innocent purchaser for
value. The decree of registration shall not be reopened or
revised by reason of absence, minority, or other disability of any
person adversely affected thereby, nor by any proceeding in any
court for reversing judgment, subject, however, to the right of
any person, including the government and the branches
thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual
fraud, to file in the proper [court] a petition for reopening and
review of the decree of registration not later than one year from
and after the date of the entry of such decree of registration,
but in no case shall such petition be entertained by the court
where an innocent purchaser for value has acquired the land or
an interest therein whose rights may be prejudiced. Whenever
the phrase "innocent purchaser for value" or an equivalent
phrase occurs in this Decree, it shall be deemed to include an
innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of
registration and the certificate of title issued shall become
incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for
damages against the applicant or any other person responsible
for the fraud.
xxx xxx xxx
SEC. 48. Certificate not subject to collateral attack.
A certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or canceled except in a direct
proceeding in accordance with law. (Emphasis supplied)
Indeed, a decree of registration or patent and the certificate of
title issued pursuant thereto may be attacked on the ground of
falsification or fraud within one year from the date of their
issuance. Such an attack must be direct and not by a collateral
proceeding.23 The rationale is this:
xxx [The] public should be able to rely on a registered title. The
Torrens System was adopted in this country because it was
believed to be the most effective measure to guarantee the
integrity of land titles and to protect their indefeasibility once
the claim of ownership is established and recognized.24
An action is deemed an attack on a title when the object of the
action or proceeding is to nullify the title and thus challenge the
judgment pursuant to which the title was decreed. The attack is
direct when the object of the action is to annul or set aside such
judgment, or enjoin its enforcement. On the other hand, the
attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is nevertheless made
as an incident thereof.25
In the present case, the attack on OCT No. P-30187 was merely
collateral because the action was principally for the declaration
of nullity of the deed of donation and the other deeds of
conveyance which followed.
However, the principle of indefeasibility does not apply when
the patent and the title based thereon are null and void. An
action to declare the nullity of a void title does not prescribe
and is susceptible to direct, as well as to collateral, attack.26 OCT
No. P-30187 was registered on the basis of a free patent which
the RTC ruled was issued by the Director of Lands without
authority.27 The petitioners falsely claimed that the land was
public land when in fact it was not as it was private land
previously owned by Carmen who inherited it from her parents.
This finding was affirmed by the CA. There is no reason to
reverse it.28
The settled rule is that a free patent issued over a private land is
null and void, and produces no legal effects whatsoever. Private
ownership of land as when there is a prima facie proof of
ownership like a duly registered possessory information or a
clear showing of open, continuous, exclusive, and notorious
possession, by present or previous occupants is not affected
by the issuance of a free patent over the same land, because
the Public Land law applies only to lands of the public domain.
The Director of Lands has no authority to grant free patent to
lands that have ceased to be public in character and have
passed to private ownership. Consequently, a certificate of title
issued pursuant to a homestead patent partakes of the nature
of a certificate issued in a judicial proceeding only if the land
covered by it is really a part of the disposable land of the public
domain.29
Since the Director of Lands has no authority to grant a free
patent over privately owned land, any title issued pursuant
thereto is null and void.30
Therefore, although OCT No. P-30187 was merely collaterally
attacked, it was still correctly nullified because the free patent
on which it was based was null and void ab initio.
WHEREFORE, the petition is hereby DENIED. The October 14,
2003 decision and April 20, 2004 resolution of the Court of
Appeals in CA-G.R. CV No. 55238 are AFFIRMED.
Costs against petitioners.
SO ORDERED.
8
G.R. No. 165838 April 3, 2013
NEMESIO FIRAZA, SR., Petitioner,
vs.
SPOUSES CLAUDIO and EUFRECENA UGAY, Respondents.
RESOLUTION
REYES, J.:
Assailed in this petition1 for review on certiorari under Rule 45
of the Rules of Court is the Decision2 dated January 30, 2004 of
the Court of Appeals (CA) in C.A. G.R. SP No. 73495, affirming
the Orders dated August 20, 20013 and July 2, 20024 of the
Regional Trial Court (RTC) of Bayugan, Agusan del Sur, Branch 7,
which disallowed petitioner Nemesio Firaza, Sr. (petitioner)
from propounding questions attacking the validity of Spouses
Claudio and Eufrecena Ugay's (respondents) land title during the
trial in Civil Case No. 442.
Likewise assailed is the CA Resolution 5 dated September 24,
2004 denying reconsideration.
The Antecedents
Civil Case No. 442 was commenced by a complaint for Quieting
of Title filed by the respondents who alleged that they are the
registered owners of Lot No. 2887-A as evidenced by Original
Certificate of Title (OCT) No. P-16080. The complaint prayed for
the annulment of Tax Declaration No. C-22-0857 dated February
18, 1993 issued in the name of the petitioner on the ground
that it creates a cloud upon the respondents title.6
In his answer,7 the petitioner set up the affirmative defense that
the respondents obtained their title through fraud and
misrepresentation perpetrated during the processing of their
Free Patent Application before the Office of the Community
Environment and Natural Resources Officer of Bayugan, Agusan
del Sur. The respondents purportedly connived with Land
Management Officer Lourdes Tadem (Tadem) who favorably
recommended their application despite the petitioners prior
claim and continuous possession of the subject lot.
On the basis of the said affirmative defense, the petitioner also
filed a counterclaim praying for the: (1) nullification of OCT No.
P-16080; (2) reconveyance to him of the ownership of the
subject lot; and (3) payment of moral and exemplary damages,
and attorneys fees.8
The RTC thereafter set the affirmative defense for preliminary
hearing as if a motion to dismiss had been filed pursuant to
Section 6, Rule 16 of the Rules of Court.9 The RTC likewise
ordered the parties to submit their respective memorandum to
which the respondents duly complied. Instead of similarly
complying, however, the petitioner filed a Motion to Dispense
with the Filing of the Petitioners Memorandum reasoning that
his affirmative defense cannot be proven adequately through a
written pleading.10
On October 2, 1998, the RTC issued an Order11 denying the
petitioners affirmative defense on the ground that the same
can be better ventilated along with the allegations of the
complaint and answer in a full-blown trial.
Thus, trial on the merits ensued during which Land
Management Officer Tadem was presented as a hostile witness
for the respondents. While on direct examination, the
petitioners counsel propounded questions pertaining to the
circumstances attending the issuance by Tadem of a
recommendation for the respondents Free Patent Application.
Counsel for the respondents objected to the questioning on the
ground that the same constitutes a collateral attack to the
respondents land title. In response, the petitioner argued that
the questions are necessary for him to establish his defenses of
fraud and misrepresentation and to substantiate his
counterclaim for reconveyance. To fully thresh out the issue,
the RTC required the parties to file, as they did so file, their
respective position papers on whether the petitioners
counterclaim constitutes a direct or a collateral attack to the
validity of the respondents title.12
On August 20, 2001, the RTC issued an Order13 disallowing any
issue pertaining to the petitioners counterclaim which in turn
was adjudged as a direct attack to the validity of the
respondents title, hence, prohibited, viz:
After an in-depth reading of the facts extant from the records,
the Court is of the opinion and so holds that the Counterclaim is
a direct attack on the validity of the title.
Proverbial it is that actions to nullity [sic] Free Patents should be
at the behest of the Director of Lands (Kayaban vs. Republic, 52
SCRA 357).
Along this plain, since the counterclaim is a direct attack on the
validity of the title and the proper agencies, like the Land
Management Bureau of the DENR were not included, any issue
presented to prove the illegality of the title, shall not be
allowed.
SO ORDERED.14
When his motion for reconsideration was denied by the RTC in
an Order15 dated July 2, 2002, the petitioner sought recourse
with the CA via a special civil action for certiorari.
In its herein assailed Decision16 dated January 30, 2004, the CA
affirmed the RTCs judgment albeit premised on the different
finding that the petitioners counterclaim was a collateral attack
9
to the validity of the respondents title. The CA stated: "[the]
petitioners attempt to introduce evidence on the alleged fraud
committed by the respondents in securing their title to the
subject land constitutes a collateral attack on the title which is
not allowed by law."17
The petitioner moved for reconsideration but his motion was
denied in the CA Resolution18 dated September 24, 2004 hence,
the present appeal moored on this legal question:
Whether the petitioners counterclaim constitutes a collateral
attack of the respondents land title and thus bars the former
from introducing evidence thereon in the latters civil action for
quieting of title?
The Courts Ruling
The appeal is impressed with merit.
Section 48 of Presidential Decree No. 152919 or the Property
Registration Decree proscribes a collateral attack to a certificate
of title and allows only a direct attack thereof, viz:
Sec. 48. Certificate not subject to collateral attack. A certificate
of title shall not be subject to collateral attack. It cannot be
altered, modified or cancelled except in a direct proceedings in
accordance with law.1wphi1
In Arangote v. Maglunob,20 the Court, after distinguishing
between direct and collateral attack, classified a counterclaim
under former, viz:
The attack is considered direct when the object of an action is to
annul or set aside such proceeding, or enjoin its enforcement.
Conversely, an attack is indirect or collateral when, in an action
to obtain a different relief, an attack on the proceeding is
nevertheless made as an incident thereof. Such action to attack
a certificate of title may be an original action or a counterclaim,
in which a certificate of title is assailed as void. 21 (Citation
omitted and emphasis supplied)
In the recent case of Sampaco v. Lantud,22 the Court applied the
foregoing distinction and held that a counterclaim, specifically
one for annulment of title and reconveyance based on fraud, is
a direct attack on the Torrens title upon which the complaint for
quieting of title is premised.23 Earlier in, Development Bank of
the Philippines v. CA,24 the Court ruled similarly and explained
thus:
Nor is there any obstacle to the determination of the validity of
TCT No. 10101. It is true that the indefeasibility of torrens title
cannot be collaterally attacked. In the instant case, the original
complaint is for recovery of possession filed by petitioner
against private respondent, not an original action filed by the
latter to question the validity of TCT No. 10101 on which
petitioner bases its right. To rule on the issue of validity in a case
for recovery of possession is tantamount to a collateral attack.
However, it should not [b]e overlooked that private respondent
filed a counterclaim against petitioner, claiming ownership over
the land and seeking damages. Hence, we could rule on the
question of the validity of TCT No. 10101 for the counterclaim
can be considered a direct attack on the same. x x x.25
The above pronouncements were based on the well-settled
principle that a counterclaim is essentially a complaint filed by
the defendant against the plaintiff and stands on the same
footing as an independent action.26
From the foregoing, it is immediately apparent that the courts a
quo erred in their conclusions.1wphi1 The CA erroneously
classified the herein counterclaim as a collateral attack. On the
other hand, the RTC correctly adjudged the same as a direct
attack to the respondents land title but mistakenly declared it
as a prohibited action.
As clearly pronounced in the above-cited jurisprudence, the
petitioners counterclaim is a permissible direct attack to the
validity of respondents torrens title. As such counterclaim, it
involves a cause of action separate from that alleged in the
complaint; it has for its purpose the vindication of a right in as
much as the complaint similarly seeks the redress of one.27 As
the plaintiff in his own counterclaim, the petitioner is equally
entitled to the opportunity granted the plaintiff in the original
complaint, to establish his cause of action and to prove the right
he asserts.
The courts a quo deprived the petitioner of such opportunity
when they barred him from propounding questions relating to
the validity of the respondents title; they unjustifiably
precluded him from presenting evidence of fraud and
misrepresentation upon which his counterclaim is grounded.
The courts a quo, the RTC especially, should have instead dealt
with such issues and allowed the presentation of the facts and
evidence necessary for a complete determination of the
controversy.
WHEREFORE, premises considered, the petition is GRANTED.
The Decision dated January 30, 2004 of the Court of Appeals in
C.A. G.R. SP No. 73495 and the Orders dated August 20, 2001
and July 2, 2002 of the Regional Trial Court of Bayugan, Agusan
del Sur, Branch 7, in Civic Case No. 442 are hereby REVERSED
and SET ASIDE. The trial court is ORDERED to proceed with the
trial of Civil Case No. 442 and to allow petitioner Nemesio
Firaza, Sr. to propound questions pertaining to' the validity of
Original Certificate of Title No. P-16080 and present such other
evidence, testimonial or documentary, substantiating his
counterclaim
10
SO ORDERED.
G.R. No. 175485 July 27, 2011
CASIMIRO DEVELOPMENT CORPORATION, Petitioner,
vs.
RENATO L. MATEO, Respondent.
DECISION
BERSAMIN, J.:
The focus of this appeal is the faith that should be accorded to
the Torrens title that the seller holds at the time of the sale.
In its decision promulgated on August 31, 2006,1 the Court of
Appeals (CA) declared that the respondent and his three
brothers were the rightful owners of the land in litis, and
directed the Office of the Register of Deeds of Las Pias City to
cancel the transfer certificate of title (TCT) registered under the
name of petitioner Casimiro Development Corporation (CDC)
and to issue in its place another TCT in favor of the respondent
and his three brothers. Thereby, the CA reversed the judgment
of the Regional Trial Court (RTC) rendered on May 9, 2000
(dismissing the respondents complaint for quieting of title and
reconveyance upon a finding that CDC had been a buyer in good
faith of the land in litis and that the respondents suit had
already been time-barred).
Aggrieved, CDC brought its petition for review on certiorari.
Antecedents
The subject of this case is a registered parcel of land (property)
with an area of 6,693 square meters, more or less, located in
Barrio Pulang Lupa, Las Pias City, that was originally owned by
Isaias Lara,2 the respondents maternal grandfather. Upon the
death of Isaias Lara in 1930, the property passed on to his
children, namely: Miguela, Perfecta and Felicidad, and a
grandson, Rosauro (son of Perfecta who had predeceased Isaias
in 1920). In 1962, the co-heirs effected the transfer of the full
and exclusive ownership to Felicidad (whose married surname
was Lara-Mateo) under an agreement denominated as Pagaayos
Na Gawa Sa Labas Ng Hukuman.
Felicidad Lara-Mateo had five children, namely: Laura,
respondent Renato, Cesar, Candido, Jr. and Leonardo. With the
agreement of the entire Lara-Mateo family, a deed of sale
covering the property was executed in favor of Laura, who, in
1967, applied for land registration. After the application was
granted, Original Certificate of Title (OCT) No. 6386 was issued
in Lauras sole name.
In due course, the property now covered by OCT No. 6386 was
used as collateral to secure a succession of loans. The first loan
was obtained from Bacoor Rural Bank (Bacoor Bank). To repay
the loan to Bacoor Bank and secure the release of the mortgage,
Laura borrowed funds from Parmenas Perez (Perez), who,
however, required that the title be meanwhile transferred to his
name. Thus, OCT No. 6386 was cancelled and Transfer
Certificate of Title (TCT) No. 438959 was issued in the name of
Perez. Subsequently, Laura recovered the property by repaying
the obligation with the proceeds of another loan obtained from
Rodolfo Pe (Pe), resulting in the cancellation of TCT No. 438595,
and in the issuance of TCT No. S-91595 in Lauras name. She
later executed a deed of sale in favor of Pe, leading to the
issuance of TCT No. S-91738 in the name of Pe, who in turn
constituted a mortgage on the property in favor of China
Banking Corporation (China Bank) as security for a loan. In the
end, China Bank foreclosed the mortgage, and consolidated its
ownership of the property in 1985 after Pe failed to redeem.
Thus, TCT No. (99527) T-11749-A was issued in the name of
China Bank.
In 1988, CDC and China Bank negotiated and eventually came to
terms on the purchase of the property, with China Bank
executing a deed of conditional sale for the purpose. On March
4, 1993, CDC and China Bank executed a deed of absolute sale
over the property. Resultantly, on March 29, 1993, CDC was
issued TCT No. T-34640 in its own name.
In the meanwhile, on February 28, 1991, Felicidad died
intestate.
On June 6, 1991, CDC brought an action for unlawful detainer in
the Metropolitan Trial Court (MeTC) in Las Pias City against the
respondents siblings, namely: Cesar, Candido, Jr., and
Leonardo, and the other occupants of the property. Therein, the
defendants maintained that the MeTC did not have jurisdiction
over the action because the land was classified as agricultural;
that the jurisdiction belonged to the Department of Agrarian
Reform Adjudication Board (DARAB); that they had been in
continuous and open possession of the land even before World
War II and had presumed themselves entitled to a government
grant of the land; and that CDCs title was invalid, considering
that the land had been registered before its being declared
alienable.3
On October 19, 1992, the MeTC ruled in favor of CDC, viz:
The Court, after careful consideration of the facts and the laws
applicable to this case[,] hereby resolves:
1. On the issue of jurisdiction.
The defendants alleged that the land in question is an
agricultural land by presenting a Tax Declaration Certificate
classifying the land as "FISHPOND." The classification of the land
11
in a tax declaration certificate as a "fishpond" merely refers to
the use of the land in question for the purpose of real property
taxation. This alone would not be sufficient to bring the land in
question under the operation of the Comprehensive Agrarian
Reform Law.
2. On the issue of open and adverse possession by the
defendants.
It should be noted that the subject land is covered by a Transfer
Certificate of Title in the name of plaintiffs predecessor-in-
interest China Banking Corporation. Certificates of Title under
the Torrens System is indefeasible and imprescriptible. As
between two persons claiming possession, one having a
[T]orrens title and the other has none, the former has a better
right.
3. On the issue of the nullity of the Certificate of Title.
The defense of the defendants that the subject property was a
forest land when the same was originally registered in 1967 and
hence, the registration is void[,] is not for this Court to decide[,]
for lack of jurisdiction. The certificate of title over the property
must be respected by this Court until it has been nullified by a
competent Court.
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff[,] ordering the defendants
1. [sic] and all persons claiming right[s] under it to vacate the
subject premises located at Pulang Lupa I, Las Pias, Metro
Manila and surrender the possession of the same to herein
plaintiff;
2. to pay the plaintiff reasonable compensation for the use and
occupation of the subject premises hereby fixed at (100.00)
one hundred pesos a month starting November 22, 1990 (the
time when the demand letter to vacate was given) until
defendants actually vacate the property;
No pronouncement as to costs and attorneys fees.
SO ORDERED.4
The decision of the MeTC was assailed in the RTC via petition for
certiorari and prohibition. The RTC resolved against CDC, and
held that the MeTC had acted without jurisdiction because the
land, being a fishpond, was agricultural; hence, the dispute was
within the exclusive jurisdiction of the DARAB pursuant to
Republic Act No. 6657 (Comprehensive Agrarian Reform Law of
1988).5
CDC appealed to the CA, which, on January 25, 1996, found in
favor of CDC, declaring that the MeTC had jurisdiction. As a
result, the CA reinstated the decision of the MeTC.6
On appeal (G.R. No. 128392), the Court affirmed the CAs
decision in favor of CDC, ruling thusly:
WHEREFORE, the petition is DENIED and the Court of Appeals
Decision and Resolution in CA- G.R. SP No. 34039, dated January
25, 1996 and February 21, 1997 respectively, are AFFIRMED. No
costs.
SO ORDERED.7
The decision in G.R. No. 128392 became final.
Nonetheless, on June 29, 1994, the respondent brought an
action for quieting of title, reconveyance of four-fifths of the
land, and damages against CDC and Laura in the RTC in Las Pias
City entitled Renato L. Mateo v. Casimiro Development
Corporation and Laura Mateo de Castro. In paragraph 4 of his
complaint, he stated that he was "bringing this action to quiet
title on behalf of himself and of his three (3) brothers Cesar,
Leonardo, and Candido, Jr., all surnamed MATEO in his
capacity as one of the co-owners of a parcel of land situated at
Barrio Pulang Lupa, Municipality of Las Pias, Metro Manila."
On May 9, 2001, the RTC held in favor of CDC, disposing:
WHEREFORE, and by strong preponderance of evidence,
judgment is hereby rendered in favor of the defendant Casimiro
Development Corporation and against the plaintiff Renato L.
Mateo by (1) Dismissing the complaint, and upholding the
validity and indefeasibility of Transfer Certificate of Title No. T-
34640 in the name of Casimiro Development Corporation; (2)
Ordering the plaintiff Renato Mateo to pay defendant Casimiro
Development Corporation the sum of [a] 200,000.00 as
compensatory damages; [b] 200,000.00 as attorneys fees; and
[c] to pay the costs.
SO ORDERED.8
On appeal (C.A.-G.R. CV No. 71696), the CA promulgated its
decision on August 31, 2006, reversing the RTC and declaring
CDC to be not a buyer in good faith due to its being charged
with notice of the defects and flaws of the title at the time it
acquired the property from China Bank, and decreeing:
WHEREFORE, the Decision dated May 9, 2001 of Branch 225,
Regional Trial Court, Las Pias City in Civil Case No. 94-2045 is
hereby REVERSED and SET ASIDE and a new one rendered:
(1) Declaring appellant Renato Mateo and his brothers and co-
owners Cesar, Candido, Jr., and Leonardo, all surnamed Mateo
12
as well as his sister, Laura Mateo de Castro as the rightful
owners of the parcel of land, subject of this case; and
(2) Ordering the Register of Deeds of Las Pias City, Metro-
Manila to cancel Transfer Certificate of Title No. T-34640 under
the name of appellee Casimiro Development Corporation, and
that a new one be issued in favor of the appellant and his co-
heirs and siblings, mentioned above as co-owners pro indiviso of
the said parcel.
(3) No pronouncement as to cost.
SO ORDERED.9
The CA denied CDCs motion for reconsideration.
Hence, this appeal, in which CDC urges that the CA committed
serious errors of law,10 as follows:
(A) xxx in failing to rule that the decree of registration over the
Subject Property is incontrovertible and no longer open to
review or attack after the lapse of one (1) year from entry of
such decree of registration in favor of Laura Mateo de Castro.
(B) xxx in failing to rule that the present action is likewise barred
by res judicata.
(C) xxx in failing to rule that the instant action for quieting of
title and reconveyance under PD No. 1529 cannot prosper
because the Subject Property had already been conveyed and
transferred to third parties who claimed adverse title for
themselves.
(D) xxx in failing to rule that the action of respondent for
"quieting of title, reconveyance and damages" is barred by
laches.
(E) xxx in ruling that the Subject Property must be reconveyed to
respondent because petitioner Casimiro Development
Corporation is not a "purchaser in good faith."
CDC argues that it was a buyer in good faith; and that the CA did
not rule on matters that fortified its title in the property,
namely: (a) the incontrovertibility of the title of Laura; (b) the
action being barred by laches and res judicata; and (c) the
property having been conveyed to third parties who had then
claimed adverse title.
The respondent counters that CDC acquired the property from
China Bank in bad faith, because it had actual knowledge of the
possession of the property by the respondent and his siblings;
that CDC did not actually accept delivery of the possession of
the property from China Bank; and that CDC ignored the failure
of China Bank to warrant its title.
Ruling
We grant the petition.
1.
Indefeasibility of title in the name of Laura
As basis for recovering the possession of the property, the
respondent has assailed the title of Laura.
We cannot sustain the respondent.
There is no doubt that the land in question, although once a
part of the public domain, has already been placed under the
Torrens system of land registration. The Government is required
under the Torrens system of registration to issue an official
certificate of title to attest to the fact that the person named in
the certificate is the owner of the property therein described,
subject to such liens and encumbrances as thereon noted or
what the law warrants or reserves.11 The objective is to obviate
possible conflicts of title by giving the public the right to rely
upon the face of the Torrens certificate and to dispense, as a
rule, with the necessity of inquiring further. The Torrens system
gives the registered owner complete peace of mind, in order
that he will be secured in his ownership as long as he has not
voluntarily disposed of any right over the covered land.12
The Government has adopted the Torrens system due to its
being the most effective measure to guarantee the integrity of
land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. If a person purchases
a piece of land on the assurance that the sellers title thereto is
valid, he should not run the risk of being told later that his
acquisition was ineffectual after all, which will not only be unfair
to him as the purchaser, but will also erode public confidence in
the system and will force land transactions to be attended by
complicated and not necessarily conclusive investigations and
proof of ownership. The further consequence will be that land
conflicts can be even more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens
system, should be the first to accept the validity of titles issued
thereunder once the conditions laid down by the law are
satisfied.13
Yet, registration under the Torrens system, not being a mode of
acquiring ownership, does not create or vest title.14 The Torrens
certificate of title is merely an evidence of ownership or title in
the particular property described therein.15 In that sense, the
issuance of the certificate of title to a particular person does not
preclude the possibility that persons not named in the
certificate may be co-owners of the real property therein
described with the person named therein, or that the registered
13
owner may be holding the property in trust for another
person.16
Nonetheless, it is essential that title registered under the
Torrens system becomes indefeasible and incontrovertible.17
The land in question has been covered by a Torrens certificate
of title (OCT No. 6386 in the name of Laura, and its derivative
certificates) before CDC became the registered owner by
purchase from China Bank. In all that time, neither the
respondent nor his siblings opposed the transactions causing
the various transfers. In fact, the respondent admitted in his
complaint that the registration of the land in the name of Laura
alone had been with the knowledge and upon the agreement of
the entire Lara-Mateo family. It is unthinkable, therefore, that
the respondent, fully aware of the exclusive registration in her
sister Lauras name, allowed more than 20 years to pass before
asserting his claim of ownership for the first time through this
case in mid-1994. Making it worse for him is that he did so only
after CDC had commenced the ejectment case against his own
siblings.
Worthy of mention is that Candido, Jr., Leonardo, and Cesars
defense in the ejectment case brought by CDC against them was
not predicated on a claim of their ownership of the property,
but on their being agricultural lessees or tenants of CDC. Even
that defense was ultimately rejected by this Court by observing
in G.R. No. 128392 as follows:
With regard to the first element, the petitioners have tried to
prove that they are tenants or agricultural lessees of the
respondent corporation, CDC, by showing that the land was
originally owned by their grandfather, Isaias Lara, who gave
them permission to work the land, and that CDC is merely a
successor-in-interest of their grandfather. It must be noted that
the petitioners failed to adequately prove their grandfathers
ownership of the land. They merely showed six tax declarations.
It has been held by this Court that, as against a transfer
certificate of title, tax declarations or receipts are not adequate
proofs of ownership. Granting arguendo that the land was really
owned by the petitioners grandfather, petitioners did not even
attempt to show how the land went from the patrimony of their
grandfather to that of CDC. Furthermore, petitioners did not
prove, but relied on mere allegation, that they indeed had an
agreement with their grandfather to use the land.
As for the third element, there is apparently no consent
between the parties. Petitioners were unable to show any proof
of consent from CDC to work the land. For the sake of
argument, if petitioners were able to prove that their
grandfather owned the land, they nonetheless failed to show
any proof of consent from their grandfather to work the land.
Since the third element was not proven, the fourth element
cannot be present since there can be no purpose to a
relationship to which the parties have not consented.18
The respondents attack against the title of CDC is likewise
anchored on his assertion that the only purpose for having OCT
No. 6386 issued in the sole name of Laura was for Laura to hold
the title in trust for their mother. This assertion cannot stand,
however, inasmuch as Lauras title had long ago become
indefeasible.
Moreover, the respondents suit is exposed as being, in reality, a
collateral attack on the title in the name of Laura, and for that
reason should not prosper. Registration of land under the
Torrens System, aside from perfecting the title and rendering it
indefeasible after the lapse of the period allowed by law, also
renders the title immune from collateral attack.19 A collateral
attack occurs when, in another action to obtain a different relief
and as an incident of the present action, an attack is made
against the judgment granting the title. This manner of attack is
to be distinguished from a direct attack against a judgment
granting the title, through an action whose main objective is to
annul, set aside, or enjoin the enforcement of such judgment if
not yet implemented, or to seek recovery if the property titled
under the judgment had been disposed of.20
2.
CDC was an innocent purchaser for value
The CA found that CDC acquired the property in bad faith
because CDC had knowledge of defects in the title of China
Bank, including the adverse possession of the respondents
siblings and the supposed failure of China Bank to warrant its
title by inserting an as-is, where-is clause in its contract of sale
with CDC.
The CA plainly erred in so finding against CDC.
To start with, one who deals with property registered under the
Torrens system need not go beyond the certificate of title, but
only has to rely on the certificate of title.21 He is charged with
notice only of such burdens and claims as are annotated on the
title.22 The pertinent law on the matter of burdens and claims is
Section 44 of the Property Registration Decree,23 which
provides:
Section 44. Statutory liens affecting title. Every registered
owner receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land
taking a certificate of title for value and in good faith, shall hold
the same free from all encumbrances except those noted on
said certificate and any of the following encumbrances which
may be subsisting, namely:
14
First. Liens, claims or rights arising or existing under the laws
and Constitution of the Philippines which are not by law
required to appear of record in the Registry of Deeds in order to
be valid against subsequent purchasers or encumbrances of
record.
Second. Unpaid real estate taxes levied and assessed within two
years immediately preceding the acquisition of any right over
the land by an innocent purchaser for value, without prejudice
to the right of the government to collect taxes payable before
that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or
recognized by law, or any government irrigation canal or lateral
thereof, if the certificate of title does not state that the
boundaries of such highway or irrigation canal or lateral thereof
have been determined.
Fourth. Any disposition of the property or limitation on the use
thereof by virtue of, or pursuant to, Presidential Decree No. 27
or any other law or regulations on agrarian reform.
In short, considering that China Banks TCT No. 99527 was a
clean title, that is, it was free from any lien or encumbrance,
CDC had the right to rely, when it purchased the property, solely
upon the face of the certificate of title in the name of China
Bank.24
The CAs ascribing of bad faith to CDC based on its knowledge of
the adverse possession of the respondents siblings at the time
it acquired the property from China Bank was absolutely
unfounded and unwarranted. That possession did not translate
to an adverse claim of ownership that should have put CDC on
actual notice of a defect or flaw in the China Banks title, for the
respondents siblings themselves, far from asserting ownership
in their own right, even characterized their possession only as
that of mere agricultural tenants. Under no law was possession
grounded on tenancy a status that might create a defect or
inflict a flaw in the title of the owner. Consequently, due to his
own admission in his complaint that the respondents own
possession was not any different from that of his siblings, there
was really nothing factually or legally speaking that ought to
have alerted CDC or, for that matter, China Bank and its
predecessors-in-interest, about any defect or flaw in the title.
The vendees notice of a defect or flaw in the title of the vendor,
in order for it to amount to bad faith, should encompass facts
and circumstances that would impel a reasonably cautious
person to make further inquiry into the vendors title,25 or facts
and circumstances that would induce a reasonably prudent man
to inquire into the status of the title of the property in
litigation.26 In other words, the presence of anything that excites
or arouses suspicion should then prompt the vendee to look
beyond the certificate and to investigate the title of the vendor
appearing on the face of said certificate.27
And, secondly, the CA grossly erred in construing the as-is,
where-is clause contained in the deed of sale between CDC (as
vendee) and China Bank (as vendor) as proof or manifestation of
any bad faith on the part of CDC. On the contrary, the as-is,
where-is clause did not affect the title of China Bank because it
related only to the physical condition of the property upon its
purchase by CDC. The clause only placed on CDC the burden of
having the occupants removed from the property. In a sale
made on an as-is, where-is basis, the buyer agrees to take
possession of the things sold "in the condition where they are
found and from the place where they are located," because the
phrase as-is, where-is pertains solely "to the physical condition
of the thing sold, not to its legal situation" and is "merely
descriptive of the state of the thing sold" without altering the
sellers responsibility to deliver the property sold to the buyer.28
What the foregoing circumstances ineluctably indicate is that
CDC, having paid the full and fair price of the land, was an
innocent purchaser for value, for, according to Sandoval v. Court
of Appeals:29
A purchaser in good faith is one who buys 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 claim
or interest of some other persons in the property. He buys the
property with the belief that the person from whom he receives
the thing was the owner and could convey title to the property.
A purchaser cannot close his eyes to facts which should put a
reasonable man on his guard and still claim he acted in good
faith.
WHEREFORE, we grant the petition for review on certiorari; set
aside the decision of the Court of Appeals in CA-GR. CV No.
71696; dismiss the complaint in Civil Case No. 94-2045; and
declare Transfer Certificate of Title No. T-34640 in the name of
Casimiro Development Corporation valid and subsisting.
The respondent shall pay the costs of suit.
SO ORDERED.
15
G.R. No. 163551 July 18, 2011
DATU KIRAM SAMPACO, substituted by HADJI SORAYA
MACABANDO, Petitioner,
vs.
HADJI SERAD MINGCA LANTUD, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari of the Court of Appeals
Decision dated August 15, 2003 in CA-G.R. CV No. 63801 and its
Resolution dated May 13, 2004, denying petitioners motion for
reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud,
the plaintiff in the lower court, filed an action to quiet title with
damages1 with the Regional Trial Court (RTC) of Lanao del Sur,
Branch 8, Marawi City (trial court), against petitioner Datu Kiram
Sampaco (deceased), the defendant in the lower court, who has
been substituted by his heirs, represented by Hadji Soraya
Sampaco-Macabando.2
Respondent alleged in his Complaint3 that he is the owner in fee
simple of a parcel of residential lot located at Marinaut, Marawi
City, with an area of 897 square meters covered by Original
Certificate of Title (OCT) No. P-658. On August 25, 1984,
petitioner Datu Kiram Sampaco, through his daughter Soraya
Sampaco-Macabando with several armed men, forcibly and
unlawfully entered his property and destroyed the nursery
buildings, cabbage seedlings and other improvements therein
worth 10,000.00. On August 30, 1984, Barangay Captain Hadji
Hassan Abato and his councilmen prepared and issued a
decision4 in writing stating that petitioner Datu Kiram Sampaco
is the owner of the subject parcel of land. Respondent stated
that the acts of petitioner and the said decision of the Barangay
Captain may cast a cloud over or otherwise prejudice his title.
Respondent stated that he and his predecessors-in-interest
have been in open, public and exclusive possession of the
subject property. He prayed that the acts of petitioner and the
decision of Barangay Captain Hadji Hassan Abato and his
councilmen be declared invalid, and that petitioner be ordered
to pay respondent damages in the amount of 10,000.00 and
attorneys fees.
In his Answer,5 defendant Datu Kiram Sampaco, petitioner
herein, denied the material allegations of the Complaint.
Petitioner asserted that he and his predecessors-in-interest are
the ones who had been in open, public, continuous, and
exclusive possession of the property in dispute. Petitioner
alleged that OCT No. P-658 was secured in violation of laws and
through fraud, deception and misrepresentation, considering
that the subject parcel of land is a residential lot and the title
S.
issued is a free patent. Moreover, respondent and his
predecessors-in-interest had never taken actual possession or
occupied the land under litigation. On the contrary, petitioner
has all the evidence of actual possession and ownership of
permanent improvements and other plants on the land in
dispute.
Petitioner filed a counterclaim for actual and moral damages,
and attorney's fees for the unfounded complaint and prayed for
its dismissal. He also sought the cancellation of respondents
OCT No. P-658 and the reconveyance of the subject parcel of
land.
During the trial, respondent Hadji Lantud testified that he
acquired the subject lot from his grandmother, Intumo
Pagsidan, a portion thereof from his grandmothers helper,
Totop Malacop, pursuant to a court decision after litigating with
him.6 Respondent had been residing on the lot for more than 30
years, applied for a title thereto and was issued OCT No. P-
658.7 He paid the corresponding real estate taxes for the
land.8 He planted assorted trees and plants on the lot like
bananas, jackfruits, coconuts and others.9 He testified that he
was not aware of the alleged litigation over the lot before
Barangay Captain Hadji Hassan Abato, although he was
furnished a copy of the decision.10
On the other hand, petitioner Datu Kiram Sampaco testified that
the land under litigation is only a portion of the 1,800 square
meters of land that he inherited in 1952 from his father, Datu
Sampaco Gubat.11 Since then, he had been in adverse
possession and ownership of the subject lot, cultivating and
planting trees and plants through his caretaker Hadji Mustapha
Macawadib.12 In 1962, he mortgaged the land (1,800 square
meters) with the Development Bank of the Philippines, Ozamis
branch.13 He declared the land (1,800 square meters) for
taxation purposes14 and paid real estate taxes, and adduced in
evidence the latest Tax Receipt No. 1756386 dated September
15, 19[9]3.15 Petitioner presented four corroborating witnesses
as regards his possession of the subject property.
After trial on the merits, the trial court rendered a Decision on
March 31, 1999 in favor of petitioner, the dispositive portion of
which reads:
WHEREFORE, premises considered the court is of the opinion
and so holds that the preponderance of evidence is in favor of
the defendant and against the plaintiff. Judgment is hereby
rendered as follows:
1. Dismissing plaintiffs complaint for lack of merit;
16
2. Declaring Original Certificate of Title No. P-658 (Exh. A) null
and void and of no legal effect;
3. Declaring the defendant the absolute or true owner and
possessor of the land in dispute; and
4. Ordering the plaintiff to pay the defendant the sum of
10,000.00 for attorneys fees plus 500.00 per appearance.16
The trial court held that the issuance of respondents title, OCT
No. P-658, was tainted with fraud and irregularities and the title
is, therefore, spurious; hence, it is null and void, and without
any probative value. The finding of fraud was based on: (1) the
Certification issued by Datu Samra Andam, A/Adm. Assistant II,
Natural Resources District No. XII-3, Marawi City, stating that
the data contained in respondents title were verified and had
no record in the said office; (2) the said Certification was not
refuted or rebutted by respondent; (3) while free patents are
normally issued for agricultural lands, respondents title is a free
patent title issued over a residential land as the lot is described
in the Complaint as a residential lot; and (4) Yusoph Lumampa,
an employee of the local Bureau of Lands, to whom respondent
allegedly entrusted the paperwork of the land titling, was not
presented as a witness.
Moreover, the trial court stated that respondent failed to
establish with competent and credible evidence that he was in
prior possession of the subject property. No corroborative
witness was presented to further prove his prior possession.
On the other hand, the trial court stated that petitioner offered
documentary evidence, consisting of a contract of real estate
mortgage of the subject property, tax declarations, an official
tax receipt, and testimonial evidence to prove that he had been
in open, public, continuous, and lawful possession of the subject
property in the concept of owner.
Respondent appealed the decision of the trial court to the Court
of Appeals.
On August 15, 2003, the Court of Appeals rendered a Decision
reversing the decision of the trial court, the dispositive portion
of which reads:
WHEREFORE:
1. The appeal is granted and the appealed judgment is hereby
totally REVERSED.
2. To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud
is confirmed the owner of the parcel of land covered by Original
Certificate of Title No. P-658;
3. The defendant-appellee is ordered to pay 50,000.00 as
attorneys fees to the plaintiff-appellant; and
4. Costs against the defendant-appellee.17
Petitioners motion for reconsideration was denied by the Court
of Appeals in its Resolution18 dated May 13, 2004.
The Court of Appeals held that there is no controversy that
respondent is a holder of a Torrens title; hence, he is the owner
of the subject property. The appellate court stressed that
Section 4719 of the Land Registration Act (Act No. 496) provides
that the certificate of title covering registered land shall be
received as evidence in all courts of the Philippines and shall be
conclusive as to all matters stated therein.
The Court of Appeals stated that the Torrens title has three
attributes: (1) a Torrens title is the best evidence of ownership
over registered land and, unless annulled in an appropriate
proceeding, the title is conclusive on the issue of ownership; (2)
a Torrens title is incontrovertible and indefeasible upon the
expiration of one year from the date of the entry of the decree
of registration;20 and (3) a Torrens title is not subject to
collateral attack.21
The Court of Appeals held that petitioners counterclaim filed on
October 15, 1984 for cancellation of respondents original
certificate of title issued on May 22, 1981 was filed beyond the
statutory one-year period; hence, petitioners title had become
indefeasible, and cannot be affected by the decision made by
Barangay Captain Hadji Hassan Abato and his councilmen.
Moreover, the appellate court held that petitioners prayer for
the cancellation of respondents title, OCT No. P-658, through a
counterclaim included in his Answer is a collateral attack, which
the law does not allow, citing Cimafranca v. Court of
Appeals22 and Natalia Realty Corporation v. Valdez.23
The allegation of fraud in securing OCT No. P-658 on the ground
that the property in dispute is a residential lot and not subject of
a free patent was not given weight by the appellate court as it
was supported only by testimonial evidence that did not show
how (by metes and bounds) and why the property in dispute
could not have been the subject of a free patent. The appellate
court stated that a mere preponderance of evidence is not
adequate to prove fraud;24 it must be established by clear and
convincing evidence.
The Court of Appeals also noted that petitioner claimed that the
subject property is only part of his larger property. Although
petitioner introduced proof of payment of the real estate taxes
of the said property, as well as a previous mortgage of the
property, petitioner did not show that the disputed property is
part of his larger property. Hence, the appellate court stated
17
that under such circumstances, it cannot rule that petitioner
owned the land under litigation, since petitioner failed to show
that it is part of his larger property.
The Court of Appeals did not award actual and moral damages,
because respondent failed to prove the amount of any actual
damages sustained, and the instances enumerated under Article
2219 of the Civil Code warranting the award of moral damages
were not present.
However, the Court of Appeals awarded attorney's fees in the
amount of 50,000.00, considering that respondent was forced
to incur expenses to protect his right through the action to quiet
title.
Petitioner filed this petition raising the following issues:
I ownership of the land described therein, and other matters
THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE
FACT THAT THE TORRENS TITLE INVOLVED HEREIN WAS ISSUED
PURSUANT TO A FREE PATENT WHICH COULD NOT BE VALIDLY
ISSUED OVER A PRIVATE LAND.
II
THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT
THAT AS CERTIFIED TO BY THE BUREAU OF LANDS ITSELF NO
SUCH FREE PATENT OVER THE SUBJECT LAND WAS ISSUED BY IT;
HENCE, SAID FREE PATENT IS SPURIOUS.
III
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF
THE TRIAL COURT THAT THE SUBJECT LOT HAD LONG BEEN
OWNED, POSSESSED AND CULTIVATED BY THE DEFENDANT
(PETITIONER HEREIN) OR HIS PREDECESSORS-IN-INTEREST SINCE
TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE
PETITIONERS COUNTERCLAIM FOR CANCELLATION OF
RESPONDENTS TITLE IS BARRED.
V that the land is residential was made only by respondent, but
THE COURT OF APPEALS ERRED IN RULING THAT THE
COUNTERCLAIM IN THE INSTANT CASE IS A COLLATERAL ATTACK
ON RESPONDENT-PLAINTIFFS TITLE.
VI
THE COURT OF APPEALS ERRED IN DENYING PETITIONERS
MOTION FOR RECONSIDERATION.25
The main issue is whether or not the Court of Appeals erred in
sustaining the validity of OCT No. P-658 and confirming
respondent as owner of the property in dispute.
Petitioner contends that the Court of Appeals erred in
disregarding the fact that the Torrens title was issued to
respondent by virtue of a free patent covering a residential lot
that is private land as it has been acquired by petitioner through
open, public, continuous and lawful possession of the land in
the concept of owner. Petitioner thus prayed for the
cancellation of respondents title and the reconveyance of the
subject property. Hence, the Court of Appeals erred in declaring
that the subject lot belongs to respondent.
The contention is without merit.
The Torrens title is conclusive evidence with respect to the
which can be litigated and decided in land registration
proceedings.26 Tax declarations and tax receipts cannot prevail
over a certificate of title which is an incontrovertible proof of
ownership.27 An original certificate of title issued by the Register
of Deeds under an administrative proceeding is as indefeasible
as a certificate of title issued under judicial
proceedings.28 However, the Court has ruled that indefeasibility
of title does not attach to titles secured by fraud and
misrepresentation.29
In this case, petitioner alleged in his Answer to respondents
Complaint in the trial court that respondents title, OCT No. P-
658, was secured in violation of the law and through fraud,
deception and misrepresentation, because the subject parcel of
land is a residential lot, which cannot be subject of a free
patent, since only agricultural lands are subject of a free patent.
The trial court found that "[t]he lot under litigation as clearly
described in the complaint is a residential lot and a free patent
title thereto cannot validly be issued." This finding was one of
the bases for the trial courts declaration that the issuance of
OCT was tainted with fraud and irregularities and is, therefore,
spurious; thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint
the true classification of the disputed land as residential was not
shown to have been made by the President, upon
recommendation by the Secretary of Environment and Natural
Resources, pursuant to Section 9 of Commonwealth Act No.
141, otherwise known as The Public Land Act.30 Hence, the trial
court erred in concluding that there was fraud in the issuance of
respondents free patent title on the ground that it covered
residential land based only on the Complaint which stated that
the property was residential land when it was not shown that it
18
was the President who classified the disputed property as
residential, and OCT No. P-658 itself stated that the free patent
title covered agricultural land. It has been stated that at present,
not only agricultural lands, but also residential lands, have been
made available by recent legislation for acquisition by free
patent by any natural born Filipino citizen. 31 Nevertheless, the
fact is that in this case, the free patent title was granted over
agricultural land as stated in OCT No. P-658.
Moreover, petitioner contends in his petition that the
Certification32 dated July 24, 1987 issued by Datu Samra I.
Andam, A/Adm. Assistant II, Natural Resources District No. XII-3,
Bureau of Lands, Marawi City, certifying that the data contained
in OCT No. P-658 in respondents name had no records in the
said office, showed that respondents Torrens title was spurious.
The Court holds that the certification, by itself, is insufficient to
prove the alleged fraud. Fraud and misrepresentation, as
grounds for cancellation of patent and annulment of title,
should never be presumed, but must be proved by clear and
convincing evidence, mere preponderance of evidence not
being adequate.33 Fraud is a question of fact which must be
proved.34 The signatory of the certification, Datu Samra Andam,
A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi
City, was not presented in court to testify on the due issuance of
the certification, and to testify on the details of his certification,
particularly the reason why the said office had no records of the
data contained in OCT No. P-658 or to testify on the fact of
fraud, if any.
Thus, the Court holds that the evidence on record is insufficient
to prove that fraud was committed in the issuance of
respondents Torrens title. Hence, respondents Torrens title is a
valid evidence of his ownership of the land in dispute.
On the other hand, petitioner claims ownership of the subject
lot, which is merely a portion of a larger property (1,800 square
meters) that he allegedly inherited from his father in 1952, by
virtue of open, public and continuous possession of the land in
the concept of owner making it petitioners private property.
Hence, petitioner prays for reconveyance of the said property.
Article 434 of the Civil Code governs an action for reconveyance,
thus:
Art. 434. In an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title
and not on the weakness of the defendants claim.
Under Article 434 of the Civil Code, to successfully maintain an
action to recover the ownership of a real property, the person
who claims a better right to it must prove two (2) things: first,
the identity of the land claimed; and second, his title thereto.35
In regard to the first requisite, in an accion reinvindicatoria, the
person who claims that he has a better right to the property
must first fix the identity of the land he is claiming by describing
the location, area and boundaries thereof.36
In this case, petitioner claims that the property in dispute is part
of his larger property. However, petitioner failed to identify his
larger property by providing evidence of the metes and bounds
thereof, so that the same may be compared with the technical
description contained in the title of respondent, which would
have shown whether the disputed property really formed part
of petitioners larger property. The appellate court correctly
held in its Resolution dated May 13, 2004 that petitioners claim
is solely supported by testimonial evidence, which did not
conclusively show the metes and bounds of petitioners larger
property in relation to the metes and bounds of the disputed
property; thus, there is no sufficient evidence on record to
support petitioners claim that the disputed property is part of
his larger property.
In regard to the second requisite of title to property, both
petitioner and respondent separately claim that they are
entitled to ownership of the property by virtue of open, public,
continuous and exclusive possession of the same in the concept
of owner. Petitioner claims that he inherited the subject
property from his father in 1952, while respondent claims that
he acquired the property from his grandmother Intumo
Pagsidan, a portion thereof from his grandmothers helper
Totop Malacop pursuant to a court decision after litigating with
him.37 Respondent has OCT No. P-658 to prove his title to the
subject property, while petitioner merely claims that the
property is already his private land by virtue of his open, public,
continuous possession of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of
reconveyance as he failed to prove the identity of his larger
property in relation to the disputed property, and his claim of
title by virtue of open, public and continuous possession of the
disputed property in the concept of owner is nebulous in the
light of a similar claim by respondent who holds a free patent
title over the subject property. As stated in Ybaez v.
Intermediate Appellate Court,38 it is relatively easy to declare
and claim that one owns and possesses public agricultural land,
but it is entirely a different matter to affirmatively declare and
to prove before a court of law that one actually possessed and
cultivated the entire area to the exclusion of other claimants
who stand on equal footing under the Public Land Act
(Commonwealth Act No. 141, as amended) as any other
pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in
ruling that petitioners counterclaim is time-barred, since the
19
one-year prescriptive period does not apply when the person
seeking annulment of title or reconveyance is in possession of
the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago.39Petitioner also contends that the Court of Appeals
erred in ruling that the counterclaim in this case is a collateral
attack on respondents title, citing Cimafranca v. Intermediate
Appellate Court.40 Petitioner cites the case of Heirs of Simplicio
Santiago v. Heirs of Mariano E. Santiago,41 which held that a
counterclaim can be considered a direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate
Appellate Court,42 cited by the Court of Appeals to support its
ruling that the prayer for the cancellation of respondents title
through a counterclaim included in petitioners Answer is a
collateral attack on the said title, is inapplicable to this case. In
Cimafranca, petitioners therein filed a complaint for Partition
and Damages, and respondents therein indirectly attacked the
validity of the title involved in their counterclaim. Hence, the
Court ruled that a Torrens title cannot be attacked collaterally,
and the issue on its validity can be raised only in an action
expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v.
Heirs of Mariano E. Santiago, declared that the one-year
prescriptive period does not apply when the party seeking
annulment of title or reconveyance is in possession of the lot, as
well as distinguished a collateral attack under Section 48 of PD
No. 1529 from a direct attack, and held that a counterclaim may
be considered as a complaint or an independent action and can
be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply
when the person seeking annulment of title or reconveyance is
in possession of the lot. This is because the action partakes of a
suit to quiet title which is imprescriptible. In David v. Malay, we
held that a person in actual possession of a piece of land under
claim of ownership may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, and
his undisturbed possession gives him the continuing right to
seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his
title.
xxxx
Section 48 of P.D. 1529, the Property Registration Decree,
provides that a certificate of title shall not be subject to
collateral attack and cannot be altered, modified, or canceled
except in a direct proceeding. An action is an attack on a title
when the object of the action is to nullify the title, and thus
challenge the judgment or proceeding pursuant to which the
title was decreed. The attack is direct when the object of an
action is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an
attack on the judgment or proceeding is nevertheless made as
an incident thereof.
x x x A counterclaim can be considered a direct attack on the
title. In Development Bank of the Philippines v. Court Appeals,
we ruled on the validity of a certificate of title despite the fact
that the nullity thereof was raised only as a counterclaim. It was
held that a counterclaim is considered a complaint, only this
time, it is the original defendant who becomes the
plaintiff.1avvphi1 It stands on the same footing and is to be
tested by the same rules as if it were an independent action. x x
x43
The above ruling of the court on the definition of collateral
attack under Section 48 of P.D. No. 1529 was reiterated in
Leyson v. Bontuyan,44 Heirs of Enrique Diaz v. Virata,45 Arangote
v. Maglunob,46 and Catores v. Afidchao.47
Based on the foregoing, the Court holds that petitioners
counterclaim for cancellation of respondents title is not a
collateral attack, but a direct attack on the Torrens title of
petitioner. However, the counterclaim seeking for the
cancellation of title and reconveyance of the subject property
has prescribed as petitioner has not proven actual possession
and ownership of the property due to his failure to prove the
identity of his larger property that would show that the disputed
property is a part thereof, and his claim of title to the subject
property by virtue of open, public and continuous possession in
the concept of owner is nebulous in the light of a similar claim
by respondent who holds a Torrens title to the subject property.
Respondents original certificate of title was issued on May 22,
1981, while the counterclaim was filed by petitioner on October
15, 1984, which is clearly beyond the one-year prescriptive
period.
In fine, the Court of Appeals did not err in confirming that
respondent is the owner of the parcel of land covered by OCT
No. P-658.
WHEREFORE, the petition is DENIED. The Court of Appeals
decision dated August 15, 2003, and its Resolution dated May
13, 2004 in CA-G.R. CV No. 63801, are hereby AFFIRMED.
No costs.
SO ORDERED.
20
G.R. No. 160895 October 30, 2006
JOSE R. MARTINEZ, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
TINGA, J.:
The central issue presented in this Petition for Review is
whether an order of general default issued by a trial court in a
land registration case bars the Republic of the Philippines,
through the Office of the Solicitor General, from interposing an
appeal from the trial courts subsequent decision in favor of the
applicant.
The antecedent facts follow.
On 24 February 1999, petitioner Jose R. Martinez (Martinez)
filed a petition for the registration in his name of three (3)
parcels of land included in the Cortes, Surigao del Sur Cadastre.
The lots, individually identified as Lot No. 464-A, Lot No. 464-B,
and Lot No. 370, Cad No. 597, collectively comprised around
3,700 square meters. Martinez alleged that he had purchased
lots in 1952 from his uncle, whose predecessors-in-interest
were traceable up to the 1870s. It was claimed that Martinez
had remained in continuous possession of the lots; that the lots
had remained unencumbered; and that they became private
property through prescription pursuant to Section 48(b) of
Commonwealth Act No. 141. Martinez further claimed that he
had been constrained to initiate the proceedings because the
Director of the Land Management Services had failed to do so
despite the completion of the cadastral survey of Cortes,
Surigao del Sur.1
The case was docketed as Land Registration Case No. N-30 and
raffled to the Regional Trial Court (RTC) of Surigao del Sur,
Branch 27. The Office of the Solicitor General (OSG) was
furnished a copy of the petition. The trial court set the case for
hearing and directed the publication of the corresponding
Notice of Hearing in the Official Gazette. On 30 September
1999, the OSG, in behalf of the Republic of the Philippines,
opposed the petition on the grounds that appellees possession
was not in accordance with Section 48(b) of Commonwealth Act
No. 141; that his muniments of title were insufficient to prove
bona-fide acquisition and possession of the subject parcels; and
that the properties formed part of the public domain and thus
not susceptible to private appropriation.2
Despite the opposition filed by the OSG, the RTC issued an order
of general default, even against the Republic of the Philippines,
on 29 March 2000. This ensued when during the hearing of
even date, no party appeared before the Court to oppose
Martinezs petition.3
Afterwards, the trial court proceeded to receive Martinezs oral
and documentary evidence in support of his petition. On 1
August 2000, the RTC rendered a Decision4 concluding that
Martinez and his predecessors-in-interest had been for over 100
years in possession characterized as continuous, open, public,
and in the concept of an owner. The RTC thus decreed the
registration of the three (3) lots in the name of Martinez.
From this Decision, the OSG filed a Notice of Appeal dated 28
August 2000,5 which was approved by the RTC. However, after
the records had been transmitted to the Court of Appeals, the
RTC received a letter dated 21 February 20016 from the Land
Registration Authority (LRA) stating that only Lot Nos. 464-A and
464-B were referred to in the Notice of Hearing published in the
Official Gazette; and that Lot No. 370, Cad No. 597 had been
deliberately omitted due to the lack of an approved survey plan
for that property. Accordingly, the LRA manifested that this lot
should not have been adjudicated to Martinez for lack of
jurisdiction. This letter was referred by the RTC to the Court of
Appeals for appropriate action.7
On 10 October 2003, the Court of Appeals promulgated the
assailed Decision,8 reversing the RTC and instead ordering the
dismissal of the petition for registration. In light of the
opposition filed by the OSG, the appellate court found the
evidence presented by Martinez as insufficient to support the
registration of the subject lots. The Court of Appeals concluded
that the oral evidence presented by Martinez merely consisted
of general declarations of ownership, without alluding to
specific acts of ownership performed by him or his
predecessors-in-interest. It likewise debunked the documentary
evidence presented by Martinez, adjudging the same as either
inadmissible or ineffective to establish proof of ownership.
No motion for reconsideration appears to have been filed with
the Court of Appeals by Martinez, who instead directly assailed
its Decision before this Court through the present petition.
We cannot help but observe that the petition, eight (8) pages in
all, was apparently prepared with all deliberate effort to attain
nothing more but the perfunctory. The arguments raised center
almost exclusively on the claim that the OSG no longer had
personality to oppose the petition, or appeal its allowance by
the RTC, following the order of general default. Starkly put, "the
[OSG] has no personality to raise any issue at all under the
circumstances pointed out hereinabove."9 Otherwise, it is
content in alleging that "[Martinez] presented sufficient and
persuasive proof to substantiate the fact that his title to Lot
Nos. 464-A and 464-B is worth the confirmation he seeks to be
done in this registration case";10 and that the RTC had since
21
issued a new Order dated 1 September 2003, confirming
Martinezs title over Lot No. 370.
In its Comment dated 24 May 2004,11 the OSG raises several
substantial points, including the fact that it had duly opposed
Martinezs application for registration before the RTC; that
jurisprudence and the Rules of Court acknowledge that a party
in default is not precluded from appealing the unfavorable
judgment; that the RTC had no jurisdiction over Lot No. 370
since its technical description was not published in the Official
Gazette; and that as found by the Court of Appeals the evidence
presented by Martinez is insufficient for registering the lots in
his name.12 Despite an order from the Court requiring him to file
a Reply to the Comment, counsel for Martinez declined to do so,
explaining, among others, that "he felt he would only be taxing
the collective patience of this [Court] if he merely repeats x x x
what petitioner had succinctly stated x x x on pages four (4) to
seven (7) of his said petition." Counsel for petitioner was
accordingly fined by the Court.13
The Courts patience is taxed less by redundant pleadings than
by insubstantial arguments. The inability of Martinez to offer an
effective rebuttal to the arguments of the OSG further
debilitates what is an already weak petition.
The central question, as posed by Martinez, is whether the OSG
could have still appealed the RTC decision after it had been
declared in default. The OSG argues that a party in default is not
precluded from filing an appeal, citing Metropolitan Bank &
Trust Co. v. Court of Appeals,14 and asserts that "[t]he Rules of
Court expressly provides that a party who has been declared in
default may appeal from the judgment rendered against him."15
There is error in that latter, unequivocal averment, though one
which does not deter from the ultimate correctness of the
general postulate that a party declared in default is allowed to
pose an appeal. Elaboration is in order.
We note at the onset that the OSG does not impute before this
Court that the RTC acted improperly in declaring public
respondent in default, even though an opposition had been filed
to Martinezs petition. Under Section 26 of Presidential Decree
No. 1529, as amended, the order of default may be issued "[i]f
no person appears and answers within the time allowed." The
RTC appears to have issued the order of general default simply
on the premise that no oppositor appeared before it on the
hearing of 29 March 2000. But it cannot be denied that the OSG
had already duly filed its Opposition to Martinezs petition long
before the said hearing. As we held in Director of Lands v.
Santiago:16
[The] opposition or answer, which is based on substantial
grounds, having been formally filed, it was improper for the
respondent Judge taking cognizance of such registration case to
declare the oppositor in default simply because he failed to
appear on the day set for the initial healing. The pertinent
provision of law which states: "If no person appears and
answers within the time allowed, the court may at once upon
motion of the applicant, no reason to the contrary appearing,
order a general default to be recorded . . . ," cannot be
interpreted to mean that the court can just disregard the
answer before it, which has long been filed, for such an
interpretation would be nothing less than illogical, unwarranted,
and unjust. Had the law intended that failure of the oppositor to
appear on the date of the initial hearing would be a ground for
default despite his having filed an answer, it would have been so
stated in unmistakable terms, considering the serious
consequences of an order of default. Especially in this case
where the greater public interest is involved as the land sought
to be registered is alleged to be public land, the respondent
Judge should have received the applicant's evidence and set
another date for the reception of the oppositor's evidence. The
oppositor in the Court below and petitioner herein should have
been accorded ample opportunity to establish the government's
claim.17
Strangely, the OSG did not challenge the propriety of the default
order, whether in its appeal before the Court of Appeals or in its
petition before this Court. It would thus be improper for the
Court to make a pronouncement on the validity of the default
order since the same has not been put into issue. Nonetheless,
we can, with comfort, proceed from same apparent premise of
the OSG that the default order was proper or regular.
The juridical utility of a declaration of default cannot be
disputed. By forgoing the need for adversarial proceedings, it
affords the opportunity for the speedy resolution of cases even
as it penalizes parties who fail to give regard or obedience to
the judicial processes.
The extent to which a party in default loses standing in court has
been the subject of considerable jurisprudential debate. Way
back in 1920, in Velez v. Ramas,18 we declared that the
defaulting defendant "loses his standing in court, he not being
entitled to the service of notices in the case, nor to appear in
the suit in any way. He cannot adduce evidence; nor can he be
heard at the final hearing."19 These restrictions were
controversially expanded in Lim Toco v. Go Fay,20 decided in
1948, where a divided Court pronounced that a defendant in
default had no right to appeal the judgment rendered by the
trial court, except where a motion to set aside the order of
default had been filed. This, despite the point raised by Justice
Perfecto in dissent that there was no provision in the then Rules
of Court or any law "depriving a defaulted defendant of the right
to be heard on appeal."21
22
The enactment of the 1964 Rules of Court incontestably
countermanded the Lim Toco ruling. Section 2, Rule 41 therein
expressly stated that "[a] party who has been declared in default
may likewise appeal from the judgment rendered against him as
contrary to the evidence or to the law, even if no petition for
relief to set aside the order of default has been presented by
him in accordance with Rule 38."22 By clearly specifying that the
right to appeal was available even if no petition for relief to set
aside the order of default had been filed, the then fresh Rules
clearly rendered the Lim Toco ruling as moot.
Another provision in the 1964 Rules concerning the effect of an
order of default acknowledged that "a party declared in default
shall not be entitled to notice of subsequent proceedings, nor to
take part in the trial."23Though it might be argued that appellate
proceedings fall part of "the trial" since there is no final
termination of the case as of then, the clear intent of the 1964
Rules was to nonetheless allow the defaulted defendant to file
an appeal from the trial court decision. Indeed, jurisprudence
applying the 1964 Rules was unhesitant to affirm a defaulted
defendants right to appeal, as guaranteed under Section 2 of
Rule 41, even as Lim Toco was not explicitly abandoned.
In the 1965 case of Antonio, et al. v. Jacinto,24 the Court
acknowledged that the prior necessity of a ruling setting aside
the order of default "however, was changed by the Revised
Rules of Court. Under Rule 41, section 2, paragraph 3, a party
who has been declared in default may likewise appeal from the
judgment rendered against him as contrary to the evidence or
to the law, even if no petition for relief to set aside the order of
default has been presented by him in accordance with Rule
38."25 It was further qualified in Matute v. Court of
Appeals26 that the new availability of a defaulted defendants
right to appeal did not preclude "a defendant who has been
illegally declared in default from pursuing a more speedy and
efficacious remedy, like a petition for certiorari to have the
judgment by default set aside as a nullity."27
In Tanhu v. Ramolete,28 the Court cited with approval the
commentaries of Chief Justice Moran, expressing the
reformulated doctrine that following Lim Toco, a defaulted
defendant "cannot adduce evidence; nor can he be heard at the
final hearing, although [under Section 2, Rule 41,] he may
appeal the judgment rendered against him on the merits."29
Thus, for around thirty-odd years, there was no cause to doubt
that a defaulted defendant had the right to appeal the adverse
decision of the trial court even without seeking to set aside the
order of default. Then, in 1997, the Rules of Civil Procedure
were amended, providing for a new Section 2, Rule 41. The new
provision reads:
SECTION 1. Subject of appeal.An appeal may be taken from a
judgment or final order that completely disposes of the case, or
of a particular matter therein when declared by these Rules to
be appealable.
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion
seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by
consent, confession or compromise on the ground of fraud,
mistake or duress, or any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against or one or more of
several parties or in separate claims, counterclaims, cross-claims
and third-party complaints, while the main case is pending,
unless the court allows an appeal therefrom; and
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is
not appealable, the aggrieved party may file an appropriate
special civil action under Rule 65.
Evidently, the prior warrant that a defaulted defendant had the
right to appeal was removed from Section 2, Rule 41. On the
other hand, Section 3 of Rule 9 of the 1997 Rules incorporated
the particular effects on the parties of an order of default:
Sec. 3. Default; declaration of.If the defending party fails to
answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party,
and proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting
the claimant such relief as his pleading may warrant, unless the
court in its discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the clerk of
court.
(a) Effect of order of default.A party in default shall be entitled
to notice of subsequent proceedings but shall not take part in
the trial.
(b) Relief from order of default.A party declared in default may
any time after notice thereof and before judgment file a motion
under oath to set aside the order of default upon proper
23
showing that his failure to answer was due to fraud, accident,
mistake or excusable negligence and that he has a meritorious
defense. In such case, the order of default may be set aside on
such terms and conditions as the judge may impose in the
interest of justice.
(c) Effect of partial default.When a pleading asserting a claim
states a common cause of action against several defending
parties, some of whom answer and the others fail to do so, the
court shall try the case against all upon the answers thus filed
and render judgment upon the evidence presented.
(d) Extent of relief to be awarded.A judgment rendered
against a party in default shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated
damages.
xxx
It cannot be escaped that the old provision expressly
guaranteeing the right of a defendant declared in default to
appeal the adverse decision was not replicated in the 1997
Rules of Civil Procedure. Should this be taken as a sign that
under the 1997 Rules a defaulted defendant no longer has the
right to appeal the trial court decision, or that the Lim
Toco doctrine has been reinstated?
If post-1997 jurisprudence and the published commentaries to
the 1997 Rules were taken as an indication, the answer should
be in the negative. The right of a defaulted defendant to appeal
remains extant.
By 1997, the doctrinal rule concerning the remedies of a party
declared in default had evolved into a fairly comprehensive
restatement as offered in Lina v. Court of Appeals:30
a) The defendant in default may, at any time after discovery
thereof and before judgment, file a motion, under oath, to set
aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable
neglect, and that he has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when the
defendant discovered the default, but before the same has
become final and executory, he may file a motion for new trial
under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment
has become final and executory, he may file a petition for relief
under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him
as contrary to the evidence or to the law, even if no petition to
set aside the order of default has been presented by him. (Sec.
2, Rule 41)31
The fourth remedy, that of appeal, is anchored on Section 2,
Rule 41 of the 1964 Rules. Yet even after that provisions
deletion under the 1997 Rules, the Court did not hesitate to
expressly rely again on the Lina doctrine, including the
pronouncement that a defaulted defendant may appeal from
the judgment rendered against him. This can be seen in the
cases of Indiana Aerospace University v. Commission on Higher
Education,32 Tan v. Dumarpa,33 and Crisologo v. Globe Telecom,
Inc.34
Annotated textbooks on the 1997 Rules of Civil Procedure
similarly acknowledge that even under the new rules, a
defaulted defendant retains the right to appeal as previously
confirmed under the old Section 2, Rule 41. In his textbook on
Civil Procedure, Justice Francisco answers the question "What
are the remedies available to a defending party in default?" with
a reiteration of the Lina doctrine, including the remedy that a
defaulted defendant "may also appeal from the judgment
rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been
presented by him."35 Justice Regalado also restates the Lina rule
in his textbook on Civil Procedure, opining that the remedies
enumerated therein, even if under the former Rules of
Procedure, "would hold true under the present amended
Rules."36 Former Court of Appeals Justice Herrerra likewise
reiterates the Lina doctrine, though with the caveat that an
appeal from an order denying a petition for relief from
judgment was no longer appealable under Section 1, Rule 41 of
the 1997 Rules.37 Herrera further adds:
Section 2, paragraph [2] of the former Rule 41, which allows an
appeal from a denial of a petition for relief, was deleted from
the present Rule, and confined appeals to cases from a final
judgment or final order that completely disposes of the case, or
of a particular matter therein, when declared by these rules to
be appealable. A judgment by default may be considered as one
that completely disposes of the case.38
We are hard-pressed to find a published view that the
enactment of the 1997 Rules of Civil Procedure accordingly
withdrew the right, previously granted under the 1964 Rules, of
a defaulted defendant to appeal the judgment by default
against him. Neither is there any provision under the 1997 Rules
which expressly denies the defaulted defendant such a right. If it
is perplexing why the 1997 Rules deleted the previous
authorization under the old Section 2, Rule 41 (on subject of
appeal), it is perhaps worth noting that its counterpart provision
in the 1997 Rules, now Section 1, Rule 41, is different in
orientation even as it also covers "subject of appeal." Unlike in
24
the old provision, the bulk of the new provision is devoted to
enumerating the various rulings from which no appeal may be
taken, and nowhere therein is a judgment by default included. A
declaration therein that a defaulted defendant may still appeal
the judgment by default would have seemed out of place.
Yet even if it were to assume the doubtful proposition that this
contested right of appeal finds no anchor in the 1997 Rules, the
doctrine still exists, applying the principle of stare decisis.
Jurisprudence applying the 1997 Rules has continued to
acknowledge the Lina doctrine which embodies this right to
appeal as among the remedies of a defendant, and no argument
in this petition persuades the Court to rule otherwise.
In Rural Bank of Sta. Catalina v. Land Bank of the
Philippines,39 the Court, through Justice Callejo, Sr., again
provided a comprehensive restatement of the remedies of the
defending party declared in default, which we adopt for
purposes of this decision:
It bears stressing that a defending party declared in default
loses his standing in court and his right to adduce evidence and
to present his defense. He, however, has the right to appeal
from the judgment by default and assail said judgment on the
ground, inter alia, that the amount of the judgment is excessive
or is different in kind from that prayed for, or that the plaintiff
failed to prove the material allegations of his complaint, or that
the decision is contrary to law. Such party declared in default is
proscribed from seeking a modification or reversal of the
assailed decision on the basis of the evidence submitted by him
in the Court of Appeals, for if it were otherwise, he would
thereby be allowed to regain his right to adduce evidence, a
right which he lost in the trial court when he was declared in
default, and which he failed to have vacated. In this case, the
petitioner sought the modification of the decision of the trial
court based on the evidence submitted by it only in the Court of
Appeals.40
If it cannot be made any clearer, we hold that a defendant party
declared in default retains the right to appeal from the
judgment by default on the ground that the plaintiff failed to
prove the material allegations of the complaint, or that the
decision is contrary to law, even without need of the prior filing
of a motion to set aside the order of default. We reaffirm that
the Lim Toco doctrine, denying such right to appeal unless the
order of default has been set aside, was no longer controlling in
this jurisdiction upon the effectivity of the 1964 Rules of Court,
and up to this day.
Turning to the other issues, we affirm the conclusion of the
Court of Appeals that Martinez failed to adduce the evidence
needed to secure the registration of the subject lots in his
name.
It should be noted that the OSG, in appealing the case to the
Court of Appeals, did not introduce any new evidence, but
simply pointed to the insufficiency of the evidence presented by
Martinez before the trial court. The Court of Appeals was
careful to point out that the case against Martinez was
established not by the OSGs evidence, but by petitioners own
insufficient evidence. We adopt with approval the following
findings arrived at by the Court of Appeals, thus:
The burden of proof in land registration cases is incumbent on
the applicant who must show that he is the real and absolute
owner in fee simple of the land applied for. Unless the applicant
succeeds in showing by clear and convincing evidence that the
property involved was acquired by him or his ancestors by any
of the means provided for the proper acquisition of public lands,
the rule is settled that the property must be held to be a part of
the public domain. The applicant must, therefore, present
competent and persuasive proof to substantiate his claim. He
may not rely on general statements, or mere conclusions of law
other than factual evidence of possession and title.
Considered in the light of the opposition filed by the Office of
the Solicitor General, we find the evidence adduced by appellee,
on the whole, insufficient to support the registration of the
subject parcels in his name. To prove the provenance of the
land, for one, all that appellee proffered by way of oral evidence
is the following cursory testimony during his direct examination,
viz:
xxxx
Q You mentioned that you are the owner of these three (3)
parcels of land. How did you begin the ownership of the same?
A I bought it from my uncles Julian Martinez and Juan Martinez.
xxxx
Q x x x x Who took possession of these parcels of land from then
on?
A I took possession, sir
Q As owner?
A Yes, as owner.
Q Up to the present who is in possession as owner of these
parcels of land?
A I took possession.
Q Before Julian Martinez and Juan Martinez sold these parcels
of land before you took possession who were the owners and in
possession of these?
25
A Hilarion Martinez, the father of my predecessors-in-interest
and also my grandfather.
xxxx
Court:
Q Of your own knowledge[,] where [sic] did your grandfather
Hilarion Martinez acquire these lands?
A According to my grandfather he bought that land from a
certain Juan Casano in the year 1870s[,] I think.
xxxx
Q By the way[,] when did your grandfather Hilarion Martinez
die?
A Either in 1920 or 1921.
Q Since you said your immediate predecessors-in-interest Julian
Martinez and Juan Martinez inherited the same from your
grandfather. Can you say it the same that your predecessors-in-
interest were the owners and possessors of the same since
1921 up to the time they sold the land to you in 1952?
A Yes, sir.
xxxx
In the dreary tradition of most land registration cases, appellee
has apparently taken the absence of representation for appellant
at the hearing of his petition as license to be perfunctory in the
presentation of his evidence. Actual possession of land, however,
consists in the manifestation of acts of dominion over it of such a
nature as a party would naturally exercise over his own property.
It is not enough for an applicant to declare himself or his
predecessors-in-interest the possessors and owners of the land
for which registration is sought. He must present specific acts of
ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law requiring
evidentiary support and substantiation.
The record shows that appellee did not fare any better with the
documentary evidence he adduced before the trial court. The
October 20, 1952 Deed of Sale by which appellee claims to have
purchased the subject parcels from his uncle, Julian Martinez,
was not translated from the vernacular in which it was executed
and, by said token, was inadmissible in evidence. Having
submitted a white print copy of the survey plan for Lot Nos. 464-
A and 464-B, appellee also submitted the tracing cloth plan for
Lot No. 370 which does not, however, appear to be approved by
the Director of Lands. In much the same manner that the
submission of the original tracing cloth plan is a mandatory
statutory requirement which cannot be waived, the rule is
settled that a survey plan not approved by the Director of Lands
is not admissible in evidence.41
These findings of the Court of Appeals, arrived at after a
sufficiently extensive evaluation of the evidence, stand in
contrast to that contained in the RTC decision, encapsulated in a
one-paragraph prcis of the factual allegations of Martinez
concerning how he acquired possession of the subject
properties. The Court of Appeals, of course, is an appropriate
trier of facts, and a comparison between the findings of fact of
the Court of Appeals and that of the RTC clearly demonstrates
that it was the appellate court which reached a more thorough
and considered evaluation of the evidence.
As correctly held by the Court of Appeals, the burden of proof
expected of the petitioner in a land registration case has not
been matched in this case.
WHEREFORE, the petition is DISMISSED. Costs against
petitioner.
SO ORDERED.
G.R. No. 160711 August 14, 2004
HEIRS OF MAXIMO LABANON, represented by ALICIA LABANON CAEDO
and the PROVINCIAL ASSESSOR OF COTABATO, Petitioners,
vs.
HEIRS OF CONSTANCIO LABANON, represented by ALBERTO
MAKILANG, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the
recall and nullification of the May 8, 2003 Decision1 of the Court
of Appeals (CA) in CA-G.R. CV No. 65617 entitled Heirs of
Constancio Labanon represented by Alberto Makilang v. Heirs of
Maximo Labanon represented by Alicia Labanon Caedo and the
Provincial Assessor of Cotabato, which reversed the August 18,
1999 Decision2 of the Kidapawan City, Cotabato Regional Trial
Court (RTC), Branch 17, in Civil Case No. 865. Likewise assailed is
the October 13, 2003 Resolution3 which disregarded petitioners
Motion for Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the outbreak
of WWII, he settled upon a piece of alienable and disposable
public agricultural land situated at Brgy. Lanao, Kidapawan,
Cotabato x x x. Constancio cultivated the said lot and introduced
26
permanent improvements that still exist up to the present.
Being of very limited educational attainment, he found it
difficult to file his public land application over said lot.
Constancio then asked his brother, Maximo Labanon who was
better educated to file the corresponding public land application
under the express agreement that they will divide the said lot as
soon as it would be feasible for them to do so. The offer was
accepted by Maximo. During the time of the application it was
Constancio who continued to cultivate the said lot in order to
comply with the cultivation requirement set forth under
Commonwealth Act 141, as amended, on Homestead
applications. After which, on June 6, 1941, due to industry of
Constancio, Homestead Application No. 244742 (E-128802) of
his brother Maximo was approved with Homestead Patent No.
67512. Eventually, Original Certificate of Title No. P-14320 was
issued by the Register of Deeds of Cotabato over said lot in
favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a document
denominated as "Assignment of Rights and Ownership" and
docketed as Doc. No. 20; Page No. 49; Book No. V; Series of
1955 of the Notarial Register of Atty. Florentino Kintanar. The
document was executed to safeguard the ownership and
interest of his brother Constancio Labanon. Pertinent portion of
which is reproduced as follows:
"That I, MAXIMO LABANON, of legal age, married to Anastacia
Sagarino, and a resident of Kidapawan, Cotabato, for and in
consideration of the expenses incurred by my elder brother
CONSTANCIO LABANON also of legal age, Filipino, widower and
a resident of Kidapawan, Cotabato, for the clearing, cultivation
and improvements on the eastern portion xxx Lot No. 1, Blk. 22,
Pls-59 xxx which expenses have been incurred by my said
brother xxx before the outbreak of the last world war xxx I do
hereby assign transfer and convey my rights to, interests in and
ownership on the said eastern portion of said Lot No. 1, Block
22, Pls-59 ONE HUNDRED (100 M) ALONG THE NATIONAL
HIGHWAY, (DAVAO-COTABATO ROAD) by TWO HUNDRED FIFTY
METERS (250 M) going inside the land to cover an area of TWO
AND ONE HALF HECTARES (25,000 SQ. M.), more or less,
adjoining the school site of barrio Lanao, Kidapawan, Cotabato,
to the said CONSTANCIO LABANON, his heirs and assigns, can
freely occupy for his own use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set my hand this 11th
day of February 1995 at Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife)" (p.16, rollo)
On April 25, 1962, Maximo Labanon executed a sworn
statement reiterating his desire that his elder brother
Constancio, his heirs and assigns shall own the eastern portion
of the Lot, pertinent portion of which reads:
"That I am the same and identical person who is a homestead
applicant (HA-224742, E-128802) of a tract of land which is
covered by Homestead Patent No. 67512 dated June 6, 1941,
known as Lot No. 1, Block 22, Pls-59, situated in [B]arrio Lanao,
Municipality of Kidapawan, Province of Cotabato, Philippines,
and containing an area of 5.0000 hectares, more or less;
That I am the same and identical person who executed a deed
of ASSIGNMENT OF RIGHTS AND OWNERSHIP in favor of my
brother Constancio Labanon, now deceased, now for his heirs,
for the eastern half portion of the land above described, and
which deed was duly notarized by notary public Florentino P.
Kintanar on February 11, 1955 at Kidapawan, Cotabato and
entered in his Notarial Register as Doc. No. 20, Page No. 49,
Book No. V, Series of 1955; and
That in order that I and the Heirs of Constancio Labanon will
exercise our respective rights and ownership over the
aforementioned lot, and to give force and effect to said deed of
assignment, I hereby, by these presents, request the Honorable
Director of Lands and the Land Title Commission to issue a
separate title in my favor covering the western half portion of
the aforementioned lot and to the Heirs of Constancio Labanon
a title for the eastern half portion thereof.
IN WITNESS THEREOF, I have hereunto set my hand this 25th
day of April, 1962, at Pikit, Cotabato, Philippines." (p. 9, records)
After the death of Constancio Labanon, his heirs executed an
[e]xtra-judicial settlement of estate with simultaneous sale over
the aforesaid eastern portion of the lot in favor of Alberto
Makilang, the husband of Visitacion Labanon, one of the
children of Constancio. Subsequently, the parcel of land was
declared for taxation purposes in the name of Alberto under TD
No. 11593. However, in March 1991, the defendants heirs of
Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon,
Roberto Nieto and Pancho Labanon, caused to be cancelled
from the records of the defendant Provincial Assessor of
Cotabato the aforesaid TD No. 11593 and the latter, without
first verifying the legality of the basis for said cancellation, did
cancel the same. x x x Further, after discovering that the
defendant-heirs of Maximo Labanon were taking steps to
deprive the heirs of Constancio Labanon of their ownership over
the eastern portion of said lot, the latter, thru Alberto Makilang,
demanded the owners copy of the certificate of title covering
the aforesaid Lot to be surrendered to the Register of Deeds of
Cotabato so that the ownership of the heirs of Constancio may
be fully effected but the defendants refused and still continue
27
to refuse to honor the trust agreement entered into by the
deceased brothers. x x x4
Thus, on November 12, 1991, petitioners filed a complaint5 for
Specific Performance, Recovery of Ownership, Attorneys Fees
and Damages with Writ of Preliminary Injunction and Prayer for
Temporary Restraining Order against respondents docketed as
Civil Case No. 865 before the Kidapawan City RTC. After hearing,
the trial court rendered its August 18, 1999 Decision, the
decretal portion of which reads:
Wherefore, prescinding from the foregoing facts and
considerations the Court finds and so holds that the [defendant-
heirs] of Maximo Labanon represented by Alicia Labanon
Caniedo have proved by preponderance of evidence that they
are entitled to the reliefs set forth in their answer and
consequently judgment is hereby rendered as follows:
1. Ordering the dismissal of the complaint against the Heirs of
Maximo Labanon represented by Alicia Labanon Caniedo for
lack of merit;
2. Ordering the dismissal of the case against the Provincial
Assessor. The claim of the plaintiff is untenable, because the
duties of the Provincial Assessor are ministerial. Moreover, the
presumption of regularity in the performance of his duty is in his
favor;
3. Ordering the plaintiff to pay the defendants the amount of
P20,000.00 as exemplary damages, P10,000.00 for Attorneys
Fees, P500.00 per appearance in Court; and
4. To pay the costs of this suit.
IT IS SO ORDERED.6
Aggrieved, respondents elevated the adverse judgment to the
CA which issued the assailed May 8, 2003 Decision in CA-G.R. CV
No. 65617, the fallo of which states:
WHEREFORE, the appeal is hereby GRANTED for being
meritorious. The assailed decision of the Regional Trial Court is
hereby REVERSED and SET ASIDE and a new one is hereby
entered as follows:
1) Recognizing the lawful possession of the plaintiffs-appellants
over the eastern portion of the property in dispute;
2) Declaring the plaintiffs-appellants as owners of the eastern
portion of the property by reason of lawful possession;
3) Ordering the Provincial Assessor to reinstate TD No. 11593
and declaring TD No. 243-A null and void;
4) Ordering the defendants-appellees to pay the plaintiffs-
appellants the amount of P20,000 as moral damages, P10,000
for attorneys fees, P500.00 per appearance in Court and
5) To pay the costs of the suit.
SO ORDERED.
The Issues
Surprised by the turn of events, petitioners brought this petition
before us raising the following issues, to wit:
1. Whether or not Original Certificate of Title No. 41320 issued
on April 10, 1975 in the name of MAXIMO LABANON be now
considered indefeasible and conclusive; and
2. Whether or not the Trust Agreement allegedly made by
Constancio Labanon and Maximo Labanon prescribed.7
The Courts Ruling
The petition must fail.
First Issue
Respondents are not precluded from challenging the validity of
Original Certificate of Title No. P-41320
Petitioners argue that respondents can no longer question
Maximo Labanons ownership of the land after its registration
under the principle of indefeasibility of a Transfer Certificate of
Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section
32 of Presidential Decree No. (PD) 1529, amending the Land
Registration Act, which provides:
Section 32. Review of decree of registration; Innocent purchaser
for value. The decree of registration shall not be reopened or
revised by reason of absence, minority, or other disability of any
person adversely affected thereby, nor by any proceeding in any
court for reversing judgments, subject, however, to the right of
any person, including the government and the branches
thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual
fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later
than one year from and after the date of the entry of such
decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value
has acquired the land or an interest therein, whose rights may
be prejudiced. Whenever the phrase "innocent purchaser for
28
value" or an equivalent phrase occurs in this Decree, it shall be
deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of
registration and the certificate of title issued shall become
incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for
damages against the applicant or any other persons responsible
for the fraud.
Contrary to petitioners interpretation, the aforequoted legal
provision does not totally deprive a party of any remedy to
recover the property fraudulently registered in the name of
another. Section 32 of PD 1529 merely precludes the reopening
of the registration proceedings for titles covered by the Torrens
System, but does not foreclose other remedies for the
reconveyance of the property to its rightful owner. As
elaborated in Heirs of Clemente Ermac v. Heirs of Vicente
Ermac:
While it is true that Section 32 of PD 1529 provides that the
decree of registration becomes incontrovertible after a year, it
does not altogether deprive an aggrieved party of a remedy in
law. The acceptability of the Torrens System would be impaired,
if it is utilized to perpetuate fraud against the real owners.8
A more succinct explanation is found in Vda. De Recinto v.
Inciong, thus:
The mere possession of a certificate of title under the Torrens
system does not necessarily make the possessor a true owner of
all the property described therein for he does not by virtue of
said certificate alone become the owner of the land illegally
included. It is evident from the records that the petitioner owns
the portion in question and therefore the area should be
conveyed to her. The remedy of the land owner whose property
has been wrongfully or erroneously registered in another's
name is, after one year from the date of the decree, not to set
aside the decree, but, respecting the decree as incontrovertible
and no longer open to review, to bring an ordinary action in the
ordinary court of justice for reconveyance or, if the property has
passed into the hands of an innocent purchaser for value, for
damages.9 (Emphasis supplied.)
Undeniably, respondents are not precluded from recovering the
eastern portion of Original Certificate of Title (OCT) No. P-
14320, with an area subject of the "Assignment of Rights and
Ownership" previously owned by their father, Constancio
Labanon. The action for Recovery of Ownership before the RTC
is indeed the appropriate remedy.
Second Issue
The trust agreement between Maximo Labanon and Constancio
Labanon may still be enforced
Former Vice-President and Senator Arturo Tolentino, a noted
civilist, explained the nature and import of a trust:
Trust is the legal relationship between one person having an
equitable ownership in property and another person owning the
legal title to such property, the equitable ownership of the
former entitling him to the performance of certain duties and
the exercise of certain powers by the latter.10
This legal relationship can be distinguished from other
relationships of a fiduciary character, such as deposit,
guardianship, and agency, in that the trustee has legal title to
the property.11 In the case at bench, this is exactly the
relationship established between the parties.
Trusts are classified under the Civil Code as either express or
implied. Such classification determines the prescriptive period
for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that
"[n]o particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly intended."
Civil law expert Tolentino further elucidated on the express
trust, thus:
No particular form of words or conduct is necessary for the
manifestation of intention to create a trust. It is possible to
create a trust without using the word "trust" or "trustee".
Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question
in each case is whether the trustor manifested an intention to
create the kind of relationship which to lawyers is known as
trust. It is immaterial whether or not he knows that the
relationship which he intends to create is called a trust, and
whether or not he knows the precise characteristics of the
relationship which is called a trust.12
Correlatively, we ruled in Estate of Edward Miller Grimm v.
Estate of Charles Parsons and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the
parties, by some writing or deed or by words evidencing an
intention to create a trust; the use of the word trust is not
required or essential to its constitution, it being sufficient that a
trust is clearly intended.131avvphi1
In the instant case, such intention to institute an express trust
between Maximo Labanon as trustee and Constancio Labanon
as trustor was contained in not just one but two written
documents, the Assignment of Rights and Ownership as well as
29
Maximo Labanons April 25, 1962 Sworn Statement. In both
documents, Maximo Labanon recognized Constancio Labanons
ownership and possession over the eastern portion of the
property covered by OCT No. P-14320, even as he recognized
himself as the applicant for the Homestead Patent over the
land. Thus, Maximo Labanon maintained the title over the
property while acknowledging the true ownership of Constancio
Labanon over the eastern portion of the land. The existence of
an express trust cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in
Bueno v. Reyes that unrepudiated written express trusts are
imprescriptible:
While there are some decisions which hold that an action upon
a trust is imprescriptible, without distinguishing between
express and implied trusts, the better rule, as laid down by this
Court in other decisions, is that prescription does supervene
where the trust is merely an implied one. The reason has been
expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs.
Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions
for recovery of real property prescribed in 10 years, excepting
only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case
of Diaz v. Gorricho, L-11229, March 29, 1958, however, the
continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are imposed
by law) where no fiduciary relation exists and the trustee does
not recognize the trust at all.14
This principle was amplified in Escay v. Court of Appeals this
way: "Express trusts prescribe 10 years from the repudiation of
the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 0.G.
p. 8429, Sec. 40, Code of Civil Procedure)."15
In the more recent case of Secuya v. De Selma, we again ruled
that the prescriptive period for the enforcement of an express
trust of ten (10) years starts upon the repudiation of the trust by
the trustee.16
In the case at bar, Maximo Labanon never repudiated the
express trust instituted between him and Constancio Labanon.
And after Maximo Labanons death, the trust could no longer be
renounced; thus, respondents right to enforce the trust
agreement can no longer be restricted nor prejudiced by
prescription.
It must be noted that the Assignment of Rights and Ownership
and Maximo Labanons Sworn Statement were executed after
the Homestead Patent was applied for and eventually granted
with the issuance of Homestead Patent No. 67512 on June 6,
1942. Evidently, it was the intent of Maximo Labanon to hold
the title over the land in his name while recognizing Constancio
Labanons equitable ownership and actual possession of the
eastern portion of the land covered by OCT No. P-14320.
In addition, petitioners can no longer question the validity of the
positive declaration of Maximo Labanon in the Assignment of
Rights and Ownership in favor of the late Constancio Labanon,
as the agreement was not impugned during the formers
lifetime and the recognition of his brothers rights over the
eastern portion of the lot was further affirmed and confirmed in
the subsequent April 25, 1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of
the settled precept that "[w]here one derives title to property
from another, the act, declaration, or omission of the latter,
while holding the title, in relation to the property, is evidence
against the former." Thus, petitioners have accepted the
declaration made by their predecessor-in-interest, Maximo
Labanon, that the eastern portion of the land covered by OCT
No. P-14320 is owned and possessed by and rightfully belongs
to Constancio Labanon and the latters heirs. Petitioners cannot
now feign ignorance of such acknowledgment by their father,
Maximo.
Lastly, the heirs of Maximo Labanon are bound to the
stipulations embodied in the Assignment of Rights and
Ownership pursuant to Article 1371 of the Civil Code that
contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the
commitment made by their father with respect to the subject
property since they were merely subrogated to the rights and
obligations of their predecessor-in-interest. They simply stepped
into the shoes of their predecessor and must therefore
recognize the rights of the heirs of Constancio over the eastern
portion of the lot. As the old adage goes, the spring cannot rise
higher than its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA
Decision and October 13, 2003 Resolution in CA-G.R. CV No.
65617 are AFFIRMED with the modifications that the Kidapawan
City, Cotabato RTC, Branch 17 is directed to have OCT No. P-
14320 segregated and subdivided by the Land Management
Bureau into two (2) lots based on the terms of the February 11,
1955 Assignment of Rights and Ownership executed by Maximo
Labanon and Constancio Labanon; and after approval of the
subdivision plan, to order the Register of Deeds of Kidapawan
City, Cotabato to cancel OCT No. P-14320 and issue one title
each to petitioners and respondents based on the said
subdivision plan.
30
Costs against petitioners.
SO ORDERED.
G.R. No. 150629 June 30, 2004
RENATO TICHANGCO; ROMEO RAMOS, for himself and the SAMAHANG
MAGKAKAPITBAHAY NG DULONG GAGALANGIN; ANTONIO PASCO, for
himself and the SAMAHANG MAGKAKAPITBAHAY NG BARANGAY 186;
CELSO SANTIAGO, for himself and the SAMAHANG NAGKAKAISANG
DAMDAMIN NG SUNOG APOG; and ARTURO BALLO, for himself and the
FEDERATION KAPIT-BISIG HOMEOWNERS ASSOCIATION,
INC., petitioners,
vs.
The Honorable ALFREDO ENRIQUEZ, Administrator, Land Registration
Authority; The LAND REGISTRATION AUTHORITY; and/or The
SUCCESSORS-IN-INTEREST OF SEVERINO MANOTOK, BENITA MANOTOK,
AMBROSIO MANOTOK and/or RICARDO MANOTOK, namely, PATRICIA L.
TIONGSON and/or ELISA V. MANOTOK, respondents.
DECISION
PANGANIBAN, J.:
Unless contrary substantial evidence is presented in the proper
proceedings by the proper party, a Torrens certificate of title
cannot be overturned. The Torrens system rests on stability --
on the assurance that once ownership is recorded in the proper
registry, owners can rest easy on their properties.
The Case
Before us is a Petition for Review1 challenging the August 8,
2001 Decision2 and the October 29, 2002 Resolution3 of the
Court of Appeals (CA) in CA-GR SP No. 54648. The assailed
Decision affirmed the findings of the then Land Registration
Authority (LRA) administrator, Alfredo Enriquez, that there were
no legal grounds to initiate appropriate proceedings to nullify
Original Certificate of Title (OCT) Nos. 820 and 7477 and the
subsequent titles derived therefrom: Transfer Certificate of Title
(TCT) Nos. 128240 to 128249, inclusive, and TCT No. 128270 --
all covering parcels of land in Tondo, Manila registered in the
names of private respondents.
The challenged Resolution denied reconsideration.
The Facts
The antecedents are summarized in the Decision of the CA as
follows:
Sometime in March 1996, Renato Tichangco, in behalf of the
homeowners association of Gagalangin and Sunog Apog
(Tondo, Manila), who are occupants of various parcels of land in
Gagalangin, Tondo, filed a land title verification request with the
Land Registration Authority (LRA), docketed as LTV No. 96-0376.
The verification request was prompted by an alleged claim of
ownership of a certain Manotok over the land which petitioners
occupy, and which they perceive as public land, being portions
of the dried or filled bed of Estero de Maypajo and Sunog Apog
area, and which allegedly have already been identified as Area
for Priority Development under the Urban Poor Law. Manotoks
claim is anchored upon Survey Plan Psd-25141, allegedly
covering Lots 62-B and 69, Blk. 2918 of the Manila Cadastre,
dated 22 December 1948 and Survey Plan (LRC) Psd-44026,
allegedly covering Lots 86-A to C and 80-C-1 to 3, also of the
Manila Cadastre. On 23 October 1996, the LRA-Task Force
issued a report stating, among others, that "(a)s appearing on
the survey plan (i.e., plan Psd-25141), Lots 62 and 69 were
bounded among others by ESTERO DE MAYPAJO and Lot 55-C,
Psd-11746." The task force also found that Psd-25141 and (LRC)
Psd-44026 overlap with other surveys. Moreover, it found that
"(t)he Lands Management Bureau x x x has no record showing
that Lot 55-C, Psd-11746 was issued patent in favor of some
private persons," and that "(v)erification on MIS No. 1955 for
Manila, in the file with this Authority, disclosed no previous
plotting of a title over Lot 55-C, Psd-11746 located near the
Estero de Maypajo, Tondo, Manila and appearing as boundary in
survey plan Psd-25141 of Ricardo Manotok."
Subsequently, the Estero de Sunog Apog homeowners, thru City
Councilor Danilo Varona, 2nd District, Tondo, Manila, made
similar requests for verification of TCTs Nos. 12870, and 128240
to 128249, inclusive, with the LRA, docketed as LTV-98-1222.
The LRA-Task Force found that "[s]ubject titles covered ten (10)
lots under (LRC) Pcs-14840, which were consolidation-
subdivision of Psd-11746 and (LRC) Psd-7815." TCT Nos. 128240
to 128249 had its origin from two Original Certificate of Title
(OCT) No. 820, issued pursuant to Decree of Registration No.
1424 (31 January 1905), Expediente Number 302. These consist
of Lots 1 to [10] of the consolidation-subdivision plan (LRC) Pcs-
14840, portions of the consolidation of Lots 55-B and 55-C,
Block 2918, Psd-11746, B, (LRC) Psd-7815, LRC Record No. 302
& N-1555. TCT No. 128270, on the other hand, had its origin
from OCT No. 520 (sic) and 7477, issued pursuant to Decree
Nos. 1424 and N-[23419], LRC Record No[s. 302,] N-1555. This
lot is more particularly identified as Lot 10 of the consolidation-
subdivision plan (LRC) Pcs-14686, portion of the consolidated
Lots A, (LRC) Psd-7815, Psu-117259 & 55-A, Blk. 2918, Psd-
11746, LRC Cad. No. 302 & Rec. No. N-1555. Moreover, the task
force found that "(i)n plotting, based on the Manila Cadastral
Map, surveys (LRC) Pcs-14686 and (LRC) Pcs-14840, of the
above subjects, have encroached:
1. Over the Estero de Sunog Apog by an estimated 30 meters;
and
2. Over all of the Sapang Visita."
31
The task force hence referred the matter to the LRA-OSG Task
Force for appropriate action.
Petitioners sought the assistance of the Office of the Solicitor
General (OSG) for legal action on OCTs Nos. 820 and 7477. On
18 February 1999, the OSG wrote a letter to public respondent
for a review and evaluation of the records on the issuance of
TCTs Nos. 128240 to 128249, and 128270 covering parcels of
land in Gagalangin, Tondo, Manila, docketed as Task Force TM
No. 98-0087. In reply, public respondent issued the assailed
"final resolution", stating, inter alia, that the parcels of land
described in TCTs Nos. 128240 to 128249 were originally
registered on 09 January 1907 in the Manila Registry of Deeds
as OCT No. 820 pursuant to Decree No. 1424 in Record No. 702
[sic]. In finding no legal grounds to initiate an action for the
nullification of the assailed certificates of title, public
respondent ratiocinated that:
"Upon thorough examination of Lots 55-A (28,525 sqm.), 55-B
(28,525.4 sqm.) and 55-C (15,377.8 sqm.) of Plan 11746 covered
by TCTs Nos. 49286 to 49288, respectively, which emanated
from OCT No. 820, the following were established:
1. That the adjoining on the S.W., N.W. of Lot 55-A, Block 2918,
of the subdivision plan Psd-11746, covering TCT No. 42986 are
by Lots 56, 70, Block 2918, Manila Cadastre and Sapang Visita
and by Sunog Apog, respectively;
2. That the adjoining on the West of Lot 55-B, Block 2918 of the
subdivision plan Psd-11746, covering TCT No. 42987 is by Estero
de Sapang (sic) Apog;
3. That the adjoining N.E., N.W. of Lot 55-C, Block 2918 of the
subdivision plan Psd-11746, covering TCT No. 49288 are by
Estero de Maypajo and Estero de Sunog Apog, respectively;
4. That it was mentioned on the decision dated April 25, 1955
that the parcel of land Psu-117186 and Psu-117259 decreed
under N-23419, issued in the name of Severino Manotoc, are
the adjoining properties of Lot 55-A, 55-B and 55-C, Block No.
2918 of the subdivision plan Psd-11746, covered by TCTs Nos.
49286, 24542 and 24522, respectively, and was further
mentioned in the said decision that the said land were really
acquired by accretion as the Sapang Visita is no longer navigable
and Estero de Maypajo and Sapang (sic) Apog Creek is generally
dried[;]
5. That in the course of examining the subdivision plan (LRC)
Psd-7815, it appears that the adjoining on the N.E. and S.W. are
Lots 1 and 3 of Plan Psu-174649 and Psu-11259 in the name of
Severino Manotoc and beyond of which are Estero de Maypajo
(10 to 12 meters wide), Estero de Sunog Apog (20 meters wide)
and Sapang Visita, respectively.
"On the other hand, Lot 10 of Plan (LRC) Pcs-14684, being a
portion of the consolidation of Lots A, (LRC) Psd-7815, Psu-
117259 & 55-A, Blk. 2918, Psd-11746, was originally registered
in Manila Registry of Deeds as OCT No. 820 (erroneously typed
therein as OCT No. 520) and OCT No. 7477. In other words, Lot
10 is the result of the earlier consolidation and subdivision of
certain parcels of land covered by certificates of title which
emanated from OCT No. 820 and OCT No. 7477, as evidenced
by Plan (LRC) Pcs- 14648 (approved by LRA on 19 December
1972), Plan (LRC) Psd-7815 (approved by LRA on 24 July 1969),
Plan Psu-117259 (appears to have been approved by the Bureau
of Lands on 11 February 1936).
"OCT No. 7477 was issued by the Manila Register of Deeds in
1955 pursuant to Decree No. N-23419 in Land Registration Case
No. N-1-LRC Record No. N-1555 in favor of Severino Manotok,
covering two (2) parcels of land described in Plan Psu-117186
(8,838 sq. meters) and Plan Psu-117259 (1,689.30 sq. meters).
Decree No. N-23419 was issued by this Authority on 18 June
1955 pursuant to the Decision dated 25 A[pril] 1955 of former
Judge Bienvenido A. Tan of the then Court of First Instance of
Manila in GLRO Record No. 1555 (Severino Manotok, applicant
vs. The Director of Lands, Oppositor), the pertinent portions of
which read:
It is conceded that the two parcels of land are agricultural in
nature, and the only question to be decided is whether they are
public or private lands. The decision of the Court of Appeals
raises no other question but the following:
Applicant likewise contended that he, his coheirs and his late
father, (Severino), had always believed that the land, sought for
registration was a part, and in fact included, in their old
registered property. Such contention could have been properly
substantiated by the certificate of title covering the old property
and the tax declaration for assessment purposes, showing
whether it was bounded by the creeks now cited as boundaries
of the Lot in question. But they were not presented as evidence.
Now that the said certificates of title were presented together
with the memorandum of the Commissioner of Land
Registration, the contention of the applicant is duly
corroborated. The parcels of land sought to be registered are
not included in the titles issued; but are adjoining the lots
covered by said certificates of title. There is no question that the
said parcels of land have been in the actual possession of the
applicant and that his possession as well as that of his
predecessors have been open, exclusive, continuous, adverse
and in the concept of owner for the number of years required
by law as the Sapang Visita is no longer navigable and its bed is
dry, and that the Sunog Apog Creek is generally dried up due to
the ordinary course of its current. The fact that his physical
32
possession of these two parcels of land for the number of years
required cannot be denied, and has not been denied or
contradicted by any other evidence submitted by the oppositor.
As well remarked by the Court of Appeals in its decision, the
oppositor by a mere inference would make us believe that the
applicant or his predecessors could not have occupied these
Lots from time immemorial, as alleged. They got flooded at high
tide, and only on Lot B does bacaoan grow and sparsely.
"Based on the said decision, it would appear that the parcels of
land covered by OCT No. 7477 were formerly part of Estero de
Maypajo, Sapang Visita and Estero de Sunog Apog which had
dried up.
"Accordingly, and considering that the dried up portion of the
esteros were the subject of regular land registration
proceedings; and that a period of one (1) year form the decree
of registration and original certificate of title had already lapsed
without said decrees being controverted by any adverse party
within the reglementary period, the certificate of title become
incontrovertible. (Sec. 32, PD 1529; Pamintuan vs. San Agustin,
343 Phil. 558)
"As narrated above, the issuance of TCTs Nos. 128240 to
128249, which emanated from OCT No. 820, are supported by
the records of the Manila Registry of Deeds."4
Ruling of the Court of Appeals
The CA held that OCT No. 820 had been issued on January 7,
1907, not on January 31, 1905, as petitioners claim. True,
Decree No. 1424 had been issued on January 31, 1905, but it
was entered or transcribed in the registration book of the
Register of Deeds only in 1907. Pursuant to Section 42 of Act
No. 4965 (otherwise known as the Land Registration Act), OCT
No. 820 took effect on January 7, 1907, the date of the
transcription of the decree. The record number of Decree No.
1424, however, should be 786. Further, the appellate court held
that an OCT was conclusive on all matters stated therein. Hence,
the fact that the copy of Decree No. 1424 was no longer extant
in the records of the LRA was of no moment.
The CA also held that OCT No. 7477 was already
incontrovertible, because it had been the subject of regular land
registration proceedings. More than one year after its
registration, the decree was not controverted by any adverse
party.
In their Motion for Reconsideration, petitioners raised the
minority of the land registration applicants -- Severino, Benita,
Ambrosio and Ricardo, all surnamed Manotok -- as an additional
ground to nullify OCT No. 820. Ostensibly, they had filed their
application without the assistance of a legally appointed
guardian. The CA, however, denied petitioners Motion for
Reconsideration for lack of merit.6
Hence, this present recourse entitled by petitioners as a
"Petition for Certiorari under Rule 65," filed on November 20,
2001.
On December 10, 2001, this Court (Third Division) dismissed the
Petition, because certiorari was not a substitute for the lost
remedy of appeal.7
On February 6, 2002, the Court -- upon reconsideration --
deemed the Petition as one filed under Rule 45 and required
respondents to comment thereon.8 After all, it had been
submitted within the 15-day period required by Rule 45.
Issues
Petitioners raise the following issues:
"A. With respect to OCT No. 820
(10) Did respondent Court of Appeals commit grave abuse of
discretion tantamount to or in excess of jurisdiction when it
failed to declare null and void OCT No. 820, despite the
following undisputed facts:
(1) OCT No. 820 was issued in the name of [m]inors Severino,
Benita, Ambrosio and Ricardo, all surnamed Manotok, aged 17,
14, 12 and 10, without a court appointed guardian; and
(2) Decree of Registration No. 1424 of January 31, 1905 (which
led to the issuance of OCT No. 820) was issued before
completion of the magnetic survey of the parcels of land
covered by OCT No. 820 on November 15, 1906.
(11) Did respondent Court of Appeals violate Section 14, Article
VIII, 1987 Constitution when it omitted in its narration of facts
that the Magnetic Survey of the parcels of land covered by OCT
No. 820 was made and completed only on November 15, 1906?
"B. With respect to OCT No. 7477
(12) Did respondent Court of Appeals commit grave abuse of
discretion tantamount to or in excess of jurisdiction when it
failed to declare OCT No. 7477 null and void despite the
undisputed and conclusive fact that the parcels of land it covers
were formerly part of the Estero de Maypajo, Estero de Sunog
Apog and Sapang Visita, or inalienable lands of the public
domain intended for public use?"9
In simpler and more understandable language, the issues raised
by petitioners are as follows: 1) whether OCT Nos. 820 and 7477
are valid; and 2) whether the CA complied with Section 14 of
Article VIII of the 1987 Constitution.
33
The Courts Ruling
The Petition has no merit.
Preliminary Issue:
Propriety of Petition for Certiorari Under Rule 65
At the outset, this Court notes that petitioners erroneously
anchor their Petition on Rule 65. Their remedy should be based
on Rule 45, because they are appealing a final disposition of the
Court of Appeals.
"Certiorari under Rule 65 is a remedy narrow in scope and
inflexible in character. It is not a general utility tool in the legal
workshop."10 It involves a correction of errors of jurisdiction
only, or grave abuse of discretion amounting to lack or excess of
jurisdiction. It is not a substitute for an appeal, when the latter
remedy is available.11
Indubitably, the CA had jurisdiction over petitioners appeal
from the Resolution of the LRA and rendered the assailed
Decision in the proper exercise of that jurisdiction. Under the
circumstances, Rule 45 was the plain, speedy and adequate
remedy in the ordinary course of law.
Since the Petition was filed within the 15-day period, in the
interest of justice it shall be treated as one for review under
Rule 45, and not for certiorari under Rule 65.
First Issue:
Validity of OCT Nos. 820 and 7477
The fundamental purpose of the Land Registration Law (Act No.
496, now PD 1529) is to finally settle title to real property 12 in
order to preempt any question on the legality of the title --
except claims that were noted on the certificate itself at the
time of registration or those that arose subsequent
thereto.13 Consequently, once the title is registered under the
said law, owners can rest secure on their ownership and
possession.
The proceedings for the judicial registration of land under the
Torrens system involve more consequences than an ordinary
action would.14 Once a decree of registration is made under the
Torrens system, and the reglementary period has passed within
which the decree may be questioned, the title is perfected and
cannot be collaterally questioned later on.15
OCT No. 820
In assailing the validity of OCT No. 820, petitioners capitalize on
the plain statement written on the face of the Certificate that
the magnetic survey was completed only on November 15,
1906, while the decree had been issued earlier on January 31,
1905. They insist that the land registration court acquired no
jurisdiction over the land that was the subject of the registration
proceedings; and that -- as no survey had been made,
completed and submitted to it -- therefore, the court had no
authority to issue the decree.
We are not persuaded. Petitioners erroneously and baselessly
speculate that the magnetic survey of the land was the only
survey conducted, or that no other plan was submitted to the
registration court, or that the land was not surveyed at all. Mere
conclusions and speculations are not sufficient to defeat or
impair the title of private respondents.
OCT No. 820 was issued more than 90 years ago in 1907, but
the original Certificate is still existing in the records of the
Register of Deeds. Having been issued under the Torrens
system, the original Certificate enjoys a presumption of
validity.16 Correlatively, it also carries a strong presumption that
the provisions of the law governing the registration of land
under the Torrens system have duly been followed.
The law applicable at the time of registration of OCT No. 820,
Act No. 496, provides thus:
"SEC. 26. The applicant shall file with the application a plan of
the land, and an original muniments of title within his control
mentioned in the schedule of documents, such original
muniments to be produced before the court at the hearing
when required. When an application is dismissed or
discontinued, the applicant may, with the consent of the court,
withdraw such original muniments of title."
"SEC. 36. x x x. The court may in any case before decree require
a survey to be made for the purpose of determining boundaries,
and may order durable bounds to be set, and referred to in the
application, by amendment. x x x."
"SEC. 40. Every decree of registration shall bear the day of the
year, hour, and minute of its entry, and shall be signed by the
clerk. x x x. It shall contain a description of the land as finally
determined by the court, x x x."
Based on the foregoing, an original survey plan other than that
completed in 1906 was presumably submitted to the land
registration court prior to the issuance of the decree. In his
Comment,17 then LRA Director Benjamin A. Flestado quoted a
portion of the Decision in Land Registration Case No. N-1-LRC,
Record No. N-1555, pertaining to the history of the two lots
embraced in OCT No. 820. The Decision stated that a survey of
those lots had been undertaken by American surveyors on or
before 1905. That Decision is certainly more reliable than the
34
plain assertions of petitioners, who obviously had no personal
knowledge of the original land registration proceedings.
The completion of the magnetic survey does not discount the
existence and the submission of a prior survey plan. Relevant is
the Courts ruling in Francisco v. Borja,18 from which we quote:
"x x x. When surveys under the old system are not correct and
differ from the result obtained by the modern and more
scientific way of surveying, corrections of errors contained in
the old plan should be permitted by the court so long as the
boundaries laid down in the description as enclosing the land
and indicating its limits are not changed. If they are not allowed
in the expediente of the case, no other remedy may be resorted
to by which errors or imperfections in the old plan can be cured
and to permit a decree based on such erroneous survey to stand
would be absurd. The decree is not reopened and thereby
modified. It is the new plan that is made to conform to the
decree, which procedure should be allowed and even
encouraged in these Islands where, as court records show, many
certificates of title are still based on the old and highly defective
surveys. x x x."19
From the above, it is clear that a new survey may be conducted
to conform to a decree, even after it has been issued.
In the same Comment, Director Flestado stated that Decree No.
1424, issued before the Second World War, had either been lost
or destroyed during that war. Thus, it could no longer be the
basis for determining which parcels of land were covered by the
decree and on what date they had originally been surveyed.20
At any rate, by legal presumption, public officers are deemed to
have regularly performed their official duties. Thus, the
proceedings for land registration that led to the issuance of OCT
No. 820 are presumed to have regularly and properly been
conducted. To overturn this legal presumption carelessly --
more than 90 years since the termination of the case -- will not
only endanger judicial stability, but also violate the underlying
principle of the Torrens system. Indeed, to do so would reduce
the vaunted legal indefeasibility of Torrens titles to meaningless
verbiage.
In the same vein, we reject the contention of petitioners that
OCT No. 820 is null and void on the ground that the applicants
for land registration were minors who were not assisted by a
legal guardian. They allege that while the names of the minor
applicants were contained in the title, no legal guardian was
named therein.
Again, petitioners rely on mere speculations and conjectures,
which cannot be sustained by this Court. The mere failure to
mention on the title the names of the legal guardians does not
necessarily imply their absence during the actual land
registration proceedings. Besides, the absence of legal
guardians cannot be used as a basis for depriving minors of
benefits that have accrued to them. If at all, it could be a ground
to invalidate an imprudent attack against their interest, not to
deprive them of any advantage or gain.
OCT No. 7477
It cannot be denied that OCT No. 7477 was the subject of
judicial proceedings in which the government, represented by
the director of lands, amply participated. We quote hereunder
pertinent portions of the April 25, 1955 Decision of Judge
Bienvenido A. Tan of the then Court of First Instance of Manila
in GLRO (General Land Registration Office) Record No. 1555,
entitled Severino Manotok, Applicant v. The Director of Lands,
Oppositor:
The Director of Lands filed an opposition alleging that the
parcels of land are public domain belonging to the Republic of
the Philippines and the applicant has no title and possession
under claim of ownership since 26 July 1894; that on 18
November 1950, a decision was rendered denying the
application, which decision was appealed to the Court of
Appeals in due time; that eventually the Decision dated 18
November 1950 was set aside and a new trial was ordered; that
pursuant to the order of CA for new trial, the Chief Surveyor of
LRC was ordered "to determine whether or not said parcels of
land. . . are included in any certificate of title of the applicant";
that in due time, the LRC submitted a report stating that the
lands "are not included in any of the TCT Nos. 49286, 24542 and
24522 submitted to this Commission by the applicant" and that
said certificates of title "cover Lots 55-A, 55-B and 55-C, Block
No. 2918 of the subdivision plan Psd-11746" which lots adjoin
the parcels of land subject matter of the instant case (Record
No. 1555); that during the trial, the applicant testified that the
lands in question are not included in the land described in OCT
No. 820; that the said parcels of land were believed by him and
his predecessors as included therein "because on the West the
first parcel in OCT No. 820, the boundary is the Sunog Apog
Creek, and that on the South, the boundary is the Sapang
Visita"; that the first parcel of land covered by OCT No. 820 was
subdivided into 3 Lots, known as Lots 55-a, 55-b and 55-c, the
last two Lots were bought by the applicant from Ricardo
Manotok (1 August 1946) and Benita Manotok de Geronimo (17
September 1949) while Lot 55-a was adjudicated to him and
now covered by TCT No. 49286.
Public Land Surveyor Gregorio M. Aranzas testified on cross
examination that the shore-line of Sunog Apog Creek "is traced
by him by dotted lines on Exh. A and marked as Exh. O" and the
shoreline of Sapang Visita "is that traced by him, also by a
35
dotted line, and marked as Exh. P on Exh. B"; that while the
applicant testified that the lands in question "are now high and
are dry even during rainy season", no evidence to the contrary
"has been presented by the oppositor", thus it "only goes to
show that the lands in question are no longer banks of the
Sunog Apog Creek and the Sapang Visita, as previously
contended by the Director of Lands."
That the parcels of land sought to be registered are not included
in titles already issued; that the lands have been in the actual
possession of the applicant and his possession, as well as that of
his predecessors, "has been open, exclusive, continuous,
adverse and in the concept of owner for the number of years
required by law"; that portions of said land "were really
acquired by accretions as the Sapang Visita is no longer
navigable and its bed is dry, and that the Sunog Apog Creek is
generally dried up due to the ordinary course of its current";
that the herein applicant sought registration of these land only
in 1947 "as it was then that he discovered that the lands were
not included in the old title."21
As things stand now, private respondents have in their favor a
judicial pronouncement showing, prima facie at least, that the
expanded areas do not belong to the public domain, and that
they have acquired rights of ownership over them by accretion.
In brief, they have overcome the presumption that the land is
within an unclassified property of the public domain.22
While registration proceedings are judicial, they involve more
consequences than an ordinary action would. The entire world,
including the government, is given a chance to participate in the
case.
After the registration is completed and finalized in the regular
course, the rights of all adverse claimants are foreclosed by the
decree of registration.23 The government itself assumes the
burden of giving notice to all parties. The very purpose and
intent of the law, however, would be defeated by permitting
persons to litigate again on the basis of the same adverse claims
in the registration proceedings, after they have already been
given the opportunity to do so. For them to raise the same
questions anew would be to cast doubt again upon the validity
of the registered title.24
Even assuming that petitioners may still institute an action for
the nullification of OCT No. 7477, the review of a decree of
registration under Section 38 of Act No. 496 (Section 32 of
Presidential Decree No. 1529) would prosper only upon proof
that the registration was procured through actual fraud.25 "The
fraud must be actual and extrinsic, not merely constructive or
intrinsic; the evidence thereof must be clear, convincing and
more than merely preponderant, because the proceedings
which are assailed as having been fraudulent are judicial
proceedings which by law, are presumed to have been fair and
regular."26
Actual fraud proceeds from an intentional deception
perpetrated through the misrepresentation or the concealment
of a material fact.27 The fraud is extrinsic if it is employed to
deprive parties of their day in court and thus prevent them from
asserting their right to the property registered in the name of
the applicant. The fraud is intrinsic if that which is alleged in the
petition to set aside the decree is the fraud involved in the same
proceedings in which the parties seeking relief have had ample
opportunity to assert their right, to attack the document
presented by the applicant for registration, and to cross-
examine the witnesses who have testified thereon.28 Inquiry
into this latter kind of fraud is barred after the judgment of the
land registration court has become final.
Petitioners fail to convince the Court that the facts they rely
upon to justify a review of the decree in question constitute
actual extrinsic fraud.
Legal Standing
Finally, assuming arguendo that the validity of the two titles
may still be impugned, petitioners do not have any legal
standing to ask directly for their annulment.
We can only infer the interest, supposedly in their favor, from
their allegation that they were occupants of a portion of the
parcel covered by OCT Nos. 820 and 7477, which they perceive
to be public land. Petitioners were neither applicants nor
claimants of any preferential right over the aforesaid disputed
lands. Being too vague, too highly speculative and uncertain,
their presumed interest does not suffice to constitute a legal
right or interest that would grant them standing in court.
"Legal standing has been defined as a personal and substantial
interest in the case, such that the party has sustained or will
sustain direct injury as a result of the challenged act. Interest
means a material interest in issue that is affected by the
questioned act or instrument, as distinguished from a mere
incidental interest in the question involved."29 Since the parcels
they claim are properties of the public domain, only the
government can bring an action to nullify the TCTs.30
Second Issue:
Compliance with the Constitution
The first paragraph of Section 14 of Article VIII of the
Constitution mandates that "[n]o decision shall be rendered by
any court without expressing therein clearly and distinctly the
facts and the law on which it is based."
36
Petitioners attack the validity of the assailed CA Decision for its
failure to mention that a magnetic survey was completed only
on November 15, 1906, a fact that they perceived to be crucial
to the determination of the case. The untenability of such
grasping at straws can easily be demonstrated.
In its assailed Decision, the CA affirmed the resolution of LRA
Administrator Enriquez. The appellate court deliberated on the
law and the reasons it relied upon in its determination of the
issues presented only after giving a detailed account and
assessment of the factual antecedents found by respondent
administrator.
Since the Decision of the CA contains the necessary antecedents
to warrant its conclusions, the appellate court cannot be said to
have withheld "any specific finding of facts." What the law
insists on is that a decision state the "essential ultimate facts."
Indeed, the "mere failure to specify x x x the contentions of the
petitioner and the reasons for refusing to believe them is not
sufficient to hold the same contrary to the requirements of the
provision of law and the Constitution."731
This constitutional provision deals with the disposition of
petitions for review and of motions for reconsideration. In
appellate courts, the rule does not require any comprehensive
statement of facts or mention of the applicable law, but merely
a statement of the "legal basis" for denying due course.32
Thus, there is sufficient compliance with the constitutional
requirement when a collegiate appellate court, after
deliberation, decides to deny a motion; states that the
questions raised are factual or have already been passed upon;
or cites some other legal basis.33 There is no need to explain
fully the courts denial, since the facts and the law have already
been laid out in the assailed Decision.
WHEREFORE, the Petition is DENIED and the assailed Decision
and Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 140528 December 7, 2011
MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband
and children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed
TOSINO, APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO
TORBELA, represented by his heirs, namely: JOSE and DIONISIO, both surnamed
TORBELA; EUFROSINA TORBELA ROSARIO, represented by her heirs, namely:
ESTEBAN T. ROSARIO, MANUEL T. ROSARIO, ROMULO T. ROSARIO and ANDREA
ROSARIO-HADUCA; LEONILA TORBELA TAMIN; FERNANDO TORBELA, represented
by his heirs, namely: SERGIO T. TORBELA, EUTROPIA T. VELASCO, PILAR T.
ZULUETA, CANDIDO T. TORBELA, FLORENTINA T. TORBELA and PANTALEON T.
TORBELA; DOLORES TORBELA TABLADA; LEONORA TORBELA AGUSTIN,
represented by her heirs, namely: PATRICIO, SEGUNDO, CONSUELO and FELIX, all
surnamed AGUSTIN; and SEVERINA TORBELA ILDEFONSO, Petitioners,
vs.
SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 140553
LENA DUQUE-ROSARIO, Petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Presently before the Court are two consolidated Petitions for
Review on Certiorari under Rule 45 of the Rules of Court, both
assailing the Decision1 dated June 29, 1999 and
Resolution2 dated October 22, 1999 of the Court of Appeals in
CA-G.R. CV No. 39770.
The petitioners in G.R. No. 140528 are siblings Maria
Torbela,3 Pedro Torbela,4 Eufrosina Torbela Rosario,5Leonila
Torbela Tamin, Fernando Torbela,6 Dolores Torbela Tablada,
Leonora Torbela Agustin,7 and Severina Torbela Ildefonso
(Torbela siblings).
The petitioner in G.R. No. 140553 is Lena Duque-Rosario
(Duque-Rosario), who was married to, but now legally separated
from, Dr. Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son
of Eufrosina Torbela Rosario and the nephew of the other
Torbela siblings.
The controversy began with a parcel of land, with an area of 374
square meters, located in Urdaneta City, Pangasinan (Lot No.
356-A). It was originally part of a larger parcel of land, known as
Lot No. 356 of the Cadastral Survey of Urdaneta, measuring 749
square meters, and covered by Original Certificate of Title (OCT)
No. 16676,8 in the name of Valeriano Semilla (Valeriano),
married to Potenciana Acosta. Under unexplained
circumstances, Valeriano gave Lot No. 356-A to his sister Marta
Semilla, married to Eugenio Torbela (spouses Torbela). Upon the
deaths of the spouses Torbela, Lot No. 356-A was adjudicated in
equal shares among their children, the Torbela siblings, by
virtue of a Deed of Extrajudicial Partition9 dated December 3,
1962.
On December 12, 1964, the Torbela siblings executed a Deed of
Absolute Quitclaim10 over Lot No. 356-A in favor of Dr. Rosario.
According to the said Deed, the Torbela siblings "for and in
consideration of the sum of NINE PESOS (9.00) x x x
transfer[red] and convey[ed] x x x unto the said Andres T.
Rosario, that undivided portion of THREE HUNDRED SEVENTY-
FOUR square meters of that parcel of land embraced in Original
Certificate of Title No. 16676 of the land records of Pangasinan x
x x."11 Four days later, on December 16, 1964, OCT No. 16676 in
37
Valerianos name was partially cancelled as to Lot No. 356-A and
TCT No. 5275112 was issued in Dr. Rosarios name covering the
said property.
Another Deed of Absolute Quitclaim13 was subsequently
executed on December 28, 1964, this time by Dr. Rosario,
acknowledging that he only borrowed Lot No. 356-A from the
Torbela siblings and was already returning the same to the latter
for 1.00. The Deed stated:
That for and in consideration of the sum of one peso (1.00),
Philippine Currency and the fact that I only borrowed the above
described parcel of land from MARIA TORBELA, married to
Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario,
PEDRO TORBELA, married to Petra Pagador, LEONILA TORBELA,
married to Fortunato Tamen, FERNANDO TORBELA, married to
Victoriana Tablada, DOLORES TORBELA, widow, LEONORA
TORBELA, married to Matias Agustin and SEVERINA TORBELA,
married to Jorge Ildefonso, x x x by these presents do hereby
cede, transfer and convey by way of this ABSOLUTE QUITCLAIM
unto the said Maria, Eufrosina, Pedro, Leonila, Fernando,
Dolores, Leonora and Severina, all surnamed Torbela the parcel
of land described above.14 (Emphasis ours.)
The aforequoted Deed was notarized, but was not immediately
annotated on TCT No. 52751.
Following the issuance of TCT No. 52751, Dr. Rosario obtained a
loan from the Development Bank of the Philippines (DBP) on
February 21, 1965 in the sum of 70,200.00, secured by a
mortgage constituted on Lot No. 356-A. The mortgage was
annotated on TCT No. 52751 on September 21, 1965 as Entry
No. 243537.15 Dr. Rosario used the proceeds of the loan for the
construction of improvements on Lot No. 356-A.
On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an
Affidavit of Adverse Claim,16 on behalf of the Torbela siblings.
Cornelio deposed in said Affidavit:
3. That ANDRES T. ROSARIO later quitclaimed his rights in favor
of the former owners by virtue of a Deed of Absolute Quitclaim
which he executed before Notary Public Banaga, and entered in
his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I;
Series of 1964;
4. That it is the desire of the parties, my aforestated kins, to
register ownership over the above-described property or to
perfect their title over the same but their Deed could not be
registered because the registered owner now, ANDRES T.
ROSARIO mortgaged the property with the DEVELOPMENT
BANK OF THE PHILIPPINES, on September 21, 1965, and for
which reason, the Title is still impounded and held by the said
bank;
5. That pending payment of the obligation with the
DEVELOPMENT BANK OF THE PHILIPPINES or redemption of the
Title from said bank, I, CORNELIO T. TOSINO, in behalf of my
mother MARIA TORBELA-TOSINO, and my Aunts EUFROSINA
TORBELA, LEONILA TORBELA-TAMEN, DOLORES TORBELA,
LEONORA TORBELA-AGUSTIN, SEVERINA TORBELA-ILDEFONSO,
and my Uncles PEDRO TORBELA and FERNANDO, also surnamed
TORBELA, I request the Register of Deeds of Pangasinan to
annotate their adverse claim at the back of Transfer Certificate
of Title No. 52751, based on the annexed document, Deed of
Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28,
1964, marked as Annex "A" and made a part of this Affidavit,
and it is also requested that the DEVELOPMENT BANK OF THE
PHILIPPINES be informed accordingly.17
The very next day, on May 17, 1967, the Torbela siblings had
Cornelios Affidavit of Adverse Claim dated May 16, 1967 and
Dr. Rosarios Deed of Absolute Quitclaim dated December 28,
1964 annotated on TCT No. 52751 as Entry Nos. 27447118 and
274472,19 respectively.
The construction of a four-storey building on Lot No. 356-A was
eventually completed. The building was initially used as a
hospital, but was later converted to a commercial building. Part
of the building was leased to PT&T; and the rest to Mrs. Andrea
Rosario-Haduca, Dr. Rosarios sister, who operated the Rose Inn
Hotel and Restaurant.
Dr. Rosario was able to fully pay his loan from DBP. Under Entry
No. 520197 on TCT No. 5275120 dated March 6, 1981, the
mortgage appearing under Entry No. 243537 was cancelled per
the Cancellation and Discharge of Mortgage executed by DBP in
favor of Dr. Rosario and ratified before a notary public on July
11, 1980.
In the meantime, Dr. Rosario acquired another loan from the
Philippine National Bank (PNB) sometime in 1979-1981. Records
do not reveal though the original amount of the loan from PNB,
but the loan agreement was amended on March 5, 1981 and
the loan amount was increased to 450,000.00. The loan was
secured by mortgages constituted on the following properties:
(1) Lot No. 356-A, covered by TCT No. 52751 in Dr. Rosarios
name; (2) Lot No. 4489, with an area of 1,862 square meters,
located in Dagupan City, Pangasinan, covered by TCT No. 24832;
and (3) Lot No. 5-F-8-C-2-B-2-A, with an area of 1,001 square
meters, located in Nancayasan, Urdaneta, Pangasinan, covered
by TCT No. 104189.21 The amended loan agreement and
mortgage on Lot No. 356-A was annotated on TCT No. 52751 on
March 6, 1981 as Entry No. 520099.22
Five days later, on March 11, 1981, another annotation, Entry
No. 520469,23 was made on TCT No. 52751, canceling the
adverse claim on Lot No. 356-A under Entry Nos. 274471-
38
274472, on the basis of the Cancellation and Discharge of
Mortgage executed by Dr. Rosario on March 5, 1981. Entry No.
520469 consisted of both stamped and handwritten portions,
and exactly reads:
Entry No. 520469. Cancellation of Adverse Claim executed
by Andres Rosario in favor of same. The incumbrance/mortgage
appearing under Entry No. 274471-72 is now cancelled as per
Cancellation and Discharge of Mortgage Ratified before Notary
Public Mauro G. Meris on March 5, 1981: Doc. No. 215; Page
No. 44; Book No. 1; Series Of 1981.
Lingayen, Pangasinan, 3-11, 19981
[Signed: Pedro dela Cruz]
24
Register of Deeds
On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario
(spouses Rosario), acquired a third loan in the amount of
1,200,000.00 from Banco Filipino Savings and Mortgage Bank
(Banco Filipino). To secure said loan, the spouses Rosario again
constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot
No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was
annotated on TCT No. 52751 as Entry No. 53328325 on
December 18, 1981. Since the construction of a two-storey
commercial building on Lot No. 5-F-8-C-2-B-2-A was still
incomplete, the loan value thereof as collateral was deducted
from the approved loan amount. Thus, the spouses Rosario
could only avail of the maximum loan amount of 830,064.00
from Banco Filipino.
Because Banco Filipino paid the balance of Dr. Rosarios loan
from PNB, the mortgage on Lot No. 356-A in favor of PNB was
cancelled per Entry No. 53347826 on TCT No. 52751 dated
December 23, 1981.
On February 13, 1986, the Torbela siblings filed before the
Regional Trial Court (RTC) of Urdaneta, Pangasinan, a Complaint
for recovery of ownership and possession of Lot No. 356-A, plus
damages, against the spouses Rosario, which was docketed as
Civil Case No. U-4359. On the same day, Entry Nos. 593493 and
593494 were made on TCT No. 52751 that read as follows:
Entry No. 593494 Complaint Civil Case No. U-4359 (For:
Recovery of Ownership and Possession and Damages. (Sup.
Paper).
Entry No. 593493 Notice of Lis Pendens The parcel of land
described in this title is subject to Lis Pendens executed by
Liliosa B. Rosario, CLAO, Trial Attorney dated February 13, 1986.
Filed to TCT No. 52751
February 13, 1986-1986 February 13 3:30 p.m.
(SGD.) PACIFICO M. BRAGANZA
27
Register of Deeds
The spouses Rosario afterwards failed to pay their loan from
Banco Filipino. As of April 2, 1987, the spouses Rosarios
outstanding principal obligation and penalty charges amounted
to 743,296.82 and 151,524.00, respectively.28
Banco Filipino extrajudicially foreclosed the mortgages on Lot
No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. During
the public auction on April 2, 1987, Banco Filipino was the lone
bidder for the three foreclosed properties for the price of
1,372,387.04. The Certificate of Sale29 dated April 2, 1987, in
favor of Banco Filipino, was annotated on TCT No. 52751 on
April 14, 1987 as Entry No. 610623.30
On December 9, 1987, the Torbela siblings filed before the RTC
their Amended Complaint,31 impleading Banco Filipino as
additional defendant in Civil Case No. U-4359 and praying that
the spouses Rosario be ordered to redeem Lot No. 356-A from
Banco Filipino.
The spouses Rosario instituted before the RTC on March 4, 1988
a case for annulment of extrajudicial foreclosure and damages,
with prayer for a writ of preliminary injunction and temporary
restraining order, against Banco Filipino, the Provincial Ex Officio
Sheriff and his Deputy, and the Register of Deeds of Pangasinan.
The case was docketed as Civil Case No. U-4667. Another notice
of lis pendens was annotated on TCT No. 52751 on March 10,
1988 as Entry No. 627059, viz:
Entry No. 627059 Lis Pendens Dr. Andres T. Rosario and Lena
Duque Rosario, Plaintiff versus Banco Filipino, et. al. Civil Case
No. U-4667 or Annulment of ExtraJudicial Foreclosure of Real
Estate Mortgage The parcel of land described in this title is
subject to Notice of Lis Pendens subscribed and sworn to before
Notary Public Mauro G. Meris, as Doc. No. 21; Page No. 5; Book
111; S-1988. March 7, 1988-1988 March 10, 1:00 p.m.
(SGD.) RUFINO M. MORENO, SR.
Register of Deeds32
The Torbela siblings intervened in Civil Case No. U-4667.
Eventually, on October 17, 1990, the RTC issued an
Order33 dismissing without prejudice Civil Case No. U-4667 due
to the spouses Rosarios failure to prosecute.
Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A
from Banco Filipino, but their efforts were unsuccessful. Upon
the expiration of the one-year redemption period in April 1988,
the Certificate of Final Sale34and Affidavit of
35
Consolidation covering all three foreclosed properties were
executed on May 24, 1988 and May 25, 1988, respectively.
39
On June 7, 1988, new certificates of title were issued in the
name of Banco Filipino, particularly, TCT No. 165812 for Lot No.
5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .36
The Torbela siblings thereafter filed before the RTC on August
29, 1988 a Complaint37 for annulment of the Certificate of Final
Sale dated May 24, 1988, judicial cancelation of TCT No.
165813, and damages, against Banco Filipino, the Ex Officio
Provincial Sheriff, and the Register of Deeds of Pangasinan,
which was docketed as Civil Case No. U-4733.
On June 19, 1991, Banco Filipino filed before the RTC of
Urdaneta City a Petition for the issuance of a writ of possession.
In said Petition, docketed as Pet. Case No. U-822, Banco Filipino
prayed that a writ of possession be issued in its favor over Lot
No. 5-F-8-C-2-B-2-A and Lot No. 356-A, plus the improvements
thereon, and the spouses Rosario and other persons presently
in possession of said properties be directed to abide by said
writ.
The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and
Pet. Case No. U-822. The Decision38 on these three cases was
promulgated on January 15, 1992, the dispositive portion of
which reads:
WHEREFORE, judgment is rendered:
1. Declaring the real estate mortgage over Lot 356-A covered by
TCT 52751 executed by Spouses Andres Rosario in favor of
Banco Filipino, legal and valid;
2. Declaring the sheriffs sale dated April 2, 1987 over Lot 356-A
covered by TCT 52751 and subsequent final Deed of Sale dated
May 14, 1988 over Lot 356-A covered by TCT No. 52751 legal
and valid;
3. Declaring Banco Filipino the owner of Lot 356-A covered by
TCT No. 52751 (now TCT 165813);
4. Banco Filipino is entitled to a Writ of Possession over Lot 356-
A together with the improvements thereon (Rose Inn Building).
The Branch Clerk of Court is hereby ordered to issue a writ of
possession in favor of Banco Filipino;
5. [The Torbela siblings] are hereby ordered to render
accounting to Banco Filipino the rental they received from
tenants of Rose Inn Building from May 14, 1988;
6. [The Torbela siblings] are hereby ordered to pay Banco
Filipino the sum of 20,000.00 as attorneys fees;
7. Banco Filipino is hereby ordered to give [the Torbela siblings]
the right of first refusal over Lot 356-A. The Register of Deeds is
hereby ordered to annotate the right of [the Torbela siblings] at
the back of TCT No. 165813 after payment of the required fees;
8. Dr. Rosario and Lena Rosario are hereby ordered to
reimburse [the Torbela siblings] the market value of Lot 356-A
as of December, 1964 minus payments made by the former;
9. Dismissing the complaint of [the Torbela siblings] against
Banco Filipino, Pedro Habon and Rufino Moreno in Civil Case
No. U-4733; and against Banco Filipino in Civil Case No. U-
4359.39
The RTC released an Amended Decision40 dated January 29,
1992, adding the following paragraph to the dispositive:
Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-
C-2-[B]-2-A of the subdivision plan (LRC) Psd-122471, covered
by Transfer Certificate of Title 104189 of the Registry of Deeds
of Pangasinan[.]41
The Torbela siblings and Dr. Rosario appealed the foregoing RTC
judgment before the Court of Appeals. Their appeal was
docketed as CA-G.R. CV No. 39770.
In its Decision42 dated June 29, 1999, the Court of Appeals
decreed:
WHEREFORE, foregoing considered, the appealed decision is
hereby AFFIRMED with modification. Items No. 6 and 7 of the
appealed decision are DELETED. Item No. 8 is modified requiring
[Dr. Rosario] to pay [the Torbela siblings] actual damages, in the
amount of 1,200,000.00 with 6% per annum interest from
finality of this decision until fully paid. [Dr. Rosario] is further
ORDERED to pay [the Torbela siblings] the amount of
300,000.00 as moral damages; 200,000.00 as exemplary
damages and 100,000.00 as attorneys fees.
Costs against [Dr. Rosario].43
The Court of Appeals, in a Resolution44 dated October 22, 1999,
denied the separate Motions for Reconsideration of the Torbela
siblings and Dr. Rosario.
The Torbela siblings come before this Court via the Petition for
Review in G.R. No. 140528, with the following assignment of
errors:
First Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE REGISTRATION OF THE DEED OF ABSOLUTE
QUITCLAIM EXECUTED BY [DR. ANDRES T. ROSARIO] IN FAVOR
OF THE [TORBELA SIBLINGS] DATED DECEMBER 28, 1964 AND
THE REGISTRATION OF THE NOTICE OF ADVERSE CLAIM
EXECUTED BY THE [TORBELA SIBLINGS], SERVE AS THE
40
OPERATIVE ACT TO CONVEY OR AFFECT THE LAND AND
IMPROVEMENTS THEREOF IN SO FAR AS THIRD PERSONS ARE
CONCERNED.
Second Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE SUBJECT PROPERTY COVERED BY T.C.T. NO.
52751 IS CLEAN AND FREE, DESPITE OF THE ANNOTATION OF
ENCUMBRANCES OF THE NOTICE OF ADVERSE CLAIM AND THE
DEED OF ABSOLUTE QUITCLAIM APPEARING AT THE BACK
THEREOF AS ENTRY NOS. 274471 AND 274472, RESPECTIVELY.
Third Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE NOTICE OF ADVERSE CLAIM OF THE
[TORBELA SIBLINGS] UNDER ENTRY NO. 274471 WAS VALIDLY
CANCELLED BY THE REGISTER OF DEEDS, IN THE ABSENCE OF A
PETITION DULY FILED IN COURT FOR ITS CANCELLATION.
Fourth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT RESPONDENT BANCO FILIPINO SAVINGS AND
MORTGAGE BANK IS A MORTGAGEE IN GOOD FAITH.
Fifth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE FILING OF A CIVIL CASE NO. U-4359 ON
DECEMBER 9, 1987, IMPLEADING RESPONDENT BANCO FILIPINO
AS ADDITIONAL PARTY DEFENDANT, TOLL OR SUSPEND THE
RUNNING OF THE ONE YEAR PERIOD OF REDEMPTION.
Sixth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE OWNERSHIP OVER THE SUBJECT PROPERTY
WAS PREMATURELY CONSOLIDATED IN FAVOR OF RESPONDENT
BANCO FILIPINO SAVINGS AND MORTGAGE BANK.
Seventh Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE SUBJECT PROPERTY IS AT LEAST WORTH
1,200,000.00.45
The Torbela siblings ask of this Court:
WHEREFORE, in the light of the foregoing considerations, the
[Torbela siblings] most respectfully pray that the questioned
DECISION promulgated on June 29, 1999 (Annex "A", Petition)
and the RESOLUTION dated October 22, 1999 (Annex "B",
Petition) be REVERSED and SET ASIDE, and/or further MODIFIED
in favor of the [Torbela siblings], and another DECISION issue
ordering, among other reliefs, the respondent Banco Filipino to
reconvey back Lot No. 356-A, covered by T.C.T. No. 52751, in
favor of the [Torbela siblings] who are the actual owners of the
same.
The [Torbela siblings] likewise pray for such other reliefs and
further remedies as may be deemed just and equitable under
the premises.46
Duque-Rosario, now legally separated from Dr. Rosario, avers in
her Petition for Review in G.R. No. 140553 that Lot No. 4489
and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and
she was unlawfully deprived of ownership of said properties
because of the following errors of the Court of Appeals:
A
THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT
FINDING THAT THE PERIOD TO REDEEM THE PROPERTY HAS
NOT COMMENCED, HENCE, THE CERTIFICATE OF SALE, THE
CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO], ARE
NULL AND VOID.
B
THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO
RULE THAT THE FILING OF THE COMPLAINT BEFORE THE COURT
A QUO BY THE [TORBELA SIBLINGS] HAD ALREADY BEEN
PRESCRIBED.47
Duque-Rosario prays that the appealed decision of the Court of
Appeals be reversed and set aside, and that Lot No. 4489 and
Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and
encumbrances and returned to her.
Review of findings of fact by the RTC and the Court of Appeals
warranted.
A disquisition of the issues raised and/or errors assigned in the
Petitions at bar unavoidably requires a re-evaluation of the facts
and evidence presented by the parties in the court a quo.
In Republic v. Heirs of Julia Ramos,48 the Court summed up the
rules governing the power of review of the Court:
Ordinarily, this Court will not review, much less reverse, the
factual findings of the Court of Appeals, especially where such
findings coincide with those of the trial
court.http://sc.judiciary.gov.ph/jurisprudence/2010/february20
10/169481.htm - _ftn The findings of facts of the Court of
Appeals are, as a general rule, conclusive and binding upon this
Court, since this Court is not a trier of facts and does not
41
routinely undertake the re-examination of the evidence
presented by the contending parties during the trial of the case.
The above rule, however, is subject to a number of exceptions,
such as (1) when the inference made is manifestly mistaken,
absurd or impossible; (2) when there is grave abuse of
discretion; (3) when the finding is grounded entirely on
speculations, surmises, or conjectures; (4) when the judgment
of the Court of Appeals is based on misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when the Court
of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both parties;
(7) when the findings of the Court of Appeals are contrary to
those of the trial court; (8) when the findings of fact are
conclusions without citation of specific evidence on which they
are based; (9) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion; and
(10) when the findings of fact of the Court of Appeals are
premised on the absence of evidence and are contradicted by
the evidence on record.49
As the succeeding discussion will bear out, the first, fourth, and
ninth exceptions are extant in these case.
Barangay conciliation was not a pre-requisite to the institution
of Civil Case No. U-4359.
Dr. Rosario contends that Civil Case No. U-4359, the Complaint
of the Torbela siblings for recovery of ownership and possession
of Lot No. 356-A, plus damages, should have been dismissed by
the RTC because of the failure of the Torbela siblings to comply
with the prior requirement of submitting the dispute to
barangay conciliation.
The Torbela siblings instituted Civil Case No. U-4359 on
February 13, 1986, when Presidential Decree No. 1508,
Establishing a System of Amicably Settling Disputes at the
Barangay Level, was still in effect.50 Pertinent provisions of said
issuance read:
Section 2. Subject matters for amicable settlement. The Lupon of
each barangay shall have authority to bring together the parties
actually residing in the same city or municipality for amicable
settlement of all disputes except:
1. Where one party is the government, or any subdivision or
instrumentality thereof;
2. Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
3. Offenses punishable by imprisonment exceeding 30 days, or a
fine exceeding 200.00;
4. Offenses where there is no private offended party;
5. Such other classes of disputes which the Prime Minister may
in the interest of justice determine upon recommendation of
the Minister of Justice and the Minister of Local Government.
Section 3. Venue. Disputes between or among persons actually
residing in the same barangay shall be brought for amicable
settlement before the Lupon of said barangay. Those involving
actual residents of different barangays within the same city or
municipality shall be brought in the barangay where the
respondent or any of the respondents actually resides, at the
election of the complainant. However, all disputes which
involved real property or any interest therein shall be brought in
the barangay where the real property or any part thereof is
situated.
The Lupon shall have no authority over disputes:
1. involving parties who actually reside in barangays of different
cities or municipalities, except where such barangays adjoin
each other; and
2. involving real property located in different municipalities.
xxxx
Section 6. Conciliation, pre-condition to filing of complaint. No
complaint, petition, action or proceeding involving any matter
within the authority of the Lupon as provided in Section 2
hereof shall be filed or instituted in court or any other
government office for adjudication unless there has been a
confrontation of the parties before the Lupon Chairman or the
Pangkat and no conciliation or settlement has been reached as
certified by the Lupon Secretary or the Pangkat Secretary,
attested by the Lupon or Pangkat Chairman, or unless the
settlement has been repudiated. x x x. (Emphases supplied.)
The Court gave the following elucidation on the jurisdiction of
the Lupong Tagapayapa in Tavora v. Hon. Veloso51:
The foregoing provisions are quite clear. Section 2 specifies the
conditions under which the Lupon of a barangay "shall have
authority" to bring together the disputants for amicable
settlement of their dispute: The parties must be "actually
residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be
"actually residing in the same barangay" or in "different
barangays" within the same city or municipality
unequivocably declares that the Lupon shall have "no authority"
over disputes "involving parties who actually reside in barangays
of different cities or municipalities," except where such
barangays adjoin each other.
42
Thus, by express statutory inclusion and exclusion, the Lupon
shall have no jurisdiction over disputes where the parties are
not actual residents of the same city or municipality, except
where the barangays in which they actually reside adjoin each
other.
It is true that immediately after specifying the barangay whose
Lupon shall take cognizance of a given dispute, Sec. 3 of PD
1508 adds:
"However, all disputes which involve real property or any
interest therein shall be brought in the barangay where the real
property or any part thereof is situated."
Actually, however, this added sentence is just an ordinary
proviso and should operate as such.
The operation of a proviso, as a rule, should be limited to its
normal function, which is to restrict or vary the operation of the
principal clause, rather than expand its scope, in the absence of
a clear indication to the contrary.
"The natural and appropriate office of a proviso is . . . to except
something from the enacting clause; to limit, restrict, or qualify
the statute in whole or in part; or to exclude from the scope of
the statute that which otherwise would be within its terms." (73
Am Jur 2d 467.)
Therefore, the quoted proviso should simply be deemed to
restrict or vary the rule on venue prescribed in the principal
clauses of the first paragraph of Section 3, thus: Although venue
is generally determined by the residence of the parties, disputes
involving real property shall be brought in the barangay where
the real property or any part thereof is situated,
notwithstanding that the parties reside elsewhere within the
same city/municipality.52 (Emphases supplied.)
The original parties in Civil Case No. U-4359 (the Torbela siblings
and the spouses Rosario) do not reside in the same barangay, or
in different barangays within the same city or municipality, or in
different barangays of different cities or municipalities but are
adjoining each other. Some of them reside outside Pangasinan
and even outside of the country altogether. The Torbela siblings
reside separately in Barangay Macalong, Urdaneta, Pangasinan;
Barangay Consolacion, Urdaneta, Pangasinan; Pangil, Laguna;
Chicago, United States of America; and Canada. The spouses
Rosario are residents of Calle Garcia, Poblacion, Urdaneta,
Pangasinan. Resultantly, the Lupon had no jurisdiction over the
dispute and barangay conciliation was not a pre-condition for
the filing of Civil Case No. U-4359.
The Court now looks into the merits of Civil Case No. U-4359.
There was an express trust between the Torbela siblings and Dr.
Rosario.
There is no dispute that the Torbela sibling inherited the title to
Lot No. 356-A from their parents, the Torbela spouses, who, in
turn, acquired the same from the first registered owner of Lot
No. 356-A, Valeriano.
Indeed, the Torbela siblings executed a Deed of Absolute
Quitclaim on December 12, 1964 in which they transferred and
conveyed Lot No. 356-A to Dr. Rosario for the consideration of
9.00. However, the Torbela siblings explained that they only
executed the Deed as an accommodation so that Dr. Rosario
could have Lot No. 356-A registered in his name and use said
property to secure a loan from DBP, the proceeds of which
would be used for building a hospital on Lot No. 356-A a claim
supported by testimonial and documentary evidence, and borne
out by the sequence of events immediately following the
execution by the Torbela siblings of said Deed. On December 16,
1964, TCT No. 52751, covering Lot No. 356-A, was already
issued in Dr. Rosarios name. On December 28, 1964, Dr.
Rosario executed his own Deed of Absolute Quitclaim, in which
he expressly acknowledged that he "only borrowed" Lot No.
356-A and was transferring and conveying the same back to the
Torbela siblings for the consideration of 1.00. On February 21,
1965, Dr. Rosarios loan in the amount of 70,200.00, secured
by a mortgage on Lot No. 356-A, was approved by DBP. Soon
thereafter, construction of a hospital building started on Lot No.
356-A.
Among the notable evidence presented by the Torbela siblings
is the testimony of Atty. Lorenza Alcantara (Atty. Alcantara),
who had no apparent personal interest in the present case. Atty.
Alcantara, when she was still a boarder at the house of
Eufrosina Torbela Rosario (Dr. Rosarios mother), was consulted
by the Torbela siblings as regards the extrajudicial partition of
Lot No. 356-A. She also witnessed the execution of the two
Deeds of Absolute Quitclaim by the Torbela siblings and Dr.
Rosario.
In contrast, Dr. Rosario presented TCT No. 52751, issued in his
name, to prove his purported title to Lot No. 356-A. In Lee Tek
Sheng v. Court of Appeals,53 the Court made a clear distinction
between title and the certificate of title:
The certificate referred to is that document issued by the
Register of Deeds known as the Transfer Certificate of Title
(TCT). By title, the law refers to ownership which is represented
by that document. Petitioner apparently confuses certificate
with title. Placing a parcel of land under the mantle of the
Torrens system does not mean that ownership thereof can no
longer be disputed. Ownership is different from a certificate of
title. The TCT is only the best proof of ownership of a piece of
43
land. Besides, the certificate cannot always be considered as
conclusive evidence of ownership. Mere issuance of the
certificate of title in the name of any person does not foreclose
the possibility that the real property may be under co-
ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have
acquired interest subsequent to the issuance of the certificate
of title. To repeat, registration is not the equivalent of title, but
is only the best evidence thereof. Title as a concept of
ownership should not be confused with the certificate of title as
evidence of such ownership although both are interchangeably
used. x x x.54 (Emphases supplied.)
Registration does not vest title; it is merely the evidence of such
title. Land registration laws do not give the holder any better
title than what he actually has.55 Consequently, Dr. Rosario must
still prove herein his acquisition of title to Lot No. 356-A, apart
from his submission of TCT No. 52751 in his name.
Dr. Rosario testified that he obtained Lot No. 356-A after paying
the Torbela siblings 25,000.00, pursuant to a verbal agreement
with the latter. The Court though observes that Dr. Rosarios
testimony on the execution and existence of the verbal
agreement with the Torbela siblings lacks significant details
(such as the names of the parties present, dates, places, etc.)
and is not corroborated by independent evidence.
In addition, Dr. Rosario acknowledged the execution of the two
Deeds of Absolute Quitclaim dated December 12, 1964 and
December 28, 1964, even affirming his own signature on the
latter Deed. The Parol Evidence Rule provides that when the
terms of the agreement have been reduced into writing, it is
considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written
agreement.56 Dr. Rosario may not modify, explain, or add to the
terms in the two written Deeds of Absolute Quitclaim since he
did not put in issue in his pleadings (1) an intrinsic ambiguity,
mistake, or imperfection in the Deeds; (2) failure of the Deeds
to express the true intent and the agreement of the parties
thereto; (3) the validity of the Deeds; or (4) the existence of
other terms agreed to by the Torbela siblings and Dr. Rosario
after the execution of the Deeds.57
Even if the Court considers Dr. Rosarios testimony on his
alleged verbal agreement with the Torbela siblings, the Court
finds the same unsatisfactory. Dr. Rosario averred that the two
Deeds were executed only because he was "planning to secure
loan from the Development Bank of the Philippines and
Philippine National Bank and the bank needed absolute
quitclaim[.]"58 While Dr. Rosarios explanation makes sense for
the first Deed of Absolute Quitclaim dated December 12, 1964
executed by the Torbela siblings (which transferred Lot No. 356-
A to Dr. Rosario for 9.00.00), the same could not be said for
the second Deed of Absolute Quitclaim dated December 28,
1964 executed by Dr. Rosario. In fact, Dr. Rosarios Deed of
Absolute Quitclaim (in which he admitted that he only borrowed
Lot No. 356-A and was transferring the same to the Torbela
siblings for 1.00.00) would actually work against the approval
of Dr. Rosarios loan by the banks. Since Dr. Rosarios Deed of
Absolute Quitclaim dated December 28, 1964 is a declaration
against his self-interest, it must be taken as favoring the
truthfulness of the contents of said Deed.59
It can also be said that Dr. Rosario is estopped from claiming or
asserting ownership over Lot No. 356-A based on his Deed of
Absolute Quitclaim dated December 28, 1964. Dr. Rosario's
admission in the said Deed that he merely borrowed Lot No.
356-A is deemed conclusive upon him. Under Article 1431 of the
Civil Code, "[t]hrough estoppel an admission or representation
is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying
thereon."60 That admission cannot now be denied by Dr. Rosario
as against the Torbela siblings, the latter having relied upon his
representation.
Considering the foregoing, the Court agrees with the RTC and
the Court of Appeals that Dr. Rosario only holds Lot No. 356-A in
trust for the Torbela siblings.
Trust is the right to the beneficial enjoyment of property, the
legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property
for the benefit of the beneficiary. Trust relations between
parties may either be express or implied. An express trust is
created by the intention of the trustor or of the parties, while an
implied trust comes into being by operation of law.61
Express trusts are created by direct and positive acts of the
parties, by some writing or deed, or will, or by words either
expressly or impliedly evincing an intention to create a trust.
Under Article 1444 of the Civil Code, "[n]o particular words are
required for the creation of an express trust, it being sufficient
that a trust is clearly intended."62 It is possible to create a trust
without using the word "trust" or "trustee." Conversely, the
mere fact that these words are used does not necessarily
indicate an intention to create a trust. The question in each case
is whether the trustor manifested an intention to create the
kind of relationship which to lawyers is known as trust. It is
immaterial whether or not he knows that the relationship which
he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is
called a trust.63
44
In Tamayo v. Callejo,64 the Court recognized that a trust may
have a constructive or implied nature in the beginning, but the
registered owners subsequent express acknowledgement in a
public document of a previous sale of the property to another
party, had the effect of imparting to the aforementioned trust
the nature of an express trust. The same situation exists in this
case. When Dr. Rosario was able to register Lot No. 356-A in his
name under TCT No. 52751 on December 16, 1964, an implied
trust was initially established between him and the Torbela
siblings under Article 1451 of the Civil Code, which provides:
ART. 1451. When land passes by succession to any person and
he causes the legal title to be put in the name of another, a trust
is established by implication of law for the benefit of the true
owner.
Dr. Rosarios execution of the Deed of Absolute Quitclaim on
December 28, 1964, containing his express admission that he
only borrowed Lot No. 356-A from the Torbela siblings,
eventually transformed the nature of the trust to an express
one. The express trust continued despite Dr. Rosario stating in
his Deed of Absolute Quitclaim that he was already returning
Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained
registered in Dr. Rosarios name under TCT No. 52751 and Dr.
Rosario kept possession of said property, together with the
improvements thereon.
The right of the Torbela siblings to recover Lot No. 356-A has
not yet prescribed.
The Court extensively discussed the prescriptive period for
express trusts in the Heirs of Maximo Labanon v. Heirs of
Constancio Labanon,65 to wit:
On the issue of prescription, we had the opportunity to rule in
Bueno v. Reyes that unrepudiated written express trusts are
imprescriptible:
"While there are some decisions which hold that an action upon
a trust is imprescriptible, without distinguishing between
express and implied trusts, the better rule, as laid down by this
Court in other decisions, is that prescription does supervene
where the trust is merely an implied one. The reason has been
expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs.
Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions
for recovery of real property prescribed in 10 years, excepting
only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case
of Diaz v. Gorricho, L-11229, March 29, 1958, however, the
continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are imposed
by law) where no fiduciary relation exists and the trustee does
not recognize the trust at all."
This principle was amplified in Escay v. Court of Appeals this
way: "Express trusts prescribe 10 years from the repudiation of
the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 O.G.
p. 8429, Sec. 40, Code of Civil Procedure)."
In the more recent case of Secuya v. De Selma, we again ruled
that the prescriptive period for the enforcement of an express
trust of ten (10) years starts upon the repudiation of the trust by
the trustee.66
To apply the 10-year prescriptive period, which would bar a
beneficiarys action to recover in an express trust, the
repudiation of the trust must be proven by clear and convincing
evidence and made known to the beneficiary.67The express trust
disables the trustee from acquiring for his own benefit the
property committed to his management or custody, at least
while he does not openly repudiate the trust, and makes such
repudiation known to the beneficiary or cestui que trust. For this
reason, the old Code of Civil Procedure (Act 190) declared that
the rules on adverse possession do not apply to "continuing and
subsisting" (i.e., unrepudiated) trusts. In an express trust, the
delay of the beneficiary is directly attributable to the trustee
who undertakes to hold the property for the former, or who is
linked to the beneficiary by confidential or fiduciary relations.
The trustee's possession is, therefore, not adverse to the
beneficiary, until and unless the latter is made aware that the
trust has been repudiated.68
Dr. Rosario argues that he is deemed to have repudiated the
trust on December 16, 1964, when he registered Lot No. 356-A
in his name under TCT No. 52751, so when on February 13,
1986, the Torbela siblings instituted before the RTC Civil Case
No. U-4359, for the recovery of ownership and possession of Lot
No. 356-A from the spouses Rosario, over 21 years had passed.
Civil Case No. U-4359 was already barred by prescription, as well
as laches.
The Court already rejected a similar argument in Ringor v.
Ringor69 for the following reasons:
A trustee who obtains a Torrens title over a property held in
trust for him by another cannot repudiate the trust by relying on
the registration. A Torrens Certificate of Title in Joses name did
not vest ownership of the land upon him. The Torrens system
does not create or vest title. It only confirms and records title
already existing and vested. It does not protect a usurper from
the true owner. The Torrens system was not intended to foment
betrayal in the performance of a trust. It does not permit one to
enrich himself at the expense of another. Where one does not
45
have a rightful claim to the property, the Torrens system of
registration can confirm or record nothing. Petitioners cannot
rely on the registration of the lands in Joses name nor in the
name of the Heirs of Jose M. Ringor, Inc., for the wrong result
they seek. For Jose could not repudiate a trust by relying on a
Torrens title he held in trust for his co-heirs. The beneficiaries
are entitled to enforce the trust, notwithstanding the
irrevocability of the Torrens title. The intended trust must be
sustained.70 (Emphasis supplied.)
In the more recent case of Heirs of Tranquilino Labiste v. Heirs
of Jose Labiste,71 the Court refused to apply prescription and
laches and reiterated that:
[P]rescription and laches will run only from the time the express
trust is repudiated. The Court has held that for acquisitive
prescription to bar the action of the beneficiary against the
trustee in an express trust for the recovery of the property held
in trust it must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an ouster of the
cestui que trust; (b) such positive acts of repudiation have been
made known to the cestui que trust, and (c) the evidence
thereon is clear and conclusive. Respondents cannot rely on the
fact that the Torrens title was issued in the name of Epifanio
and the other heirs of Jose. It has been held that a trustee who
obtains a Torrens title over property held in trust by him for
another cannot repudiate the trust by relying on the
registration. The rule requires a clear repudiation of the trust
duly communicated to the beneficiary. The only act that can be
construed as repudiation was when respondents filed the
petition for reconstitution in October 1993. And since
petitioners filed their complaint in January 1995, their cause of
action has not yet prescribed, laches cannot be attributed to
them.72 (Emphasis supplied.)
It is clear that under the foregoing jurisprudence, the
registration of Lot No. 356-A by Dr. Rosario in his name under
TCT No. 52751 on December 16, 1964 is not the repudiation
that would have caused the 10-year prescriptive period for the
enforcement of an express trust to run.
The Court of Appeals held that Dr. Rosario repudiated the
express trust when he acquired another loan from PNB and
constituted a second mortgage on Lot No. 356-A sometime in
1979, which, unlike the first mortgage to DBP in 1965, was
without the knowledge and/or consent of the Torbela siblings.
The Court only concurs in part with the Court of Appeals on this
matter.
For repudiation of an express trust to be effective, the
unequivocal act of repudiation had to be made known to the
Torbela siblings as the cestuis que trust and must be proven by
clear and conclusive evidence. A scrutiny of TCT No. 52751
reveals the following inscription:
Entry No. 520099
Amendment of the mortgage in favor of PNB inscribed under
Entry No. 490658 in the sense that the consideration thereof
has been increased to PHILIPPINE PESOS Four Hundred Fifty
Thousand Pesos only(450,000.00) and to secure any and all
negotiations with PNB, whether contracted before, during or
after the date of this instrument, acknowledged before Notary
Public of Pangasinan Alejo M. Dato as Doc. No. 198, Page
No. 41, Book No. 11, Series of 1985.
Date of Instrument March 5, 1981
Date of Inscription March 6, 198173
Although according to Entry No. 520099, the original loan and
mortgage agreement of Lot No. 356-A between Dr. Rosario and
PNB was previously inscribed as Entry No. 490658, Entry No.
490658 does not actually appear on TCT No. 52751 and, thus, it
cannot be used as the reckoning date for the start of the
prescriptive period.
The Torbela siblings can only be charged with knowledge of the
mortgage of Lot No. 356-A to PNB on March 6, 1981 when the
amended loan and mortgage agreement was registered on TCT
No. 52751 as Entry No. 520099. Entry No. 520099 is
constructive notice to the whole world74 that Lot No. 356-A was
mortgaged by Dr. Rosario to PNB as security for a loan, the
amount of which was increased to 450,000.00. Hence, Dr.
Rosario is deemed to have effectively repudiated the express
trust between him and the Torbela siblings on March 6, 1981,
on which day, the prescriptive period for the enforcement of
the express trust by the Torbela siblings began to run.
From March 6, 1981, when the amended loan and mortgage
agreement was registered on TCT No. 52751, to February 13,
1986, when the Torbela siblings instituted before the RTC Civil
Case No. U-4359 against the spouses Rosario, only about five
years had passed. The Torbela siblings were able to institute
Civil Case No. U-4359 well before the lapse of the 10-year
prescriptive period for the enforcement of their express trust
with Dr. Rosario.
Civil Case No. U-4359 is likewise not barred by laches. Laches
means the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due
diligence could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert
it either has abandoned it or declined to assert it. As the Court
explained in the preceding paragraphs, the Torbela siblings
46
instituted Civil Case No. U-4359 five years after Dr. Rosarios
repudiation of the express trust, still within the 10-year
prescriptive period for enforcement of such trusts. This does not
constitute an unreasonable delay in asserting one's right. A
delay within the prescriptive period is sanctioned by law and is
not considered to be a delay that would bar relief. Laches apply
only in the absence of a statutory prescriptive period. 75
Banco Filipino is not a mortgagee and buyer in good faith.
Having determined that the Torbela siblings are the true owners
and Dr. Rosario merely the trustee of Lot No. 356-A, the Court is
next faced with the issue of whether or not the Torbela siblings
may still recover Lot No. 356-A considering that Dr. Rosario had
already mortgaged Lot No. 356-A to Banco Filipino, and upon
Dr. Rosarios default on his loan obligations, Banco Filipino
foreclosed the mortgage, acquired Lot No. 356-A as the highest
bidder at the foreclosure sale, and consolidated title in its name
under TCT No. 165813. The resolution of this issue depends on
the answer to the question of whether or not Banco Filipino was
a mortgagee in good faith.
Under Article 2085 of the Civil Code, one of the essential
requisites of the contract of mortgage is that the mortgagor
should be the absolute owner of the property to be mortgaged;
otherwise, the mortgage is considered null and void. However,
an exception to this rule is the doctrine of "mortgagee in good
faith." Under this doctrine, even if the mortgagor is not the
owner of the mortgaged property, the mortgage contract and
any foreclosure sale arising therefrom are given effect by reason
of public policy. This principle is based on the rule that all
persons dealing with property covered by a Torrens Certificate
of Title, as buyers or mortgagees, are not required to go beyond
what appears on the face of the title. This is the same rule that
underlies the principle of "innocent purchasers for value." The
prevailing jurisprudence is that a mortgagee has a right to rely in
good faith on the certificate of title of the mortgagor to the
property given as security and in the absence of any sign that
might arouse suspicion, has no obligation to undertake further
investigation. Hence, even if the mortgagor is not the rightful
owner of, or does not have a valid title to, the mortgaged
property, the mortgagee in good faith is, nonetheless, entitled
to protection.76
On one hand, the Torbela siblings aver that Banco Filipino is not
a mortgagee in good faith because as early as May 17, 1967,
they had already annotated Cornelios Adverse Claim dated May
16, 1967 and Dr. Rosarios Deed of Absolute Quitclaim dated
December 28, 1964 on TCT No. 52751 as Entry Nos. 274471-
274472, respectively.
On the other hand, Banco Filipino asseverates that it is a
mortgagee in good faith because per Section 70 of Presidential
Decree No. 1529, otherwise known as the Property Registration
Decree, the notice of adverse claim, registered on May 17, 1967
by the Torbela siblings under Entry Nos. 274471-274472 on TCT
No. 52751, already lapsed after 30 days or on June 16, 1967.
Additionally, there was an express cancellation of Entry Nos.
274471-274472 by Entry No. 520469 dated March 11, 1981. So
when Banco Filipino approved Dr. Rosarios loan for
1,200,000.00 and constituted a mortgage on Lot No. 356-A
(together with two other properties) on December 8, 1981, the
only other encumbrance on TCT No. 52751 was Entry No.
520099 dated March 6, 1981, i.e., the amended loan and
mortgage agreement between Dr. Rosario and PNB (which was
eventually cancelled after it was paid off with part of the
proceeds from Dr. Rosarios loan from Banco Filipino). Hence,
Banco Filipino was not aware that the Torbela siblings adverse
claim on Lot No. 356-A still subsisted.
The Court finds that Banco Filipino is not a mortgagee in good
faith. Entry Nos. 274471-274472 were not validly cancelled, and
the improper cancellation should have been apparent to Banco
Filipino and aroused suspicion in said bank of some defect in Dr.
Rosarios title.
The purpose of annotating the adverse claim on the title of the
disputed land is to apprise third persons that there is a
controversy over the ownership of the land and to preserve and
protect the right of the adverse claimant during the pendency of
the controversy. It is a notice to third persons that any
transaction regarding the disputed land is subject to the
outcome of the dispute.77
Adverse claims were previously governed by Section 110 of Act
No. 496, otherwise known as the Land Registration Act, quoted
in full below:
ADVERSE CLAIM
SEC. 110. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date
of the original registration, may, if no other provision is made in
this Act for registering the same, make a statement in writing
setting forth fully his alleged right or interest, and how or under
whom acquired, and a reference to the volume and page of the
certificate of title of the registered owner, and a description of
the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the
adverse claimants residence, and designate a place at which all
notices may be served upon him. This statement shall be
entitled to registration as an adverse claim, and the court, upon
a petition of any party in interest, shall grant a speedy hearing
upon the question of the validity of such adverse claim and shall
enter such decree therein as justice and equity may require. If
47
the claim is adjudged to be invalid, the registration shall be
cancelled. If in any case the court after notice and hearing shall
find that a claim thus registered was frivolous or vexatious, it
may tax the adverse claimant double or treble costs in its
discretion.
Construing the aforequoted provision, the Court stressed in Ty
Sin Tei v. Lee Dy Piao78 that "[t]he validity or efficaciousness of
the [adverse] claim x x x may only be determined by the Court
upon petition by an interested party, in which event, the Court
shall order the immediate hearing thereof and make the proper
adjudication as justice and equity may warrant. And it is ONLY
when such claim is found unmeritorious that the registration
thereof may be cancelled." The Court likewise pointed out in the
same case that while a notice of lis pendens may be cancelled in
a number of ways, "the same is not true in a registered adverse
claim, for it may be cancelled only in one instance, i.e., after the
claim is adjudged invalid or unmeritorious by the Court x x x;"
and "if any of the registrations should be considered
unnecessary or superfluous, it would be the notice of lis
pendens and not the annotation of the adverse claim which is
more permanent and cannot be cancelled without adequate
hearing and proper disposition of the claim."
With the enactment of the Property Registration Decree on
June 11, 1978, Section 70 thereof now applies to adverse
claims:
SEC. 70. Adverse claim. Whoever claims any part or interest in
registered land adverse to the registered owner, arising
subsequent to the date of the original registrations, may, if no
other provision is made in this Decree for registering the same,
make a statement in writing setting forth fully his alleged right,
or interest, and how or under whom acquired, a reference to
the number of the certificate of title of the registered owner,
the name of the registered owner, and a description of the land
in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the
adverse claimants residence, and a place at which all notices
may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The
adverse claim shall be effective for a period of thirty days from
the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest: Provided,
however, that after cancellation, no second adverse claim based
on the same ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest
may file a petition in the Court of First Instance where the land
is situated for the cancellation of the adverse claim, and the
court shall grant a speedy hearing upon the question of the
validity of such adverse claim, and shall render judgment as may
be just and equitable. If the adverse claim is adjudged to be
invalid, the registration thereof shall be ordered cancelled. If, in
any case, the court, after notice and hearing, shall find that the
adverse claim thus registered was frivolous, it may fine the
claimant in an amount not less than one thousand pesos nor
more than five thousand pesos, in its discretion. Before the
lapse of thirty days, the claimant may withdraw his adverse
claim by filing with the Register of Deeds a sworn petition to
that effect. (Emphases supplied.)
In Sajonas v. Court of Appeals,79 the Court squarely interpreted
Section 70 of the Property Registration Decree, particularly, the
new 30-day period not previously found in Section 110 of the
Land Registration Act, thus:
In construing the law aforesaid, care should be taken that every
part thereof be given effect and a construction that could
render a provision inoperative should be avoided, and
inconsistent provisions should be reconciled whenever possible
as parts of a harmonious whole. For taken in solitude, a word or
phrase might easily convey a meaning quite different from the
one actually intended and evident when a word or phrase is
considered with those with which it is associated. In ascertaining
the period of effectivity of an inscription of adverse claim, we
must read the law in its entirety. Sentence three, paragraph two
of Section 70 of P.D. 1529 provides:
"The adverse claim shall be effective for a period of thirty days
from the date of registration."
At first blush, the provision in question would seem to restrict
the effectivity of the adverse claim to thirty days. But the above
provision cannot and should not be treated separately, but
should be read in relation to the sentence following, which
reads:
"After the lapse of said period, the annotation of adverse claim
may be cancelled upon filing of a verified petition therefor by
the party in interest."
If the rationale of the law was for the adverse claim to ipso facto
lose force and effect after the lapse of thirty days, then it would
not have been necessary to include the foregoing caveat to
clarify and complete the rule. For then, no adverse claim need
be cancelled. If it has been automatically terminated by mere
lapse of time, the law would not have required the party in
interest to do a useless act.
A statute's clauses and phrases must not be taken separately,
but in its relation to the statute's totality. Each statute must, in
fact, be construed as to harmonize it with the pre-existing body
of laws. Unless clearly repugnant, provisions of statutes must be
48
reconciled. The printed pages of the published Act, its history,
origin, and its purposes may be examined by the courts in their
construction. x x x.
xxxx
Construing the provision as a whole would reconcile the
apparent inconsistency between the portions of the law such
that the provision on cancellation of adverse claim by verified
petition would serve to qualify the provision on the effectivity
period. The law, taken together, simply means that the
cancellation of the adverse claim is still necessary to render it
ineffective, otherwise, the inscription will remain annotated and
shall continue as a lien upon the property. For if the adverse
claim has already ceased to be effective upon the lapse of said
period, its cancellation is no longer necessary and the process of
cancellation would be a useless ceremony.
It should be noted that the law employs the phrase "may be
cancelled," which obviously indicates, as inherent in its decision
making power, that the court may or may not order the
cancellation of an adverse claim, notwithstanding such provision
limiting the effectivity of an adverse claim for thirty days from
the date of registration. The court cannot be bound by such
period as it would be inconsistent with the very authority vested
in it. A fortiori, the limitation on the period of effectivity is
immaterial in determining the validity or invalidity of an adverse
claim which is the principal issue to be decided in the court
hearing. It will therefore depend upon the evidence at a proper
hearing for the court to determine whether it will order the
cancellation of the adverse claim or not.
To interpret the effectivity period of the adverse claim as
absolute and without qualification limited to thirty days defeats
the very purpose for which the statute provides for the remedy
of an inscription of adverse claim, as the annotation of an
adverse claim is a measure designed to protect the interest of a
person over a piece of real property where the registration of
such interest or right is not otherwise provided for by the Land
Registration Act or Act 496 (now P.D. 1529 or the Property
Registration Decree), and serves as a warning to third parties
dealing with said property that someone is claiming an interest
or the same or a better right than the registered owner thereof.
The reason why the law provides for a hearing where the
validity of the adverse claim is to be threshed out is to afford
the adverse claimant an opportunity to be heard, providing a
venue where the propriety of his claimed interest can be
established or revoked, all for the purpose of determining at last
the existence of any encumbrance on the title arising from such
adverse claim. This is in line with the provision immediately
following:
"Provided, however, that after cancellation, no second adverse
claim shall be registered by the same claimant."
Should the adverse claimant fail to sustain his interest in the
property, the adverse claimant will be precluded from
registering a second adverse claim based on the same ground.
It was held that "validity or efficaciousness of the claim may only
be determined by the Court upon petition by an interested
party, in which event, the Court shall order the immediate
hearing thereof and make the proper adjudication as justice and
equity may warrant. And it is only when such claim is found
unmeritorious that the registration of the adverse claim may be
cancelled, thereby protecting the interest of the adverse
claimant and giving notice and warning to third
parties."80 (Emphases supplied.)
Whether under Section 110 of the Land Registration Act or
Section 70 of the Property Registration Decree, notice of
adverse claim can only be cancelled after a party in interest files
a petition for cancellation before the RTC wherein the property
is located, and the RTC conducts a hearing and determines the
said claim to be invalid or unmeritorious.
No petition for cancellation has been filed and no hearing has
been conducted herein to determine the validity or merit of the
adverse claim of the Torbela siblings. Entry No. 520469
cancelled the adverse claim of the Torbela siblings, annotated as
Entry Nos. 274471-774472, upon the presentation by Dr.
Rosario of a mere Cancellation and Discharge of Mortgage.
Regardless of whether or not the Register of Deeds should have
inscribed Entry No. 520469 on TCT No. 52751, Banco Filipino
could not invoke said inscription in support of its claim of good
faith. There were several things amiss in Entry No. 520469
which should have already aroused suspicions in Banco Filipino,
and compelled the bank to look beyond TCT No. 52751 and
inquire into Dr. Rosarios title. First, Entry No. 520469 does not
mention any court order as basis for the cancellation of the
adverse claim. Second, the adverse claim was not a mortgage
which could be cancelled with Dr. Rosarios Cancellation and
Discharge of Mortgage. And third, the adverse claim was against
Dr. Rosario, yet it was cancelled based on a document also
executed by Dr. Rosario.
It is a well-settled rule that a purchaser or mortgagee cannot
close his eyes to facts which should put a reasonable man upon
his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor or
mortgagor. His mere refusal to believe that such defect exists,
or his willful closing of his eyes to the possibility of the existence
of a defect in the vendor's or mortgagor's title, will not make
him an innocent purchaser or mortgagee for value, if it
49
afterwards develops that the title was in fact defective, and it
appears that he had such notice of the defects as would have
led to its discovery had he acted with the measure of precaution
which may be required of a prudent man in a like situation.81
While the defective cancellation of Entry Nos. 274471-274472
by Entry No. 520469 might not be evident to a private
individual, the same should have been apparent to Banco
Filipino. Banco Filipino is not an ordinary mortgagee, but is a
mortgagee-bank, whose business is impressed with public
interest. In fact, in one case, 82 the Court explicitly declared that
the rule that persons dealing with registered lands can rely
solely on the certificate of title does not apply to banks. In
another case,83 the Court adjudged that unlike private
individuals, a bank is expected to exercise greater care and
prudence in its dealings, including those involving registered
lands. A banking institution is expected to exercise due diligence
before entering into a mortgage contract. The ascertainment of
the status or condition of a property offered to it as security for
a loan must be a standard and indispensable part of its
operations.
Banco Filipino cannot be deemed a mortgagee in good faith,
much less a purchaser in good faith at the foreclosure sale of
Lot No. 356-A. Hence, the right of the Torbela siblings over Lot
No. 356-A is superior over that of Banco Filipino; and as the true
owners of Lot No. 356-A, the Torbela siblings are entitled to a
reconveyance of said property even from Banco Filipino.
Nonetheless, the failure of Banco Filipino to comply with the
due diligence requirement was not the result of a dishonest
purpose, some moral obliquity, or breach of a known duty for
some interest or ill will that partakes of fraud that would justify
damages.84
Given the reconveyance of Lot No. 356-A to the Torbela siblings,
there is no more need to address issues concerning redemption,
annulment of the foreclosure sale and certificate of sale (subject
matter of Civil Case No. U-4733), or issuance of a writ of
possession in favor of Banco Filipino (subject matter of Pet. Case
No. U-822) insofar as Lot No. 356-A is concerned. Such would
only be superfluous. Banco Filipino, however, is not left without
any recourse should the foreclosure and sale of the two other
mortgaged properties be insufficient to cover Dr. Rosarios loan,
for the bank may still bring a proper suit against Dr. Rosario to
collect the unpaid balance.
The rules on accession shall govern the improvements on Lot
No. 356-A and the rents thereof.
The accessory follows the principal. The right of accession is
recognized under Article 440 of the Civil Code which states that
"[t]he ownership of property gives the right by accession to
everything which is produced thereby, or which is incorporated
or attached thereto, either naturally or artificially."
There is no question that Dr. Rosario is the builder of the
improvements on Lot No. 356-A. The Torbela siblings
themselves alleged that they allowed Dr. Rosario to register Lot
No. 356-A in his name so he could obtain a loan from DBP, using
said parcel of land as security; and with the proceeds of the
loan, Dr. Rosario had a building constructed on Lot No. 356-A,
initially used as a hospital, and then later for other commercial
purposes. Dr. Rosario supervised the construction of the
building, which began in 1965; fully liquidated the loan from
DBP; and maintained and administered the building, as well as
collected the rental income therefrom, until the Torbela siblings
instituted Civil Case No. U-4359 before the RTC on February 13,
1986.
When it comes to the improvements on Lot No. 356-A, both the
Torbela siblings (as landowners) and Dr. Rosario (as builder) are
deemed in bad faith. The Torbela siblings were aware of the
construction of a building by Dr. Rosario on Lot No. 356-A, while
Dr. Rosario proceeded with the said construction despite his
knowledge that Lot No. 356-A belonged to the Torbela siblings.
This is the case contemplated under Article 453 of the Civil
Code, which reads:
ART. 453. If there was bad faith, not only on the part of the
person who built, planted or sowed on the land of another, but
also on the part of the owner of such land, the rights of one and
the other shall be the same as though both had acted in good
faith.
It is understood that there is bad faith on the part of the
landowner whenever the act was done with his knowledge and
without opposition on his part. (Emphasis supplied.)
When both the landowner and the builder are in good faith, the
following rules govern:
ART. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548,
or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms
thereof.
50
ART. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the
thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good
faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof.
ART. 548. Expenses for pure luxury or mere pleasure shall not
be refunded to the possessor in good faith; but he may remove
the ornaments with which he has embellished the principal
thing if it suffers no injury thereby, and if his successor in the
possession does not prefer to refund the amount expended.
Whatever is built, planted, or sown on the land of another, and
the improvements or repairs made thereon, belong to the
owner of the land. Where, however, the planter, builder, or
sower has acted in good faith, a conflict of rights arises between
the owners and it becomes necessary to protect the owner of
the improvements without causing injustice to the owner of the
land. In view of the impracticability of creating what Manresa
calls a state of "forced co-ownership," the law has provided a
just and equitable solution by giving the owner of the land the
option to acquire the improvements after payment of the
proper indemnity or to oblige the builder or planter to pay for
the land and the sower to pay the proper rent. It is the owner of
the land who is allowed to exercise the option because his right
is older and because, by the principle of accession, he is entitled
to the ownership of the accessory thing.85
The landowner has to make a choice between appropriating the
building by paying the proper indemnity or obliging the builder
to pay the price of the land. But even as the option lies with the
landowner, the grant to him, nevertheless, is preclusive. He
must choose one. He cannot, for instance, compel the owner of
the building to remove the building from the land without first
exercising either option. It is only if the owner chooses to sell his
land, and the builder or planter fails to purchase it where its
value is not more than the value of the improvements, that the
owner may remove the improvements from the land. The
owner is entitled to such remotion only when, after having
chosen to sell his land, the other party fails to pay for the
same.86
This case then must be remanded to the RTC for the
determination of matters necessary for the proper application
of Article 448, in relation to Article 546, of the Civil Code. Such
matters include the option that the Torbela siblings will choose;
the amount of indemnity that they will pay if they decide to
appropriate the improvements on Lot No. 356-A; the value of
Lot No. 356-A if they prefer to sell it to Dr. Rosario; or the
reasonable rent if they opt to sell Lot No. 356-A to Dr. Rosario
but the value of the land is considerably more than the
improvements. The determination made by the Court of
Appeals in its Decision dated June 29, 1999 that the current
value of Lot No. 356-A is 1,200,000.00 is not supported by any
evidence on record.
Should the Torbela siblings choose to appropriate the
improvements on Lot No. 356-A, the following ruling of the
Court in Pecson v. Court of Appeals87 is relevant in the
determination of the amount of indemnity under Article 546 of
the Civil Code:
Article 546 does not specifically state how the value of the
useful improvements should be determined. The respondent
court and the private respondents espouse the belief that the
cost of construction of the apartment building in 1965, and not
its current market value, is sufficient reimbursement for
necessary and useful improvements made by the petitioner.
This position is, however, not in consonance with previous
rulings of this Court in similar cases. In Javier vs. Concepcion, Jr.,
this Court pegged the value of the useful improvements
consisting of various fruits, bamboos, a house and camarin
made of strong material based on the market value of the said
improvements. In Sarmiento vs. Agana, despite the finding that
the useful improvement, a residential house, was built in 1967
at a cost of between eight thousand pesos (8,000.00) to ten
thousand pesos (10,000.00), the landowner was ordered to
reimburse the builder in the amount of forty thousand pesos
(40,000.00), the value of the house at the time of the trial. In
the same way, the landowner was required to pay the "present
value" of the house, a useful improvement, in the case of De
Guzman vs. De la Fuente, cited by the petitioner.
The objective of Article 546 of the Civil Code is to administer
justice between the parties involved. In this regard, this Court
had long ago stated in Rivera vs. Roman Catholic Archbishop of
Manila that the said provision was formulated in trying to adjust
the rights of the owner and possessor in good faith of a piece of
land, to administer complete justice to both of them in such a
way as neither one nor the other may enrich himself of that
which does not belong to him. Guided by this precept, it is
therefore the current market value of the improvements which
should be made the basis of reimbursement. A contrary ruling
would unjustly enrich the private respondents who would
otherwise be allowed to acquire a highly valued income-yielding
four-unit apartment building for a measly amount.
Consequently, the parties should therefore be allowed to
adduce evidence on the present market value of the apartment
building upon which the trial court should base its finding as to
the amount of reimbursement to be paid by the
landowner.88 (Emphases supplied.)
51
Still following the rules of accession, civil fruits, such as rents,
belong to the owner of the building.89 Thus, Dr. Rosario has a
right to the rents of the improvements on Lot No. 356-A and is
under no obligation to render an accounting of the same to
anyone. In fact, it is the Torbela siblings who are required to
account for the rents they had collected from the lessees of the
commercial building and turn over any balance to Dr. Rosario.
Dr. Rosarios right to the rents of the improvements on Lot No.
356-A shall continue until the Torbela siblings have chosen their
option under Article 448 of the Civil Code. And in case the
Torbela siblings decide to appropriate the improvements, Dr.
Rosario shall have the right to retain said improvements, as well
as the rents thereof, until the indemnity for the same has been
paid.90
Dr. Rosario is liable for damages to the Torbela siblings.
The Court of Appeals ordered Dr. Rosario to pay the Torbela
siblings 300,000.00 as moral damages; 200,000.00 as
exemplary damages; and 100,000.00 as attorneys fees.
Indeed, Dr. Rosarios deceit and bad faith is evident when, being
fully aware that he only held Lot No. 356-A in trust for the
Torbela siblings, he mortgaged said property to PNB and Banco
Filipino absent the consent of the Torbela siblings, and caused
the irregular cancellation of the Torbela siblings adverse claim
on TCT No. 52751. Irrefragably, Dr. Rosarios betrayal had
caused the Torbela siblings (which included Dr. Rosarios own
mother, Eufrosina Torbela Rosario) mental anguish, serious
anxiety, and wounded feelings. Resultantly, the award of moral
damages is justified, but the amount thereof is reduced to
200,000.00.
In addition to the moral damages, exemplary damages may also
be imposed given that Dr. Rosarios wrongful acts were
accompanied by bad faith. However, judicial discretion granted
to the courts in the assessment of damages must always be
exercised with balanced restraint and measured objectivity. The
circumstances of the case call for a reduction of the award of
exemplary damages to 100,000.00.
As regards attorney's fees, they may be awarded when the
defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his
interest. Because of Dr. Rosarios acts, the Torbela siblings were
constrained to institute several cases against Dr. Rosario and his
spouse, Duque-Rosario, as well as Banco Filipino, which had
lasted for more than 25 years. Consequently, the Torbela
siblings are entitled to an award of attorney's fees and the
amount of 100,000.00 may be considered rational, fair, and
reasonable.
Banco Filipino is entitled to a writ of possession for Lot No. 5-F-
8-C-2-B-2-A.
The Court emphasizes that Pet. Case No. U-822, instituted by
Banco Filipino for the issuance of a writ of possession before the
RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot
No. 356-A (Lot No. 4489, the third property mortgaged to
secure Dr. Rosarios loan from Banco Filipino, is located in
Dagupan City, Pangasinan, and the petition for issuance of a writ
of possession for the same should be separately filed with the
RTC of Dagupan City). Since the Court has already granted
herein the reconveyance of Lot No. 356-A from Banco Filipino to
the Torbela siblings, the writ of possession now pertains only to
Lot No. 5-F-8-C-2-B-2-A.
To recall, the Court of Appeals affirmed the issuance by the RTC
of a writ of possession in favor of Banco Filipino. Dr. Rosario no
longer appealed from said judgment of the appellate court.
Already legally separated from Dr. Rosario, Duque-Rosario alone
challenges the writ of possession before this Court through her
Petition in G.R. No. 140553.
Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-2-B-2-
A had been registered in her name under TCT No. 104189. Yet,
without a copy of TCT No. 104189 on record, the Court cannot
give much credence to Duque-Rosarios claim of sole ownership
of Lot No. 5-F-8-C-2-B-2-A. Also, the question of whether Lot
No. 5-F-8-C-2-B-2-A was the paraphernal property of Duque-
Rosario or the conjugal property of the spouses Rosario would
not alter the outcome of Duque-Rosarios Petition.
The following facts are undisputed: Banco Filipino extrajudicially
foreclosed the mortgage constituted on Lot No. 5-F-8-C-2-B-2-A
and the two other properties after Dr. Rosario defaulted on the
payment of his loan; Banco Filipino was the highest bidder for all
three properties at the foreclosure sale on April 2, 1987; the
Certificate of Sale dated April 2, 1987 was registered in April
1987; and based on the Certificate of Final Sale dated May 24,
1988 and Affidavit of Consolidation dated May 25, 1988, the
Register of Deeds cancelled TCT No. 104189 and issued TCT No.
165812 in the name of Banco Filipino for Lot No. 5-F-8-C-2-B-2-
A on June 7, 1988.
The Court has consistently ruled that the one-year redemption
period should be counted not from the date of foreclosure sale,
but from the time the certificate of sale is registered with the
Registry of Deeds.91 No copy of TCT No. 104189 can be found in
the records of this case, but the fact of annotation of the
Certificate of Sale thereon was admitted by the parties, only
differing on the date it was made: April 14, 1987 according to
Banco Filipino and April 15, 1987 as maintained by Duque-
Rosario. Even if the Court concedes that the Certificate of Sale
was annotated on TCT No. 104189 on the later date, April 15,
52
1987, the one-year redemption period already expired on April
14, 1988.92 The Certificate of Final Sale and Affidavit of
Consolidation were executed more than a month thereafter, on
May 24, 1988 and May 25, 1988, respectively, and were clearly
not premature.
It is true that the rule on redemption is liberally construed in
favor of the original owner of the property. The policy of the law
is to aid rather than to defeat him in the exercise of his right of
redemption.93 However, the liberal interpretation of the rule on
redemption is inapplicable herein as neither Duque-Rosario nor
Dr. Rosario had made any attempt to redeem Lot No. 5-F-8-C-2-
B-2-A. Duque-Rosario could only rely on the efforts of the
Torbela siblings at redemption, which were unsuccessful. While
the Torbela siblings made several offers to redeem Lot No. 356-
A, as well as the two other properties mortgaged by Dr. Rosario,
they did not make any valid tender of the redemption price to
effect a valid redemption. The general rule in redemption is that
it is not sufficient that a person offering to redeem manifests his
desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender of payment.
The redemption price should either be fully offered in legal
tender or else validly consigned in court. Only by such means
can the auction winner be assured that the offer to redeem is
being made in good faith.94 In case of disagreement over the
redemption price, the redemptioner may preserve his right of
redemption through judicial action, which in every case, must
be filed within the one-year period of redemption. The filing of
the court action to enforce redemption, being equivalent to a
formal offer to redeem, would have the effect of preserving his
redemptive rights and "freezing" the expiration of the one-year
period.95But no such action was instituted by the Torbela
siblings or either of the spouses Rosario.
Duque-Rosario also cannot bar the issuance of the writ of
possession over Lot No. 5-F-8-C-2-B-2-A in favor of Banco
Filipino by invoking the pendency of Civil Case No. U-4359, the
Torbela siblings action for recovery of ownership and
possession and damages, which supposedly tolled the period for
redemption of the foreclosed properties. Without belaboring
the issue of Civil Case No. U-4359 suspending the redemption
period, the Court simply points out to Duque-Rosario that Civil
Case No. U-4359 involved Lot No. 356-A only, and the legal
consequences of the institution, pendency, and resolution of
Civil Case No. U-4359 apply to Lot No. 356-A alone.
Equally unpersuasive is Duque-Rosarios argument that the writ
of possession over Lot No. 5-F-8-C-2-B-2-A should not be issued
given the defects in the conduct of the foreclosure sale (i.e., lack
of personal notice to Duque-Rosario) and consolidation of title
(i.e., failure to provide Duque-Rosario with copies of the
Certificate of Final Sale).
The right of the purchaser to the possession of the foreclosed
property becomes absolute upon the expiration of the
redemption period. The basis of this right to possession is the
purchaser's ownership of the property. After the consolidation
of title in the buyer's name for failure of the mortgagor to
redeem, the writ of possession becomes a matter of right and
its issuance to a purchaser in an extrajudicial foreclosure is
merely a ministerial function.961avvphi1
The judge with whom an application for a writ of possession is
filed need not look into the validity of the mortgage or the
manner of its foreclosure. Any question regarding the validity of
the mortgage or its foreclosure cannot be a legal ground for the
refusal to issue a writ of possession. Regardless of whether or
not there is a pending suit for the annulment of the mortgage or
the foreclosure itself, the purchaser is entitled to a writ of
possession, without prejudice, of course, to the eventual
outcome of the pending annulment case. The issuance of a writ
of possession in favor of the purchaser in a foreclosure sale is a
ministerial act and does not entail the exercise of discretion.97
WHEREFORE, in view of the foregoing, the Petition of the
Torbela siblings in G.R. No. 140528 is GRANTED, while the
Petition of Lena Duque-Rosario in G.R. No. 140553 is DENIED for
lack of merit. The Decision dated June 29, 1999 of the Court of
Appeals in CA-G.R. CV No. 39770, which affirmed with
modification the Amended Decision dated January 29, 1992 of
the RTC in Civil Case Nos. U-4359 and U-4733 and Pet. Case No.
U-822, is AFFIRMED WITH MODIFICATIONS, to now read as
follows:
(1) Banco Filipino is ORDERED to reconvey Lot No. 356-A to the
Torbela siblings;
(2) The Register of Deeds of Pangasinan is ORDERED to cancel
TCT No. 165813 in the name of Banco Filipino and to issue a
new certificate of title in the name of the Torbela siblings for Lot
No. 356-A;
(3) The case is REMANDED to the RTC for further proceedings to
determine the facts essential to the proper application of
Articles 448 and 546 of the Civil Code, particularly: (a) the
present fair market value of Lot No. 356-A; (b) the present fair
market value of the improvements thereon; (c) the option of
the Torbela siblings to appropriate the improvements on Lot No.
356-A or require Dr. Rosario to purchase Lot No. 356-A; and (d)
in the event that the Torbela siblings choose to require Dr.
Rosario to purchase Lot No. 356-A but the value thereof is
considerably more than the improvements, then the reasonable
rent of Lot No. 356-A to be paid by Dr. Rosario to the Torbela
siblings;
53
(4) The Torbela siblings are DIRECTED to submit an accounting
of the rents of the improvements on Lot No. 356-A which they
had received and to turn over any balance thereof to Dr.
Rosario;
(5) Dr. Rosario is ORDERED to pay the Torbela siblings
200,000.00 as moral damages, 100,000.00 as exemplary
damages, and 100,000.00 as attorneys fees; and
(6) Banco Filipino is entitled to a writ of possession over Lot-5-F-
8-C-2-B-2-A, covered by TCT No. 165812. The RTC Branch Clerk
of Court is ORDERED to issue a writ of possession for the said
property in favor of Banco Filipino.
SO ORDERED
G.R. No. 189647 February 6, 2012
NANCY T. LORZANO, Petitioner,
vs.
JUAN TABAYAG, JR., Respondent.
DECISION
REYES, J.:
Nature of the Petition
This is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by Nancy T. Lorzano (petitioner) assailing the
Court of Appeals (CA) Decision1 dated March 18, 2009 and
Resolution2 dated September 16, 2009 in CA-G.R. CV No. 87762
entitled "Juan Tabayag, Jr. v. Nancy T. Lorzano."
The Antecedent Facts
The instant case stemmed from an amended complaint3 for
annulment of document and reconveyance filed by Juan
Tabayag, Jr. (respondent) against the petitioner, docketed as
Civil Case No. Ir-3286, with the Regional Trial Court (RTC) of Iriga
City.
The petitioner and the respondent are two of the children of
the late Juan Tabayag (Tabayag) who died on June 2, 1992.
Tabayag owned a parcel of land situated in Sto. Domingo, Iriga
City (subject property). Right after the burial of their father, the
petitioner allegedly requested from her siblings that she be
allowed to take possession of and receive the income generated
by the subject property until after her eldest son could graduate
from college. The petitioners siblings acceded to the said
request.
After the petitioners eldest son finished college, her siblings
asked her to return to them the possession of the subject
property so that they could partition it among themselves.
However, the petitioner refused to relinquish her possession of
the subject property claiming that she purchased the subject
property from their father as evidenced by a Deed of Absolute
Sale of Real Property4 executed by the latter on May 25, 1992.
The respondent claimed that their father did not execute the
said deed of sale. He pointed out that the signature of their
father appearing in the said deed of sale was a forgery as the
same is markedly different from the real signature of Tabayag.
Further, the respondent asserted that the said deed of sale was
acknowledged before a person who was not a duly
commissioned Notary Public. The deed of sale was
acknowledged by the petitioner before a certain Julian P.
Cabaes (Cabaes) on May 25, 1992 at Iriga City. However, as
per the Certification5 issued by the Office of the Clerk of Court of
the RTC on May 16, 2002, Cabaes has never been
commissioned as a Notary Public for and in the Province of
Camarines Sur and in the Cities of Iriga and Naga.
The respondent alleged that the petitioner purposely forged the
signature of Tabayag in the said deed of sale to deprive him and
their other siblings of their share in the subject property. He
then averred that the subject property was already covered by
Original Certificate of Title (OCT) No. 17866 issued by the
Register of Deeds of Iriga City on January 9, 2001 registered
under the name of the petitioner. OCT No. 1786 was issued
pursuant to Free Patent No. 051716 which was procured by the
petitioner on June 24, 1996.
For her part, the petitioner maintained she is the owner of the
subject parcel of land having purchased the same from Tabayag
as evidenced by the May 25, 1992 deed of sale. Further, the
petitioner asserted that the respondent failed to establish that
the signature of Tabayag appearing on the said deed of sale was
a forgery considering that it was not submitted for examination
by a handwriting expert.
The RTC Decision
On April 28, 2006, the RTC rendered an Amended Decision 7 the
decretal portion of which reads:
WHEREFORE, Judgment is hereby rendered[:]
a. Declaring the supposed Deed of Sale null and void and of no
legal effect;
b. Ordering the [petitioner] to reconvey to the heirs of the late
Juan Tabayag, Sr. the land subject matter of this case[;]
c. Declaring the property described in the complaint and in the
spurious deed of sale to be owned in common by the heirs of
Juan Tabayag, Sr. as part of their inheritance from said Juan
Tabayag, Sr[.];
54
d. Ordering [petitioner] to pay plaintiff the sum of One Hundred
Thousand Pesos (P100,000.00)by way of moral damages;
e. Ordering defendant to pay plaintiff the attorneys fees in the
sum of Fifteen Thousand Pesos (P15,000.00), based on quantum
meruit;
f. Dismissing the counterclaim for lack of merit[;]
g. Costs against the defendant.
SO ORDERED.8
The RTC opined that a cursory comparison between the
signature of Tabayag appearing on the said deed of sale and his
signatures appearing on other documents would clearly yield a
conclusion that the former was indeed a forgery. Moreover, the
RTC asserted that the nullity of the said May 25, 1992 deed of
sale all the more becomes glaring considering that the same was
purportedly acknowledged before a person who is not a duly
commissioned Notary Public.
The CA Decision
Thereafter, the petitioner appealed the decision with the CA. On
March 18, 2009, the CA rendered the assailed decision affirming
in toto the RTC decision.9 The CA held that the testimony of a
handwriting expert in this case is not indispensable as the
similarity and dissimilarity between the questioned signature of
Tabayag as compared to other signatures of the latter in other
documents could be determined by a visual comparison.
Further, the CA upheld the award of moral damages and
attorneys fees in favor of the respondent as the petitioners
conduct caused "great concern and anxiety" to the respondent
and that the latter had to go to court and retain the services of
counsel to pursue his rights and protect his interests.
Undaunted, the petitioner instituted the instant petition for
review on certiorari before this Court asserting the following: (1)
the questioned signature of Tabayag in the May 25, 1992 deed
of sale could not be declared spurious unless first examined and
declared to be so by a handwriting expert; (2) considering that
the subject property was registered under the petitioners name
pursuant to a free patent, reconveyance of the same in favor of
the respondent is improper since only the Government, through
the Office of the Solicitor General (OSG), could assail her title
thereto in an action for reversion; and (3) the respondent is not
entitled to an award for moral damages and attorneys fees.
In his Comment,10 the respondent claimed that the issues raised
in the instant petition are factual in nature and, hence, could
not be passed upon by this Court in a petition for review on
certiorari under Rule 45. Likewise, the respondent asserted that
the petitioners free patent, having been issued on the basis of a
falsified document, does not create a right over the subject
property in her favor.
Issues
In sum, the threshold issues for resolution are the following: (a)
whether the lower courts erred in declaring the May 25, 1992
deed of sale a nullity; (b) whether an action for reconveyance is
proper in the instant case; and (c) whether the respondent is
entitled to an award of moral damages and attorneys fees.
The Courts Ruling
First and Third Issues: Nullity of the Deed of Sale and Award of
Moral Damages and Attorneys Fees
This Court shall jointly discuss the first and third issues as the
resolution of the same are interrelated.
Primarily, Section 1, Rule 45 of the Rules of Court categorically
states that the petition filed shall raise only questions of law,
which must be distinctly set forth. A question of law arises when
there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the
truth or falsity of the alleged facts. For a question to be one of
law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them.
The resolution of the issue must rest solely on what the law
provides on the given set of circumstances. Once it is clear that
the issue invites a review of the evidence presented, the
question posed is one of fact.11
That the signature of Tabayag in the May 25, 1992 deed of sale
was a forgery is a conclusion derived by the RTC and the CA on a
question of fact. The same is conclusive upon this Court as it
involves the truth or falsehood of an alleged fact, which is a
matter not for this Court to resolve. 12 Where a petitioner casts
doubt on the findings of the lower court as affirmed by the CA
regarding the existence of forgery is a question of fact.13
In any case, the CA aptly ruled that a handwriting expert is not
indispensable to prove that the signature of Tabayag in the
questioned deed of sale was indeed a forgery. It is true that the
opinion of handwriting experts are not necessarily binding upon
the court, the experts function being to place before the court
data upon which the court can form its own opinion.
Handwriting experts are usually helpful in the examination of
forged documents because of the technical procedure involved
in analyzing them. But resort to these experts is not mandatory
or indispensable to the examination or the comparison of
handwriting. A finding of forgery does not depend entirely on
the testimonies of handwriting experts, because the judge must
conduct an independent examination of the questioned
55
signature in order to arrive at a reasonable conclusion as to its
authenticity.14
For the same reason, we would ordinarily disregard the
petitioners allegation as to the propriety of the award of moral
damages and attorneys fees in favor of the respondent as it is a
question of fact. Thus, questions on whether or not there was a
preponderance of evidence to justify the award of damages or
whether or not there was a causal connection between the
given set of facts and the damage suffered by the private
complainant or whether or not the act from which civil liability
might arise exists are questions of fact.15
Essentially, the petitioner is questioning the award of moral
damages and attorneys fees in favor of the respondent as the
same is supposedly not fully supported by evidence. However,
in the final analysis, the question of whether the said award is
fully supported by evidence is a factual question as it would
necessitate whether the evidence adduced in support of the
same has any probative value. For a question to be one of law, it
must involve no examination of the probative value of the
evidence presented by the litigants or any of them.16
Nevertheless, a review of the amount of moral damages actually
awarded by the lower courts in favor of the respondent is
necessary.
Here, the lower courts ordered the petitioner to pay the
respondent moral damages in the amount of 100,000.00. We
find the said amount to be excessive.
Moral damages are not intended to enrich the complainant at
the expense of the defendant. Rather, these are awarded only
to enable the injured party to obtain "means, diversions or
amusements" that will serve to alleviate the moral suffering that
resulted by reason of the defendants culpable action. The
purpose of such damages is essentially indemnity or reparation,
not punishment or correction. In other words, the award
thereof is aimed at a restoration within the limits of the
possible, of the spiritual status quo ante; therefore, it must
always reasonably approximate the extent of injury and be
proportional to the wrong committed.17
Accordingly, the amount of moral damages must be reduced to
30,000.00, an amount reasonably commensurate to the injury
sustained by the respondent.
Second Issue: Propriety of the Reconveyance of the Subject
Property to the Heirs of the late Juan Tabayag
The petitioner asserted that the CA erred in not finding that her
ownership over the subject property was by virtue of a free
patent issued by the government and, thus, even assuming that
the subject deed of sale is invalid, her title and ownership of the
subject property cannot be divested or much less ordered
reconveyed to the heirs of Tabayag.
Simply put, the petitioner points out that the subject property,
being acquired by her through a grant of free patent from the
government, originally belonged to the public domain. As such,
the lower courts could not order the reconveyance of the
subject property to the heirs of Tabayag as the latter are not the
original owners thereof. If at all, the subject property could only
be ordered reverted to the public domain.
An issue cannot be raised for the first time on appeal as it is
already barred by estoppel.
This Court notes that the foregoing argument is being raised by
the petitioner for the first time in the instant petition. It is well-
settled that no question will be entertained on appeal unless it
has been raised in the proceedings below. Points of law,
theories, issues and arguments not brought to the attention of
the lower court, administrative agency or quasi-judicial
body, need not be considered by a reviewing court, as they
cannot be raised for the first time at that late stage. Basic
considerations of fairness and due process impel this rule. Any
issue raised for the first time on appeal is barred by estoppel.18
Accordingly, the petitioners attack on the propriety of the
action for reconveyance in this case ought to be disregarded.
However, in order to obviate any lingering doubt on the
resolution of the issues involved in the instant case, this Court
would proceed to discuss the cogency of the petitioners
foregoing argument.
Title emanating from a free patent fraudulently secured does
not become indefeasible.
The petitioner asserts that the amended complaint for
annulment of document, reconveyance and damages that was
filed by the respondent with the RTC is a collateral attack on her
title over the subject property. She avers that, when the said
amended compliant was filed, more than a year had already
lapsed since OCT No. 1786 over the subject property was issued
under her name. Thus, the petitioner maintains that her title
over the subject property is already indefeasible and, hence,
could not be attacked collaterally.
We do not agree.
A Free Patent may be issued where the applicant is a natural-
born citizen of the Philippines; is not the owner of more than
twelve (12) hectares of land; has continuously occupied and
cultivated, either by himself or through his predecessors-in-
interest, a tract or tracts of agricultural public land subject to
disposition, for at least 30 years prior to the effectivity of
56
Republic Act No. 6940; and has paid the real taxes thereon while
the same has not been occupied by any person.19
Once a patent is registered and the corresponding certificate of
title is issued, the land covered thereby ceases to be part of
public domain and becomes private property, and the Torrens
Title issued pursuant to the patent becomes indefeasible upon
the expiration of one year from the date of such
issuance.20 However, a title emanating from a free patent which
was secured through fraud does not become indefeasible,
precisely because the patent from whence the title sprung is
itself void and of no effect whatsoever.21
On this point, our ruling in Republic v. Heirs of Felipe Alejaga,
Sr.22 is instructive:
True, once a patent is registered and the corresponding
certificate of title [is] issued, the land covered by them ceases to
be part of the public domain and becomes private property.
Further, the Torrens Title issued pursuant to the patent
becomes indefeasible a year after the issuance of the
latter. However, this indefeasibility of a title does not attach to
titles secured by fraud and misrepresentation. Well-settled is
the doctrine that the registration of a patent under the Torrens
System does not by itself vest title; it merely confirms the
registrants already existing one. Verily, registration under the
Torrens System is not a mode of acquiring
ownership.23 (citations omitted)
A fraudulently acquired free patent may only be assailed by the
government in an action for reversion.
Nonetheless, a free patent that was fraudulently acquired, and
the certificate of title issued pursuant to the same, may only be
assailed by the government in an action for reversion pursuant
to Section 101 of the Public Land Act.24 In Sherwill Development
Corporation v. Sitio Sto. Nio Residents Association, Inc.,25 this
Court pointed out that:
It is also to the public interest that one who succeeds in
fraudulently acquiring title to a public land should not be
allowed to benefit therefrom, and the State should, therefore,
have an even existing authority, thru its duly-authorized officers,
to inquire into the circumstances surrounding the issuance of
any such title, to the end that the Republic, thru the Solicitor
General or any other officer who may be authorized by law, may
file the corresponding action for the reversion of the land
involved to the public domain, subject thereafter to disposal to
other qualified persons in accordance with law. In other words,
the indefeasibility of a title over land previously public is not a
bar to an investigation by the Director of Lands as to how such
title has been acquired, if the purpose of such investigation is to
determine whether or not fraud had been committed in
securing such title in order that the appropriate action for
reversion may be filed by the Government.26
In Kayaban, et al. v. Republic, et al.,27 this Court explained the
reason for the rule that only the government, through the OSG,
upon the recommendation of the Director of Lands, may bring
an action assailing a certificate of title issued pursuant to a
fraudulently acquired free patent:
Since it was the Director of Lands who processed and approved
the applications of the appellants and who ordered the issuance
of the corresponding free patents in their favor in his capacity as
administrator of the disposable lands of the public domain, the
action for annulment should have been initiated by him, or at
least with his prior authority and consent.28
An action for reconveyance is proper in this case.
However, the foregoing rule is not without an exception. A
recognized exception is that situation where plaintiff-claimant
seeks direct reconveyance from defendant public land
unlawfully and in breach of trust titled by him, on the principle
of enforcement of a constructive trust.29
A private individual may bring an action for reconveyance of a
parcel of land even if the title thereof was issued through a free
patent since such action does not aim or purport to re-open the
registration proceeding and set aside the decree of registration,
but only to show that the person who secured the registration
of the questioned property is not the real owner thereof.30
In Roco, et al. v. Gimeda,31 we stated that if a patent had already
been issued through fraud or mistake and has been registered,
the remedy of a party who has been injured by the fraudulent
registration is an action for reconveyance, thus:
It is to be noted that the petition does not seek for a
reconsideration of the granting of the patent or of the decree
issued in the registration proceeding. The purpose is not to
annul the title but to have it conveyed to plaintiffs. Fraudulent
statements were made in the application for the patent and no
notice thereof was given to plaintiffs, nor knowledge of the
petition known to the actual possessors and occupants of the
property. The action is one based on fraud and under the law, it
can be instituted within four years from the discovery of the
fraud. (Art. 1146, Civil Code, as based on Section 3, paragraph
43 of Act No. 190.) It is to be noted that as the patent here has
already been issued, the land has the character of registered
property in accordance with the provisions of Section 122 of Act
No. 496, as amended by Act No. 2332, and the remedy of the
party who has been injured by the fraudulent registration is an
action for reconveyance. (Director of Lands vs. Registered of
57
Deeds, 92 Phil., 826; 49 Off. Gaz. [3] 935; Section 55 of Act No.
496.)32
In the same vein, in Quiiano, et al. v. Court of Appeals, et
al.,33 we stressed that:
The controlling legal norm was set forth in succinct language by
Justice Tuason in a 1953 decision, Director of Lands v. Register
of Deeds of Rizal. Thus: "The sole remedy of the land owner
whose property has been wrongfully or erroneously registered
in another's name is, after one year from the date of the decree,
not to set aside the decree, as was done in the instant case, but,
respecting the decree as incontrovertible and no longer open to
review, to bring an ordinary action in the ordinary court of
justice for reconveyance or, if the property has passed into the
hands of an innocent purchaser for value, for damages." Such a
doctrine goes back to the 1919 landmark decision of Cabanos v.
Register of Deeds of Laguna. If it were otherwise the institution
of registration would, to quote from Justice Torres, serve "as a
protecting mantle to cover and shelter bad faith ...." In the
language of the then Justice, later Chief Justice, Bengzon: "A
different view would encourage fraud and permit one person
unjustly to enrich himself at the expense of another." It would
indeed be a signal failing of any legal system if under the
circumstances disclosed, the aggrieved party is considered as
having lost his right to a property to which he is entitled. It is
one thing to protect an innocent third party; it is entirely a
different matter, and one devoid of justification, if [deceit]
would be rewarded by allowing the perpetrator to enjoy the
fruits of his nefarious deed. As clearly revealed by the
undeviating line of decisions coming from this Court, such an
undesirable eventuality is precisely sought to be guarded
against. So it has been before; so it should continue to
be.34 (citations omitted)
Here, the respondent, in filing the amended complaint for
annulment of documents, reconveyance and damages, was not
seeking a reconsideration of the granting of the patent or the
decree issued in the registration proceedings. What the
respondent sought was the reconveyance of the subject
property to the heirs of the late Tabayag on account of the
fraud committed by the petitioner. Thus, the lower courts did
not err in upholding the respondents right to ask for the
reconveyance of the subject property. To hold otherwise would
be to make the Torrens system a shield for the commission of
fraud.
That the subject property was not registered under the name of
the heirs of Tabayag prior to the issuance of OCT No. 1786 in
the name of the petitioner would not effectively deny the
remedy of reconveyance to the former. An action for
reconveyance is a legal and equitable remedy granted to the
rightful landowner, whose land was wrongfully or erroneously
registered in the name of another, to compel the registered
owner to transfer or reconvey the land to him.35
It cannot be gainsaid that the heirs of Tabayag, by themselves
and through their predecessors-in-interest, had already
acquired a vested right over the subject property. An open,
continuous, adverse and public possession of a land of the
public domain from time immemorial by a private individual
personally and through his predecessors confers an effective
title on said possessors whereby the land ceases to be public, to
become private property, at least by presumption.36 Hence, the
right of the heirs of Tabayag to ask for the reconveyance of the
subject property is irrefutable.1wphi1
At this juncture, we deem it necessary to reiterate our
disquisition in Naval v. Court of Appeals,37 thus:
The fact that petitioner was able to secure a title in her name
did not operate to vest ownership upon her of the subject land.
Registration of a piece of land under the Torrens System does
not create or vest title, because it is not a mode of acquiring
ownership. A certificate of title is merely an evidence of
ownership or title over the particular property described
therein. It cannot be used to protect a usurper from the true
owner; nor can it be used as a shield for the commission of
fraud; neither does it permit one to enrich himself at the
expense of others. Its issuance in favor of a particular person
does not foreclose the possibility that the real property may be
co-owned with persons not named in the certificate, or that it
may be held in trust for another person by the registered
owner.38 (citations omitted)
WHEREFORE, in consideration of the foregoing disquisitions, the
petition is DENIED. The Decision dated March 18, 2009 and
Resolution dated September 16, 2009 issued by the Court of
Appeals in CA-G.R. CV No. 87762 are hereby AFFIRMED with
MODIFICATION. The petitioner is ordered to pay the respondent
moral damages in the amount of Thirty Thousand Pesos
(30,000.00).
SO ORDERED
58
G.R. No. 168661 October 26, 2007
ESTATE OF THE LATE JESUS S. YUJUICO, represented by
ADMINISTRATORS BENEDICTO V. YUJUICO and EDILBERTO V. YUJUICO;
and AUGUSTO Y. CARPIO, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and the COURT OF
APPEALS, Respondents.
DECISION
VELASCO, JR., J.:
In 1973, Fermina Castro filed an application for the registration
and confirmation of her title over a parcel of land with an area
of 17,343 square meters covered by plan (LRC) Psu-964 located
in the Municipality of Paraaque, Province of Rizal (now
Paraaque City), in the Pasig-Rizal Court of First Instance (CFI),
Branch 22. The application was docketed LRC Case No. N-8239.
The application was opposed by the Office of the Solicitor
General (OSG) on behalf of the Director of Lands, and by
Mercedes Dizon, a private party. Both oppositions were stricken
from the records since the opposition of Dizon was filed after
the expiration of the period given by the court, and the
opposition of the Director of Lands was filed after the entry of
the order of general default. After considering the evidence, the
trial court rendered its April 26, 1974 Decision. The dispositive
portion reads:
____________________________
* As per September 3, 2007 raffle.
WHEREFORE, the Court hereby declares the applicant, Fermina
Castro, of legal age, single, Filipino and a resident of 1515 F.
Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and
absolute owner of the land applied for situated in the
Municipality of Paraaque, Province of Rizal, with an area of
17,343 square meters and covered by plan (LRC) Psu-964 and
orders the registration of said parcel of land in her name with
her aforementioned personal circumstances.
Once this decision becomes final and executory, let the
corresponding order for the issuance of the decree be issued.
1
SO ORDERED.
The Director of Lands and Mercedes Dizon did not appeal from
the adverse decision of the Pasig-Rizal CFI. Thus, the order for
the issuance of a decree of registration became final, and
Decree No. N-150912 was issued by the Land Registration
Commission (LRC).2 Original Certificate of Title (OCT) No. 10215
was issued in the name of Fermina Castro by the Register of
Deeds for the Province of Rizal on May 29, 1974.3
The land was then sold to Jesus S. Yujuico, and OCT No. 10215
was cancelled. On May 31, 1974,4 Transfer Certificate of Title
(TCT) No. 445863 was issued in Yujuicos name, who subdivided
the land into two lots. TCT No. 4463865 over Lot 1 was issued in
his name, while TCT No. S-293616 over Lot 2 was issued in the
name of petitioner Augusto Y. Carpio.
Annotations at the back of TCT No. 446386 show that Yujuico
had, at one time or another, mortgaged the lot to the Philippine
Investments System Organization (PISO) and Citibank, N.A.
Annotations in the title of petitioner Carpio reveal the lot was
mortgaged in favor of Private Development Corporation (PDC),
Rizal Commercial Banking Corporation (RCBC) and then
Philippine Commercial and Industrial Bank (PCIB) and the
Development Bank of the Philippines (DBP) to secure various
loans.
Sometime in 1977, Presidential Decree No. (PD) 1085
entitled Conveying the Land Reclaimed in the Foreshore and
Offshore of the Manila Bay (The Manila-Cavite Coastal Road
Project) as Property of the Public Estates Authority as well as
Rights and Interests with Assumptions of Obligations in the
Reclamation Contract Covering Areas of the Manila Bay between
the Republic of the Philippines and the Construction and
Development Corporation of the Philippines (1977) was issued.
Land reclaimed in the foreshore and offshore areas of Manila
Bay became the properties of the Public Estates Authority (PEA),
a government corporation that undertook the reclamation of
lands or the acquisition of reclaimed lands. On January 13, 1989,
OCT No. SP 02 was issued in favor of PEA. The PEA also acquired
ownership of other parcels of land along the Manila Bay coast,
some of which were subsequently sold to the Manila Bay
Development Corporation (MBDC), which in turn leased
portions to Uniwide Holdings, Inc.7
The PEA undertook the construction of the Manila Coastal Road.
As this was being planned, Yujuico and Carpio discovered that a
verification survey they commissioned showed that the road
directly overlapped their property, and that they owned a
portion of the land sold by the PEA to the MBDC.
On July 24, 1996, Yujuico and Carpio filed before the Paraaque
City Regional Trial Court (RTC), a complaint for the Removal of
Cloud and Annulment of Title with Damages docketed as Civil
Case No. 96-0317 against the PEA. On May 15, 1998 the parties
entered into a compromise agreement approved by the trial
court in a Resolution dated May 18, 1998. On June 17, 1998, the
parties executed a Deed of Exchange of Real Property, pursuant
to the compromise agreement, where the PEA property with an
area of 1.4007 hectares would be conveyed to Jesus Yujuico and
petitioner Carpio in exchange for their property with a
combined area of 1.7343 hectares.
59
On July 31, 1998, the incumbent PEA General Manager, Carlos
P. Doble, informed the OSG that the new PEA board and
management had reviewed the compromise agreement and
had decided to defer its implementation and hold it in abeyance
following the view of the former PEA General Manager, Atty.
Arsenio Yulo, Jr., that the compromise agreement did not reflect
a condition of the previous PEA Board, requiring the approval of
the Office of the President. The new PEA management then
filed a petition for relief from the resolution approving the
compromise agreement on the ground of mistake and excusable
negligence.
The petition was dismissed by the trial court on the ground that
it was filed out of time and that the allegation of mistake and
excusable negligence lacked basis.
The PEA fared no better in the Court of Appeals (CA), as the
petition was dismissed for failure to pay the required docket
fees and for lack of merit.
The matter was raised to the Supreme Court in Public Estates
Authority v. Yujuico8 but PEAs petition was denied, upholding
the trial courts dismissal of the petition for relief for having
been filed out of time. The allegation of fraud in the titling of
the subject property in the name of Fermina Castro was not
taken up by the Court.
On June 8, 2001, in a Complaint for Annulment and Cancellation
of Decree No. N-150912 and its Derivative Titles,
entitled Republic of the Philippines v. Fermina Castro, Jesus S.
Yujuico, August Y. Carpio and the Registry of Deeds of
Paraaque City docketed as Civil Case No. 01-0222, filed with
the Paraaque City RTC, respondent Republic of the Philippines,
through the OSG, alleged that when the land registered to
Castro was surveyed by Engr. H. Obreto on August 3, 1972 and
subsequently approved by the LRC on April 23, 1973, the land
was still a portion of Manila Bay as evidenced by Namria
Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January
9/61: Revised 80-11-2; that Roman Mataverde, the then OIC of
the Surveys Division, Bureau of Lands, informed the OIC of the
Legal Division that "[w]hen projected on Cadastral Maps CM 14
deg. 13 N-120 deg, 59E, Sec.2-A of Paraaque Cadastre (Cad.
299), (LRC) Psu-964 falls inside Manila Bay, outside Cad. 299";
that then Acting Regional Lands Director Narciso V. Villapando
issued a Report dated November 15, 1973 stating that plan
(LRC) Psu-964 is a portion of Manila Bay; that then Officer-in-
Charge, Assistant Director of Lands, Ernesto C. Mendiola,
submitted his Comment and Recommendation re: Application
for Registration of Title of FERMINA CASTRO, LRC Case No. N-
8239, dated Dec. 1, 1977, praying that the instant registration
case be dismissed; and that Fermina Castro had no registrable
rights over the property.
More significantly, respondent Republic argued that, first, since
the subject land was still underwater, it could not be registered
in the name of Fermina Castro. Second, the land registration
court did not have jurisdiction to adjudicate inalienable lands,
thus the decision adjudicating the subject parcel of land to
Fermina Castro was void. And third, the titles of Yujuico and
Carpio, being derived from a void title, were likewise void.9
On September 13, 2001, Yujuico and Carpio filed a Motion to
Dismiss (With Cancellation of Notice of Lis Pendens),10 on the
grounds that: (1) the cause of action was barred by prior
judgment; (2) the claim had been waived, abandoned, or
otherwise extinguished; (3) a condition precedent for the filing
of the complaint was not complied with; and (4) the complaint
was not verified and the certification against forum shopping
was not duly executed by the plaintiff or principal party.
On November 27, 2001, respondent Republic filed an
Opposition11 to the motion to dismiss to which defendants filed
a Reply12 on January 14, 2002, reiterating the grounds for the
motion to dismiss.
In the August 7, 2002 Order of the RTC,13 Civil Case No. 01-0222
was dismissed. The trial court stated that the matter had
already been decided in LRC Case No. N-8239, and that after 28
years without being contested, the case had already become
final and executory.1wphi1 The trial court also found that the
OSG had participated in the LRC case, and could have
questioned the validity of the decision but did not. Civil Case No.
01-0222 was thus found barred by prior judgment.
On appeal to the CA, in CA-G.R. CV No. 76212, respondent
Republic alleged that the trial court erred in disregarding that
appellant had evidence to prove that the subject parcel of land
used to be foreshore land of the Manila Bay and that the trial
court erred in dismissing Civil Case No. 01-0222 on the ground
of res judicata.14
The CA observed that shores are properties of the public
domain intended for public use and, therefore, not registrable
and their inclusion in a certificate of title does not convert the
same into properties of private ownership or confer title upon
the registrant.
Further, according to the appellate court res judicata does not
apply to lands of public domain, nor does possession of the land
automatically divest the land of its public character.
The appellate court explained that rulings of the Supreme Court
have made exceptions in cases where the findings of the
Director of Lands and the Department of Environment and
Natural Resources (DENR) were conflicting as to the true nature
60
of the land in as much as reversion efforts pertaining foreshore
lands are embued with public interest.
The dispositive portion of the CA decision reads,
WHEREFORE, premises considered, the present appeal is hereby
GRANTED. The appealed Order dated August 7, 2002 of the trial
court in Civil Case No. 01-0222 is hereby REVERSED and SET
ASIDE. The case is hereby REMANDED to said court for further
proceedings and a full-blown trial on the merits with utmost
dispatch.15
Hence, this petition.
The Issues
Petitioners now raise the following issues before this Court:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF
THE HONORABLE COURT AND HAS DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
NECESSITATING THE HONORABLE COURTS EXERCISE OF ITS
POWER OF SUPERVISION CONSIDERING THAT:
I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL
COURTS APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN
THE INSTANT CASE IS BASED ON ITS ERRONEOUS ASSUMPTION
THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY
PART OF MANILA BAY.
A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED
THE PRINCIPLE OF RES JUDICATA NOTWITHSTANDING
ALLEGATIONS OF LACK OF JURISDICTION OF A LAND
REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT
BY RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO
RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF
REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER
ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.
B. THE LAND REGISTRATION COURT HAD JURISDICTION TO
DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE
PUBLIC DOMAIN.
C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY
SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY
DETERMINED OVER THIRTY (30) YEARS AGO.
D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF
APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED,
CONSIDERING THAT THEY ARE ALL PREDICATED ON THE
ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE
SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.
II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND
LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND
REGISTRATION COURT.
III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED
PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA
CASE IS UNWARRANTED AND MISLEADING CONSIDERING THAT
THE MATTER OF WHETHER RES JUDICATA APPLIES WITH
RESPECT TO THE LAND REGISTRATION COURTS DECISION IN
1974 WAS NOT IN ISSUE IN SAID CASE.
A. THE INSTANT REVERSION CASE IS NOT THE PROPER
RECOURSE.
B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE
AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY
THE HONORABLE COURT IN THE PEA CASE.
IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION
OF THE RULE ON ORDINARY ESTOPPEL AND LACHES IN THE
INSTANT CASE AGAINST RESPONDENT.
V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION
AND EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE.16
Essentially, the issues boil down to three: (1) Is a reversion suit
proper in this case? (2) Is the present petition estopped by
laches? (3) Did the CA erroneously apply the principle of res
judicata?
An action for reversion seeks to restore public land fraudulently
awarded and disposed of to private individuals or corporations
to the mass of public domain.17 This remedy is provided under
Commonwealth Act (CA) No. 141 (Public Land Act) which
became effective on December 1, 1936. Said law recognized the
power of the state to recover lands of public domain. Section
124 of CA No. 141 reads:
SEC. 124. Any acquisition, conveyance, alienation, transfer, or
other contract made or executed in violation of any of the
provisions of Sections one hundred and eighteen, one hundred
and twenty, one hundred and twenty one, one hundred and
twenty-two, and one hundred twenty-three of this Act shall be
unlawful and null and void from its execution and shall produce
the effect of annulling and cancelling the grant, title, patent, or
permit originally issued, recognized or confirmed, actually or
presumptively, and cause the reversion of the property and its
improvements to the State. (Emphasis supplied.)
Pursuant to Section 124 of the Public Land Act, reversion suits
are proper in the following instances, to wit:
1. Alienations of land acquired under free patent or homestead
provisions in violation of Section 118, CA No. 141;
61
2. Conveyances made by non-Christians in violation of Section
120, CA No. 141; and
3. Alienations of lands acquired under CA No. 141 in favor of
persons not qualified under Sections 121, 122, and 123 of CA
No. 141.
From the foregoing, an action for reversion to cancel titles
derived from homestead patents or free patents based on
transfers and conveyances in violation of CA No. 141 is filed by
the OSG pursuant to its authority under the Administrative Code
with the RTC. It is clear therefore that reversion suits were
originally utilized to annul titles or patents administratively
issued by the Director of the Land Management Bureau or the
Secretary of the DENR.
While CA No. 141 did not specify whether judicial confirmation
of titles by a land registration court can be subject of a reversion
suit, the government availed of such remedy by filing actions
with the RTC to cancel titles and decrees granted in land
registration applications.
The situation changed on August 14, 1981 upon effectivity of
Batas Pambansa (BP) Blg. 129 which gave the Intermediate
Appellate Court the exclusive original jurisdiction over actions
for annulment of judgments of RTCs.
When the 1997 Rules of Civil Procedure became effective on
July 1, 1997, it incorporated Rule 47 on annulment of judgments
or final orders and resolutions of the RTCs. The two grounds for
annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of
jurisdiction. If based on extrinsic fraud, the action must be filed
within four (4) years from its discovery, and if based on lack of
jurisdiction, before it is barred by laches or estoppel as provided
by Section 3, Rule 47. Thus, effective July 1, 1997, any action for
reversion of public land instituted by the Government was
already covered by Rule 47.
The instant Civil Case No. 01-0222 for annulment and
cancellation of Decree No. N-150912 and its derivative titles was
filed on June 8, 2001 with the Paraaque City RTC. It is clear
therefore that the reversion suit was erroneously instituted in
the Paraaque RTC and should have been dismissed for lack of
jurisdiction. The proper court is the CA which is the body
mandated by BP Blg. 129 and prescribed by Rule 47 to handle
annulment of judgments of RTCs.
In Collado v. Court of Appeals,18 the government, represented
by the Solicitor General pursuant to Section 9(2) of BP Blg. 129,
filed a petition for annulment of judgment with the CA. Similarly
in the case of Republic v. Court of Appeals,19 the Solicitor
General correctly filed the annulment of judgment with the said
appellate court.
This was not done in this case. The Republic misfiled the
reversion suit with the Paraaque RTC. It should have been filed
with the CA as required by Rule 47. Evidently, the Paraaque
RTC had no jurisdiction over the instant reversion case.
Assuming that the Paraaque RTC has jurisdiction over the
reversion case, still the lapse of almost three decades in filing
the instant case, the inexplicable lack of action of the Republic
and the injury this would cause constrain us to rule for
petitioners. While it may be true that estoppel does not operate
against the state or its agents,20 deviations have been allowed.
In Manila Lodge No. 761 v. Court of Appeals, we said:
Estoppels against the public are little favored. They should not
be invoked except in rare and unusual circumstances, and may
not be invoked where they would operate to defeat the
effective operation of a policy adopted to protect the public.
They must be applied with circumspection and should be
applied only in those special cases where the interests of justice
clearly require it. Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with its citizens,
and must not play an ignoble part or do a shabby thing; and
subject to limitations x x x, the doctrine of equitable estoppel
may be invoked against public authorities as well as against
private individuals.21 (Emphasis supplied.)
Equitable estoppel may be invoked against public authorities
when as in this case, the lot was already alienated to innocent
buyers for value and the government did not undertake any act
to contest the title for an unreasonable length of time.
In Republic v. Court of Appeals, where the title of an innocent
purchaser for value who relied on the clean certificates of the
title was sought to be cancelled and the excess land to be
reverted to the Government, we ruled that "[i]t is only fair and
reasonable to apply the equitable principle of estoppel by laches
against the government to avoid an injustice to innocent
purchasers for value (emphasis supplied)."22 We explained:
Likewise time-settled is the doctrine that where innocent third
persons, relying on the correctness of the certificate of title,
acquire rights over the property, courts cannot disregard such
rights and order the cancellation of the certificate. Such
cancellation would impair public confidence in the certificate of
title, for everyone dealing with property registered under the
Torrens system would have to inquire in every instance whether
the title has been regularly issued or not. This would be contrary
to the very purpose of the law, which is to stabilize land titles.
Verily, all persons dealing with registered land may safely rely
on the correctness of the certificate of title issued therefore,
and the law or the courts do not oblige them to go behind the
certificate in order to investigate again the true condition of the
property. They are only charged with notice of the liens and
62
encumbrances on the property that are noted on the
certificate.23
xxxx
But in the interest of justice and equity, neither may the
titleholder be made to bear the unfavorable effect of the
mistake or negligence of the States agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third
persons. First, the real purpose of the Torrens system is to quiet
title to land to put a stop forever to any question as to the
legality of the title, except claims that were noted in the
certificate at the time of the registration or that may arise
subsequent thereto. Second, as we discussed earlier, estoppel
by laches now bars petitioner from questioning private
respondents titles to the subdivision lots. Third, it was never
proven that Private Respondent St. Jude was a party to the
fraud that led to the increase in the area of the property after
its subdivision. Finally, because petitioner even failed to give
sufficient proof of any error that might have been committed by
its agents who had surveyed the property, the presumption of
regularity in the performance of their functions must be
respected. Otherwise, the integrity of the Torrens system, which
petitioner purportedly aims to protect by filing this case, shall
forever be sullied by the ineptitude and inefficiency of land
registration officials, who are ordinarily presumed to have
regularly performed their duties.24
Republic v. Court of Appeals is reinforced by our ruling
in Republic v. Umali,25 where, in a reversion case, we held that
even if the original grantee of a patent and title has obtained
the same through fraud, reversion will no longer prosper as the
land had become private land and the fraudulent acquisition
cannot affect the titles of innocent purchasers for value.
Considering that innocent purchaser for value Yujuico bought
the lot in 1974, and more than 27 years had elapsed before the
action for reversion was filed, then said action is now barred by
laches.
While the general rule is that an action to recover lands of
public domain is imprescriptible, said right can be barred by
laches or estoppel. Section 32 of PD 1592 recognized the rights
of an innocent purchaser for value over and above the interests
of the government. Section 32 provides:
SEC. 32. Review of decree of registration; Innocent purchaser
for value.The decree of registration shall not be reopened or
revised by reason of absence, minority, or other disability of any
person adversely affected thereby, nor by any proceeding in any
court for reversing judgments, subject, however, to the right of
any person, including the government and the branches
thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual
fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later
than one year from and after the date of the entry of such
decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value
has acquired the land or an interest therein, whose rights may
be prejudiced. Whenever the phrase "innocent purchaser for
value" or an equivalent phrase occurs in this Decree, it shall be
deemed to include an innocent lessee, mortgagee, or other
encumbrances for value. (Emphasis supplied.)
In this petition, the LRC (now LRA), on May 30, 1974, issued
Decree No. N-150912 in favor of Fermina Castro and OCT No.
10215 was issued by the Rizal Registrar of Deeds on May 29,
1974. OCT No. 10215 does not show any annotation, lien, or
encumbrance on its face. Relying on the clean title, Yujuico
bought the same in good faith and for value from her. He was
issued TCT No. 445863 on May 31, 1974. There is no allegation
that Yujuico was a buyer in bad faith, nor did he acquire the land
fraudulently. He thus had the protection of the Torrens System
that every subsequent purchaser of registered land taking a
certificate of title for value and in good faith shall hold the same
free from all encumbrances except those noted on the
certificate and any of the x x x encumbrances which may be
subsisting.26 The same legal shield redounds to his successors-
in-interest, the Yujuicos and Carpio, more particularly the latter
since Carpio bought the lot from Jesus Y. Yujuico for value and in
good faith.
Likewise protected are the rights of innocent mortgagees for
value, the PISO, Citibank, N.A., PDC, RCBC, PCIB, and DBP. Even
if the mortgagors title was proved fraudulent and the title
declared null and void, such declaration cannot nullify the
mortgage rights of a mortgagee in good faith.27
All told, a reversion suit will no longer be allowed at this stage.
More on the issue of laches. Laches is the failure or neglect, for
an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been
done earlier. It is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the party
entitled thereto has either abandoned or declined to assert it.28
When respondent government filed the reversion case in 2001,
27 years had already elapsed from the time the late Jesus
Yujuico purchased the land from the original owner Castro.
After the issuance of OCT No. 10215 to Castro, no further action
was taken by the government to question the issuance of the
title to Castro until the case of Public Estates Authority, brought
up in the oral argument before this Court on September 6,
2000.29 We then held that allegation of fraud in the issuance of
63
the title was not proper for consideration and determination at
that stage of the case.
From the undisputed facts of the case, it is easily revealed that
respondent Republic took its sweet time to nullify Castros title,
notwithstanding the easy access to ample remedies which were
readily available after OCT No. 10215 was registered in the
name of Castro. First, it could have appealed to the CA when the
Pasig-Rizal CFI rendered a decision ordering the registration of
title in the name of applicant Castro on April 26, 1974. Had it
done so, it could have elevated the matter to this Court if the
appellate court affirms the decision of the land registration
court. Second, when the entry of Decree No. N-150912 was
made on May 29, 1974 by the Rizal Register of Deeds, the
Republic had one (1) year from said date or up to May 28, 1975
to file a petition for the reopening and review of Decree No. N-
150912 with the Rizal CFI (now RTC) on the ground of actual
fraud under section 32 of PD 1592. Again, respondent Republic
did not avail of such remedy. Third, when Jesus Yujuico filed a
complaint for Removal of Cloud and Annulment of Title with
Damages against PEA before the Paraaque RTC in Civil Case
No. 96-0317, respondent could have persevered to question
and nullify Castros title. Instead, PEA undertook a compromise
agreement on which the May 18, 1998 Resolution30 was issued.
PEA in effect admitted that the disputed land was owned by the
predecessors-in-interest of petitioners and their title legal and
valid; and impliedly waived its right to contest the validity of said
title; respondent Republic even filed the petition for relief from
judgment beyond the time frames allowed by the rules, a fact
even acknowledged by this Court in Public Estates Authority.
Lastly, respondent only filed the reversion suit on June 8, 2001
after the passage of 27 years from the date the decree of
registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of the
settlement with PEA, understandably misled petitioners to
believe that the government no longer had any right or interest
in the disputed lot to the extent that the two lots were even
mortgaged to several banks including a government financing
institution. Any nullification of title at this stage would unsettle
and prejudice the rights and obligations of innocent parties. All
told, we are constrained to conclude that laches had set in.
Even granting arguendo that respondent Republic is not
precluded by laches from challenging the title of petitioners in
the case at bar, still we find that the instant action for reversion
is already barred by res judicata.
Petitioners relying on Firestone Ceramics, Inc. v. Court of
Appeals31 as a precedent to the case at bar contend that the
instant reversion suit is now barred by res judicata.
We agree with petitioners.
The doctrine on precedents is expressed in the latin maxim
Stare decisis et non quieta movere. Follow past precedents and
do not disturb what has been settled.32 In order however that a
case can be considered as a precedent to another case which is
pending consideration, the facts of the first case should be
similar or analogous to the second case.
A perusal of the facts of the Firestone case and those of the
case at bar reveals that the facts in the two (2) cases are
parallel. First, in Firestone and in this case, the claimants filed
land registration applications with the CFI; both claimants
obtained decrees for registration of lots applied for and were
issued OCTs. Second, in Firestone, the Republic filed a reversion
case alleging that the land covered by the OCT was still
inalienable forest land at the time of the application and hence
the Land Registration Court did not acquire jurisdiction to
adjudicate the property to the claimant. In the instant case,
respondent Republic contend that the land applied for by
Yujuico was within Manila Bay at the time of application and
therefore the CFI had no jurisdiction over the subject matter of
the complaint. Third, in Firestone, the validity of the title of the
claimant was favorably ruled upon by this Court in G.R. No.
109490 entitled Patrocinio E. Margolles v. CA. In the case at bar,
the validity of the compromise agreement involving the
disputed lot was in effect upheld when this Court in Public
Estates Authority v. Yujuico dismissed the petition of PEA
seeking to reinstate the petition for relief from the May 18,
1998 Resolution approving said compromise agreement. With
the dismissal of the petition, the May 18, 1998 Resolution
became final and executory and herein respondent Republic
through PEA was deemed to have recognized Castros title over
the disputed land as legal and valid. In Romero v. Tan,33 we
ruled that "a judicial compromise has the effect of res judicata."
We also made clear that a judgment based on a compromise
agreement is a judgment on the merits, wherein the parties
have validly entered into stipulations and the evidence was duly
considered by the trial court that approved the agreement. In
the instant case, the May 18, 1998 Resolution approving the
compromise agreement confirmed the favorable decision
directing the registration of the lot to Castros name in LRC Case
No. N-8239. Similarly, in Firestone, the Margolles case
confirmed the decision rendered in favor of Gana in Land
Registration Case No. 672 ordering the issuance of the decree to
said applicant. Fourth, in Firestone, the Supreme Court relied on
the letter of then Solicitor General Francisco Chavez that the
evidence of the Bureau of Lands and the LRC was not sufficient
to support an action for cancellation of OCT No. 4216. In the
instant case, both the Solicitor General and the Government
Corporate Counsel opined that the Yujuico land was not under
water and that "there appears to be no sufficient basis for the
Government to institute the action for annulment." Fifth, in
Firestone, we ruled that "the Margolles case had long become
64
final, thus the validity of OCT No. 4216 should no longer be
disturbed and should be applied in the instant case (reversion
suit) based on the principle of res judicata or, otherwise, the
rule on conclusiveness of judgment."34
Clearly from the above, Firestone is a precedent case. The Public
Estates Authority had become final and thus the validity of OCT
No. 10215 issued to Castro could no longer be questioned.
While we said in Public Estates Authority that the court does not
foreclose the right of the Republic from pursuing the proper
recourse in a separate proceedings as it may deem warranted,
the statement was obiter dictum since the inquiry on whether
or not the disputed land was still under water at the time of its
registration was a non-issue in the said case.
Even granting for the sake of argument that Firestone is not
squarely applicable, still we find the reversion suit already
barred by res judicata.
For res judicata to serve as an absolute bar to a subsequent
action, the following requisites must concur: (1) there must be a
final judgment or order; (2) the court rendering it must have
jurisdiction over the subject matter and the parties; (3) it must
be a judgment or order on the merits; and (4) there must be
between the two cases, identity of parties, subject matter and
causes of action.35
There is no question as to the first, third and last requisites. The
threshold question pertains to the second requisite, whether or
not the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the
subject matter in LRC Case No. N-8239. In Civil Case No. 01-
0222, the Paraaque City RTC, Branch 257 held that the CFI had
jurisdiction. The CA reversed the decision of the Paraaque City
RTC based on the assertion of respondent Republic that the
Pasig-Rizal CFI had no jurisdiction over the subject matter, and
that there was a need to determine the character of the land in
question.
The Paraaque City RTC Order dismissing the case for res
judicata must be upheld.
The CA, in rejecting the dismissal of the reversion case by the
Paraaque RTC, relied on two cases, namely: Municipality of
Antipolo v. Zapanta36 and Republic v. Vda. De Castillo.37
In Municipality of Antipolo, we held that the land registration
court had no jurisdiction to entertain any land registration
application if the land was public property, thus:
Since the Land Registration Court had no jurisdiction to
entertain the application for registration of public property of
ANTIPOLO, its Decision adjudicating the DISPUTED PROPERTY as
of private ownership is null and void. It never attained finality,
and can be attacked at any time. It was not a bar to the action
brought by ANTIPOLO for its annulment by reason of res
judicata.
"[x x x] the want of jurisdiction by a court over the subject
matter renders the judgment void and a mere nullity, and
considering that a void judgment is in legal effect no judgment,
by which no rights are divested, from which no rights can be
obtained, which neither binds nor bars any one, and under
which all acts performed and all claims flowing out of are void,
and considering, further, that the decision, for want of
jurisdiction of the court, is not a decision in contemplation of
law, and hence, can never become executory, it follows that
such a void judgment cannot constitute a bar to another case by
reason of res judicata."
xxxx
"It follows that if a person obtains a title under the Public Land
Act which includes, by oversight, lands which cannot be
registered under the Torrens System, or when the Director of
Lands did not have jurisdiction over the same because it is a
public forest, the grantee does not, by virtue of the said
certificate of title alone, become the owner of the land illegally
included (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs.
Municipality of Iloilo, 49 Phil. 769)."
[x x x x]
"Under these circumstances, the certificate of title may be
ordered cancelled (Republic vs. Animas, et al., supra), and the
cancellation maybe pursued through an ordinary action
therefore. This action cannot be barred by the prior judgment of
the land registration court, since the said court had no
jurisdiction over the subject matter. And if there was no such
jurisdiction, then the principle of res judicata does not apply. [x
x x] Certainly, one of the essential requisites, i.e., jurisdiction
over the subject matter, is absent in this case." (Italics
supplied).38
The plain import of Municipality of Antipolo is that a land
registration court, the RTC at present, has no jurisdiction over
the subject matter of the application which respondent Republic
claims is public land. This ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction over the
subject matter is conferred by law.39 Consequently, the proper
CFI (now the RTC) under Section 14 of PD 152940 (Property
Registration Decree) has jurisdiction over applications for
registration of title to land.
Section 14 of PD 1592 provides:
65
SEC. 14. Who may apply.The following persons may file in the
proper Court of First Instance an application for registration of
title to land, whether personally or through their duly
authorized representatives:
(1) Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of
the public domain under a bona fide claim of ownership since
June 12, 1945, or earlier. (Emphasis supplied.)
Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction
over the subject matter of the land registration case filed by
Fermina Castro, petitioners predecessor-in-interest, since
jurisdiction over the subject matter is determined by the
allegations of the initiatory pleadingthe application.41 Settled is
the rule that "the authority to decide a case and not the
decision rendered therein is what makes up jurisdiction. When
there is jurisdiction, the decision of all questions arising in the
case is but an exercise of jurisdiction."42
In our view, it was imprecise to state in Municipality of Antipolo
that the "Land Registration Court [has] no jurisdiction to
entertain the application for registration of public property x x
x" for such court precisely has the jurisdiction to entertain land
registration applications since that is conferred by PD 1529. The
applicant in a land registration case usually claims the land
subject matter of the application as his/her private property, as
in the case of the application of Castro. Thus, the conclusion of
the CA that the Pasig-Rizal CFI has no jurisdiction over the
subject matter of the application of Castro has no legal mooring.
The land registration court initially has jurisdiction over the land
applied for at the time of the filing of the application. After trial,
the court, in the exercise of its jurisdiction, can determine
whether the title to the land applied for is registrable and can
be confirmed. In the event that the subject matter of the
application turns out to be inalienable public land, then it has no
jurisdiction to order the registration of the land and perforce
must dismiss the application.
Based on our ruling in Antipolo, the threshold question is
whether the land covered by the titles of petitioners is under
water and forms part of Manila Bay at the time of the land
registration application in 1974. If the land was within Manila
Bay, then res judicata does not apply. Otherwise, the decision of
the land registration court is a bar to the instant reversion suit.
After a scrutiny of the case records and pleadings of the parties
in LRC Case No. N-8239 and in the instant petition, we rule that
the land of Fermina Castro is registrable and not part of Manila
Bay at the time of the filing of the land registration application.
The trial courts Decision in 1974 easily reveals the basis for its
conclusion that the subject matter was a dry land, thus:
On February 1, 1974, the applicant presented her evidence
before the Deputy Clerk of this Court and among the evidence
presented by her were certain documents which were marked
as Exhibits D to J, inclusive. The applicant testified in her behalf
and substantially declared that: she was 62 years old, single,
housekeeper and residing at 1550 J. Escoda, Ermita, Manila;
that she was born on June 3, 1911; that she first came to know
of the land applied for which is situated in the Municipality of
Paraaque, province of Rizal, with an area of 17,343 square
meters and covered by plan (LRC) Psu-964 while she was still
ten (10) years old or sometime in 1921; that when she first
came to know of the land applied for, the person who was in
possession and owner of said land was her father, Catalino
Castro; that during that time her father used to plant on said
land various crops like pechay, mustard, eggplant, etc.; that
during that time, her father built a house on said land which was
used by her father and the other members of the family,
including the applicant, as their residential house; that the land
applied for was inherited by her father from her grandfather
Sergio Castro; that Catalino Castro continuously possessed and
owned the land in question from 1921 up to the time of his
death in 1952; and that during that period of time nobody ever
disturbed the possession and ownership of her father over the
said parcel of land; that after the death of her father in 1952 she
left the place and transferred her place of residence but she had
also occasions to visit said land twice or thrice a week and
sometimes once a week; that after she left the land in question
in 1952, she still continued possessing said land, through her
caretaker Eliseo Salonga; that her possession over the land in
question from the time she inherited it up to the time of the
filing of the application has been continuous, public, adverse
against the whole world and in the concept of an owner; that it
was never encumbered, mortgaged, or disposed of by her
father during his lifetime and neither did she ever encumber or
sell the same; that it was declared for taxation purposes by her
father when he was still alive and her father also paid the real
estate taxes due to the government although the receipt
evidencing the payment of said real estate taxes for the
property applied for have been lost and could no longer be
found inspite of diligent effort exerted to locate the same.
The other witness presented by the applicant was Emiliano de
Leon, who declared that he was 70 years old, married, farmer
and residing at San Jose, Baliwag, Bulacan; that he knew
Catalino Castro, the father of the applicant because said
Catalino Castro was his neighbor in Tambo, Paraaque, Rizal, he
had a house erected on the land of Catalino Castro; that he was
born in 1903 and he first came to know of the land in question
when in 1918 when he was about 18 years old; that the area of
66
the land owned and possessed by Catalino Castro where he
constructed a residential house has an area of more than one
and one-half (1 ) hectares; that the possession of Catalino
Castro over the land in question was peaceful, continuous,
notorious, adverse against the whole world and in the concept
of an owner; that during the time that Catalino Castro was in
possession of the land applied for he planted on said parcel of
land mango, coconut and banana, etc.; that Catalino Castro
continuously possessed and owned said parcel of land up to the
year 1952 when he died; that during the time that Catalino
Castro was in possession of said land, nobody ever laid claim
over the said property; that said land is not within any military
or naval reservation; that upon the death of Catalino Castro, the
applicant took possession of the land applied for and that up to
the present the applicant is in possession of said land; that he
resided in the land in question from 1918 up to the time he
transferred his place of residence in Baliwag, Bulacan in the year
1958.
On February 11, 1974, the Court, pursuant to the provision of
Presidential Decree No. 230 issued by his Excellency, Ferdinand
E. Marcos dated July 9, 1973 held in abeyance the rendition of a
decision in this case and directed the applicant to submit a
white print copy of plan (LRC) Psu-964 to the Director of lands
who was directed by the Court to submit his comment and
recommendation thereon.
The property in question is declared for taxation purposes
under Tax Declaration No. 51842 (Exhibit G) and real estate
taxes due thereon have been paid up to the year 1973 (Exhibit
H).
In compliance with the Order of this Court February 11, 1974,
the Director of Lands, thru Special Attorney Saturnino A.
Pacubas, submitted a report to this Court dated April 25, 1974,
stating among other things, that upon ocular inspection
conducted by Land Inspector Adelino G. Gorospe and the
subsequent joint ocular inspection conducted by Geodetic
Engineer Manuel A. Cervantes and Administrative Assistant
Lazaro G. Berania, it was established that the parcel of land
covered by plan (LRC) Psu-964 no longer forms part of the
Manila Bay but is definitely solid and dry land.
In this connection, it should be noted that Administrative
Assistant Lazaro G. Berania and Geodetic Engineer Manuel A.
Cervantes, in their report dated March 22, 1974 have also
stated that the land applied for cannot be reached by water
even in the highest tide and that the said land is occupied by
squatter families who have erected makeshift shanties and a
basketball court which only prove that the same is dry and solid
land away from the shores of Manila Bay.
Furthermore, Land Inspector Adelino G. Gorospe in his letter-
report dated November 28, 1973 has also stated that there is a
house of pre-war vintage owned by the applicant on the land in
question which in effect corroborates the testimony of the
applicant and her witness that they have lived on the land in
question even prior to the outbreak of the second world war
and that the applicant has been in possession of the land in
question long time ago.43
To counter the evidence of applicant Castro, and bolster its
claim that she has no valid title, respondent Republic relies on
the July 18, 1973 Office Memorandum 44 of Roman Mataverde,
OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of
Lands, stating that "when projected on cadastral maps CM 14
13N - 120 59 E., Sec. 3-D and CM 14 30N - 120 59E., Sec.
2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-964 falls
inside Manila Bay, outside Cad-299."45
The same conclusion was adopted in a November 15, 1973
letter of Narciso Villapando, Acting Regional Lands Director to
the Chief, Legal Division, Bureau of Lands and in the Comment
and Recommendation of Ernesto C. Mendiola, Assistant
Director, also of the Bureau of Lands.
Respondent likewise cites Namria Hydrographic Map No. 4243
Revised 80-11-2 to support its position that Castros lot is a
portion of Manila Bay.
The burden of proving these averments falls to the shoulders of
respondent Republic. The difficulty is locating the witnesses of
the government. Roman Mataverde, then OIC of the Surveys
Division retired from the government service in 1982. He should
by this time be in his 90s. Moreover, Asst. Regional Director
Narciso Villapando and Asst. Director Ernesto C. Mendiola are
no longer connected with the Bureau of Lands since 1986.
Assuming that OIC Roman Mataverde, Asst. Regional Director
Narciso Villapando and Assistant Director Ernesto C. Mendiola
are still available as witnesses, the projections made on the
cadastral maps of the then Bureau of Lands cannot prevail over
the results of the two ocular inspections by several Bureau of
Lands officials that the disputed lot is definitely "dry and solid
land" and not part of Manila Bay. Special Attorney Saturnino A.
Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer
Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana,
all officials of the Bureau of Lands, were positive that the
disputed land is solid and dry land and no longer forms part of
Manila Bay. Evidence gathered from the ocular inspection is
considered direct and firsthand information entitled to great
weight and credit while the Mataverde and Villapando reports
are evidence weak in probative value, being merely based on
theoretical projections "in the cadastral map or table
surveys."46 Said projections must be confirmed by the actual
67
inspection and verification survey by the land inspectors and
geodetic engineers of the Bureau of Lands. Unfortunately for
respondent Republic, the bureau land inspectors attested and
affirmed that the disputed land is already dry land and not
within Manila Bay.
On the other hand, the Namria Hydrographic Map No. 4243
does not reveal what portion of Manila Bay was Castros lot
located in 1974. Moreover, a hydrographic map is not the best
evidence to show the nature and location of the lot subject of a
land registration application. It is derived from a hydrographic
survey which is mainly used for navigation purposes, thus:
Surveys whose principal purpose is the determination of data
relating to bodies of water. A hydrographic survey may consist
of the determination of one or several of the following classes
of data: depth water; configuration and nature of the bottom;
directions and force of currents; heights and times of tides and
water stages; and location of fixed objects for survey and
navigation purposes.47
Juxtaposed with finding of the ocular inspection by Bureau of
Lands Special Attorney Pacubas and others that Castros lot is
dry land in 1974, Namria Hydrographic Map No. 4243 is
therefore inferior evidence and lacking in probative force.
Moreover, the reliability and veracity of the July 18, 1973 report
of Roman Mataverde based on the alleged projection on
cadastral maps and the Villapando report dated November 15,
1973 are put to serious doubt in the face of the opinion dated
October 13, 1997 of the Government Corporate Counsel, the
lawyer of the PEA, which upheld the validity of the titles of
petitioners, thus:
We maintain to agree with the findings of the court that the
property of Fermina Castro was registrable land, as based on
the two (2) ocular inspections conducted on March 22, 1974 by
Lands Administrative Assistant Lazaro G. Berania and Lands
Geodetic Engr. Manuel Cervantes, finding the same no longer
forms part of Manila Bay but is definitely solid land which
cannot be reached by water even in the highest of tides. This
Berania-Cervantes report based on ocular inspections literally
overturned the findings and recommendations of Land Director
Narciso V. Villapando dated November 15, 1973, and that of
Director Ernesto C. Mendiola dated December 1, 1977, and the
fact that the Villapando-Mendiola reports were merely based on
projections in the cadastral map or table surveys.
xxxx
A. The Legal prognosis of the case is not promising in favor of
PEA.
4.1 LRC Case No. N-8239 has already become final and
executory and OCT No. 10215 was already issued in favor of
Fermina Castro. Any and all attempts to question its validity can
only be entertained in a quo warranto proceedings (sic),
assuming that there are legal grounds (not factual grounds) to
support its nullification. Subjecting it to a collateral attack is not
allowed under the Torrens Title System. In Calalang vs. Register
of Deeds of Quezon City, 208 SCRA 215, the Supreme Court held
that the present petition is not the proper remedy in
challenging the validity of certificates of titles since the judicial
action required is a direct and not a collateral attack (refer also
to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).
4.2 OCT No. 10215 in favor of Fermina Castro was issued
pursuant to a cadastral proceeding, hence is a rem
proceedings which is translated as a constructive notice to the
whole world, as held in Adez Realty Incorporated vs. CA, 212
SCRA 623.
4.3 From the cursory and intent reading of the decision of Judge
Sison in LRC Case No. N-8239, we cannot find any iota of fraud
having been committed by the court and the parties. In fact,
due process was observed when the Office of the Solicitor
General represented ably the Bureau of Lands. In Balangcad vs.
Justices of the Court of Appeals, 206 SCRA 169, the Supreme
Court held that title to registered property becomes
indefeasible after one-year from date of registration except
where there is actual fraud in which case it may be challenged in
a direct proceeding within that period. This is also the ruling in
Bishop vs. CA, 208 SCRA 636, that to sustain an action for
annulment of a torrens certificate for being void ab initio, it
must be shown that the registration court had not acquired
jurisdiction over the case and there was actual fraud in securing
the title.
4.4 As to priority of torrens title, PEA has no defense, assuming
that both PEA and Yujuico titles are valid, as held in
Metropolitan Waterworks and Sewerage System vs. CA, 215
SCRA 783, where two (2) certificates purport to include the
same land, the earlier in date prevails.
4.5 The documents so far submitted by the parties to the court
indicate that the mother title of the Yujuico land when
registered in 1974 was not underwater. This was shown in the
two (2) ocular inspections conducted by the officials of the Land
Bureau.
4.6 The provision of P.D. 239 that no decree of registration may
be issued by the court unless upon approval and
recommendation of the Bureau of Lands was substantially
complied with in the Report of Lands Special Attorney Saturnino
Pacubas, submitted to the court.48
68
Even the counsel of respondent Republic, the OSG, arrived at
the conclusion that there is no sufficient legal basis for said
respondent to institute action to annul the titles of petitioners,
thus:
It may be stated at the outset that a petition for annulment of
certificate of title or reconveyance of land may be based on
fraud which attended the issuance of the decree of registration
and the corresponding certificate of title.
Based on the decision in the LRC Case No. N-8239 involving the
petition for registration and confirmation of title filed by
Fermina Castro, there is no showing that fraud attended the
issuance of OCT No. 10215. it appears that the evidence
presented by Fermina Castro was sufficient for the trial court to
grant her petition.
The testimony of Fermina Castro, which was corroborated by
Emiliano de Leon, that she and her predecessors-in-interest had
been in possession of the land for more than thirty (30) years
sufficiently established her vested right over the property
initially covered by OCT No. 10215. The report dated April 25,
1974 which was submitted to the trial court by the Director of
Lands through Special Attorney Saturnino Pacubas showed that
the parcel of land was solid and dry land when Fermina Castros
application for registration of title was filed. It was based on the
ocular inspection conducted by Land Inspector Adelino Gorospe
and the joint circular inspection conducted by Geodetic
Engineer Manuel A. Cervantes and Administrative Assistant
Lazaro Berania on November 28, 1973 and March 22, 1974
respectively.
The aforesaid report must be requested unless there is a
concrete proof that there was an irregularity in the issuance
thereof. In the absence of evidence to the contrary, the ocular
inspection of the parcel of land, which was made the basis of
said report, is presumed to be in order.
Based on the available records, there appears to be no sufficient
basis for the Government to institute an action for the
annulment of OCT No. 10215 and its derivative titles. It is opined
that a petition for cancellation/annulment of Decree No. N-
150912 and OCT No. 10215 and all its derivative titles will not
prosper unless there is convincing evidence to negate the report
of the then Land Management Bureau through Special Attorney
Pacubas. Should the Government pursue the filing of such an
action, the possibility of winning the case is remote.49
More so, respondent Government, through its counsel, admits
that the land applied by Fermina Castro in 1973 was solid and
dry land, negating the nebulous allegation that said land is
underwater. The only conclusion that can be derived from the
admissions of the Solicitor General and Government Corporate
Counsel is that the land subject of the titles of petitioners is
alienable land beyond the reach of the reversion suit of the
state.
Notably, the land in question has been the subject of a
compromise agreement upheld by this Court in Public Estates
Authority.50 In that compromise agreement, among other
provisions, it was held that the property covered by TCT Nos.
446386 and S-29361, the land subject of the instant case, would
be exchanged for PEA property. The fact that PEA signed the
May 15, 1998 Compromise Agreement is already a clear
admission that it recognized petitioners as true and legal
owners of the land subject of this controversy.
Moreover, PEA has waived its right to contest the legality and
validity of Castros title. Such waiver is clearly within the powers
of PEA since it was created by PD 1084 as a body corporate
"which shall have the attribute of perpetual succession and
possessed of the powers of the corporations, to be exercised in
conformity with the provisions of this Charter [PD 1084]." 51 It
has the power "to enter into, make, perform and carry out
contracts of every class and description, including loan
agreements, mortgages and other types of security
arrangements, necessary or incidental to the realization of its
purposes with any person, firm or corporation, private or public,
and with any foreign government or entity."52 It also has the
power to sue and be sued in its corporate name.53Thus, the
Compromise Agreement and the Deed of Exchange of Real
Property signed by PEA with the petitioners are legal, valid and
binding on PEA. In the Compromise Agreement, it is provided
that it "settles in full all the claims/counterclaims of the parties
against each other."54 The waiver by PEA of its right to question
petitioners title is fortified by the manifestation by PEA in the
Joint Motion for Judgment based on Compromise Agreement
that
4. The parties herein hereto waive and abandon any and all
other claims and counterclaims which they may have against
each other arising from this case or related thereto.55
Thus, there was a valid waiver of the right of respondent
Republic through PEA to challenge petitioners titles.
The recognition of petitioners legal ownership of the land is
further bolstered by the categorical and unequivocal
acknowledgment made by PEA in its September 30, 2003 letter
where it stated that: "Your ownership thereof was
acknowledged by PEA when it did not object to your
membership in the CBP-IA Association, in which an owner of a
piece of land in CBP-IA automatically becomes a member
thereof."56 Section 26, Rule 130 provides that "the act,
declaration or omission of a party as to a relevant fact may be
given in evidence against him." The admissions of PEA which is
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the real party-in-interest in this case on the nature of the land of

Fermina Castro are valid and binding on respondent Republic.
Respondents claim that the disputed land is underwater falls
flat in the face of the admissions of PEA against its interests.
Hence, res judicata now effectively precludes the relitigation of
the issue of registrability of petitioners lot.

In sum, the Court finds that the reversion case should be

dismissed for lack of jurisdiction on the part of the Paraaque
RTC. Even if we treat said case as a petition for annulment of
judgment under Rule 47 of the 1997 Rules of Civil Procedure,
the dismissal of the case nevertheless has to be upheld because
it is already barred by laches. Even if laches is disregarded, still
the suit is already precluded by res judicata in view of the
peculiar facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED.

The Decision of the Court of Appeals in CA-G.R. CV No. 76212 is
REVERSED and SET ASIDE, and the August 7, 2002 Order of the
Paraaque City RTC, Branch 257 in Civil Case No. 01-0222
entitled Republic of the Philippines v. Fermina Castro, et
al. dismissing the complaint is AFFIRMED.

No costs.

SO ORDERED.