LTD | JAN29 2016 |1

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 Decision 1of the Court of Appeals (CA) in CAG.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.

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.

The Facts
(SGD) MAXIMO LABANON
The CA culled the facts this way:
With my marital consent.
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 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.

(SGD)
(Wife)" (p.16, rollo)

ANASTACIA

SAGARINO

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 (HA224742, 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

LTD | JAN29 2016 |2

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
to refuse to honor the trust agreement entered into by the deceased
brothers. x x x4

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;

Thus, on November 12, 1991, petitioners filed a complaint 5 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:

3) Ordering the Provincial Assessor to reinstate TD No. 11593 and

declaring TD No. 243-A null and void;

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

5) To pay the costs of the suit.

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

LTD | JAN29 2016 |3

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 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
registration becomes
deprive an aggrieved
Torrens System would
the real owners.8

Section 32 of PD 1529 provides that the decree of

incontrovertible after a year, it does not altogether
party of a remedy in law. The acceptability of the
be impaired, if it is utilized to perpetuate fraud against

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.

LTD | JAN29 2016 |4

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 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

LTD | JAN29 2016 |5

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.
Costs against petitioners.
SO ORDERED.

LTD | JAN29 2016 |6

1. A 255-square meter real estate property located at Malvar St.,

Quezon City covered by TCT No. 303224 and registered in the name
of Bayani S. Samoy, Jr. "married to Betty Lacbayan."5
2. A 296-square meter real estate property located at Main Ave.,
Quezon City covered by TCT No. 23301 and registered in the name of
"Spouses Bayani S. Samoy and Betty Lacbayan."6
G.R. No. 165427

March 21, 2011

BETTY
B.
vs.
BAYANI S. SAMOY, JR., Respondent.

LACBAYAN, Petitioner,

DECISION
VILLARAMA, JR., J.:
This settles the petition for review on certiorari filed by petitioner Betty B.
Lacbayan against respondent Bayani S. Samoy, Jr. assailing the September
14, 2004 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 67596.
The CA had affirmed the February 10, 2000 Decision 2 of the Regional Trial
Court (RTC), Branch 224, of Quezon City declaring respondent as the sole
owner of the properties involved in this suit and awarding to himP100,000.00
as attorneys fees.
This suit stemmed from the following facts.
Petitioner and respondent met each other through a common friend sometime
in 1978. Despite respondent being already married, their relationship
developed until petitioner gave birth to respondents son on October 12,
1979.3
During their illicit relationship, petitioner and respondent, together with three
more incorporators, were able to establish a manpower services
company.4 Five parcels of land were also acquired during the said period and
were registered in petitioner and respondents names, ostensibly as husband
and wife. The lands are briefly described as follows:

3. A 300-square meter real estate property located at Matatag St.,

Quezon City covered by TCT No. RT-38264 and registered in the name
of Bayani S. Samoy, Jr. "married to Betty Lacbayan Samoy."7
4. A 183.20-square meter real estate property located at Zobel St.,
Quezon City covered by TCT No. 335193 and registered in the name
of Bayani S. Samoy, Jr. "married to Betty L. Samoy."8
5. A 400-square meter real estate property located at Don Enrique
Heights, Quezon City covered by TCT No. 90232 and registered in the
name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."9
Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon
City. In 1983, petitioner left her parents and decided to reside in the property
located in Malvar St. in Project 4, Quezon City. Later, she and their son
transferred to Zobel St., also in Project 4, and finally to the 400-square meter
property in Don Enrique Heights.10
Eventually, however, their relationship turned sour and they decided to part
ways sometime in 1991. In 1998, both parties agreed to divide the said
properties and terminate their business partnership by executing a Partition
Agreement.11 Initially, respondent agreed to petitioners proposal that the
properties in Malvar St. and Don Enrique Heights be assigned to the latter,
while the ownership over the three other properties will go to
respondent.12 However, when petitioner wanted additional demands to be
included in the partition agreement, respondent refused. 13 Feeling aggrieved,
petitioner filed a complaint for judicial partition 14 of the said properties before
the RTC in Quezon City on May 31, 1999.
In her complaint, petitioner averred that she and respondent started to live
together as husband and wife in 1979 without the benefit of marriage and
worked together as business partners, acquiring real properties amounting

LTD | JAN29 2016 |7

toP15,500,000.00.15 Respondent, in his Answer,16 however, denied petitioners of the subject realties itself an issue correlative to and a necessary adjunct
claim of cohabitation and said that the properties were acquired out of his of the claim of co-ownership upon which appellant anchored her cause of
own personal funds without any contribution from petitioner.17
action for partition. It bears emphasizing, moreover, that the rule on the
indefeasibility of a Torrens title applies only to original and not to subsequent
During the trial, petitioner admitted that although they were together for registration as that availed of by the parties in respect to the properties in
almost 24 hours a day in 1983 until 1991, respondent would still go home to litigation. To our mind, the inapplicability of said principle to the case at bench
his wife usually in the wee hours of the morning. 18 Petitioner likewise claimed is even more underscored by the admitted falsity of the registration of the
that they acquired the said real estate properties from the income of the selfsame realties in the parties name as husband and wife.
company which she and respondent established. 19
The same dearth of merit permeates appellants imputation of reversible error
Respondent, meanwhile, testified that the properties were purchased from his against the trial court for supposedly failing to make the proper delineation
personal funds, salaries, dividends, allowances and commissions. 20 He between an action for partition and an action involving ownership. Typically
countered that the said properties were registered in his name together with brought by a person claiming to be co-owner of a specified property against a
petitioner to exclude the same from the property regime of respondent and defendant or defendants whom the plaintiff recognizes to be co-owners, an
his legal wife, and to prevent the possible dissipation of the said properties action for partition may be seen to present simultaneously two principal
since his legal wife was then a heavy gambler.21 Respondent added that he issues, i.e., first, the issue of whether the plaintiff is indeed a co-owner of the
also purchased the said properties as investment, with the intention to sell property sought to be partitioned and, second assuming that the plaintiff
successfully hurdles the first the issue of how the property is to be divided
them later on for the purchase or construction of a new building. 22
between plaintiff and defendant(s). Otherwise stated, the court must initially
On February 10, 2000, the trial court rendered a decision dismissing the settle the issue of ownership for the simple reason that it cannot properly
complaint for lack of merit. 23 In resolving the issue on ownership, the RTC issue an order to divide the property without first making a determination as
decided to give considerable weight to petitioners own admission that the to the existence of co-ownership. Until and unless the issue of ownership is
properties were acquired not from her own personal funds but from the definitely resolved, it would be premature to effect a partition of the
income of the manpower services company over which she owns a measly properties. This is precisely what the trial court did when it discounted the
merit in appellants claim of co-ownership.26
3.33% share.24
Aggrieved, petitioner elevated the matter to the CA asserting that she is the
pro indiviso owner of one-half of the properties in dispute. Petitioner argued
that the trial courts decision subjected the certificates of title over the said
properties to collateral attack contrary to law and jurisprudence. Petitioner
also contended that it is improper to thresh out the issue on ownership in an
action for partition.25
Unimpressed with petitioners arguments, the appellate court denied the
appeal, explaining in the following manner:
Appellants harping on the indefeasibility of the certificates of title covering
the subject realties is, to say the least, misplaced. Rather than the validity of
said certificates which was nowhere dealt with in the appealed decision, the
record shows that what the trial court determined therein was the ownership

Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case.
II. The partition agreement duly signed by respondent contains an
admission against respondents interest as to the existence of coownership between the parties.
III. An action for partition cannot be defeated by the mere
expedience of repudiating co-ownership based on self-serving claims
of exclusive ownership of the properties in dispute.
IV. A Torrens title is the best evidence of ownership which cannot be
outweighed by respondents self-serving assertion to the contrary.

LTD | JAN29 2016 |8

V. The properties involved were acquired by both parties through their

actual joint contribution of money, property, or industry.27
Noticeably, the last argument is essentially a question of fact, which we feel
has been squarely threshed out in the decisions of both the trial and appellate
courts. We deem it wise not to disturb the findings of the lower courts on the
said matter absent any showing that the instant case falls under the
exceptions to the general rule that questions of fact are beyond the ambit of
the Courts jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil
Procedure, as amended. The issues may be summarized into only three:

three (3) commissioners. This second stage may well also deal with the
rendition of the accounting itself and its approval by the [c]ourt after the
parties have been accorded opportunity to be heard thereon, and an award
for the recovery by the party or parties thereto entitled of their just share in
the rents and profits of the real estate in question. x x x 29 (Emphasis
supplied.)

II. Whether the Torrens title over the disputed properties was
collaterally attacked in the action for partition; and

While it is true that the complaint involved here is one for partition, the same
is premised on the existence or non-existence of co-ownership between the
parties. Petitioner insists she is a co-owner pro indiviso of the five real estate
properties based on the transfer certificates of title (TCTs) covering the
subject properties. Respondent maintains otherwise. Indubitably, therefore,
until and unless this issue of co-ownership is definitely and finally resolved, it
would be premature to effect a partition of the disputed properties. 30 More
importantly, the complaint will not even lie if the claimant, or petitioner in this
case, does not even have any rightful interest over the subject properties. 31

III. Whether respondent is estopped from repudiating co-ownership

over the subject realties.

Would a resolution on the issue of ownership subject the Torrens title issued
over the disputed realties to a collateral attack? Most definitely, it would not.

I. Whether an action for partition precludes a settlement on the issue

of ownership;

We find the petition bereft of merit.

Our disquisition in Municipality of Bian v. Garcia28 is definitive. There, we
explained that the determination as to the existence of co-ownership is
necessary in the resolution of an action for partition. Thus:
The first phase of a partition and/or accounting suit is taken up with the
determination of whether or not a co-ownership in fact exists, and a partition
is proper (i.e., not otherwise legally proscribed) and may be made by
voluntary agreement of all the parties interested in the property. This phase
may end with a declaration that plaintiff is not entitled to have a partition
either because a co-ownership does not exist, or partition is legally
prohibited. It may end, on the other hand, with an adjudgment that a coownership does in truth exist, partition is proper in the premises and an
accounting of rents and profits received by the defendant from the real estate
in question is in order. x x x
The second phase commences when it appears that "the parties are unable to
agree upon the partition" directed by the court. In that event[,] partition shall
be done for the parties by the [c]ourt with the assistance of not more than

There is no dispute that a Torrens certificate of title cannot be collaterally

attacked,32 but that rule is not material to the case at bar. What cannot be
collaterally attacked is the certificate of title and not the title itself. 33 The
certificate referred to is that document issued by the Register of Deeds known
as the TCT. In contrast, the title referred to by law means ownership which is,
more often than not, represented by that document. 34 Petitioner apparently
confuses title with the certificate of title. 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. 35
Moreover, 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 latter only serving as the best proof
of ownership over a piece of land. The certificate cannot always be considered
as conclusive evidence of ownership.36 In fact, 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 over the property subsequent to the issuance of
the certificate of title.37 Needless to say, registration does not vest ownership
over a property, but may be the best evidence thereof.1avvphi1

LTD | JAN29 2016 |9

Finally, as to whether respondents assent to the initial partition agreement

serves as an admission against interest, in that the respondent is deemed to
have admitted the existence of co-ownership between him and petitioner, we
rule in the negative.
An admission is any statement of fact made by a party against his interest or
unfavorable to the conclusion for which he contends or is inconsistent with
the facts alleged by him. 38 Admission against interest is governed by Section
26 of Rule 130 of the Rules of Court, which provides:
Sec. 26. Admissions of a party. The act, declaration or omission of a party
as to a relevant fact may be given in evidence against him.
To be admissible, an admission must (a) involve matters of fact, and not of
law; (b) be categorical and definite; (c) be knowingly and voluntarily made;
and (d) be adverse to the admitters interests, otherwise it would be selfserving and inadmissible.39

counsel to defend his interest as to entitle him an award of P100,000.00 as

attorneys fees. But we note that in the first place, it was respondent himself
who impressed upon petitioner that she has a right over the involved
properties. Secondly, respondents act of representing himself and petitioner
as husband and wife was a deliberate attempt to skirt the law and escape his
legal obligation to his lawful wife. Respondent, therefore, has no one but
himself to blame the consequences of his deceitful act which resulted in the
filing of the complaint against him.
WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the
Court of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION.
Respondent Bayani S. Samoy, Jr. is hereby declared the sole owner of the
disputed properties, without prejudice to any claim his legal wife may have
filed or may file against him. The award of P100,000.00 as attorneys fees in
respondents favor is DELETED.
No costs.

A careful perusal of the contents of the so-called Partition Agreement SO ORDERED.

indicates that the document involves matters which necessitate prior
settlement of questions of law, basic of which is a determination as to
whether the parties have the right to freely divide among themselves the
subject properties. Moreover, to follow petitioners argument would be to
allow respondent not only to admit against his own interest but that of his
legal spouse as well, who may also be lawfully entitled co-ownership over the
said properties. Respondent is not allowed by law to waive whatever share his
lawful spouse may have on the disputed properties. Basic is the rule that
rights may be waived, unless the waiver is contrary to law, public order,
public policy, morals, good customs or prejudicial to a third person with a
right recognized by law.40
Curiously, petitioner herself admitted that she did not assent to the Partition
Agreement after seeing the need to amend the same to include other
matters. Petitioner does not have any right to insist on the contents of an
agreement she intentionally refused to sign.
As to the award of damages to respondent, we do not subscribe to the trial
courts view that respondent is entitled to attorneys fees. Unlike the trial
court, we do not commiserate with respondents predicament. The trial court
ruled that respondent was forced to litigate and engaged the services of his

LTD | JAN29 2016 |10

G.R. No. 175485

July 27, 2011

CASIMIRO
DEVELOPMENT
vs.
RENATO L. MATEO, Respondent.

CORPORATION, Petitioner,

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 timebarred).
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.

LTD | JAN29 2016 |11

Felicidad Lara-Mateo had five children, namely: Laura, respondent Renato,

Cesar, Candido, Jr. and Leonardo. With the agreement of the entire LaraMateo 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 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

LTD | JAN29 2016 |12

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 (P100.00) 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. T34640 in the name of Casimiro Development Corporation; (2) Ordering the
plaintiff Renato Mateo to pay defendant Casimiro Development Corporation
the sum of [a] P200,000.00 as compensatory damages; [b] P200,000.00 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 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.

LTD | JAN29 2016 |13

SO ORDERED.9

We grant the petition.

The CA denied CDCs motion for reconsideration.

1.

Hence, this appeal, in which CDC urges that the CA committed serious errors
of law,10 as follows:

Indefeasibility of title in the name of Laura

(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

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

LTD | JAN29 2016 |14

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 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.

LTD | JAN29 2016 |15

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:
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

LTD | JAN29 2016 |16

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.

LTD | JAN29 2016 |17

G.R. No. 167232

July 31, 2009

D.B.T.
MAR-BAY
CONSTRUCTION,
INCORPORATED, Petitioner,
vs.
RICAREDO PANES, ANGELITO PANES, SALVADOR CEA, ABOGADO
MAUTIN, DONARDO PACLIBAR, ZOSIMO PERALTA and HILARION
MANONGDO, Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition 1 for Review on Certiorari under Rule 45 of the
Rules of Civil Procedure, assailing the Court of Appeals (CA) Decision 2 dated
October 25, 2004 which reversed and set aside the Order 3 of the Regional
Trial Court (RTC) of Quezon City, Branch 216, dated November 8, 2001.
The Facts
Subject of this controversy is a parcel of land identified as Lot Plan Psu123169,4 containing an area of Two Hundred Forty Thousand, One Hundred
Forty-Six (240,146) square meters, and situated at Barangay (Brgy.) Pasong
Putik, Novaliches, Quezon City (subject property). The property is included in
Transfer Certificate of Title (TCT) No. 200519, 5 entered on July 19, 1974 and
issued in favor of B.C. Regalado & Co. (B.C. Regalado). It was conveyed by
B.C. Regalado to petitioner D.B.T. Mar-Bay Construction, Inc. (DBT) through a
dacion en pago6 for services rendered by the latter to the former.
On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito
P. Panes (Angelito), Salvador Cea, Abogado Mautin, Donardo Paclibar, Zosimo
P. Peralta, and Hilarion Manongdo (herein collectively referred to as
respondents) filed a Complaint 7 for "Quieting of Title with Cancellation of TCT

No. 200519 and all Titles derived thereat (sic), Damages, with Petition for the
Issuance of Injunction with Prayer for the Issuance of Restraining Order ExParte, Etc." against B.C. Regalado, Mar-Bay Realty, Inc., Spouses Gereno
Brioso and Criselda M. Brioso, Spouses Ciriaco and Nellie Mariano, Avelino C.
Perdido and Florentina Allado, Eufrocina A. Maborang and Fe Maborang,
Spouses Jaime and Rosario Tabangcura, Spouses Oscar Ikalina and the
Register of Deeds (RD) of Quezon City. Subsequently, respondents filed an
Amended Complaint8 and a Second Amended Complaint9 particularly
impleading DBT as one of the defendants.
In the Complaints, Ricaredo alleged that he is the lawful owner and claimant
of the subject property which he had declared for taxation purposes in his
name, and assessed in the amount of P2,602,190.00 by the City Assessor of
Quezon City as of the year 1985. Respondents alleged that per
Certification10 of the Department of Environment and Natural Resources
(DENR) National Capital Region (NCR) dated May 7, 1992, Lot Plan Psu123169 was verified to be correct and on file in said office, and approved on
July 23, 1948.
Respondents also claimed that Ricaredo, his immediate family members, and
the other respondents had been, and still are, in actual possession of the
portions of the subject property, and their possession preceded the Second
World War. To perfect his title in accordance with Act No. 496 (The Land
Registration Act) as amended by Presidential Decree (P.D.) No. 1529 (The
Property Registration Decree), Ricaredo filed with the RTC of Quezon City,
Branch 82 a case docketed as LRC Case No. Q-91-011, with LRC Rec. No. N62563.11
Respondents averred that in the process of complying with the publication
requirements for the Notice of Initial Hearing with the Land Registration
Authority (LRA), it was discovered by the Mapping Services of the LRA that
there existed an overlapping of portions of the land subject of Ricaredos
application, with the subdivision plan of B.C. Regalado. The said portion had,
by then, already been conveyed by B.C. Regalado to DBT.
Ricaredo asseverated that upon verification with the LRA, he found that the
subdivision plan of B.C. Regalado was deliberately drawn to cover portions of
the subject property. Respondents claimed that the title used by B.C.
Regalado in the preparation of the subdivision plan did not actually cover the
subject property. They asserted that from the records of B.C. Regalado, they
gathered that TCT Nos. 211081, 12 21109513 and 211132,14 which allegedly

LTD | JAN29 2016 |18

included portions of the subject property, were derived from TCT No. 200519.
However, TCT No. 200519 only covered Lot 503 of the Tala Estate with an
area of Twenty-Two Thousand Six Hundred Fifteen (22,615) square meters,
and was different from those mentioned in TCT Nos. 211081, 211095 and
211132. According to respondents, an examination of TCT No. 200519 would
show that it was derived from TCT Nos. 14814,15 14827,16 1481517 and T-28.
In essence, respondents alleged that B.C. Regalado and DBT used the
derivative titles which covered properties located far from Pasong Putik,
Novaliches, Quezon City where the subject property is located, and B.C.
Regalado and DBT then offered the same for sale to the public. Respondents
thus submitted that B.C Regalado and DBT through their deliberate scheme,
in collusion with others, used (LRC) Pcs-18345 as shown in the consolidationsubdivision plan to include the subject property covered by Lot Plan Psu123169.
In his Answer18 dated July 24, 1992, the RD of Quezon City interposed the
defense that at the time of registration, he found all documents to be in
order. Subsequently, on December 5, 1994, in his Motion 19 for Leave to Admit
Amended Answer, with the Amended Answer attached, he admitted that he
committed a grave mistake when he earlier said that TCT No. 200519 covered
only one lot, i.e. Lot 503. He averred that upon careful examination, he
discovered that TCT No. 200519 is composed of 17 pages, and actually
covered 54 lots, namely: Lots 503, 506, 507, 508, 509, 582, 586, 655, 659,
686, 434, 495, 497, 299, 498, 499, 500, 501, 502, 493, 692, 776, 496, 785,
777, 786, 780, 783, 505, 654, 660, 661, 663, 664, 665, 668, 693, 694, 713,
716, 781, 779, 784, 782, 787, 893, 1115, 1114, 778, 669 and 788, all of the
Tala Estate. Other lots included therein are Lot 890-B of Psd 36854, Lot 2 of
(LRC) Pcs 12892 and Lot 3 of (LRC) Pcs 12892. Thus, respondents' allegation
that Lots 661, 664, 665, 693 and 694 of the Tala Estate were not included in
TCT No. 200519 was not true.
On December 28, 1993, then defendants Spouses Jaime and Rosario
Tabangcura (Spouses Tabangcura) filed their Answer 20 with Counterclaim,
claiming that they were buyers in good faith and for value when they bought
a house and lot covered by TCT No. 211095 from B.C. Regalado, the latter
being a subdivision developer and registered owner thereof, on June 30,
1986. When respondent Abogado Mautin entered and occupied the property,
Spouses Tabangcura filed a case for Recovery of Property before the RTC,
Quezon City, Branch 97 which rendered a decision 21 in their favor.

On its part, DBT, traversing the complaint, alleged that it is the legitimate
owner and occupant of the subject property pursuant to a dacion en pago
executed by B.C. Regalado in the formers favor; that respondents were not
real parties-in-interests because Ricaredo was a mere claimant whose rights
over the property had yet to be determined by the RTC where he filed his
application for registration; that the other respondents did not allege matters
or invoke rights which would entitle them to the relief
prayed for in their complaint; that the complaint was premature; and that the
action inflicted a chilling effect on the lot buyers of DBT.22
The RTC's Rulings
On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge
Bacalla), rendered a Decision23 in favor of the respondents. The RTC held that
the testimony of Ricaredo that he occupied the subject property since 1936
when he was only 16 years old had not been rebutted; that Ricaredo's
occupation and cultivation of the subject property for more than thirty (30)
years in the concept of an owner vested in him equitable ownership over the
same by virtue of an approved plan, Psu 123169; that the subject property
was declared under the name of Ricaredo for taxation purposes; 24 and that
the subject property per survey should not have been included in TCT No.
200519, registered in the name of B.C. Regalado and ceded to DBT. The RTC
further held that Spouses Tabangcura failed to present satisfactory evidence
to prove their claim. Thus, the RTC disposed of the case in this wise:
WHEREFORE, in view of the foregoing considerations, judgment is hereby
rendered declaring Certificate of Title No. 200519 and all titles derived
thereat as null and void insofar as the same embrace the land covered by
Plan PSU-123169 with an area of 240,146 square meters in the name of
Ricaredo Panes; ordering defendant DBT Marbay Realty, Inc. to pay plaintiff
Ricaredo Panes the sum of TWENTY THOUSAND (P20,000) pesos as
attorneys fees plus costs of suit.
SO ORDERED.
On September 12, 2000, DBT filed a Motion 25 for Reconsideration, based on
the grounds of prescription and laches. DBT also disputed Ricaredos claim of
open, adverse, and continuous possession of the subject property for more
than thirty (30) years, and asserted that the subject property could not be

LTD | JAN29 2016 |19

acquired by prescription or adverse possession because it is covered by TCT

No. 200519.
While the said Motion for Reconsideration was pending, Judge Bacalla passed
away.
Meanwhile, on January 2, 2001, a Motion 26 for Intervention and a Complaint
in Intervention were filed by Atty. Andres B. Pulumbarit (Atty. Pulumbarit),
representing the Don Pedro/Don Jose de Ocampo Estate. The intervenor
alleged that the subject property formed part of the vast tract of land with an
area of 117,000 hectares, covered by Original Certificate of Title (OCT) No.
779 issued by the Honorable Norberto Romualdez on March 14, 1913 under
Decree No. 10139, which belongs to the Estate of Don Pedro/Don Jose de
Ocampo. Thus, the Complaint27in Intervention prayed that the RTCs Decision
be reconsidered; that the legitimacy and superiority of OCT 779 be upheld;
and that the subject property be declared as belonging to the Estate of Don
Pedro/Don Jose de Ocampo.

land; hence, a title once registered cannot be defeated even by adverse, open
or notorious possession. Moreover, the RTC opined that even if the subject
property could be acquired by prescription, respondents' action was already
barred by prescription and/or laches because they never asserted their rights
when B.C. Regalado registered the subject property in 1974; and later
developed, subdivided and sold the same to individual lot buyers.
On
December
18,
2001,
respondents
filed
a
Motion
for
Reconsideration38 which the RTC denied in its Order39dated June 17, 2002.
Aggrieved, respondents appealed to the CA.40
The CA's Ruling

On October 25, 2004, the CA reversed and set aside the RTC Orders dated
November 8, 2001 and June 17, 2002 and reinstated the RTC Decision dated
June 15, 2000. The CA held that the properties described and included in TCT
No. 200519 are located in San Francisco del Monte, San Juan del Monte, Rizal
and Cubao, Quezon City while the subject property is located in Brgy. Pasong
In its Order28 dated March 13, 2001, the RTC, through Acting Judge Modesto Putik, Novaliches, Quezon City. Furthermore, the CA held that Engr.
C. Juanson (Judge Juanson), denied Atty. Pulumbarits Motion for Intervention Vertudazo's testimony that there is a gap of around 1,250 meters between
because a judgment had already been rendered pursuant to Section 2, 29 Rule Lot 503 and Psu 123169 was not disproved or refuted. The CA found that
19 of the 1997 Rules of Civil Procedure.
Judge Juanson committed a procedural infraction when he entertained issues
and admitted evidence presented by DBT in its Motion for Reconsideration
On April 10, 2001, the RTC issued an Order 30 stating that there appeared to which were never raised in the pleadings and proceedings prior to the
be a need for a clarificatory hearing before it could act on DBT's Motion for rendition of the RTC Decision. The CA opined that DBT's claims of laches and
Reconsideration. Thus, a hearing was held on May 17, 2001. Thereafter, prescription clearly appeared to be an afterthought. Lastly, the CA held that
supplemental memoranda were required of the parties. 31 Both parties DBT's Motion for Reconsideration was not based on grounds enumerated in
41
complied.32 However, having found that the original copy of TCT No. 200519 the Rules of Procedure.
was not submitted to it for comparison with the photocopy thereof on file, the
RTC directed DBT to present the original or certified true copy of the TCT on Petitioner filed a Motion for Reconsideration,42 which was, however, denied by
August 21, 2001.33 Respondents moved to reconsider the said directive 34 but the CA in its Resolution43 dated February 22, 2005.
the same was denied.35 DBT, on the other hand, manifested that a copy of
TCT No. 200519, consisting of 17 pages, had already been admitted in Hence, this Petition.
evidence; and that because of the fire in the Office of the RD in Quezon City
sometime in 1988, DBT, despite diligent effort, could not secure an original or The Issues
certified true copy of said TCT. Instead, DBT submitted a certified true copy of
Consolidated Subdivision Plan Pcs 18345.36
Petitioner raises the following as grounds for this Petition:
On November 8, 2001, the RTC, through Judge Juanson, issued an
Order37 reversing the earlier RTC Decision and dismissing the Complaint for
lack of merit. The RTC held that prescription does not run against registered

I.

LTD | JAN29 2016 |20

PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A

WAIVER OF SUCH DEFENSE.
II.
IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED
TRUE COPY OF TCT NO. 200519 AFTER THE DECISION ON THE MERITS HAS
BEEN RENDERED BUT BEFORE IT BECAME FINAL.
III.
A REGISTERED
PRESCRIPTION.

LAND

CAN

NOT

BE

ACQUIRED

BY

ACQUISITIVE

IV.
THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL
DESCRIPTION OF LOT 503 IN AN INCOMPLETE DOCUMENT IS UNRELIABLE.
V.
MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS
POSSESSION OF THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30)
YEARS.44
Distilled from the petition and the responsive pleadings, and culled from the
arguments of the parties, the issues may be reduced to two questions,
namely:
1) Did the RTC err in upholding DBT's defenses of prescription and
laches as raised in the latter's Motion for Reconsideration?
2) Which between DBT and the respondents have a better right over
the subject property?
Our Ruling
We answer the first question in the affirmative.
It is true that in Dino v. Court of Appeals 45 we ruled:

(T)rial courts have authority and discretion to dismiss an action on the ground
of prescription when the parties' pleadings or other facts on record show it to
be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid,
50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14,
1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v.
Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to
dismiss (Sec. 1, [f] Rule 16, Rules of Court), or an answer which sets up such
ground as an affirmative defense (Sec. 5, Rule 16), or even if the ground is
alleged after judgment on the merits, as in a motion for reconsideration
(Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted
at all, as where no statement thereof is found in the pleadings (Garcia v.
Mathis, 100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua
Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been declared
in default (PNB v. Perez; 16 SCRA 270). What is essential only, to repeat, is
that the facts demonstrating the lapse of the prescriptive period be otherwise
sufficiently and satisfactorily apparent on the record; either in the averments
of the plaintiff's complaint, or otherwise established by the evidence.
(Emphasis supplied)
Indeed, one of the inherent powers of courts is to amend and control its
processes so as to make them conformable to law and justice. This includes
the right to reverse itself, especially when in its opinion it has committed an
error or mistake in judgment, and adherence to its decision would cause
injustice.46 Thus, the RTC in its Order dated November 8, 2001 could validly
entertain the defenses of prescription and laches in DBT's motion for
reconsideration.
However, the conclusion reached by the RTC in its assailed Order was
erroneous. The RTC failed to consider that the action filed before it was not
simply for reconveyance but an action for quieting of title which is
imprescriptible.
Verily, an action for reconveyance can be barred by prescription. When an
action for reconveyance is based on fraud, it must be filed within four (4)
years from discovery of the fraud, and such discovery is deemed to have
taken place from the issuance of the original certificate of title. On the other
hand, an action for reconveyance based on an implied or constructive trust
prescribes in ten (10) years from the date of the issuance of the original
certificate of title or transfer certificate of title. The rule is that the
registration of an instrument in the Office of the RD constitutes constructive

LTD | JAN29 2016 |21

notice to the whole world and therefore the discovery of the fraud is deemed
to have taken place at the time of registration.47lavvphil
However, the prescriptive period applies only if there is an actual need to
reconvey the property as when the plaintiff is not in possession of the
property. If the plaintiff, as the real owner of the property also remains in
possession of the property, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an
action for reconveyance, if nonetheless filed, would be in the nature of a suit
for quieting of title, an action that is imprescriptible. 48 Thus, in Vda. de
Gualberto v. Go,49 this Court held:

of title imprescriptible and, hence, not barred by laches. Moreover, since

laches is a creation of equity, acts or conduct alleged to constitute the same
must be intentional and unequivocal so as to avoid injustice. Laches will
operate not really to penalize neglect or sleeping on one's rights, but rather
to avoid recognizing a right when to do so would result in a clearly inequitable
situation.52
Albeit the conclusion of the RTC in its Order dated November 8, 2001, which
dismissed respondents' complaint on grounds of prescription and laches, may
have been erroneous, we, nevertheless, resolve the second question in favor
of DBT.

[A]n action for reconveyance of a parcel of land based on implied or

constructive trust prescribes in ten years, the point of reference being the
date of registration of the deed or the date of the issuance of the certificate of
title over the property, but this rule applies only when the plaintiff or the
person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the
property, as the defendants are in the instant case, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a
piece of land claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the
reason for the rule being, that his undisturbed possession gives him a
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 own title, which right can be claimed only by one who is in possession.

It is a well-entrenched rule in this jurisdiction that no title to registered land

in derogation of the rights of the registered owner shall be acquired by
prescription or adverse possession.53

Insofar as Ricaredo and his son, Angelito, are concerned, they established in
their testimonies that, for some time, they possessed the subject property
and that Angelito bought a house within the subject property in 1987. 50Thus,
the respondents are proper parties to bring an action for quieting of title
because persons having legal, as well as equitable, title to or interest in a real
property may bring such action, and "title" here does not necessarily denote a
certificate of title issued in favor of the person filing the suit. 51

Thus, respondents' claim of acquisitive prescription over the subject property

is baseless. Under Article 1126 of the Civil Code, acquisitive prescription of
ownership of lands registered under the Land Registration Act shall be
governed by special laws. Correlatively, Act No. 496, as amended by PD No.
1529, provides that no title to registered land in derogation of that of the
registered owner shall be acquired by adverse possession. Consequently, in
the instant case, proof of possession by the respondents is immaterial and
inconsequential.58

Although prescription and laches are distinct concepts, we have held,

nonetheless, that in some instances, the doctrine of laches is inapplicable
where the action was filed within the prescriptive period provided by law.
Therefore, laches will not apply to this case, because respondents' possession
of the subject property has rendered their right to bring an action for quieting

Article 112654 of the Civil Code in connection with Section 4655 of Act No. 496
(The Land Registration Act), as amended by Section 47 56 of P.D. No. 1529
(The Property Registration Decree), clearly supports this rule. Prescription is
unavailing not only against the registered owner but also against his
hereditary successors. Possession is a mere consequence of ownership where
land has been registered under the Torrens system, the efficacy and integrity
of which must be protected. Prescription is rightly regarded as a statute of
repose whose objective is to suppress fraudulent and stale claims from
springing up at great distances of time and surprising the parties or their
representatives when the facts have become obscure from the lapse of time
or the defective memory or death or removal of witnesses. 57

Moreover, it may be stressed that there was no ample proof that DBT
participated in the alleged fraud. While factual issues are admittedly not
within the province of this Court, as it is not a trier of facts and is not
required to re-examine or contrast the oral and documentary evidence anew,

LTD | JAN29 2016 |22

we have the authority to review and, in proper cases, reverse the factual
findings of lower courts when the findings of fact of the trial court are in
conflict with those of the appellate court. 59 In this regard, we reviewed the
records of this case and found no clear evidence that DBT participated in the
fraudulent scheme. In Republic v. Court of Appeals, 60 this Court gave due
importance to the fact that the private respondent therein did not participate
in the fraud averred. We accord the same benefit to DBT in this case. To add,
DBT is an innocent purchaser for value and good faith which, through a
dacion en pago duly entered into with B.C. Regalado, acquired
ownership over the subject property, and whose rights must be protected
under Section 3261 of P.D. No. 1529.
Dacion en pago is the delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted equivalent of the performance of the
obligation. It is a special mode of payment where the debtor offers another
thing to the creditor, who accepts it as an equivalent of the payment of an
outstanding debt. In its modern concept, what actually takes place in dacion
en pago is an objective novation of the obligation where the thing offered as
an accepted equivalent of the performance of an obligation is considered as
the object of the contract of sale, while the debt is considered as the
purchase price.62

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.
Otherwise, the integrity of the Torrens system would forever be sullied by the
ineptitude and inefficiency of land registration officials, who are ordinarily
presumed to have regularly performed their duties. 64 Thus, where innocent
third persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property, the court cannot disregard those rights and
order the cancellation of the certificate. The effect of such outright
cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone
dealing with the property registered under the system will have to inquire in
every instance on whether the title had been regularly or irregularly issued,
contrary to the evident purpose of the law. Every person dealing with the
registered land may safely rely on the correctness of the certificate of title
issued therefor, and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.65
WHEREFORE, the instant Petition is GRANTED and the assailed Court of
Appeals Decision dated October 25, 2004 is hereby REVERSED and SET
ASIDE. A new judgment is hereby entered DISMISSING the Complaint filed
by the respondents for lack of merit.
SO ORDERED.

It must also be noted that portions of the subject property had already been
sold to third persons who, like DBT, are innocent purchasers in good faith and
for value, relying on the certificates of title shown to them, and who had no
knowledge of any defect in the title of the vendor, or of facts sufficient to
induce a reasonably prudent man to inquire into the status of the subject
property.63 To disregard these circumstances simply on the basis of alleged
continuous and adverse possession of respondents would not only be inimical
to the rights of the aforementioned titleholders, but would ultimately wreak
havoc on the stability of the Torrens system of registration.
A final note.
While the Torrens system is not a mode of acquiring title, but merely a
system of registration of titles to lands, justice and equity demand that the
titleholder should not be made to bear the unfavorable effect of the mistake
or negligence of the State's agents, in the absence of proof of his complicity
in a fraud or of manifest damage to third persons. The real purpose of the
Torrens system is to quiet title to land and put a stop forever to any question

LTD | JAN29 2016 |23

G.R. No. 163566

February 19, 2008

RAYMUNDO
and
PERLA
vs.
PRAXIDES J. AGBAGALA, respondent.

DE

GUZMAN, petitioners,

DECISION
CORONA, J.:
This is a petition for review on certiorari1 of a decision2 and resolution3 of the
Court of Appeals (CA) dated October 14, 2003 and April 20, 2004,
respectively, in CA-G.R. CV No. 55238 which affirmed the decision of the
Regional Trial Court (RTC), Lingayen, Pangasinan, Branch 37 dated May 30,
1996 in Civil Case No. 16516.

LTD | JAN29 2016 |24

The spouses Elias P. Javier and Maria Sison died on May 8, 1942 and July
1936, respectively, both in Lingayen, Pangasinan. They were survived by their
six children, namely: Conrado Javier, respondent Praxides Javier Agbagala,
Nicasio Javier, Carmen Javier, Encarnacion Javier Ongnoy 4 and Juana Javier.
They left 13 parcels of land which their children inherited and divided among
themselves in a public document of extrajudicial partition dated June 29,
1948. Five of the parcels of land 5 were inherited by Carmen. On February 25,
1984, she died single, without any compulsory heir and survived only by her
sisters Encarnacion, respondent Praxides, Juana and brother Nicasio. 6
According to respondent and her daughter, Milagros Agbagala Gutierrez, one
afternoon sometime in mid-1987, a certain Rosing Cruz went to their house
to borrow P30,000 from Milagros. Rosing offered as collateral a document
which turned out to be a deed of donation dated January 25, 1977
purportedly signed by Carmen in favor of her niece Madelene Javier Cruz,
daughter of Juana and sister-in-law of Rosing. Milagros told her (Rosing) that
she had no money to lend. Thereafter, Milagros, upon the request of
respondent, went to the Register of Deeds in Lingayen, Pangasinan to verify
the existence of such donation. She found out that it was indeed duly
registered. It was the first time respondent came to know of such donation
and the transfer of Carmen's properties to their niece Madelene. 7
According to Madelene, she lived in her Aunt Carmen's house 8 and had been
her companion since she was four years old. She transferred to Manila only
when she graduated in 1970. On January 25, 1977, Carmen executed the
deed of donation in her favor. She was present when all the signatories
thereon, including the notary public, signed the document. From that time on,
she received the rentals of the properties covered by the donation. Carmen
even informed her tenants that Madelene would inherit the properties upon
her death.9
On November 18, 1987,10 respondent filed civil case no. 16516 against
Madelene praying that the deed of donation be nullified, as well as the
subsequent transfers to other parties of the properties covered by the
spurious donation.11 An amended complaint was filed on September 15,
198812 to include the transferees13 of the properties including petitioner
spouses Raymundo and Perla de Guzman, who were the transferees of the
land located at Tampac, Aguilar, Pangasinan.14
Respondent claimed that the deed of donation was fake. This was confirmed
by the handwriting expert of the National Bureau of Investigation, Rogelio G.

Azores,15 who examined the document and compared it with several

documents bearing the signature of Carmen. He found that the purported
signature of the late Carmen on the deed of donation was forged. 16
Petitioners filed their answer dated November 28, 1989. 17 They claimed that
they applied for a free patent over the subject area on August 10, 1987 and
on November 26, 1987, they were issued free patent no. 165790. 18 On
December 11, 1987, Original Certificate of Title (OCT) No. P-30187 was
registered in their name. During the trial, they also presented a tax
declaration and realty tax receipts from 1985 to 1990 issued to them. 19
In a decision dated May 30, 1996, the RTC declared the deed of donation in
favor of Madelene null and void ab initio, canceled the deeds of sale executed
by Madelene in favor of the defendants, 20 declared null and void OCT No. P30187 in the name of petitioners and directed all the defendants to jointly
and severally pay respondentP6,000 as attorney's fees and litigation
expenses and each of the defendants to pay respondent P1,000 as nominal
damages. It further ruled that the properties subject of the annulled
documents should revert back to the intestate estate of Carmen. 21
In a decision promulgated on October 14, 2003, the CA affirmed the decision
of the RTC. It denied reconsideration in a resolution promulgated on April 20,
2004.
Hence this petition raising the lone issue of whether OCT No. P-30187 was
correctly nullified considering that it cannot be the subject of collateral attack
under Section 48 of PD 1529.22
Petitioners argue that at the time of the filing of the amended complaint on
September 15, 1988, OCT No. P-30187 had already been issued in their
name. Thus this certificate of title can only be nullified in an action directly
attacking its validity.
Respondent counters that at the time the amended complaint was filed, OCT
No. P-30187 (which was issued on December 11, 1987) was not yet
indefeasible since less than one year had lapsed. Furthermore, she asserts
that the doctrine of indefeasibility does not apply if the free patent is null and
void ab initio.
We agree with respondent.

LTD | JAN29 2016 |25

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

LTD | JAN29 2016 |26

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.

LTD | JAN29 2016 |27

G.R. No. 163551

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 ofP10,000.00 and attorneys fees.

July 18, 2011

DATU KIRAM SAMPACO, substituted by

MACABANDO, Petitioner,
vs.
HADJI SERAD MINGCA LANTUD, Respondent.

HADJI

SORAYA

S.

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 damages 1 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 P10,000.00. On August 30, 1984,
Barangay Captain Hadji Hassan Abato and his councilmen prepared and

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 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

LTD | JAN29 2016 |28

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 purposes 14 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:

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.

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;

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:

2. Declaring Original Certificate of Title No. P-658 (Exh. A) null and

void and of no legal effect;

1. The appeal is granted and the appealed judgment is hereby totally

REVERSED.

3. Declaring the defendant the absolute or true owner and possessor

of the land in dispute; and

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;

4. Ordering the plaintiff to pay the defendant the sum of P10,000.00

for attorneys fees plus P500.00 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.

3. The defendant-appellee is ordered to pay P50,000.00 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 47 19 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.

LTD | JAN29 2016 |29

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

However, the Court of Appeals awarded attorney's fees in the amount

of P50,000.00, 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

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 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.

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
THE COURT OF APPEALS ERRED IN RULING THAT THE
COUNTERCLAIM IN THE INSTANT CASE IS A COLLATERAL ATTACK ON
RESPONDENT-PLAINTIFFS TITLE.

LTD | JAN29 2016 |30

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 ownership of the
land described therein, and other matters 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 that the land is
residential was made only by respondent, but 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 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 Certification 32 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

LTD | JAN29 2016 |31

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.

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.

Article 434 of the Civil Code governs an action for reconveyance, thus:

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.

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

Further, petitioner contends that the Court of Appeals erred in ruling that
petitioners counterclaim is time-barred, since the 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

LTD | JAN29 2016 |32

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 x 43
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.