2016 Bar Q&A

1. Joven and Juliana are the owners of a 30-hectare plantation in Cotabato, covered by a title. One day, a
group of armed men forcibly entered their house and, at gun point, forced them to sign a Deed of
Absolute Sale in favor of Romeo. 9 Romeo got the title from them and they were ejected from the house
and threatened not to come back or else they will be killed. The spouses went to Manila and resided there
for more than 35 years. They never went back to Cotabato for fear of their lives. Word came to them that
peace and order have been restored in their former place of residence and they decided to reclaim their
land for the benefit of their grandchildren. Joven and Juliana filed a suit for reconveyance of their
property. This was opposed by the grandson of Romeo to whom the title was eventually transferred, on
the ground of laches and prescription. Decide the case and rule on the defenses of laches and
prescription. Explain your answer. (5%)

SUGGESTED ANSWER:
The right of the registered owners, Joven and Juliana, to file suit to recover their property, is not barred by
prescription. Under Section 47 of P.D. No. 1529, no title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession. Proof of possession by the
owner in an action for reconveyance is immaterial and inconsequential. The right to recover possession is
equally imprescriptible since possession is a mere consequence of ownership (Republic v. Mendoza, 627
SCRA 443 120101). The right of Joven and Juliana to recover is not barred by laches, either. Laches deals
with unreasonable delay in filing the action. The owners' delay, if any, cannot be construed as deliberate
and intentional. They were simply coerced out of Cotabato and threatened with death if they returned,
and, thus, could not have filed the action.

2. Ellen entrusted her title over the lot where she is residing to Patrick, her nephew, for safekeeping
because of her poor eyesight. Patrick, a gambler, prepared a Special Power of Attorney empowering him
to mortgage the lot. Ellen's signature was forged. With the help of Julia who represented herself as Ellen,
Mega Bank granted a loan to Patrick secured by a mortgage on Ellen's lot. Due to non-payment, Mega
Bank foreclosed the mortgage and was declared the highest bidder. Title was later registered in the name
of the bank. When Ellen was notified that she should vacate the premises, she filed a complaint to nullify
the loan with mortgage, the auction sale and the title of Mega Bank on the ground that the bank is not a
mortgagee in good faith. Decide the case with reasons. (5%)

SUGGESTED ANSWER:
I will decide in favor of Ellen. Banks, their business being impressed with public interest, are expected to
exercise more care and prudence than private individuals in their dealings, even those involving registered
lands. The highest degree of diligence is expected, and high standards of integrity and performance are
even required of it. A mortgagee — usually, can rely on what appears on the certificate of title presented
by the mortgagor and an innocent mortgagee is not expected to conduct an exhaustive investigation on the
history of the mortgagor's title. This rule is, however, strictly applied against banking institutions. Mega
Bank cannot be considered a mortgagee in good faith as it failed to inspect the disputed property when
offered to it as security for the loan, which could have led it to discover the forged Special Power of
Attorney.

ALTERNATIVE ANSWER:
I will decide in favor of Ellen, the victim of a forged document. Section 52 of P.D. No. 1529 provides
that after the entry of a decree of registration, any subsequent registration procured by a forged deed shall
be null and void, even if accompanied by the owner's duplicate certificate of title. In this case, the
registered owner, Ellen, did not lose her title, and neither did the mortgagee, Mega Bank, acquire any
right to the property (Joaquin v. Madrid, 106 Phil. 1060 [1960]). The bank was defrauded because it
believed the imposter who had, without authority, gained possession of Ellen's certificate 13 of title, and
who then forged her signature to the deed of mortgage (De Lara v. Ayroso, 95 Phil. 185, [1954/). It is not
a mortgagee in good faith.

3. On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel where the former
sold his titled lot in Quezon City with an area of three hundred (300) square meters to the latter for the
price of P300, 000.00. The prevailing market value of the lot was P3, 000.00 per square meter. On March
20, 2008, they executed another "Agreement to Buy Back/Redeem Property" where Ariel was given an
option to repurchase the property on or before March 20, 2010 for the same price. Ariel, however,
remained in actual possession of the lot. Since Noel did not pay the taxes , Ariel paid the real property
taxes to avoid a delinquency sale. On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a
manager's check for P300, 000.00 manifesting that he is redeeming the property. Noel rejected the
redemption claiming that the DAS was a true and valid sale representing the true intent of the parties.
Ariel filed a suit for the nullification of the DAS or the reformation of said agreement to that of a Loan
with Real Estate Mortgage. He claims the DAS and the redemption agreement constitute an equitable
mortgage. Noel however claims it is a valid sale with pacto de retro and Ariel clearly failed to redeem the
property. As the RTC judge, decide the case with reasons. (5%)

SUGGESTED ANSWER:
I will decide in favor of Ariel and allow the reformation of the agreement. The DAS and the redemption
agreement constitute an equitable mortgage and Ariel may ask for the reformation of the agreement to
that of a Loan with Real Estate Mortgage as allowed by Article 1605 of the Civil Code. The
circumstances clearly show that that the agreement is an equitable mortgage, such as the: a). price of the
lot was inadequate since it was only sold at P300, 000 when the prevailing market value of such was
P900, 000; b). the vendor, Ariel, remained in actual possession of the property after the purported sale;
and c). Ariel was the one who paid the real property taxes. Under the circumstances, a presumption arises
under Article 1602 C.C. that what was really executed was an equitable mortgage. Moreover, Article
1603 C.C. provides that in case of doubt, a contract purporting to be a sale with right to repurchase shall
be construed as an equitable mortgage.

4. On February 28, 1998, Arthur filed an application for registration of title of a lot in Ternate, Cavite
before the Regional Trial Court of Naic, Cavite under Section 48(b) of Commonwealth Act No. 141 (CA
141) for judicial confirmation of imperfect title. Section 48(b) of CA 141 requires possession counted
from June 12, 1945. Arthur presented testimonial and documentary evidence that his possession and that
of his predecessors-in- interest started in 1936. The lot was declared alienable and disposable (A and D)
in 1993 based on a PENRO certification and a certified true copy of the original classification made by
the DENR Secretary. The government opposed the application on the ground that the lot was certified A
and D only in 1993 while the application was instituted only in 1998. Arthur's possession of five (5) years
from the date of declaration does not comply with the 30-year period required under CA 141. Should the
possession of Arthur be reckoned from the date when the lot was declared A and D or from the date of
actual possession of the applicant? Explain. (5%)

SUGGESTED ANSWER:
Arthur's possession should be reckoned from the date of his actual possession, by himself and his
predecessors-in-interest, since 1936. Under Section 48(b) of CA 141, as amended by PD No. 1973, the
length of the requisite possession was changed from possession for "thirty (30) years immediately
preceding the filing of the application" to possession "since June 12, 1945 or earlier". But possession is
different from classification. As held in Malabanan v. Republic, 587 SCRA 172 [2009], it is only
necessary that the land be already classified as A and D "at the time the application for registration is
filed" to make public the release of the property for alienation or disposition. But the possession of Arthur
even prior to the classification of the land as A and D shall be counted in determining the period of
possession.
5. Macario bought a titled lot from Ramon, got the title and took possession of the lot. Since Macario did
not have the money to pay the taxes, fees and registration expenses, he was not able to register the Deed
of Absolute Sale. Upon advice, he merely executed an Affidavit of Adverse Claim and had it annotated at
the back of the title. A few years after, he received a Notice of Levy on Attachment and Writ of Execution
in favor of Alex. The notice, writ and certificate of sale were annotated at the back of the title still in
Ramon's name. Alex contends that since the Affidavit of Adverse Claim is effective only for 30 days
from the date of its registration, then its validity has expired. Macario posits that the annotation of his
adverse claim is notice to the whole world of his purchase of the lot in question. Who has the superior
right over the disputed property - Macario or Alex? Explain. (5%)

SUGGESTED ANSWER:
Macario is preferred since the registration of his adverse claim was made ahead of the notice of levy and
writ of execution in favor of Alex. Macario's adverse claim, coupled with the fact that he was in
possession of the disputed property, are circumstances which should have put Alex on constructive notice
that the property being offered to him had already been sold to another (Ching v Enrile, G.R. No. 156076
[2008]). The contention that the adverse claim is effective only for 30 years is puerile. In Sajonas v.
Court of Appeals, 258 (SCRA 79 [1996]), the Court held that the adverse claim does not ipso facto lose
its validity since an independent action is still necessary to render it ineffective. Until then, the adverse
claim shall continue as a prior lien on the property.