FIRST DIVISION
August 9, 2017
G.R. No. 211845
PEN DEVELOPMENT CORPORATION and LAS BRISAS RESORT CORPORATION, Petitioners,
vs.
MARTINEZ LEYBA, INC.,, Respondent
D E C I S I O N
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari1 are the July 17, 2013 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 97478 which affirmed with modification the January 20, 2009 Decision3 of the Regional Trial Court of Antipolo City, Branch 71 (RTC) in Civil Case No. 97-4386, and the CA's March 28, 2014 Resolution4 denying herein petitioners' Motion for Reconsideration.
Factual Antecedents
As found by the CA, the facts are as follows:
Plaintiff-Appellee Martinez Leyba, Inc. (hereafter Martinez) is a corporation organized and existing under Philippine laws and the registered owner of three (3) contiguous parcels of land situated in Antipolo, Rizal, surveyed and identified as Lot Nos. 29, 30 and 31, Block 3, (LRC) Pcs-7305 and registered under Transfer Certificate of Title Nos. 250212, 25044 and 250243, respectively, with the Register of Deeds of Rizal.
Defendants-Appellants Pen Development Corporation and Las Brisas Resorts Corporation are also domestic corporations duly organized and existing under Philippine laws. Appellants, facreafter, merged into one corporate entity under the name Las Brisas Resmis Corporation (hereafter Las Brisas). Las Brisas is the registered owner of a parcel of land under TCT No. 153101 which is situated adjacent to the lMds owned by Martinez. Las Brisas occupied the said land in 1967 and fenced the same.
In l 968, Martinez noticed that the construction of Las Brisas' fence seemed to encroach on its land. Upon verification by surveyors, Martinez was informed that the fence of Las Brisas overlaps its property. On 11 March 1968, Martinez sent a Letter informing Las Brisas that the fence it constructed encroaches [sic] on Martinez's land and requested Las Brisas to refrain from further intruding on the same. Las Brisa5 did not respond to Martinez's letter and continued developing its land.
Martinez sent two (2) more Letters dated 31 March 1970 and 3 November 1970 to Las Brisas informing the latter of the encroachment of its structures and improvements over Martinez's titled land.
On 31 July 1971, Las Brisas, through a certain Paul Naidas, sent a letter to Martinez, claiming that it 'can not [sic] trace the origin of these titles' (pertaining to Martinez's land).
Martinez sent two (2) Letters to Las Bdsas reiterating its ownership over the land that Las Brisas' improvements h.ave encroached upon. Despite the notices, Las Brisas continued developing its property.
Martinez sought the services of a licensed geodetic engineer to survey the boundaries of its land. The verification survey plan Vs.,Q4,Q0034, which was approved by the Regional Technical Director for Lands of the Department of Environment and Natural Resources (DENR), revealed that the building and improvements constructed by Las Brisas occupied portions of Martinez's lands: 567 square meters of Lot No. 29, Block 3, (LRC) Pcs. 7305; a portion of 1,389 square meters of Lot No. 30, Block 3, (LRC) Pcs.
On 24 November 1994, Martinez sent a letter to Las Brisas demanding the latter to cease and desist from unlawfully holding portions of Martinez's land occupied by Las Brisas structures and improvements. Despite the said demand, no action was taken by Las Brisa.
On 24 March 1997, Martinez filed a Complaint for Quieting of Title, Cancellation of Title and Recovery of Ownership with Damages against Las Brisas before the Regional Trial Court of Antipolo City, docketed as Civil Case No. 97-4386. The case was raffled to, and heard by, Branch 71 thereof x x x.
In its Answer, Las Brisas denied that it encroached on Martinez's land and that it constructed the Las Brisas Resort Complex within the land covered by TCT No. 153101.6
its Complaint,7 Martinez added that Transfer Certificate of Title (TCT) Nos. 250242, 250244 and 250243 (or the Martinez titles - totaling 9,796 square meters )8 emanated from Decree No. 1921 issued by the General Land Registration Office pursuant to Land Registration Case No. 3296, which was transcribed as Original Certificate of Title (OCT) No. 756 by the Register of Deeds of Rizal on August 14, 1915; that Las Brisas "constructed a riprapping on the northern portion of Lot No. 29, a building straddling Lots 30 and 31, and are now constructing a new building on Lot No. 31,"9 which acts constitute an encroachment on lands covered by the Martinez titles; that Las Brisas' s title, TCT 15310110 (TCT 153101), was originally registered on September 14, 1973, under OCT 9311 pursuant to Decree No. N-147380, LRC Case No. N-7993, Rec. No. N-43097; that the encroachment is confirmed per verification survey conducted by a geodetic engineer and approved by the Regional Technical Director for Lands of the Department of Environment and Natural Resources (DENR); and that TCT 153101 thus casts a cloud on the Martinez titles, which must be removed in order to quiet title to the latter.
Las Brisas countered in its Answer11 that it bought the land covered by TCT 153101 (consisting of 3,606 square meters) on May 18, 1967 from Republic Bank; that it took possession thereof in good faith that very same year; and that it is actually Martinez that was encroaching upon its land.
Ruling of the Regional Trial Court
After trial, the RTC issued its Decision dated January 20, 2009, containing the following pronouncement:
To clarify matters, the plaintiff12 engaged the services of Ricardo S. Cruz, a licensed Geodetic Engineer, to plot and verify the plans and technical descriptions to determine the relative geographic positions of the land covered by the titles of plaintiff and defendant.13 This verification survey was approved by the Regional Technical Director of Lands on May 23, 1996, under plan VS-04- 000394. (Exh. T-1, T-2, T-3, T-4, T-5). 'Ibis plan revealed that Psu-234002, in relation to T.C.T. No. 153101 of the defendant overlapped thus:
a. A portion of 567 square meters of Lot No. 29, Block 3, (LRC) Pcs- 7305, covered by plaintiff's T.C.T. No. 250242. This is the portion where the defendant built a riprapping.
b. A portion of 1,389 square meters of Lot No. 30, Block 3, (LRC) Pcs- 7305, covered by plaintiff's T.C.T. No. 250243. This is the portion where the defendant had constructed an old building.
c. A portion of 1,498 square meters of Lot No. 31, Block 3, (LRC) Pcs- 7305, covered by plaintiff's T.C.T. No. 250244. This is the portion where the defendant constructed a new multi-story edifice.
x x x x
The issues sought to be resolved x x x can be read in the respective memorandum [sic] submitted by the parties.
For the plaintiff, the statement of issues are as follows:
1. Whether x x x the Certificate of Title of the defendant overlapped and thus created a cloud on plaintiff T.C.T. Nos. 250242, 250243, 250244, covering lots nos. 29, 30, and 31, block 3 (LRC) PCS-7305, which should be removed under Article 476 of the Civil Code of the Philippines;
2. Whether x x x defendant's T.C.T. No. 153101 should be cancelled insofar as it overlapped Lots 29, 30 and 31, Block 3, (LRC) PCS- 7305;
3. Whether x x x the defendant is a builder in bad faith and is liable for the consequence of his acts;
4. Whether x x x the plaintiff is entitled to collect actual or compensatory and moral damages in the amount of ₱5,000,000.00, exemplary damage in the amount of ₱1,000,000.00, nominal damage in the amount of ₱l,000,000.00, and attorney's fees in the amount of ₱300,000.00, exclusive of appearance fee of ₱3,000.00 per hearing or unferome [sic] attended.
For defendants, the issues presented are:
1. Whether x x x defendant's title over the property is valid and effective;
2. Whether x x x defendant is an innocent purchaser for value;
3. Whether x x x defendant is entitled to reimbursement for expenses in developing the property.
For its evidence in chief, plaintiff presented Nestor Quesada (direct, June 7, 2001; cross July 26, 2001) rested its case on October 4, 2001. Its Formal Offer of Evidence as filed with the Couit on November l 5, 2001 wherein Court Order dated January 15, 2002, Exhibits A to U. inclusive of their submarkings were admitted over the objections of defendant.
The defendant presented Eu:fracia Naidas (direct/cross on July 11, 2004), then rested its case on May 11, 2005, the Formal Offer of Evidence was filed in Court on June 10, 2005 wherein the Court Order dared June 27, 2005, Exhibits 1 to 7 inclusive of submarkings were all admitted over plaintiff's objections.
x x x x
Considering that the defendant has raised the defense of the validity of T.C.T. No. N-21871 of the Registry of Deeds, Marikina (Exhibit 1), and subsequently cancelled by T.C.T. No. 153101 as transferred to the Pen Development Corp. (Exh. 2) and introduced substantial improvements thereon which from the facts established and evidence presented during the hearings of the case it cannot be denied that said title over the property in question is genuine and valid. Moreover, the defendant obtained the property as innocent purchasers for value, having no knowledge of any irregularity, defect, or duplication in the title.
Defendant further argued that there is no proof to plaintiff's claim that it had sent notices and claims to defendant. Assuming that notices were sent to defendant as early as 1968, it took plaintiff almost thirty (30) years to file the action to quiet its title. Therefore, by the principle of laches it should suffer the consequence of its failure to do so within a reasonable period of time. x x x
Defendant, having introduced substantial improvements on the property, if on the ground or assumption that the case will be decided in favor of the plaintiff, that defendant should be, by law, entitled to be reimbursed for the expenses incurred in purchasing and developing the property, the construction cost of the building alone estimated to be Fifty-Five Million Pesos (₱55,000,000.00) x x x.
Defendant also cited Articles 544, 546, 548 of the New Civil Code of the Philippines in further support of its defense.
It is incumbent upon the plaintiff to adduce evidence in support of his complaint x x x. Likewise, the trial shall be limited to the issues stated in the pretrial order.
As earlier stated, the Court shall rule on whether x x x plaintiff has discharged its obligation to do so in compliance with the Rules of Court. Having closely examined, evaluated and passed upon the evidence presented by both the plaintiff and defendant the Court is convinced that the plaintiff has successfully discharged said obligation and is inclined to grant the reliefs prayed for.
Clearly this is a valid complaint for quieting of title specifically defined under Article 476 of the Civil Code and as cited in the cases of Vda. De Angeles v. CA, G.R. No. 95748, November 21, 1996; Tan vs. Valdehuesa, 66 SCRA 61 (1975).
As claimed by the plaintiff, defendant's T.C.T. No. 153101 is an instrument, record or claim which constitutes or casts a cloud upon its T.C.T. Nos. 250242, 250243, and 250244. Sufficient and competent evidence has been introduced by the plaintiff that upon plotting verification of the technical description of both parcels of land conducted by Geodetic Engineer Ricardo Cruz, duly approved by the Regional Technical Director of Lands of the DENR that Psu-234002, covered by defendant's T.C.T. No. 153101 overlapped a portion of 567 square meters of Lot No. 29 x x x, a portion of 1,389 square meter of Lot No. 30 x x x covered by plaintiff's T.C.T. Nos. 250242, 250243and 250244, respectively. Surprisingly, defendant has not disputed nor has it adduced evidence to disprove these findings.
It was likewise established that plaintiffs T.C.T. No[s]. 250242, 250243 and 250244 emanated from O.C.T. No. 756, which was originally registered on August 14, 1915, whereas, from defendant's own evidence, its T.C.T. No. 153101 was derived from O.C.T. No. 9311, which was originally registered on September 14, 1973, pursuant to Decree No. D-147380, in LRC Case No. N- 7993, Rec. No. 43097.
Plaintiffs mother title was registered 58 years ahead of defendant's mother title. Thus, while defendant's T.C.T. No. 153101 and its mother title are apparently valid and effective in the sense that they were issued in consequence of a land registration proceeding, they are in truth and in fact invalid, ineffective, voidable, and unforceable [sic] insofar as it overlaps plaintiffs prior and subsisting titles.
x x x x
In the cases of Chan vs. CA, 298 SCRA 713, de Villa vs. Trinidad, 20 SCRA 1167, Gotian vs. Gaffud, 27 SCRA 706, again the Supreme Court held:
'When two certificates of title are issued to different persons covering the same land, in whole or in part, the earlier in date must prevail and in cases of successive registrations where more than one certificate of title is issued over the same land, the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate. '
x x x x
Article 526 of the Civil Code defines a possession in good faith as 'one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it, and a possession in bad faith as one who possesses in any case contrary to the foregoing.
x x x x
In the case of Ortiz vs. Fuentebella, 27 Phil. 537, the Supreme Court held.
'Thus, where defendant received a letter from the daughter of the plaintiff, advising defendant to desist from planting coconut on a land in possession of defendant, and which letter the defendant answered by saying she did not intend to plant coconuts on the land belonging to plaintiff, it was held that the possession [in] bad faith began from the receipt of such letter.'
A close similarity exists in Fuentebella above cited with the facts obtaining in this case. The pieces evidence [sic] show that while defendant was in good faith when it bought the land from the Republic Bank as a foreclosed property, the plaintiff in a letter dated as early as March 11, 1968 x x x had advised the defendant that the land it was trying to fence is within plaintiff’s property and that the defendant should refrain from occupying and building improvements thereon and from doing any act in derogation of plaintiff's property rights. Six other letters followed suit x x x. The records show that defendant received these letters but chose to ignore them and the only communication in writing from the defendant thru Paul Naidas was a letter dated July 31, 1971, stating that he (Naidas) was all the more confused about plaintiff's claim to the land. The defendant cannot dispute the letters sent because it sent a response dated July 31, 1970. It is very clear that while defendant may have been [in] good faith when it purchased the land from Republic Bank on December 6, 1977, such good faith ceased upon being informed in writing about plaintiff's title or claim over the same land, and, worse, it acted with evident bad faith when it proceed [sic] to build the structures on the land despite such notice.
Consequently, the rule on the matter can be found in Articles 449, 450 of the Civil Code of the Philippines which provide:
'Article 449. - He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. "
Article 450. - The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed, or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.'
In the case of Tan Queto vs. CA, 122 SCRA 206, the Supreme Court held:
'A builder in bad faith loses the building he builds on another's property without right of refund, 'x x x
x x x x
As to defendant's claim that they had obtained title to the property as innocent purchasers for value, lack of knowledge of any irregularity, effect or duplication of title, they could have discovered the overlapping had they only bothered to engage a licensed geodetic engineer to check the accuracy of their plan Psu-234002. To that extent, defendant has failed to exercise the diligence to be entitled to the status as an innocent purchaser for value. It was clearly established that defendant's certificate of title emanated from a mother title that partially overlapped the plaintiff's prior and subsisting title. Hence, defendant's certificate of title is void abinittio [sic] insofar as the overlapped areas are concerned.
Defendant's claim of lack of notice on the claim of the plaintiff on the overlapped properties is belied by the evidence presented by plaintiff which consisted by [sic] a letter dated as early as March 11, 1968 (Exh. N, N-1, N-2) advising defendant that the land it was trying to fence of [sic] is within plaintiff's property, and at the same time asking the defendant to refrain from occupying and building improvements thereon and from doing any act in derogation of plaintiff's property rights. Five (5) succeeding let1ers addressed to defendant
followed suit and the evidence clearly show that the san1e were received by defendant and no less than Paul Naidas wrote a reply letter to plaintiff's counsel, Alfonso Roldan on July 31, 1971 which conclusively affi1m the fact that defendant is well aware of plaintiffs claim to the portion of the land encroached. Thus, the defendant's claim that it is a builder in good faith finds no factual nor legal basis. On the contrary, the defendant's continued construction and introduction of improvements on the questioned portion of plaintiff's property clearly negates good faith.
The claim for damages prayed for by plaintiff as a result of defendant's obstinate refusal to recognize [the] plaintiff's title to the land insofar as the encroachments were made and to turn over the possession thereof entitles the plaintiff to the award of moral, exemplary damages and attorney's fees. However, since no sufficient evidence was presented that the plaintiff suffered actual damages, the Court cannot award any pursuant to [Article] 2199 of the New Civil Code of the Philippines.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against 1he defendant as follows:
1. Quieting its T.C.T. Nos. 250242, 240243 and 250[2]44, and removing the clouds thereon created by the issuance of T.C.T. No. 153101 insofar as the said titles are overlapped by the T.C.T. No. : 153101;
2. Ordering the cancellation or annulment of portions of T.C.T. No. 153101 insofar as it overlaps plaintiff's T.C.T. No. 250242, to Lot 29, Block 3, (LRC) Pcs-7305; plaintiff's T.C.T. No. 250243 to Lot 30, Block 3 (LRC) Pcs- 7305; and plaintiff's [TCT] No. 250244 to Lot 31, Block 3, (LRC) Pcs-7305;
3. Ordering the defendant to vac1.ite and turn over the possession of said portions in favor of the plaintiff: and to remove the building or structures it has constructed thereon at its own expense without right to indemnity [therefor]; to allow the plaintiff to appropriate what the defendant has built or to compel the defendant to pay for the value of the land encroached upon;
4. Ordering the defendant to pay moral damages to the plaintiff in thy amount of ₱ 1,000,000.00; exemplary damages in the amount of ₱1,000,000.00 and attorney's fees in 1he amount of ₱100,000.00.
5. Ordering the defendant to pay for the cost of suit.
SO ORDERED.14
Petitioners filed a joint Motion for Reconsideration.15 However, in an August 7, 2009 Order,16 the RTC held its ground.
Ruling of the Court of Appeals
Petitioners interposed an appeal before the CA, docketed as CA-G.R. CV No. 97478. They argued that the trial court erred in- giving probative value to respondent's documentary evidence despite its hearsay character; that the trial court erred in declaring them builders in bad faith; that the respondent is guilty of laches; and that the lower court erred in awarding damages to respondent.
On July 17, 2013, the CA rendered the assailed Decision declaring as follows:
The appeal fails.
Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individual's personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.
Article 528 of the New Civil Code provide that possession acquired in good faith does not lose 1his character, except in a case and from the moment facts exist which show 1hat the possessor is not unaware that he possesses the thing improperly or wrongfully. Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defect of his title or mode of acquisition, it must be considered sufficient to show bad faith.
In the instant case, as early as 1968, Martinez sent several letters to Las Brisas informing the latter of Martinez's Ownership over the land covered by TCT Nos. 250242, 250243 and 250244 and that the buildings and improvements Las Brisas made have encroached on the said property. In the Letter dated 11 March 1968, Martinez informed Las Brisas that the latter's fence had overlapped into the former's land and requested that Las Brisas refrain from entering Martinez's property. However, Las Brisas did not heed Martinez's demand and continued developing its property. Martinez sent six (6) more letters to Las Brisas reiterating that the latter's structures and improvements encroached on Martinez land. Records show that Las Brisas received these notices and in fact, made a reply to one of Martint1z's letters. Clearly, Las Brisas was informed on several occasions about Martinez's title x x x over its land and, despite such notices, Las Brisas chose to ignore Martinez's demand and continued constructing other buildings and improvements that intruded into Martinez's property. Hence, Las Brisas cannot claim that it had no knowledge of the defects of its title and, consequently, cannot be considered in good faith.
Neither did Las Brisas bother to have its property surveyed in order to discover, for its own benefit, the actual boundaries of its land (TCT No. 153101). It is doctrinal in land registration law that possession of titled property adverse to the registered owner is necessarily tainted with bad faith. Thus, proceeding with the construction works on the overlapped portions of TCT Nos. 250242, 250243 and 250244 despite knowledge of Martinez's ownership thereof puts Las Brisas in bad faith.
Las Brisas further argues that Martinez is guilty of laches as it failed to assert its right over the encroached portions of TCT Nos. 250242, 250243 and 250244 within reasonable time.
We disagree.
x x x x
Furthermore, Martinez is the registered owner of TCT Nos. 250242, 250243 and 250244 (and, as such, its right to demand to recover the portions thereof encroached by Las Brisas is never barred by laches. In the case of Arroyo vs. Bocage Inland Dev't Corp., the Supreme Court held:
'As registered owners of the lots in question, the private respondents have a right to eject any person illegally occupying their property. This right is in1prescriptible. Even if it be supposed that they were aware of the petitioners' occupation of the property, and regardless of the length of that possession, the lawful owners have right to demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all. This right is never barred by laches.'
Las Brisas argues that the court a quo erred in admitting Martinez's Relocation Survey of tot Nos. 28, 29 and 30 and the Verification Plan Vs-04-00394 as they constitute hearsay evidence and as such are inadmissible.
We are not persuaded.
It bears noting that this issue of hearsay evidence was raised for the first time on appeal. It is a fundamental rule that no question will be entertained on appeal unless it has been raised below Stated differently, issues of fact and arguments not adequately brought to the attention of the lower courts will not be considered by the reviewing courts as they cannot be raised for the first time on appeal. An issue, which was neither averred in the complaint nor raised during the trial in the lower courts, cannot be raised for the first time on appeal because it would be offensive to the basic rule of fair play and justice, and would be violative of the constitutional right to due process of the other party. In fact, the determination of issues at the pre-trial bars consideration of other issues or questions on appeal,
In this case, Las Brisas failed to raise this argument during pre-trial and in the trial proper. Las Brisas even failed to [raise] its objection during Martinez's fom1al offer of evidence. Clearly, Las Brisas waived its right to object on [sic] the admissibility of Martinez's evidence. Thus, We cannot bend backwards to examine this issue raised by Las Brisas at this late stage of the proceedings as it would violate Martinez's right to due process and should thus be disregarded.
Anent the award of moral damages of Php1,000,000.00 and exemplary damages of Php1,000,000.00, We find the same without factual or legal basis.
A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering, or such sentiment as wounded feelings, serious anxiety, mental anguish or moral shock. While the courts may allow the grant of moral damages to corporations in exceptional situations, it is not automatically granted because there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendant's acts. Moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty 0n the wrongdoer. In this case, We find no evidence that Martinez suffered besmirched reputation on account of the Las Brisas encroachment on Martinez's land. Hence, the award of moral damages should be deleted.
Neither is Martinez entitled to exemplary damages. Exemplary damages may only be awarded if it has been shown that wrongful act was accompanied by bad faith or done in a wanton, fraudulent and reckless or malevolent manner. Exemplary damages are allowed only in addition to moral damages such that no exemplary damage can be awarded unless the claimant first establishes his clear right to moral damages. As the moral damages are improper in the instant case, so is the award of exemplary damages.
Nevertheless, an award of nominal damages of Php100,000.00 is warranted since Las Brisas violated the property rights of Martinez. The New Civil Code provides:
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff; which has been violated or invaded by the defendan4 may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded.
The award of damages is also in accordance with Article 451 of the New Civil Code which states that the landowner is entitled to damages from the builder in bad faith.
WHEREFORE, the Decision dated 20 January 2009 of the Regional Trial Court of Antipolo City, Branch 71, in Civil Case No. 97-4386 is AFFIRMED with MODIHCATION, as follows:
1.) deleting the award of moral damages and exemplary damages to Martinez Leyba, Inc.; and
2.) ordering Las Brisas Resort Corporation to pay Martinez Leyba, Inc., Php 100,000.00, as nominal damages.
SO ORDERED.17 (Citations omitted)
Petitioners sought to reconsider, but were rebuffed. Hence, the present Petition.
Issues
In a June 15, 2015 Resolution,18 this Court resolved to give due course to the Petition, which contains the following assignment of errors:
A. THE HONORALBE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT PETITIONER IS A POSSESSOR/BUILDER IN BAD FAITH.
B. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT THE RESPONDENT INCURRED LACHES IN ENFORCING ITS PUTATIVE RIGHTS.
C. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT THE ISSUE ON HEARSAY CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL.19
Petitioners' Arguments
In praying that the assailed CA and trial court dispositions be set aside and that Civil Case No. 97-4386 be dismissed instead, petitioners argue in their Petition and Reply20 that they are not builders in bad faith; that in constructing the improvements subject of the instant case, they merely relied on the validity and indefeasibility of their title, TCT 153101; that until their title is nullified and invalidated, the same subsists; that as builders in good faith, they are entitled either to a) a refund and reimbursement of the necessary expenses, and full retention of the land until they are paid by respondent, or b) removal of the improvements without damage to respondent's property; that contrary to the CA's pronouncement, respondent may be held accountable for laches in filing a case only after the lapse of thirty years; and that the Survey Plan of Lots 29, 30 and 31 and the Verification Survey Plan Vs-04-000394 are inadmissible in evidence for being hearsay, as they were not authenticated in court.
Respondent's Arguments
Respondent, on the other hand, counters in its Comment21 that the CA is correct in declaring that petitioners are possessors and builders in bad faith; that while petitioners may have been innocent purchasers for value, they were not possessors and builders in good faith because despite having been regularly informed in writing that they encroached on respondent's land and are building illegal structures thereon, they continued with their illegal occupation and construction; that under the Civil Code, petitioners are not entitled to retention or reimbursement for being bi1ilders in bad faith; that the principle of laches does not apply against owners of land registered under the Torrens system of land registration; and that petitioners cannot be allowed to argue for the first time on appeal that the pieces of documentary evidence it presented before the trial court are hearsay.
Our Ruling
The Court denies the Petition.
Under the Manual on Land Survey Procedures of the Philippines, on Verification Surveys, particularly, it is provided, thus:
Section 146. The Regional Technical Director for Lands may issue order to conduct a verification survey whenever any approved survey is reported to be erroneous, or when titled lands are reported to overlap or where occupancy is reported to encroach another property. xxx
x x x x
Section 149. All survey work undertaken for verification purposes shall be subject of verification and approval in the DENR~LMS Regional Office concerned and shall be designated as Verification Surveys (Vs). x x x
Pursuant to these provisions, respondent caused its property to be surveyed, and on May 23, 1996, the Regional Technical Director of Lands approved the verification survey under Verification Survey Plan Vs-04-000394.22 This Verification Survey Plan revealed that petitioners encroached on respondent's land to the following extent:
a. A portion of 567 square meters of Lot No. 29, Block 3, (LRC) Pcs-7305, covered by respondent's TCT-250242. This is the portion where the petitioners built a riprapping.
b. A p01tion of 1,389 square meters of Lot No. 30, Block 3, (LRC) Pcs-7305, covered by respondent's TCT 250243. This is the portion where the petitioners had constructed an old building.
c. A portion of 1,498 square meters of Lot No. 31, Block 3, (LRC) Pcs7305, covered by respondent's TCT 250244. This is the portion where the petitioners constructed & new multi-story edifice.
On this basis, respondent filed Civil Case No. 97·"4386. Respondent's main evidence is the said Verification Survey Plan V s-04-000394, which is a public document. As a public document, it is admissible in evidence even without further proof of its due execution and genuineness,23 and had in its favor the presumption of regularity. To contradict the same, there must be evidence that is clear, convincing and more than merely preponderant, otherwise the document should be upheld,24 The certification and approval by the Regional Technical Director of Lands signifies the technical correctness of the survey plotted in the said plan."25
On the other hand, petitioners' evidence consists mainly of the claim that their TCT 153101 is a valid title and that they purchased the land covered by it in good faith and for value. They did not present evidence to contradict respondent's Verification Survey Plan VS-Q4-000394; in other words, no evidence was presented to disprove respondent's claim of overlapping. Their evidence only goes so far as proving that they acquired the land covered by TCT 153101 in good faith. However, while it may be true that they acquired TCT 153101 in good faith and for value, this does not prove that they did not encroach upon respondent's lands.
In effect, respondent's Verification Survey Plan Vs-04-000394 remains unrefuted. Petitioners' sole objection to this piece of evidence that it was not authenticated during trial is of no significance considering that the said documentary evidence is a public document.
Although "[i]n overlapping of titles disputes, it has always been the practice for the [trial] court to appoint a surveyor from the government land agencies [such as] the Land Registration Authority or the DENR to act as commissioner,"26 this is not mandatory procedure; the trial court may rely on the parties' respective evidence to resolve the case.27 In this case, respondent presented the results of a verification survey conducted on its lands. On the other hand, petitioners did not present proof like the results of a survey conducted upon their initiative to contradict respondent's evidence; nor did they move for the appointment by the trial court of government or private surveyors to act as commissioners. Their sole defense is that they acquired their land in good faith and for value; but this does not squarely address respondent's claim of overlapping.
For the RTC and CA, respondent's undisputed evidence proved its claim of overlapping. This Court agrees. As a public document containing the certification and approval by the Regional Technical Director of Lands, Verification Survey Plan Vs-Q4-000394 can be relied upon as proof of the encroachment over respondent's lands. More so when petitioners could not present contradictory proof.
On the issue of being a builder in had faith, there is no question that petitioners should be held liable to respondent for their obstinate refusal to abide by the latter's repeated demands to cease and desist from continuing their construction upon the encroached area. Petitioners' sole defense is that they purchased their property in good faith and for value; but this does not squarely address the issue of encroachment or overlapping. To repeat, while petitioners may have been innocent purchasers for value with respect to their land, this does not prove that they are equally innocent of the claim of encroachment upon respondent's lands. The evidence suggests otherwise: despite being apprised of the encroachment, petitioners turned a blind eye and deaf ear and continued to construct on the disputed area. They did not bother to conduct their own survey to put the issue to rest, and to avoid the possibility of being adjudged as builders in bad faith upon land that did not belong to them.
Under the Civil Code,
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.
Art. 450. Tue owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the builder planter or sower.
Moreover, it has been declared that
The right of the owner of the land to recover damages from a builder in bad faith is clearly provided for in Article 451 of the Civil Code. Although said Article 451 does not elaborate on the basis for damages, the Court perceives that it should reasonably correspond with the value of the properties lost or destroyed as a result of the occupation in bad faith, as well as the fruits (natural, industrial or civil) from those properties that the owner of the land reasonably expected to obtain. x x x28
For their part, petitioners are not entitled to reimbursement for necessary expenses. Indeed, under Article 452 of the Civil Code,29 the builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land. However, in this case, respondent's lands were not preserved: petitioners' construction and use thereof in fact caused dan1age, which must be undone or simply endured by respondent by force of law and circumstance. Respondent did not in any way benefit from petitioners' occupation of its lands.
Finally, on the question of laches, the CA correctly held that as owners of the subject property, respondent has the imprescriptible right to recover possession thereof from any person illegally occupying its lands. Even if petitioners have been occupying these lands for a significant period of time, respondent as the registered and lawful owner has the right to demand the return thereof at any time.
Jurisprudence consistently holds that ‘prescription and laches cannot apply to registered land covered by the Torrens system' because 'under the Property Registration Decree, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.’30
Under Section 47 of the Property Registration Decree, or Presidential Decree No. 1529, "(n)o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession."
WHEREFORE, the Petition is DENIED. The July 17, 2013 Decision and March 28i 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 97478 are AFFIRMEDin toto.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
MARIA LOURDES P.A. SERENO
Associate Justice
Chairperson
I join the Concurring and Dissenting
Opinion of Justice Caguioa
TERESITA J. LEONARDO-DE CASTRO
Associate Justice |
ESTELA M. PERLAS-BERNABE
Associate Justice |
See dissenting opinion
ALFREDO BENJAMIN S. CAGUIOA
Associate Justice
C E R T I F I C A T I O N
Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
MARIA LOURDES P.A. SERENO
Chief Justice
Footnotes
1 Rollo, pp. 11-40.
2 Id. at 42-52; penned by Associate Justice Jane Aurora C. Lantion and concurred in by Associate Justices Vicente S.E. Veloso and Eduardo B. Peralta, Jr.
3 Id. at 198-207; penned by Assisting Judge Armando A. Yanga.
4 Id. at 81-82.
5 Id. at 53-62.
6 Id. at 43-45.
7 Id. at 91-99.
8 Id. at 113-115.
9 Id. at 92.
10 Id. at 166-167.
11 Id. at 100-104.
12 Martinez.
13 Las Brisas.
14 Rollo, pp. 200-207.
15 Id. at 208-222.
16 Id. at 245-251.
17 Id. at 46-52.
18 Id. at 425-426,
19 Id. at 17-18.
20 Id. at 405-411.
21 Id. at 369-387.
22 Annex "E," records, p, 13,
23 Iwasawa v. Gangan, 717 Phil. 825, 830(2013).
24 Ladignon v. Court of Appeals, 390 Phil. 1161, 1 In (2000).
25 Republic v. Dayaoen, G.R. No. 200773, July 8, 2015, 762 SCRA 310, 337.
26 Cambridge Realty and Resources Corporation v. Eridanus Development, Inc., 579 Phil. 375, 395-396 (2008).
27 Id.
28 Heirs of Durano, Sr. v. Spouses Uy, 398 Phil. 125, 155 (2000).
29 Art. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.
30 Spouses Ocampo v. Heirs of Bernardino U Dionisio, 744 Phil. 716, 730 (2014), citing Jakosalem v. Barangan, 682 Phil. 130, 142 (20 l2).
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