FIRST DIVISION
[ G.R. No. 222166, June 10, 2020 ]
MERCEDES S. GATMAYTAN AND ERLINDA V. VALDELLON, PETITIONERS, VS. MISIBIS LAND, INC., RESPONDENT.
DECISION
CAGUIOA, J:
The Case
This is a petition for review on certiorari1 (Petition) filed under Rule 45 of the Rules of Court against the following orders issued by the Regional Trial Court (RTC) of Tabaco City, Branch 15 in Civil Case No. T-2820:
1. Order2 dated October 22, 2015 (First RTC Order) dismissing the complaint filed by petitioners Mercedes S. Gatmaytan and Erlinda V. Valdellon (Petitioners) on the ground of prescription and lack of jurisdiction; and
2. Order3 dated December 28, 2015 (Second RTC Order) denying Petitioners' motion for reconsideration.
The Facts
On December 9, 1991, Petitioners purchased from Oscar and Cidra Garcia (Spouses Garcia) a parcel of land (disputed lot) in Misibis, Cagraray Island, Albay with an area of 6.4868 hectares, covered by Transfer Certificate of Title (TCT) No. T-77703 issued in the latter's name. Petitioners paid the taxes arising from the transaction.4
On April 6, 1992, Petitioners, armed with the original owner's duplicate copy of TCT No. T-77703, attempted to register the corresponding Deed of Absolute Sale dated December 9, 1991 (1991 DOAS) with the Register of Deeds of Albay (RD). They were successful in having the 1991 DOAS duly annotated on TCT No. T-77703, but they were not able to cause the transfer of the Torrens title in their name since they lacked the Department of Agrarian Reform (DAR) clearance necessary to do so.5
In 2010, when Petitioners resumed processing the transfer of the Torrens title to their names, they discovered that the disputed lot had been consolidated by Misibis Land, Inc. (MLI) with other adjoining lots in Misibis, and sub-divided into smaller lots covered by several new Torrens titles.6
Upon further investigation, Petitioners learned that TCT No. T-77703 had been stamped "cancelled", and replaced by subsequent Torrens titles issued on the basis of the following transactions:7
| Date |
Transaction |
Parties |
Resulting Titles |
| February 21, 1996 |
Deed of Absolute Sale (1996 DOAS) |
Spouses Garcia as sellers and DAA Realty Corporation (DAA Realty) as buyer |
TCT No. T-97059 issued on February 22, 1996 |
| April 21, 2005 |
Deed of Absolute Sale (2005 DOAS) |
DAA Realty as seller and MLI as buyer |
TCT No. T-138212 |
With this discovery, Petitioners immediately caused, on September 1, 2010, the annotation of their Affidavit of Adverse Claim on MLI's Torrens titles.8
On December 10, 2014, Petitioners filed a complaint before the RTC (Complaint) against Spouses Garcia, DAA Realty and MLI, as well as Philippine National Bank (PNB) to whom the disputed lot had been mortgaged.9
In their Complaint, Petitioners stated their causes of action, as follows:
FIRST CAUSE OF ACTION
(For: Declaration of Plaintiffs' Ownership and Nullity of the [1996 DOAS,] [2005 DOAS] and [the April 21, 2005 MLI-PNB Mortgage])10
x x x x
FIRST ALTERNATIVE CAUSE OF ACTION
(Re: Declaration of Nullity Based on Double Sale (sic) of [the 1996 DOAS] and TCT Nos. T-97059 and T-138212 and Any and All Transfers and Dealings Thereafter)11
x x x x
SECOND ALTERNATIVE CAUSE OF ACTION
(For: Quieting of Title)12
x x x x
SECOND CAUSE OF ACTION
(For: Accounting and Remittance, if any, of [a]ll [of MLI's] Income and Profits vis-a-vis the [disputed lot])13
x x x x
THIRD CAUSE OF ACTION
(For: Exemplary Damages)14
x x x x
FOURTH CAUSE OF ACTION
(For: Moral Damages)15
x x x x
FIFTH CAUSE OF ACTION
(For Attorney's Fees and Litigation Expenses)16
Based on these causes of action, Petitioners prayed for the following reliefs:
1. The declaration of Petitioners as true and rightful owners of the disputed lot;17
2. The nullification of the 1996 DOAS and all subsequent transactions involving the disputed lot for being void ab initio;18
3. The cancellation of TCT Nos. T-97059 and T-138212 respectively issued in the name of DAA Realty and MLI, and the subsequent issuance of a Torrens title in Petitioners' name;19
4. A full and complete accounting and remittance of all profits and income derived by MLI from the use of the disputed lot;20 and
5. The payment of moral and exemplary damages, and attorney's fees at the rate of Php500,000.00 each.21
In its Answer,22 MLI claimed, among others, that it was an innocent purchaser for value since it relied on DAA Realty's TCT No. T-97059 which did not bear any defects.23
MLI further argued in its Answer that Petitioners' cause of action is already barred by prescription since an action for reconveyance of real property based on an implied constructive trust arising from fraud prescribes ten (10) years after the issuance of title in favor of the defrauder. Here, MLI stressed that the Complaint was filed in 2014, or more than ten (10) years after the issuance of DAA Realty's Torrens title in 1996.24
Based on the records, DAA Realty did not file any pleading before the RTC.
Finding merit in MLI's assertions, the RTC issued the First RTC Order dismissing the Complaint on the ground of prescription of action and failure to pay the correct docket fees.25 Petitioners' subsequent motion for reconsideration was also denied through the Second RTC Order.26
Petitioners received a copy of the Second RTC Order on January 14, 2016.27
On January 28, 2016, Petitioners filed a Motion for Extension of Time to File Petition for Review on Certiorari28 (Motion for Extension). In the body of the Motion for Extension, Petitioners prayed for an additional period of fifteen (15) days from January 14, 2016, or until January 29, 2016 within which to file their petition for review. However, under the caption "Relief", Petitioners prayed for an additional period of thirty (30) days from January 29, 2016 or until February 28, 2016 to file said petition for review.29
On February 24, 2016, this Petition was filed.30
On April 18, 2016, the Court issued a Resolution31 (April 2016 Resolution) denying the Petition, thus:
Considering the allegations, issues and arguments adduced in the petition for review on certiorari assailing the Orders dated [October 22, 2015 and December 28, 2015 of the Regional Trial Court of Tabaco City, Br. 15 in Civil Case No. T-2820, the Court resolves to DENY the petition for failure to sufficiently show any reversible error in the assailed orders to warrant the exercise of this Court's discretionary appellate jurisdiction in this case.
Moreover, the petition failed to strictly comply with the requirements specified in Rule 45 and other related provisions of the 1997 Rules of Civil Procedure, as amended, as the petition lacks: (1) a verified statement of the material date of receipt of the assailed order in accordance with Sections 4 (b) and 5, Rule 45 in relation to Section 5 (d), Rule 56 of the Rules; and (2) a proper verification in accordance with Section 1, Rule 45 in relation to Section 4, Rule 7, and a valid certification of non-forum shopping in accordance with Section 5, Rule 7 of the Rules, the attached verification and certification against forum shopping having been signed by Mercedes S. Gatmaytan without the proof of authority to sign for her co-petitioner.32
Petitioners received the Court's April 2016 Resolution on May 30, 2016.33
On June 14, 2016, Petitioners filed a Motion for Reconsideration,34 praying that the Court take a "second hard look" on the merits of the Petition.
Subsequently, Petitioners filed an Urgent Motion to Refer the Case to the Supreme Court En Banc35 (Motion to Refer), claiming that the Court's April 2016 Resolution deviates from the settled doctrine that "an incidental action for cancellation or nullification of a 'certificate of title' with the declaration of nullity of a deed of sale does not convert the latter to an action for 'reconveyance'", and that such action remains incapable of pecuniary estimation.36 Petitioners added that the Petition presents a novel question of law which will have a far reaching impact on future litigation.37
On August 22, 2016, the Court issued a Resolution38 granting the Motion for Reconsideration. Thus, the Petition was reinstated and respondent MLI was directed to file its comment thereto. However, the Court denied Petitioners' Motion to Refer for lack of merit.39
MLI filed its Comment40 on October 24, 2016, to which Petitioners filed their Reply.41
Here, Petitioners mainly argue that their Complaint should be allowed to proceed since it is an action "primarily for [the] declaration of nullity of the [1996 DOAS],"42 and alternatively, for quieting of title.43
The Issue
The sole issue for the Court's resolution is whether Petitioners' Complaint should be allowed to proceed for trial on the merits.
The Court's Ruling
The Court grants the Petition.
Section 2, Rule 8 of the Rules of Court permits the assertion of alternative causes of action, thus:
SEC. 2. Alternative causes of action or defenses. — A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one cause of action or defense or in separate causes of action or defenses. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. (Emphasis and underscoring supplied)
Section 2, Rule 8 allows parties to plead as many separate claims as they may have, provided that no rules regarding venue and joinder of parties are violated.44 A complaint which contains two or more alternative causes of action cannot be dismissed where one of them clearly states a sufficient cause of action against the defendant.45 This is hornbook law.
In determining the sufficiency of the Complaint and whether it should be allowed to proceed to trial, analysis of each alternative cause of action alleged is necessary, as the sufficiency of one precludes its outright dismissal.
Reconveyance based on the nullity of
the 1996 DOAS in favor of DAA
Realty
An action for reconveyance is a legal remedy granted to a rightful owner of land wrongfully or erroneously registered in the name of another to compel the latter to reconvey the land to him.46 In reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property, which has been wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or to one with a better right.47
In Uy v. Court of Appeals,48 the Court expounded on the statutory basis of reconveyance, the two kinds of actions for reconveyance (as distinguished by their underlying basis), and the prescriptive periods applicable to each, thus:
An action for reconveyance is based on Section 53, paragraph 3 of Presidential Decree (PD) No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder for value of a certificate of title. x x x
In Caro v. Court of Appeals, we said that this provision should be read in conjunction with Article 1456 of the Civil Code, which provides:
Article 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.
The law creates the obligation of the trustee to reconvey the property and its title in favor of the true owner. Correlating Section 53, paragraph 3 of PD No. 1529 and Article 1456 of the Civil Code with Article 1144 (2) of the Civil Code, the prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the certificate of title. This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land. An exception to this rule is when the party seeking reconveyance based on implied or constructive trust is in actual, continuous and peaceful possession of the property involved. Prescription does not commence to run against him because the action would be in the nature of a suit for quieting of title, an action that is imprescriptible.
The foregoing cases on the prescriptibility of actions for reconveyance apply when the action is based on fraud, or when the contract used as basis for the action is voidable. Under Article 1390 of the Civil Code, a contract is voidable when the consent of one of the contracting parties is vitiated by mistake, violence, intimidation, undue influence or fraud. When the consent is totally absent and not merely vitiated, the contract is void. An action for reconveyance may also be based on a void contract. When the action for reconveyance is based on a void contract, as when there was no consent on the part of the alleged vendor, the action is imprescriptible. The property may be reconveyed to the true owner, notwithstanding the TCTs already issued in another's name. The issuance of a certificate of title in the latter's favor could not vest upon him or her ownership of the property; neither could it validate the purchase thereof which is null and void. Registration does not vest title; it is merely the evidence of such title. Our land registration laws do not give the holder any better title than what he actually has. Being null and void, the sale produces no legal effects whatsoever.
Whether an action for reconveyance prescribes or not is therefore determined by the nature of the action, that is, whether it is founded on a claim of the existence of an implied or constructive trust, or one based on the existence of a void or inexistent contract. This is evident in several of our past decisions. In Casipit v. Court of Appeals, we rejected the claim of imprescriptibility and applied the 10-year prescription where the action filed was based on fraud:
There is no dispute that an action for reconveyance based on a void contract is imprescriptible x x x. However, We simply cannot apply this principle to the present case because the action filed by petitioner before the trial court was 1) for reconveyance based on fraud since the ownership of private respondents over the questioned property was allegedly established on "false assertions, misrepresentations and deceptive allegations" x x x; and 2) for rescission of the "Kasulatan ng Pagmamana at Paghahati x x x." x x x
On the other hand, in Daclag v. Macahilig, we rejected the claim of petitioners that prescription is applicable because the action was based on fraud. We ruled that the action was not subject to prescription because it was, in fact, based on a deed of sale that was null and void. Thus:
However, a review of the factual antecedents of the case shows that respondents' action for reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was not the owner of the land she sold to petitioners, and the one-half northern portion of such land was owned by respondents. Being an absolute nullity, the deed is subject to attack anytime, in accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not prescribe. x x x An action for reconveyance based on a void contract is imprescriptible. As long as the land wrongfully registered under the Torrens system is still in the name of the person who caused such registration, an action in personam will lie to compel him to reconvey the property to the real owner. x x x
In Santos v. Heirs of Dominga Lustre, the complaint alleged that the deed of sale was simulated by forging the signature of the original registered owner.1âшphi1 We ruled in favor of imprescriptibility applying the doctrine that the action for reconveyance on the ground that the certificate of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration of its nullity, which does not prescribe.49 (Emphasis and underscoring supplied; italics and citations omitted)
Proceeding from the foregoing, Petitioners' action should be characterized primarily as one for reconveyance based on a void contract, and thus, imprescriptible. This is evident from the following allegations of the Complaint with respect to the 1996 DOAS:
1.8 This feigned second sale by the Spouses [Garcia] purportedly to DAA Realty was downright void, ineffective and fraudulent in that:
(a) By virtue of [Petitioners'] prior purchase, the Spouses [Garcia] had no more title, hence could not validly sell the subject property to DAA Realty.
(b) On its face, the purported signature of [Cidra Garcia] in the [1996 DOAS] appears even to the naked eye, to be forged and/or falsified for which [DAA Realty and MLI] as beneficiaries are prima facie presumed to be the forgers.
(c) Per its SEC Articles of Incorporation x x x DAA Realty appears to have been incorporated only on [January 22, 1999, or three (3) years after its purported second purchase of the subject property on [February 21, 1996.
(d) On top of all (sic), based on [Petitioners'] clear and subsisting annotation as early as [April 6, 1992 under Entry No. 4145 of their prior purchase on both the original RD Albay and Spouses [Garcia's] Owner's copy of TCT No. T-77703, [DAA Realty] and MLI, being real estate companies reposed with a higher degree of prudence, due care and utmost diligence, very well knew or ought to have known, directly or indirectly as to put them on due notice or inquiry, about [Petitioners'] prior purchase thereof from Spouses [Garcia].
(e) This is especially so since the Spouses [Garcia's] Owner's Copy of TCT No. T-77703 was, at all time to date, in the actual possession and control of [Petitioners] upon their purchase from [Spouses Garcia]. That said, x x x DAA Realty and MLI could not have possibly obtained a new TCT in DAA Realty's name without possessing and surrendering the Owner's copy of the Spouses [Garcia's] TCT No. T-77703 to the RD Albay. The Spouses [Garcia's] failure to surrender their Owner's Copy of TCT No. [T-]77703 makes MLI and DAA Realty purchaser[s] in bad faith vis-a-vis [Petitioners].50
In essence, Petitioners assert that the 1996 DOAS is void and inexistent, as: (i) the purported sellers were no longer the owners of the disputed lot at the time of execution; (ii) the signature of one of the sellers therein had been forged; and (iii) the buyer-corporation was legally inexistent at the time of execution.
Here, recovery of ownership is not restricted to the mere fact that a Torrens title had been issued in favor of DAA Realty, and later, MLI. The above allegations show that the recovery of ownership is predicated on the nullification of the underlying mode of transfer of title of the disputed lot — the issuance of the Torrens titles to DAA Realty and then to MLI being merely the result of the 1996 DOAS sought to be nullified.
While the Complaint admittedly alleged fraud on the part of DAA Realty and MLI, this allegation of fraud was essential in attacking the Torrens titles resulting from the underlying transactions in question — the 1996 DOAS in favor of DAA Realty, and subsequently, the 2005 DOAS in favor of MLI.
Here, Petitioners allege in their Complaint that the owner's duplicate title of Spouses Garcia was surrendered to them upon the execution of the 1991 DOAS,51 and that because such owner's duplicate title never left their possession, DAA Realty's Torrens title was necessarily issued in violation of Section 53 of PD 152952 which sets forth the requirements for registration of voluntary instruments affecting registered land, thus:
SEC. 53. Presentation of owner's duplicate upon entry of new certificate. – No voluntary instrument shall be registered by the Register of Deeds, unless the owner's duplicate certificate is presented with such instrument, except in cases expressly provided for in this Decree or upon order of the court, for cause shown.
The production of the owner's duplicate certificate, whenever any voluntary instrument is presented for registration, shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith.
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder for value of a certificate of title. After the entry of the decree of registration on the original petition or application, any subsequent registration procured by the presentation of a forged duplicate certificate of title, or a forged deed or other instrument, shall be null and void. (Emphasis and underscoring supplied)
In addition, both DAA Realty and MLI may be deemed to have been constructively notified of the 1991 DOAS in favor of Petitioners, as it was duly annotated on Spouses Garcia's TCT No. T-77703. Hence, contrary to MLI's assertions, it may not be considered an innocent purchaser for value in this case.
It must be noted that MLI filed a Motion for Preliminary Hearing on Affirmative Defenses53 (Motion for Preliminary Hearing) invoking the defenses of prescription and lack of jurisdiction for failure of Petitioners to allege in their Complaint the assessed value of the disputed lot.54 In asserting these affirmative defenses, MLI hypothetically admitted the material allegations in Petitioners' Complaint, pursuant to Section 5, Rule 6 of the Rules of Court, thus:
SEC. 5. Defenses. — Defenses may either be negative or affirmative.
(a) A negative defense is the specific denial of the material fact or facts alleged in the pleading of the claimant essential to his cause or causes of action.
(b) An affirmative defense is an allegation of a new matter which, while hypothetically admitting the material allegations in the pleading of the claimant, would nevertheless prevent or bar recovery by him. The affirmative defenses include fraud, statute of limitations, release, payment, illegality, statute of frauds, estoppel, former recovery, discharge in bankruptcy, and any other matter by way of confession and avoidance. (Emphasis supplied)
Hence, the material allegations in Petitioners' Complaint, including the possession by Petitioners of the owner's duplicate title of Spouses Garcia's TCT No. T-77703 and the annotation of the 1991 DOAS in both original and owner's duplicate title covering the disputed lot, are deemed hypothetically admitted.
Since the nullity of DAA Realty's Torrens title may be anchored on the non-presentation of Spouses Garcia's owner's duplicate title, and MLI may not be considered an innocent purchaser for value, then Petitioners' allegation for reconveyance based on the nullity of the 1996 DOAS and the Torrens titles resulting therefrom was sufficiently made.
Moreover, Petitioners' action for reconveyance can also be viewed from the law on sales. Petitioners alleged that a prior sale had been consummated in their favor. It must be noted that the copy of the 1991 DOAS forming part of the records shows that it is a public document. That the 1991 DOAS is a public document is further confirmed by the fact that Petitioners were successful in having the 1991 DOAS duly annotated on TCT No. T-77703, and that the only reason they were unable to cause the transfer of the Torrens title in their name was because they lacked the DAR clearance necessary to do so.55 According to Article 149856 of the Civil Code, the execution of this public document may partake constructive delivery of the property so as to constitute the Petitioners as full owners thereof. In turn, the validity of this sale, documented through the 1991 DOAS, was hypothetically admitted by MLI through its Motion for Preliminary Hearing. In other words, the second sale to DAA Realty, documented through the 1996 DOAS, may be considered void, since Spouses Garcia would no longer be the owners of the disputed lot at such time. As early as 1991, Petitioners may be considered full owners of the property covered by TCT No. T-77703. This means that DAA Realty could not have acquired anything in 1996. It follows that MLI purchased nothing from DAA Realty in 2005.57 Clearly, Petitioners have alleged a sufficient cause of action in this regard.
What is then the applicable period in Petitioners' action for reconveyance? Being based on the allegation of nullity of the 1996 DOAS in favor of DAA Realty, said action should be deemed imprescriptible.
In this connection, it should again be stressed that limiting the characterization of Petitioners' action for reconveyance to one solely based on an implied constructive trust, as was done by the RTC is a grievous error. To do so is to unwarrantedly view the Complaint solely through the assertions made by MLI in its Motion for Preliminary Hearing — and not through the allegations of the Complaint, which, as discussed, are deemed hypothetically admitted.
Since the allegations in the Complaint point to the nullity of the 1996 DOAS — which is the underlying transaction from which MLI derives its alleged right of ownership over the disputed lot — such issue should have been resolved by the RTC instead of ordering the Complaint's outright dismissal. The mere issuance of a Torrens title in favor of DAA Realty, which the Complaint alleges as void, cannot, by itself, without the requisite determination of the factual circumstances surrounding it, be accorded any probative weight to justify the dismissal of the Complaint given that in addition to the invalidity of said Torrens title, Petitioners also made allegations relating to the nullity of the underlying sale, which is the substantive basis for its issuance.
Quieting of Title
Under Article 476 of the Civil Code, an action for quieting of title may be filed "[w]henever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title." This action may be brought by one who has legal or equitable title to, or interest in the real property which is the subject matter of the action, whether or not such party is in possession.58 As a general rule, an action for quieting of title, being a real action, prescribes thirty (30) years after accrual.59 However, by way of exception, an action to quiet title involving property in the possession of the plaintiff is imprescriptible.60
For an action for quieting of title to prosper: (i) the plaintiff or complainant must have a legal or an equitable title to or interest in the real property subject of the action; and (ii) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.61
Here, Petitioners claim to have equitable title over the disputed lot based on the 1991 DOAS registered with the RD and annotated on the original and owner's duplicate of Spouses Garcia's TCT No. T-77703. In addition, they allege that the 1996 DOAS purportedly executed between Spouses Garcia and DAA Realty, and all transactions subsequent thereto, cast a cloud of doubt on such equitable title. Hence, the two requisites to sustain an action for quieting of title have been met.
As stated, an action for quieting of title involving property not in the possession of the plaintiff prescribes thirty (30) years after the cause of action accrues, which, in this case, appears to have taken place on February 22, 1996, upon issuance of DAA Realty's Torrens title. Hence, Petitioners' action for quieting of title has not prescribed, as the Complaint was filed only eighteen (18) years thereafter, on December 10, 2014.
The outright dismissal of the
Complaint is unwarranted
Instead of conducting a full-blown hearing as necessitated by the nature of the allegations in the Complaint, the RTC erroneously dismissed the Complaint on the ground of prescription. The relevant portions of the First RTC Order read:
x x x [B]ased upon the allegations of [Petitioners] in the [C]omplaint an implied or constructive trusts (sic) has been created in favor of [Petitioners] when [DAA Realty] and [MLI] acquired the [disputed lot] allegedly by fraud. This conclusion is consistent with the ruling of the Supreme Court in Estate of the late Mercedes Jacob vs. Court of Appeals.
x x x x
[MLI] proceeded [to state] that unfortunately for [Petitioners], at the time they filed their [C]omplaint on [December] 10, 2014, their cause of action for reconveyance based on an implied trust has already prescribed, as more than ten (10) years had lapsed already from the time of the issuance of title to [DAA Realty] on February 22, 1996.62
In ruling that Petitioners' action had already prescribed, it is clear that the RTC treated the Complaint as an action for reconveyance based solely on implied constructive trust. This is clearly grievous error, if not grave abuse of discretion, as the Complaint clearly alleged Petitioners' other causes of action.
In any case, even if the Complaint were to be treated, for the sake of argument, as an action for reconveyance based solely on an implied constructive trust, the Complaint should still be allowed to proceed, having been timely filed.
Under Article 1456 of the Civil Code, "[i]f property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes." The law thus creates the obligation of the trustee to reconvey the property and its title in favor of the true owner.63 An action for reconveyance of property based on an implied constructive trust prescribes in ten (10) years, in accordance with Article 1144(2) of the Civil Code, which states that that an action involving an obligation created by law must be brought within ten (10) years from the time the right of action accrues.
However, in cases where fraud is specifically alleged to have been attendant in the trustee's registration of the subject property in his/her own name, the prescriptive period is ten (10) years counted from the true owner's discovery of the fraud.64
When is the fraud deemed discovered in the context of registered property? Adille v. Court of Appeals65 (Adille) lends guidance:
It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud.
x x x x
x x x Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. x x x66
The Court's ruling in Adille, reiterated in Samonte v. Court of Appeals67 and Government Service Insurance System v. Santiago,68 is in congruence with Section 53 of PD 1529, which states that in all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud and that registration procured by the presentation of a forged deed or other instrument shall be null and void.
Among the allegations hypothetically admitted by MLI are those concerning DAA Realty's failure to present Spouses Garcia's owner's duplicate copy of TCT No. T-77703 upon issuance of TCT No. T-97059 in its name, as required by Section 53 of PD 1529.
In Levin v. Bass69 (Levin) the Court en banc unanimously held that failure to comply with the registration requirements of the Torrens system averts the registration process, and prevents the underlying transaction from affecting the land subject of the registration, hence:
x x x Under the Torrens system the act of registration is the operative act to convey and affect the land. [Does] the entry in the day book of a deed of sale which was presented and filed together with the owner's duplicate certificate of title with the office of the Registrar of Deeds and full payment of registration fees constitute a complete act of registration which operates to convey and affect the land? In voluntary registration, such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within [fifteen (15)] days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. x x x70 (Emphasis and underscoring supplied)
Levin thus teaches that a Torrens title issued without prior presentation and cancellation of the existing owner's duplicate title does not bind the property to which it pertains. The title so issued does not produce the effects of a Torrens title contemplated under PD 1529, including the effects of constructive notice. It is literally a scrap of paper.
On this basis, coupled with the fact that they were always in possession of the owner's duplicate copy of TCT No. T-77703, Petitioners cannot be deemed to have been constructively notified of the issuance of DAA Realty's TCT No. T-97059. The ten (10)-year prescriptive period thus referred to in Article 1144(2) of the Civil Code must be reckoned not from the issuance of DAA Realty's Torrens title, but rather, from Petitioners' actual discovery of the fraud in 2010. The Complaint, having been filed barely four (4) years after, or on December 10, 2014, was therefore timely filed.
Belated payment of docket fees may
still be permitted
Apart from prescription, the RTC also anchored the outright dismissal of the Complaint on Petitioners' alleged failure to pay the correct docket fees.71 Again, this is error.
Assuming that the payment made by Petitioners is in fact deficient, belated payment of the difference may still be permitted consistent with the Court's ruling in Sun Insurance Office, Ltd. v. Asuncion:72
x x x It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.73
Accordingly, in determining whether belated payment of the deficiency of Petitioners' docket fees may still be allowed, the prescriptive periods applicable to Petitioners' alternative causes of action, as discussed above, should be considered. As already explained, Petitioners' Complaint should be characterized primarily as an action for reconveyance based on a void contract which is imprescriptible, and alternatively, as an action for quieting of title which prescribes thirty (30) years after the cause of action accrues, which, in this case, occurred on February 22, 1996 when the issuance of DAA Realty's Torrens title cast a cloud on Petitioners' claim of ownership over the disputed lot. As none of Petitioners' alternative causes of action has prescribed, payment of the deficiency in the docket fees paid, if any, should still be permitted.
The 1991 DOAS in favor of
Petitioners cannot be declared void
without trial
Finally, the Court is not unaware of certain discrepancies between the allegations in the Complaint and the statements appearing on the face of the supporting documents attached thereto. These discrepancies appear from the following allegations, thus:
1.3 On or about [December 9, 1991, [Petitioners] purchased from [Spouses Garcia], for and in consideration of Php70,000.00, a parcel of land located at Misibis, Cagraray Island, Albay, consisting of 6.4868 has., duly evidenced and covered by TCT No. T-77703, Registry of Deeds for the Province of Albay x x x, the technical descriptions of which are:
x x x x
photocopies of the Deed of Absolute Sale of Real Property dated [December 9, 1991 [(1991 DOAS)] and [Spouses Garcia's] Owner's copy of TCT No. T-77703 as surrendered to [Petitioners] are attached hereto as Annexes "A" and "A-1".74
The documents referred to as Annexes "A" and "A-1" above appear to show that: (i) while the 1991 DOAS names Cidra Garcia as vendor, her signature does not appear on the document; (ii) only Oscar Garcia's signature appears on the 1991 DOAS; and (iii) TCT No. T-77703 is registered in the name of "Cidra R. Garcia x x x married to Oscar G. Garcia." These discrepancies, if taken as fact, may cast doubt on the validity of the 1991 DOAS.
However, and precisely to the point, matters relating to the validity of the 1991 DOAS cannot be resolved without presentation of evidence. Any finding to be made by the Court here would amount to a prejudgment of the merits of the Complaint without trial, and would constitute a violation of Petitioners' right to due process. To treat the 1991 DOAS as void without the benefit of trial will contradict the hypothetical admissions made by MLI when it filed its Motion for Preliminary Hearing.
In this regard, established jurisprudence dictates that in cases where there is a conflict between the allegations in a complaint and its supporting documents, the complainant must be given the opportunity to reconcile the same, consistent with the fundamental principle of due process. The Court's ruling in World Wide Insurance & Surety Co., Inc. v. Manuel75 is thus apropos:
x x x To determine whether a complaint states a cause of action one must accept its allegations as true. One may not go beyond and outside the complaint for data or facts, especially contrary to the allegations of the complaint, to determine whether there is cause of action. Of course, there are cases where there may be a conflict or contradiction between the allegations of a complaint and a document or exhibit attached to and made part of it. In that case, instead of dismissing the complaint, defendant should be made to answer the same so as to establish an issue and then the parties will be given an opportunity, the plaintiff to reconcile any apparent conflict between the allegations in his complaint and a document attached to support the same, and the defendant an equal opportunity to refute the allegations of the complaint and to show that the conflict between its allegation and the document attached to it is real, material and decisive.76 (Emphasis and underscoring supplied)
In sum, the resolution of the substantive issues raised in the Complaint, as discussed herein, requires a full-blown trial. The issuance of the First and Second RTC Orders directing the outright dismissal of the Complaint are not only grievously erroneous, but amount to grave abuse of discretion, as they deprive Petitioners of the right to due process.
Final Note
The factual and legal conclusions expressed herein are mainly based on the allegations of the Complaint which have been hypothetically admitted by MLI through its Motion for Preliminary Hearing. These conclusions are made only for the purpose of resolving the basic issue before the Court, that is, whether the allegations in the Complaint are sufficient to sustain any of the alternative causes of action asserted therein.
This Decision does not resolve with finality or conclusiveness the factual and legal issues that the parties have raised in their respective pleadings filed before the trial court. Such factual and legal issues should be resolved before said court, after reception of evidence on the merits. Lest there be any confusion, this Decision should not be interpreted as a prejudgment of the factual and substantive issues raised in the Complaint or in the Answer. Precisely, this Decision seeks to afford the parties their day in court with due regard to their right to due process, given that the resolution of their conflict may entail deprivation of property.
WHEREFORE, the Petition is GRANTED. Accordingly, the Orders dated October 22, 2015 and December 28, 2015 issued by the Regional Trial Court of Tabaco City, Branch 15, in Civil Case No. T-2820 are REVERSED.
This case is REMANDED to the Regional Trial Court of Tabaco City, Branch 15 for trial on the merits. Said court is DIRECTED to resolve the case with dispatch.
SO ORDERED.
Peralta, C.J. (Chairperson), Reyes, J. Jr., and Lopez, JJ., concur.
Lazaro-Javier, J., see dissenting opinion.
Footnotes
1 Rollo, pp. 21-61.
2 Id. at 62-69. Penned by Judge Alben Casimiro Rabe.
3 Id. at 70-71.
4 Id. at 26-27, 73-74.
5 See id. at 27.
6 Id.
7 See id. at 65-66.
8 Id. at 30, 140-143.
9 Id. at 72-89.
10 Id. at 79. Emphasis omitted.
11 Id. at 81. Emphasis omitted.
12 Id. at 83. Emphasis omitted.
13 Id. at 84. Emphasis and underscoring omitted.
14 Id. Emphasis and underscoring omitted.
15 Id. at 85. Emphasis and underscoring omitted.
16 Id. Emphasis and underscoring omitted.
17 Id. at 86.
18 Id. at 85-87.
19 Id. at 86-87.
20 Id. at 87.
21 Id. at 87-88.
22 Id. at 144-174.
23 Id. at 145.
24 Id. at 144-174.
25 Id. at 62-69.
26 Id. at 70-71.
27 Id. at 3.
28 Id. at 3-6.
29 Id. at 4.
30 Id. at 21, 60.
31 Id. at 302-303. Issued by the Second Division composed of Associate Justice Antonio T. Carpio, Chairperson and Associate Justices Arturo D. Brion, Mariano C. Del Castillo, Jose C. Mendoza and Marvic Mario Victor F. Leonen, Members.
32 Id. at 302.
33 Id. at 304.
34 Id. at 304-344.
35 Id. at 345-365.
36 Id. at 346.
37 Id. at 346-347.
38 Id. at 388-389. Issued by the Second Division composed of Associate Justice Antonio T. Carpio, Chairperson and Associate Justices Mariano C. Del Castillo, Jose C. Mendoza and Marvic Mario Victor F. Leonen, Members; Associate Justice Arturo D. Brion, Member, on leave.
39 Id. at 388.
40 Id. at 400-415.
41 Id. at 417-422.
42 Id. at 33, 37.
43 Id. at 33, 45.
44 See Baluyot v. Court of Appeals, 370 Phil. 30, 51 (1999).
45 Id. at 51.
46 Tomas v. Court of Appeals, 264 Phil. 221, 228 (1990).
47 Uy v. Court of Appeals, 769 Phil. 705, 718-719 (2005).
48 Id.
49 Id. at 719-722.
50 Rollo, pp. 75-76.
51 Paragraph 1.8 (e) of the Complaint states:
(e) This is especially so since the Spouses [Garcia's] Owner's Copy of TCT No. T-77703 was, at all times to date, in the actual possession and control of the plaintiffs upon their purchase from the [Spouses Garcia]. That said, defendants DAA Realty and MLI could not have possibly obtained a new TCT in DAA Realty's name without possessing and surrendering the Owner's copy of the Spouses [Garcia's] TCT No. T-77703 to the RD Albay. The Spouses [Garcia's] failure to surrender their Owner's Copy of TCT No. [T-]77703 makes MLI and DAA Realty purchaser[s] in bad faith vis-a-vis [Petitioners]. Id. at 76.
52 Petitioners' Complaint alleged that:
1.8 This feigned second sale by the Spouses [Garcia] purportedly to DAA Realty was downright void, ineffective and fraudulent in that:
x x x [T]he Spouses [Garcia's owner's duplicate] of TCT No. T-77703 was, at all times to date, in the actual possession and control of [Petitioners] upon their purchase from [Spouses Garcia]. That said, [DAA Realty and MLI] could not have possibly obtained a new TCT in DAA Realty's name without possessing and surrendering the [owner's duplicate of the Spouses Garcia's] TCT No. T-77703 to the [RD]. The Spouses [Garcia's] failure to surrender their [owner's duplicate] of TCT No. [T-]77703 makes MLI and DAA Realty purchaser[s] in bad faith vis-a-vis [Petitioners]. Id. at 75-76.
53 Rollo, pp. 201-208.
54 Id. at 201.
55 Id. at 27.
56 Article 1498 states:
ART. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred.
With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept.
57 See generally Miranda v. Spouses Mallari, G.R. No. 218343, November 28, 2018.
58 See CIVIL CODE, Art. 477.
59 Id., Art. 1141.
60 Heirs of Segundo Uberas v. Court of First Instance of Negros Occidental, 175 Phil. 334, 341 (1978).
61 See generally Residents of Lower Atab & Teachers' Village v. Sta. Monica Industrial & Development Corp., 745 Phil. 554, 563 (2014).
62 Rollo, pp. 63-64.
63 Uy v. Court of Appeals, supra note 47, at 719.
64 Desiderio P. Jurado, COMMENTS AND JURISPRUDENCE ON OBLIGATIONS AND CONTRACTS, 1987 9th Revised Ed., p. 647.
65 241 Phil. 487 (1988).
66 Id. at 495-496.
67 413 Phil. 487, 497 (2001).
68 460 Phil. 763, 773-774 (2003).
69 91 Phil. 419 (1952).
70 Id. at 436-437.
71 Rollo, p. 69.
72 252 Phil. 280 (1989).
73 Id. at 291.
74 Rollo, pp. 73-74.
75 98 Phil. 46 (1955).
76 Id. at 49-50.
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