[ G.R. No. 222166, June 10, 2020 ]
MERCEDES S. GATMAYTAN AND ERLINDA V. VALDELLON, PETITIONERS, VS. MISIBIS LAND, INC., RESPONDENT.
This Petition for Review on Certiorari assails the following dispositions of the Regional Trial Court – Branch 15, Tabaco City, Albay in Civil Case No. T-2820 entitled "Mercedes S. Gatmaytan and Erlinda V. Valdellon v. Misibis Land, Inc. et al.":
1) Order1 dated October 22, 2015 dismissing petitioners' complaint on ground that their cause of action was already barred by prescription, and for failure to pay the proper docket fees; and
2) Order2 dated December 28, 2015 denying petitioners' motion for reconsideration.
Under Complaint3 dated December 10, 2014, petitioners Mercedes S. Gatmaytan and Erlinda V. Valdellon sued respondent Misibis Land, Inc., DAA Realty Corporation (DAA Realty), Philippine National Bank, Spouses Oscar and Cidra Garcia et al. alleging the following facts:
xxx xxx xxx
1.3 On or about 09 December 1991, plaintiffs purchased from the Spouses Garcias, for and in consideration of P70,000.00, a parcel of land located at Misibis, Cagraray Island, Albay, consisting of 6.4846 has., duly evidenced and covered by TCT No. T-77703, Registry of Deeds for the Province of Albay ("RD Albay") xxx
1.3.1 Accordingly, plaintiffs paid the accruing Capital Gains and Documentary Taxes for which the BIR issued the corresponding Certificate Authorizing Registration ("CAR") No. 338686 dated 03 April 1992, xxx
1.3.2 Meanwhile, on 06 April 1992, plaintiffs registered and annotated their Deed of Absolute Sale dated 09 December 1991, per Entry No. 4145, on both the Original RD copy and Owner's copy of TCT No. T-77703.
1.4 For apparent lack of DAR Clearance, however, plaintiffs inadvertently failed to complete and consummate the registration and obtain a new TCT in their names.
1.5 Sometime in 2010, however, when plaintiffs resumed processing the transfer of their title, plaintiffs were aghast to learn, upon their representative's verification with the RD Albay, that their subject property had been consolidated by defendant MLI with its other lots in Misibis, and in turn subdivided anew into smaller lots for evident commercial gain. Plaintiffs' subject property now appears to be covered by new TCT Nos. 138330 to T-138337, T-13847 to T-138512, T-138521 to T-138600, and T-138619 to T-138640.
1.6 Worse, plaintiffs discovered that defendants MLI, DAA Realty and the Spouses Garcias had conspired, confederated and cooperated with each other to defraud plaintiffs of their subject property. Defendants MLI and DAA Realty made it appear, contrary to the truth, that they were bona fide buyers in good faith of the subject property without knowledge or notice of plaintiffs' prior purchase thereof from the Spouses Garcias.
1.7 In truth, defendants MLI and DAA Realty, with the apparent cooperation of the Spouses Garcias, had methodically and systematically undertaken a scheme to defraud and deprive plaintiffs of their purchased property, despite their actual notice and/or constructive knowledge thereof, as shown by the following:
a. The original RD Copy of the Spouses Oscar and Cidra Garcia's TCT No. T-77703 duly reflects an annotation dated 06 April 1992 under Entry No. 4145 respecting plaintiffs' prior purchase thereof on 09 December 1991.
b. Initially, defendants MLI and DAA Realty, despite their actual notice and/or constructive knowledge of its previous sale to plaintiffs, made it appear that on 21 February 1996, the defendant Spouses Garcias, had purportedly sold plaintiffs' property to DAA Realty xxx
1.8 This feigned second sale by the Spouses Garcias purportedly to DAA Realty was downright void, ineffective and fraudulent in that:
(a) By virtue of plaintiffs' prior purchase, the Spouses Garcias had no more title, hence could not validly sell the subject property to DAA Realty.
(b) On its face, the purported signature of defendant Cidra in the Deed of Absolute Sale dated 21 February 1996 appears even to the naked eye, to be forged and/or falsified for which the defendants DAA Realty and MLI as beneficiaries are prima facie presumed to be the forgers.
(c) Per its SEC Articles of Incorporation, Annex "B-1" hereof, DAA Realty appears to have been incorporated only on 22 January 1999, or three (3) years after its purported second purchase of the subject property on 21 February 1996.
(d) On top of all, based on plaintiffs' clear and subsisting annotation as early as 06 April 1992 under Entry No. 4145 of their prior purchase on both the original RD Albay and the Spouses Garcias' Owner's copy of TCT No. T-77703, defendants 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 plaintiffs' prior purchase thereof from the Spouses Garcias.
(e) This is especially so since the Spouses Garcias' 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 Sps. Garcias. 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 Garcias' TCT No. T-77703 to the RD Albay. The Spouses Garcias' failure to surrender their Owner's Copy of TCT No. 77703 makes MLI and DAA Realty purchasers in bad faith vis-a-vis plaintiffs.
(f) Neither did the defendants MLI and DAA Realty, in the exercise of higher prudence, utmost due care and diligence as real estate companies, ever file any petition for issuance of a new Owner's Copy of TCT No. T-77703. This, they could not as defendants MLI and DAA Realty very well knew that such Owner's Copy of TCT No. T77703 was with plaintiffs by virtue of their prior purchase.
(g) Neither did DAA Realty or Spouses Garcias present any DAR Clearance as a pre-requisite to the registration of the transfer and obtention of their new title to the subject property xxx,
1.9 Yet, despite their actual notice and/or constructive knowledge of plaintiffs' prior purchase, on or about 22 February 1996, DAA Realty fraudulently secured and smoothly obtained a bogus and void TCT No. T-97059 in its name from the RD Albay xxx
1.10 Worst of all, DAA Realty's fraudulent obtention of TCT No. T-97059 was facilitated by them, by simply causing baselessly the RD Albay to merely stamp as "CANCELLED", without any requisite explanation of the basis therefor, plaintiffs' annotated Entry 4145 concerning their prior Deed of Sale dated 09 December 1991 at the back ofthe Original RD Albay copy of TCT No. T-77703 xxx
1.11 To ice this fraud, DAA Realty, if it was in good faith, ought to have derived its tax declaration from the Spouses Garcias' Tax Declaration No. 55 xxx Instead, DAA Realty with obvious arrogance of power, merely applied and declared for a NEW ORIGINAL real property tax declaration, the subject property in its own name, and thereby obtained a NEW Original Tax Declaration No. 96-0059 on 04 November 1998 xxx
1.12 Despite their actual knowledge and/or constructive notice, directly and/or indirectly, of plaintiffs' prior purchase prescinding from their status as real estate entities who are charged and reposed with higher degree of prudence, due care and diligence, on or about 21 April 2005, defendants MLI and DAA Realty then made it appear contrary to the truth that defendant MLI had purchased the subject property in good faith from DAA Realty, for which defendant MLI was purportedly issued a new TCT No. T-138212 xxx
1.13 Subsequently, plaintiffs additionally discovered, and so allege, that defendant MLI with apparent concealment of their fraudulent taking of plaintiffs' property, inveigled, cajoled, enticed and duped the defendant PNB, to grant it a commercial loan, duly secured by mortgage of plaintiffs' subject property, among others. As a banking institution, defendant PNB is also charged with a much higher degree of prudence, due care and diligence for which it is also guilty of actual knowledge and/or constructive notice, directly or indirectly, of such fraud and defects. Defendant MLI, together with its other affiliate corporations, had loaned and mortgaged to defendant PNB, among others, its alleged parcels of land located in Misibis, including the subject property, initially for the amount of P210 Million, and then to P500 Million xxx
1.14 [sic] Based on their startling discoveries of the above defraudation, on 01 September 2010, plaintiff Gatmaytan then immediately executed an Affidavit of Adverse Claim and registered on defendant MLI's TCTs xxx
1.14 Presently, plaintiffs' subject property is now a vital part of defendant MLI's prime commercial and residential projects popularly known as Misibis Residential Resort, and the Misibis Vacation Villa and Retirement Village-for tourism, lease and/or sale to the general unwary public, both local and international.4
xxx xxx xxx
Based on the foregoing factual allegations, petitioners raised three (3) causes of action, viz:
i. Reconveyance of property since defendants were all allegedly guilty of fraud in transferring and obtaining the property;5
ii. Nullity of the Deed of Absolute Sale dated February 21, 1996 in favor of DAA Realty since Spouses Garcias could not have sold a property that no longer belonged to them;6
iii. Quieting of title since the Deed of Absolute Sale dated February 21, 1996 created a cloud of doubt on their title which needed to be dispersed.7
Petitioners ultimately sought to be declared the true and rightful owner of subject property; to nullify the Deed of Absolute Sale dated February 21, 1996 between Spouses Garcias and DAA Realty and all transactions subsequent thereto, including the Deed of Absolute Sale dated April 21, 2005 between DAA Realty and respondent; to cancel DAA Realty and respondent's Transfer Certificate of Title (TCT) Nos. 97059 and T-138212, respectively, and all titles prescinding therefrom; to issue a new title in their favor, subject to submission of the required registration documents; and to obtain from defendants moral damages, exemplary damages, and attorney's fees at P500,000.00 each.8
In its Answer,9 respondent denied the allegations and insisted it was an innocent purchaser for value of the property.1âшphi1 It relied on DAA Realty's TCT No. 97059 which allegedly did not bear notice of any defect or prior sale in favor of petitioners.
More, petitioners never acquired ownership of the property since Cidra Garcia did not sign the Deed of Absolute Sale of Real Property dated December 9, 1991 in their favor, neither was possession of the property delivered to them. Considering that respondent was the first to register the property under its name, it had a better right thereto compared to petitioners.10
At any rate, petitioners' cause of action was already barred by prescription. Under Article 1456 of the New Civil Code,11 when a person acquires property through fraud, an implied trust is created in favor of the defrauded party. An action for reconveyance of property based on an implied trust created by operation of law prescribes after ten (10) years from issuance of title to the trustee.12 Here, TCT-97509 was issued to DAA Realty in 1996 while petitioners initiated the complaint only on December 10, 2014, more than ten (10) years later.13
Too, petitioners' failure to allege the assessed value of subject property in their Complaint was fatal to their case. Because of this omission, it could not be determined whether the Regional Trial Court or the Municipal Trial Court had jurisdiction over the suit.14
Finally, whatever cause of action petitioners may have had was already barred by laches. Petitioners had been sleeping on their rights from the time they allegedly bought the property on December 9, 1991 until they filed the Affidavit of Adverse Claim on September 8, 2010 and the Complaint on December 10, 2014. They did not even pay the real property taxes due thereon. Their failure to protect their alleged right, as they were negligently silent and inactive, converted their claim to a stale demand.15
In its compulsory counterclaim, respondent sought payment from petitioners for attorney's fees of P300,000.00, claiming it was compelled to litigate despite the Complaint's utter lack of basis.16 It also filed a cross-claim against DAA Realty for reimbursement of the purchase price of the property should the trial court rule in petitioners' favor.17
In their Reply,18 petitioners argued that whether they lacked a cause of action is an issue that should be threshed out in the trial proper.19 In any event, records showed that not only did they have valid causes of action,20 they also have a better right to the property compared to respondent.21
As for the issues of prescription and failure to allege the assessed value of the property, petitioners riposted:
Under Article 1410 of the New Civil Code,22 a suit for the nullity of the fraudulent sales and titles was imprescriptible. Further, the alternative cause of action for quieting of title would only prescribe after thirty (30) years since respondent did not acquire the property in good faith.23
Their failure to declare the assessed value of the property in their Complaint was immaterial. The suit was for the nullity of the sale between Spouses Garcias to DAA Realty, and from DAA Realty to respondent, hence, it was an action incapable of pecuniary estimation falling within the exclusive original jurisdiction of the Regional Trial Court regardless of the value of the property involved.24
Finally, the equitable defense of laches could not be raised too early in the proceedings. The defense, too, was unavailing since petitioners discovered the fraudulent transfer only in 2010.25
Respondent filed a Motion for Preliminary Hearing26 dated July 6, 2015, urging the trial court to hear and rule on its defenses of prescription and lack of jurisdiction. Petitioners filed their Comment/Opposition27 thereto, repleading the counter-arguments in their Reply. Both parties essentially reiterated their arguments in their respective memoranda.28
The Trial Court's Ruling
Through its assailed Order29 dated October 22, 2015, the trial court dismissed the Complaint due to prescription and lack of jurisdiction.
It held that under Art. 1456 of the New Civil Code, an implied trust is created by operation of law when property is acquired through fraud. The offended party may recover the property from the trustee through an action for reconveyance which prescribes in ten (10) years from the time the implied trust was constituted. Here, petitioners filed the Complaint on December 10, 2014, more than ten (10) years after the implied trust was constituted on February 22, 1996 when DAA Realty acquired title over the property. Hence, their cause of action had already prescribed.
More, petitioners' failure to indicate the assessed value of the property in their Complaint resulted in their failure to be assessed of, and pay for, the proper docket fees. Their non-payment of proper docket fees was a jurisdictional defect that led to the dismissal of the Complaint.
Petitioners' motion for reconsideration was denied on December 28, 2015.30
The Present Petition
In this Petition for Review on Certiorari, petitioners fault the trial court for ruling that their action for reconveyance was based on fraud which prescribes, rather than on nullity of the Deed of Absolute Sale dated February 21, 1996 which is imprescriptible. The trial court allegedly read matters not pleaded in their Complaint in ascertaining what their cause of action was, thus, improperly resulting in the dismissal of the suit.31
They never avoided payment of docket fees. In fact, they paid based on the assessed value of the property under DAA Realty's Tax Declaration No. 0059. Same tax declaration reveals that as early as 1998, the assessed value of the property was already P52,140.00, clearly placing the case within the jurisdiction of the Regional Trial Court.32
In its Comment,33 respondent counters that the assailed Orders dismissed the complaint without prejudice. Hence, no appeal can be taken therefrom;34 the proper remedy available to petitioners is a Petition for Certiorari under Rule 65 of the Rules of Court.35 Even assuming that petitioners properly filed an appeal, it cannot be given due course since it involves questions of fact which the Court cannot try and resolve.36
At any rate, the trial court did not err in classifying petitioners' cause of action as one for reconveyance of property based on fraud.37 The material allegations in the Complaint and the relief sought reveal that the primary objective of the suit was to recover the property and to have the trial court declare petitioners as the true and rightful owners thereof.38 Although the Complaint also sought to nullify the sales in favor of DAA Realty and respondent, this did not efface the fundamental and prime objective of the suit which was to recover the property.39 As such, petitioners' cause of action had already prescribed ten (10) years after DAA Realty acquired title over the property.
The trial court also correctly dismissed the action for reconveyance for petitioners' failure to allege the value of the subject property. For it prevented the clerk of court from computing the proper docket fees. Consequently, petitioners could not have paid for the correct amount40 which, in turn, prevented the trial court from acquiring jurisdiction over the case.
In their Reply,41 petitioners argue that the present petition raises pure question of law; their cause of action is for the nullity of deeds of sale in favor of DAA Realty and respondent, thus, the same is incapable of pecuniary estimation falling within the jurisdiction of the Regional Trial Court; and the trial court may direct petitioners to pay additional docket fees if their earlier payment is deficient.
1. Did petitioners avail of the proper remedy when they filed the present Petition for Review on Certiorari with the Supreme Court?
2. Has petitioners' cause of action already prescribed?
3. Was petitioners' alleged failure to pay the correct docket fees fatal to their case?
Petitioners availed of the proper remedy
In assailing the trial court's dispositions, petitioners availed of a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Section 1 of the Rule allows such recourse to be filed with the Supreme Court, provided that purely legal questions are raised, viz:
Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (emphases added)
As held in the landmark case of Gios-Samar, Inc. v. Department of Transportation and Communication,42 direct recourse to this Court is allowed only to resolve questions of law. Otherwise, the doctrine of hierarchy of courts should strictly be observed. The doctrine is not mere policy, rather, it is a constitutional filtering mechanism designed to enable the Court to focus on the more fundamental and essential tasks assigned to it by the highest law of the land.
Respondent, nevertheless, claims that the proper remedy for petitioners was a Petition for Certiorari under Rule 65 based on Section 1, Rule 41 of the Rules of Court, viz:
Section 1. Subject of appeal. — xxx
No appeal may be taken from:
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65.
Too, petitioners allegedly violated Section 1, Rule 45 of the Rules of Court when they purportedly raised questions of fact in their petition, i.e. whether the trial court read into the Complaint a cause of action which petitioners did not allege, and whether the trial court erred in dismissing the complaint.
For one, respondent misleads the Court in claiming that the trial court's dismissal was without prejudice. Although the order of dismissal did not expressly bar petitioners from refiling the case, it is deemed written since the ground for dismissal was prescription. Sections 1 and 5, Rule 16 of the Rules of Court read:
Section 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
(f) That the cause of action is barred by a prior judgment or by the statute of limitations;
Section 5. Effect of dismissal. — Subject to the right of appeal, an order granting a motion to dismiss based on paragraphs (f), (h) and (i) of section 1 hereof shall bar the refiling of the same action or claim. (emphases added)
Hence, the dismissal of petitioners' complaint below was not "without prejudice." Consequently, the prohibition against the filing of appeal under Section 1, Rule 41 of the Rules of Court does not apply, and a Petition for Certiorari under Rule 65 becomes unavailable.
For another, respondent is mistaken in claiming that the present petition raises questions of fact, not pure questions of law. Tongonan Holdings and Development Corporation v. Escaño, Jr.43 distinguished the two concepts, thus:
xxx A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact. (emphases added)
Here, respondent invoked the affirmative defenses of prescription and lack of jurisdiction in seeking the immediate dismissal of the Complaint. Under Section 6, Rule 16 of the Rules of Court,44 invoking these affirmative defenses is akin to filing a Motion to Dismiss wherein the movant hypothetically admits the truth of the material facts alleged and pleaded in the complaint.45
True to form, respondent, as in a motion to dismiss, hypothetically admitted the allegations in petitioners' Complaint but countered that their cause of action had prescribed ten (10) years after the issuance of Certificate of Title No. T-97059 in favor of DAA Realty in 1996. Petitioners, for their part, also admitted that more than ten (10) years had elapsed from the issuance of Certificate of Title No. T-97059 but nevertheless argue that their cause of action is imprescriptible.
Too, petitioners never denied failing to allege the assessed value of the property involved when they filed the Complaint. They claim, however, that such failure is immaterial since their cause of action is incapable of pecuniary estimation. The assessed value of the property, therefore, is not jurisdictional and should not be used as basis for computing the docket fees they had to pay.
By virtue of these admissions from the parties themselves, both express and implied, hypothetical and otherwise, no factual issue remains insofar as prescription and non-payment of the proper docket fees are concerned. Whether petitioners' cause of action had already prescribed and whether the Complaint required an allegation on the assessed value of the property -- are pure legal questions which the Court may resolve on the basis of the allegations in the Complaint. Nothing more.
Petitioners' action for reconveyance of
property on ground of fraud had already
Petitioners essentially alleged three (3) causes of action in their Complaint, viz:
i. Reconveyance of property based on bad faith;46
ii. Reconveyance of property based on nullity of contract;47 and
iii. Quieting of title48
A complaint for reconveyance is an action which admits the registration of title of another party but claims that such registration was erroneous or wrongful. It seeks the transfer of the title to the rightful and legal owner, or to the party who has a superior right over it, without prejudice to innocent purchasers in good faith.49
The relief prayed for may be granted on the basis of intrinsic fraud - fraud committed on the true owner.50 In such a case, an implied trust is constituted in favor of the offended party,51 and the action for reconveyance and cancellation of title prescribes in ten (10) years from issuance of the Torrens title to the property in favor of the trustee.52
By way of exception, the Court has permitted the filing of an action for reconveyance of property despite the lapse of more than ten (10) years from issuance of title where plaintiff is in possession of the disputed property, converting the action from reconveyance of property into one for quieting of title. These cases are imprescriptible since the plaintiff has the right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right.53
The action for reconveyance, however, may also be premised on a void or inexistent contract. Being an absolute nullity, the transfer instrument is subject to attack anytime, in accordance with Article 1410 of the Civil Code.54 In other words, an action for reconveyance based on a void contract is imprescriptible. So 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.55
Whether an action for reconveyance prescribes, therefore, depends on two (2) criteria:
First. Whether it is founded on a claim of fraud resulting in an implied or constructive trust, or one based on a void or inexistent contract;56 and
Second. Whether plaintiff is in possession of the disputed property.
Petitioners' allegation of three (3) alternative causes of action notwithstanding, I agree with the trial court's finding that petitioners' main thrust is to recover the property which respondent allegedly acquired through fraud.
The allegations in the complaint, including the character of the relief sought, determines its cause of action.57 Here, the Complaint essentially alleged that respondent, DAA Realty and Spouses Garcias conspired and schemed to methodically defraud and deprive petitioners of the property they bought. Despite actual knowledge of such prior sale to petitioners, respondent et al. made it appear that respondent had purchased the property in good faith from DAA Realty. Subsequently, they fraudulently secured and smoothly obtained a bogus and void TCT No. T-97059 in its name from the RD Albay, and applied for a new tax declaration instead of deriving one from the Tax Declaration No. 55 under the name of Spouses Garcias. Meanwhile, the other circumstances mentioned pertain to whether respondent was a purchaser in good faith.
As for the remedies prayed for in the Complaint, petitioners sought to be declared the true and rightful owner of the property and to have a new title issued in their favor, subject to the submission of the required registration documents. Notably, although they also sought to cancel DAA Realty and respondent's titles, this relief was merely incidental to their main cause. As held in Heirs of Spouses Ramiro and Llamada v. Spouses Bacaron, thus:58
The ultimate relief sought by respondents is for the recovery of the property through the enforcement of its sale in their favor by the late spouses Ramiro. Their other causes of action for the cancellation of the original title and the issuance of a new one in their name, as well as for injunction and damages, are merely incidental to the recovery of the property. Before any of the other reliefs respondents prayed for in their complaint can be granted, the issue of who between them and petitioners has the valid title to the lot must first be determined.
On this score, the trial court correctly ruled that petitioners' cause of action is actually for reconveyance of property on ground of fraud.
This brings to fore the second criterion. Indeed, whether petitioners are in possession of the disputed land determines whether their cause of action for reconveyance is converted to an action for quieting of title which is imprescriptible. As it was, however, the Complaint here did not bear any allegation that petitioners have been in possession of the property for the purpose of excluding the case from the ten (10) year prescriptive period. In fact, the Complaint itself contained petitioners' admission that they filed it on December 10, 2014, more than ten (10) years from the time TCT No. T-97509 was issued in favor of DAA Realty in 1996. Consequently, the trial court did not err in dismissing petitioners' Complaint on ground of prescription.
Petitioners do not bear the requisite legal
or equitable title to or interest in the
property to sustain an action for quieting
Indeed, petitioners' cause of action could not have been one for quieting of title which requires the following elements: (1) the plaintiff or complainant has legal or equitable title to or interest in the real property subject of the action; and (2) 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.59
The first element is sorely missing in this case. For although petitioners claim that Spouses Cidra and Oscar Garcia sold them the disputed property through a Deed of Absolute Sale dated December 9, 1991,60 this is belied by evidence that petitioners themselves submitted to this Court.
Attached to petitioners' Complaint is copy of TCT T-7770361 covering the disputed property. The title bears the name of the registered owner as "Cidra Garcia married to Oscar Garcia". Curiously, though, the Deed of Absolute Sale dated December 9, 1991 was executed by Oscar Garcia only.
Under the Family Code, the consent of both spouses is indispensable for purposes of disposing either conjugal or community property, viz:
Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (206a)
xxx xxx xxx
Art. 124. The administration and enjoyment of the conjugal partnership shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration ofthe conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (emphases added)
Here, it does not appear that Cidra consented to the sale of the disputed property in favor of petitioners. The Deed of Absolute Sale dated December 9, 1991 bears no indication whatsoever regarding Oscar's authority to sign the deed of conveyance in her behalf. Hence, the sale of the property in favor of petitioners is void. Petitioners never acquired ownership over the disputed property. Their complaint, therefore, failed to sustain a valid cause of action for quieting of title, let alone one that has yet to prescribe.
TCT No. 97059 cannot be subject to
collateral attack; DAA Realty is an
indispensable party in assailing its validity
Neither could petitioners' complaint sustain a cause of action for reconveyance of property against respondent based on the alleged nullity of the Deed of Absolute Sale dated February 21, 1996 and TCT No. 97059. Said deed was executed by both Cidra and Oscar Garcia in favor of DAA Realty, not respondent. Thus, if petitioners wish to challenge the validity of the conveyance and the consequent title, they should have impleaded DAA Realty in the present petition, being an indispensable party to the case.
Section 3, Rule 7 of the Rules of Court defines an "indispensable party" thus:
Section 7. Compulsory joinder of indispensable parties. — Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.
Cagatao v. Almonte elucidates:62
The validity of TCT No. 12159-A
cannot be attacked collaterally;
Carlos is an indispensable party
From the arguments of Cagatao, it is clear that he is assailing the validity of the title of Carlos over the land in question. Section 48 of P.D. No. 1529 clearly states that "a certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law." An attack on the validity of the title is considered to be a collateral attack when, in an action to obtain a different relief and as an incident of the said action, an attack is made against the judgment granting the title. Cagatao's original complaint before the RTC was for the cancellation of TCT No. T-249437 in the name of the Fernandez Siblings and the nullification of the deeds of sale between the Fernandez Siblings and Spouses Fernandez, and the earlier one between the latter and Almonte and Aguilar. Nowhere in his complaint did Cagatao mention that he sought to invalidate TCT No. 12159-A. It was only during the course of the proceedings, when Spouses Fernandez disclosed that they had purchased the property from Carlos, that Cagatao thought of questioning the validity of TCT No. 12159-A.
Moreover, Carlos, as the registered owner of the lot whose title Cagatao seeks to nullify, should have been impleaded as an indispensable party. Section 7, Rule 3 of the 1997 Rules of Civil Procedure defines indispensable parties to be "parties in interest without whom no final determination can be had of an action." It is clear in this case that Cagatao failed to include Carlos in his action for the annulment of TCT No. 12159-A. Basic is the rule in procedural law that no man can be affected by any proceeding to which he is a stranger and strangers to a case cannot be bound by a judgment rendered by the court. It would be the height of injustice to entertain an action for the annulment of Carlos' title without giving her the opportunity to present evidence to support her claim of ownership through title. In addition, it is without question a violation of the constitutional guarantee that no person shall be deprived of property without due process of law.
Thus, should Cagatao wish to question the ownership of the subject lot of Carlos and Spouses Fernandez, he should institute a direct action before the proper courts for the cancellation or modification of the titles in the name of the latter two. He cannot do so now because it is tantamount to a collateral attack on Carlos' title, which is expressly prohibited by law and jurisprudence.
Here, petitioners impleaded respondent Misibis Land, DAA Realty, Philippine National Bank, Spouses Oscar and Cidra Garcia, Hector Cledera in his capacity as Registrar of Deeds of Albay, and John and Jane Does as party-respondents in their complaint below. Subsequently, the trial court dismissed the complaint through its assailed Order dated October 22, 2015. But for reasons known only to petitioners, they appealed the order of dismissal against respondent Misibis Land alone. This allowed the dismissal of the Complaint against DAA Realty et al. to lapse into finality. Unfortunately, Misibis Land is not the proper party against whom the complaint for nullifying the Deed of Absolute Sale dated February 21, 1996 ought to proceed. It was not privy to the contract of sale and is therefore in no position to defend its validity.
In view of the finality of the dismissal of the complaint as against DAA Realty, petitioners can no longer assail the validity of Deed of Absolute Sale dated February 21, 1996 and TCT No. 97059. Consequently, TCT No. 138212 which resulted from respondent's purchase of the property from DAA Realty may no longer be challenged based on the latter's purported null title. Otherwise, the case would be nothing more than a collateral attack on respondent's title which violates Section 48 of Presidential Decree (PD) 1529, viz:
Section 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.
In the same vein, the alleged violation of Section 53, PD 152963 - for failure to surrender Spouses Garcia's duplicate owner's copy of TCT No. T-77703 - cannot be raised against Misibis Land. For it was DAA Realty, not respondent Misibis Land which was required to surrender TCT No. T-77703 when it registered the Deed of Absolute Sale dated February 21, 1996 in its favor. When respondent registered the Deed of Absolute Sale dated April 21, 2005, it was only required to present TCT No. 97059 under the name of DAA Realty.
Petitioners failed to pay the correct docket fees
Under Section 7(a), Rule 141, the docket fees in cases involving real property such as an action for reconveyance based on fraud, depend on the assessed value of the subject property at the time the complaint was filed. The higher the assessed value, the higher the docket fees.
Here, respondent has never refuted that petitioners paid docket fees based on the assessed value of the property under DAA Realty's Tax Declaration No. 0059 dated 1998, albeit the case was filed in 2014 when the assessed value of the property had definitely increased.
In the landmark case of Sun Insurance Office, Ltd. v. Asuncion,64 the Court held that although belated payment of docket fees may still be allowed within a reasonable time, it cannot be extended beyond the applicable prescriptive or reglementary period. Thus, contrary to petitioners' claim, their failure to pay the correct docket fees here can no longer be cured. Ordering them to pay any deficiency will simply serve no purpose since their cause of action had already prescribed.
ACCORDINGLY, I vote to DENY the present appeal and AFFIRM the Orders dated October 22, 2015 and December 28, 2015 of the Regional Trial Court – Branch 15, Tabaco City, Albay in Civil Case No. T-2820.
1 Penned by Judge Alben Casimiro Rabe; rollo, p. 7.
2 Rollo, p. 15.
3 Id. at 72.
4 Id. at 73-78.
5 Id. at 79-81.
6 Id. at 82-83.
7 Id. at 83-84.
8 Id. at 85-88.
9 Id. at 145.
10 Id. at 145-153.
11 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.
12 Rollo, p. 160.
13 Id. at 163.
14 Id. at 163-164.
15 Id. at 165-166.
16 Id. at 168.
17 Id. at 169.
18 Id. at 175.
19 Id. at 176-177.
20 Id. at 178.
21 Id. at 195-196.
22 Article 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.
23 Rollo, pp. 186-191.
24 Id. at 191-193.
25 Id. at 194.
26 Id. at 201.
27 Id. at 209.
28 Id. at 217 and 229.
29 Id. at 7.
30 Id. at 15.
31 Id. at 37.
32 Id. at 45.
33 Id. at 100.
34 Citing Section 1, Rule 41 of the Rules of Court; rollo, p. 401.
35 Rollo, p. 402.
36 Id. at 402-403.
37 Id. at 403.
38 Id. at 404.
39 Id. at 406.
40 Id. at 409-410.
41 Id. at 417.
42 G.R. No. 217158, March 12, 2019.
43 672 Phil. 747, 756 (2011).
44 Section 6. Pleading grounds as affirmative defenses. — If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed. (5a)
The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer. (n)
45 Aquino v. Quiazon, 755 Phil. 793, 808-809 (2015).
46 Rollo, pp. 79-81.
47 Id. at 82-83.
48 Id. at 83-84.
49 Sps. Aboitiz and Cabarrus v. Sps. Po, 810 Phil. 123, 137 (2017).
51 Art. 1456, New Civil Code:
Art. 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.
52 Article 1144, New Civil Code: Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
53 Ocampo v. Ocampo, Sr., 813 Phil. 390, 401 (2017).
54 Article 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.
55 Uy v. Court of Appeals, 769 Phil. 705, 722 (2015).
57 Sps. Pajares v. Remarkable Laundry and Dry Cleaning, 806 Phil. 39, 45 (2017).
58 G.R. No. 196874, February 6, 2019.
59 Residents of Lower Atab & Teachers' Village, Sto. Tomas Proper Barangay, Baguio City v. Sta. Monica Industrial & Development Corporation, 745 Phil. 554, 563 (2014).
60 Rollo, p. 90.
61 Id. at 93.
62 719 Phil. 241, 252-254 (2013).
63 Section 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.
64 252 Phil. 280 (1989).
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