SECOND DIVISION
G.R. No. 208450, June 05, 2017
SPS. ROBERTO ABOITIZ AND MARIA CRISTINA CABARRUS, Petitioners, v. SPS. PETER L. PO AND VICTORIA L. PO, Respondents.
G.R. No. 208497
SPS. PETER L. PO AND VICTORIA L. PO, Petitioners, v. SPS. ROBERTO ABOITIZ AND MARIA CRISTINA CABARRUS, JOSE MARIA MORAZA, AND ERNESTO ABOITIZ AND ISABEL ABOITIZ, Respondents.
D E C I S I O N
LEONEN, J.:
This resolves two (2) Petitions for Review on Certiorari1 assailing the Court of Appeals' October 31, 2012 Decision2 and its June 17, 2013 Resolution3 in CA-G.R. CV No. 03803. The assailed decision affirmed the Regional Trial Court's Decision,4 which declared the spouses Peter Po and Victoria Po (Spouses Po) as the rightful owners of the parcel of land. However, the Court of Appeals ruled that respondents Jose Maria Moraza (Jose), spouses Ernesto Aboitiz (Ernesto), and Isabel Aboitiz (Isabel) were innocent buyers in good faith whose titles were entitled to protection.5 The assailed resolution denied the Motion for Partial Reconsideration of the spouses Roberto Aboitiz and Maria Cristina Cabarrus (Spouses Aboitiz).6
The Spouses Aboitiz filed the Petition7 docketed as G.R. No. 208450. The Spouses Po filed the Petition8 docketed as G.R. No. 208497. These cases are consolidated in the case at bar.
This case involves a parcel of land located in Cabancalan, Mandaue City,9 initially registered as Original Certificate of Title No. 0-887, and titled under the name of Roberto Aboitiz (Roberto).10 The land is referred to as Lot No. 2835.11
This parcel of land originally belonged to the late Mariano Seno (Mariano).12
On July 31, 1973, Mariano executed a Deed of Absolute Sale in favor of his son, Ciriaco Seno (Ciriaco), over a 1.0120-hectare land in Cebu covered by Tax Declaration No. 43358.13 This property included two (2) lots: Lot No. 2807 and the land subject of this case, Lot No. 2835.14
On May 5, 1978, Ciriaco sold the two (2) lots to Victoria Po (Victoria).15 The parties executed a Deed of Absolute Sale.16
On July 15, 1982, Mariano died and was survived by his five (5) children (Mariano Heirs): Esperanza Seno Vda. De Kuizon, Ramon Seno,17 Benita Seno Vda. De Lim, Simeon Seno,18 and Ciriaco.19
In 1990, Peter Po (Peter) discovered that Ciriaco "had executed a [q]uitclaim dated August 7, 1989 renouncing [his] interest over Lot [No.] 2807 in favor of [petitioner] Roberto."20 In the quitclaim, Ciriaco stated that he was "the declared owner of Lot [Nos.] 2835 and 2807."21
The Spouses Po confronted Ciriaco.22 By way of remedy, Ciriaco and the Spouses Po executed a Memorandum of Agreement dated June 28, 1990 in which Ciriaco agreed to pay Peter the difference between the amount paid by the Spouses Po as consideration for the entire property and the value of the land the Spouses Po were left with after the quitclaim.23
However, also in 1990, Lot No. 2835 was also sold to Roberto.24 The Mariano Heirs, including Ciriaco, executed separate deeds of absolute sale in favor of Roberto.25 Thereafter, Roberto immediately developed the lot as part of a subdivision called North Town Homes.26
In 1991, the Spouses Po declared Lot No. 2835 for taxation purposes and was issued Tax. Declaration No. 0634-A.27
In 1992, Roberto also declared Lot No. 2835 for taxation purposes and was issued Tax Declaration No. 1100, annotated with: "This tax declaration is also declared in the name of Mrs. VICTORIA LEE PO married to PETER PO under [T]ax [Declaration] [N]o. 0634-A so that one may be considered a duplicate to the other."28
On April 19, 1993, Roberto filed an application for original registration of Lot No. 2835 with the Mandaue City Regional Trial Court, acting as land registration court.29 The case was raffled to Branch 28 and docketed as LRC Case No. N-208.30
In its Decision dated October 28, 1993, the trial court granted the issuance of Original Certificate of Title No. 0-887 in the name of Roberto.31 The lot was immediately subdivided with portions sold to Ernesto and Jose.32
On November 19, 1996, the Spouses Po filed a complaint to recover the land and to declare nullity of title with damages.33
The complaint was docketed in Branch 55, Regional Trial Court of Mandaue City.34
The trial court ruled in favor of the Spouses Po in its Decision dated November 23, 2009:
WHEREFORE, premises considered, judgment is rendered in favor of plaintiffs, and against defendants, declaring the plaintiffs as owner of subject land and ordering the defendants reconvey and/or return to plaintiffs Lot No. 2835; declaring as absolute nullity all the documents of sale involving Lot 2835 executed by the Heirs of Mariano Seno in favor of defendant Roberto Aboitiz and such other documents used in the improvident issuance of titles in the name of defendants, and to cancel the said titles.35The Spouses Aboitiz appealed to the Court of Appeals. The Court of Appeals, in its Decision dated October 31, 2012, partially affirmed the trial court decision, declaring the Spouses Po as the rightful owner of the land. However, it ruled that the titles issued to respondents Jose, Ernesto, and Isabel should be respected.36
WHEREFORE, premises considered, this Honorable Court is respectfully prayed to render judgment in favor of plaintiffs and against defendants, ordering the latter as follows:Except for actions falling within the jurisdiction of the Municipal Trial Courts, the Regional Trial Courts have exclusive original jurisdiction over actions involving "title to, or possession of, real property."83 Section 19 of Batas Pambansa Blg. 129 provides:
1. To reconvey and/or return to plaintiffs Lot No. 2835 which is the subject matter of this complaint;
2. To declare as absolute nullity all the documents of sale involving Lot 2835 in favor of defendants and such other documents used in the improvident issuance of the Title in the name of defendants, and to cancel said Title;
3. To pay jointly and severally the amount of P1,000,000.00 as moral damages; P500,000.00 as actual damages; P100,000.00 as attorneys fees and P20,000.00 as litigation expenses.
Plaintiffs further pray for such other reliefs and remedies just and equitable in the premises.82
Section 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:An action for reconveyance and annulment of title is an action involving the title to real property.84
. . . .
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts[.]
Section 9. Jurisdiction. - The Intermediate Appellate Court shall exercise:While the Court of Appeals has jurisdiction to annul judgments of the Regional Trial Courts, the case at bar is not for the annulment of a judgment of a Regional Trial Court. It is for reconveyance and the annulment of title.
. . . .
(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts[.]
An action for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting, and only if the judgment, final order or final resolution sought to be annulled was rendered by a court lacking jurisdiction or through extrinsic fraud. An action for reconveyance, on the other hand, is a legal and equitable remedy granted to the rightful owner of land which has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the land to him. The Court of Appeals has exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts whereas actions for reconveyance of real property may be filed before the Regional Trial Courts or the Municipal Trial Courts, depending on the assessed value of the property involved.As stated, a complaint for reconveyance is a remedy where the plaintiff argues for an order for the defendant to transfer its title issued in a proceeding not otherwise invalid. The relief prayed for may be granted on the basis of intrinsic rather than extrinsic fraud; that is, fraud committed on the real owner rather than fraud committed on the procedure amounting to lack of jurisdiction.
. . . .
Petitioners allege that: first, they are the owners of the land by virtue of a sale between their and respondents' predecessors-in-interest; and second, that respondents Ramoses and ARC Marketing illegally dispossessed them by having the same property registered in respondents' names. Thus, far from establishing a case for annulment of judgment, the foregoing allegations clearly show a case for reconveyance.87 (Citations omitted)
SECTION 53. Presentation of Owner's Duplicate Upon Entry of New Certificate. - . . .Article 1456 of the Civil Code provides that a person acquiring a property through fraud becomes an implied trustee of the property's true and lawful owner.97
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...
Art. 1456 of the Civil Code provides:Thus, the law creates a trust in favor of the property's true owner.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.Thus, it was held that when a party uses fraud or concealment to obtain a certificate of title of property, a constructive trust is created in favor of the defrauded party.
Constructive trusts are "created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold."
When property is registered in another's name, an implied or constructive trust is created by law in favor of the true owner. The action for reconveyance of the title to the rightful owner prescribes in 10 years from the issuance of the title.105 (Citations omitted)
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:In an action for reconveyance, the right of action accrues from the ti.me the property is registered.106
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
In the case at bar, respondent's action which is for Reconveyance and Cancellation of Title is based on an implied trust under Art. 1456 of the Civil Code since he averred in his complaint that through fraud petitioners were able to obtain a Certificate of Title over the property. He does not seek the annulment of a voidable contract whereby Articles 1390 and 1391 of the Civil Code would find application such that the cause of action would prescribe in four years.Likewise, in Duque v. Domingo:112
. . . .
An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged fraudulent registration or date of issuance of the certificate of title over the property.
It is now well-settled that the prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant to Art. 1144. 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.111 (Citations omitted, emphasis supplied)
The registration of an instrument in the Office of the Register of Deeds constitutes constructive notice to the whole world, and, therefore , discovery of the fraud is deemed to have taken place at the time of registration. Such registration is deemed to be a constructive notice that the alleged fiduciary or trust relationship has been repudiated. It is now settled that an action on an implied or constructive trust prescribes in ten (10) years from the date the right of action accrued. The issuance of Transfer Certificate of Title No. 7501 in 1931 to Mariano Duque commenced the effective assertion of adverse title for the purpose of the statute of limitations.113 (Citations omitted)Registration of the property is a "constructive notice to the whole world."114 Thus, in registering the property, the adverse party repudiates the implied trust.115 Necessarily, the cause of action accrues upon registration.116
There is laches when: (1) the conduct of the defendant or one under whom he claims, gave rise to the situation complained of; (2) there was delay in asserting a right after knowledge of the defendant's conduct and after an opportunity to sue; (3) defendant had no knowledge or notice that the complainant would assert his right; (4) there is injury or prejudice to the defendant in the event relief is accorded to the complainant.130 (Citation omitted)"Laches is different from prescription."131 Prescription deals with delay itself and thus is an issue of how much time has passed.132 The time period when prescription is deemed to have set in is fixed by law.133 Laches, on the other hand, concerns itself with the effect of delay and not the period of time that has lapsed.134 It asks the question whether the delay has changed "the condition of the property or the relation of the parties" such that it is no longer equitable to insist on the original right.135 In Nielson & Co., Inc. v. Lepanto Consolidated Mining Co.:136
Appellee is correct in its contention that the defense of laches applies independently of prescription. Laches is different from the statute of limitations. Prescription is concerned with the fact of delay. Whereas laches is concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is based on fixed time, laches is not.137The defense of laches is based on equity.138 It is not based on the title of the party invoking it, but on the right holder's "long inaction or inexcusable neglect" to assert his claim.139
11) That demands were made upon the defendants to reconvey to plaintiffs Lot 2835 unlawfully and feloniously acquired by defendants, but to no avail, thereby compelling the plaintiffs to elevate the matter for barangay conciliation, and for failure of the parties to effect a settlement, the proper Certification to file action was then issued, a copy of which is hereto attached as Annex "L."147In their Answer with Counterclaim, the Spouses Aboitiz did not deny that demands were made upon them and that the matter was elevated for barangay conciliation:
8. Par. 11 is denied as regards the all[e]gation that Lot 2835 was feloniously and un[l]awfully acquired by defendants, for being false. The truth is that defendants were in good faith in acquiring same property. Defendants refused to meet the demands of settlement by plaintiffs because they are strangers to the property in question.148When they discovered that the property was registered in the name of the Spouses Aboitiz in 1993, the Spouses Po then filed the instant complaint to recover the property sold to them by Ciriaco, alleging that it was done without their knowledge, through evident bad faith and fraud.149 The Spouses Po filed this case in less than three (3) years from the time of registration.
That this parcel of land is covered by tax declarations, to wit:This Court rules that this cannot be binding in this action for reconveyance.
1) Tax Dec. No. 43174 in the name of Ciriaco Seno for the year 1953 (Exh. "T");
. . . .
11) Tax Dec. No. 2835 in the name of applicant, Roberto Aboitiz for the year 1991 (Exh. "DD").
That the tax declarations covering Lot No. 2835 are in the name of Ciriaco Seno because the heirs of Mariano Seno have agreed that Lot No. 2835 be held in trust by Ciriaco Seno in favor of the heirs.155
Section 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:Res judicata in the concept of bar by prior judgment proscribes the filing of another action based on "the same claim, demand, or cause of action."157 It applies when the following are present: (a) there is a final judgment or order; (b) it is a judgment or order on the merits; (c) it was "rendered by a court having jurisdiction over the subject matter and parties"; and (d) there is "identity of parties, of subject matter, and of causes of action" between the first and second actions.158. . . .(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.
The second concept - conclusiveness of judgment - states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue[s] be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not required but merely identity of issues.162However, in Racoma v. Fortich,163 this Court held that res judicata could not be a defense in an action for reconveyance based on fraud where the complainant had no knowledge of the application for registration:
The other ground upon which the lower court dismissed the complaint is res judicata. It is stated in the order of dismissal that the plaintiff had admitted that the property in controversy was applied for by defendant Maximina Fortich in a cadastral proceeding and under Act 496; that the proceedings were in rem and, therefore, the whole world, including the plaintiff, were parties thereto and bound by the judgment thereon... [I]t is obvious that the lower court was referring to the legal effect of the conclusiveness against all persons of the in rem decision in the cadastral case rather than the actual fact that the plaintiff was a claimant who appeared in the said case, for he alleged in his complaint that he "has no knowledge whatsoever of the application for registration filed by defendant Maximina Fortich and the order of decree of registration issued in favor of the defendant Maximina Fortich by this Honorable Court until on February 25, 1967..." (Record on Appeal, page 30). Such being the case, then an action for reconveyance is available to the plaintiff, the decree of registration notwithstanding, for...The reason for this rule is to prevent the unjust deprivation of rights over real property. As discussed in People v. Cainglet:165"..., it is now a well-settled doctrine in this jurisdiction that the existence of a decree of registration in favor of one party is no bar to an action to compel reconveyance of the property to the true owner, which is an action in personam, even if such action be instituted after the year fixed by Section 38 of the Land Registration Act as a limit to the review of the registration decree, provided it is shown that the registration is wrongful and the property sought to be reconveyed has not passed to an innocent third party holder for value.["]164 (Emphasis supplied)
It is fundamental and well-settled that a final judgment in a cadastral proceeding - a proceeding in rem - is binding and conclusive upon the whole world. Reason is that public policy and public order demand not only that litigations must terminate at some definite point but also that titles over lands under the Torrens system should be given stability for on it greatly depends the stability of the country's economy. Interest republicae ut sit finis litium. However, this conclusiveness of judgment in the registration of lands is not absolute. It admits of exception. Public policy also dictates that those unjustly deprived of their rights over real property by reason of the operation of our registration laws be afforded remedies. Thus, the aggrieved party may file a suit for reconveyance of property or a personal action for recovery of damages against the party who registered his property through fraud, or in case of insolvency of the party who procured the registration through fraud, an action against the Treasurer of the Philippines for recovery of damages from the Assurance Fund. Through these remedial proceedings, the law, while holding registered titles indefoasible, allows redress calculated to prevent one from enriching himself at the expense of other. Necessarily, without setting aside the decree of title, the issues raised in the previous registration case are relitigated, for purposes of reconveyance of said title or recovery of damages.166 (Citations omitted, emphasis supplied)In this case, the Spouses Po allege that the registration was done through fraud. They contend that they were unaware and were thus unable to contest the registration and prove their claim over the property. Aside from several tax receipts, the Spouses Po formally offered as evidence, among others, the Deed of Sale executed by Mariano in Ciriaco's favor, the Deed of Absolute Sale executed by Ciriaco in their favor, and the Tax Declaration under Victoria's name. Additionally, they also submitted their Memorandum of Agreement with Ciriaco and the Quitclaim executed by Ciriaco in favor of the Spouses Aboitiz.167 These documents were not considered by the land registration court when it issued the title in favor of the Spouses Aboitiz. The Spouses Po also offered the Application of Original Registration of Title of the Spouses Aboitiz to prove that the Spouses Aboitiz only submitted to the land registration court the cancelled tax declarations of Ciriaco, instead of the tax declaration of the Spouses Po.168
[A]n action for reconveyance is a recognized remedy, an action in personam, available to a person whose property has been wrongfully registered under the Torrens system in another's name. In an action for reconveyance, the decree is not sought to be set aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always available as long as the property has not passed to an innocent third person for value.Likewise in Naval v. Court of Appeals:172
There is no quibble that a certificate of title, like in the case at bench, can only be questioned through a direct proceeding. The MCTC and the CA, however, failed to take into account that in a complaint for reconveyance, the decree of registration is respected as incontrovertible and is not being questioned. What is being sought is the transfer of the property wrongfully or erroneously registered in another's name to its rightful owner or to the one with a better right. If the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of the property.171 (Citations omitted, emphasis supplied)
Ownership is different from a certificate of title. The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be coowned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.The rationale for allowing reconveyance despite the finality of the registration is that the issuance of a certificate of title does not create or vest ownership to a person over the property.174 Registration under the Torrens system "is not a mode of acquiring ownership."175 A certificate is only a proof of ownership.176 Thus, its issuance does not foreclose the possibility of having a different owner, and it cannot be used against the true owner as a shield for fraud.177
As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the registered property to its true owners. The rationale for the rule is that reconveyance does not set aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been wrongfully or erroneously registered in another person's name, to its rightful or legal owner, or to the one with a better right.173 (Citations omitted, emphasis supplied)
Analyzing the adduced and admitted evidence of both parties, Art. 1544 of the Civil Code cannot be aptly applied in the case at bar, for reason that only the sale of Ciriaco Seno (Exh. "A" Exh. A/1" Exh. 2"/ A, A-1 and A-2) has the validating elements of sale, whereas the rest of the Deeds of Sale (Exhs 1 to 5) executed by the Heirs of Mariano Seno in favor of the Defendants are void, for containing untruthful statements as pleaded and proven. They are no longer the owners of the subject property when they executed the several Deeds of Conveyance to defendant Roberto Aboitiz.With the exception of its ruling regarding respondents Jose, Ernesto, and Isabel being purchasers in good faith, these factual findings were affirmed by the Court of Appeals.
On the first issue on the identity and location of the land, the sale of Ciriaco Seno to Plaintiffs (Exh. "A") reflected in the Tax Declarations that the Defendants used in their titling proceeding is the very same lot as certified by the Barangay Captain dated July 28, 1999 under Plaintiff's Request for Admission.
Concerning the second formulated issue, only the Deed of Sale executed by Ciriaco Seno was valid with all the attending requisites of sale. It was sold by the legitimate owner of the land, Ciriaco Seno to the Plaintiffs. The sale (Exh. A, Exhibit "X") enjoyed preferential date of execution, being dated or executed in 1978 by the lawful owner Ciriaco Seno who was first to register the sale in the Registry of Property office, and due to such registration, the Tax Declaration of Ciriaco Seno, was cancelled and a new Tax Declaration was issued in the name of Victoria Po for as shown in Exh. E the said tax declaration succeeded in canceling the Tax Declaration of Mariano Seno (Exh. C) and was issued thereafter a Tax Declaration in the name of C[i]riaco Seno (Exh. D). So, when the latter sold the subject land to plaintiffs in 1978, the same was already owned by C[i]riaco Seno.
When Mariano Seno died in 1982, the subject land owned by C[i]riaco Seno, naturally, is not part of the estate of Mariano Seno, for at that point in time, the subject land is now owned by plaintiffs Sps. Po, and the same was declared in their names (Exh. "D" "E" & "E-1").
As to the issue whether defendant Roberto Aboitiz was a purchaser in good faith and for value, the Court holds that defendant Roberto Aboitiz was not a purchaser in good faith and for value for he was already informed of the ownership of plaintiffs over the subject land during the conciliation proceedings before the barangay official when plaintiffs filed a barangay case against him.
. . . .
In this case, the Court believes that defendant Roberto Aboitiz is aware of the proprietary rights of the plaintiffs considering the land was already declared for taxation purposes in plaintiffs' names after the tax declaration of said land, first in the name of Mariano Seno was cancelled and another one issued in the name of C[i]riaco Seno when the latter bought the said land from his father Mariano Seno, and after the said tax declaration in the name of C[i]riaco Seno was cancelled and another one issued in the name of plaintiffs herein.
So, defendant Roberto Aboitiz purchased the subject land from the Heirs of Mariano Seno who are no longer the owners thereof and the tax declaration of subject land was no longer in the name of Mariano Seno nor in the name of Heirs of Mariano Seno.
The City Assessor of Mandaue City even issued a Certification (Exh. X) to the effect that Tax Declaration No. 0634-A in the name of Mrs. Victoria Lee Po married to Peter Po was issued prior to the issuance of T.D. No. 1100 in the name of Roberto Aboitiz married to Maria Cristina Cabarruz.
Buyers of any untitled parcel of land for that matter, to protect their interest, will first verify from the Assessor's Office that status of said land whether it has clean title or not.196
This is to certify that per records of this Office, Deed of Sale executed by and between Ciriaco Seno and Victoria Lee known as Doc. No. 66; Page No. 14; Book No. I; Series of 1978 entered in the Notarial Register of Notary Public Jesus Pono is not among the documents transferred by the Regional Trial Court of Cebu for safekeeping.198Likewise, the Certification dated April 4, 1997 of the Office of the Clerk of Court of the Regional Trial Court of Cebu, 7th Judicial Region, Cebu City provides:
This is to certify that as per notarial records on file with this office, available and found as of this date, Atty. Jesus M. Pono had been issued a Notarial Commission for the term 1978-1979.These Certifications do not declare that the Deed of Absolute Sale does not exist. They only state that at the time of their issuance, the Notary Public had not submitted his notarial reports or that the document had not been transferred to the archives for safekeeping. It cannot logically be concluded from these certifications that the document is inexistent, false, or fraudulent.
It is further certifie[d] that said Notary Public has not submitted his notarial reports for the year 1978-1979 in this office wherein the Deed of Sale as stated on the letter dated March 31, 1997 designated as Doc. no. 66; Page no. 14; Book No. I and Series of 1978 is allegedly included.199 (Emphasis supplied)
Section 30. Proof of notarial documents. - Every instrument duly acknowledged or proved and certified as provided by law, may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of the execution of the instrument or document involved.When a private document is notarized, the document is converted to a public document which is presumed regular, admissible in evidence without need for proof of its authenticity and due execution, and entitled to full faith and credit upon its face.201
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.An indispensable party is the party whose legal presence in the proceeding is so necessary that "the action cannot be finally determined" without him or her because his or her interests in the matter and in the relief "are so bound up with that of the other parties."206
Similarly, by virtue of the second Deed of Absolute Sale between Spring Homes and the Spouses Lumbres, the Spouses Lumbres became the absolute and registered owner of the subject property herein. As such, they possess that certain interest in the property without which, the courts cannot proceed for settled is the doctrine that registered owners of parcels of land whose title is sought to be nullified should be impleaded as an indispensable party. Spring Homes, however, which has already sold its interests in the subject land, is no longer regarded as an indispensable party, but is, at best, considered to be a necessary party whose presence is necessary to acijudicate the whole controversy, but whose interests are so far separable that a final decree can be made in its absence without affecting it. This is because when Spring Homes sold the property in question to the Spouses Lumbres, it practically transferred all its interests therein to the said Spouses. In fact, a new title was already issued in the names of the Spouses Lumbres. As such, Spring Homes no longer stands to be directly benefited or injured by the judgment in the instant suit regardless of whether the new title registered in the names of the Spouses Lumbres is cancelled in favor of the Spouses Tablada or not. Thus, contrary to the ruling of the RTC, the failure to summon Spring Homes does not deprive it of jurisdiction over the instant case for Spring Homes is not an indispensable party.212 (Citations omitted, emphasis supplied).The Mariano Heirs, as the alleged sellers of the property, are not indispensable parties. They are at best necessary parties, which are covered by Rule 3, Section 8 of the Rules of Court:
Section 8. Necessary Party. - A necessary party is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.Necessary parties may be joined in the case "to adjudicate the whole controversy," but the case may go on without them because a judgment may be rendered without any effect on their rights and interests.213
This tax declaration is also declared in the name of Mrs. Victoria Lee Po, married to Peter Po under tax dec. no. 0634-A so that one may be considered a duplicate to the other.However, if a property is registered, the buyer of a parcel of land is not obliged to look beyond the transfer certificate of title to be considered a purchaser in good faith for value.217
Section 44. Statutory liens affecting title. - Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted in said certificate and any of the following encumbrances which may be subsisting, namely:In Cruz v. Court of Appeals:219
First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record.
Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government to collect taxes payable before that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof, if the certificate of title does not state that the boundaries of such highway or irrigation canal or lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian reform. (Emphasis supplied)
The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.The rationale for this rule is the public's interest in sustaining "the indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance" on it.221 In Leong v. See:222
Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. Even if a decree in a registration proceeding is infected with nullity, still an innocent purchaser for value relying on a Torrens title issued in pursuance thereof is protected.220
The Torrens system was adopted to "obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring further."Thus, respondents were not obliged to look beyond the title before they purchased the property. They may rely solely on the face of the title.
One need not inquire beyond the four comers of the certificate of title when dealing with registered property...
. . . .
The protection of innocent purchasers in good faith for value grounds on the social interest embedded in the legal concept granting indefeasibility of titles. Between the third party and the owner, the latter would be more familiar with the history and status of the titled property. Consequently, an owner would incur less costs to discover alleged invalidities relating to the property compared to a third party. Such costs are, thus, better borne by the owner to mitigate costs for the economy, lessen delays in transactions, and achieve a less optimal welfare level for the entire society.223 (Citations omitted)
Endnotes:
1 The Petitions were filed under Rule 45 of the Rules of Court.
2Rollo (G.R. No. 208450), pp. 42-57-A. The Decision was penned by Associate Justice Edgardo L. Delos Santos and concurred in by Associate Justices Gabriel T. Ingles and Maria Elisa Sempio Diy of the Special Nineteenth Division, Court of Appeals, Cebu City.
3 Id. at 60-61. The Resolution was penned by Associate Justice Edgardo L. Delos Santos and concurred in by Associate Justices Gabriel T. Ingles and Maria Elisa Sempio Diy of the Special Nineteenth Division, Court of Appeals, Cebu City.
4Rollo (G.R. No. 208497), pp. 60-71. The Decision, docketed as Civil Case No. MAN-2803, was penned by Presiding Judge Ulric R. Cañete of Branch 55, Regional Trial Court, Mandaue City.
5Rollo (G.R. No. 208450), pp. 55-56.
6 Id. at 60-61.
7 Id. at 11-40-A.
8Rollo (G.R. No. 208497), pp. 10-27.
9Rollo (G.R. No. 208450), p. 43.
10 Id. at 45.
11 Id.
12 Id. at 43.
13 Id. at 43-44.
14 Id.
15 Id. at 44.
16 Id.
17 Deceased and survived by his spouse and seven (7) children.
18 Deceased and survived by his spouse and six (6) children.
19Rollo (G.R. No. 208450), p. 43.
20 Id. at 44.
21 Id. at 87.
22 Id. at 44.
23 Id.
24 Id.
25 Id.
26 Id. at 16, Petition for Review of Spouses Aboitiz.
27 Id.
28 Id. at 45.
29 Id.
30 Id.
31 Id.
32 Id. See rollo, p. 74. Ernesto is married to Maria Isabel Aboitiz.
33 Id. In the CA Decision and in the Spouses Po's Brief for the Appellee filed with the Court of Appeals, the date of filing of the complaint is November 19, 1996. See rollo, (G.R. No. 208450), pp. 45 and 193, respectively.
34 Id. at 42.
35 Id. at 175.
36 Id. at 57.
37 Id. at 48-49.
38 Id. at 54.
39 Id. at 49-50.
40 Id. at 49.
41 Id. at 51-52.
42 Id. at 50.
43 Id. at 55-56.
44 Id.
45 Id. at 11-40-A.
46 Id. at 23.
47 Id. at 21.
48 Id. at 23.
49 Id. at 27-28.
50 Id.
51 Id. In the CA Decision and in the Spouses Po's Brief for the Appellee filed with the Court of Appeals, the date of filing of the complaint is November 19, 1996. See rollo, (G.R. No. 208450), pp. 45 and 193, respectively.
52 Id. at 32.
53 Id. at 25.
54 Id. at 29.
55 Id. at 32.
56 Id.
57 Id.
58 Id. at 34.
59 Id. at 275-288.
60 Id. at 282.
61 Id. at 283-284.
62 Id. at 284.
63 Id. at 285.
64 Id.
65 Id.
66 Id. at 287-288.
67 Id. at 293-307.
68Rollo (G.R. No. 208497), p. 18.
69 Id.
70 Id. at 86-106.
71 Id. at 103.
72 Id. at 134-142, Reply to Respondents' Comment.
73Rollo (G.R. No. 208450), p. 20.
74 Id. at 23.
75 Id. at 81-85.
76Toledo vs. Court of Appeals, G.R. No. 167838, August 5, 2015, 765 SCRA 104, 115 [Per J. Jardeleza, Third Division].
77Toledo vs. Court of Appeals, G.R. No. 167838, August 5, 2015, 765 SCRA 104, 115 [Per J. Jardeleza, Third Division].
78Rollo (G.R. No. 208450), pp. 81-85.
79 Id.
80 Id.
81 Id.
82 Id. at 83.
83Heirs of Concha, Sr. v. Spouses Lumocso, 564 Phil. 580, 595-597 (2007) [Per C.J. Puno, First Division].
84 Id. at 596-597.
85Rollo (G.R No. 208450), p. 23, Petition.
86 G.R. No. 167838, August 5, 2015, 765 SCRA 104 [Per J. Jardeleza, Third Division].
87 Id. at 113-118.
88Rollo (G.R. No. 208450), pp. 81-85.
89 Id. at 27-28.
90 Id. In the CA Decision and in the Spouses Po's Brief for the Appellee filed with the Court of Appeals, the date of filing of the complaint is November 19, 1996. See rollo, (GR. No. 208450), pp. 45 and 193, respectively.
91Amerol v. Bagumbaran, 238 Phil. 397, 409 (1987) [Per J. Sarmiento, Second Division]; Caro v. Court of Appeals, 259 Phil. 891, 898 (1989) [Per J. Medialdea, First Division].
92 Pres. Decree No. 1529, sec. 53, par. 3 provides:
Section 53. Presentation of Owner's Duplicate Upon Entry ofNew Certificate. - . . .
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.
93 Property Registration Decree (1978).
94 CIVIL CODE, art. 1456 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.
95 CIVIL CODE, art. 1144(2) provides:
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
. . . .
(2) Upon an obligation created by law[.]
96Caro v. Court of Appeals, 259 Phil. 891, 898 (1989) [Per J. Medialdea, First Division].
97 CIVIL CODE, art. 1456 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.
98Salvatierra v. Court of Appeals, 329 Phil. 758, 775 (1996) [Per Hermosisima, Jr., Third Division].
99 Id.
100 Id.
101 CIVIL CODE, art. 1456 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.
102Salvatierra v. Court of Appeals, 329 Phil. 758, 775 (1996) [Per Hermosisima, Jr., Third Division].
103 Id.
104Crisostomo v. Garcia, Jr., 516 Phil. 743 (2006) [Per J. Chico-Nazario, First Division].
105 Id. at 752-753.
106 Id. at 752.
107Crisostomo v. Garcia, Jr., 516 Phil. 743 (2006) [Per J. Chico-Nazario, First Division].
108 Id. at 746.
109 Id. at 747.
110 Id. at 746.
111 Id. at 752-753.
112 170 Phil. 676 (1977) [Per J. Fernandez, First Division].
113 Id. at 686.
114 Id.
115 Id.
116 Id.
117Crisostomo v. Garcia, Jr., 516 Phil. 743, 751-752 (2006) [Per J. Chico-Nazario, First Division].
118 Id.
119 Id.
120 CIVIL CODE, art. 1390 provides:
Article 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.
121 CIVIL CODE, art. 1391 provides:
Article 1391. The action for annulment shall be brought within four years. This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.
122Crisostomo v. Garcia, Jr., 516 Phil. 743, 751-752 (2006) [Per J. Chico-Nazario, First Division].
123 Id. at 752-753.
124Rollo (G.R. No. 208450), pp. 29-31, Petition.
125 Id. at 25.
126 Id. at 29.
127 Id. at 30-31.
128Ignacio v. Basilio, 418 Phil. 256, 265-266 (2001) [Per J. Quisimbing, Second Division].
129 Id. at 266.
130 Id. at 266.
131Nielson & Co., Inc. v. Lepanto Consolidated Mining Co., 125 Phil. 204, 219 (1966) [Per J. Zaldivar, En Banc].
132 Id.
133 Id.
134 Id.
135 Id.
136 125 Phil. 204 (1966) [Per J. Zaldivar, En Banc].
137 Id. at 219.
138Pabalate v. Echarri, Jr., 147 Phil. 472, 475 (1971) [Per J. Makalintal, En Banc].
139 Id.
140Rollo (G.R. No. 208450), pp. 48-49.
141Rollo (GR. No. 208497), p. 66.
142Rollo (GR. No. 208450), p. 44.
143 Id. at 44.
144 Id. at 45.
145 Id. at 44.
146 Id. at 84.
147 Id.
148 Id. at 95.
149 Id. at 45.
150 Id. at 25.
151 Id.
152 Id. at 26.
153 Id. at 67.
154 Id. at 68.
155 Id. at 69.
156Dy v. Yu, G.R. No. 202632, July 8, 2015, 762 SCRA 357, 373 [Per J. Perlas-Bernabe, First Division].
157 Id.
158 Id.
159 Id.
160 Id.
161 301 Phil. 91 (1994) [Per J. Melo, En Banc].
162 Id. at 103.
163 148-A Phil. 454 (1971) [Per J.J.B.L. Reyes, En Banc].
164 Id. at 460-461. See also Cabanas vs. Register of Deeds, 40 Phil. 620 (1919) [Per J. Torres, First Division]; Dizon vs. Lacap, 50 Phil. 193 (1927) [Per J. Street, Second Division]; Escobar vs. Locsin, 74 Phil. 86 (1943) [Per J. Bocobo, First Division]; Sumira vs. Vistan, 74 Phil. 138 (1943) [Per J. Moran, First Division]; Palma vs. Cristobal, 77 Phil. 712 (1946) [Per J. Perfecto, En Banc].
165 123 Phil. 568 (1966) [Per J.P. Bengzon, En Banc].
166 Id. at 573-574.
167Rollo (G.R. No. 208450), pp. 99-100.
168 Id. at 102.
169Hortizuela v. Tagufa, 754 Phil. 499, 512 (2015) [Per J. Mendoza, Second Division].
170 754 Phil. 499 (2015) [Per J. Mendoza, Second Division].
171 Id. at 507-508.
172 518 Phil. 271 (2006) [Per J. Ynares-Santiago, First Division).
173 Id. at 282-283.
174Wee v. Mardo, 735 Phil. 420, 433 (2014) [Per J. Mendoza, Third Division).
175 Id.
176 Id.
177 Id.
178Abes v. Rodil, 124 Phil. 243, 248 (1966) [Per J. Sanchez, En Banc].
179 Id.
180 Id.
181Rollo (G.R. No. 208450), p. 32, Petition for Review.
182 Id.
183 Id.
184 See Fangonil-Herrera v. Fangonil, 558 Phil. 235, 255-257 (2007) [Per J. Chico-Nazario, Third Division], citing Philippine Airlines, Inc. v. Court of Appeals, 341 Phil. 624 (1997) [Per J. Regalado, Second Division].
185 See Fangonil-Herrera v. Fangonil, 558 Phil. 235, 255-257 (2007) [Per J. Chico-Nazario, Third Division], citing Philippine Airlines, Inc. v. Court of Appeals, 341 Phil. 624 (1997) [Per J. Regalado, Second Division].
186 See Fangonil-Herrera v. Fangonil, 558 Phil. 235, 255-257 (2007) [Per J. Chico-Nazario, Third Division], citing Philippine Airlines. Inc. v. Court of Appeals, 274 Phil. 624 (1997) [Per J. Regalado, Second Division].
187Rollo (G.R. No. 208497), p. 70.
188 Id. at 71.
189 Id. at 66.
190 Id.
191 Id.
192 Id. at 67.
193 Id.
194 Id. at 68.
195 Id.
196 Id. at 69-71.
197Rollo, (G.R. No. 208450), p. 17.
198 Id. at 92.
199 Id. at 93.
200Destreza v. Riñoza-Plazo, 619 Phil. 775, 782-783 (2009) [Per J. Abad, Second Division].
201Heirs of Spouses Liwagon v. Heirs of Spouses Liwagon, G.R. No. 193117, November 26, 2014, 743 SCRA 16, 24 [Per J. Villarama, Third Division].
202 Id.
203Destreza v. Riñoza-Plazo, 619 Phil. 775, 782-783 (2009) [Per J. Abad, Second Division].
204 Id.
205Rollo (G.R. No. 208450), p. 34.
206Lozano v. Ballesteros, 273 Phil. 43, 54 (1991) citing Co v. Intermediate Appellate Court, 245 Phil. 347 (1988) [Per J. Cruz, First Division].
207 Id. citing Acting Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati v. Regional Trial Court of Makati, Branch 57, 263 Phil. 568 (1990) [Per J. Sarmiento, En Banc].
208 Id.
209 Id.
210Spring Homes Subdivision Co., Inc. v. Spouses Tablada, Jr., G.R. No. 200009, January 23, 2017 8-9 [Per J. Peralta, Second Division].
211 G.R. No. 200009, January 23, 2017 [Per J. Peralta, Second Division].
212 Id. at 10-11.
213Seno v. Mangubat, 240 Phil. 121, 131 (1987) [Per J. Gancayco, First Division].
214U.S. v. Ballena, 18 Phil. 382, 385 (1911) [Per J. Trent, En Banc].
215Leong v. See, G.R. No. 194077, December 3, 2014, 743 SCRA 677, 687 [Per J. Leonen, Second Division].
216Sandoval v. Court of Appeals, 329 Phil. 48, 62 (1996) [Per J. Romero, Second Division].
217Leong v. See, G.R. No. 194077, December 3, 2014, 743 SCRA 677, 688 [Per J. Leonen, Second Division].
218 Property Registration Decree (1978).
219 346 Phil. 506 (1997) [Per J. Belosillo, First Division].
220 Id. at 511-512.
221Claudio v. Spouses Saraza, G.R. No. 213286, August 26, 2015, 768 SCRA 356, 365 [Per J. Mendoza, Second Division], citing Cavite Development Bank vs. Lim, 381 Phil. 355 (2000) [Per J. Mendoza, Second Division].
222 G.R. No. 194077, December 3, 2014, 743 SCRA 677, 687 [Per J. Leonen, Second Division].
223 Id. at 686-688.
224Sandoval v. Court of Appeals, 329 Phil. 48, 60 (1996) [Per J. Romero, Second Division].
225 Id.
226 Id.
227Rollo (G.R. No. 208450), pp. 42-57.
228 Id. at 60-61.