SECOND DIVISION
G.R. No. 226065, July 29, 2019
HEIRS OF SOLEDAD ALIDO, PETITIONERS, v. FLORA CAMPANO, OR HER REPRESENTATIVES AND THE REGISTER OF DEEDS, PROVINCE OF ILOILO, RESPONDENTS.
D E C I S I O N
REYES, J. JR., J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the January 20, 2016 Decision1 and the May 31, 2016 Resolution2 of the Court of Appeals-Cebu City (CA) in CA-G.R. CV No. 04983, which reversed the September 24, 2012 Decision3 of the Regional Trial Court, Branch 33, Iloilo City (RTC).
The present controversy revolves around a parcel of land in Barangay Abang-Abang,* Alimondian, Iloilo covered by Original Certificate of Title (OCT) No. F-16558 and registered under the name of Soledad Alido (Alido).
Factual background
On March 17, 1975, Alido was able to register the said parcel of land under her name. In 1978, Flora Campano (respondent) was able to take possession of the land and the owner's duplicate of OCT No. F-16558, and paid its realty taxes. Allegedly, Alido had sold the property to her.4
On September 18, 1996, Alido died leaving behind her children, namely Reynaldo Almendral, Maggie Almendral-Sencil and Rodrigo Almendral. On September 8, 2009, the heirs of Alido (petitioners) executed a Deed of Adjudication of the above-mentioned property and sought to register the property in their names. As such, they needed to retrieve OCT No. F-16558, but respondent refused to do so. Thus, they were constrained to file a verified petition before the RTC for respondent to surrender the owner's duplicate of the title.5
RTC Decision
In its September 24, 2012 Decision, the RTC granted petitioners' petition and ordered respondent to surrender the owner's duplicate of OCT No. F-16558. The trial court ruled that since Alido is the registered owner of the property, respondent cannot assert any right over the same and that the payment of realty taxes does not prove ownership over the property. It explained that as registered owner of the land, Alido's right cannot be defeated by prescription. The RTC also expounded that the purported sale between Alido and respondent was not valid because it was an oral sale. The trial court posited that the law requires that the sale of real property must appear in a public instrument. It expounded that the delivery of the certificate of title did not create a valid sale. Thus, it disposed:
IN VIEW THEREOF, judgment is hereby rendered in favor of the petitioners and against the respondent, whereby respondent Flora Campano is ordered to surrender the owner's duplicate certificate of Original Certificate of Title No. F-16558 with the Register of Deeds for the Province of Iloilo. In the event that the said respondent is not amenable to the process of this Court, the Register of Deeds is directed to annul the owner's duplicate certificate of Original Certificate of Title No. F-16558 in the possession of the latter and to issue new owner's duplicate certificate of Original Certificate of Title No. F-16558 in lieu thereof which shall contain a memorandum of the annulment of the outstanding duplicate copy and to carry whatever entries or annotations made thereat before its annulment but shall, in all respects, be entitled to like faith and credence as the original owner's duplicate certificate of title, upon payment of the required fees thereof.
SO ORDERED.6
IN LIGHT OF THE FOREGOING, the instant appeal is GRANTED. The Decision dated September 24, 2012 of the RTC, Branch 33, Iloilo City in Cad. Case No. Free Patent, is REVERSED and SET ASIDE. The complaint filed by the heirs of Soledad Alido is DISMISSED.
SO ORDERED.8
The IssuesI
WHETHER THERE WAS A VALID SALE OF REAL PROPERTY BETWEEN ALIDO AND RESPONDENT; andII
WHETHER PETITIONERS' ACTION HAD BEEN BARRED BY LACHES.
(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains; (3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; (4) The cession of actions or rights proceeding from an act appearing in a public document. (Emphasis supplied)
Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to the validity or enforceability of the transaction, but merely for convenience. The Court agrees with the CA in holding that a sale of real property, though not consigned in a public instrument or formal writing, is, nevertheless, valid and binding among the parties, for the time-honored rule is that even a verbal contract of sale of real estate produces legal effects between the parties. Stated differently, although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only to insure its efficacy.
The Statute Frauds embodied in Article 1403, paragraph (2), of the Civil Code requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. The term "Statute of Frauds" is descriptive of statutes which require certain classes of contracts to be in writing. The Statute does not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates the formalities of the contract necessary to render it enforceable. Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents.
The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. Consequently, the effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the requirement is complied with. Clearly, the form required is for evidentiary purposes only. Hence, if the parties permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied with.
The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. (Emphases supplied)
In the instant case, it was established that Lot 2344 is a private property of the Santiago clan since time immemorial, and that they have declared the same for taxation. Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one's bona fide claim of acquisition of ownership. (Emphases supplied)
Santos involved the sale of a parcel of land within the five-year prohibitory period. The Roman Catholic Church raised the defense of in pari delicto. It was also argued by the Roman Catholic Church that the effect of the sale would be the reversion of the property to the state. This court held that:Section 124 of the Public Land Act indeed provides that any acquisition, conveyance or transfer executed in violation of any of its provisions shall be null and void and shall produce the effect of annulling and cancelling the grant or patent and cause the reversion of the property to the State, and the principle of pari delicto has been applied by this Court in a number of cases wherein the parties to a transaction have proven to be guilty of effected the transaction with knowledge of the cause of its invalidity. But we doubt if these principles can now be invoked considering the philosophy and the policy behind the approval of the Public Land Act. The principle underlying pari delicto as known here and in the United States is not absolute in its application. It recognizes certain exceptions one of them being when its enforcement or application runs counter to an avowed fundamental policy or to public interest. As stated by us in the [Rellosa] case, "This doctrine is subject to one important limitation, namely, [']whenever public policy is considered advanced by allowing either party to sue for relief against the transaction. [']"
The case under consideration comes within the exception above adverted to. Here appellee desires to nullify a transaction which was done in violation of the law. Ordinarily the principle of pari delicto would apply to her because her predecessor-in-interest has carried out the sale with the presumed knowledge of its illegality, but because the subject of the transaction is a piece of public land, public policy requires that she, as heir, be not prevented from re-acquiring it because it was given by law to her family for her home and cultivation. This is the policy on which our homestead law is predicated. This right cannot be waived. "It is not within the competence of any citizen to barter away what public policy by law seeks to preserve." We are, therefore, constrained to hold that appellee can maintain the present action it being in furtherance of this fundamental aim of our homestead law.
x x x x
As the in pari delicto rule is not applicable, the question now arises as to who between the parties have a better right to possess the subject parcel of land. x x x
x x x x
In Binayug v. Ugaddan, which involved the sale of two properties covered by a homestead patent, this court cited jurisprudence showing that in cases involving the sale of a property covered by the five-year prohibitory period, the property should be returned to the grantee.
Applying the ruling in Santos and Binayug, this court makes it clear that petitioners have no better right to remain in possession of the property against respondents.
Hence, the Court of Appeals did not err in ruling that while there is yet no action for reversion filed by the Office of the Solicitor General, the property should be conveyed by petitioners to respondents. (Emphases supplied, citation in the original omitted)
In actions for reconveyance of property predicated on the fact that the conveyance complained of was null and void ab initio, a claim of prescription of action would be unavailing. "The action or defense for the declaration of the inexistence of a contract does not prescribe." Neither could laches be invoked in the case at bar. Laches is a doctrine in equity and our courts are basically courts of law and not courts of equity. Equity, which has been aptly described as "justice outside legality," should be applied only in the absence of, and never against, statutory law. Aequetas [nunquam] contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring imprescriptibility to actions for declaration of the inexistence of a contract should preempt and prevail over all abstract arguments based only on equity. Certainly, laches cannot be set up to resist the enforcement of an imprescriptible legal right, and petitioners can validly vindicate their inheritance despite the lapse of time. (Emphasis and underscoring supplied)
Following the declaration that the contract of sale over the subject property is void for being in violation of Section 118 of the Public Land Act, as amended, jurisprudence dictates that the subject land be returned to the heirs of petitioner Anastacio. x x x
x x x x
The Court made the same ruling on the issue of ownership in the earlier cited case of Manzano in 1961, including a disposition that the buyer therein is entitled to a reimbursement of the purchase price plus interest, viz.:xxx Being void from its inception, the approval thereof by the Undersecretary of Agriculture and Natural Resources after the lapse of five years from Manzano's patent did not legalize the sale x x x The result is that the homestead in question must be returned to Manzano's heirs, petitioners herein, who are, in turn, bound to restore to appellee Ocampo the sum of P3,000.00 received by Manzano as the price thereof x x x The fruits of the land should equitably compensate the interest on the price.
Prior to Manzano, we made a similar ruling in the case of De los Santos v. Roman Catholic Church of Midsayap that "[u]pon annulment of the sale, the purchaser's claim is reduced to the purchase price and its interest."
We shall apply the same rule in the case at bar. However, since the trial court ruled that petitioners were barred by laches in asserting any claim to the subject property, it did not make a factual determination of the total purchase price paid by respondent-spouses to petitioner Anastacio which must be returned to the heirs of respondents, including interest on such amount. The trial court also did not make a ruling on the amount of interest to be paid by petitioners to respondent-spouses, and if the fruits realized by respondent-spouses from their long possession of the subject land since 1977 would "equitably compensate the interest on the price." This Court is not a trier of facts and we remand the instant case for the trial court to make a factual determination of the aforesaid amounts.
Endnotes:
1 Penned by Associate Justice Pamela Ann Abella Maxino, with Associate Justices Pablito A. Perez and Gabriel T. Robeniol, concurring; rollo, pp. 7-18.
2 Id. at 19-21.
3 Penned by Judge Narciso M. Aguilar; id. at 76-81.
* "Abangabang" in some parts of the rollo.
4 Id. at 8.
5 Id.
6 Id. at 80-81.
7 Issued by Pairing Judge Globert J. Justalero; id. at 87-88.
8 Id. at 18.
9 Id. at 149-158.
10 Id. at 164-171.
11Hortizuela v. Tagufa, 754 Phil. 499, 506 (2015).
12Wee v. Mardo, 735 Phil. 420, 430 (2014).
13Spouses Ocampo v. Heirs of Bernardino U. Dionisio, 744 Phil. 716, 730 (2014).
14 CIVIL CODE, Art. 1356.
15 620 Phil. 47, 61-62 (2009).
16Vda. de Ouano v. Republic, 657 Phil. 391, 411 (2011).
17 483 Phil. 735, 747-748 (2004).
18 CIVIL CODE, Art. 1405.
19Carbonnel v. Poncio, 103 Phil. 655, 659 (1958).
20 Id.
21Ortega v. Leonardo, 103 Phil. 870, 872 (1958).
22 452 Phil. 238, 248 (2003).
23Spouses De Guzman v. Court of Appeals, 782 Phil. 71, 81 (2016).
24Republic v. Court of Appeals, 346 Phil. 637, 649 (1997), citing Pascua v. Talens, 80 Phil. 792, 793-794 (1948).
25Metropolitan Bank and Trust Company v. Viray, 627 Phil. 398, 408 (2010).
26Binayug v. Ugaddan, 700 Phil. 382, 397 (2012).
27 Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking.
28Gonzalo v. Tarnate, Jr., 724 Phil. 198, 206 (2014).
29Fullido v. Grilli, 781 Phil. 840, 859 (2016)
30Angeles v. Court of Appeals, 102 Phil. 1006, 1011 (1958).
31 769 Phil. 598, 615-620 (2015).
32Pangasinan v. Disonglo-Almazora, 762 Phil. 492, 502-503 (2015).
33 Id. at 503.
34Heirs of Tomas Arao v. Heirs of Pedro Eclipse, G.R. No. 211425, November 19, 2018.
35 415 Phil. 665, 673-674 (2011).
36 762 Phil. 114, 127-128 (2015).