SPS ABOITIZ v. SPS PO

Sps. Roberto Aboitiz and Maria Cristina Cabarrus Vs. Sps. Peter L. Po and Victoria L. Po/Sps. Peter L. Po and Victoria L. Po Vs. Sps. Roberto Aboitiz, et al.

G.R. No. 208450/G.R. No. 208497 

June 5, 2017 

FACTS: 

This case involves a parcel of land located in Cabancalan, Mandaue City, initially registered as Original Certificate of Title No. 0-887, and titled under the name of Roberto Aboitiz (Roberto). The land is referred to as Lot No. 2835. This parcel of land originally belonged to the late Mariano Seno. 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. This property included two (2) lots: Lot No. 2807 and the land subject of this case, Lot No. 2835. In 1990, Peter Po (Peter) discovered that Ciriaco "had executed a quitclaim dated August 7, 1989 renouncing [his] interest over Lot [No.] 2807 in favor of [petitioner] Roberto." In the quitclaim, Ciriaco stated that he was "the declared owner of Lot [Nos.] 2835 and 2807." The Spouses Po confronted Ciriaco. 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. 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. The lot was immediately subdivided with portions sold to Ernesto and Jose. The trial court ruled in favor of the Spouses Po in its Decision dated November 23, 2009. The 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. The Court of Appeals discussed the inapplicability of the rules on double sale and the doctrine of buyer in good faith since the land was not yet registered when it was sold to the Spouses Po. However, it ruled in favor of the Spouses Po on the premise that registered property may be reconveyed to the "rightful or legal owner or to the one with a better right if the title [was] wrongfully or erroneously registered in another person's name." The Court of Appeals held that the Mariano Heirs were no longer the owners of the lot at the time they sold it to Roberto in 1990 because Mariano, during his lifetime, already sold this to Ciriaco in 1973. However, the Court of Appeals ruled that the certificates of title of Jose, Ernesto, and Isabel were valid as they were innocent buyers in good faith. The Spouses Aboitiz thus filed their Petition for Review, which was docketed as G.R. No. 208450. They argue that the Decision of Branch 55, Regional Trial Court of Mandaue City granting the complaint of the Spouses Po is void for lack of jurisdiction over the matter. They claim that a branch of the Regional Trial Court has no jurisdiction to nullify a final and executory decision of a co-equal branch; it is the Court of Appeals that has this jurisdiction. The Spouses Po also filed a Petition for Review, which was docketed as G.R. No. 208497. They claim that respondents Jose, Ernesto, and Isabel are not "innocent purchasers for value." They allegedly knew of the defective title of Roberto because his tax declaration had the following annotation: "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. 

ISSUES: 

1) Whether or not the Regional Trial Court has jurisdiction over the Spouses Peter and Victoria Po's complaint; 

2) Whether the action is barred by prescription; 

3) Whether the doctrines of estoppel and laches apply; 

4) Whether the land registration court's finding that Ciriaco Seno only held the property in trust for the Mariano Heirs is binding as res judicata in this case; 

5) Whether the Deed of Absolute Sale between Ciriaco Seno and the Spouses Peter and Victoria Po should be considered as evidence of their entitlement to the property; 

6) Whether the Mariano Heirs, as sellers in a deed of conveyance of realty, are indispensable parties; and 

7) Whether the respondents Jose Maria Moraza, Ernesto Aboitiz, and Isabel Aboitiz are innocent purchasers in good faith. 

HELD: 

1) 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." Section 19 of Batas Pambansa Blg. 129 provides: Section 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall exercise exclusive original jurisdiction: (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. The Spouses Aboitiz claim that it is the Court of Appeals that has jurisdiction over the annulment of Regional Trial Court judgments. The jurisdiction of the Court of Appeals is provided in Section 9 of Batas Pambansa Blg. 129: Section 9. Jurisdiction. - The Intermediate Appellate Court shall exercise: (2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts. 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. Considering the Spouses Aboitiz's fraudulent registration without the Spouses Po's knowledge and the latter's assertion of their ownership of the land, their right to recover the property and to cancel the Spouses Aboitiz's title, the action is for reconveyance and annulment of title and not for annulment of judgment. Thus, the Regional Trial Court has jurisdiction to hear this case. 

2) "An action for reconveyance prescribes in ten [10] years from the issuance of the Torrens title over the property." The basis for this is Section 53, Paragraph 3 of Presidential Decree No. 1529 in relation to Articles 1456 and 1144(2) of the Civil Code. Under Presidential Decree No. 1529 (Property Registration Decree), the owner of a property may avail of legal remedies against a registration procured by fraud: SECTION 53. Presentation of Owner's Duplicate Upon Entry of New 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 ... 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. 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. In an action for reconveyance, the right of action accrues from the time the property is registered. An action for reconveyance and annulment of title does not seek to question the contract which allowed the adverse party to obtain the title to t h e property. What is put on issue in an action for reconveyance and cancellation of title is the ownership of the property and its registration. It does not question any fraudulent contract. Should that be the case, the applicable provisions are Articles 1390 and 1391 of the Civil Code. Thus, an action for reconveyance and cancellation of title prescribes in 10 years from the time of the issuance of the Torrens title over the property. Considering that the Spouses Po's complaint was filed on November 19, 1996, less than three (3) years from the issuance of the Torrens title over the property on April 6, 1994, it is well within the 10-year prescriptive period imposed on an action for reconveyance. 

3) There is laches when a party was negligent or has failed "to assert a right within a reasonable time," thus giving rise to the presumption that he or she has abandoned it. Laches has set in when it is already inequitable or unfair to allow the party to assert the right. The elements of laches were enumerated in Ignacio v. Basilio: 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. "Laches is different from prescription." Prescription deals with delay itself and thus is an issue of how much time has passed. The time period when prescription is deemed to have set in is fixed by law. Laches, on the other hand, concerns itself with the effect of delay and not the period of time that has lapsed. When 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. The Spouses Po filed this case in less than three (3) years from the time of registration. Based on these circumstances, the elements of laches are clearly lacking in this case. There was no delay in asserting their right over the property, and the Spouses Aboitiz had knowledge that the Spouses Po would assert their right. Thus, it cannot be said that they are barred by laches. 

4) This Court rules that this cannot be binding in this action for reconveyance. Res judicata embraces two (2) concepts: (i) bar by prior judgment and (ii) conclusiveness of judgment, respectively covered under Rule 39, Section 47 of the Rules of Court, paragraphs (b) and (c): 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: (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. An exception to this rule is if the party claiming ownership has already had the opportunity to prove his or her claim in the land registration case. In such a case, res judicata will then apply. When an issue of ownership has been raised in the land registration proceedings where the adverse party was given full opportunity to present his or her claim, the findings in the land registration case will constitute a bar from any other claim of the adverse party on the property. However, this is not the circumstance in the case at bar. The Spouses Po were not able to prove their claim in the registration proceedings. Thus, res judicata cannot apply to their action for reconveyance. 

5) The Spouses Aboitiz posit that the Deed of Absolute Sale between Ciriaco and the Spouses Po is fake and fraudulent. 181 They argue that this is evidenced by certifications of the document's non-existence in the notarial books and the Spouses Po's failure to enforce their rights over the property until 18 years later. They also claim that the Deed of Absolute Sale is inadmissible as no documentary stamp was paid and affixed. The Spouses Aboitiz failed to prove that these exceptions exist in the case at bar. The Regional Trial Court lent credence to documents presented by the Spouses Po, Peter's testimony about Mariano's sale of the property to Ciriaco, Ciriaco's sale of the property to the Spouses Po, and the issuance of a Tax Declaration in the name of Victoria. The Regional Trial Court thus held: 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 Ciriaco Seno when the latter bought the said land from his father Mariano Seno, and after the said tax declaration in the name of Ciriaco 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. The Spouses Aboitiz failed to present clear and convincing evidence to overturn the presumption. The notarized Deed of Absolute Sale between Ciriaco and the Spouses Po is, thus, presumed regular and authentic. Consequently, this Court can affirm the finding that the property was sold to Ciriaco in 1973, and that Ciriaco, as the owner of the property, had the right to sell it to the Spouses Po. Hence, the lot did not form part of the estate of Mariano, and the Mariano Heirs did not have the capacity to sell the property to the Spouses Aboitiz later on. 

6) The Mariano Heirs are not indispensable parties. Rule 3, Section 7 of the Revised Rules of Court provides: 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 interest in the matter and in the relief "are so bound up with that of the other parties. 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. It is clear that the Mariano Heirs are not indispensable parties. They have already sold all their interests in the property to the Spouses Aboitiz. They will no longer be affected, benefited, or injured by any ruling of this Court on the matter, whether it grants or denies the complaint for reconveyance. The ruling of this Court as to whether the Spouses Po are entitled to reconveyance will not affect their rights. Their interest has, thus, become separable from that of Jose, Ernesto, and Isabel. Thus, the Court of Appeals correctly ruled that the Mariano Heirs are not indispensable parties. 

7) An innocent purchaser for value refers to the buyer of the property who pays for its full and fair price without or before notice of another person's right or interest in it. He or she buys the property believing that "the seller is the owner and could transfer the title to the property." 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. Section 44 of Presidential Decree No. 1529 states: 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: 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. In Leong v. See: 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." 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. 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. The only exception to the rule is when the purchaser has actual knowledge of any defect or other circumstance that would cause "a reasonably cautious man" to inquire into the title of the seller. If there is anything which arouses suspicion, the vendee is obliged to investigate beyond the face of the title. Otherwise, the vendee cannot be deemed a purchaser in good faith entitled to protection under the law.