[G.R. No.

165427, March 21, 2011]

BETTY B. LACBAYAN, PETITIONER, VS. BAYANI S. SAMOY, JR.,
RESPONDENT.
DECISION
VILLARAMA, JR., J.:
This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan
against respondent Bayani S. Samoy, Jr. assailing the September 14, 2004
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 67596. The CA had
affirmed the February 10, 2000 Decision[2] of the Regional Trial Court (RTC),
Branch 224, of Quezon City declaring respondent as the sole owner of the properties
involved in this suit and awarding to him P100,000.00 as attorney's fees.
This suit stemmed from the following facts.
Petitioner and respondent met each other through a common friend sometime in
1978. Despite respondent being already married, their relationship developed until
petitioner gave birth to respondent's son on October 12, 1979.[3]
During their illicit relationship, petitioner and respondent, together with three more
incorporators, were able to establish a manpower services company.[4] Five parcels
of land were also acquired during the said period and were registered in petitioner
and respondent's names, ostensibly as husband and wife. The lands are briefly
described as follows:
1. A 255-square meter real estate property located at Malvar St.,
Quezon City covered by TCT No. 303224 and registered in the
name of Bayani S. Samoy, Jr. "married to Betty Lacbayan."[5]
2. A 296-square meter real estate property located at Main Ave.,
Quezon City covered by TCT No. 23301 and registered in the
name of "Spouses Bayani S. Samoy and Betty Lacbayan."[6]
3. A 300-square meter real estate property located at Matatag St.,
Quezon City covered by TCT No. RT-38264 and registered in the
name of Bayani S. Samoy, Jr. "married to Betty Lacbayan
Samoy."[7]
4. A 183.20-square meter real estate property located at Zobel St.,
Quezon City covered by TCT No. 335193 and registered in the
name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."[8]/sup>
5. A 400-square meter real estate property located at Don Enrique
Heights, Quezon City covered by TCT No. 90232 and registered in
the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."[9]

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City.
In 1983, petitioner left her parents and decided to reside in the property located in
Malvar St. in Project 4, Quezon City. Later, she and their son transferred to Zobel St.,
also in Project 4, and finally to the 400-square meter property in Don Enrique
Heights.[10]
Eventually, however, their relationship turned sour and they decided to part ways
sometime in 1991. In 1998, both parties agreed to divide the said properties and
terminate their business partnership by executing a Partition Agreement.[11] Initially,
respondent agreed to petitioner's proposal that the properties in Malvar St. and Don
Enrique Heights be assigned to the latter, while the ownership over the three other
properties will go to respondent.[12] However, when petitioner wanted additional
demands to be included in the partition agreement, respondent refused.[13] Feeling
aggrieved, petitioner filed a complaint for judicial partition[14] of the said properties
before the RTC in Quezon City on May 31, 1999.
In her complaint, petitioner averred that she and respondent started to live together as
husband and wife in 1979 without the benefit of marriage and worked together as
business partners, acquiring real properties amounting to P15,500,000.00.[15]
Respondent, in his Answer,[16] however, denied petitioner's claim of cohabitation and
said that the properties were acquired out of his own personal funds without any
contribution from petitioner.[17]
During the trial, petitioner admitted that although they were together for almost 24
hours a day in 1983 until 1991, respondent would still go home to his wife usually in
the wee hours of the morning.[18] Petitioner likewise claimed that they acquired the
said real estate properties from the income of the company which she and respondent
established.[19]
Respondent, meanwhile, testified that the properties were purchased from his
personal funds, salaries, dividends, allowances and commissions.[20] He countered
that the said properties were registered in his name together with petitioner to
exclude the same from the property regime of respondent and his legal wife, and to
prevent the possible dissipation of the said properties since his legal wife was then a
heavy gambler.[21] Respondent added that he also purchased the said properties as
investment, with the intention to sell them later on for the purchase or construction of
a new building.[22]
On February 10, 2000, the trial court rendered a decision dismissing the complaint
for lack of merit.[23] In resolving the issue on ownership, the RTC decided to give
considerable weight to petitioner's own admission that the properties were acquired
not from her own personal funds but from the income of the manpower services
company over which she owns a measly 3.33% share.[24]
Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro

indiviso owner of one-half of the properties in dispute. Petitioner argued that the trial
court's decision subjected the certificates of title over the said properties to collateral
attack contrary to law and jurisprudence. Petitioner also contended that it is improper
to thresh out the issue on ownership in an action for partition.[25]
Unimpressed with petitioner's arguments, the appellate court denied the appeal,
explaining in the following manner:
Appellant's harping on the indefeasibility of the certificates of title covering the
subject realties is, to say the least, misplaced. Rather than the validity of said
certificates which was nowhere dealt with in the appealed decision, the record shows
that what the trial court determined therein was the ownership of the subject realties itself an issue correlative to and a necessary adjunct of the claim of co-ownership
upon which appellant anchored her cause of action for partition. It bears
emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies
only to original and not to subsequent registration as that availed of by the parties in
respect to the properties in litigation. To our mind, the inapplicability of said
principle to the case at bench is even more underscored by the admitted falsity of the
registration of the selfsame realties in the parties' name as husband and wife.
The same dearth of merit permeates appellant's imputation of reversible error against
the trial court for supposedly failing to make the proper delineation between an
action for partition and an action involving ownership. Typically brought by a person
claiming to be co-owner of a specified property against a defendant or defendants
whom the plaintiff recognizes to be co-owners, an action for partition may be seen to
present simultaneously two principal issues, i.e., first, the issue of whether the
plaintiff is indeed a co-owner of the property sought to be partitioned and, second assuming that the plaintiff successfully hurdles the first - the issue of how the
property is to be divided between plaintiff and defendant(s). Otherwise stated, the
court must initially settle the issue of ownership for the simple reason that it cannot
properly issue an order to divide the property without first making a determination as
to the existence of co-ownership. Until and unless the issue of ownership is
definitely resolved, it would be premature to effect a partition of the properties. This
is precisely what the trial court did when it discounted the merit in appellant's claim
of co-ownership.[26]
Hence, this petition premised on the following arguments:
I.
Ownership cannot be passed upon in a partition case.
II.
The partition agreement duly signed by respondent contains an
admission against respondent's interest as to the existence of coownership between the parties.
III.
An action for partition cannot be defeated by the mere expedience
of repudiating co-ownership based on self-serving claims of
exclusive ownership of the properties in dispute.
IV.
A Torrens title is the best evidence of ownership which cannot be
outweighed by respondent's self-serving assertion to the contrary.

V.

The properties involved were acquired by both parties through

their actual joint contribution of money, property, or industry.[27]

Noticeably, the last argument is essentially a question of fact, which we feel has been
squarely threshed out in the decisions of both the trial and appellate courts. We deem
it wise not to disturb the findings of the lower courts on the said matter absent any
showing that the instant case falls under the exceptions to the general rule that
questions of fact are beyond the ambit of the Court's jurisdiction in petitions under
Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues may be
summarized into only three:
I.
Whether an action for partition precludes a settlement on the issue
of ownership;
II.
Whether the Torrens title over the disputed properties was
collaterally attacked in the action for partition; and
III.
Whether respondent is estopped from repudiating co-ownership
over the subject realties.
We find the petition bereft of merit.
Our disquisition in Municipality of Bian v. Garcia[28] is definitive. There, we
explained that the determination as to the existence of co-ownership is necessary in
the resolution of an action for partition. Thus:
The first phase of a partition and/or accounting suit is taken up with the
determination of whether or not a co-ownership in fact exists, and a partition is
proper (i.e., not otherwise legally proscribed) and may be made by voluntary
agreement of all the parties interested in the property. This phase may end with a
declaration that plaintiff is not entitled to have a partition either because a coownership does not exist, or partition is legally prohibited. It may end, on the other
hand, with an adjudgment that a co-ownership does in truth exist, partition is proper
in the premises and an accounting of rents and profits received by the defendant from
the real estate in question is in order. x x x
The second phase commences when it appears that "the parties are unable to agree
upon the partition" directed by the court. In that event[,] partition shall be done for
the parties by the [c]ourt with the assistance of not more than three (3)
commissioners. This second stage may well also deal with the rendition of the
accounting itself and its approval by the [c]ourt after the parties have been accorded
opportunity to be heard thereon, and an award for the recovery by the party or parties
thereto entitled of their just share in the rents and profits of the real estate in
question. x x x[29] (Emphasis supplied.)
While it is true that the complaint involved here is one for partition, the same is
premised on the existence or non-existence of co-ownership between the parties.
Petitioner insists she is a co-ownerpro indiviso of the five real estate properties based
on the transfer certificates of title (TCTs) covering the subject properties. Respondent
maintains otherwise. Indubitably, therefore, until and unless this issue of co-

ownership is definitely and finally resolved, it would be premature to effect a

partition of the disputed properties.[30] More importantly, the complaint will not even
lie if the claimant, or petitioner in this case, does not even have any rightful interest
over the subject properties.[31]
Would a resolution on the issue of ownership subject the Torrens title issued over the
disputed realties to a collateral attack? Most definitely, it would not.
There is no dispute that a Torrens certificate of title cannot be collaterally attacked,
[32]
but that rule is not material to the case at bar. What cannot be collaterally attacked
is the certificate of title and not the title itself.[33] The certificate referred to is that
document issued by the Register of Deeds known as the TCT. In contrast, the title
referred to by law means ownership which is, more often than not, represented by
that document.[34] Petitioner apparently confuses title with the certificate of title. Title
as a concept of ownership should not be confused with the certificate of title as
evidence of such ownership although both are interchangeably used.[35]
Moreover, placing a parcel of land under the mantle of the Torrens system does not
mean that ownership thereof can no longer be disputed. Ownership is different from
a certificate of title, the latter only serving as the best proof of ownership over a
piece of land. The certificate cannot always be considered as conclusive evidence of
ownership.[36] In fact, mere issuance of the certificate of title in the name of any
person does not foreclose the possibility that the real property may be under coownership with persons not named in the certificate, or that the registrant may only
be a trustee, or that other parties may have acquired interest over the property
subsequent to the issuance of the certificate of title.[37] Needless to say, registration
does not vest ownership over a property, but may be the best evidence thereof.
Finally, as to whether respondent's assent to the initial partition agreement serves as
an admission against interest, in that the respondent is deemed to have admitted the
existence of co-ownership between him and petitioner, we rule in the negative.
An admission is any statement of fact made by a party against his interest or
unfavorable to the conclusion for which he contends or is inconsistent with the facts
alleged by him.[38] Admission against interest is governed by Section 26 of Rule 130
of the Rules of Court, which provides:
Sec. 26. Admissions of a party. - The act, declaration or omission of a party as to a
relevant fact may be given in evidence against him.
To be admissible, an admission must (a) involve matters of fact, and not of law; (b)
be categorical and definite; (c) be knowingly and voluntarily made; and (d) be
adverse to the admitter's interests, otherwise it would be self-serving and
inadmissible.[39]
A careful perusal of the contents of the so-called Partition Agreement indicates that
the document involves matters which necessitate prior settlement of questions of law,

basic of which is a determination as to whether the parties have the right to freely
divide among themselves the subject properties. Moreover, to follow petitioner's
argument would be to allow respondent not only to admit against his own interest but
that of his legal spouse as well, who may also be lawfully entitled co-ownership over
the said properties. Respondent is not allowed by law to waive whatever share his
lawful spouse may have on the disputed properties. Basic is the rule that rights may
be waived, unless the waiver is contrary to law, public order, public policy, morals,
good customs or prejudicial to a third person with a right recognized by law.[40]
Curiously, petitioner herself admitted that she did not assent to the Partition
Agreement after seeing the need to amend the same to include other matters.
Petitioner does not have any right to insist on the contents of an agreement she
intentionally refused to sign.
As to the award of damages to respondent, we do not subscribe to the trial court's
view that respondent is entitled to attorney's fees. Unlike the trial court, we do not
commiserate with respondent's predicament. The trial court ruled that respondent
was forced to litigate and engaged the services of his counsel to defend his interest as
to entitle him an award of P100,000.00 as attorney's fees. But we note that in the first
place, it was respondent himself who impressed upon petitioner that she has a right
over the involved properties. Secondly, respondent's act of representing himself and
petitioner as husband and wife was a deliberate attempt to skirt the law and escape
his legal obligation to his lawful wife. Respondent, therefore, has no one but himself
to blame the consequences of his deceitful act which resulted in the filing of the
complaint against him.
WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the
Court of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with
MODIFICATION. Respondent Bayani S. Samoy, Jr. is hereby declared the sole
owner of the disputed properties, without prejudice to any claim his legal wife may
have filed or may file against him. The award of P100,000.00 as attorney's fees in
respondent's favor is DELETED.
No costs.
SO ORDERED.

G.R. No. 160711

August 14, 2004

HEIRS OF MAXIMO LABANON vs. HEIRS OF CONSTANCIO

LABANON
x-----------------------------------------------------------------------------------------x
The Case
This Petition for Review on Certiorari under Rule 45 seeks the recall and
nullification of the May 8, 2003 Decision [1] of the Court of Appeals (CA) in CA-G.R.
CV No. 65617 entitled Heirs of Constancio Labanon represented by Alberto
Makilang v. Heirs of Maximo Labanon represented by Alicia Labanon Caedo and
the Provincial Assessor of Cotabato, which reversed the August 18, 1999
Decision[2] of the Kidapawan City, Cotabato Regional Trial Court (RTC), Branch 17,
in Civil Case No. 865. Likewise assailed is the October 13, 2003 Resolution[3] which
disregarded petitioners Motion for Reconsideration.
The Facts
The CA culled the facts this way:

No. V; Series of 1955 of the Notarial Register of Atty.

Florentino Kintanar. The document was executed to safeguard
the ownership and interest of his brother Constancio Labanon.
Pertinent portion of which is reproduced as follows:
That I, MAXIMO LABANON, of legal age,
married to Anastacia Sagarino, and a resident of
Kidapawan, Cotabato, for and in consideration of the
expenses incurred by my elder brother
CONSTANCIO LABANON also of legal age,
Filipino, widower and a resident of Kidapawan,
Cotabato, for the clearing, cultivation and
improvements on the eastern portion xxx Lot No. 1,
Blk. 22, Pls-59 xxx which expenses have been
incurred by my said brother xxx before the outbreak
of the last world war xxx I do hereby assign transfer
and convey my rights to, interests in and ownership
on the said eastern portion of said Lot No. 1, Block
22, Pls-59 ONE HUNDRED (100 M) ALONG THE
NATIONAL HIGHWAY, (DAVAO-COTABATO
ROAD) by TWO HUNDRED FIFTY METERS (250
M) going inside the land to cover an area of TWO
AND ONE HALF HECTARES (25,000 SQ. M.),
more or less, adjoining the school site of barrio
Lanao, Kidapawan, Cotabato, to the said
CONSTANCIO LABANON, his heirs and assigns,
can freely occupy for his own use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set
my hand this 11th day of February 1995 at
Kidapawan, Cotabato.

During the lifetime of Constancio Labanon, prior to the

outbreak of WWII, he settled upon a piece of alienable and
disposable public agricultural land situated at Brgy. Lanao,
Kidapawan, Cotabato x x x. Constancio cultivated the said lot
and introduced permanent improvements that still exist up to
the present. Being of very limited educational attainment, he
found it difficult to file his public land application over said lot.
Constancio then asked his brother, Maximo Labanon who was
better educated to file the corresponding public land application
under the express agreement that they will divide the said lot as
soon as it would be feasible for them to do so. The offer was
accepted by Maximo. During the time of the application it was
Constancio who continued to cultivate the said lot in order to
comply with the cultivation requirement set forth under
Commonwealth
Act
141,
as
amended,
onHomestead applications. After which, on June 6, 1941, due
to industry of Constancio, Homestead Application No. 244742
(E-128802) of his brother Maximo was approved with
Homestead Patent No. 67512. Eventually, Original Certificate
of Title No. P-14320 was issued by the Register of Deeds of
Cotabato over said lot in favor of Maximo Labanon.

On April 25, 1962, Maximo Labanon executed a sworn

statement reiterating his desire that his elder brother
Constancio, his heirs and assigns shall own the eastern
portion of the Lot, pertinent portion of which reads:

On February 11, 1955, Maximo Labanon executed a

document denominated as Assignment of Rights and
Ownership and docketed as Doc. No. 20; Page No. 49; Book

That I am the same and identical person

who is a homestead applicant (HA-224742, E128802) of a tract of land which is covered by

(SGD) MAXIMO LABANON

With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife) (p.16, rollo)

Homestead Patent No. 67512 dated June 6, 1941,

known as Lot No. 1, Block 22, Pls-59, situated in
[B]arrio Lanao, Municipality of Kidapawan,
Province of Cotabato, Philippines, and
containing an area of 5.0000 hectares, more or
less;
That I am the same and identical person who
executed a deed of ASSIGNMENT OF RIGHTS
AND OWNERSHIP in favor of my brother
Constancio Labanon, now deceased, now for his
heirs, for the eastern half portion of the land
above described, and which deed was duly
notarized by notary public Florentino P. Kintanar
on February 11, 1955 at Kidapawan, Cotabato
and entered in his Notarial Register as Doc. No.
20, Page No. 49, Book No. V, Series of 1955;
and
That in order that I and the Heirs of
Constancio Labanon will exercise our respective
rights and ownership over the aforementioned
lot, and to give force and effect to said deed of
assignment, I hereby, by these presents, request
the Honorable Director of Lands and the Land
Title Commission to issue a separate title in my
favor covering the western half portion of the
aforementioned lot and to the Heirs of
Constancio Labanon a title for the eastern half
portion thereof.
IN WITNESS THEREOF, I have hereunto
set my hand this 25th day of April, 1962, at
Pikit, Cotabato, Philippines. (p. 9, records)
After the death of Constancio Labanon, his heirs
executed an [e]xtra-judicial settlement of estate with
simultaneous sale over the aforesaid eastern portion of the
lot in favor of Alberto Makilang, the husband of Visitacion
Labanon, one of the children of Constancio. Subsequently,
the parcel of land was declared for taxation purposes in the
name of Alberto under TD No. 11593. However, in March
1991, the defendants heirs of Maximo Labanon namely,
Alicia L. Caniedo, Leopoldo Labanon, Roberto Nieto and
Pancho Labanon, caused to be cancelled from the records of
the defendant Provincial Assessor of Cotabato the aforesaid

TD No. 11593 and the latter, without first verifying the

legality of the basis for said cancellation, did cancel the
same. x x x Further, after discovering that the defendantheirs of Maximo Labanon were taking steps to deprive the
heirs of Constancio Labanon of their ownership over the
eastern portion of said lot, the latter, thru Alberto Makilang,
demanded the owners copy of the certificate of title
covering the aforesaid Lot to be surrendered to the Register
of Deeds of Cotabato so that the ownership of the heirs of
Constancio may be fully effected but the defendants refused
and still continue to refuse to honor the trust agreement
entered into by the deceased brothers. x x x[4]
Thus, on November 12, 1991, petitioners filed a complaint [5] for Specific
Performance, Recovery of Ownership, Attorneys Fees and Damages with Writ of
Preliminary Injunction and Prayer for Temporary Restraining Order against
respondents docketed as Civil Case No. 865 before the Kidapawan City RTC. After
hearing, the trial court rendered its August 18, 1999 Decision, the decretal portion of
which reads:
Wherefore, prescinding from the foregoing facts and
considerations the Court finds and so holds that the
[defendant-heirs] of Maximo Labanon represented by Alicia
Labanon Caniedo have proved by preponderance of
evidence that they are entitled to the reliefs set forth in their
answer and consequently judgment is hereby rendered as
follows:
1.
Ordering the dismissal of the complaint against
the Heirs of Maximo Labanon represented by Alicia
Labanon Caniedo for lack of merit;
2.
Ordering the dismissal of the case against the
Provincial Assessor. The claim of the plaintiff is untenable,
because the duties of the Provincial Assessor are
ministerial. Moreover, the presumption of regularity in the
performance of his duty is in his favor;
3.
Ordering the plaintiff to pay the defendants the
amount of P20,000.00 as exemplary damages, P10,000.00
for Attorneys Fees, P500.00 per appearance in Court; and
4.

To pay the costs of this suit.

IT IS SO ORDERED.[6]

Aggrieved, respondents elevated the adverse judgment to the CA which issued

the assailed May 8, 2003 Decision in CA-G.R. CV No. 65617, the fallo of which
states:
WHEREFORE, the appeal is hereby GRANTED for
being meritorious. The assailed decision of the Regional
Trial Court is hereby REVERSED and SET ASIDE and a
new one is hereby entered as follows:
1)
Recognizing the lawful possession of the plaintiffsappellants
over the eastern portion of the property in
dispute;
2)

Declaring the plaintiffs-appellants as owners of the

eastern portion of the property by reason of lawful
possession;

3)

Ordering the Provincial Assessor to reinstate TD No.

11593 and declaring TD No. 243-A null and void;

4)

Ordering the defendants-appellees to pay the

plaintiffs-appellants the amount of P20,000 as moral
damages, P10,000 for attorneys fees, P500.00 per
appearance in Court and

5)

To pay the costs of the suit.

SO ORDERED.
The Issues

Surprised by the turn of events, petitioners brought this petition before us

raising the following issues, to wit:
1. Whether or not Original Certificate of Title No. 41320
issued on
April 10, 1975 in the name of MAXIMO
LABANON be now considered indefeasible and
conclusive; and
2. Whether or not the Trust Agreement allegedly made
by
Constancio Labanon and Maximo Labanon
prescribed.[7]

First Issue
Respondents are not precluded from challenging the validity of
Original Certificate of Title No. P-41320
Petitioners argue that respondents can no longer question Maximo
Labanons ownership of the land after its registration under the principle of
indefeasibility of a Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section 32 of
Presidential Decree No. (PD) 1529, amending the Land Registration Act, which
provides:
Section 32. Review of decree of registration; Innocent
purchaser for value. The decree of registration shall not be
reopened or revised by reason of absence, minority, or other
disability of any person adversely affected thereby, nor by
any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the
government and the branches thereof, deprived of land or of
any estate or interest therein by such adjudication or
confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and
review of the decree of registration not later than one year
from and after the date of the entry of such decree of
registration, but in no case shall such petition be entertained
by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may
be prejudiced. Whenever the phrase innocent purchaser for
value or an equivalent phrase occurs in this Decree, it shall
be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the
decree of registration and the certificate of title issued shall
become incontrovertible. Any person aggrieved by such
decree of registration in any case may pursue his remedy by
action for damages against the applicant or any other
persons responsible for the fraud.

The Courts Ruling

The petition must fail.

Contrary to petitioners interpretation, the aforequoted legal provision does not

totally deprive a party of any remedy to recover the property fraudulently registered

in the name of another. Section 32 of PD 1529 merely precludes the reopening of the
registration proceedings for titles covered by the Torrens System, but does not
foreclose other remedies for the reconveyance of the property to its rightful
owner. As elaborated in Heirs of Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that the
decree of registration becomes incontrovertible after a year,
it does not altogether deprive an aggrieved party of a
remedy in law. The acceptability of the Torrens System
would be impaired, if it is utilized to perpetuate fraud
against the real owners.[8]

Trust is the legal relationship between one person

having an equitable ownership in property and another
person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the
latter.[10]
This legal relationship can be distinguished from other relationships of a
fiduciary character, such as deposit, guardianship, and agency, in that the trustee has
legal title to the property.[11] In the case at bench, this is exactly the relationship
established between the parties.

A more succinct explanation is found in Vda. De Recinto v. Inciong, thus:

The mere possession of a certificate of title under
the Torrens system does not necessarily make the possessor
a true owner of all the property described therein for he
does not by virtue of said certificate alone become the
owner of the land illegally included. It is evident from the
records that the petitioner owns the portion in question and
therefore the area should be conveyed to her. The remedy
of the land owner whose property has been wrongfully
or erroneously registered in another's name is, after one
year from the date of the decree, not to set aside the
decree, but, respecting the decree as incontrovertible and no
longer open to review, to bring an ordinary action in the
ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent
purchaser for value, for damages.[9] (Emphasis supplied.)
Undeniably, respondents are not precluded from recovering the eastern
portion of Original Certificate of Title (OCT) No. P-14320, with an area subject of
the Assignment of Rights and Ownership previously owned by their father,
Constancio Labanon. The action for Recovery of Ownership before the RTC is
indeed the appropriate remedy.

Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that [n]o
particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended.
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for
the manifestation of intention to create a trust. It is possible
to create a trust without using the word trust or trustee.
Conversely, the mere fact that these words are used does
not necessarily indicate an intention to create a trust. The
question in each case is whether the trustor manifested an
intention to create the kind of relationship which to lawyers
is known as trust. It is immaterial whether or not he knows
that the relationship which he intends to create is called a
trust, and whether or not he knows the precise
characteristics of the relationship which is called a trust.[12]
Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of
Charles Parsons and Patrick C. Parsons, that:

Second Issue
The trust agreement between Maximo Labanon and Constancio Labanon may
still be enforced
Former Vice-President and Senator Arturo Tolentino, a noted civilist,
explained the nature and import of a trust:

An express trust is created by the direct and positive

acts of the parties, by some writing or deed or by words
evidencing an intention to create a trust; the use of the
word trust is not required or essential to its constitution, it
being sufficient that a trust is clearly intended.[13]

In the instant case, such intention to institute an express trust between

Maximo Labanon as trustee and Constancio Labanon as trustor was contained in not
just one but two written documents, the Assignment of Rights and Ownership as well
as Maximo Labanons April 25, 1962 Sworn Statement. In both documents, Maximo
Labanon recognized Constancio Labanons ownership and possession over the
eastern portion of the property covered by OCT No. P-14320, even as he recognized
himself as the applicant for the Homestead Patent over the land. Thus, Maximo
Labanon maintained the title over the property while acknowledging the true
ownership of Constancio Labanon over the eastern portion of the land. The
existence of an express trust cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in Bueno v.
Reyes that unrepudiated written express trusts are imprescriptible:
While there are some decisions which hold that an
action upon a trust is imprescriptible, without distinguishing
between express and implied trusts, the better rule, as laid
down by this Court in other decisions, is that prescription
does supervene where the trust is merely an implied
one. The reason has been expressed by Justice J.B.L. Reyes
in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84,
88, as follows:
Under Section 40 of the old Code of Civil
Procedure, all actions for recovery of real
property prescribed in 10 years, excepting only
actions based on continuing or subsisting trusts
that were considered by section 38 as
imprescriptible. As held in the case of Diaz v.
Gorricho, L-11229, March 29, 1958, however,
the continuing or subsisting trusts contemplated
in section 38 of the Code of Civil Procedure
referred only to express unrepudiated trusts, and
did not include constructive trusts (that are
imposed by law) where no fiduciary relation
exists and the trustee does not recognize the trust
at all.[14]
This principle was amplified in Escay v. Court of Appeals this
way: Express trusts prescribe 10 years from the repudiation of the trust (Manuel
Diaz, et al. vs. Carmen Gorricho et al., 54 0.G. p. 8429, Sec. 40, Code of Civil
Procedure).[15]

In the more recent case of Secuya v. De Selma, we again ruled that the
prescriptive period for the enforcement of an express trust of ten (10) years starts
upon the repudiation of the trust by the trustee.[16]
In the case at bar, Maximo Labanon never repudiated the express trust
instituted between him and Constancio Labanon. And after Maximo Labanons
death, the trust could no longer be renounced; thus, respondents right to enforce the
trust agreement can no longer be restricted nor prejudiced by prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo
Labanons Sworn Statement were executed after the Homestead Patent was applied
for and eventually granted with the issuance of Homestead Patent No. 67512 on June
6, 1942. Evidently, it was the intent of Maximo Labanon to hold the title over the
land in his name while recognizing Constancio Labanons equitable ownership and
actual possession of the eastern portion of the land covered by OCT No. P-14320.
In addition, petitioners can no longer question the validity of the positive
declaration of Maximo Labanon in the Assignment of Rights and Ownership in favor
of the late Constancio Labanon, as the agreement was not impugned during the
formers lifetime and the recognition of his brothers rights over the eastern portion
of the lot was further affirmed and confirmed in the subsequent April 25, 1962
Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of the settled
precept that [w]here one derives title to property from another, the act, declaration,
or omission of the latter, while holding the title, in relation to the property, is
evidence against the former. Thus, petitioners have accepted the declaration made
by their predecessor-in-interest, Maximo Labanon, that the eastern portion of the
land covered by OCT No. P-14320 is owned and possessed by and rightfully belongs
to Constancio Labanon and the latters heirs. Petitioners cannot now feign ignorance
of such acknowledgment by their father, Maximo.
Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied
in the Assignment of Rights and Ownership pursuant to Article 1371 of the Civil
Code that contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by
their father with respect to the subject property since they were merely subrogated to
the rights and obligations of their predecessor-in-interest. They simply stepped into
the shoes of their predecessor and must therefore recognize the rights of the heirs of
Constancio over the eastern portion of the lot. As the old adage goes, the spring
cannot rise higher than its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision
and October 13, 2003 Resolution in CA-G.R. CV No. 65617 are AFFIRMED with
the modifications that the Kidapawan City, Cotabato RTC, Branch 17 is directed to

have OCT No. P-14320 segregated and subdivided by the Land Management Bureau
into two (2) lots based on the terms of the February 11, 1955 Assignment of Rights
and Ownership executed by Maximo Labanon and Constancio Labanon; and after
approval of the subdivision plan, to order the Register of Deeds of Kidapawan City,
Cotabato to cancel OCT No. P-14320 and issue one title each to petitioners and
respondents based on the said subdivision plan.
Costs against petitioners.
SO ORDERED.

G.R. No. 16355 July 18, 2011

DATU KIRAM SAMPACO
vs.
HADJI SERAD MINGCA LANTUD,
x-----------------------------------------------------------------------------------------x
This is a petition for review on certiorari of the Court of Appeals Decision
dated August 15, 2003 in CA-G.R. CV No. 63801 and its Resolution dated May 13,
2004, denying petitioners motion for reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud, the
plaintiff in the lower court, filed an action to quiet title with damages [1] with the
Regional Trial Court (RTC) of Lanao del Sur, Branch 8, Marawi City (trial court),
against petitioner Datu Kiram Sampaco (deceased), the defendant in the lower court,
who has been substituted by his heirs, represented by Hadji Soraya SampacoMacabando.[2]
Respondent alleged in his Complaint[3] that he is the owner in fee simple of
a parcel of residential lot located at Marinaut, Marawi City, with an area of 897
square meters covered by Original Certificate of Title (OCT) No. P-658. On August
25, 1984, petitioner Datu Kiram Sampaco, through his daughter Soraya SampacoMacabando with several armed men, forcibly and unlawfully entered his property
and destroyed the nursery buildings, cabbage seedlings and other improvements
therein worth P10,000.00. On August 30, 1984, Barangay Captain Hadji Hassan
Abato and his councilmen prepared and issued a decision[4] in writing stating that
petitioner Datu Kiram Sampaco is the owner of the subject parcel of
land. Respondent stated that the acts of petitioner and the said decision of the
Barangay Captain may cast a cloud over or otherwise prejudice his title. Respondent
stated that he and his predecessors-in-interest have been in open, public and
exclusive possession of the subject property. He prayed that the acts of petitioner
and the decision of Barangay Captain Hadji Hassan Abato and his councilmen be
declared invalid, and that petitioner be ordered to pay respondent damages in the
amount of P10,000.00 and attorneys fees.

the contrary, petitioner has all the evidence of actual possession and ownership of
permanent improvements and other plants on the land in dispute.
Petitioner filed a counterclaim for actual and moral damages, and attorney's
fees for the unfounded complaint and prayed for its dismissal. He also sought the
cancellation of respondents OCT No. P-658 and the reconveyance of the subject
parcel of land.
During the trial, respondent Hadji Lantud testified that he acquired the
subject lot from his grandmother, Intumo Pagsidan, a portion thereof from his
grandmothers helper, Totop Malacop, pursuant to a court decision after litigating
with him.[6] Respondent had been residing on the lot for more than 30 years, applied
for a title thereto and was issued OCT No. P-658.[7] He paid the corresponding real
estate taxes for the land.[8] He planted assorted trees and plants on the lot like
bananas, jackfruits, coconuts and others.[9] He testified that he was not aware of the
alleged litigation over the lot before Barangay Captain Hadji Hassan Abato, although
he was furnished a copy of the decision.[10]
On the other hand, petitioner Datu Kiram Sampaco testified that the land
under litigation is only a portion of the 1,800 square meters of land that he inherited
in 1952 from his father, Datu Sampaco Gubat.[11] Since then, he had been in adverse
possession and ownership of the subject lot, cultivating and planting trees and plants
through his caretaker Hadji Mustapha Macawadib.[12] In 1962, he mortgaged the land
(1,800 square meters) with the Development Bank of the Philippines, Ozamis
branch.[13] He declared the land (1,800 square meters) for taxation purposes [14] and
paid real estate taxes, and adduced in evidence the latest Tax Receipt No. 1756386
dated September 15, 19[9]3.[15] Petitioner presented four corroborating witnesses as
regards his possession of the subject property.
After trial on the merits, the trial court rendered a Decision on March 31,
1999 in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, premises considered the court is of the
opinion and so holds that the preponderance of evidence is in favor
of the defendant and against the plaintiff. Judgment is hereby
rendered as follows:
1.

In his Answer,[5] defendant Datu Kiram Sampaco, petitioner herein, denied

the material allegations of the Complaint. Petitioner asserted that he and his
predecessors-in-interest are the ones who had been in open, public, continuous, and
exclusive possession of the property in dispute. Petitioner alleged that OCT No. P658 was secured in violation of laws and through fraud, deception and
misrepresentation, considering that the subject parcel of land is a residential lot and
the title issued is a free patent. Moreover, respondent and his predecessors-ininterest had never taken actual possession or occupied the land under litigation. On

2.
3.
4.

Dismissing plaintiffs complaint for lack of

merit;
Declaring Original Certificate of Title No. P-658
(Exh. A) null and void and of no legal effect;
Declaring the defendant the absolute or true
owner and possessor of the land in dispute; and
Ordering the plaintiff to pay the defendant the
sum of P10,000.00 for attorneys fees plus P500.00
per appearance.[16]

The trial court held that the issuance of respondents title, OCT No. P-658,
was tainted with fraud and irregularities and the title is, therefore, spurious; hence, it
is null and void, and without any probative value. The finding of fraud was based on:
(1) the Certification issued by Datu Samra Andam, A/Adm. Assistant II, Natural
Resources District No. XII-3, Marawi City, stating that the data contained in
respondents title were verified and had no record in the said office; (2) the said
Certification was not refuted or rebutted by respondent; (3) while free patents are
normally issued for agricultural lands, respondents title is a free patent title issued
over a residential land as the lot is described in the Complaint as a residential lot;
and (4) Yusoph Lumampa, an employee of the local Bureau of Lands, to whom
respondent allegedly entrusted the paperwork of the land titling, was not presented as
a witness.
Moreover, the trial court stated that respondent failed to establish with
competent and credible evidence that he was in prior possession of the subject
property. No corroborative witness was presented to further prove his prior
possession.
On the other hand, the trial court stated that petitioner offered documentary
evidence, consisting of a contract of real estate mortgage of the subject property, tax
declarations, an official tax receipt, and testimonial evidence to prove that he had
been in open, public, continuous, and lawful possession of the subject property in the
concept of owner.
Respondent appealed the decision of the trial court to the Court of Appeals.
On August 15, 2003, the Court of Appeals rendered a Decision reversing
the decision of the trial court, the dispositive portion of which reads:
WHEREFORE:
The appeal is granted and the appealed judgment is hereby
totally REVERSED.
2.
To quiet his title, plaintiff-appelant Hadji Serad Mingca
Lantud is confirmed the owner of the parcel of land covered
by Original Certificate of Title No. P-658;
3.
The defendant-appellee is ordered to pay P50,000.00 as
attorneys fees to the plaintiff-appellant; and
4.
Costs against the defendant-appellee.[17]
Petitioners motion for reconsideration was denied by the Court of Appeals
in its Resolution[18] dated May 13, 2004.
1.

The Court of Appeals held that there is no controversy that respondent is a

holder of a Torrens title; hence, he is the owner of the subject property. The
appellate court stressed that Section 47[19] of the Land Registration Act (Act No. 496)

provides that the certificate of title covering registered land shall be received as
evidence in all courts of the Philippines and shall be conclusive as to all matters
stated therein.
The Court of Appeals stated that the Torrens title has three attributes: (1) a
Torrens title is the best evidence of ownership over registered land and, unless
annulled in an appropriate proceeding, the title is conclusive on the issue of
ownership; (2) a Torrens title is incontrovertible and indefeasible upon the expiration
of one year from the date of the entry of the decree of registration; [20] and (3) a
Torrens title is not subject to collateral attack.[21]
The Court of Appeals held that petitioners counterclaim filed on October
15, 1984 for cancellation of respondents original certificate of title issued on May
22, 1981 was filed beyond the statutory one-year period; hence, petitioners title had
become indefeasible, and cannot be affected by the decision made by Barangay
Captain Hadji Hassan Abato and his councilmen. Moreover, the appellate court held
that petitioners prayer for the cancellation of respondents title, OCT No. P-658,
through a counterclaim included in his Answer is a collateral attack, which the law
does not allow, citing Cimafranca v. Court of Appeals[22] and Natalia Realty
Corporation v. Valdez.[23]
The allegation of fraud in securing OCT No. P-658 on the ground that the
property in dispute is a residential lot and not subject of a free patent was not given
weight by the appellate court as it was supported only by testimonial evidence that
did not show how (by metes and bounds) and why the property in dispute could not
have been the subject of a free patent. The appellate court stated that a mere
preponderance of evidence is not adequate to prove fraud; [24] it must be established
by clear and convincing evidence.
The Court of Appeals also noted that petitioner claimed that the subject
property is only part of his larger property. Although petitioner introduced proof of
payment of the real estate taxes of the said property, as well as a previous mortgage
of the property, petitioner did not show that the disputed property is part of his larger
property. Hence, the appellate court stated that under such circumstances, it cannot
rule that petitioner owned the land under litigation, since petitioner failed to show
that it is part of his larger property.
The Court of Appeals did not award actual and moral damages, because
respondent failed to prove the amount of any actual damages sustained, and the
instances enumerated under Article 2219 of the Civil Code warranting the award of
moral damages were not present.
However, the Court of Appeals awarded attorney's fees in the amount
of P50,000.00, considering that respondent was forced to incur expenses to protect
his right through the action to quiet title.

Petitioner filed this petition raising the following issues:

I
THE COURT OF APPEALS MISERABLY FAILED TO
CONSIDER THE FACT THAT THE TORRENS TITLE
INVOLVED HEREIN WAS ISSUED PURSUANT TO A FREE
PATENT WHICH COULD NOT BE VALIDLY ISSUED OVER
A PRIVATE LAND.
II
THE
COURT
OF
APPEALS
ERRED
IN
DISREGARDING THE FACT THAT AS CERTIFIED TO BY
THE BUREAU OF LANDS ITSELF NO SUCH FREE PATENT
OVER THESUBJECT LAND WAS ISSUED BY IT; HENCE,
SAID FREE PATENT IS SPURIOUS.
III
THE COURT OF APPEALS ERRED IN REVERSING
THE DECISION OF THE TRIAL COURT THAT THE SUBJECT
LOT HAD LONG BEEN OWNED, POSSESSED AND
CULTIVATED BY THE DEFENDANT (PETITIONER HEREIN)
OR HIS PREDECESSORS-IN-INTEREST SINCE TIME
IMMEMORIAL IN THE CONCEPT OF AN OWNER.
IV
THE COURT OF APPEALS ERRED IN RULING THAT
THE
PETITIONERS
COUNTERCLAIM
FOR
CANCELLATION OF RESPONDENTS TITLE IS BARRED.
V
THE COURT OF APPEALS ERRED IN RULING THAT
THE COUNTERCLAIM IN THE INSTANT CASE IS A
COLLATERAL ATTACK ON RESPONDENT-PLAINTIFFS
TITLE.
VI
THE COURT OF APPEALS ERRED IN DENYING
PETITIONERS MOTION FOR RECONSIDERATION.[25]

The main issue is whether or not the Court of Appeals erred in sustaining
the validity of OCT No. P-658 and confirming respondent as owner of the property
in dispute.

Petitioner contends that the Court of Appeals erred in disregarding the fact
that the Torrens title was issued to respondent by virtue of a free patent covering a
residential lot that is private land as it has been acquired by petitioner through open,
public, continuous and lawful possession of the land in the concept of
owner. Petitioner thus prayed for the cancellation of respondents title and the
reconveyance of the subject property. Hence, the Court of Appeals erred in declaring
that the subject lot belongs to respondent.
The contention is without merit.
The Torrens title is conclusive evidence with respect to the ownership of the
land described therein, and other matters which can be litigated and decided in land
registration proceedings.[26] Tax declarations and tax receipts cannot prevail over a
certificate of title which is an incontrovertible proof of ownership. [27] An original
certificate of title issued by the Register of Deeds under an administrative proceeding
is as indefeasible as a certificate of title issued under judicial proceedings.
[28]
However, the Court has ruled that indefeasibility of title does not attach to titles
secured by fraud and misrepresentation.[29]
In this case, petitioner alleged in his Answer to respondents Complaint in
the trial court that respondents title, OCT No. P-658, was secured in violation of the
law and through fraud, deception and misrepresentation, because the subject parcel
of land is a residential lot, which cannot be subject of a free patent, since only
agricultural lands are subject of a free patent.
The trial court found that [t]he lot under litigation as clearly described in
the complaint is a residential lot and a free patent title thereto cannot validly be
issued. This finding was one of the bases for the trial courts declaration that the
issuance of OCT was tainted with fraud and irregularities and is, therefore, spurious;
thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint that the land is
residential was made only by respondent, but the true classification of the disputed
land as residential was not shown to have been made by the President, upon
recommendation by the Secretary of Environment and Natural Resources, pursuant
to Section 9 of Commonwealth Act No. 141, otherwise known as The Public Land
Act.[30] Hence, the trial court erred in concluding that there was fraud in the issuance
of respondents free patent title on the ground that it covered residential land based
only on the Complaint which stated that the property was residential land when it
was not shown that it was the President who classified the disputed property as
residential, and OCT No. P-658 itself stated that the free patent title covered
agricultural land. It has been stated that at present,not only agricultural lands, but
also residential lands, have been made available by recent legislation for acquisition
by free patent by any natural born Filipino citizen.[31] Nevertheless, the fact is that in
this case, the free patent title was granted over agricultural land as stated in OCT No.
P-658.

Moreover,
petitioner
contends
in
his
petition
that
the
Certification[32] dated July 24, 1987 issued by Datu Samra I. Andam, A/Adm.
Assistant II, Natural Resources District No. XII-3, Bureau of Lands, Marawi City,
certifying that the data contained in OCT No. P-658 in respondents name had no
records in the said office, showed that respondentsTorrens title was spurious.
The Court holds that the certification, by itself, is insufficient to prove the
alleged fraud. Fraud and misrepresentation, as grounds for cancellation of patent and
annulment of title, should never be presumed, but must be proved by clear and
convincing evidence, mere preponderance of evidence not being adequate. [33] Fraud
is a question of fact which must be proved. [34] The signatory of the certification, Datu
Samra Andam, A/Adm. Assistant II, Natural Resources District No. XII3, Marawi City, was not presented in court to testify on the due issuance of the
certification, and to testify on the details of his certification, particularly the reason
why the said office had no records of the data contained in OCT No. P-658 or to
testify on the fact of fraud, if any.
Thus, the Court holds that the evidence on record is insufficient to prove
that fraud was committed in the issuance of respondents Torrens title. Hence,
respondentsTorrens title is a valid evidence of his ownership of the land in dispute.
On the other hand, petitioner claims ownership of the subject lot, which is
merely a portion of a larger property (1,800 square meters) that he allegedly
inherited from his father in 1952, by virtue of open, public and continuous
possession of the land in the concept of owner making it petitioners private
property. Hence, petitioner prays for reconveyance of the said property.
Article 434 of the Civil Code governs an action for reconveyance, thus:
Art. 434. In an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title and
not on the weakness of the defendants claim.
Under Article 434 of the Civil Code, to successfully maintain an action to
recover the ownership of a real property, the person who claims a better right to it
must prove two (2) things: first, the identity of the land claimed; and second, his title
thereto.[35]
In regard to the first requisite, in an accion reinvindicatoria, the person who
claims that he has a better right to the property must first fix the identity of the land
he is claiming by describing the location, area and boundaries thereof.[36]
In this case, petitioner claims that the property in dispute is part of his larger
property. However, petitioner failed to identify his larger property by providing
evidence of the metes and bounds thereof, so that the same may be compared with

the technical description contained in the title of respondent, which would have
shown whether the disputed property really formed part of petitioners larger
property. The appellate court correctly held in its Resolution dated May 13, 2004 that
petitioners claim is solely supported by testimonial evidence, which did not
conclusively show the metes and bounds of petitioners larger property in relation to
the metes and bounds of the disputed property; thus, there is no sufficient evidence
on record to support petitioners claim that the disputed property is part of his larger
property.
In regard to the second requisite of title to property, both petitioner and
respondent separately claim that they are entitled to ownership of the property by
virtue of open, public, continuous and exclusive possession of the same in the
concept of owner. Petitioner claims that he inherited the subject property from his
father in 1952, while respondent claims that he acquired the property from his
grandmother Intumo Pagsidan, a portion thereof from his grandmothers helper
Totop Malacop pursuant to a court decision after litigating with him. [37] Respondent
has OCT No. P-658 to prove his title to the subject property, while petitioner merely
claims that the property is already his private land by virtue of his open, public,
continuous possession of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of
reconveyance as he failed to prove the identity of his larger property in relation to the
disputed property, and his claim of title by virtue of open, public and continuous
possession of the disputed property in the concept of owner is nebulous in the light
of a similar claim by respondent who holds a free patent title over the subject
property. As stated in Ybaez v. Intermediate Appellate Court,[38] it is relatively easy
to declare and claim that one owns and possesses public agricultural land, but it is
entirely a different matter to affirmatively declare and to prove before a court of law
that one actually possessed and cultivated the entire area to the exclusion of other
claimants who stand on equal footing under the Public Land Act (Commonwealth
Act No. 141, as amended) as any other pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in ruling that
petitioners counterclaim is time-barred, since the one-year prescriptive period does
not apply when the person seeking annulment of title or reconveyance is in
possession of the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago.[39] Petitioner also contends that the Court of Appeals erred in ruling that
the counterclaim in this case is a collateral attack on respondents title,
citing Cimafranca v. Intermediate Appellate Court.[40] Petitioner cites the case
of Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago,[41] which held that
a counterclaim can be considered a direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate Appellate
Court,[42] cited by the Court of Appeals to support its ruling that the prayer for
the cancellation of respondents title through a counterclaim included in petitioners
Answer is a collateral attack on the said title, is inapplicable to this
case. In Cimafranca, petitioners therein filed a complaint for Partition and

Damages, and respondents therein indirectly attacked the validity of the title
involved in their counterclaim. Hence, the Court ruled that aTorrens title cannot be
attacked collaterally, and the issue on its validity can be raised only in an action
expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of
Mariano E. Santiago, declared that the one-year prescriptive period does not apply
when the party seeking annulment of title or reconveyance is in possession of the lot,
as well as distinguished a collateral attack under Section 48 of PD No. 1529 from a
direct attack, and held that a counterclaim may be considered as a complaint or an
independent action and can be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not
apply when the person seeking annulment of title or
reconveyance is in possession of the lot. This is because the
action partakes of a suit to quiet title which is imprescriptible.
In David v. Malay, we held that a person in actual possession of a
piece of land under claim of ownership may wait until his
possession is disturbed or his title is attacked before taking steps to
vindicate his right, and his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its
effect on his title.

The above ruling of the court on the definition of collateral attack under
Section 48 of P.D. No. 1529 was reiterated in Leyson v. Bontuyan,[44] Heirs of
Enrique Diaz v. Virata,[45] Arangote v. Maglunob,[46] and Catores v. Afidchao.[47]
Based on the foregoing, the Court holds that petitioners counterclaim for
cancellation of respondents title is not a collateral attack, but a direct attack on
the Torrens title of petitioner. However, the counterclaim seeking for the cancellation
of title and reconveyance of the subject property has prescribed as petitioner has not
proven actual possession and ownership of the property due to his failure to prove
the identity of his larger property that would show that the disputed property is a part
thereof, and his claim of title to the subject property by virtue of open, public and
continuous possession in the concept of owner is nebulous in the light of a similar
claim by respondent who holds a Torrens title to the subject property.
Respondents original certificate of title was issued on May 22, 1981, while
the counterclaim was filed by petitioner on October 15, 1984, which is clearly
beyond the one-year prescriptive period.
In fine, the Court of Appeals did not err in confirming that respondent is the
owner of the parcel of land covered by OCT No. P-658.

xxxx
Section 48 of P.D. 1529, the Property Registration Decree,
provides that a certificate of title shall not be subject to collateral
attack and cannot be altered, modified, or canceled except in a
direct proceeding. An action is an attack on a title when the
object of the action is to nullify the title, and thus challenge the
judgment or proceeding pursuant to which the title was
decreed. The attack is direct when the object of an action is to
annul or set aside such judgment, or enjoin its enforcement.
On the other hand, the attack is indirect or collateral when, in an
action to obtain a different relief, an attack on the judgment or
proceeding is nevertheless made as an incident thereof.
x x x A counterclaim can be considered a direct attack on the
title. In Development Bank of the Philippines v. Court Appeals, we
ruled on the validity of a certificate of title despite the fact that the
nullity thereof was raised only as a counterclaim. It was held that
a counterclaim is considered a complaint, only this time, it is
the original defendant who becomes the plaintiff. It stands on
the same footing and is to be tested by the same rules as if it
were an independent action. x x x[43]

WHEREFORE, the petition is DENIED. The Court of Appeals

decision dated August 15, 2003, and its Resolution dated May 13, 2004 in CAG.R. CV No. 63801, are hereby AFFIRMED.
No costs.
SO ORDERED.

G.R. No. 175485

July 27, 2011

CASIMIRO DEVELOPMENT CORPORATION

vs.
RENATO L. MATEO,
Respondent.
x-----------------------------------------------------------------------------------------x
The focus of this appeal is the faith that should be accorded to the Torrens title
that the seller holds at the time of the sale.
In its decision promulgated on August 31, 2006, [1] the Court of Appeals
(CA) declared that the respondent and his three brothers were the rightful owners of
the land in litis, and directed the Office of the Register of Deeds of Las Pias City to
cancel the transfer certificate of title (TCT) registered under the name of petitioner
Casimiro Development Corporation (CDC) and to issue in its place another TCT in
favor of the respondent and his three brothers. Thereby, the CA reversed the
judgment of the Regional Trial Court (RTC) rendered on May 9, 2000 (dismissing
the respondents complaint for quieting of title and reconveyance upon a finding that
CDC had been a buyer in good faith of the land in litis and that the respondents suit
had already been time-barred).
Aggrieved, CDC brought its petition for review on certiorari.
Antecedents
The subject of this case is a registered parcel of land (property) with an area of
6,693 square meters, more or less, located in Barrio Pulang Lupa, Las Pias City,
that was originally owned by Isaias Lara, [2] the respondents maternal grandfather.
Upon the death of Isaias Lara in 1930, the property passed on to his children,
namely: Miguela, Perfecta and Felicidad, and a grandson, Rosauro (son of Perfecta
who had predeceased Isaias in 1920). In 1962, the co-heirs effected the transfer of
the full and exclusive ownership to Felicidad (whose married surname was LaraMateo) under an agreement denominated as Pagaayos Na Gawa Sa Labas Ng
Hukuman.
Felicidad Lara-Mateo had five children, namely: Laura, respondent Renato,
Cesar, Candido, Jr. and Leonardo. With the agreement of the entire Lara-Mateo
family, a deed of sale covering the property was executed in favor of Laura, who, in
1967, applied for land registration. After the application was granted, Original
Certificate of Title (OCT) No. 6386 was issued in Lauras sole name.
In due course, the property now covered by OCT No. 6386 was used as
collateral to secure a succession of loans. The first loan was obtained from Bacoor
Rural Bank (Bacoor Bank). To repay the loan to Bacoor Bank and secure the release
of the mortgage, Laura borrowed funds from Parmenas Perez (Perez), who, however,
required that the title be meanwhile transferred to his name. Thus, OCT No. 6386

was cancelled and Transfer Certificate of Title (TCT) No. 438959 was issued in the
name of Perez. Subsequently, Laura recovered the property by repaying the
obligation with the proceeds of another loan obtained from Rodolfo Pe (Pe),
resulting in the cancellation of TCT No. 438595, and in the issuance of TCT No. S91595 in Lauras name. She later executed a deed of sale in favor of Pe, leading to
the issuance of TCT No. S-91738 in the name of Pe, who in turn constituted a
mortgage on the property in favor of China Banking Corporation (China Bank) as
security for a loan. In the end, China Bank foreclosed the mortgage, and consolidated
its ownership of the property in 1985 after Pe failed to redeem. Thus, TCT No.
(99527) T-11749-A was issued in the name of China Bank.
In 1988, CDC and China Bank negotiated and eventually came to terms on the
purchase of the property, with China Bank executing a deed of conditional sale for
the purpose. On March 4, 1993, CDC and China Bank executed a deed of absolute
sale over the property. Resultantly, on March 29, 1993, CDC was issued TCT No. T34640 in its own name.
In the meanwhile, on February 28, 1991, Felicidad died intestate.
On June 6, 1991, CDC brought an action for unlawful detainer in the
Metropolitan Trial Court (MeTC) in Las Pias City against the respondents siblings,
namely: Cesar, Candido, Jr., and Leonardo, and the other occupants of the property.
Therein, the defendants maintained that the MeTC did not have jurisdiction over the
action because the land was classified as agricultural; that the jurisdiction belonged
to the Department of Agrarian Reform Adjudication Board (DARAB); that they had
been in continuous and open possession of the land even before World War II and
had presumed themselves entitled to a government grant of the land; and that CDCs
title was invalid, considering that the land had been registered before its being
declared alienable.[3]
On October 19, 1992, the MeTC ruled in favor of CDC, viz:
The Court, after careful consideration of the facts and the
laws applicable to this case[,] hereby resolves:
1. On the issue of jurisdiction.
The defendants alleged that the land in question is an
agricultural land by presenting a Tax Declaration Certificate
classifying the land as FISHPOND. The classification of the land
in a tax declaration certificate as a fishpond merely refers to the
use of the land in question for the purpose of real property
taxation. This alone would not be sufficient to bring the land in
question under the operation of the Comprehensive Agrarian
Reform Law.

2. On the issue of open and adverse possession by the

defendants.
It should be noted that the subject land is covered by a
Transfer Certificate of Title in the name of plaintiffs predecessorin-interest China Banking Corporation. Certificates of Title under
the Torrens System is indefeasible and imprescriptible. As between
two persons claiming possession, one having a [T]orrens title and
the other has none, the former has a better right.

CDC appealed to the CA, which, on January 25, 1996, found in favor of
CDC, declaring that the MeTC had jurisdiction. As a result, the CA reinstated the
decision of the MeTC.[6]
On appeal (G.R. No. 128392), the Court affirmed the CAs decision in favor
of CDC, ruling thusly:
WHEREFORE, the petition is DENIED and the Court of
Appeals Decision and Resolution in CA- G.R. SP No. 34039,
dated January 25, 1996 and February 21, 1997 respectively, are
AFFIRMED. No costs.

3. On the issue of the nullity of the Certificate of Title.

SO ORDERED.[7]
The defense of the defendants that the subject property was
a forest land when the same was originally registered in 1967 and
hence, the registration is void[,] is not for this Court to decide[,]
for lack of jurisdiction. The certificate of title over the property
must be respected by this Court until it has been nullified by a
competent Court.
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff[,] ordering the defendants
1. [sic] and all persons claiming right[s] under it to vacate
the subject premises located at Pulang Lupa I, Las Pias, Metro
Manila and surrender the possession of the same to herein plaintiff;
2. to pay the plaintiff reasonable compensation for the use
and occupation of the subject premises hereby fixed at (P100.00)
one hundred pesos a month starting November 22, 1990 (the time
when the demand letter to vacate was given) until defendants
actually vacate the property;
No pronouncement as to costs and attorneys fees.
SO ORDERED.[4]
The decision of the MeTC was assailed in the RTC via petition
for certiorari and prohibition. The RTC resolved against CDC, and held that the
MeTC had acted without jurisdiction because the land, being a fishpond, was
agricultural; hence, the dispute was within the exclusive jurisdiction of the DARAB
pursuant to Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988).
[5]

The decision in G.R. No. 128392 became final.

Nonetheless, on June 29, 1994, the respondent brought an action for
quieting of title, reconveyance of four-fifths of the land, and damages against CDC
and Laura in the RTC in Las Pias City entitled Renato L. Mateo v. Casimiro
Development Corporation and Laura Mateo de Castro. In paragraph 4 of his
complaint, he stated that he was bringing this action to quiet title on behalf of
himself and of his three (3) brothers Cesar, Leonardo, and Candido, Jr., all
surnamed MATEO in his capacity as one of the co-owners of a parcel of land
situated at Barrio Pulang Lupa, Municipality of Las Pias, Metro Manila.
On May 9, 2001, the RTC held in favor of CDC, disposing:
WHEREFORE, and by strong preponderance of evidence,
judgment is hereby rendered in favor of the defendant Casimiro
Development Corporation and against the plaintiff Renato L.
Mateo by (1) Dismissing the complaint, and upholding the validity
and indefeasibility of Transfer Certificate of Title No. T-34640 in
the name of Casimiro Development Corporation; (2) Ordering the
plaintiff Renato Mateo to pay defendant Casimiro Development
Corporation the sum of [a] P200,000.00 as compensatory damages;
[b] P200,000.00 as attorneys fees; and [c] to pay the costs.
SO ORDERED.[8]
On appeal (C.A.-G.R. CV No. 71696), the CA promulgated its decision on
August 31, 2006, reversing the RTC and declaring CDC to be not a buyer in good
faith due to its being charged with notice of the defects and flaws of the title at the
time it acquired the property from China Bank, and decreeing:
WHEREFORE, the Decision dated May 9, 2001 of Branch
225, Regional Trial Court, Las Pias City in Civil Case No. 94-

2045 is hereby REVERSED and SET ASIDE and a new one

rendered:
(1) Declaring appellant Renato Mateo and his brothers
and co-owners Cesar, Candido, Jr., and Leonardo, all surnamed
Mateo as well as his sister, Laura Mateo de Castro as the rightful
owners of the parcel of land, subject of this case; and
(2) Ordering the Register of Deeds of Las Pias City, MetroManila to cancel Transfer Certificate of Title No. T-34640 under the name
of appellee Casimiro Development Corporation, and that a new one be
issued in favor of the appellant and his co-heirs and siblings, mentioned
above as co-owners pro indiviso of the said parcel.

CDC argues that it was a buyer in good faith; and that the CA did not rule on
matters that fortified its title in the property, namely: (a) the incontrovertibility of the
title of Laura; (b) the action being barred by laches and res judicata; and (c) the
property having been conveyed to third parties who had then claimed adverse title.
The respondent counters that CDC acquired the property from China Bank
in bad faith, because it had actual knowledge of the possession of the property by the
respondent and his siblings; that CDC did not actually accept delivery of the
possession of the property from China Bank; and that CDC ignored the failure of
China Bank to warrant its title.
Ruling
We grant the petition.

(3)

No pronouncement as to cost.
SO ORDERED.[9]

1.
Indefeasibility of title in
the name of Laura

The CA denied CDCs motion for reconsideration.

Hence, this appeal, in which CDC urges that the CA committed serious
errors of law,[10] as follows:

As basis for recovering the possession of the property, the respondent has
assailed the title of Laura.
We cannot sustain the respondent.

(A) xxx in failing to rule that the decree of registration over the
Subject Property is incontrovertible and no longer open to
review or attack after the lapse of one (1) year from entry of
such decree of registration in favor of Laura Mateo de Castro.
(B) xxx in failing to rule that the present action is likewise barred
by res judicata.
(C) xxx in failing to rule that the instant action for quieting of title
and reconveyance under PD No. 1529 cannot prosper because
the Subject Property had already been conveyed and
transferred to third parties who claimed adverse title for
themselves.
(D) xxx in failing to rule that the action of respondent for
quieting of title, reconveyance and damages is barred by
laches.
(E) xxx in ruling that the Subject Property must be reconveyed to
respondent because petitioner Casimiro Development
Corporation is not a purchaser in good faith.

There is no doubt that the land in question, although once a part of the
public domain, has already been placed under the Torrens system of land registration.
The Government is required under the Torrens system of registration to issue an
official certificate of title to attest to the fact that the person named in the certificate
is the owner of the property therein described, subject to such liens and
encumbrances as thereon noted or what the law warrants or reserves. [11] The objective
is 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. The Torrens system gives the registered owner complete peace of
mind, in order that he will be secured in his ownership as long as he has not
voluntarily disposed of any right over the covered land.[12]
The Government has adopted the Torrens system due to its being the most
effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the sellers title thereto is valid, he
should not run the risk of being told later that his acquisition was ineffectual after all,
which will not only be unfair to him as the purchaser, but will also erode public
confidence in the system and will force land transactions to be attended by
complicated and not necessarily conclusive investigations and proof of ownership.
The further consequence will be that land conflicts can be even more abrasive, if not
even violent. The Government, recognizing the worthy purposes of the Torrens

system, should be the first to accept the validity of titles issued thereunder once the
conditions laid down by the law are satisfied.[13]

allegation, that they indeed had an agreement with their

grandfather to use the land.

Yet, registration under the Torrens system, not being a mode of acquiring
ownership, does not create or vest title. [14] The Torrens certificate of title is merely an
evidence of ownership or title in the particular property described therein. [15] In that
sense, the issuance of the certificate of title to a particular person does not preclude
the possibility that persons not named in the certificate may be co-owners of the real
property therein described with the person named therein, or that the registered
owner may be holding the property in trust for another person.[16]

As for the third element, there is apparently no consent

between the parties. Petitioners were unable to show any proof of
consent from CDC to work the land. For the sake of argument, if
petitioners were able to prove that their grandfather owned the
land, they nonetheless failed to show any proof of consent from
their grandfather to work the land. Since the third element was not
proven, the fourth element cannot be present since there can be
no purpose to a relationship to which the parties have not
consented.[18]

Nonetheless, it is essential that title registered under the Torrens system

becomes indefeasible and incontrovertible.[17]
The land in question has been covered by a Torrens certificate of title (OCT
No. 6386 in the name of Laura, and its derivative certificates) before CDC became
the registered owner by purchase from China Bank. In all that time, neither the
respondent nor his siblings opposed the transactions causing the various transfers. In
fact, the respondent admitted in his complaint that the registration of the land in the
name of Laura alone had been with the knowledge and upon the agreement of the
entire Lara-Mateo family. It is unthinkable, therefore, that the respondent, fully
aware of the exclusive registration in her sister Lauras name, allowed more than 20
years to pass before asserting his claim of ownership for the first time through this
case in mid-1994. Making it worse for him is that he did so only after CDC had
commenced the ejectment case against his own siblings.
Worthy of mention is that Candido, Jr., Leonardo, and Cesars defense in the
ejectment case brought by CDC against them was not predicated on a claim of their
ownership of the property, but on their being agricultural lessees or tenants of
CDC. Even that defense was ultimately rejected by this Court by observing in G.R.
No. 128392 as follows:
With regard to the first element, the petitioners have tried to
prove that they are tenants or agricultural lessees of the respondent
corporation, CDC, by showing that the land was originally owned
by their grandfather, Isaias Lara, who gave them permission to
work the land, and that CDC is merely a successor-in-interest of
their grandfather. It must be noted that the petitioners failed to
adequately prove their grandfathers ownership of the land. They
merely showed six tax declarations. It has been held by this Court
that, as against a transfer certificate of title, tax declarations or
receipts
are
not
adequate
proofs
of
ownership.
Granting arguendo that the land was really owned by the
petitioners grandfather, petitioners did not even attempt to show
how the land went from the patrimony of their grandfather to that
of CDC. Furthermore, petitioners did not prove, but relied on mere

The respondents attack against the title of CDC is likewise anchored on his
assertion that the only purpose for having OCT No. 6386 issued in the sole name of
Laura was for Laura to hold the title in trust for their mother. This assertion cannot
stand, however, inasmuch as Lauras title had long ago become indefeasible.
Moreover, the respondents suit is exposed as being, in reality, a collateral
attack on the title in the name of Laura, and for that reason should not prosper.
Registration of land under the Torrens System, aside from perfecting the title and
rendering it indefeasible after the lapse of the period allowed by law, also renders the
title immune from collateral attack. [19] A collateral attack occurs when, in another
action to obtain a different relief and as an incident of the present action, an attack is
made against the judgment granting the title. This manner of attack is to be
distinguished from a direct attack against a judgment granting the title, through an
action whose main objective is to annul, set aside, or enjoin the enforcement of such
judgment if not yet implemented, or to seek recovery if the property titled under the
judgment had been disposed of.[20]
2.
CDC was an innocent purchaser for value
The CA found that CDC acquired the property in bad faith because CDC had
knowledge of defects in the title of China Bank, including the adverse possession of
the respondents siblings and the supposed failure of China Bank to warrant its title
by inserting an as-is, where-is clause in its contract of sale with CDC.
The CA plainly erred in so finding against CDC.
To start with, one who deals with property registered under the Torrens
system need not go beyond the certificate of title, but only has to rely on the
certificate of title.[21]He is charged with notice only of such burdens and claims as are
annotated on the title.[22] The pertinent law on the matter of burdens and claims is
Section 44 of the Property Registration Decree,[23] which provides:

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 on 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 encumbrances 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 short, considering that China Banks TCT No. 99527 was a clean title,
that is, it was free from any lien or encumbrance, CDC had the right to rely, when it
purchased the property, solely upon the face of the certificate of title in the name of
China Bank.[24]
The CAs ascribing of bad faith to CDC based on its knowledge of the
adverse possession of the respondents siblings at the time it acquired the property
from China Bank was absolutely unfounded and unwarranted. That possession did
not translate to an adverse claim of ownership that should have put CDC on actual
notice of a defect or flaw in the China Banks title, for the respondents siblings
themselves, far from asserting ownership in their own right, even characterized their
possession only as that of mere agricultural tenants. Under no law was possession
grounded on tenancy a status that might create a defect or inflict a flaw in the title of
the owner. Consequently, due to his own admission in his complaint that the
respondents own possession was not any different from that of his siblings, there was
really nothing factually or legally speaking that ought to have alerted CDC or, for

that matter, China Bank and its predecessors-in-interest, about any defect or flaw in
the title.
The vendees notice of a defect or flaw in the title of the vendor, in order for it
to amount to bad faith, should encompass facts and circumstances that would impel a
reasonably cautious person to make further inquiry into the vendors title, [25] or facts
and circumstances that would induce a reasonably prudent man to inquire into the
status of the title of the property in litigation. [26] In other words, the presence of
anything that excites or arouses suspicion should then prompt the vendee to look
beyond the certificate and to investigate the title of the vendor appearing on the face
of said certificate.[27]
And, secondly, the CA grossly erred in construing the as-is, where-is clause
contained in the deed of sale between CDC (as vendee) and China Bank (as vendor)
as proof or manifestation of any bad faith on the part of CDC. On the contrary,
the as-is, where-is clause did not affect the title of China Bank because it related only
to the physical condition of the property upon its purchase by CDC. The clause only
placed on CDC the burden of having the occupants removed from the property. In a
sale made on an as-is, where-isbasis, the buyer agrees to take possession of the things
sold in the condition where they are found and from the place where they are
located, because the phrase as-is, where-ispertains solely to the physical condition
of the thing sold, not to its legal situation and is merely descriptive of the state of
the thing sold without altering the sellers responsibility to deliver the property sold
to the buyer.[28]
What the foregoing circumstances ineluctably indicate is that CDC, having
paid the full and fair price of the land, was an innocent purchaser for value, for,
according toSandoval v. Court of Appeals:[29]
A purchaser in good faith is one who buys property of
another, without notice that some other person has a right to, or
interest in, such property and pays a full and fair price for the
same, at the time of such purchase, or before he has notice of the
claim or interest of some other persons in the property. He buys the
property with the belief that the person from whom he receives the
thing was the owner and could convey title to the property. A
purchaser cannot close his eyes to facts which should put a
reasonable man on his guard and still claim he acted in good faith.
WHEREFORE, we grant the petition for review on certiorari; set aside the
decision of the Court of Appeals in CA-GR. CV No. 71696; dismiss the complaint in
Civil Case No. 94-2045; and declare Transfer Certificate of Title No. T-34640 in the
name of Casimiro Development Corporation valid and subsisting.
The respondent shall pay the costs of suit.
SO ORDERED.