HEIRS OF TOMAS ARAO, REPRESENTED BY PROCESO ARAO, EULALIA ARAO-
MAGGAY, GABRIEL ARAO AND FELIPA A. DELELIS, PETITIONERS, VS. HEIRS
OF PEDRO ECLIPSE, REPRESENTED BY BASILIO ECLIPSE; HEIRS OF EUFEMIA
ECLIPSEPAGULAYAN, REPRESENTED BY BASILIA P. CUARESMA; HEIRS OF
HONORATO ECLIPSE, REPRESENTED BY VICENTE ECLIPSE, JUANITA E.
AGAMATA AND JIMMY ECLIPSE; AND HEIRS OF MARIA ECLIPSE-DAYAG,
REPRESENTED BY OSMUNDO E. DAYAG, RESPONDENTS.
DECISION
J. REYES, JR., J.:
The Case
Before Us is a Petition for Review on Certiorari[1] filed under Rule 45 of the
Rules of Court assailing the Decision[2] dated June 7, 2013 and the
Resolution[3] dated January 30, 2014 of the Court of Appeals (CA), in CA-G.R.
CV No. 93660, which reversed and set aside the Decision [4] dated April 23,
2009 of the Regional Trial Court (RTC) of Tuguegarao City, Cagayan, Branch
5, in Civil Case No. 5892, for Declaration of Nullity of a Deed of Absolute Sale
and Reconveyance of Lot No. 1667, Recovery of Ownership and Possession
with Damages.
The Facts
Subject of the controversy is a 5,587-square-meter land, known as Lot No.
1667 situated in Ugac Sur, Tuguegarao City, Cagayan, originally owned by
Policarpio Eclipse (Policarpio), married to Cecilia Errera (spouses Eclipse),
and covered by Original Certificate of Title (OCT) No. 1546. [5]
In 1994, respondents (spouses Eclipse's successors-in-interest) discovered
that the land in question had been subject of a Deed of Absolute Sale dated
September 5, 1969[6] by which the registered owner, Policarpio, with the
consent of his wife Cecilia, sold the land in question to Tomas Arao (Tomas),
married to Tomasa Balubal.[7] They averred that the sale was registered,
resulting in the cancellation of OCT No. 1546, which was replaced by
Transfer Certificate of Title (TCT) No. T-13798[8] in the name of Tomas,
married to Terasa Balubal.[9] On June 30, 1977, Tomas executed a Deed of
Absolute Sale[10] of the subject land in favor of his children Eulalia, Proceso
and Felipa Arao, whose heirs are herein petitioners. Eventually, Eulalia and
Felipa registered the land in their names as TCT No. T-39071.
Respondents maintained that the said Deed of Sale dated September 5, 1969
was a forgery because at the time of its execution, Policarpio and Cecilia
were already dead. Policarpio died on November 21, 1936, while Cecilia died
on June 3, 1925. Respondents thus argued that on the basis of the said
forged deed, the subsequent transfer from Tomas to Eulalia and Felipa was
likewise void. Hence, they filed the present action for Nullity of a Deed of
Absolute Sale and Reconveyance of Lot No. 1667, Recovery of Ownership
and Possession with Damages[11] against herein petitioners, the heirs of
Tomas.
Petitioners moved for the dismissal of the complaint on the ground of
prescription, arguing that actions for annulment of title and reconveyance
prescribe in 10 years.[12] Their motion was denied in a Resolution[13] dated
June 7, 2002.
Thus, in their Answer with Counterclaim,[14] petitiOners countered
respondents' allegation by stating that the children of spouses Eclipse,
namely, Pedro, Eufemia, Honorato and Maria Eclipse sold the subject land to
Paulino Arao (Paulino), married to Balbina Cancino, per Deed of Sale [15] dated
June 25, 1940. Paulino and Balbina died intestate and without an heir except
Paulino's brother, Tomas.[16] On June 30, 1977, Tomas sold it to his children
Eulalia, Proceso and Felipa, and the latter registered the land in their names
as TCT No. T-39071.[17] During trial, petitioners also presented a Deed of Sale
dated November 14, 1949 executed by a certain Gavino Arao (Gavino), who
was later identified as the son of Paulino, in favor of Tomas.
Ruling of the RTC
On April 23, 2009, the RTC rendered a Decision dismissing the complaint and
counterclaim on the ground of laches. The RTC ruled that the Deed of Sale
dated September 5, 1969 in favor of Tomas was a forgery. Since the said
Deed was a forgery, it conferred no right in favor of Tomas' heirs. But despite
the findings of nullity, the RTC still dismissed the complaint as laches had
set in. The RTC ruled:
When Tomas registered the fake deed of sale (Exhibit "B") and Transfer
Certificate of Title No. T-13793[18] (Exhibit "3") was issued to him on 09
September 1969, the situation was significantly altered. As of that date, 09
September 1969, the plaintiffs were deemed to have constructive notice of
the cancellation of Original Certificate of Title No. 1546 (Exhibit "A") and the
issuance to Tomas Arao of Transfer Certificate of Title No. 13793 (Exhibit
"3")[19] in his name. Consequently, the plaintiffs' cause of action to have
Tomas' title be annulled and to recover ownership and possession of the land
in question arose as of 09 September 1969. Plaintiffs filed their complaint
only on 12 October 2001. In short, they slept on their rights for 32 years, 1
month and 4 days.[20]
Respondents moved for reconsideration, but the said Motion was denied by
the RTC in its Order[21] dated May 18, 2009. Thus, respondents filed an
appeal with the CA.
Ruling of the Court of Appeals
On June 7, 2013, the CA issued the now appealed Decision [22] finding that the
doctrine of laches is not applicable since respondents' cause of action is
imprescriptible pursuant to Article 1410 of the Civil Code. But nonetheless,
the CA upheld the RTC 's findings that there was forgery and irregularities in
the execution of the deed to Tomas, such that it conveys no title either to
Tomas or to his children. The dispositive portion of the CA Decision reads as
follows:
WHEREFORE, the instant appeal is hereby GRANTED. The April 23, 2009
Decision of the Regional Trial Court, Branch 5, Tuguegarao City, Cagayan is
REVERSED and judgment is rendered:
1. Declaring null and void the Deed of Absolute Sale dated September 5, 1969
being fictitious and inexistent and without any legal force and effect; and
2. Ordering the Heirs of Tomas Arao, particularly Eulalia AraoMaggay and
Felipa Arao-Delelis, to surrender possession of and reconvey to the Heirs
of Pedro Eclipse title to Lot No. 1667.[23]
Petitioners filed a Motion for Reconsideration[24] of the aforesaid June 7,
2013 CA Decision. The said Motion was, however, denied by the CA in a
Resolution[25] dated January 30, 2014.
Aggrieved, petitioners, on April 15, 2014, filed the instant petition with this
Court.
In their appeal, petitioners argued that respondents are barred by laches
from pursuing their cause of action against the petitioners given their
inaction for more than 30 years, despite being fully aware of the petitioners'
adverse possession and claim over the subject property. They also averred
that their claim of ownership is not based on the forged Deed of Sale
allegedly executed on September 5, 1969, but on the Deed of Sale entered
into between the heirs of Policarpio and Paulino on June 25, 1940. However,
assuming that the title of Tomas was fraudulent, petitioners maintained that
they nevertheless acquired a valid right and legal title thereon being buyers
in good faith and for value, pursuant to the settled rule that a forged deed of
sale may be a valid source of legal rights. Finally, petitioners averred that
respondents are not entitled to the reconveyance of the subject property
since they failed to prove that they are the owners of the lot in litigation and
that petitioners' registration of the property is erroneous, fraudulent and
wrongful. They argued that even assuming that reconveyance is proper, the
10-year prescriptive period to institute the same had long prescribed.
The Issues
From the arguments set forth by petitioners, three essential Issues were
raised:
1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT
LACHES IS NOT APPLICABLE IN THIS CASE.
2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISREGARDING
THE DEED OF SALE DATED JUNE 25, 1940 ENTERED INTO BETWEEN THE
HEIRS OF POLICARPIO ECLIPSE AND PAULINO ARAO.
3. WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR IN NOT DECLARING PETITIONERS HEREIN AS BUYERS IN GOOD
FAITH AND FOR VALUE.[26]
The Court's Ruling
Before resolving whether laches has set in, it is important to determine first
how and by what contract Tomas (petitioners' predecessor-in-interest)
acquired the title of the subject lot in his name. This is because if the
assailed contract is void ab initio, then laches will not apply.
Article 1410 of the Civil Code states that an "action to declare the
inexistence of a void contract does not prescribe." The foregoing provision is
echoed by this Court in the case of Fil-Estate Golf and Development, Inc. v.
Navarro[27] when it held that a complaint for cancellation of title based on
the nullity of the deed of conveyance does not prescribe. In other words, an
action that is predicated on the fact that the conveyance complained of was
null and void ab initio is imprescriptible. And if the action is imprescriptible,
it follows then that the defense of laches cannot be invoked. Thus:
Laches is a doctrine in equity and our courts are basically courts of law and
not courts of equity. Equity, which has been aptly described as "justice
outside legality," should be applied only in the absence of, and never against,
statutory law. Aequetas nunguam contravenit legis. The positive mandate of
Art. 1410 of the New Civil Code conferring imprescriptibility to actions for
declaration of the inexistence of a contract should pre-empt and prevail over
all abstract arguments based only on equity. Certainly, laches cannot be set
up to resist the enforcement of an imprescriptible legal right, and petitioners
can validly vindicate their inheritance despite the lapse of time. [28]
Records of the case reveal three different Deeds of Absolute Sale which
directly and indirectly conveyed title to Tomas over the property in question.
First. The September 5, 1969 Deed of Absolute Sale purportedly executed
by the original owner, Policarpio, in favor of Tomas;
Second. The November 14, 1949 Deed of Sale executed by Gavino, (the son
of Tomas' brother, Paulino) in favor of Tomas; and
Third. The June 25, 1940 Deed of Sale executed by the children of
Policarpio, namely, Pedro, Eufemia, Honorato and Maria, in favor of Paulino,
who, upon his death, transmitted, by operation of law, the subject property to
his sole heir and brother, Tomas.
Respondents' present action is based on the nullity of the September 5, 1969
Deed of Absolute Sale.
When this 1969 Deed of Sale was executed, the seller thereof, Policarpio,
was already deceased, having died on November 21, 1936. It is settled that
the death of a person terminates contractual capacity. [29] If any one party to
a supposed contract was already dead at the time of its execution, such
contract is undoubtedly simulated and false, and, therefore, null and void by
reason of its having been made after the death of the party who appears as
one of the contracting parties therein.[30] There is no doubt, therefore, that
this 1969 Deed of Sale is spurious and the signature of the seller appearing
thereon is forged. Suffice it to say, a forged deed is a nullity and conveys no
title.[31] As a forged deed is null and void, and conveys no title, all the
transactions subsequent to the alleged sale are likewise void. [32]
Since the Deed of Absolute Sale dated September 5, 1969 is null and void, it
follows then that all the TCTs which were issued by virtue of the said
spurious and forged document are also null and void.[33]
It was the registration of this forged Deed of Absolute Sale dated September
5, 1969 that caused the cancellation of OCT No. 1546 in the name of
Policarpio and the issuance of the new title - TCT No. T-13798 in the name of
Tomas, and subsequently, TCT No. T-39071 in the name of Tomas' children,
petitioners' predecessors-in-interest. As admitted by petitioners, it was the
1969 Deed of Absolute Sale which they used to facilitate the transfer of the
Certificates in the name of Tomas and, thereafter, in the name of their
predecessors-in-interest, in order to cut short the circuitous process of
registration.
Notwithstanding the fact that petitioners have in their favor the said
certificates of title in their name, the same is of no beneficial effect on them.
Their title cannot be used to validate the forgery or cure the void sale.
[34]
Verily, when the instrument presented is forged, even if accompanied by
the owner's duplicate certificate of title, the registered owner does not
thereby lose his title, and neither does the assignee in the forged deed
acquire any right or title to the property.[35] As held:
Insofar as a person who fraudulently obtained a property is concerned, the
registration of the property in said person's name would not be sufficient to
vest in him or her the title to the property. A certificate of title merely
confirms or records title already existing and vested. The indefeasibility of
the Torrens title should not be used as a means to perpetrate fraud against
the rightful owner of real property. Good faith must concur with registration
because, otherwise, registration would be an exercise in futility. A Torrens
title does not furnish a shield for fraud, notwithstanding the long-standing
rule that registration is a constructive notice of title binding upon the whole
world.[36]
Needless to state, all subsequent certificates of title, including petitioners'
titles, are also void because of the legal truism that the spring cannot rise
higher than its source.[37]
Petitioners' invocation of good faith is likewise unavailing. Petitioners
admitted that they knew that the 1969 Deed of Sale was a forgery. [38] They
justified resort to it (1969 Deed of Sale) not for the purpose of claiming title
to the land, but only to cut short the circuitous process of transferring the
title of the property from the original registered owner to Tomas, considering
that the genuine Deed of Sale was executed as early as 1940 and Tomas is
the fourth transferee of the property from the original owner. This candid
admission on their part negates their claim of good faith. Good faith consists
in the belief of the possessors that the persons from whom they received the
thing are its rightful owners who could convey their title. [39] Petitioners'
claim of good faith is debunked by their knowledge that the registration of
the subject land in favor of their predecessor is procured on the basis of a
fraudulent deed.
Going back to the preliminary issue of whether laches has set in, the answer
is in the negative. To reiterate, laches cannot be set up to resist the
enforcement of an imprescriptible right.[40] With the 1969 Deed of Sale being
null and void ab initio, petitioners cannot set up the defense of laches to
thwart respondents' imprescriptible action. And with the Court's
determination that petitioners' title is null and void, the matter of direct or
collateral attack is a foregone conclusion as well.[41] An action to declare the
nullity of a void title does not prescribe and is susceptible to direct, as well
as to collateral, attack.[42]
There is no doubt that the September 5, 1969 Deed of Sale conveyed no title
whatsoever in favor of Tomas. However, this does not mean the automatic
granting of the action for reconveyance in favor of respondents.
By definition, an action for reconveyance is a legal and equitable remedy
granted to the rightful landowner, whose land was wrongfully or erroneously
registered in the name of another, to compel the registered owner to transfer
or reconvey the land to him. The plaintiff must allege and prove his
ownership of the land in dispute and the defendant's erroneous, fraudulent or
wrongful registration of the property.[43] In other words, the plaintiff must
allege and prove his ownership of the land in dispute and the defendant's
erroneous, fraudulent or wrongful registration of the property. [44] Clearly,
reconveyance is the remedy available only to the rightful owners.
Respondents failed to prove that they are the rightful owners of the lot in
question. Respondents did not even controvert by clear and convincing
evidence petitioners' claimed ownership of the subject lot on the basis of the
June 25, 1940 Deed of Sale, executed by the children of Policarpio in favor of
Paulino and then subsequently to Tomas by succession, and the November
14, 1949 Deed of Sale, executed by a certain Gavino in favor of Tomas.
In their attempt to invalidate the June 25, 1940 Deed of Sale, respondents
alleged that said Deed of Sale was not registered in the Registry of Deeds,
thereby rendering inoperative the provisions of the Property Registration
Decree. While it is true that the deed was not registered, it was, however,
notarized. It bears to stress that non-registration of a Deed of Sale is not
sufficient to nullify the agreement of the parties embodied therein, especially
if the same is acknowledged before a Notary Public. Thus:
Moreso, the above-mentioned deeds of sale, having been acknowledged
before notaries public, are public documents as defined under par. (b),
Section 19, Rule 132 of the Revised Rules of Court. Thus, [they carry] the
evidentiary weight conferred upon them with respect to [their] due
execution, and have in their favor the presumption of regularity, in the
absence of a clear and convincing evidence to the contrary. They are valid
and binding between the parties thereto even if said deeds of sale were not
registered with the Register of Deeds, since registration is not a requirement
for validity of the contract as between the parties.[45]
Indeed, registration is not a requirement for validity of the contract as
between the parties, for the effect of registration serves chiefly to bind third
persons.[46] The principal purpose of registration is merely to notify other
persons not parties to a contract that a transaction involving the property
has been entered into. Thus, it has been held that "registration in a public
registry creates constructive notice to the whole world." [47] Hence, if the
conveyance is not registered, it is not valid against any person. But there are
recognized exceptions. The conveyance is still valid as to (1) the grantor; (2)
the grantor's heirs and devisees; and (3) third persons having actual notice or
knowledge thereof.[48] No doubt, respondents are the grantors' heirs.
Petitioners, on the other hand, are third persons within the contemplation of
the registration rule. Apart from them being the heirs of Tomas, they have
actual notice/knowledge of the conveyance. Hence, registration is not
required to bind respondents and petitioners.[49]
As to the November 14, 1949 Deed of Sale, we cannot determine for sure the
objectives of the parties in executing the said document. The RTC even
suspected the genuineness and due execution of the said Deed of Sale when
it observed:
The deed does not state by what authority he [Gavino] was selling a property
titled in the name of Policarpio Arao. No document was presented as
evidence to show the authority of Gavino to sell the said land. [50]
Moreover, as the RTC added, it cannot be known if indeed Gavino exists,
especially in the light of the avennents in petitioners' Answer that Tomas'
brother, Paulino, died without issue.[51]
If it turned out that Paulino had an heir (in the person of Gavino), then the
November 14, 1949 Deed of Sale, which the latter executed in favor of
Tomas, would merely strengthen the intent of the parties to transfer the title
of the subject property to Tomas. As it was not fully established in this case
whether Gavino was indeed Paulino's heir, then the said November 14, 1949
Deed of Sale would serve no other purpose, but a mere superfluity. With or
without the said 1949 Deed of Sale, the title has already been passed in favor
of Tomas by virtue of the June 25, 1940 Deed of Sale which we declared as
valid.
The intent to transfer the ownership over the subject land has been
established and effected by the execution of the 1940 Deed of Sale by the
heirs of the registered owner, as well as the delivery thereof to petitioners.
[52]
What is needed is merely the issuance of the corresponding Certificate of
Title on the basis of the said 1940 Deed of Sale. To make this possible,
certain documents (pertaining to estate settlements, as well as registrable
Deeds of Conveyance) are needed to facilitate the transfer of the title of the
lot from the heirs of the original owners to herein petitioners, not to mention
payment of corresponding taxes. Hence, this Court directs the parties herein
to execute all necessary documents as required by law to effect the smooth
issuance of the new Certificate of Title based on the 1940 Deed of Sale. This
is not the first time this Court made such directive even if not prayed for by
the winning parties in their pleadings. The case of Spouses Aguinaldo v.
Torres, Jr.[53] is instructive:
To be sure, the directive to execute a registrable deed of conveyance in
respondent's favor - albeit not specifically prayed for in respondent's Answer
with Counterclaim - is but a necessary consequence of the judgment
upholding the validity of the sale to him, and an essential measure to put in
proper place the title to and ownership of the subject properties and to
preclude further contentions thereon. As aptly explained by the CA, "to leave
the 1991 deed of sale as a private one would not necessarily serve the intent
of the country's land registration laws, and resorting to another action
merely to compel the petitioners to execute a registrable deed of sale would
unnecessarily prolong the resolution of this case, especially when the end
goal would be the same." In this relation, case law states that a judgment
should be complete by itself; hence, the courts are to dispose finally of the
litigation so as to preclude further litigation between the parties on the same
subject matter, thereby avoiding a multiplicity of suits between the parties
and their privies and successors-in-interests.[54] (Emphasis supplied)
WHEREFORE, the petition is PARTLY GRANTED. The assailed Decision dated
June 7, 2013 of the Court of Appeals, in CA-G.R. CV No. 93660, is AFFIRMED
with MODIFICATION, to read as follows:
1. Declaring as NULL and VOID the Deed of Absolute Sale dated September
5, 1969 for being fictitious, inexistent and without any legal force and
effect.
2. Consequently, Transfer Certificates of Title No. T-13798 and T-39071 are
likewise declared NULL and VOID for being issued based on the aforesaid
forged and fictitious Deed of Sale dated September 5, 1969.
3. Declaring as VALID the Deed of Sale dated June 25, 1940.
4. Declaring petitioners to be the LAWFUL owners and possessors of the
subject Lot No. 1667 by virtue of the valid Deed of Sale dated June 25,
1940.
5. Directing the parties to EXECUTE pertinent documents required by law to
effect the issuance of a new Transfer Certificate of Title in favor of
petitioners, heirs of Tomas Arao represented by Proceso Arao, Eulalia
Arao-Maggay, Gabriel Arao and Felipa A. Delelis.
SO ORDERED.
Peralta, (Chairperson), and Leonen, JJ., concur.
Gesmundo, and Hernando, JJ., on wellness leave.
In order to inquire about the status of the request about the implications of a force majeure in
suspending the increase in water tariffs, COWD wrote a letter dated November 10, 2023, to your
excellent office. Nevertheless, COWD has not heard back regarding the matter brought up as of yet.
