G.R. No. 223763 - Basilio vs. Callo

Petitioners Adoracion L. Basilio and Lolita P. Lucero, as direct descendants and heirs of Eduveges Bafiaga who died intestate in 1921, filed a complaint for reconveyance, accion publiciana, and cancellation of title with damages.
The subject property is a 12,459‑square meter parcel in West Dirita, San Antonio, Zambales, designated as Lot No. 4462 and covered by Original Certificate of Title (OCT) No. P-24666, which was registered in the name of respondent Perla Callo.

Eduveges Bafiaga was the original owner of the subject lot, and a Final Project of Partition executed in 1973 allotted the parcel among his heirs, including petitioners, through the daughter Rufina Pascasio.
In a series of transactions:

On March 25, 1971, Librada Lucero mortgaged one‑half undivided portion of the subject lot to spouses Edilberto and Perla Callo for P2,800.00, allowing cultivation until the loan’s payment.
In March 1974, a subsequent mortgage was executed where a 5/8 portion was mortgaged by Librada, the petitioners, and their sibling Remedios, and the remaining 3/8 was mortgaged to Eulalia Callo for P3,800.00. This mortgage permitted cultivation and was redeemable within five years.
The mortgage was purportedly extinguished by full payment on March 29, 1996, with a corresponding Release of Mortgage executed by the Callos.

After the mortgage redemption, petitioners requested that the Callos vacate the subject lot; when refused, petitioners filed a petition for security of tenure before the Department of Agrarian Reform Adjudication Board, seeking recognition as tenants—a claim that was dismissed.
In May 2006, while processing a survey for titling, petitioners discovered that the subject lot was already registered in respondent’s name under OCT No. P-24666, prompting them to allege that the title was fraudulently obtained through a fictitious and anomalous claim of ownership.
In her Answer with Compulsory Counterclaim, respondent claimed:

Acquisition of title in compliance with legal requirements.
That the rights petitioners purported over the subject lot had been waived.
Uninterrupted possession of the lot for over 35 years under the concept of owner.
Lack of standing of the petitioners as real parties-in-interest.

The Regional Trial Court (RTC) decision dated July 5, 2011 found respondent to have committed fraud by misrepresenting her claim and concealing that her possession was acquired via a mortgage that had already been redeemed.

The RTC declared the title (OCT No. P-24666) null and void ab initio and ordered reconveyance of the subject lot to petitioners, along with attorney’s fees and costs.

The Court of Appeals (CA), in its Decision dated September 30, 2015, reversed the RTC ruling.

The CA held that the petitioners failed to show clear and convincing evidence of their title to the subject lot and of fraud on the part of respondent.
A subsequent Resolution dated March 18, 2016 denied petitioners’ motion for reconsideration, leading to the present petition for review on certiorari.

Whether the Court of Appeals correctly dismissed the complaint filed by petitioners seeking reconveyance, accion publiciana, and cancellation of title with damages.
Whether respondent’s free patent and the corresponding title were issued in compliance with the legal requisites, given that her possession was derived from a mortgage that had been redeemed and not acquired in the concept of an owner.