Case Summary (G.R. No. L-56170)
Procedural Posture
Petitioners filed a complaint in the RTC on December 10, 2014. The RTC dismissed the complaint by order dated October 22, 2015 on grounds of prescription and improper payment of docket fees; a motion for reconsideration was denied on December 28, 2015. Petitioners filed a petition for review under Rule 45 in the Supreme Court. The Supreme Court initially denied the petition for procedural deficiencies, then reinstated it on motion for reconsideration and treated the merits. The Supreme Court ultimately granted the petition, reversed the RTC orders, and remanded the case for trial on the merits.
Relevant Facts (succinct)
- December 9, 1991: Petitioners purchased the disputed 6.4868-hectare parcel from the Spouses Garcia and paid taxes; petitioners possessed the owner’s duplicate of TCT No. T-77703.
- April 6, 1992: Petitioners caused annotation of their 1991 DOAS on TCT No. T-77703 but could not complete transfer due to lack of DAR clearance.
- February 21, 1996: Spouses Garcia purportedly sold same parcel to DAA Realty; TCT No. T-97059 issued February 22, 1996.
- April 21, 2005: DAA Realty purportedly sold to MLI; TCT No. T-138212 issued.
- 2010: Petitioners discovered consolidation and subdivision of the parcel into new titles and that TCT No. T-77703 had been stamped “cancelled”; petitioners annotated an Affidavit of Adverse Claim on MLI’s titles on September 1, 2010.
- December 10, 2014: Petitioners filed the RTC complaint seeking reconveyance/ declaration of ownership, nullity of the 1996 and subsequent DOAS, cancellation of the later TCTs, quieting of title, accounting, and damages.
Causes of Action and Reliefs Pleaded
Primary and alternative claims: (1) Declaration of plaintiffs’ ownership and nullity of the 1996 DOAS, 2005 DOAS and the MLI–PNB mortgage; (2) Alternative claim that 1996 DOAS and subsequent titles are null for double sale; (3) Quieting of title; (4) Accounting and remittance of MLI’s income from the property; (5) Exemplary and moral damages; (6) Attorney’s fees. Remedies sought included cancellation of TCT Nos. T-97059 and T-138212 and issuance of a Torrens title in petitioners’ names.
RTC Ruling and Grounds for Dismissal
The RTC dismissed the complaint as barred by prescription, reasoning that the action was for reconveyance based on an implied constructive trust arising from fraud and that the ten-year prescriptive period ran from issuance of the Torrens title in 1996. The RTC also dismissed for failure to allege the assessed value (affecting proper docket fee) and for failure to pay correct docket fees.
Supreme Court: Rule on Alternative Pleadings and Standard to Survive Dismissal
The Supreme Court applied Section 2, Rule 8 (alternative causes of action): a complaint may plead alternative claims and where one alternative states a sufficient cause of action, the complaint should not be dismissed in its entirety. The Court emphasized that in testing sufficiency at the pleadings stage, each alternative cause must be analyzed; sufficiency of any one alternative precludes outright dismissal.
Reconveyance — Void Contract vs. Constructive Trust; Prescriptibility
The Court analyzed reconveyance law distinguishing two bases:
- Reconveyance based on an implied or constructive trust arising from fraud — prescribes in ten (10) years from issuance of title or from discovery of fraud (when title registration repudiates the trust).
- Reconveyance based on a void or inexistent contract — imprescriptible (action to declare inexistence of a contract does not prescribe under Article 1410); transfer may be attacked at any time while title remains in the registrant’s name.
Applying petitioners’ pleaded allegations (which, by respondent’s invocation of affirmative defenses, were hypothetically admitted), the Court found sufficient allegations that the 1996 DOAS was void: (a) petitioners had prior purchase in 1991 and retained the owner’s duplicate of TCT No. T-77703; (b) the 1996 DOAS showed signs of forgery and/or falsified signature; (c) DAA Realty may not have existed at the time of the 1996 DOAS per its SEC incorporation date; (d) DAA Realty and MLI were put on constructive notice by the 1991 annotation. These allegations supported characterization of the 1996 DOAS as void and inexistent rather than merely voidable by fraud, which meant the reconveyance claim could be imprescriptible.
PD 1529 Section 53, Levin, and Constructive Notice
The Court relied on PD 1529 Section 53 requiring presentation of the owner’s duplicate certificate when registering voluntary instruments; issuance of TCT without presentation (or by presenting a forged duplicate) renders subsequent registration null and void. Citing Levin, the Court held an issued Torrens title obtained without surrender/presentation of the owner’s duplicate does not engender the normal legal consequences of registration (i.e., it is “a scrap of paper”) and therefore does not furnish constructive notice to prior owners who retained the owner’s duplicate. Because petitioners alleged possession of the owner’s duplicate and annotation of the 1991 DOAS, petitioners could not be deemed constructively notified of DAA Realty’s 1996 TCT; prescription for a fraud-based reconveyance would therefore run from actual discovery of fraud in 2010, making the December 2014 complaint timely.
Quieting of Title as an Alternative Cause (30-year rule)
The Court also evaluated petitioners’ alternative cause for quieting of title under Article 476 (Civil Code) (and related jurisprudence). Quieting of title requires: (i) plaintiff has legal or equitable title or interest; and (ii) the instrument casting a cloud must be shown invalid despite its prima facie validity. Quieting actions are generally subject to a 30-year prescription, though if the plaintiff is in possession it may be imprescriptible. Here petitioners alleged equitable title based on the 1991 DOAS annotated on the registered title, and alleged that the 1996 DOAS and subsequent transactions cast a cloud. The 30‑year prescriptive period (reckoned from issuance of DAA Realty’s 1996 TCT) had not yet lapsed when suit was filed in 2014; thus the quieting claim was not barred.
Docket Fees and Jurisdictional Objection
The Court held the RTC erred in dismissing solely for alleged failure to pay correct docket fees. Where an initiatory pleading has been filed with a deficient docket fee, trial courts may permit belated payment of any deficiency within a reasonable time, provided the allowance does not run afoul of applicable prescriptive or reglementary periods (citing Sun Insurance Office, Ltd. v. Asuncion). Because petitioners’ alternative causes of action were either imprescriptible (reconveyance based on void contract) or not yet time‑barred (quieting of title), any docket fee deficiency could be remedied by belated payment; dismissal on that ground was therefore improper.
Due Process and Avoidance of Prejudgment
The Supreme Court stressed that resolution of conflicting allegations and documentary discrepancies (for example, apparent inconsistencies between the 1991 DOAS and the face of attached documents, such as a missing signature) requires full evidentiary hearing. Dismissal at the pleading stage on the basis of documents that raise factual conflicts would amount to prejudging the merits and denying petitioners due process. Consequently, the proper course was remand for trial where evidence may be presented and tested.
Conclusion of the Supreme Court Majority
On the basis that (a) petitioners pleaded alternative, sufficient causes of action; (b) the complaint, as hypothetically admitted by MLI’s preliminary defenses, alleged facts supporting nullity of the 1996 DOAS and
Case Syllabus (G.R. No. L-56170)
The Case
- This is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court by Mercedes S. Gatmaytan and Erlinda V. Valdellon (Petitioners) assailing: (a) the Regional Trial Court (RTC), Tabaco City, Branch 15, Order dated October 22, 2015 dismissing their Complaint in Civil Case No. T-2820 on the ground of prescription and lack of jurisdiction (First RTC Order); and (b) the RTC Order dated December 28, 2015 denying Petitioners’ motion for reconsideration (Second RTC Order).
- The sole legal question presented to the Supreme Court was whether Petitioners’ Complaint should be allowed to proceed to trial on the merits.
Procedural History
- December 9, 1991 — Petitioners purchased the disputed parcel of land from Spouses Oscar and Cidra Garcia; the parcel was covered by TCT No. T-77703 in the Garcias’ name.
- April 6, 1992 — Petitioners attempted registration of the Deed of Absolute Sale dated December 9, 1991 (1991 DOAS); the 1991 DOAS was annotated on TCT No. T-77703 but transfer of title to Petitioners was not effected due to lack of DAR clearance.
- February 21, 1996 — A Deed of Absolute Sale (1996 DOAS) was executed between the Spouses Garcia and DAA Realty Corporation (DAA Realty); TCT No. T-97059 was issued to DAA Realty on February 22, 1996.
- April 21, 2005 — DAA Realty purportedly sold to Misibis Land, Inc. (MLI); TCT No. T-138212 was thereafter issued in MLI’s name.
- September 1, 2010 — Petitioners caused annotation of an Affidavit of Adverse Claim on MLI’s Torrens titles after discovering consolidation and subdivision of the disputed lot and that TCT No. T-77703 had been stamped “cancelled”.
- December 10, 2014 — Petitioners filed Complaint in RTC Civil Case No. T-2820 against Spouses Garcia, DAA Realty, MLI, and Philippine National Bank (PNB).
- October 22, 2015 — RTC issued First RTC Order dismissing the Complaint based on prescription and failure to pay correct docket fees.
- December 28, 2015 — RTC denied Petitioners’ motion for reconsideration (Second RTC Order).
- Petitioners received copy of Second RTC Order on January 14, 2016 and filed a Motion for Extension of Time; this Petition for Review on Certiorari was filed on February 24, 2016.
- April 18, 2016 — Supreme Court Resolution initially denied the Petition for procedural deficiencies (lack of verified statement of material date of receipt; improper verification and certification against forum shopping).
- Petitioners filed Motion for Reconsideration and Motion to Refer to the En Banc.
- August 22, 2016 — Supreme Court granted Motion for Reconsideration, reinstated the Petition and directed MLI to file its comment; Motion to Refer denied.
- MLI filed Comment October 24, 2016; Petitioners filed Reply thereafter.
- June 10, 2020 — Full Decision: Supreme Court granted the Petition, reversed the RTC Orders, and remanded the case to the RTC for trial on the merits.
Material Facts
- The disputed lot: located in Misibis, Cagraray Island, Albay, area 6.4868 hectares, covered by TCT No. T-77703 in the name of Spouses Oscar and Cidra Garcia at time of Petitioners’ 1991 purchase.
- Petitioners paid taxes arising from 1991 transaction and possessed the owner’s duplicate copy of TCT No. T-77703, and caused annotation of the 1991 DOAS on the title (Entry No. 4145, April 6, 1992).
- Petitioners were unable to complete transfer of Torrens title to their names in 1992 because they lacked DAR clearance.
- Petitioners discovered in 2010 that the disputed lot had been consolidated by MLI and subdivided into smaller lots covered by new Torrens titles; TCT No. T-77703 had been stamped “cancelled”.
- The chain of subsequent transactions alleged in the Complaint:
- February 21, 1996 — purported sale by Spouses Garcia to DAA Realty with TCT No. T-97059 issued February 22, 1996.
- April 21, 2005 — DAA Realty to MLI sale with resulting TCT No. T-138212.
- Petitioners allege multiple irregularities and fraudulent acts: (i) Spouses Garcia had no title to sell in 1996 because they had already sold to Petitioners in 1991; (ii) Cidra Garcia’s purported signature on the 1996 DOAS appears forged; (iii) DAA Realty’s SEC incorporation appears to post-date the 1996 purported sale (incorporated January 22, 1999); (iv) Petitioners possessed the owner’s duplicate of TCT No. T-77703 throughout; (v) the 1991 DOAS was annotated on the original and owner’s duplicate title; (vi) DAA Realty and MLI are charged by Petitioners to be in bad faith or not innocent purchasers for value.
- Petitioners annotated an Affidavit of Adverse Claim on MLI’s titles on September 1, 2010.
- The disputed property was subsequently mortgaged to PNB; Petitioners included PNB as defendant in the Complaint.
Causes of Action Alleged in the Complaint
- FIRST CAUSE OF ACTION: Declaration of Petitioners’ Ownership and Nullity of (i) the 1996 DOAS, (ii) the 2005 DOAS, and (iii) the April 21, 2005 MLI–PNB Mortgage.
- FIRST ALTERNATIVE CAUSE OF ACTION: Declaration of Nullity Based on Double Sale (re: 1996 DOAS) and cancellation of TCT Nos. T-97059 and T-138212 and any transfers thereafter.
- SECOND ALTERNATIVE CAUSE OF ACTION: Quieting of Title.
- SECOND CAUSE OF ACTION: Accounting and Remittance of all income and profits derived by MLI vis-à-vis the disputed lot.
- THIRD CAUSE OF ACTION: Exemplary Damages.
- FOURTH CAUSE OF ACTION: Moral Damages.
- FIFTH CAUSE OF ACTION: Attorney’s Fees and Litigation Expenses (claimed at Php500,000.00 each).
- Reliefs prayed: declaration of Petitioners as rightful owners; nullification of the 1996 DOAS and subsequent transactions as void ab initio; cancellation of TCT Nos. T-97059 and T-138212 and issuance of title in Petitioners’ name; full accounting and remittance of profits; moral and exemplary damages; attorneys’ fees.
Respondent’s (MLI’s) Defenses and Procedural Maneuvers
- MLI pleaded it was an innocent purchaser for value relying on DAA Realty’s TCT No. T-97059 which allegedly bore no defects.
- MLI asserted prescription: an action for reconveyance based on an implied constructive trust arising from fraud prescribes ten (10) years after issuance of title to the defrauder (DAA Realty’s TCT was issued in 1996; Complaint filed in 2014).
- MLI moved for a Preliminary Hearing on Affirmative Defenses invoking prescription and lack of jurisdiction for failure of Petitioners to allege assessed value of the disputed lot — thereby hypothetically admitting the material allegations of the Complaint (per Section 5, Rule 6, Rules of Court).
- MLI contended Petitioners failed to pay correct docket fees; RTC relied partly on this ground in dismissing the Complaint.
The RTC’s Orders (as appealed)
- First RTC Order (Oct. 22, 2015):
- Dismissed the Complaint primarily on two grounds: (1) prescription (treating Petitioners’ action as an action for reconveyance based on an implied constructive trust and therefore barred by the 10-year prescriptive period counted from issuance of DAA Realty’s title in 1996); and (2) failure to pay the correct docket fees (jurisdictional defect).
- The RTC regarded the Complaint as creating an implied or constructive trust in favor of Petitioners because DAA Realty and MLI allegedly acquired the disputed lot by fraud.
- Second RTC Order (Dec. 28, 2015):
- Denied Petitioners’ motion for reconsideration.
- Petitioners appealed by filing a Petition for Review on Certiorari (Rule 45) to the Supreme Court.
Issue Presented to the Supreme Court
- Whether Petitioners’ Complaint should be allowed to proceed to trial on the merits (i.e., whether the Complaint sufficiently states any of the alternative causes of action to preclude outright dismissal).
Supreme Court Ruling — Disposition
- The Supreme Court GRANTED the Petition.
- The Orders dated October 22, 2015 and December 28, 2015 of the RTC, Branch 15, Tabaco City, were REVERSED.
- The case was REMANDED to the RTC for trial on the merits, and the RTC was DIRECTED to resolve the case with dispatch.
Supreme Court Reasoning — Key Legal Principles Applied
- Pleading of alternative causes:
- Section 2, Rule 8 of the Rules of Court permits pleading alternative causes of action or defenses; a pleading is not insufficient merely because one