G.R. No. 8170 - Hibberd vs. Estate of McElroy

Case Summary (G.R. No. 8170)

Facts Underlying the Dispute

The Court traced the origins of the properties to OCT No. P-2980 issued in the names of Pedro Bernardo and Pacita Ronquillo for Lot 1323, with an area of 67,873 square meters. A CA Decision dated February 3, 1978 later found that Lot 1323 encroached on the adjacent land owned by the spouses Clemente and Gregoria Paredes, and ordered reconveyance of 8,161.705 square meters to the Paredes. As a result, Lot 1323 was renamed Lot 1323-B and its area was reduced to 59,711 square meters under TCT No. NT-109773.

Upon inheritance by the petitioners, ownership over Lot 1323-B was transferred to them and TCT No. NT-308292 was issued in their names. Respondents, on the other hand, possessed and claimed ownership over Lot 1324 (with an area of 42,643 square meters). They acquired Lot 1324 by virtue of a notarized Kasulatan ng Bilihang Tuluyan dated May 15, 1978, through which spouses Corseno Padolina and Maria Abesamis sold Lot 1324 to respondents for P28,500.00.

Respondents asserted that their predecessors had been in possession since 1925, and that after their purchase in 1978 they immediately took possession and exercised ownership by, among others, planting mango trees and constructing a poultry house and a water fountain. They learned of the dispute only in November 2003, when petitioner Belen sent them a sketch plan of Lot 1323-B and informed them that a relocation survey of Lot 1323-B had allegedly shown that respondents were occupying 14,749 square meters. Respondents then discovered that the portion they physically possessed and cultivated since 1978 was included in petitioners’ title under TCT No. NT-109773.

Filing of the RTC Case and the Pleadings

On December 23, 2003, respondents filed a complaint against petitioners for Cancellation of Title and/or Reconveyance of Title with Damages. They alleged that (i) Lot 1323 had been procured through fraudulent acts involving surveys and subdivision plans, (ii) OCT No. P-2980 described Lot 1323 as 67,873 square meters, (iii) the relocation survey and related paperwork used in the application for free patent unlawfully included a 14,749-square meter portion that should not have been included because it was no longer part of the free, alienable and disposable public domain at the time, and (iv) Pedro Bernardo had previously been found guilty of fraud by the CA and ordered to reconvey 8,161.705 square meters to the Paredes.

Respondents prayed for the segregation of the 14,749-square meter portion of Lot 1324 from TCT No. NT-109773, for the Register of Deeds to cancel the title insofar as it covered the segregated portion, and for the issuance of a new title in respondents’ names over the segregated portion. They also sought actual, moral and exemplary damages, litigation expenses, and attorney’s fees.

Petitioners answered and countered that a relocation survey showed respondents’ encroachment of the area in dispute. They also invoked res judicata based on a prior judgment involving Corseno Padolina, asserted prescription and laches on the theory that OCT No. P-2980 had long attained indefeasibility, and claimed respondents’ bad faith in filing the complaint.

During pre-trial, the parties stipulated that respondents were in actual physical possession of the 14,749-square meter portion in dispute.

RTC Decision

After trial, the RTC ruled for respondents. It reasoned that Pedro Bernardo had been previously judicially held guilty of encroaching on the neighboring land of the Paredes. The RTC treated this as providing the basis for respondents’ claim that Pedro Bernardo likewise encroached on Lot 1324. It further found that fraud was committed by Pedro Bernardo prior to respondents’ acquisition of Lot 1324, by virtue of a relocation survey that included a portion belonging to respondents and supported his application for free patent, which led to the issuance of OCT No. P-2980.

The RTC found petitioners’ evidence insufficient to prove that the disputed 14,749-square meter area was part of Lot 1323. It also held that respondents were not guilty of laches and that the action was not barred by prescription, emphasizing that petitioners admitted respondents’ continued possession of Lot 1324.

The RTC ordered petitioners to cause the subdivision of Lot 1323-B covered by TCT No. NT-308292, segregate the 14,749-square meter portion belonging to respondents, and have that segregated portion titled in the names of respondents, and it directed partial cancellation of TCT No. NT-308292 insofar as it covered the segregated portion.

CA Proceedings and Ruling

Petitioners appealed to the CA, arguing that the RTC improperly relied on the CA Decision dated February 3, 1978; that respondents failed to prove fraud on the part of Pedro Bernardo; that respondents’ action was barred by prescription and laches; and that damages should be awarded because respondents allegedly acted in bad faith.

In its Decision dated January 31, 2017, the CA denied the appeal. It held that respondents proved the identity of Lot 1324 and their ownership, and it affirmed the trial court’s findings regarding fraud in the relocation survey used by Pedro Bernardo, including the use of an unsigned or unsupported technical description in support of the free patent application. The CA likewise affirmed that the action was not barred by prescription or laches and held that petitioners were not entitled to damages because respondents filed in good faith. The CA denied petitioners’ motion for reconsideration in its Resolution dated July 18, 2017.

Issues Presented to the Supreme Court

The Petition raised multiple questions of fact and law, including whether respondents’ action constituted an illegal collateral attack on petitioners’ Torrens title; whether alleged fraud attending the procurement and issuance of OCT No. P-2980 could be raised in respondents’ RTC case; whether respondents could seek subdivision and issuance of title over a portion included in petitioners’ title; whether respondents could acquire the disputed portion through acquisitive prescription; whether the CA’s factual narration was supported by evidence; whether the CA erred in relying on tax declarations and subdivision plans; whether respondents met their burden of proving fraud; whether respondents were real parties in interest; and whether respondents’ action was barred by prescription and laches.

Supreme Court’s Treatment of the Record and the Standard of Review

The Court denied the Petition for lack of merit. It emphasized that under Rule 45, only questions of law may be raised and the Court is not a trier of facts. The Court further held that factual findings by the RTC, as affirmed by the CA, generally bind it, and that none of the recognized exceptions warranted a re-evaluation of evidence in this case. Finding no reversible error, the Court proceeded to address the legal contentions raised.

Legal Characterization of the RTC Action: Not a Collateral Attack

The Court first held that respondents’ complaint for reconveyance was not a collateral attack on OCT No. P-2980 (now TCT No. NT-109773). It reiterated the settled rule that a Torrens title cannot be altered, modified, or cancelled except in a direct proceeding according to law. It also distinguished a direct proceeding as an action specifically intended to annul or set aside a judgment or enjoin its enforcement.

The Court treated an action for reconveyance as a recognized action in personam, available where property was wrongfully registered in another’s name under the Torrens system. In such actions, the decree itself is not the target of cancellation for purposes of setting aside the registration proceedings; what is sought is the transfer of the property to the rightful owner. Applying this framework, the Court noted that respondents did not seek reconsideration of the grant of the patent or the registration decree. Their prayers focused on the segregation and exclusion of the 14,749-square meter portion allegedly belonging to respondents and on partial cancellation of petitioners’ title insofar as it covered that portion.

The Court rejected petitioners’ theory that respondents had no right to a new title over a portion already covered by petitioners’ title. It held that a certificate of title is merely evidence of ownership. It cannot protect a usurper from the true owner, cannot serve as a shield for fraud, and its issuance in favor of a particular person does not foreclose the possibility that the property may belong to another.

Basis for Segregation and Reconveyance as a Remedy

The Court also upheld the propriety of segregation and issuance of title in respondents’ names in the context of reconveyance. It explained that the main object of reconveyance is to return to the rightful owner property erroneously registered in the name of another. Thus, respondents could legally compel the registered owner to transfer or reconvey the property erroneously registered.

Proof of Identity and Ownership of Lot 1324

On the evidentiary issue, the Court held that respondents proved the identity of Lot 1324 and their ownership by preponderance of evidence. It declined petitioners’ insistence that respondents failed to establish ownership. The Court reasoned that respondents’ Kasulatan dated May 15, 1978 clearly described a property of 42,643 square meters and specified boundaries consistent with the parcels described in respondents’ complaint. It also considered that petitioners admitted respondents’ possession and that petitioners were uncertain as to when the alleged encroachment began.

The Court further credited evidence of cultivation by respondents, particularly mango trees that had grown into maturity by the time of litigation. It treated such cultivation as consistent with the conclusion that upon acquisition in 1978, respondents took possession and exercised acts of ownership over Lot 1324. It also noted that the Kasulatan’s document referred to the land as Lot 1324 in the t

Case Syllabus (G.R. No. 8170)

The case arose from a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the Court of Appeals (CA) Decision dated January 31, 2017 and the CA Resolution dated July 18, 2017, which affirmed an RTC Decision dated February 9, 2015.
The RTC case was an action for Cancellation of Title and/or Reconveyance of Title and Damages filed in Civil Case No. 2738 before the RTC of Gapan City, Nueva Ecija, Branch 34.
The Supreme Court denied the petition for utter lack of merit, and it affirmed both the CA Decision and Resolution.
The Court treated the petition as largely raising questions of fact and law, but it emphasized that in Rule 45, the Court is not a trier of facts.

Parties and Procedural Posture

The petitioners were the Heirs of Pedro Bernardo and Pacita Ronquillo, represented by Belen B. Ortiz and other heir-representatives as stated in the petition.
The respondents were the Spouses Guadalupe M. Gamboa and Trinidad Caballero, who initiated the RTC case.
The respondents sued the petitioners to compel segregation of a portion of the respondents’ land wrongfully included in the petitioners’ title, and they sought damages.
The RTC ruled for the respondents and ordered subdivision, partial cancellation, and issuance of a new title over the segregated portion.
The CA affirmed the RTC, and it likewise ruled against petitioners on prescription, laches, and damages.
Petitioners then moved for reconsideration at the CA, but the CA denied it, prompting the Rule 45 petition before the Supreme Court.

Key Property Facts

The controversy involved two adjacent parcels: Lot 1323 (later known as Lot 1323-B) and Lot 1324, both located at Sitio Bical-Bical, Diwalaan, General Tinio, Nueva Ecija.
Lot 1323 originally had an area of 67,873 square meters under Original Certificate of Title (OCT) No. P-2980 in the names of Pedro Bernardo and Pacita Ronquillo.
A CA Decision dated February 3, 1978 previously found that Lot 1323 encroached on adjacent property of spouses Clemente and Gregoria Paredes, and it ordered reconveyance of 8,161.705 square meters to the Paredes spouses.
After that reconveyance, Lot 1323 became Lot 1323-B with a reduced area of 59,711 square meters and was covered by Transfer Certificate of Title (TCT) No. NT-109773.
When petitioners inherited Lot 1323-B, title was transferred to them, and TCT No. NT-308292 was issued in their names.
Lot 1324 had an area of 42,643 square meters and was occupied by the respondents, who acquired it via a notarized Kasulatan ng Bilihang Tuluyan dated May 15, 1978, where Corseno Padolina and Maria Abesamis sold the lot to the respondents for P28,500.00.
The respondents asserted that their predecessors-in-interest had occupied Lot 1324 since 1925, and that after their acquisition in 1978 they continued possession and exercised acts of ownership, including planting mango trees and building structures such as a poultry house and a water fountain.

Genesis of the Dispute

In November 2003, petitioner Belen sent respondents a sketch plan of Lot 1323-B and informed them that petitioners’ relocation survey of Lot 1323-B showed respondents’ possession included an area of 14,749 square meters.
Upon verification, respondents learned that the 14,749-square meter portion in their physical possession and cultivation since 1978 was included in petitioners’ TCT No. NT-109773.
On December 23, 2003, respondents filed a Complaint for Cancellation of Title and/or Reconveyance of Title and Damages.
The pre-trial stipulation established that respondents were in actual physical possession of the disputed 14,749-square meter portion.

Respondents’ Theory in the RTC

Respondents alleged that OCT No. P-2980 was fraudulently procured by petitioners’ predecessor-in-interest, Pedro Bernardo, through manipulated surveys.
Respondents claimed that between August 25 and November 7, 1958, spouses Pedro Bernardo and Pacita Ronquillo had Lot 1323 surveyed, revealing an area of 19,656 square meters per subdivision plan Psu-173404 by Geodetic Engineer Deogracias Javier.
Respondents alleged that spouses Pedro Bernardo and Pacita Ronquillo later fraudulently procured another subdivision plan executed by Pedro Rayo, which substantially increased the area of Lot 1323.
Respondents maintained that when OCT No. P-2980 was issued in 1962, it described Lot 1323 as having 67,873 square meters, and that a portion of the respondents’ land was wrongfully included.
Respondents asserted that at the time the respondents’ 14,749-square meter portion was included in the free patent application, it had ceased to be part of the free, alienable and disposable public domain and was unlawfully included.
Respondents relied on the fact that in a separate case Pedro Bernardo was previously found guilty of fraud and ordered to reconvey an 8,161.705 square meter portion to the Paredes spouses.
Respondents prayed for the segregation and title transfer of the 14,749-square meter portion, and for partial cancellation of petitioners’ title insofar as it covered that portion, along with actual, moral, and exemplary damages, litigation expenses, and attorney’s fees.

Petitioners’ Defenses and Claims

Petitioners filed an Answer with Counterclaim asserting that a relocation survey showed respondents encroached upon an area of 14,749 square meters.
Petitioners asserted that the matter was brought before the Barangay for settlement, but respondents filed suit before settlement could be concluded.
Petitioners raised res judicata, claiming there was a previous judgment denying Corseno Padolina’s claim that two hectares were erroneously included in OCT No. P-2980.
Petitioners also invoked prescription and laches, arguing that OCT No. P-2980, issued January 3, 1962, had long become indefeasible and that respondents’ action filed years later was time-barred.
Petitioners sought damages on the theory that respondents filed the complaint in bad faith.

Issues Raised on Review

Petitioners challenged whether respondents’ RTC suit was an illegal collateral attack on petitioners’ Torrens title.
Petitioners questioned whether the alleged fraud attending the procurement and issuance of OCT No. P-2980 could lawfully be raised and assailed in the RTC action.
Petitioners argued that respondents could not lawfully seek subdivision and issuance of a new title over a portion of a titled lot through a reconveyance case.
Petitioners asked whether the respondents’ parcel could still be acquired through acquisitive prescription by mere occupation or possession.
Petitioners challenged the CA’s “Facts of the Case” findings as unsupported by the evidence.
Petitioners argued that the CA erred in relying on tax declarations and a subdivision plan to conclude that respondents were entitled to a certificate of title over part of Lot 1323-B.
Petitioners contested whether respondents sufficiently proved fraud and whether respondents were real parties in interest entitled to sue.
Petitioners also questioned whether respondents’ claims were barred by prescription and laches.

Rule 45 Scope of Review

The Court held that only questions of law may be