Case Summary (G.R. No. L-19149-50)
Factual Background
The plaintiff instituted Civil Case No. Q-3303 on September 9, 1958, alleging that it was the registered owner of the subject parcel by virtue of its title and that the defendant, through force, strategy and stealth, unlawfully entered and took possession of approximately two hundred (200) square meters within the larger parcel sometime on or about December 5, 1955, located at Barrio North Tatalon, Quezon City, and constructed a house thereon. The plaintiff claimed it had suffered and would continue to suffer damages equivalent to the fair rental value of the occupied portion at P60.00 monthly until restoration of possession.
In his answer, the defendant raised as his principal defense that he and his predecessors-in-interest had allegedly been in open, adverse, public, continuous and actual possession of the lot in the concept of owner since “time immemorial,” and that, by reason of such possession, he had made improvements valued at P9,000.00. As counterclaim, he sought P25,000.00 for moral and exemplary damages and P600.00 as attorney’s fees.
The defense presented documents intended to trace the defendant’s acquisition to a chain of purchases. The defendant claimed that the portion in question was acquired by him on June 28, 1954 through purchase from Graciano M. Flores (Exh. 1), who in turn acquired it from Lucia T. Teotico on April 27, 1954 (Exh. 2), who allegedly acquired it from Agustin de Torres on April 1, 1950 (Exh. 3). The chain was further said to derive from Telesforo Deudor, a party associated with earlier litigation and a Compromise Agreement that allegedly formed the basis of joint decisions in prior civil cases identified as Civil Cases Nos. Q-135, 139, 174, 177 and 186.
Ruling of the Trial Court
The court a quo rendered judgment for the plaintiff. It took judicial notice that the property had been registered under the Torrens System in the plaintiff’s name since 1914. It held that the defendant’s claim of possession could not defeat the efficacy of the plaintiff’s title, and it emphasized testimony and circumstances indicating that the defendant could not secure action in the Office of the City Assessor because there was “a question” regarding the property. The trial court concluded that the documents submitted by the defendant could not vest in him any rights over the property as against the plaintiff’s title issued since 1914.
Accordingly, the court ordered the defendant to vacate and remove his house and other constructions. It also ordered the defendant to pay the plaintiff P30.00 a month, from the date of usurpation in 1955 until restoration of possession, and to pay the costs. The decision thus rejected the defendant’s attempt to defeat the plaintiff’s registered title by relying on alleged possession and improvement.
Motion for Reconsideration and Grounds on Appeal
After the denial of the defendant’s Motion to Reconsider and/or to Set Aside Decision on February 21, 1959, the defendant appealed directly to the Supreme Court. He argued, in substance, that the trial court erred in several respects: first, by not holding that the plaintiff’s Torrens Certificate of Title was null and void insofar as the property in controversy was concerned; second, by not holding the plaintiff’s action prescribed or was barred by laches; third, by not holding the defendant to be a possessor in good faith entitled to retention until reimbursed for improvements; fourth, by ordering the defendant to pay rentals of P30.00 per month from 1955 until the plaintiff was restored to possession; and fifth, by not dismissing the complaint.
The Parties’ Positions on the Effect of Torrens Title, Prescription, and Laches
The plaintiff’s cause of action rested on ownership evidenced by TCT No. 1267, issued on May 29, 1939 under Decree No. 17431 (G.L.R.O. No. 7681), and traced to O.C.T. No. 735 (Rizal, issued on July 8, 1914.) The Supreme Court noted that the defendant’s defense before the trial court did not raise, either as defense or as counterclaim, the issues of nullity of the plaintiff’s title and reconveyance. Neither did the defendant aver prescription or laches as defenses.
The Court held that the defendant could not raise those issues for the first time on appeal. It treated the failure to raise prescription and laches as amounting to waiver under Sec. 10, Rule 9, and citing Maxilom vs. Tabotabo and Domingo vs. Osorio. On the matter of the plaintiff’s recovery based on Torrens title, the Court further held that the plaintiff’s right to recover possession based on a Torrens title was imprescriptible and not barred by laches, referring to Art. 348, Civil Code, and Francisco, et al., vs. Cruz, et al. [CA].
Legal Treatment of Assailments Against the Torrens Title
The Court acknowledged the defendant’s general argument that Act No. 496 was not intended to shield fraud, and that registration confirms title and does not vest ownership where none exists, since Torrens registration is not a mode of acquiring ownership. Yet the Court refused to apply those general principles to the defendant’s case in a manner that would partially annul the plaintiff’s Torrens title.
The Supreme Court emphasized that the plaintiff’s title was traceable to an original certificate of title issued in 1914, more than 44 years before the relevant facts, and that it had become conclusive upon the whole world. The Court cited Sec. 38, Act 496 and explained that, to sustain an action for annulment of a Torrens title as void ab initio, it had to be shown that the Land Registration Court that issued the pertinent decree acquired no jurisdiction over the case. For reconveyance after the lapse of one year from the decree, actual fraud in securing the title had to be proved, referring to Bernardo vs. Siojo.
The Court found that the defendant’s pleadings before the trial court alleged no lack of jurisdiction and adduced no evidence on jurisdiction. It also found that the record did not show fraudulent acts, knowledge of adverse rights by the original plaintiff registrants in the relevant G.L.R.O. Rec. No. 7681, or any knowledge by them of the supposed rights of Telesforo Deudor or Agustin de Torres.
Reliance on the Compromise Agreement and Alleged Earlier Possessory Rights
The defendant relied on a portion of a Compromise Agreement dated March 16, 1953 between Deudor and Tuason & Co., Inc., which referenced an alleged informacion posesoria allegedly issued in 1893 to Telesforo Deudor, and claimed that Deudor’s successor Agustin de Torres possessed the property, which later passed to Lucia T. Teotico. The Court treated this reliance as insufficient.
First, it stated that the compromise agreement had already been rescinded, citing Deudor, et al. vs. J. M. Tuason & Co., Inc. and the cited Off. Gaz. reference in the source. Second, it held that the records did not indicate that either Deudor or de Torres was in possession of the subject lot at the time the plaintiff’s predecessor-in-interest obtained a Torrens title in 1914, or at any time before World War II, and noted that the trial court made no finding supporting the earlier possession theory.
Findings on Actual Possession and Timing
The Court relied on the factual record as found and treated as binding. It noted that the defendant entered into possession of the disputed portion of about 200 square meters in December 1955, without the plaintiff’s consent and knowledge, and that the plaintiff commenced the case on September 9, 1958. Because the appeal was framed by the defendant as raising issues of law only, the Court treated the factual findings as binding.
It further reasoned that even were the compromise agreement to be given due weight, the defendant would be compelled to concede that the Deudors had a “wrong impression of the nature of their rights” in the property, leading to the admission that Telesforo Deudor and Agustin de Torres had no dominical title to the disputed property.
Good Faith as to Improvements and Payment of Rentals
The defendant further claimed that he should have been declared a builder in good faith, that he should not have been ordered to pay rentals, and that the complaint should have been dismissed. The Supreme Court rejected these arguments on procedural and factual grounds.
Procedurally, it noted that these matters were being raised for the first time on appeal. They had not been alleged as a defense or counterclaim, and the trial court had made no findings on the factual issue of good faith. Substantively, the Court found from the documents that the defendant was not a builder in good faith.
The Court grounded its good faith assessment on the existence and public character of the plaintiff’s Torrens title. It reasoned that from the initial certificate of title of the plaintiff’s predecessors-in-interest issued on July 8, 1914, there was presumptive knowledge by the defendant, since the Torrens title is notice to the whole world. It also found that the defendant had notice from the description of the purchased lot in his exhibits as being a portion of an unapproved subdivision plan, and that an inquiry would have revealed that the land was registered under the Torrens system in the name of J. M. Tuason & Co., Inc. The Court cited Sec. 51, Act 496 and Emas
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Case Syllabus (G.R. No. L-19149-50)
- The case involved J. M. Tuason & Co., Inc. (plaintiff and appellee) and Teodosio Macalindong (defendant and appellant) over recovery of possession of a portion of registered land in Quezon City.
- The dispute arose from the appellant’s entry into a measured portion of the appellee’s land and the construction of a house thereon.
- The Court resolved issues raised on appeal after the trial court granted the appellee’s action for recovery of possession and ordered payment of monthly rentals and costs.
Parties and Procedural Posture
- The plaintiff filed Civil Case No. Q-3303 in the Court of First Instance of Rizal against the defendant for recovery of possession of a portion of land.
- The defendant answered and asserted possession in the concept of owner, together with a counterclaim for damages and attorney’s fees.
- The trial court rendered a decision declaring the defendant to have no right of possession and title, ordering him to vacate and remove his construction, and ordering payment of rentals from the time of usurpation.
- The defendant filed a Motion to Reconsider and/or to Set Aside Decision, which the trial court denied on February 21, 1959.
- The defendant appealed directly to the Court, assigning multiple alleged errors, while the appellee maintained that the action was based on its Torrens Title and that defenses like prescription and laches were waived and in any event inapplicable.
Key Factual Allegations
- The plaintiff alleged that it was the registered owner of a parcel of land known as Sta. Mesa Heights Subdivision, located at Quezon City and covered by Transfer Certificate of Title No. 1267 (37686Rizal).
- The plaintiff alleged that on or about December 5, 1955, the defendant unlawfully entered into possession of approximately 200 square meters within the plaintiff’s parcel and constructed his house thereon.
- The plaintiff claimed damages at the rate of P60.00 monthly, representing the fair rental value of the portion occupied.
- The defendant countered that prior to 1955 and since time immemorial, he and his predecessors-in-interest had been in open, adverse, public, continuous, and actual possession of the lot in the concept of owner, and had made improvements valued at P9,000.00.
- The defendant also alleged a chain of acquisition by purchase, showing that he acquired the questioned portion on June 28, 1954 from Graciano M. Flores, who allegedly acquired it from Lucia T. Teotico on April 27, 1954, and so on back to Agustin de Torres and the alleged Telesforo Deudor.
- The trial court found as a fact that the defendant entered and occupied the 200-square-meter portion in December 1955 without the plaintiff’s consent or knowledge, and that the plaintiff commenced the action on September 9, 1958.
Competing Claims of Title and Possession
- The plaintiff’s right rested on TCT No. 1267, issued in its name on May 29, 1939 pursuant to Decree No. 17431 (G.L.R.O. No. 7681), traceable to O.C.T. No. 735 (Rizal, issued on July 8, 1914).
- The defendant’s defense claimed ownership through prior adverse and continuous possession and through documents tracing possession and alleged rights to predecessors before the 1914 Torrens issuance.
- The defendant relied on a purported Compromise Agreement and an “informacion posesoria” which allegedly showed that in 1893 records reflected property registered in the name of Telesforo Deudor and that the Deudors claimed possessory rights.
- The defendant invoked provisions of the compromise agreement to suggest that predecessors had been in possession and had sold possessory rights to third persons, and that in mid-1950 they had sued owners due to a mistaken impression of their rights.
- The Court treated the compromise agreement arguments as insufficient for the relief sought and also noted that the compromise agreement had already been rescinded in Deudor, et al. vs. J. M. Tuason & Co., Inc. (112 Phil., 53; Off. Gaz. [2] 217).
Issues Raised on Appeal
- The defendant argued that the trial court erred by not holding the plaintiff’s Torrens Certificate of Title null and void insofar as the property in controversy was concerned.
- The defendant contended that the plaintiff’s action had prescribed or was barred by laches.
- The defendant claimed entitlement to retention as a possessor in good faith until reimbursed for the value of improvements.
- The defendant challenged the trial court’s order requiring payment of rentals from 1955 until the plaintiff was restored to possession.
- The defendant argued that the complaint should have been dismissed.
Statutory and Doctrinal Framework
- The Court recognized that Torrens titles issued under the Torrens system are governed by Act No. 496, including the rule that section 38 of Act 496 renders a registered title incontrovertible and conclusive against the whole world after the prescribed period.
- The Court explained that to sustain an action for annulment of a Torrens title as void ab initio, it must be shown that the Land Court that issued the decree did not acquire jurisdiction.
- The Court also stated that for reconveyance after the lapse of one year from the decree of registration, actual fraud in securing the title must be proved, citing Bernardo vs. Siojo (58 Phil. 89, 102).
- The Court held that registration under the Torrens system confirms title but does not vest ownership where none e