Case Summary (G.R. No. 211845)
Petitioner
Pen Development Corporation (merged into Las Brisas Resorts Corp.), assailing CA’s affirmation that it was a possessor and builder in bad faith and its rejection of laches and hearsay arguments.
Respondent
Martinez Leyba, Inc., plaintiff below, seeking quieting of title over 3,454 sqm occupied by petitioners’ structures, cancellation of overlapping portions of TCT 153101, recovery of possession and damages.
Key Dates
• 1967–68: Las Brisas erects fence and resort improvements; MLI issues first trespass notice (March 11, 1968).
• 1996: DENR approves Verification Survey Plan VS-04-000394 revealing overlaps (567 sqm on Lot 29; 1,389 sqm on Lot 30; 1,498 sqm on Lot 31).
• March 24, 1997: MLI files Civil Case No. 97-4386 for quieting of title, cancellation, recovery.
• January 20, 2009: RTC renders decision for MLI, declaring overlap, cancelling portions of TCT 153101, awarding moral/exemplary damages and attorney’s fees.
• July 17, 2013: CA affirms with modification—deletes moral and exemplary damages, grants Php 100,000 nominal damages.
• August 9, 2017: SC decision assails petitioners’ assignments of error.
Applicable Law
• 1987 Constitution (property rights, due process)
• Property Registration Decree (PD 1529), Section 47 (no prescription of title), Sections 52–53 (constructive notice)
• Civil Code, Articles 449–453 (improvements in good/bad faith; indemnity; reimbursement)
• Torrens system jurisprudence on overlapping titles (priority of earlier title; indefeasibility)
Factual Background
MLI owns three contiguous registered parcels since 1915. In 1967, Las Brisas acquired an adjacent 3,606 sqm parcel (TCT 153101) and developed resort facilities. MLI repeatedly notified Las Brisas (1968–71) that its fence and subsequent structures encroached MLI’s lands. Despite these warnings, Las Brisas continued construction, including a multi-story conference center completed in 1995. MLI commissioned a DENR-approved verification survey in 1996, which confirmed 3,454 sqm overlap.
Issue
- Whether petitioners possessed and built in bad faith, forfeiting indemnity and reimbursement rights.
- Whether MLI’s delay constituted laches barring relief.
- Whether MLI’s survey plans were inadmissible hearsay when first objected on appeal.
RTC Ruling
The RTC granted MLI’s complaint under Civil Code Article 476 (quieting of title), held Las Brisas an innocent purchaser whose good faith ceased upon receipt of written notices (citing Ortiz v. Fuentebella). It declared TCT 153101 void in overlap areas, ordered cancellation of those portions, turnover of possession, removal of structures without indemnity, and awarded moral (P1M), exemplary (P1M) damages and attorney’s fees (P100,000).
CA Ruling
The CA upheld overlap findings and bad-faith construction, relying on:
– Article 528 (good faith ends when defects are known) and Article 526 (definition of good/bad faith).
– MLI’s seven letters sufficed to show petitioners knew of overlap.
It rejected laches defense (landowner’s right to recover is imprescriptible). It declined to consider hearsay challenge raised on appeal. It deleted moral and exemplary damages for a corporation but awarded Php 100,000 nominal damages under Articles 2221–2222 and 451.
SC Ruling
The Supreme Court denied the petition and affirmed CA’s decision in full, holding:
- Verification Survey Plan (a DENR-approved public document) conclusively proved overlap and was admissible without further authentication. Petitioners offered no contradicting survey or moved for commissioner appointment.
Case Syllabus (G.R. No. 211845)
Factual Antecedents
- Martinez Leyba, Inc. (MLI), a Philippine corporation, is registered owner of three contiguous parcels in Antipolo, Rizal (Lots 29, 30, 31, Block 3, Pcs-7305) under TCTs 250242, 250244 and 250243, traced to OCT No. 756 (1915).
- Pen Development Corporation and Las Brisas Resort Corporation (after merger, surviving as Las Brisas), also Philippine corporations, own adjacent land under TCT 153101, occupied and fenced since 1967.
- In 1968 Martinez commissioned surveyors and discovered Las Brisas’ fence overlapped its title; Martinez sent letters on March 11, 1968; March 31 and November 3, 1970; and follow-ups after a July 31, 1971 reply from Las Brisas, all warning against encroachment.
- A DENR-approved verification survey (Plan VS-04-000394, May 23, 1996) showed Las Brisas’ improvements occupied: 567 sqm of Lot 29, 1,389 sqm of Lot 30 and 1,498 sqm of Lot 31.
- Martinez’s final demand (November 24, 1994) was ignored; on March 24, 1997 MLI filed Civil Case No. 97-4386 (Quieting of Title, Cancellation of Title, Recovery of Ownership with Damages) before the RTC of Antipolo City, Branch 71.
- Las Brisas denied encroachment, claimed good-faith acquisition from Republic Bank in 1967 and countered that Martinez was the encroacher.
Issues
- Whether TCT 153101 overlaps and casts cloud on MLI’s titles (Art. 476, Civil Code), requiring its cancellation in overlapping portions.
- Whether Las Brisas acted as a builder in bad faith, forfeiting its improvements without indemnity (Arts. 449–451, Civil Code).
- Whether MLI is entitled to damages (actual, compensatory, moral, exemplary, nominal) and attorney’s fees.
- Whether Las Brisas, as an innocent purchaser for value, may claim reimbursement for development expenses or retention of lands.
- Whether MLI’s claim is barred by laches.
- Whether the CA erred in allowing hearsay—MLI’s relocation and verification survey plans—raised for first time on appeal.
Regional Trial Court Decision (Jan. 20, 2009)
- Admitted MLI’s