LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL, DIBARATUN MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, AND MANUCAO MORO, PETITIONERS, VS. MOLOK BAGUMBARAN, …

This is a petition for review on certiorari of the
decision^[1]
of the then Court of First Instance of Lando del Sur, Branch III, Marawi City,
in Civil Case No. 1354, entitled, “Molok Bagumbaran vs. Liwalug Amerol, et al.,” under Republic Act No. 5400, “as
only question of law is raised.”^[2]

The only issue for
resolution is the prescriptive period of an action for reconveyance
of real property which has been wrongfully or erroneously registered under
the Torrens system in another’s name.  In other words, what is the prescriptive
period for the action to reconvey the title to real
property arising from an implied or constructive trust and, corrolarily,
its point of reference.  The petitioners herein, defendants in the
trial court, assert at they have ten years to bring the action, while the
respondent, plaintiff in the court below, claims the prescriptive period is
four years.  The trial court ruled for
the plaintiff, now respondent.

We reverse.  We hold that the prescriptive period for such
an action for reconveyance, as this case, is ten years.  The
point of reference is, or the ten-year prescriptive period commences to run
from, the date of the issuance of the certificate of title over the real
property.

There is no issue as to
the facts, this case having been elevated to this Court, as aforestated,
on purely a question of law.  Be that as
it may, in order to satisfy constitutional requirements as well as to place the
question of law in proper perspective, there is need to state the facts of the case.  On this
regard, the findings of the trial court would best serve the stated purposes.

xxx                                                    xxx                                                       xxx

From the evidence submitted during the trial, there is no dispute
concerning the fact relative to the identity of the land in litigation.  It is commonly known as Lot No. 524, Pls-126
and technically described and bounded in the sketch (Exh. “7”).  This is the very tract of land alleged
by the plaintiff to have been forcibly entered into by the defendants and which
plaintiff now seeks to recover possession
thereof.  It has also been proven that
the same lot was covered by two free patent applications: – (1) that of
defendant Liwalug Datomanong
(erroneously surnamed Amerol) which he filed on the
4th day of September, 1953, and (2) that of Molok Bagumbaran which was filed on December 27, 1954.  There is also no question regarding the fact
that as to these two free patent applications, that of plaintiff Molok Bagumbaran was given due
course as a result of which Free Patent No. V-19050 was issued on August 16,
1955 by authority of the President of
the Philippines Ramon Magsaysay, by Jaime Ferrer, Undersecretary of Agriculture and Natural Resources
and duly registered with the office of the Register of Deeds of the Province of
Lanao (now Lanao del Sur) in the same year whereupon Original Certificate of Title
No. P-466 was duly issued, owner’s duplicate certificate having been furnished
the herein plaintiff.

This court is
also inclined to
believe that defendant Liwalug Datomanong
had never known of plaintiff’s free patent application on the land in question
nor was he ever notified or participated in the administrative proceedings
relative to plaintiff’s free patent application.  In the meantime, since the date he purchased
the land from Mandal Tando,
said defendant has been and up to the present in continuous occupation and
cultivation of the same.  His
co-defendants named in the complaint are
merely his tenants.

It is also incontrovertible
fact that said defendant did not take appropriate action to annul the patent
and title of the plaintiff within one year from issuance thereof and that the
first step taken by him to contest said patent and title was a formal protest (Exh. “12”,
p. 408, Record) dated April 24, 1964, filed before the Bureau of Lands after the
lapse of Nine (9) long years from the issuance of patent in favor of the
plaintiff.  The second step he took was
his counterclaim contained in his answer to the complaint in the above entitled
case, , which answer was filed with this court on December 4, 1964.  In said counterclaim, defendant reiterated his stand that plaintiff secured
patent on the land by means of deceit and fraud, wherefore, defendant
prayed that said title be annulled, or, alternatively, plaintiff be ordered to reconvey the said land to the said defendant Liwalug Datomanong.

First question to be resolved is whether or not the plaintiff is
guilty of fraud or misrepresentation in securing the Free Patent No. V-19050 covering the land in question.

Upon a thorough examination of the evidence, proofs are sufficient
to support defendant’s contention that plaintiff is guilty of fraud and
misrepresentation.  In the first place, proofs are
abundant tending to show that since 1952 when Mandel Tando
transferred the land to said defendant, the latter occupied, took possession
thereof and cultivated the same continuously, publicly, adversely against any
claimant and in the concept of owner up to the present; that said defendant had
introduced considerable improvements such as coconut and coffee plantations and
other fruit trees besides his farm house, a mosque, cassava plantation and
clearing and full cultivation of the entire area.  The fact of possession on the part of said
defendant has been attested to by competent and creditable witnesses like Mandal Tando who conveyed the
land to the defendant; Hadji Sirad
Gomandang, the barrio captain of Montay,
Malabang, Lanao del Sur; Hadji Rasol
Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur who are farmers and
barrio-mates of said defendant; and also Disomnong Dimna Macabuat, an employee in
the office of the District Land Officer at Marawi
City who had officially conducted occular inspection
and investigation of the premises in connection with the protest of said
defendant found thereon the above-mentioned improvements introduced by the said
defendant.

What is more, on or before filing his free patent application,
plaintiff knew that the land in question which was covered by his free patent
application was then actually occupied and cultivated by defendant Liwalug Datomanong if not
by Mandal Tando; the
original occupant.  Be it
remembered that Mandal Tando
had transferred to defendant Liwalug Datomanong Twenty Four (24) hectares, more than eleven
hectares of which is (sic) outside the military reservation and designated as
Lot No. 524, Pls-126 and the rest which is in the southern portion lies within
the military reservation.  Now,
immediately adjacent thereto on the south is the land claimed and occupied by
the herein plaintiff also consisting of Twenty Four (24) hectares but wholly
within the military reservation.  It
appears that plaintiff declared this Twenty Four
hectares for the first time on October
24, 1950 for taxation purposes
(Tax Declaration No. 1529, Record) and stated in said tax declaration (Exhs. “8” and “8-A”, p. 414, Record)
regarding the boundaries that the adjacent owner on the north is Mandal Tando.  In other words, plaintiff had expressly recognized
the fact that Mandal Tando
is an adjacent land owner north of plaintiff’s property.  On February 19, 1951 herein plaintiff revised the above-stated
tax declaration and secured another (Tax Declaration No. 1794, Exh. “9” and “9-A”, p. 413, Record) and
still plaintiff stated therein that his boundary land owner on the north is Hadji Abdul Gani.^[3] [a.k.a. Liwalug Datomanong (Amerol)].^[4]

xxx                                                    xxx                                                       xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the
trial court denied the counterclaim
of the defendants, now petitioners, for the affirmative relief of reconveyance on the
ground of prescription.  Said the court:

xxx                                                    xxx                                                       xxx

The patent of the plaintiff having been registered back in 1955 and
in contemplation of law registration thereof is notice to the whole world and
yet defendant exerted no effort whatsoever either to annul the title or
institute proceedings for reconveyance except in his
counterclaim contained in his
answer to the complaint in this case at bar which answer and counter-claim was
filed on December 4, 1964, some nine long years from
the date of registration of the patent, defendant unfortunately lost his right
to reconveyance within the period of four (4) years
from the date of registration of said patent.^[5]

xxx                                                    xxx                                                       xxx

Thus, the dispositive portion of the assailed decision stated:

xxx                                                    xxx                                                       xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows:  (1) declaring the herein plaintiff the
registered owner of Lot No. 524, Pls-126 and sustaining and respecting the
validity of the plaintiff’s Original Certificate of Title No. P-466 covering
the said land; (2) ordering the defendants to vacate the premises of Lot No.
524, Pls-126 and deliver possession thereof to the herein plaintiff under
certain terms and conditions herein below stated; (3) denying and hereby dismissing
the counterclaim of the herein defendants and consequently the prayer to annul
the title and/or for reconveyance of the land to said
defendant Liwalug Datomanong
must likewise be denied; (4) that
before plaintiff could take possession of said premises he must reimburse
defendant Liwalug Datomanong
the total sum of Six Thousand Seven Hundred Fifty-Two Pesos and Sixty-Two
Centavos (P6,752.62) which he incurred for the necessary and useful expenses on
the land in question with the right of said defendant to retain possession of
the premises if said reimbursement be not completely made.  No pronouncement as to costs.^[6]

xxx                                                    xxx                                                       xxx

Hence,
this petition.^[7]

The petitioners in their
Brief^[8] assign the following two errors allegedly
committed by the trial court:

I.

THE COURT ERRED IN ITS CONCLUSION OF LAW TO THE EFFECT THAT
PETITIONERS’ RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN IMPLIED TRUST
PRESCRIBED AFTER FOUR YEARS FROM THE
REGISTRATION OF THE PATENT OF RESPONDENT.

II.

THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS
BASIS IN THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE IMPROVEMENT INTRODUCED
ON THE LAND IN GOOD FAITH BY PETITIONERS INSTEAD OF BASING
SUCH ASSESSMENT UPON PURE AND SIMPLE GUESS WORKS AND WILD ESTIMATIONS.

The first assignment of
error is well-taken as adverted to at the outset.

Indubitably, the act of
respondent in misrepresenting that he was in actual possession and occupation
of the property in question, obtaining a patent and Original Certificate of Title No. P-466 in his name, created an implied trust in favor of the actual possessor of the said property. 
The Civil Code provides:

ARTICLE 1456.  If property is acquired through mistake or
fraud, the person obtaining it
is by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.

In this case, the land in
question was patented and titled in respondent’s name by and through his false pretenses. 
Molok Bagumbaran
fraudulently misrepresented that he was the occupant and actual possessor of
the land in question when he was not because it was Liwalug
Datumanong.  Bagumbaran falsely pretended that there was no prior
applicant for a free patent over the land but there was — Liwalug
Datomanong.  By
such fraudulent acts, Molok Bagumbaran
is deemed to hold the title of the property in trust and for the benefit of
petitioner Liwalug Datomanong.  Notwithstanding the irrevocability of the Torrens title already issued in the name of
respondent, he, even being already the registered owner under the Torrens system, may still be compelled under the law
to reconvey the subject property to Liwalug Datomanong.  After all, the Torrens
system was not designed to shield and protect
one who had committed fraud or misrepresentation and thus holds title in bad
faith.  Further, contrary to the
erroneous claim of the respondent,^[9]
reconveyance does not work to set aside and put under
review anew the findings of facts of the Bureau of Lands.  In an action for reconveyance,
the decree of registration is respected as incontrovertible.  What is sought instead is the transfer of the
property, in this case the title thereof, which has been wrongfully or
erroneously registered in another
person’s name, to its rightful and legal owner,^[10]
or to one with a better right.  That is
what reconveyance is all about.

Yet, the right to seek reconveyance
based on an implied or constructive trust is not absolute.  It is subject to extinctive prescription.^[11]
Happily, both parties agree on this point. 
The seeming impediment however, is that while the petitioners assert
that the action prescribes in ten years,
the respondent avers that it does in only four years.

In support of his
submission, the respondent invokes several cases.  We have examined the invocations and find
them inapplicable.  For instance, the
case of Fabian v. Fabian,^[12] relied on by the respondent, does not square
with the present case.  In Fabian, the party who prayed for reconveyance was not in actual possession and occupation of
the property.  It was instead the party
to whom title over the property had been issued who
occupied and possessed it.  Further, the
litigated property had been in the adverse possession of the registered owner
for well-nigh over twenty-nine big years, hence, reconveyance had been irretrievably lost.

Miguel v. Court of Appeals,^[13]
is, likewise, inapplicable.  In Miguel,
the actual occupant and possessor of the controverted
parcel of land, after having been enticed by Leonor
Reyes, an ambulatory notary public, with promise of help, engaged and retained
the services of the latter to facilitate the issuance of a patent for the said
land in his (Miguel’s) favor.  Thus,
there existed between the parties a relationship very much akin to that of
lawyer-client and which is similarly fiduciary in character.  But Reyes, inspite
of his compensation of one-fifth of the yearly produce of the property, still
violated the trust reposed on him and instead worked for the issuance of the patent in the name of his
own wife.  So, after the demise of Leonor Reyes, the property was fraudulently patented and
titled in his widow’s favor.  The reconveyance of the property was decreed by the Court based
on “breach of fiduciary relations and/or fraud.” It was shown that
the parties were legally bound to each other by a bond of fiduciary trust, a
bond lacking in the case at bar.

Finally, the case of
Ramirez vs. Court of Appeals^[14] can
not be availed of because the period of prescription was not there definitely
and squarely settled.  In fact, Ramirez
underscores a vacillation between the four-year and the ten-year rule.  There it was stated that “an action for
relief on the ground of fraud – to which class the remedy prayed for by Paguia belongs – can only be brought within four years after
accrual of the right of action, or from the discovery of the fraud.” If
the decision just stayed pat on that statement, there would be merit in the
respondent’s presentation.  But Ramirez
continues:  “(I)ndependently,
however, of the alleged fraud on the part of Ramirez, the right to demand a reconveyance prescribes after 10 years from accrual of
the cause of action, June 22,
1944, the date of registration
of the patent and of the issuance of OCT No. 282-A in his name.”^[15]

Significantly, the three cases cited by the respondent to
buttress his position and support the ruling of the trial court have a common
denominator, so to speak.  The cause
action assailing the frauds committed and impugning the Torrens titles issued in those cases, all accrued
prior to the effectivity of the present Civil
Code.  The accrual of the cause of action
in Fabian was in 1928, in Miguel, February, 1950, and in Ramirez, 1944.  It must be remembered that before August
30, 1950, the date
of the effectivity of the new Civil Code, the old
Code of Civil Procedure (Act No. 190) governed prescription.  It provided:

SEC. 43. 
Other civil actions; how limited. 
– Civil actions other than for the recovery of reel property can only be
brought within the following periods after the right of action accrues:

xxx                                      xxx                                           xxx

3.  Within four
years:  x x x An action for relief on the ground of fraud, but the right of action in such case shall not be deemed to
have accrued until the discovery of the fraud;

xxx                                      xxx                                           xxx

In contrast, under the present
Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456,
Civil Code), so is the corresponding obligation to reconvey
the property and the title thereto in favor of the true owner.  In this context, and vis-a-vis
prescription, Article 1144 of the Civil Code is applicable.

Article 1144.  The following actions must be brought within
ten years from the time the right of action accrues:

(1)  Upon a written contract

(2)  Upon an obligation
created by law;

(3)  Upon a judgment.

xxx                                      xxx                                           xxx

(Emphasis supplied.)

An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise.  A long line of decisions of this Court, and of
very recent vintage at that, illustrates this rule.  Undoubtedly, it is now well-settled that an
action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over the property.^[16] The only discordant note, it seems, is Balbin vs. Medalla,^[17] which states that the prescriptive period
for a reconveyance action is four years.  However, this variance can be explained by
the erroneous reliance on Gerona vs. de Guzman.^[18] But in Gerona, the fraud was discovered on
June 25, 1948, hence Section 43(3) of Act No. 190, was applied, the new Civil
Code not coming into effect until August 30, 1950 as mentioned earlier.  It must be stressed, at this juncture, that
Article 1144 and Article 1456, are new provisions.  They have no counterparts in the old Civil
Code or in the old Code of Civil Procedure, the latter being then resorted to
as legal basis of the four-year prescriptive period for an action for reconveyance of title of real property acquired under false
pretenses.

It is abundantly clear
from all the foregoing that the action of petitioner Datomanong
for reconveyance, in the nature of a counterclaim
interposed in his Answer, filed of
December 4, 1964, to the
complaint for recovery of possession instituted by the respondent, has not yet
prescribed.  Between August 16, 1955, the date of reference, being the date of the issuance of the
Original Certificate of Title in the name of the respondent, and December
4, 1964, when the
period of prescription was interrupted by the filing of the Answer cum Counterclaim,
is less than ten years.

The respondent also interposed
as a deterrent to reconveyance the existence of a mortgage on the property.  It is claimed by the respondent that reconveyance would not be legally possible
because the property under litigation has already been mortgaged by him to the
Development Bank of the Philippines.^[19]
This claim is untenable otherwise the judgment for reconveyance
could be negated at the will of
the holder of the title.  By the simple
expedient of constituting a mortgage or
other encumbrance on the property, the remedy of reconveyance
would become illusory.  In the instant
case, the respondent being doubly in bad faith — for applying for and
obtaining a patent and the Original Certificate of Title therefor
without being in possession of the land and for mortgaging it
to the Development Bank knowing that his Original Certificate of Title
was issued under false pretenses — must alone suffer the consequences.

Besides, given the undisputed facts, we cannot consider the
mortgage contracted by the respondent in favor of the Development Bank of the Philippines
as valid and binding against petitioner Liwalug Datomanong.  It would
be most unjust to saddle him, as owner of the land, with a mortgage lien not of
his own making and from which he derived no benefit whatsoever.  The consequences of the void mortgage must be
left between the mortgagor and the mortgagee. 
In no small measure the Development Bank of the Philippines
might even be faulted for not making the requisite investigation on the possession of the land
mortgaged.

Premises considered, we deem it
superfluous to rule on the second
assignment of error raised by the petitioners.

WHEREFORE, the petition is GRANTED and the Decision dated
June 3, 1970 of the then
Court of First Instance of Lanao del Sur in Civil Case No. 1354 is hereby ANNULLED and SET ASIDE
and a new one entered ORDERING the respondent to RECONVEY Original Certificate
of Title No. P-466 in favor of petitioner Liwalug
Datomanong, free of any encumbrance.

Costs against the respondent.

SO ORDERED.

Yap, (Chairman), Melencio-Herrera,
and Paras, JJ., concur.

Padilla, J., see
separate opinion.

^[1]
Penned by Judge Demetrio B.
Benitez.

^[2]
Rollo, 15.

^[3]
Decision, 11-14; Rollo, 44-47; emphasis
supplied.

^[4]
Id., 5; Rollo, 38.

^[5]
Id., 18; Rollo, 52; emphasis supplied.

^[6]
Id., 21-22; Rollo, 55-56; emphasis supplied.

^[7]
Filed on November 24, 1970.

^[8]
Rollo, 104.

^[9]
Brief for the respondent, 3; Rollo, 130.

^[10]
Director of Lands, et al vs. Register of Deeds of Rizal,
et al, 92 Phil. 826 (1953)

^[11]
Diaz, et al, vs. Gorricho
and Aguado, 103 Phil. 261 (1958); Candelaria,
etc. v. Romero, et al., 109 Phil. 500 (1960); J.M. Tuazon
& Co., Inc. vs. Magdangal,
114 Phil. 42 (1962); Alzona, et al. vs. Capunitan and Reyes, 114 Phil. 377 (1962); Gerona vs.
De Guzman, No. L-19060, May 29, 1964, 11 SCRA 153 (1964); Gonzales vs. Jimenez, Sr., No. L-19073, January 30, 1965, 13 SCRA 80
(1965); Cuaycong, et al. vs. Cuaycong, et al., No. L-21616, December 11, 1967, 21 SCRA 1192 (1967); Armamento vs.
Guerrero, No. L-34228, February 21, 1980, 96 SCRA 178 (1980); and Ramos v. Court of Appeals, No.
L-52741, March 15, 1982, 112 SCRA 542 (1982).

^[12]
No. L-20449, January 29, 1968, 22 SCRA 231 (1968).

^[13]
No. L-20274, October 30, 1969, 29 SCRA 760 (1969).

^[14]
No. L-28591, October 31, 1969, 30 SCRA 297
(1969).

^[15]
Supra, 307.

^[16]
Gonzales vs. Jimenez, supra; Cuaycong vs. Cuaycong, supra;
De la Cerna vs. Dela Cerna, No. L-28838, August 31, 1976, 72 SCRA 514 (1976); Carantes vs.
Court of Appeals, No. L-33360, April 25, 1977, 76 SCRA 514 (1977), Jaramil vs.
Court of Appeals, No. L-31858, August 31, 1977, 78 SCRA 420 (1977); Ruiz vs. Court of Appeals, No. L-29213, October 21, 1977, 79 SCRA 525
(1977); Vda. de Nacalaban vs. Court of Appeals, No. L-39478, November 29, 1977, 80 SCRA 428
(1977); Duque vs. Domingo, No. L-33762, December 29, 1977, 80 SCRA 654
(1977); Armamento vs. Guerrero, supra; Amansec vs. Melendez No.
L-25422, July 23, 1980; 98 SCRA 639
(1980); Heirs of Tamak Pangawaran
Patiwayan vs. Martinez, No.
L-49027, June 10, 1986, 142 SCRA 252
(1986).

^[17]
No. L-46410, October 30, 1981, 108 SCRA 666 (1981).

^[18]
No. L-19060, May 29, 1964, 11 SCRA 153
(1964).

^[19]
Brief for the Respondent, 4; Rollo, 130.

6 pt
6 pt
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