HILARIO RAMIREZ AND VALENTINA BONIFACIO, PETITIONERS, VS. HONORABLE COURT OF APPEALS, FRANCISCA MEDINA, MATILDE MARTIN, EMILIO MARTIN, DELFIN GUINTO, TEOFILO GUINTO, PRUDENCIO G…

Ramirez versus Court of Appeals

The Case

This is a petition for review on certiorari brought by the spouses Hilario Ramirez and Valentina Bonifacio against the Court of Appeals and their nephews and nieces, the private respondents. The spouses had obtained a decree of registration over a parcel of riceland in Las Piñas, Rizal, and the respondents sought to have that decree reopened and set aside on the ground of fraud. The case matters because it teaches when a decree of registration may be reviewed under the Land Registration Act, what kind of fraud justifies that relief, and why an antichretic creditor who holds the land as security cannot acquire it by prescription.

Procedural History

The spouses filed an application for registration of the riceland before the then Court of First Instance of Rizal, sitting as a land registration court. Nobody opposed, an order of general default was issued, and the court allowed them to present evidence. The court then ordered the issuance of the decree of registration, and Original Certificate of Title Number 2273 was issued in their names.

The respondents later filed a petition to review that decree on the ground of fraud. After trial, the Court of First Instance set aside its earlier decision and its order for the issuance of the decree, declared the respondents the true and absolute owners of the land in stated proportions, ordered the cancellation of the spouses' title and the issuance of a new one in the respondents' names, and awarded attorney's fees and costs. The Court of Appeals affirmed the decision in full. On the spouses' motion for reconsideration, a division of the appellate court with a new member set aside its original decision, but on the respondents' motion for reconsideration that resolution was set aside and the original decision was reinstated. The spouses then came to the Supreme Court by petition for review on certiorari.

Facts

On September 15, 1959, the spouses Hilario Ramirez and Valentina Bonifacio applied to register a parcel of riceland in Pamplona, Las Piñas, Rizal. After notice and publication, no one appeared to oppose, and an order of general default was issued. The spouses then presented parol evidence that they had acquired the land by purchase from Gregoria Pascual during the early part of the American regime, but that the contract of sale had been lost and no copy or record of it was available. On January 30, 1960, the court ordered the issuance of the decree of registration, and Original Certificate of Title Number 2273 was issued in the spouses' names.

On March 30, 1960, the respondents, who are the nephews and nieces of the spouses, filed a petition to review the decree on the ground of fraud. They alleged that they are the legal heirs of Agapita Bonifacio, who died intestate in March 1936; that Valentina Bonifacio is a sister of the deceased Agapita, both being children of Gregoria Pascual; that Gregoria Pascual had owned the land, as shown by a tax declaration issued in 1920; that Agapita acquired the land by purchase from Gregoria Pascual, as shown by a tax declaration issued in her name in 1928; and that in 1938 the respondents obtained a loan of 400 pesos from the spouses, secured by a mortgage on the land by way of antichresis. For that reason the tax declaration in Agapita's name was cancelled and replaced by declarations in the spouses' names, and the spouses began paying the taxes. When attempts to redeem the land were refused, the respondents filed a complaint for recovery of possession and ownership, which was later dismissed on a joint petition after the parties agreed to have the question of ownership resolved in the registration proceedings.

In their answer, the spouses denied the material allegations and relied on two deeds of sale allegedly executed in April 1937, which they claimed to have found accidentally in March 1960. After trial, the court found the deeds of sale spurious. It found that the respondents took possession of the land as owners after the death of Agapita Bonifacio, and that in 1938 they mortgaged it to the spouses to secure a loan of 400 pesos, under an agreement that they could not redeem within five years and that the spouses would take possession, enjoy the fruits, and pay the land taxes. The written agreement was kept by the spouses as creditors, and the trial court weighed against them their failure, despite formal request, to produce that document in court.

Issues

• Whether or not the Court of First Instance, acting as a land registration court, had jurisdiction to give due course to a petition for review of the decree under Section 38 of Act Number 496, and to reopen the original proceedings, when the petition is actually one for reconveyance and is not based on actual or extrinsic fraud.
• Whether or not Section 38 of Act Number 496 applies to original land registration proceedings over public agricultural land brought under the Public Land Act, as amended.
• Whether or not the Court of First Instance, acting as a land registration court, had the power to vest title in the private respondents and to order its partition among them, given that the land was in the actual possession of the petitioners.
• Whether or not the private respondents had the legal capacity and qualification to acquire and be vested by the court with title to the land in question.

Applicable Provisions

Section 122 of Act Number 496, the Land Registration Act, provides:

Whenever public lands in the Philippine Islands belonging to the Government of the United States or to the Government of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations, the same shall be brought forthwith under the operation of this Act and shall become registered lands. It shall be the duty of the official issuing the instrument of alienation, grant, or conveyance in behalf of the Government to cause such instrument before its delivery to the grantee, to be filed with the register of deeds for the province where the land lies and to be there registered like other deeds and conveyances, whereupon a certificate shall be entered as in other cases of registered land, and an owner's duplicate certificate issued to the grantee. The deed, grant, or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land, but shall operate only as contract between the Government and the grantee and as evidence of authority to the clerk or register of deeds to make registration. The act of registration shall be the operative act to convey and affect the land, and in all cases under this Act, registration shall be made in the office of the register of deeds for the province where the land lies. The fees for registration shall be paid by the grantee. After due registration and issue of the certificate and owner's duplicate, such land shall be registered land for all purposes under this Act.

This provision answers the second issue, because once the conveyance of public land is registered and a certificate is issued, the land becomes registered land and falls under the operation of the Land Registration Act, including its remedy for review of a decree on the ground of fraud.

Article 2136 of the Civil Code provides:

The debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor.

This provision underlies the Court's modification of the judgment, requiring the respondents to pay the principal of the antichretic loan before reacquiring the enjoyment of the land.

Ruling

On the first issue, the Court held that the petition for review sufficiently alleged extrinsic fraud. The spouses did not merely omit the respondents' interest; they positively attested in their application that there was no mortgage or encumbrance and no other person having any estate or interest in the land. The Court called this a false allegation made in bad faith, since the spouses were not owners but possessors only as antichretic creditors. The Court quoted its earlier ruling in Libundan versus Palma Gil on the nature of the fraud required:

Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any fraudulent scheme executed by a prevailing litigant outside the trial of a case against the defeated party, or his agents, attorneys or witnesses, whereby said defeated party is prevented from presenting fully and fairly his side of the case.

The Court added that relief is granted where the fraud consists in willfully misrepresenting that there are no other claims, and that the overriding consideration is that the fraudulent scheme prevented a party from having his day in court. The findings of the two courts below were supported by competent proof and were not disturbed.

On the second issue, the Court held that Section 38 of the Land Registration Act applies. Under Section 122, once the conveyance of public land is registered and the certificate and owner's duplicate are issued, the land is deemed registered land for all purposes under the Act. The land in this case having been registered and covered by an original certificate of title, the decree could be reviewed on the ground of actual and extrinsic fraud under Section 38.

On the third issue, the Court held that the spouses' possession did not ripen into title. The finding that they were merely antichretic creditors was affirmed by the Court of Appeals and is binding on the Supreme Court. The Court ruled that the antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor; the spouses were not possessors in the concept of owner but mere holders placed in possession by the owners, so their possession could not serve as a title for acquiring dominion.

On the fourth issue, the Court relied on the detailed factual findings of the trial court, which concluded that the spouses were not the owners of the land and had no registrable right over it, and that the respondents had established their ownership by a strong preponderance of evidence. The Court also rejected the argument of laches, citing the close relationship of the parties and the nature of the contract of antichresis, and noting the evidence of earlier attempts to recover the property.

Doctrine

A decree of registration may be reviewed and set aside on the ground of actual and extrinsic fraud under Section 38 of the Land Registration Act. Extrinsic fraud is a fraudulent scheme outside the trial that prevents a party from fully and fairly presenting his side; a positive misrepresentation in the application that no other person has any claim or interest in the land, when the applicant knows otherwise, is such extrinsic fraud.

Once a conveyance of public land is registered and the corresponding certificate and owner's duplicate are issued, the land becomes registered land for all purposes under the Land Registration Act, and the remedy of review of the decree on the ground of fraud is available.

An antichretic creditor who holds the land as security for a loan is not a possessor in the concept of owner, and his possession cannot ripen into title by prescription. Under Article 2136 of the Civil Code, the debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals, with the modification that the respondents were ordered to pay the petitioners 400 pesos as principal for the contract of antichresis, the fruits obtained from the possession of the land having been applied to the interests on the loan.

Remember This

The single line to memorize is that a positive misrepresentation in a registration application that no one else claims the land is extrinsic fraud that opens the decree to review. Examiners use this case to test the distinction between extrinsic and intrinsic fraud in land registration, and the rule that an antichretic creditor's possession never ripens into ownership.