CARIDAD ARGUELLES, PLAINTIFF-APPELLEE, VS. GUIL­LERMO TIMBANCAYA, DEFENDANT-APPELLANT.

Arguelles versus Timbancaya

The Case

This is Caridad Arguelles against Guillermo Timbancaya, an action for reconveyance of one half of a parcel of land in Palawan. Caridad asks the Court to cancel a transfer certificate of title that Guillermo obtained in his own exclusive name over the whole property, despite a final compromise judgment that had already divided the land equally between them. The case matters because it draws the line between two distinct remedies: the one year period to reopen a decree of registration on the ground of fraud, and the separate, continuing action to annul a title or reconvey property procured by fraud, which survives as long as the land has not passed to an innocent purchaser for value.

Procedural History

Caridad Arguelles filed the action for reconveyance before the Court of First Instance of Palawan. After trial, the court found that the property was owned jointly, one half by Caridad and one half by Guillermo and Alberto Timbancaya, by virtue of the Compromise Agreement and Judgment in the intestate proceedings. It ordered the cancellation of the transfer certificate of title issued in the exclusive name of Guillermo and Alberto, and ordered them to pay Caridad 500 pesos in attorney's fees plus the costs. Guillermo appealed directly to the Supreme Court on questions of law alone.

Facts

On the sixth of July, 1950, Caridad filed an intestate proceeding for the estate of Jose Arguelles. The parties filed a compromise agreement, and on the eleventh of September, 1950, the court rendered judgment in accordance with it. The judgment declared one half of the land, the northern portion, to Caridad, and the other half, the southern portion, to Guillermo and Alberto Timbancaya. It also fixed the value of coconut trees each had planted on the other's portion, at two pesos per bearing tree and fifty centavos per non-bearing tree, to be set off between the parties.

The parties complied. They paid each other for the coconut trees, divided the land, and built a fence at the middle separating their shares. The land was surveyed and divided into two equal parts, and the survey plan was approved by the Bureau of Lands in April 1955. Caridad declared her share for taxation and paid the realty taxes on it. All the while, she had been in actual, open, and continuous possession of her one half.

But Guillermo, contrary to the agreement and the judgment, took the whole area for himself. Through an affidavit in which he claimed that he and his brother were the only legitimate children and surviving heirs of Jose Arguelles and Rufina de los Reyes, he had the original certificate of title cancelled and a new transfer certificate of title issued in his name over the entire land in June 1961. When Caridad learned of this, she filed the action for reconveyance in April 1965.

Issues

• Whether or not the judgment in the intestate proceedings was already barred by the statute of limitations, on the theory that it had never been enforced.
• Whether or not the transfer certificate of title had become indefeasible, the action having been filed almost four years after its issuance.
• Whether or not the non-enforcement of Caridad's claim for fourteen years amounted to waiver and abandonment.

Applicable Provisions

Section 55 of Act 496, as amended, provides:

In all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title.

This is the basis of the action for reconveyance, which the Court holds is independent of, and distinct from, the remedy of reopening the decree of title under Section 38 within one year.

Ruling

On the first issue, the Court held that the compromise judgment had in fact been enforced and executed. The parties paid each other for the coconut trees, occupied their respective portions, built the dividing fence, had the land surveyed and subdivided, and Caridad declared her share and paid taxes on it since 1952. Because Guillermo appealed directly on questions of law, he is deemed to have accepted as conclusive all the trial court's findings of fact.

On the second issue, the Court held that the one year rule is not relevant here. Caridad does not question the original certificate of title issued to Jose Arguelles; she attacks the transfer certificate of title that Guillermo obtained through misrepresentation in his affidavit, long after the compromise judgment had been implemented. The Court quoted the governing principle:

Public policy demands that a person guilty of fraud or at least, of breach of trust, should not be allowed to use a Torrens title as a shield against the consequences of his own wrongdoing.

On the third issue, the Court found it unnecessary to discuss the claim of waiver and abandonment, as it is inconsistent with the established facts.

Doctrine

An action to annul a title or for reconveyance, grounded on fraud in the registration, rests on Section 55 of Act 496 and is available as long as the property has not passed to an innocent purchaser for value. It is independent and distinct from the remedy under Section 38, which seeks to reopen the decree of title on the ground of fraud within one year from its issuance. A Torrens title cannot be used as a shield against the consequences of one's own fraud or breach of trust.

Disposition

The Supreme Court affirmed the judgment of the trial court, with costs against Guillermo Timbancaya.

Remember This

The one year period to reopen a decree on the ground of fraud does not bar a separate action for reconveyance based on Section 55 of Act 496, which lasts while the land remains in the hands of the party who committed the fraud. Examiners use this case to test the distinction between Section 38 and Section 55 remedies, and the rule that a Torrens title cannot shield a defrauder from his own wrongdoing.