G.R. No. L-24918. March 20, 1968
FELIX DE VILLA, PLAINTIFF-APPELLEE, VS. ANACLETO TRINIDAD, ETC., ET AL., DEFENDANTS, DEVELOPMENT BANK OF THE PHILIPPINES AND MARIANO S. TRINIDAD, DEFENDANTS-APPELLANTS.
BENGZON, J.P., J.:
Cesario Fabricante owned 5,724,415 square meters of land
designated as Lot No. 9, Plan PSU, located in Sitio Salog, Barrio San Agustin, Municipality
of Iriga, Camarines Sur, covered by
Transfer Certificate of Title No. 50, decree No. 86989, issued in his name.
To secure a loan of P150,000, Japanese
currency, he mortgaged on April 18,
1944 this land, together with another lot,[1]
in favor of Felix de Villa to whom he surrendered his duplicate certificate,
and with whom it remained until it was lost.
The mortgage was for a period of four years, redeemable within two years
thereafter.
On November 3, 1945,
Cesario Fabricante petitioned[2]
the Court of First Instance of Camarines Sur for the issuance or a new
duplicate of Transfer Certificate of Title No. 50 upon the alleged ground that
his duplicate was lost. Felix de Villa,
the mortgage creditor was not notified.
The petition was granted on November
10, 1945, and a new duplicate certificate of Transfer Certificate
of Title No. 50, was issued to Fabricante.[3]
Several days after, on November
27, 1945, Fabricante sold the land for P10,000
to Eustaquio Palma who, on the same day, secured in his name Transfer
Certificate of Title No. 12 covering said lot.[4]
In 1946, to secure two loans of P10,000
each, Palma mortgaged the property
covered by Transfer Certificate of Title No. 12 in favor of the Agricultural
and Industrial Bank, which later became the Rehabilitation Finance Corporation
and is now the Development Bank of the Philippines (DBP). When Palma
failed to pay the loan, DBP foreclosed the mortgage extrajudicially pursuant to
Act No. 3135 and, as highest bidder at the public auction held on April 17, 1951, bought the land and
possessed it by virtue of a writ of possession issued on September 26, 1951 in its favor. Later, it obtained Transfer Certificate of
Title No. 1115 covering said land.
On October 11, 1951,
Palma assigned his right of redemption
to Anacleto Trinidad who, though he failed to pay, was allowed by the DBP later
to buy the land in consideration of P27,005.11 payable
on installments.[5] Trinidad
then took possession of the land.
Meanwhile, Felix de Villa, having lost the duplicate of Transfer
Certificate of Title No. 50 surrendered to him by Fabricante and learning that
the original was lost in the Register of Deeds, filed before the Court of First
Instance of Camarines Sur,[6]
on June 12, 1948 a petition to reconstitute Transfer Certificate of Title No.
50, pursuant to Republic Act No. 26, in favor of Cesario Fabricante with the
annotation of the mortgage in his favor as was allegedly contained in the
original lost.[7]
After hearing, notice of which was served on Fabricante, the Court of First
Instance ordered[8]
the reconstitution, with the annotation of the mortgage in De Villa’s
favor. Said reconstitution was based on
the photostatic copy of the deed of mortgage[9]
in which the copy of Transfer Certificate of Title No. 50 appeared.
Seven days later, the Register of Deeds moved for reconsideration
and cancellation of the orders of reconstitution on the ground that Transfer
Certificate of Title No. 50 was found intact in the office but was already cancelled
by Transfer Certificate of Title No. 12 in the name of Eustaquio Palma who had
mortgaged the same to the Agricultural and Industrial Bank.[10]
The Register of Deeds also pointed out that in Transfer Certificate of Title
No. 50, was not annotated the mortgage alleged by
Felix de Villa.[11]
From the records of the hearing of the motion for
reconsideration,[12]
it appears that the Transfer Certificate of Title found to be
“intact” designated the land to be Lot No. 2 which certificate
originated from Original Certificate of Title No. 34. The title sought to be reconstituted covered
Lot No. 9 originating from Original Certificate of Title No. 183. The Court of First Instance denied the
motion for reconsideration on February 26, 1949, ruling that Transfer
Certificate of Title No. 50 which was found to be “intact” in the
Registrar’s office covered Lot No. 2 and originated from Original Certificate
of Title No. 34 and was therefore different from the title certificate sought
to be reconstituted, which covered Lot No. 9 and originated from Original
Certificate of Title No. 183. Thus, reconstituted Transfer Certificate of Title No.
RT-29(50) was issued in the name of Cesario Fabricante, with the mortgage in De
Villa’s favor annotated thereon.[13]
When Fabricante failed to redeem the land, De Villa foreclosed
the mortgage[14]
and bought the land in public auction as highest bidder. He obtained a writ of possession in his favor[15] January 6, 1961 and took possession of
the land three days later from the incumbent possessor, Anacleto
Trinidad. On January 30, 1961 De Villa secured Transfer
Certificate of Title No. 3347 in his name[16]
and Transfer Certificate of Title No. RT-29(50) was cancelled.
Subsequently, Anacleto Trinidad filed a forcible entry case
against Felix de Villa[17]
resulting in the issuance of a writ of preliminary injunction by the Justice of
the Peace of Iriga against De Villa and in his consequent dispossession of the
property in favor of Anacleto Trinidad who, since March 2, 1961, repossessed the land.[18]
On January 26, 1962, Felix de Villa filed the present complaint
in the Court of First Instance of Camarines Sur[19]
against Anacleto Trinidad for declaration of ownership, recovery of the land,
and payment of P500 a day – the value of products allegedly being received by
Trinidad – as well as P10,000 worth of abaca plants
alleged to have been improperly cut, and the costs of the suit. Later, the complaint was amended to include
the Development Bank of the Philippines.
In answer, Anacleto Trinidad alleged his sale[20]
from DBP, which had Transfer Certificate of Title No. 1115 in its favor, and
his possession of the land by virtue thereof, since December 29, 1951, until
De Villa dispossessed him of it; that De Villa’s claim is barred by estoppel
and res judicata, as the issue was already decided in Special Proceeding No.
258; that the Transfer Certificate of Title No. 3347 of De Villa was null and
void. As a counterclaim he alleged the
purchase price of the land which was P27,005.11; P60,000 spent in planting
abaca, P35,000 for coconuts, P2,000 for buildings, P1,500 as settlement of
squatters’ claim, P1,200 for relocation, P8,000 for taxes or a total of
P134,705.11; that when the plaintiff
took possession, the latter gathered P5,500 worth of abaca and coconuts and
destroyed P30,000 worth of plants; that
to preserve the plants, defendants spent P50 per hectare a year for 300 hectares
or P15,000 annually; that plaintiff cut
timber worth P5,944. Recovery of
litigation expenses worth P5,000 and P10,000 as moral
damages, were further sought.
The Development Bank of the Philippines also answered asserting
its right resulting from the foreclosure of Palma’s mortgage, and claiming that
the Transfer Certificate of Title No. 3347 of De Villa was void; that the claim
was barred by lathes, as plaintiff had not done anything from 1948 to 1962;
that plaintiff was barred from asserting;
the lot covered by Transfer Certificate of Title No. 1115 of the DBP is
the same as the lot covered by Transfer Certificate of Title No. 3347 because
he claimed otherwise when he petitioned for reconstitution. DBP prayed for the dismissal of the
complaint plus P5,000 as expenses of litigation.
On January 10, 1963,
Anacleto Trinidad died and the complaint was amended to substitute in his place
his children as his heirs – Romulo, Corazon, Gloria, Regina,
Mariano and Leon. However, Romulo,
Corazon, Gloria, Regina and Leon
disclaimed interest on June 29, 1963
over the land, stating that the same had been adjudicated in the extrajudicial
partition of the estate of their deceased father, to Mariano Trinidad.[21]
The Court of First Instance, in its decision of June 5, 1964,
found that the mortgage in De Villa’s favor had been annotated at the back of
both the original and the duplicate of Transfer Certificate of Title No. 50;
that Transfer Certificate of Title No. RT-29(50), the reconstituted title from
which De Villa derived Transfer Certificate of Title No. 3347, covers Lot No.
9, Plan PSU 1185, and originated from Original Certificate of Title No.
183, issued on January 30, 1920, while the duplicate title issued to
Fabricante on which Palma’s Transfer Certificate of Title No. 12 was based, as
well as the Transfer Certificate of Title No. 1115 of DBP, covers Lot No. 2,
Plan PSU 11885, and originated from Original Certificate of Title No. 34, issued
on November 25, 1920; that the two title certificates were issued covering
the same land and the rule is that the earlier in date – Original Certificate
of Title No. 183 – prevails; that the heirs of Trinidad acquired only whatever
rights DBP had acquired; that the
stigma of Fabricante’s bad faith extended to Palma and to DBP; that there was no prescription, for
plaintiff’s action was not one for recovery of title or possession but for a
judicial determination of ownership – as to which of them, both with valid
certificates of title, really owns the land.
Accordingly, it stated in the dispositive portion:
“WHEREFORE, judgment is hereby rendered declaring the
plaintiff the exclusive and absolute owner of the property described in
paragraph 2 of the amended complaint and ordering the defendants to vacate and
deliver the same to the plaintiff, to pay to the plaintiff damages at the sum
of P48,000.00 per annum representing the value of the abaca fibers derived
from the land plus the further sum of P360,00 every two months representing the
value of the harvests from coconuts, starting from the period beginning March
2, 1961 until possession of the property is restored to the plaintiff and to
pay the costs.
“The value of the useful improvements introduced on the land
by the defendants shall be appraised and deducted from the value of the damages
to be paid.”
The defendants appealed this decision to the Court of Appeals
which in turn certified the case to Us on the ground that the amount involved
is more than P200,000.
The main points at issue for Our
consideration is the ownership of the land, the presence of lanes or estoppel
and the propriety of the award of damages by the lower court.
Upon a misrepresentation, Cesario Fabricante was able to obtain a
duplicate certificate. The order[22]
granting such certificate expressly stated that the original of the title was
still kept in the office of the Register of Deeds and ordered the issuance of a
new duplicate covering the land as described in the petition. Unfortunately, the new duplicate issued is
not in the records. However, its
contents may be known from Transfer Certificate of Title No. 12 issued in favor
of Eustaquio Palma which was based on Fabricante’s newly-issued duplicate
certificate. Transfer Certificate of
Title No. 12 covers and describes 5,724,415 square meters of land, designated
as Lot No. 2, Plan PSU 11885 surveyed on October 29 to
November 11, 1917 and is
indicated to originate from Original Certificate of Title No. 34, Decree No.
89686, registered on November 25,
1920. Upon the other hand,
the reconstituted Transfer Certificate of Title RT-29(50) on which Transfer
Certificate of Title No. 3347 was based, also describes the same 5,724,415
square meters of land but designated it as Lot No. 9, Plan PSU 11885 surveyed
also on October 29 to November 11, 1917, but said certificate is shown to originate
from Original Certificate of Title No. 183, Decree No. 89686, registered on
January 30, 1920. While it is possible
that a mistake could have been made with regard to the lot numbers, it is
unlikely that a mistake as to origin of the titles and their dates of registration
could also have been made. This is
undoubtedly a case where two certificates of title were issued over the same
land in the name of different persons who were both in good faith in their
acquisition. There having been two titles,
it is understandable that the original upon which Fabricante’s newly-issued
duplicate certificate was based did not contain the mortgage annotation in
favor of De Villa.
We have laid the rule that where two certificates of title are
issued to different persons covering the same land in whole or in part, the
earlier in date must prevail as between original parties and in case of
successive registrations where more than one certificate is issued over the
land, the person holding under the prior certificate is entitled to the land as
against the person who rely on the second certificate. The purchaser from the owner of the later
certificate and his successors, should resort to his vendor for redress, rather
than molest the holder of the first certificate and his successors who should
be permitted to rest secure in their title.[23]
Consequently, since Original Certificate of Title No. 183 was registered on January 30, 1920, De Villa’s claim
which is based on said title should prevail, as against Trinidad’s
whose original title was registered on November 25, 1920.
And from the point of equity, this is the proper solution, considering
that unlike the titles of Palma and
the DBP De Villa’s title was never tainted with fraud.
When, as a result of the sale at public auction, Felix de Villa
was able to secure Transfer Certificate of Title No. 3347 in his name, his
rights were already protected and he had the right to feel secure in
them. Upon his dispossession by Anacleto
Trinidad, he had all the right to come to the courts to seek redress and We do not see any reason why he should be estopped from
doing so. Nor has his right of action
been barred by lathes. He possessed the
land from January 9, 1961
until Trinidad obtained possession on March 2, 1961. Within a reasonable time thereafter, on January 26, 1962, De Villa filed the
present case for determination of ownership with damages. These facts do not show that De Villa slept
on his rights.
With regard to appellants’ claim that the lower court erred in
holding that the mortgage was properly annotated and registered, suffice it to
say that the matter is one of fact over which We find
no strong reason for reversing the lower court which gave credence to De
Villa’s testimony to that effect.
The facts and circumstances, however, do not call for assessment
of damages against appellants until after the filing of the present suit on January 26, 1962 for only then could
they be positively adjudged in bad faith in view of their knowledge that there
was an adverse claimant to the land.
Trinidad’s repossession of the land on March 2, 1961 cannot be
deemed in bad faith as it was pursuant to a court order legally obtained, and
as his possession before that time was in good faith.
Appellant does not question the specific amounts of the
damages awarded in De Villa’s favor and the same, at any rate, is borne out by
the records. Said damages, however
should be offset against the value of whatever necessary and useful expenses
and improvements were made or incurred by Trinidad with
respect to the land, provided that in the case of useful expenses or
improvements these were made or incurred prior to the filing of the present
action. Such reimbursable amount due to Trinidad
must, therefore, first be determined before the aforesaid award of damages in
De Villa’s favor can be executed. And
its determination shall be by way of supplementary proceedings in aid of
execution in the lower court.
WHEREFORE, with the modification that the damages recoverable
by De Villa against Trinidad should date from and after the filing of the
complaint on January 26, 1962 until the property is restored to the plaintiff,
the judgment appealed from is hereby affirmed in all other respects; and, accordingly, prior to the payment of the
damages in De Villa’s favor, supplementary proceedings In aid of execution are
hereby ordered to he forthwith by the court a quo, to appraise
and determine the value f improvements and expenses reimbursable to Trinidad,
and thereafter to offset the two amounts respectively due to the parties to the
extent that one covers the other. No
costs.
SO ORDERED.
Reyes, Acting C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz
Castro, Angeles, and Fernando, JJ., concur.
[1] Covered by T.C.T. No. 15.
[2] Exhibit 7-Trinidad, p. 33, folder of exhibits.
[3] Exhibit 1-A-DBP, certified true copy, p. 44, folder of exhibits.
[4] Exhibit 2-DBP, p. 48, folder of exhibits.
[5] Exhibit 2-Trinidad, p. 23, folder of exhibits.
[6] Special Proceeding No. 258.
[7] Exhibit 12-i-Trinidad, p. 52, folder of Exhibits.
[8]
The signed copy of the deed of mortgage in De Villa’s favor was secured from
the notary public who notarized the deed of mortgage.
[9] CFI order in Special Proceeding No. 258, p. 63 of folder of
records.
[10] Then
Rehabilitation Finance Corporation, now Development Bank of the Philippines.
[11] Petition for reconsideration, pp. 66, folder of exhibits.
[12] Pp. 68-85, folder of exhibits.
[13] Exhibit H, p. 15, folder of exhibits, a certified copy upon request
of the Department of Justice.
[14]
Civil Case No. 1501, filed March 22,
1950. See p. 27, TSN,
Elorpe.
[15] Exhibit D, p. 7, folder of exhibits.
[16] Exhibit E, p. 9, folder of exhibits.
[17] Civil Case No. 251.
[18] P. 6, TSN, Elopre.
[19] Civil Case No. 5354.
[20]
Date of Deed of Sale by DBP to Trinidad, p. 19, folder
or Exhibits.
[21] Exhibit 6-Trinidad, p. 32, folder of exhibits.
[22] Exhibit 1-A-DBP, p. 44, folder of exhibits.
[23]
Legarda v. Saleeby, 31 Phil. 590.