SPOUSES ANTENEDURO ANGTUD AND LEO-NARDA ANGTUD, PLAINTIFFS-APPELLEES, VS. SPOUSES TERESITA NIADAS (DECEASED) AND RICARDO NIADAS, DEFENDANTS-APPELLANTS.

Angtud versus Niadas

The Case

This is a dispute between two families over a small piece of land in Lilo-an, Cebu. The Angtud spouses, Anteneduro and Leonarda, sued the Niadas spouses, Teresita and Ricardo, to annul a deed of sale — or more precisely, to correct it — because the area written on the deed had been secretly enlarged from 74 square meters to 374 square meters. The case matters for the Bar because it gathers in one decision several examinable rules: the weight given to the findings of a handwriting expert, the prescriptive period for an action to annul a contract vitiated by fraud, the inapplicability of laches where the action is filed promptly upon discovery, the limits of a Torrens title as a shield against fraud, and the strict requirements for awarding moral damages, exemplary damages, and attorney's fees.

Procedural History

The Angtud spouses filed a complaint for annulment of deed of sale before the Regional Trial Court, Branch 55, Mandaue City. After pre-trial and trial on the merits, the trial court rendered its decision on 20 January 2005, finding for the Angtud spouses. It declared the deed of sale valid but ordered the area reduced to 74 square meters, declared the tax declarations covering the 374 square meters in the Niadas spouses' names null and void, and awarded moral damages, exemplary damages, attorney's fees, and costs. The Niadas spouses appealed directly to the Supreme Court, assigning as errors the reduction of the area, the failure to bar the action by prescription and laches, the failure to recognize their vested rights, and the awards of damages and attorney's fees.

Facts

Anteneduro Angtud owned an unregistered parcel of land in Sambag, San Vicente, Lilo-an, Cebu, known as Lot 3964, with an area of 1,030 square meters and covered by a 1969 tax declaration. On 22 January 1970, he executed a Deed of Absolute Sale of a Portion of Land in favor of his sister, Teresita Niadas, for a 74-square meter portion. The Niadas spouses then took possession in the concept of an owner, paid the realty taxes, and planted coconut and banana trees and corn crops.

In June 1994, the Angtud spouses prevented the Niadas spouses from harvesting the crops, and the matter reached the barangay authorities. At the barangay confrontation, Anteneduro learned for the first time that the portion he had conveyed in 1970 now appeared on the deed as 374 square meters instead of 74 square meters.

The Angtud spouses alleged that the Niadas spouses, through fraudulent machinations, changed the figure on the deed. The Niadas spouses countered that Anteneduro had originally offered a 74-square meter lot that he had already sold to another couple, and that to appease Teresita he instead conveyed a 374-square meter portion. A document expert from the PNP Crime Laboratory examined the deed and concluded that the number 3 could have been added to the numbers 7 and 4 to make it appear 374, and that there were additional entries to emphasize the numbers 374.

Issues

• Whether or not the trial court erred in reducing the area of the conveyed portion on the deed of sale from 374 square meters to 74 square meters.
• Whether or not the trial court erred in not declaring the action barred by prescription and laches.
• Whether or not the trial court erred in not finding that the Niadas spouses had vested rights over the portion in litigation.
• Whether or not the trial court erred in awarding moral and exemplary damages and attorney's fees.

Applicable Provisions

Article 1391 of the Civil Code provides:

The action for annulment shall be brought within four years. This period shall begin: In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.

This fixes the four-year period for annulling a contract vitiated by fraud, counted from discovery, which defeats the claim of prescription and laches.

Article 2217 of the Civil Code states:

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission.

This is the basis for the moral damages awarded to Anteneduro, who testified to his emotional and mental suffering.

Article 2234 of the Civil Code provides that:

While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.

This supports the award of exemplary damages, since entitlement to moral damages was first established.

Article 2208 of the Civil Code provides:

In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable.

This governs the award of attorney's fees, which the Court struck down because the trial court made no findings of fact and law to justify it.

Ruling

On the first issue, the Court held that the trial court did not err. Factual findings of the trial court are entitled to great weight and will not be disturbed absent a showing that it overlooked substantial facts. The Court found no reason to disturb the finding that the number 3 was superimposed beside the numbers 74 to make it appear 374. The Court relied on the document expert's findings and on the rule that the value of a handwriting expert's opinion lies in the distinguishing marks and discrepancies he points out which would escape an unpracticed observer. The deed remained valid, but the area was properly reduced to 74 square meters, and the tax declarations covering the 374 square meters were properly cancelled.

On the second issue, the Court held that laches did not apply. The Angtud spouses discovered the fraud only in June 1994 at the barangay confrontation, and Anteneduro filed the case on 27 July 1994, barely a month later. Under Article 1391, the four-year period runs from discovery of the fraud, so there was no inaction or neglect to speak of.

On the third issue, the Court held that the certificate of title did not vest in the Niadas spouses any better title than what they lawfully had. Neither the Cadastral Act nor the Land Registration Act creates a new mode of acquiring ownership; registration only confirms and records title already existing and vested. A Torrens title cannot be used as a shield for the commission of fraud, and where a party obtains more land than he really owns, the certificate may and should be cancelled or corrected.

On the fourth issue, the Court sustained the moral damages of 30,000 pesos, there being pleading and proof of moral suffering, and the exemplary damages of 20,000 pesos, since entitlement to moral damages was shown. But it deleted the award of attorney's fees, because the trial court's decision was bereft of any findings of fact and law to justify it, and such an award is in the concept of damages under Article 2208, which strictly requires factual and legal justification.

Doctrine

• The factual findings of the trial court, especially those resting on the examination of real evidence and the demeanor of witnesses, are accorded great weight and respect and will not be disturbed on appeal absent a clear showing that substantial facts were overlooked.
• The opinion of a handwriting expert is valued not for its bare conclusion but for the distinguishing marks, characteristics, and discrepancies it points out which would ordinarily escape an unpracticed observer.
• Under Article 1391, the action to annul a contract vitiated by fraud must be brought within four years from the discovery of the fraud; laches does not bar an action filed promptly upon discovery.
• A Torrens or cadastral title does not create or vest title; it only confirms and registers title already existing. It cannot be used as a shield for fraud, and a certificate issued over more land than the owner lawfully owns may be cancelled or corrected.
• Moral damages require pleading and proof of moral suffering; exemplary damages may be awarded only upon a showing of entitlement to moral, temperate, or compensatory damages; and attorney's fees, being in the concept of damages under Article 2208, require findings of fact and law bringing the case within the enumerated exceptions.

Disposition

The Supreme Court affirmed the trial court's decision with the modification that the award of attorney's fees was deleted for want of factual and legal bases, with no costs.

Remember This

Memorize this line: a Torrens title does not create or vest title, it only confirms and registers title already existing, and it can never be a shield for fraud. Examiners use this case for the four-year period under Article 1391 counted from discovery of the fraud, for the weight of a handwriting expert's opinion, and for the strict requirements before moral damages, exemplary damages, and attorney's fees may be awarded.