CONRADO O. LASQUITE AND TEODORA I. ANDRADE, PETITIONERS, VS. VICTORY HILLS, INC., RESPONDENT.

Lasquite versus Victory Hills

The Case

This is a petition for review brought by Conrado Lasquite and Teodora Andrade against Victory Hills, Incorporated, arising from a dispute over a parcel of land in San Mateo, Rizal designated as Lot No. 3050. The petitioners hold free patents and original certificates of title issued in 1981; the respondent corporation claims the same land through a homestead patent and a certificate of title traced to 1937. The case is a contest of successive registrations over one and the same lot, and it matters because the Supreme Court here teaches when the earlier certificate does not prevail, and what a party suing for reconveyance must prove.

Procedural History

The Prescilla family first protested the free patents before the Bureau of Lands, then sued for reconveyance and damages in the Regional Trial Court of San Mateo, Rizal, Branch 77. The Manahan heirs filed a separate complaint for annulment of title, reconveyance and damages, which was consolidated with the first case, and Victory Hills intervened in that consolidated action. The trial court, in a decision dated July 2, 2002, upheld the titles of Lasquite and Andrade, dismissed the cases, and ruled that the claims founded on extrinsic fraud had prescribed. The Prescillas, the Manahans and Victory Hills appealed to the Court of Appeals, which on November 8, 2006 set aside the trial court and declared Victory Hills the absolute owner of Lot No. 3050, ordering the cancellation of the petitioners' certificates of title. The petitioners then elevated the case to the Supreme Court by petition for review.

Facts

In 1971, Jose Manahan executed a deed of quitclaim and assignment of rights over Lot No. 3050 in favor of Conrado Lasquite. Lasquite applied for a free patent, and while the application was pending he sold half of the land to Juanito Andrade in 1981. Upon approval of the application, original certificates of title were issued in the names of Andrade and Lasquite on June 18, 1981.

Beginning in 1983, the Prescillas protested the grant before the Bureau of Lands, claiming possession in the concept of owner since 1940, and later sued for reconveyance, alleging that Lasquite forged the signature of Jose Manahan, who they said had died in 1968. The Manahan heirs also sued, tracing their title to a Jose Manahan whom they said died in 1947. Victory Hills intervened in 1994, tracing its title to an original certificate of title issued in 1937 to Jose H. Manahan by virtue of a homestead patent, which passed through several transferees until it reached the corporation in 1961.

A relocation survey conducted by the Department of Environment and Natural Resources confirmed that the mother title of the respondent's transfer certificate and the petitioners' original certificates cover the same land. The trial court nonetheless sustained the petitioners' titles and held the 1937 certificate spurious for lack of the required signature. The Court of Appeals reversed, upheld the 1937 certificate, and declared Victory Hills the owner.

Issues

• Whether or not respondent Victory Hills, Incorporated is entitled to reconveyance of Lot No. 3050.
• Whether or not the respondent's claim had already prescribed.

Applicable Provisions

Section 105 of Act No. 2874, the governing law when the homestead patent was purportedly issued, provides:

Sec. 105. All patents or certificates for lands granted under this Act shall be prepared in the Bureau of Lands and shall issue in the name of the Government of the Philippine Islands under the signature of the Governor-General, countersigned by the Secretary of Agriculture and Natural Resources, but such patents or certificates shall be effective only for the purposes defined in section one hundred and twenty-two of the Land Registration Act; and the actual conveyance of the land shall be effected only as provided in said section.

This provision fixes who must countersign a patent, and the Court uses it to test the validity of the 1937 certificate on which the respondent's entire claim rests.

Section 23 of Rule 132 of the Rules of Court provides:

Sec. 23. Public documents as evidence. Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the facts therein stated. All other public documents are evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter.

This governs the evidentiary weight of the certificates of title, which are public documents presumed regular unless convincingly shown otherwise.

Ruling

On the first issue, the Court ruled that Victory Hills is not entitled to reconveyance. The relocation survey showed successive registrations over the same land, and the general rule is that the holder of the earlier certificate is entitled to the estate. But the Court refused a forthright application of that rule. Section 105 of Act No. 2874 required the patent to be countersigned by the Secretary of Agriculture and Natural Resources, yet the 1937 certificate bore the signature of the Secretary of Agriculture and Commerce, and only the notation "sgd" appeared on the original. The Court held that giving the certificate probative value would circumvent the statutory requirement, and any title sourced from it could be void. The records of the land offices were also devoid of any evidence that the homestead patent or even a patent application ever existed, and the derivative titles carried inconsistent registration dates. The Court stressed that it was beyond the power of the Register of Deeds to register public land based on an invalid or non-existent patent. On the burden of proof, the Court held that a party seeking reconveyance must establish his case by clear and convincing evidence, and the respondent failed to do so, having declared the lots for taxation only after suing, while Lasquite had paid taxes since 1972 and cultivated the land. The Court likewise held that forgery cannot be presumed but must be proved by clear and convincing evidence, and that the respondent failed to show that its Jose H. Manahan was the same Jose Manahan from whom Lasquite bought the land.

On the second issue, the Court held that the claim had not prescribed. An action for reconveyance based on an implied trust prescribes in ten years, counted from the registration of the deed or the issuance of the title, but only where the plaintiff is not in possession. Where the plaintiff, as real owner, remains in possession, the period does not run against him, and the action partakes of a suit to quiet title, which is imprescriptible. Since the respondent claimed actual possession in the concept of owner, its action was imprescriptible. The Court nevertheless concluded that the respondent failed to show its entitlement to reconveyance.

Doctrine

First, under the rule on successive registrations, the person claiming under the prior certificate is generally entitled to the land. Second, that rule yields where the earlier certificate is shown to be void, as when the patent was not countersigned by the officer required by Section 105 of Act No. 2874, or where no patent or application is shown to have existed, for the Register of Deeds cannot validly register public land on the strength of an invalid or non-existent patent. Third, a party seeking annulment or reconveyance of title must prove his case by clear and convincing evidence, not merely by preponderance. Fourth, forgery is never presumed and must be proved by clear and convincing evidence. Fifth, an action for reconveyance based on an implied trust prescribes in ten years from registration, but where the plaintiff remains in possession, the action is imprescriptible as a suit to quiet title.

Disposition

The petition was granted; the decision of the Court of Appeals was reversed and set aside, and the decision of the trial court upholding the petitioners' titles was reinstated, with no pronouncement as to costs.

Remember This

The earlier certificate does not always win: a prior title that is void for want of the required signature, or that rests on a patent shown never to have existed, cannot defeat a later one. Examiners use this case on successive registration, on the clear and convincing evidence required in reconveyance, and on the imprescriptibility of the action when the owner remains in possession.