ELENA J. TOMAS, CAMILO ADINA, RICARDO J. TOMAS, AND JOSE J. TOMAS, PETITIONERS, VS. THE COURT OF APPEALS, MAXIMA CARREON AND AMADO D. NOLASCO, AND SECOND BULACAN DEVELOPMENT BAN…

Tomas versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Elena J. Tomas, Camilo Adina, Ricardo J. Tomas, and Jose J. Tomas against the Court of Appeals, Maxima Carreon and Amado D. Nolasco, and the Second Bulacan Development Bank. The private respondents, the vendees of a small parcel of land in Meycauayan, Bulacan, sued for reconveyance after discovering that a portion of their land had been included in a Torrens title issued in the names of the petitioners. The trial court dismissed the complaint, but the Court of Appeals reversed and ordered reconveyance. The case matters because it gathers in one decision the settled rules on the power of the Court of Appeals to review facts, on reconveyance as a remedy that respects rather than attacks a Torrens title, and on the ten-year prescriptive period for an action grounded on an implied or constructive trust.

Procedural History

The respondents filed their action for reconveyance before the then Court of First Instance of Bulacan on January 2, 1979. After trial, the trial court, later identified as the Regional Trial Court of Malolos, Bulacan, Branch Ten, rendered judgment in favor of the petitioners and dismissed the amended complaint, likewise dismissing the defendants' counterclaim. The respondents appealed to the Court of Appeals, which reversed the trial court and ordered the segregation of the disputed portion and its reconveyance to the respondents, with the Register of Deeds of Bulacan directed to issue the corresponding new certificates of title. The petitioners then came to the Supreme Court by petition for review on certiorari, assigning as errors that the Court of Appeals misapprehended the facts and failed to dismiss the complaint for absence of an allegation of fraud, for res judicata, and for prescription or laches. The Second Division of the Supreme Court gave due course to the petition, and the case was decided in May 1990.

Facts

The respondents trace their claim to Cirila Mistica and her children. By a deed executed on September 5, 1961, they bought 57 square meters of land covered by a tax declaration. By a second deed executed on February 5, 1963, the area was stated as 105 square meters, the deed itself reciting that the measurement was one hundred five square meters more or less instead of fifty-seven square meters. The respondents claimed possession since 1963, built valuable improvements including a three-door apartment, declared the land for tax purposes, and paid the taxes religiously.

In 1978, the respondents discovered that the petitioners, together with their deceased brother Lazaro Tomas, had applied for the registration of a parcel known as Lot Number 2826 of the Meycauayan Cadastre, and that either by mistake or by design they had included within it a portion of the respondents' land consisting of 65 square meters, adjacent to the petitioners' property on its northern part. Original Certificate of Title Number 0-6337 was issued covering that area, including the 65 square meters in question.

When the petitioners refused to reconvey the land, the respondents sued. The evidence showed that the petitioners' predecessor, Dolores Juson, held only 600 square meters, bounded on the north by the land of Cirila Mistica, yet the disputed title covered 650 square meters. A geodetic engineer testified, on the basis of an actual ground verification survey, that approximately 65 square meters of the Mistica land had been included in the cadastral lot registered in the name of Tomas Juson. The petitioners had built a party wall marking the boundary and had never protested the respondents' open possession and business operations on the land.

Issues

• Whether or not the Court of Appeals may change or disturb the factual findings of the trial court.
• Whether or not the respondents' complaint should be dismissed for absence of an allegation of fraud.
• Whether or not the action for reconveyance is barred by the finality of the judgment in the land registration case.
• Whether or not the action for reconveyance is barred by prescription or laches.

Applicable Provisions

Section 3, Rule 51 of the Rules of Court defines the power of the Court of Appeals on appeal:

The Court of Appeals, in the exercise of its appellate jurisdiction, may affirm, reverse, or modify the judgment or order appealed from, and may direct a new trial or further proceeding to be had. When a new trial shall be granted, the court shall pass upon all the questions of law involved for the final determination of the action.

This is the source of the appellate court's authority to re-examine and re-weigh all the evidence on record and to reverse the findings of fact of the lower court.

Article 1456 of the Civil Code provides:

If a property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

This is the provision that makes the petitioners trustees of the disputed portion for the benefit of the respondents, and it is the foundation of the ten-year prescriptive period applied by the Court.

Ruling

On the first issue, the Court held that the Court of Appeals acted within its power. While appellate courts will not generally disturb the factual findings of the trial court, which heard the witnesses and observed their demeanor, that rule does not apply where the lower court overlooked facts of substance and value which, if considered, would affect the result. Here the trial court failed to consider the respondents' actual, open, peaceful, and continuous possession since 1961, their construction of the three-door apartment, their tax declarations and religious payment of taxes, and the presumption of title in favor of the possessor under Article 433 of the Civil Code. It also failed to consider that the petitioners' own predecessor held only 600 square meters, while the disputed title covered 650 square meters, and it disregarded the geodetic engineer's findings based on an actual ground verification survey.

On the second issue, the Court held that the complaint sufficiently alleged fraud, since it stated that the petitioners, while professing to recognize the respondents' rights, registered the land in their own names.

On the third issue, the Court held that reconveyance is not barred by the finality of the judgment in the land registration case, because an action for reconveyance is an action in personam. It does not seek to set aside the decree but, respecting the decree as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner to the rightful owner.

On the fourth issue, the Court held that prescription had not set in. The petitioners, who were not even in possession of the disputed land, obtained it by mistake or fraud, and so by operation of law they are considered trustees of an implied trust for the benefit of the respondents. An action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title, counted from the accrual of the cause of action. The respondents filed suit on January 2, 1979, only one year after discovering the registration in 1978.

Doctrine

First, the Court of Appeals may affirm, reverse, or modify the judgment appealed from and may re-examine and re-weigh all the evidence, and it may disturb the trial court's factual findings where the lower court overlooked facts of substance and value that would affect the result.

Second, a landowner whose property was wrongfully or erroneously registered under the Torrens System is not barred from bringing an action for reconveyance after one year from the issuance of the decree. The action does not attack the decree but respects it as incontrovertible and seeks to transfer the land from the registered owner to the rightful owner.

Third, under Article 1456 of the Civil Code, one who acquires property through mistake or fraud is by force of law a trustee of an implied trust for the benefit of the person from whom the property came, and the action for reconveyance based on such trust prescribes in ten years from the issuance of the Torrens title.

Disposition

The petition was dismissed and the decision of the Court of Appeals was affirmed, so the respondents won and the petitioners were ordered to segregate the 65 square meters and reconvey it to the respondents.

Remember This

Memorize this line: an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title, and it respects rather than attacks the decree. Examiners use this case on the power of the Court of Appeals to review facts, on reconveyance as a remedy against a Torrens title, and on the prescriptive period under Article 1456 of the Civil Code.