DEMETRIA CACHO, REPRESENTED BY DEMETRIA CONFESSOR VIDAL, AND AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION, PETITIONERS, VS. REPUBLIC OF THE PHILIPPINES, RESPONDENT.

Cacho versus Republic of the Philippines

The Case

This is a petition for review on certiorari brought by Demetria Cacho, represented by Demetria Confessor Vidal, and Azimuth International Development Corporation against the Republic of the Philippines. The Republic sought the cancellation of the certificates of title covering two parcels of land in Iligan City and the reversion of those lands to the public domain, on the ground that the titles had been procured through fraud and misrepresentation. The case matters because it is the Supreme Court's latest word on how a reversion suit against a long-issued decree of registration must be proven, and on the limits of the presumption of regularity that protects registered titles.

Procedural History

The story begins with two original applications for registration filed by Demetria Cacho over a smaller parcel and a larger parcel, jointly tried and decided by the Land Registration Court in December 1912. That ruling was affirmed in full by the Supreme Court in December 1914, and decrees of registration were issued in Demetria's name. In 1978, Teofilo Cacho, claiming to be Demetria's son and sole heir, filed a petition for reconstitution of the original certificates of title before the Regional Trial Court of Iligan City, Branch 1. The Republic opposed, but in June 1993 the trial court ordered reconstitution and re-issuance of the titles in Demetria's name. The Court of Appeals reversed, but the Supreme Court reinstated the trial court's decision in March 1997, and reconstituted certificates of title were issued.

In November 1998, Demetria, represented by Vidal, together with Azimuth, filed a petition for quieting of title before the Regional Trial Court of Iligan City, Branch 3, against Teofilo and others. In July 2004, that court found Vidal to be Demetria's sole surviving heir and entitled to the properties; the Court of Appeals affirmed, and the Supreme Court sustained that ruling in July 2010.

Meanwhile, in September 2004, the Republic filed the present complaint for cancellation of titles and reversion before the Regional Trial Court of Iligan City, Branch 4. That court initially dismissed the complaint for lack of cause of action, but the Supreme Court ordered its reinstatement. After trial, the trial court in December 2014 partially granted reversion, awarding the smaller parcel and four hectares of the larger parcel to Demetria while reverting the remaining 33.87 hectares to the public domain. On Vidal and Azimuth's motion for partial reconsideration, the trial court in June 2015 modified its decision and ordered the reversion of both parcels in their entirety. Vidal and Azimuth appealed to the Court of Appeals, which in August 2017 partly granted the appeal, setting aside the June 2015 order and reinstating the December 2014 decision. Both sides moved for partial reconsideration, and the Court of Appeals denied both motions in April 2018. Vidal and Azimuth, and the Republic, then filed separate petitions for review on certiorari before the Supreme Court, which were consolidated.

Facts

In 1912, Demetria Cacho filed applications for registration over two parcels of land in what is now Barangay Suarez, Iligan City, originally part of Military Reservation Number 43, known as Camp Overton. The smaller parcel, lot 1 of Plan II-3732, contained 3,365 square meters. The larger parcel, lot 2 of the same plan, contained 378,707 square meters, or 37.87 hectares. The Government opposed both applications, claiming the lands belonged to the United States and formed part of a military reservation.

Demetria claimed she purchased the smaller parcel from Gabriel Salzos, who had bought it from a Moro woman named Alanga, married to Darondon. Alanga had sold the parcel without Darondon's consent. As for the larger parcel, Demetria claimed she acquired it from a Moro named Datto Bunglay by a deed of sale dated January 1904. In its December 1912 ruling, the Land Registration Court found the smaller parcel to be the conjugal property of Alanga and Darondon, and required a deed from Darondon renouncing his rights before admitting it to registration. As to the larger parcel, the court awarded Demetria only the southern portion occupied and cultivated by Datto Anandog, finding that 37.87 hectares was larger than what Christian Filipinos ordinarily cultivated, and denied the application as to the rest. The court ordered a new survey and a corrected plan, and reserved final judgment until the deed and new plan were presented. The Supreme Court affirmed this ruling in full in December 1914, and decrees of registration were issued in Demetria's name.

Decades later, in 1978, Teofilo Cacho filed a petition for reconstitution of the original certificates of title, claiming to be Demetria's son and sole heir. The trial court ordered reconstitution in 1993, and after reversal by the Court of Appeals, the Supreme Court reinstated that order in 1997, leading to the issuance of reconstituted certificates of title in Demetria's name. In 1998, Demetria, represented by Vidal, and Azimuth filed a quieting of title case, which ended with the Supreme Court declaring Vidal the sole surviving heir in July 2010. In September 2004, the Republic filed the present complaint for cancellation of titles and reversion, alleging that Demetria had procured the titles through fraud and misrepresentation because the reconstituted titles covered the entire 37.87 hectares of the larger parcel, when the 1912 ruling had awarded her only a portion of it.

Issues

• Whether or not Demetria procured the titles to the subject properties through fraud, misrepresentation, or other illegal means as to warrant their reversion to the mass of the public domain.
• Whether or not the Court of Appeals erred in setting aside the trial court's June 2015 order directing the cancellation of both certificates of title and the reversion of both parcels in their entirety.

Applicable Provisions

Section 38 of Act Number 496, the old Land Registration Act, provides:

Every decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated in the following section. It shall be conclusive upon and against all persons, including the Republic of the Philippines and all the branches thereof. Such decree shall not be opened by reason of the absence, minority, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees, subject, however, to the right of any person deprived of the land or of any estate or interest therein by decree of registration obtained by actual fraud, to file in the proper Court of First Instance, now Regional Trial Court, a petition for review of the decree of registration within one year after entry of the decree provided no innocent purchaser for value has acquired an interest. Upon the expiration of said term of one year, every decree or certificate of title issued in accordance with this section shall be incontrovertible.

This provision bears on the case because it is the statutory basis for reopening a decree of registration on the ground of actual fraud, and it fixes the standard the Republic had to meet in its reversion suit.

Ruling

On the first issue, the Court held that the Republic failed to prove by clear and convincing evidence that Demetria employed actual or extrinsic fraud in obtaining the titles. The Court explained that fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by means of the misrepresentation or concealment of a material fact. Constructive fraud is construed as fraud because of its detrimental effect upon public interests and public or private confidence, even though the act is not done with an actual design to commit positive fraud or injury upon other persons. Fraud may also be extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein. Only extrinsic fraud, which is the kind that deprives a party of the opportunity to be heard, can justify reopening a decree of registration.

The Court found that the Republic's evidence consisted mainly of discrepancies between the technical descriptions in the original decrees and certificates of title and those in the 1912 ruling. These discrepancies, the Court held, do not amount to actual fraud. The Court also noted that the absence of a new survey plan and deed of conveyance, as required by the 1912 ruling, could not establish actual fraud, since those documents were lost or damaged as a result of the war, and given the issuance of the decrees, it is presumed that Demetria complied with the requirements. The Court further held that the doctrine of unlawful or erroneous inclusion does not apply, because the Republic failed to show specific details or a sufficient showing of unlawful inclusion through actual fraud or other illegal means.

On the second issue, the Court held that the Court of Appeals correctly set aside the trial court's June 2015 order. The Court agreed that Vidal and Azimuth are entitled only to the area of the larger parcel awarded to Demetria under the 1912 ruling, and that the excess area was erroneously included in the reconstituted certificates of title. The Court affirmed the Court of Appeals' ruling that the smaller parcel and four hectares of the larger parcel belong to Demetria, while the remaining 33.87 hectares must be reverted to the mass of public domain.

Doctrine

A decree of registration is conclusive upon and against all persons, including the Republic of the Philippines, and may be reopened only on the ground of actual fraud, as provided in Section 38 of Act Number 496. Actual fraud means an intentional deception practiced by means of the misrepresentation or concealment of a material fact. In a reversion case, the State must prove actual or extrinsic fraud by clear and convincing evidence. Mere discrepancies between the technical descriptions in the decrees and certificates of title and those in the original registration ruling do not constitute actual fraud. The doctrine of unlawful or erroneous inclusion requires a specific showing of unlawful inclusion through actual fraud or other illegal means. The presumption of regularity in the issuance of titles prevails absent clear and convincing proof of fraud.

Disposition

The Supreme Court denied the petitions and affirmed the Court of Appeals' decision and resolution, upholding the reversion of 33.87 hectares of the larger parcel to the public domain while confirming Demetria's ownership of the smaller parcel and four hectares of the larger parcel.

Remember This

Remember that a decree of registration is incontrovertible after one year unless actual fraud is proven by clear and convincing evidence, and that mere discrepancies in technical descriptions do not amount to actual fraud. Examiners like to use this case to test the distinction between actual and constructive fraud, and the requisites for a reversion suit under Section 38 of Act Number 496.