G.R. No. 130876 January 31, 2002
FRANCISCO M. ALONSO, substituted by his heirs, petitioners,
vs.
CEBU COUNTRY CLUB, INC., respondent.
PARDO, J.:
FACTS: The case is an appeal via certiorari from a decision of the Court of Appeals affirming in toto that of the Regional Trial Court, Branch 8, Cebu City, declaring that the title to the contested Lot No. 727, Banilad Friar Lands Estate, Cebu City, was validly re-constituted in the name of the Cebu Country Club, Inc. and ordering petitioners to pay attorney’s fees of P400,000.00, and litigation expenses of P51,000.00, and costs.
Petitioner Francisco M. Alonso, who died pendente lite and substituted by his legal heirs, a lawyer by profession, the only son and sole heir of the late Tomas N. Alonso and Asuncion Medalle, who died on June 16, 1962 and August 18, 1963, respectively. Cebu Country Club, Inc. is a non-stock, non-profit corporation duly organized and existing under Philippine Laws the purpose of which is to cater to the recreation and leisure of its members.
Sometime in 1992, petitioner discovered documents and records — Friar Lands Sale Certificate Register/Installment Record Certificate No. 734, Sales Certificate No. 734 and Assignment of Sales Certificate — showing that his father acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government of the Philippine Islands in or about the year 1911 in accordance with the Friar Lands Act (Act No. 1120). The documents show that one Leoncio Alburo, the original vendee of Lot No. 727, assigned his sales certificate to petitioner’s father on December 18, 1911, who completed the required installment payments thereon under Act No. 1120 and was consequently issued Patent No. 14353 on March 24, 1926. On March 27, 1926, the Director of Lands, acting for and in behalf of the government, executed a final deed of sale in favor of petitioner’s father Tomas N. Alonso. It appears, however, that the deed was not registered with the Register of Deeds because of lack of technical requirements, among them the approval of the deed of sale by the Secretary of Agriculture and Natural Resources, as required by law.
Upon investigation of the status of the land, petitioner found out from the office of the Registrar of Deeds of Cebu City that title to Lot No. 727 of the Banilad Friar Lands Estate had been "administratively reconstituted from the owner’s duplicate" on July 26, 1948 under Transfer Certificate of Title (TCT) No. RT-1310 (T-11351) in the name of United Service Country Club, Inc., predecessor of Cebu Country Club, Inc. On March 8, 1960, upon order of the Court of First Instance, the name of the registered owner in TCT No. RT-1310 (T-11531) was changed to Cebu Country Club, Inc. Moreover, the TCT provides that the reconstituted title was a transfer from TCT No. 1021.
In the firm belief that petitioner’s father is still the rightful owner of Lot No. 727 of the Banilad Friar Lands Estate since there are no records showing that he ever sold or conveyed the disputed property to anyone, on July 7, 1992, petitioner made a formal demand upon Cebu Country Club, Inc. to restore to him the ownership and possession of said lot within fifteen (15) days from receipt thereof. Cebu Country Club, Inc., however, denied petitioner’s claim and refused to deliver possession to him.
Left with no other recourse, on September 25, 1992, petitioner filed with the Regional Trial Court, Cebu City, a complaint for declaration of nullity and non-existence of deed/title, cancellation of certificates of title and recovery of property against defendant Cebu Country Club, Inc. He alleged that the Cebu Country Club, Inc. fraudulently and illegally managed to secure in its name the administrative reconstitution of TCT No. RT-13 10 (T-11351) despite the absence of any transaction of specific land dealing that would show how Lot No. 727 had come to pass to Cebu Country Club, Inc.; that TCT No. 11351 which is the source title of TCT No. RT-1310 (T-11351) does not pertain to Lot No. 727; that the reconstituted title which was issued on July 26, 1948, did not contain the technical description of the registered land which was inserted only on March 8, 1960, twenty-eight (28) years after the issuance of TCT No. RT-1310 (T-11351), hence, Cebu Country Club, Inc.’s title is null and void. Petitioner thus prayed for the cancellation of TCT No. RT-1310 (T-11351) and the issuance of another title in his name as the sole heir of Tomas Alonso, for Cebu Country Club, Inc. to deliver possession of the property to petitioner, and render an accounting of the fruits and income of the land. Petitioner likewise prayed for the sum of P100, 000.00 by way of attorney’s fees plus P500.00 per hearing as appearance fee, and P10, 000.00 as reasonable litigation expenses.
On November 5, 1992, Cebu Country Club, Inc. filed with the trial court its answer with counterclaim. It alleged that petitioner had no cause of action against Cebu Country Club, Inc. since the same had prescribed and was barred by laches, Cebu Country Club, Inc. having been in possession of the land since 1935 until the present in the concept of an owner, openly, publicly, peacefully, exclusively, adversely, continuously, paying regularly the real estate taxes thereon; that Cebu Country Club, Inc. acquired the lot in good faith and for value; that it caused the administrative reconstitution of Lot No. 727 in 1948 from the owner’s duplicate, the original of TCT No. 11351 having been lost or destroyed during the war, pursuant to Republic Act No. 26, its implementing Circular, GLRO Circular No. 178 and Circular No. 6 of the General Land Registration Office; that unlike Cebu Country Club, Inc., petitioner’s father never had any registered title under the Land Registration Act No. 496 nor did he pay the necessary taxes on Lot No. 727 during his lifetime; that petitioner’s father knew that the United Service Country Club, Inc., predecessor of Cebu Country Club, Inc. was occupying Lot No. 727 as owner; that petitioner’s father never reconstituted his alleged title to Lot No. 727 but did so over Lot No. 810 of the Banilad Friar Lands Estate, a lot adjacent to the disputed property, in 1946; that petitioner himself lived in Cebu City, a few kilometers away from the land in litigation; that petitioner’s father or petitioner himself, both of whom are lawyers and the former a congressman as well, for more than sixty (60) years, never made any demand on Cebu Country Club, Inc. for the recovery of the property knowing fully well that said land was owned and utilized by Cebu Country Club, Inc. as its main golf course. By way of counterclaim, Cebu Country Club, Inc. prayed for the award of attorney’s fees in the amount of P900,000.00 and litigation expenses of P100,000.00, moral damages of P500,000.00 and exemplary damages of P2,000,000.00.
Judgment is hereby rendered in favor of the defendant and against the plaintiff: declaring the contested property or Lot 727 as legally belonging to the defendant; directing the plaintiff to pay attorney'’ fee of P400, 000.00; and litigation expenses of P51, 000.00; and finally, with costs against the plaintiff.
After proceedings on appeal, on March 31, 1997, the Court of Appeals affirmed the lower court’s decision.
On April 30, 1997, petitioner filed a motion for reconsideration; however, on October 2, 1997, the Court of Appeals denied the motion. Hence, this appeal.
ISSUES:
1. Whether the Court of Appeals erred in affirming the validity of TCT No. RT-1310 (T-11351).
2. Whether the Court of Appeals erred in sustaining respondent’s claim of ownership over Lot No. 727;
3. Whether the Court of Appeals erred in holding that the present action is barred by prescription and/or by laches;
4. Whether the Court of Appeals erred in not applying the doctrine of stare decisis;
5. Whether the Court of Appeals erred in sustaining the trial court’s award for damages in the form of attorney’s fees and litigation expenses.
1. Reconstitution was based on the owner’s duplicate of the title, hence, there was no need for the covering deed of sale or other modes of conveyance. Cebu Country Club, Inc. was admittedly in possession of the land since long before the Second World War, or since 1931. In fact, the original title (TCT No. 11351) was issued to the United Service Country Club, Inc. on November 19, 1931 as a transfer from Transfer Certificate of Title No. 1021. More importantly, Cebu Country Club, Inc. paid the realty taxes on the land even before the war, and tax declarations covering the property showed the number of the TCT of the land. Cebu Country Club, Inc. produced receipts showing real estate tax payments since 1949. On the other hand, petitioner failed to produce a single receipt of real estate tax payment ever made by his father since the sales patent was issued to his father on March 24, 1926. Worse, admittedly petitioner could not show any torrens title ever issued to Tomas N. Alonso, because, as said, the deed of sale executed on March 27, 1926 by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources and could not be registered. "Under the law, it is the act of registration of the deed of conveyance that serves as the operative act to convey the land registered under the Torrens system. The act of registration creates constructive notice to the whole world of the fact of such conveyance." On this point, petitioner alleges that Cebu Country Club, Inc. obtained its title by fraud in connivance with personnel of the Register of Deeds in 1941 or in 1948, when the title was administratively reconstituted. Imputations of fraud must be proved by clear and convincing evidence. Petitioner failed to adduce evidence of fraud. In an action for re-conveyance based on fraud, he who charges fraud must prove such fraud in obtaining a title. "In this jurisdiction, fraud is never presumed." The strongest suspicion cannot sway judgment or overcome the presumption of regularity. "The sea of suspicion has no shore, and the court that embarks upon it is without rudder or compass." Worse, the imputation of fraud was so tardily brought, some forty-four (44) years or sixty-one (61) years after its supposed occurrence, that is, from the administrative reconstitution of title on July 26, 1948, or from the issuance of the original title on November 19, 1931, that verification is rendered extremely difficult, if not impossible, especially due to the supervening event of the second world war during which practically all public records were lost or destroyed, or no longer available.
Petitioners next question the lack of technical description inscribed in the reconstituted title in Cebu Country Club, Inc.’s name. This is not a bar to reconstitution of the title nor will it affect the validity of the reconstituted title. A registered owner is given two (2) years to file a plan of such land with the Chief of the General Land Registration Office. The two-year period is directory, not jurisdictional. In other words, the failure to submit the technical description within two (2) years would not invalidate the title. At most, the failure to file such technical description within the two-year period would bar a transfer of the title to a third party in a voluntary transaction.
2. Admittedly, neither petitioners nor their predecessor had any title to the land in question. The most that petitioners could claim was that the Director of Lands issued a sales patent in the name of Tomas N. Alonso. The sales patent, however, and even the corresponding deed of sale were not registered with the Register of Deeds and no title was ever issued in the name of the latter. This is because there were basic requirements not complied with, the most important of which was that the deed of sale executed by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources. Hence, the deed of sale was void. "Approval by the Secretary of Agriculture and Commerce is indispensable for the validity of the sale." Moreover, Cebu Country Club, Inc. was in possession of the land since 1931, and had been paying the real estate taxes thereon based on tax declarations in its name with the title number indicated thereon. Tax receipts and declarations of ownership for taxation purposes are strong evidence of ownership. This Court has ruled that although tax declarations or realty tax payments are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind will be paying taxes for a property that is not in his actual or constructive possession.
Notwithstanding this fatal defect, the Court of Appeals ruled that "there was substantial compliance with the requirement of Act No. 1120 to validly convey title to said lot to Tomas N. Alonso."
On this point, the Court of Appeals erred.
Under Act No. 1120, which governs the administration and disposition of friar lands, the purchase by an actual and bona fide settler or occupant of any portion of friar land shall be "agreed upon between the purchaser and the Director of Lands, subject to the approval of the Secretary of Agriculture and Natural Resources (mutatis mutandis)."
In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both instruments do not bear the signature of the Director of Lands and the Secretary of the Interior. They also do not bear the approval of the Secretary of Agriculture and Natural Resources.
Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled categorically that approval by the Secretary of Agriculture and Commerce of the sale of friar lands is indispensable for its validity, hence, the absence of such approval made the sale null and void ab-initio. Necessarily, there can be no valid titles issued on the basis of such sale or assignment. Consequently, petitioner Francisco’s father did not have any registerable title to the land in question. Having none, he could not transmit anything to his sole heir, petitioner Francisco Alonso or the latter’s heirs.
Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso or the latter’s heirs are the lawful owners of Lot No. 727 in dispute. Neither has the respondent Cebu Country Club, Inc. been able to establish a clear title over the contested estate. The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in its original form and condition. It does not determine or resolve the ownership of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership of the land or estate covered thereby.
3. An action for re-conveyance is a legal remedy granted to a landowner whose property has been wrongfully or erroneously registered in another’s name, but then the action must be filed within ten years from the issuance of the title since such issuance operates as a constructive notice." In addition, the action is barred by laches because of the long delay before the filing of the case. Petitioner Francisco’s action in the court below was basically one of re-conveyance. It was filed on September 25, 1992, sixty-one (61) years after the title was issued on November 19, 1931, and forty-four (44) years after its reconstitution on July 26, 1948.
4. Petitioners assert that as the Court of Appeals annulled Cebu Country Club, Inc.’s title in the Cabrera-Ingles case, so too must the title in this case be declared void. In the first place, there is no identity of parties; secondly, neither the titles to nor the parcels of land involved are the same. Consequently, the doctrine of res-judicata does not apply. Momentarily casting aside the doctrine of res-judicata, there is an important moiety in the Cabrera-Ingles case. There, the Director of Lands, after the administrative reconstitution of the title, issued a directive to the Register of Deeds to register the lot in question in favor of Graciano Ingles. This superseded the administrative reconstitution, rendering allegations of fraud irrelevant. Here, the Director of Lands did not issue a directive to register the land in favor of Tomas N. Alonso. And worse, the sales patent and corresponding deed of sale executed in 1926 are now stale.
5. An award of attorney’s fees and expenses of litigation is proper under the circumstances provided for in Article 2208 of the Civil Code, one of which is when the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered and when the civil action or proceeding is clearly unfounded and where defendant acted in gross and evident bad faith.
WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision of the Court of Appeals and that of the Regional Trial Court, Cebu City, Branch 08. IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil Case No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and 253 legally belongs to the Government of the Philippines.
Sabong Ayam
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