Hermosilla v. Remoquillo
REITERATIONFacts
1. The Antecedents: The case involves a 65-square meter portion of Lot 19, originally part of the San Pedro Tunasan Homesite acquired by the Republic. Apolinario Hermosilla, who occupied a lot, subdivided it into Lot 12 and Lot 19. Apolinario assigned possession of Lot 19 to his grandson, Jaime Remoquillo, in 1962. Jaime applied to acquire Lot 19 in 1963. Apolinario conveyed Lot 12 to his son, Salvador Hermosilla (Jaime's uncle), in 1963, and Salvador was awarded Lot 12 in 1971. In 1972, Jaime and Salvador executed a 'Kasunduan ng Paglipat Ng Karapatan sa Isang Lagay na Lupang Solar' (Kasunduan) where Jaime transferred ownership of the 65 square meters of Lot 19 to Salvador. Apolinario's daughter protested the disposition of the lots, but the National Housing Authority (NHA) dismissed her protest. The NHA awarded Lot 19 to Jaime in 1986, and he and his wife were issued Transfer Certificate of Title (TCT) No. T-156296 in 1987. 2. Procedural History: On May 25, 1992, the Heirs of Salvador Hermosilla (petitioners) filed an action for Annulment of Title with damages against Jaime Remoquillo and his wife before the Regional Trial Court (RTC), alleging that Jaime conveyed the questioned property to Salvador via the Kasunduan. The RTC ruled in favor of petitioners, finding the Kasunduan a perfected contract of sale and that ownership had transferred to Salvador. The RTC ordered the cancellation of TCT No. T-156296 and the issuance of a new title to petitioners for the 65 square meters. The Court of Appeals (CA) reversed the RTC decision, holding that the Kasunduan was void because the Republic still owned Lot 19 when it was executed, thus Jaime could not have transferred any right. The CA also found no fraud and ruled that the action had prescribed. Petitioners filed a petition for review on certiorari. 3. The Petition: Petitioners assail the CA's decision, arguing that the law on prescription would perpetuate fraud and that prescription does not lie against a co-owner. They also argue that if the Kasunduan is void, the prior Deed of Assignment is also void, depriving Jaime of legal basis for his occupation.
Issue(s)
Whether the action for annulment of title and reconveyance is barred by prescription. Whether the Kasunduan executed by Jaime Remoquillo in favor of Salvador Hermosilla is valid and binding. Whether Article 1434 of the Civil Code on estoppel applies to the case. Whether petitioners have the legal personality to impute fraud against the State. Whether petitioners have sufficiently proven fraud to warrant annulment of title.
Ruling
The petition is DENIED. The Court finds that while the action is not barred by prescription, it is dismissible on substantive grounds. The Kasunduan is void ab initio, and petitioners failed to prove fraud.
Ratio Decidendi
On the issue of prescription: The Court ruled that the action, though captioned as one for Annulment of Title, ultimately seeks reconveyance based on implied trust. The prescriptive period for reconveyance of fraudulently registered property is 10 years from the issuance of the title if the plaintiff is not in possession, but it is imprescriptible if the plaintiff is in possession. Since the petitioners' houses occupied the questioned property and respondents were not in possession, the petitioners remained in possession. Therefore, the action took the nature of a suit for quieting of title, which is imprescriptible. The Court stated, "However, if the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover the title and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible." Thus, the action was not barred by prescription. On the validity of the Kasunduan: The Court held that the Kasunduan executed in 1972 was void ab initio because at that time, Lot 19 was still owned by the Republic of the Philippines. Jaime Remoquillo could not transfer any right over the property to Salvador Hermosilla as he did not possess it. The Court cited the principle of nemo dat quod non habet, meaning "Nobody can give what he does not possess." The Court further explained, "When the Kasunduan was executed in 1972 by Jaime in favor of Salvador – petitioners’ predecessor-in-interest – Lot 19, of which the questioned property forms part, was still owned by the Republic." Therefore, the Kasunduan created no right. On the applicability of Article 1434 of the Civil Code (Estoppel): The Court found that petitioners' reliance on Article 1434 was misplaced. While Article 1434 states that if a person who is not the owner sells a thing and later acquires title, the title passes to the buyer, this principle applies only if not in conflict with special laws. Land Authority Administrative Order No. 4 (1967) proscribed the conveyance of the privilege or preference to purchase land from the San Pedro Tunasan project before its award. The Kasunduan, being a transfer of rights before the award, violated this administrative order and was thus null and void. The Court reiterated, "Estoppel, as postulated by petitioner, will not apply for it cannot be predicated on an illegal act. It is generally considered that as between the parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy." On the personality to impute fraud against the State: The Court held that petitioners had no personality to impute fraud or misrepresentation against the State or violation of law, as the property was previously public land. If the title was fraudulently obtained, it is the State, through the Office of the Solicitor General, which should file the suit to recover the property. The title originated from a government grant, making its cancellation a matter between the grantor and the grantee. On the proof of fraud: For an action for reconveyance based on fraud to prosper, the plaintiff must prove by clear and convincing evidence not only their title but also the fact of fraud. Fraud is never presumed and requires specific allegations and proof. The petitioners failed to discharge this burden of proof.
Main Doctrine
An action for reconveyance based on an implied trust, where the plaintiff is in actual possession of the property, is in the nature of a suit for quieting of title and is therefore imprescriptible. However, a contract transferring rights over a property that was still owned by the Republic at the time of its execution is void ab initio, and estoppel cannot be predicated on an illegal act.