Daclag v. Macahilig
REVERSALFacts
The Antecedents: Petitioners Rogelia and Adelino Daclag purchased a property which was registered in Rogelia's name in 1984. Respondents filed a complaint for reconveyance in 1991. Procedural History: The Regional Trial Court (RTC) ruled in favor of the respondents, ordering petitioners to pay their corresponding share in the produce of the land from the time they were deprived thereof until possession is restored. The Court of Appeals (CA) affirmed the RTC decision. Petitioners filed a Motion for Reconsideration before the Supreme Court. The Petition: Petitioners argued that the action for reconveyance based on fraud had a prescriptive period of four years from discovery, not ten years. They also contended that they were possessors in good faith and thus entitled to the fruits of the property until legal interruption, which should be reckoned from 1991, not 1984. Lastly, they argued that liability for damages should have been against Maxima Divison or her estate, not them.
Issue(s)
Whether the action for reconveyance based on fraud has prescribed. Whether petitioners were possessors in good faith and the reckoning period for their liability for the fruits of the property. Whether petitioners can raise the issue of Maxima Divison's liability for the first time in a motion for reconsideration.
Ruling
The Motion for Reconsideration is PARTLY GRANTED. The Court modified its previous decision, clarifying that the action for reconveyance was not subject to prescription because it was based on a void contract. The dispositive portion was modified to order petitioners to pay respondents 10 cavans of palay per annum beginning August 5, 1991, instead of 1984.
Ratio Decidendi
On the prescription of the action for reconveyance: The Court clarified that while the prescriptive period for reconveyance of fraudulently registered property is generally 10 years from the issuance of the title, in this case, the action was not subject to prescription. This is because the deed of sale executed by Maxima in favor of petitioners was null and void, as Maxima was not the owner of the entire land sold, and respondents owned a portion thereof. An action to declare the inexistence of a void contract does not prescribe, pursuant to Article 1410 of the Civil Code. The Court reiterated its consistent ruling that property registered under the Torrens system by someone who is not the owner is deemed held in trust for the real owner, who can sue for reconveyance at any time as long as the property remains in the name of the wrongful registrant. Therefore, the action for reconveyance based on a void contract is imprescriptible. On the good faith of the possessors and liability for fruits: The Court found partial merit in petitioners' argument. Citing Article 528 of the Civil Code, possession acquired in good faith ceases to be so from the moment facts exist showing that the possessor is aware they possess the thing improperly or wrongfully, or when defects in the title are made known through extraneous evidence or a suit for recovery. This interruption occurs upon service of summons. Article 544 of the Civil Code states that a possessor in good faith is entitled to fruits only until possession is legally interrupted. Since petitioners received summons on August 5, 1991, their good faith ceased on that date. Consequently, their liability for the fruits of the subject land should be reckoned from August 5, 1991, not from 1984. On raising new issues in a motion for reconsideration: The Court was not persuaded by petitioners' attempt to raise the issue of Maxima Divison's liability for the first time in their motion for reconsideration. The Court noted that this issue was never raised in their appellants' brief before the CA, nor in their petition for review before the Supreme Court. Allowing them to raise it now would offend basic rules of fair play, justice, and due process, especially since Maxima's heirs were not substituted after the RTC decision.
Main Doctrine
An action for reconveyance based on a void contract is imprescriptible, and the property registered under the Torrens system is deemed held in trust for the real owner by the person in whose name it is registered, who can be compelled to reconvey it to the real owner as long as the title remains in their name. A possessor in good faith is entitled to the fruits of the property only until their possession is legally interrupted, which occurs upon service of summons.