D.B.T. Mar-Bay Construction, Inc. v. Panes
REITERATIONFacts
The Antecedents: Respondents filed a Complaint for Quieting of Title, Cancellation of TCT No. 200519, and Damages against various defendants, including B.C. Regalado and petitioner D.B.T. Mar-Bay Construction, Inc. (DBT). Respondents claimed ownership and possession of Lot Plan Psu-123169, alleging that B.C. Regalado and DBT fraudulently used derivative titles to cover portions of their property. DBT asserted ownership through a dacion en pago from B.C. Regalado and argued that respondents were not real parties-in-interest and the complaint was premature. Procedural History: The RTC initially ruled in favor of the respondents, declaring TCT No. 200519 null and void concerning the subject property and ordering DBT to pay attorney's fees. DBT moved for reconsideration, raising prescription and laches. An intervention was filed by the Don Pedro/Don Jose de Ocampo Estate, claiming ownership under OCT No. 779. The RTC, through a different Acting Judge, reversed its earlier decision, dismissing the complaint based on prescription and laches, stating that prescription does not run against registered land. The respondents appealed to the Court of Appeals (CA). The Petition: The CA reversed the RTC's dismissal order, reinstating the initial decision in favor of the respondents. The CA found that the properties in TCT No. 200519 were located elsewhere and that there was a gap between Lot 503 and Psu 123169. The CA also noted procedural infractions by the RTC in entertaining DBT's motion for reconsideration. DBT filed a Petition for Review on Certiorari with the Supreme Court.
Issue(s)
Whether the RTC erred in upholding DBT's defenses of prescription and laches as raised in its Motion for Reconsideration; specifically, whether an action for quieting of title is imprescriptible when the plaintiff is in possession. Whether DBT or the respondents have a better right over the subject property; specifically, whether prescription or adverse possession can prevail against a registered owner, and whether DBT was an innocent purchaser for value and in good faith.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' decision, and dismissed the respondents' complaint for lack of merit.
Ratio Decidendi
On the first issue (RTC's upholding of prescription and laches): The Supreme Court held that while the RTC could validly entertain defenses of prescription and laches in a motion for reconsideration, its conclusion was erroneous. The Court clarified that an action for quieting of title, unlike an action for reconveyance, is imprescriptible, especially when the plaintiff is in possession of the property. The Court noted that respondents' possession rendered their right to bring an action for quieting of title imprescriptible and thus not barred by laches. However, the Court ultimately found that the RTC's dismissal on these grounds was based on a flawed premise regarding the nature of the action. On the second issue (better right over the subject property): The Supreme Court ruled in favor of DBT, emphasizing the well-entrenched rule that no title to registered land in derogation of the rights of the registered owner can be acquired by prescription or adverse possession. The Court cited Article 1126 of the Civil Code and Section 47 of PD No. 1529, which clearly state that prescription is unavailing against a registered owner. The Court found no clear evidence that DBT participated in any fraudulent scheme and highlighted that DBT acquired ownership through a dacion en pago, making it an innocent purchaser for value and good faith. The Court also stressed the importance of protecting the integrity of the Torrens system and the rights of innocent third-party purchasers who relied on the certificates of title.
Main Doctrine
An action for quieting of title, when the plaintiff is in possession of the property, is imprescriptible. However, no title to registered land in derogation of the rights of the registered owner shall be acquired by prescription or adverse possession.