Mercado v. Espina
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns a 338-square-meter parcel of land in Southern Leyte. The petitioners, heirs of the late spouses Santiago and Sofronia Mercado, claim ownership of the land, asserting they inherited it and possessed it as owners. They allege that in 1996, the respondents, Spouses Aguedo and Lourdes Espina, claimed ownership, asserting they purchased the land from Josefa Mercado Espina, who had previously bought it in 1939. Josefa, in turn, allegedly bought it from Genivera Mercado Kavanaugh, who had purportedly purchased it in 1937 from Escolastico Mercado, who had allegedly bought it from Santiago Mercado. The petitioners further claim that in 1962, Josefa fraudulently obtained a title (Original Certificate of Title No. 35) for the property. The petitioners dispute the validity of these alleged sales and seek to nullify the deeds of sale and the Transfer Certificate of Title (TCT) in the respondents' name, praying to be declared the owners and awarded damages. 2. Procedural History: On May 8, 2000, the petitioners filed a Complaint for Recovery of Property and Declaration of Nullity of Deed of Sale, Certificate of Title and Damages with the Regional Trial Court (RTC) of Maasin, Southern Leyte. The respondents moved to dismiss, citing lack of jurisdiction, prescription, laches, indefeasibility of title, and failure to state a cause of action. The RTC denied this motion. After the petitioners amended their complaint to include the assessed value of the property, the respondents filed another Motion to Dismiss Amended Complaint on similar grounds. The RTC again denied this motion. The respondents then filed a special civil action for certiorari with the Court of Appeals (CA), assailing the RTC's denial orders. The CA, in its Decision dated April 27, 2005, granted the petition, set aside the RTC's orders, and dismissed the petitioners' complaint, enjoining the RTC from proceeding. The CA ruled that the respondents' title had become indefeasible and the petitioners' action was barred by prescription. The CA denied the petitioners' motion for reconsideration in a Resolution dated July 12, 2006. 3. The Petition: The petitioners are before the Supreme Court via a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the CA's Decision and Resolution. They raise two main issues: first, whether the CA erred in giving due course to the respondents’ second motion to dismiss the amended complaint, arguing it was filed out of time and was a circumvention of the rules; and second, whether the CA erred in dismissing the case on the grounds of indefeasibility of title, prescription, and/or laches, arguing that indefeasibility of title is not a valid ground for dismissal under Rule 16 and that the other grounds were not supported by evidence. The petitioners contend that the respondents' motion to dismiss the amended complaint was filed beyond the period allowed by the Rules of Court and that the grounds raised were merely reiterations of their first dismissed motion. They also argue that indefeasibility of title is not a ground for dismissal under Rule 16 and that the other grounds raised by the respondents were not supported by evidence.
Issue(s)
Whether the Court of Appeals erred in giving due course to respondents’ second motion to dismiss filed on November 21, 2003, on the amended complaint filed on August 16, 2000. Whether the Court of Appeals erred in ordering the Regional Trial Court to dismiss the case and enjoining it from proceeding with the case on the ground of indefeasibility of title, prescription and/or laches, and failure to state a cause of action.
Ruling
The petition is denied. The Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of the timeliness of the second motion to dismiss: The Supreme Court held that the issue of the timeliness of respondents' Motion to Dismiss the Amended Complaint was not raised by petitioners before the RTC nor in their Comment to the CA's first petition for certiorari. It was only raised in their Motion for Reconsideration of the CA Decision. The Court reiterated the established principle that issues raised for the first time on appeal are barred by estoppel, as basic considerations of due process require that these matters be brought to the attention of the lower court. Furthermore, the Court clarified that an amended complaint supersedes the original complaint, rendering it a new pleading, thus giving respondents the right to move for its dismissal. The filing of the motion to dismiss the amended complaint was not a circumvention of the rules but a proper procedural step. On the issue of indefeasibility of title, prescription, and laches, and failure to state a cause of action: The Supreme Court affirmed the CA's ruling that the petitioners' Amended Complaint failed to state a cause of action against the respondents. The Court emphasized that for a complaint seeking recovery of property and nullity of title to prosper against subsequent transferees, there must be an allegation that these transferees were buyers in bad faith or had notice of the defect in the title of their vendors. The complaint lacked any averment that the respondents had knowledge of or participated in the alleged fraudulent nature of the original sale or the subsequent transfers. The Court noted that the property had been sold multiple times since the alleged fraudulent deprivation of ownership. Given that the property was registered under the Torrens System when respondents purchased it, they are presumed to be innocent purchasers for value, and one dealing with registered property need only rely on the title itself. The CA correctly pointed out that the RTC erred in making findings of bad faith based on evidence aliunde and supplying missing facts, as the sufficiency of a cause of action is determined solely by the allegations in the complaint.
Main Doctrine
A complaint for recovery of property and declaration of nullity of sale and title must allege that subsequent transferees, including those who acquired title under the Torrens System, are purchasers in bad faith or with notice of the defect in the title of their vendor to constitute a sufficient cause of action against them. Otherwise, such transferees are presumed to be innocent purchasers for value.