Pen Development Corp. v. Martinez Leyba, Inc.
REITERATIONFacts
The Antecedents: Martinez Leyba, Inc. (Martinez) is the registered owner of three parcels of land. Pen Development Corporation and Las Brisas Resorts Corporation (collectively, Las Brisas) are the registered owners of an adjacent parcel of land. In 1968, Martinez noticed that Las Brisas' fence encroached on its property. Despite several letters from Martinez informing Las Brisas of the encroachment and demanding cessation of further intrusion, Las Brisas continued developing its land and constructing improvements, including a riprapping, an old building, and a new multi-story edifice. Procedural History: Martinez filed a Complaint for Quieting of Title, Cancellation of Title, and Recovery of Ownership with Damages against Las Brisas. The Regional Trial Court (RTC) ruled in favor of Martinez, finding Las Brisas to be a builder in bad faith and ordering the cancellation of portions of its title, vacation of the encroached areas, removal of structures at its expense, and payment of damages. The Court of Appeals (CA) affirmed the RTC ruling with modification, deleting the award of moral and exemplary damages but ordering nominal damages. The CA found Las Brisas to be in bad faith due to its continued construction despite written notices of encroachment and held that the right of a registered owner to recover possession is imprescriptible. The Petition: Petitioners (Pen Development Corporation and Las Brisas Resorts Corporation) assailed the CA decision, arguing they were not builders in bad faith, that respondent was guilty of laches, and that the survey plans were hearsay. They contended they relied on the validity of their title and, as builders in good faith, were entitled to reimbursement or retention. Respondent countered that petitioners were builders in bad faith, that laches does not apply to registered land, and that the hearsay argument was waived.
Issue(s)
Whether petitioners are possessors/builders in bad faith. Whether respondent incurred laches in enforcing its rights. Whether the survey plans constitute hearsay evidence that cannot be raised for the first time on appeal.
Ruling
The Court denies the Petition. The July 17, 2013 Decision and March 28, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 97478 are affirmed in toto.
Ratio Decidendi
On the issue of whether petitioners are possessors/builders in bad faith: The Court affirmed the findings of the RTC and CA that petitioners were builders in bad faith. The evidence showed that Martinez repeatedly notified Las Brisas of the encroachment as early as 1968 through several letters. Despite these notices and a reply from Las Brisas, petitioners continued to construct improvements on the encroached portions of Martinez's land. The Court reiterated that possession acquired in good faith ceases to be so from the moment facts exist which show that the possessor is not unaware that they possess the thing improperly or wrongfully. The continued construction despite knowledge of Martinez's claim and title clearly demonstrated bad faith. On the issue of whether respondent incurred laches: The Court held that the principle of laches does not apply against owners of land registered under the Torrens system. As registered owners, Martinez has an imprescriptible right to recover possession of its property from any person illegally occupying it. The Court cited Section 47 of Presidential Decree No. 1529 (Property Registration Decree), which states that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. Therefore, the length of time petitioners occupied the encroached portions does not bar Martinez from asserting its ownership. On the issue of whether the survey plans constitute hearsay evidence that cannot be raised for the first time on appeal: The Court found that the issue of hearsay evidence was raised for the first time on appeal and was therefore deemed waived. Petitioners failed to raise this argument during pre-trial and trial proper, and even failed to object during Martinez's formal offer of evidence. The Court emphasized that issues not adequately brought to the attention of the lower courts cannot be raised for the first time on appeal, as it would violate the due process rights of the other party. Furthermore, the Verification Survey Plan, being a public document, is admissible in evidence and enjoys a presumption of regularity.
Main Doctrine
A builder in bad faith who encroaches upon another's titled land, despite being informed of the encroachment and continuing construction, loses what is built without indemnity and is liable for damages. The registered owner's right to recover possession is imprescriptible under the Torrens system.