Heirs of Sumagang v. Aznar Enterprises
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns ownership of a parcel of land in Cebu City, originally covered by Original Certificate of Title (OCT) No. 251 in the name of Aznar Brothers Realty Company (ABRC). The heirs of Perfecta Labaya claimed to be legal heirs of Gregorio Labaya, who allegedly owned the land and had been in possession until ABRC developed it into a golf course. Intervenors Teresita dela Calzada-Reyes and Celso Deiparine also asserted claims, with Deiparine alleging a chain of sales from Gregorio's daughter. ABRC and Aznar Enterprises, Inc. asserted ownership based on OCT No. 251 issued in 1971, arguing the claims were prescribed. The heirs of Benigno Sumagang countered that they, not tenants, had possessed the property and alleged ABRC fraudulently included their land in the title through force and intimidation. 2. Procedural History: The heirs of Perfecta Labaya initiated a case for recovery of ownership, possession, annulment of title, reconveyance, and damages. Teresita dela Calzada-Reyes and Celso Deiparine filed separate complaints-in-intervention. The Regional Trial Court (RTC), Branch 5, Cebu City, in a Decision dated March 8, 2004, declared ABRC the lawful owner of the property covered by OCT No. 251. The heirs of Perfecta, Teresita, Celso, and the heirs of Sumagang appealed. The Court of Appeals (CA) dismissed the appeals of the heirs of Perfecta and Teresita for failure to file briefs. The CA, in a Decision dated June 22, 2011, denied the appeals of the heirs of Celso and the heirs of Sumagang, holding that the latter's cross-claim constituted a collateral attack on the title. Reconsideration was denied by the CA on July 30, 2014. 3. The Petition: The heirs of Sumagang filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, raising the sole issue of whether the CA erred in sustaining the RTC's decision declaring ABRC the rightful owner. They argued that their cross-claim was an affirmative relief and a direct attack on OCT No. 251, and that the title should be declared null and void due to fraud. The Supreme Court denied the petition, finding that the cross-claim was a collateral attack on the title and that the action was barred by prescription, as OCT No. 251 was issued in 1971 and the cross-claim was filed in 1998, well beyond the one-year period for review of decrees of registration and the ten-year period for actions for reconveyance.
Issue(s)
Whether the Court of Appeals erred in sustaining the trial court's Decision declaring Aznar Brothers Realty Company (ABRC) as the rightful owner and possessor of the subject property. Whether the cross-claim filed by the heirs of Sumagang against their co-defendant ABRC constitutes a direct attack on the validity of OCT No. 251; and whether OCT No. 251 is null and void due to alleged fraud in its issuance. Whether the action for recovery of ownership and possession, annulment of title, and reconveyance is barred by prescription; and the dismissal of other appeals.
Ruling
The Supreme Court denied the petition for lack of merit and affirmed the decision of the Court of Appeals. It held that the cross-claim filed by the heirs of Sumagang was a direct attack on the title, but it was filed beyond the prescriptive periods provided by law, thus barring their claim.
Ratio Decidendi
On the Court of Appeals' decision: The Court reiterated that a certificate of title cannot be subjected to a collateral attack, as provided in Section 48 of Presidential Decree (P.D.) No. 1529. An attack is direct when the object of the action is to annul or set aside the proceeding or enjoin its enforcement, while an attack is indirect or collateral when made as an incident in an action to obtain a different relief. Although the heirs of Sumagang filed a cross-claim, the Court held that jurisprudence treating a counterclaim as a direct attack is applicable. A cross-claim, like a counterclaim, can be considered a complaint where the other defendant becomes the plaintiff. In their cross-claim, the heirs of Sumagang prayed that the certificate of title issued in ABRC's name be declared null and void, explicitly assailing its validity. Therefore, the cross-claim was a direct attack on ABRC's certificate of title. On the nature of the cross-claim as a direct attack, the alleged fraud, and the right to review the decree of registration: The Court emphasized that under Section 32 of P.D. No. 1529, a decree of registration becomes incontrovertible and binding after the expiration of one year from the entry of the decree. Any person aggrieved by such decree may file a petition for reopening and review within one year from the date of entry, provided no innocent purchaser for value has acquired the land. ABRC's certificate of title was issued on June 17, 1971. The cross-claim by the heirs of Sumagang was filed in 1998, which is significantly beyond the one-year prescriptive period for reviewing the decree of registration. Thus, their claim to reopen the registration was already barred. While the heirs of Sumagang alleged that ABRC obtained the title through violence, force, and intimidation, their claim was not substantiated with sufficient evidence. More importantly, their recourse through a cross-claim was filed after the prescriptive periods for challenging the title had lapsed. The Court noted that the heirs of Sumagang slept on their rights, allowing 27 years to pass before asserting their claim, and thus must suffer the consequence of their inaction. The Court did not delve into the merits of the fraud claim as the procedural bars were decisive. On the prescription of the action for reconveyance and the dismissal of other appeals: The Court further held that even an action for reconveyance based on implied or constructive trust is barred by prescription. Citing Spouses Aboitiz v. Spouses Po, the Court stated that such an action prescribes in 10 years from the alleged fraudulent registration or the date of issuance of the certificate of title. This is based on Section 53 of P.D. No. 1529, in relation to Articles 1456 and 1144(2) of the Civil Code, which establish that a person acquiring property through fraud becomes an implied trustee. The prescriptive period begins to run from the time the adverse party registers the land, as registration constitutes constructive notice and repudiates the implied trust. In this case, ABRC's title was registered on June 17, 1971, and the heirs of Sumagang were aware of ABRC's application for registration as early as 1963. Their filing of the cross-claim in 1998, 27 years after registration, was well beyond the 10-year prescriptive period. The Court noted that the appeals of the heirs of Perfecta and Teresita dela Calzada-Reyes were dismissed for failure to file their appeal briefs within the required period. The appeal of Celso Deiparine was also denied by the CA for failure to prove fraud in the securing of OCT No. 251, except for their claim of an alleged sale transaction, which was not sufficiently established.
Main Doctrine
A cross-claim assailing the validity of a Torrens title constitutes a direct attack, but such attack is barred by prescription if filed beyond the one-year period for review of decree of registration or the ten-year period for actions for reconveyance based on implied trust.