Catholic Bishop of Balanga vs. Court of Appeals

A registered landowner may lose the right to recover possession of registered property by laches where it fails, for an unreasonable and unexplained length of time, to assert its rights, causing prejudice to the adverse possessor — notwithstanding the indefeasibility and imprescriptibility of a Torrens title.

Lot No. 1272 of the Balanga Cadastre was church land originally titled in the name of the Roman Catholic Archbishop of Manila under OCT No. 14379. Rights over the church's Bataan properties, including Lot No. 1272, passed to the Roman Catholic Bishop of San Fernando, Pampanga and later to petitioner Catholic Bishop of Balanga, which was registered as a corporation on December 15, 1975. The dispute concerns a 265.36-square-meter portion of that titled lot in Barrio Puerto Rivas, Balanga, Bataan.

On August 23, 1936, Rev. Fr. Mariano Sarili, then parish priest and administrator of the church properties in Balanga, Bataan, executed an Escritura de Donacion conveying a 265.36-square-meter portion of Lot No. 1272 to Ana de los Reyes and her heirs as a reward for her long and satisfactory service to the church. The deed recited her acceptance of the donation and her possession of the property, but the Register of Deeds refused registration of the deed for reasons not explained in the record.

Ana de los Reyes occupied the donated lot and exercised acts of ownership over it. In 1939 she died without issue, but before her death she had given the property to her nephew, private respondent Amando de Leon, who had been living with her. Upon receiving the gift, de Leon immediately took possession in the concept of owner, built his house and store on the land, declared it for taxation purposes, and paid the taxes due thereon through the years. His possession was never disturbed by anyone.

More than 49 years after the deed was executed, on November 5, 1985, petitioner Catholic Bishop of Balanga, represented by Crispulo Torrico, filed a complaint against de Leon. It alleged that during the Japanese occupation de Leon had entered and occupied the property without the knowledge and prior consent of petitioner and its predecessors-in-interest, and that despite requests he refused to vacate. Torrico, petitioner's sole witness, testified that the subject property stood at the corner of Lot No. 1272 and that de Leon had, on the strength of the deed of donation, publicly claimed ownership and occupied the same as early as before the Second World War, building his store thereon.

De Leon answered that by virtue of the 1936 deed of donation in favor of his predecessor-in-interest he was the lawful owner, and that the complaint stated no cause of action and had been filed only to harass him. On October 27 and 30, 1986 — ten months after he filed his answer on December 10, 1985 and almost three months after petitioner rested its case — de Leon filed motions to dismiss on the ground that the action was barred by the statute of limitations. Petitioner opposed, arguing that the defense of prescription had not been raised in a timely motion to dismiss nor as an affirmative defense in the answer.

On November 13, 1989, the RTC rendered judgment for petitioner. It found that de Leon had failed to present the power of attorney from the Roman Catholic Archbishop of Manila authorizing Fr. Sarili to execute the donation; that the first two paragraphs of the Escritura de Donacion showed the parish priest was merely administrator and had no authority to dispose of church property; that the parish priest was neither a corporation sole nor the registered owner of Lot No. 1272; and that no prior leave of court had been secured under Section 159 of the old Corporation Code. The RTC concluded that Fr. Sarili could not validly donate the lot, that the deed was unenforceable under Article 1403 of the New Civil Code, and that neither de Leon nor his predecessor-in-interest ever acquired ownership. It ordered de Leon to vacate and surrender possession and to pay rent from the finality of the judgment until the property was actually vacated.

• Laches Not Assigned as Error: Petitioner argued that the CA should not have applied the doctrine of laches because private respondent did not assign it as an error on appeal.
• Authority to Donate: Petitioner argued that it was contrary to law and settled jurisprudence for the CA to have considered a mere administrator authorized to donate one of the properties under administration.

• Ownership by Donation: Respondent maintained that by virtue of the deed of donation of August 23, 1936 in favor of his predecessor-in-interest, he is the lawful owner of the subject property.
• No Cause of Action: Respondent maintained that the complaint states no cause of action as it was filed only to harass him.
• Prescription: On appeal, respondent contended that the lower court erred in not ruling on the issue of prescription, arguing that since the case was basically a suit for recovery of possession of real property filed more than 49 years after the deed of donation, the action should have been dismissed on the ground of prescription.

• Laches as Unassigned Error: Whether the CA may apply the doctrine of laches even though private respondent did not assign it as an error on appeal.
• Laches and Torrens Title: Whether laches may bar a registered landowner from recovering possession of registered property despite the indefeasibility and imprescriptibility of its Torrens title.

• Laches as Unassigned Error: Yes. The CA is accorded broad discretionary power to waive the lack of proper assignment of errors, and laches is closely related to the issue of prescription that private respondent properly raised.
• Laches and Torrens Title: Yes. All four elements of laches are present, and a registered landowner may lose the right to recover possession of registered property by laches.

• Laches as Unassigned Error: Section 16(b), Rule 46 of the Rules of Court requires the appealing party to indicate in his brief an assignment of errors, and only those assigned are considered by the appellate court. The SC held, however, that the CA is accorded a broad discretionary power to waive the lack of proper assignment of errors and to consider errors not assigned, citing Silverio vs. CA for the proposition that appeal brings before the reviewing court the totality of the controversy resolved in the questioned judgment. The SC listed the recognized exceptions: (1) grounds not assigned but affecting jurisdiction over the subject matter; (2) matters that are evidently plain or clerical errors; (3) matters necessary in arriving at a just decision and complete resolution of the case or to serve the interests of justice or to avoid piecemeal justice; (4) matters raised in the trial court and of record having some bearing on the issue submitted; (5) matters closely related to an error assigned; and (6) matters upon which the determination of a question properly assigned is dependent. The instant controversy fell squarely under the exception because laches, though not the same as prescription, is undoubtedly closely related to the issue of prescription which private respondent properly raised before the CA.

• Laches and Torrens Title: The SC defined laches as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier — negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it. It is a creation of equity applied not to penalize neglect but to avoid recognizing a right when to do so would result in a clearly inequitable situation; it does not concern itself with the character of the defendant's title but only with whether the plaintiff's long inaction or inexcusable neglect should bar him from asserting his claim at all. The SC laid down the four elements: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainant's right after he had knowledge of the defendant's conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. All four attended. On the first, de Leon's occupation of the property in the concept of owner since 1945 continued the occupation of the same nature by the donee Ana de los Reyes starting in 1936. On the second, petitioner itself alleged in its complaint that de Leon entered without its consent during the Second World War, and its own sole witness Torrico testified that the subject property was so proximately located to the rest of petitioner's church property as to foreclose any assertion of ignorance; from the war years to 1985 petitioner had every opportunity to file suit to nullify the donation and demand reconveyance, yet forty years passed before it acted. On the third, there was neither a demand letter nor positive testimony that anyone informed de Leon of petitioner's intentions, so he had every reason to believe he was secure in his possession. On the fourth, de Leon would suffer irreparable injury under the most unfair circumstances were the inaction disregarded. The SC noted its prior rulings barring recovery by laches after periods ranging from 4 to 67 years, and found no explanation for the 49-year delay here. It held that petitioner cannot claim nullity of the donation as an excuse to avoid the consequences of its own unjustified inaction, that courts cannot look with favor on parties who by silence and delay knowingly induce another to cultivate the land and pay taxes only to spring an ambush when land values rise, and that petitioner is estopped by laches from questioning private respondent's ownership. Finally, the SC agreed with the CA that while petitioner is admittedly still the registered owner and jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, there is an abundance of cases holding that a registered landowner may lose his right to recover possession of his registered property by reason of laches.

• Laches — The failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it. It is a creation of equity applied not to penalize neglect but to avoid recognizing a right when to do so would result in a clearly inequitable situation, and it concerns only whether the plaintiff's long inaction should bar the claim, not the character of the defendant's title. The SC applied it to bar petitioner's recovery after 49 years of unexplained inaction.

• Elements of Laches — (1) Conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainant's right after he had knowledge of the defendant's conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. The SC found all four present.

• Laches as a Bar to Recovery of Registered Land — Although a Torrens title is indefeasible and imprescriptible and registered land may not be acquired by prescription, a registered landowner may nonetheless lose his right to recover possession of his registered property by reason of laches. The SC applied this to defeat petitioner's recovery despite its subsisting registered ownership.

• Appellate Court's Power to Review Unassigned Errors — While Section 16(b), Rule 46 requires an assignment of errors and generally limits appellate review to those assigned, the CA has broad discretionary power to waive the lack of proper assignment and consider errors not assigned, as where the matter is closely related to an error properly assigned. The SC applied this exception because laches is closely related to the prescription issue private respondent raised.

• "Registered lands may not be acquired by prescription but the same can be lost or acquired by Laches." — The CA's formulation, quoted with approval by the SC, states the core rule that defeats petitioner's registered ownership despite the indefeasibility of its Torrens title.
• "Laches means the failure or neglect for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it." — The SC's canonical definition of laches, the doctrine on which the entire decision turns.
• "while petitioner is admittedly still the registered owner of the donated property, and jurisprudence is settled as to the imprescriptibility and indefeasibility of a Torrens Title, there is equally an abundance of cases in the annals of our jurisprudence where we categorically ruled that a registered landowner may lose his right to recover the possession of his registered property by reason of leaches." — The SC reconciles the Torrens title rule with the equitable defense, confirming that registered ownership does not immunize a claim from laches.
• "Considerable delay in asserting one's right before a court of justice is strongly persuasive of the lack of merit of his claim, since it is human nature for a person to enforce his right when same is threatened or invaded; thus, it can also be said that petitioner is estopped by laches from questioning private respondent's ownership of the subject property." — The SC draws the estoppel consequence from petitioner's 49-year silence.

• Lola vs. CA, 145 SCRA 439 — Relied on for the rule that registered lands may not be acquired by prescription but may be lost or acquired by laches.
• Tijam vs. Sibonghanoy, 23 SCRA 29 — Cited for the doctrine of laches and stale demands as grounded on public policy.
• Gicano vs. Gegato, 157 SCRA 140 — Cited for the rule that the defense of prescription is not deemed waived when it is apparent from the allegations of the complaint.
• Garcia vs. Mathis, 100 SCRA 250 — Cited for the same rule on prescription apparent from the complaint.
• PNB vs. Pacific Commission House, 27 SCRA 766 — Cited for the same rule on prescription apparent from the complaint.
• Miguel vs. Catalino, 26 SCRA 234 — Cited among the cases where laches barred recovery after a prolonged period.
• Mejia de Lucas vs. Gamponia, 100 Phil. 277 — Cited for the doctrine of laches.
• Silverio vs. CA, 141 SCRA 527 — Cited for the rule that appeal brings before the reviewing court the totality of the controversy resolved in the questioned judgment.

• Section 16(b), Rule 46, Rules of Court — Requires the appellant to indicate in his brief an assignment of errors; the SC held the CA may waive this requirement under recognized exceptions, and laches fell within the exception as closely related to the prescription issue raised.
• Article 1403, New Civil Code — The RTC held the deed of donation unenforceable under this provision; the SC resolved the case on laches without reaching the validity of the donation.
• Section 159, old Corporation Code — The RTC cited the absence of prior leave of court as a ground for invalidating the donation; the SC did not reach this ground, deciding on laches.