Fernando, Jr. vs. Acuna

Registered owners of Torrens title may lose their right to recover possession of their registered property by reason of laches, notwithstanding the imprescriptibility and indefeasibility of a Torrens title, where the registered owners and their successors-in-interest have failed for an unreasonable and unexplained length of time to assert their right to recover the property. A dried-up creek bed is property of public dominion under Articles 420(1) and 502(1) of the Civil Code and, absent any declaration by the government, does not by itself alter its inalienable character.

The petitioners are the heirs and successors-in-interest of the late spouses Jose A. Fernando (married to Lucila Tinio) and Antonia A. Fernando (married to Felipe Galvez), who were the registered owners of a parcel of land covered by OCT No. RO-487 (997) located in San Jose, Baliuag, Bulacan. The property was originally subdivided by a November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan, which adjudicated portions of Lot 1303 to various persons, including the petitioners' ascendants and the respondents' predecessors-in-interest. A subsequent July 30, 1980 Decision of the Court of First Instance of Baliuag, Bulacan in LRC Case No. 80-389 ordered the issuance of certificates of title to claimants of portions of Lot 1302, which had been subdivided into ten sublots.

The controversy concerns a parcel of land covered by OCT No. RO-487 (997), registered in the names of Jose A. Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe Galvez, located in San Jose, Baliuag, Bulacan. When the registered owners died intestate, the property remained undivided. The petitioners, as heirs and successors-in-interest of the deceased registered owners, failed to agree on the division of the subject property among themselves, even after compulsory conciliation before the Barangay Lupon.

On April 17, 1997, the petitioners, except for the heirs of Germogena Fernando, filed a Complaint for partition against the heirs of Germogena Fernando, alleging that they were common descendants and compulsory heirs of the late spouses and that their predecessors-in-interest died intestate without instructions as to the disposition of the property. They prayed that the subject property be partitioned into eight equal parts corresponding to the hereditary interest of each group of heirs. The defendants essentially admitted all the allegations and did not oppose the partition.

Respondent Leon Acuna filed a Complaint in Intervention on January 12, 1998, averring that in the November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan, Lot 1303 was already adjudicated to Antonio Fernando married to Felisa Camacho, spouses Jose Martinez and Gregoria Sison, spouses Ignacio de la Cruz and Salud Wisco, and Jose Fernando married to Lucila Tinio. Acuna claimed that Salud Wisco, through her attorney-in-fact, sold her share denominated as Lot 1303-D with an area of 3,818 square meters to Simeon P. Cunanan, who in turn sold the same to Acuna. Acuna also alleged that the heirs of the original owners had already sold their respective one-tenth shares to Ruperta Sto. Domingo Villasenor on January 25, 1978, as evidenced by a "Kasulatan sa Bilihang Patuluyan," and that he was in possession of the original copy of OCT No. RO-487 (997).

Respondent Hermogenes Fernando filed a Motion for Intervention on June 23, 1998, for himself and on behalf of the heirs of the late spouses Antonio A. Fernando and Felisa Camacho, claiming that in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-interest had been adjudged owners of Lots 1302-A, 1302-F, 1302-G, 1302-H, and 1302-J, and that the instant case was barred by res judicata. The trial court allowed both respondents to intervene.

During trial, petitioner Elizabeth Alarcon testified that the plaintiffs were not claiming the entire property but only Lot 1303 and Sapang Bayan, and admitted that Lot 1302 had already been divided into ten sublots and allocated to various owners pursuant to the 1980 CFI Decision. Petitioner Norma Fernando testified that Sapang Bayan was supposedly included in Lot 1302 and was previously a river until it dried up, and insisted that the basis of their claims over Lot 1303 was the title in the name of their ascendants, not the 1929 Decision. Respondent Hermogenes testified that the persons named in the 1929 Decision took possession of their respective lots, and that his family's tenant occupied the portion allotted to his parents, but admitted that nobody among the purported possessors registered the lots assigned to them.

The English translation of the November 29, 1929 Decision was admitted as a common exhibit, showing that Lot 1303 was subdivided and adjudicated to various claimants, with Jose A. Fernando allocated Lot 1303-C and the rest of Lot 1303 adjudged to Antonio A. Fernando married to Felisa Camacho. The trial court ruled that the 1929 Decision had prescribed and ordered the reversion of Lot 1303 to the registered owners, allowing partition among the petitioners, but excluding portions sold to Villasenor and Acuna. The trial court found that none of the parties had clearly established their claims over Sapang Bayan. All parties except Acuna appealed to the Court of Appeals, which reversed the trial court and dismissed the complaint.

• Ownership of Lot 1303 and Sapang Bayan: Petitioners argued that the ownership of Lot 1303 and the Sapang Bayan portion of the land covered by OCT No. RO-487 (997) should revert to the descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez, based on their ascendants' title.
• Torrens Title as Best Evidence: Petitioners argued that a title registered under the Torrens system, such as the subject original certificate of title, is the best evidence of ownership of land and is a notice against the world.
• Prescription of the 1929 Decision: Petitioners contended that the respondents' purported failure to execute the November 29, 1929 Decision over Lot 1303, specifically their failure to secure their own titles, meant that the entire Lot 1303, still being registered in the name of their ascendants, rightfully belongs to them, on the theory that respondents' right to have the property titled in their names had long prescribed.

• Prior Adjudication of Lots: Respondent Acuna argued that the November 29, 1929 Decision of the Cadastral Court had already adjudicated Lot 1303 to various persons, including the petitioners' predecessor-in-interest, and that the 1980 CFI Decision had ordered the issuance of certificates of title to claimants of portions of Lot 1302.
• Prior Sale of Shares: Respondent Acuna averred that the heirs of the original owners had already sold their respective one-tenth shares in the subject property to Ruperta Sto. Domingo Villasenor on January 25, 1978, as evidenced by a "Kasulatan sa Bilihang Patuluyan."
• Res Judicata: Respondent Hermogenes claimed that the instant case was already barred by res judicata in view of the July 30, 1980 Decision of the CFI of Bulacan, which had adjudged their predecessors-in-interest as owners of Lots 1302-A, 1302-F, 1302-G, 1302-H, and 1302-J.

• Ownership of Lot 1303: Whether the ownership of Lot 1303 should revert to the descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez.
• Torrens Title as Evidence of Ownership: Whether a title registered under the Torrens system, as the subject original certificate of title, is the best evidence of ownership of land and is a notice against the world.

• Ownership of Lot 1303: No. The petitioners' claim over Lot 1303 is barred by laches, and their ascendants held the property under an implied trust for the benefit of the true owners. The respondents' decades-long peaceful possession of their respective lots by virtue of the November 29, 1929 Decision may no longer be disturbed.
• Torrens Title as Evidence of Ownership: No. While a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover possession of his registered property by reason of laches. The mere issuance of a certificate of title does not foreclose the possibility that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate.

• Ownership of Lot 1303: The Court agreed with the appellate court that the petitioners' claim over Lot 1303 was barred by laches. While Section 47 of Presidential Decree No. 1529 states that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession, the Court recognized the exception that the registered landowner may lose his right to recover possession of his registered property by reason of laches. The essential elements of laches are: (a) conduct on the part of the defendant giving rise to the situation complained of; (b) delay in asserting the complainant's rights after he had knowledge of the defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by the defendant that the complainant will assert the right; and (d) injury or prejudice to the defendant if the relief is accorded. The persons named in the 1929 Decision and their heirs and assigns had been in peaceful and uncontested possession of their respective lots for more than seventy years until the filing of the suit for partition on April 17, 1997. The registered owners' inaction and neglect for an unreasonable and unexplained length of time in pursuing the recovery of the land made the petitioners' demand stale and barred by laches. The Court also upheld the finding that the title of the petitioners' ascendants wrongfully included lots belonging to third persons, and that the ascendants held the property under an implied trust for the benefit of the true owners under Article 1456 of the Civil Code. An action for reconveyance of registered land based on implied trust prescribes in ten years, but the ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property; if the person claiming to be its owner is in actual possession, the right to seek reconveyance does not prescribe.
• Torrens Title as Evidence of Ownership: The Court held that while a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover possession through laches. The essence of an action for reconveyance is that the certificate of title is respected as incontrovertible, and what is sought is the transfer of the property which has been wrongfully or erroneously registered in another person's name to its rightful owner. The mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee.
• Sapang Bayan: The Court sustained the appellate court's ruling that the petitioners failed to substantiate their ownership over Sapang Bayan, but found that the Court of Appeals erred in ruling that the principle of accretion under Article 457 of the Civil Code is applicable. The character of the Sapang Bayan property was not shown to be an accretion known as alluvion, as no evidence had been presented to support this assertion. Even assuming that Sapang Bayan was a dried-up creek bed, under Articles 420(1) and 502(1) of the Civil Code, rivers and their natural beds are property of public dominion, and in the absence of any provision of law vesting ownership of the dried-up river bed in some other person, it must continue to belong to the State.

• Laches as a bar to recovery of registered land — Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of 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 his right either has abandoned or declined to assert it. The essential elements are: (a) conduct on the part of the defendant giving rise to the situation complained of; (b) delay in asserting the complainant's rights after he had knowledge of the defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by the defendant that the complainant will assert the right; and (d) injury or prejudice to the defendant if the relief is accorded. The Court applied this doctrine to bar the petitioners' claim over Lot 1303, given the respondents' decades-long possession and the registered owners' inaction for more than seventy years.
• Implied trust under Article 1456 of the Civil Code — If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The Court applied this doctrine in holding that the petitioners' ascendants held the erroneously titled property in trust for the true owners, as the 1929 Decision had already adjudicated the lots to other persons.
• Prescription of action for reconveyance based on implied trust — An action for reconveyance of registered land based on implied trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. However, the ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property; if a person claiming to be its owner is in actual possession, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.
• Property of public dominion — Under Articles 420(1) and 502(1) of the Civil Code, rivers and their natural beds are property of public dominion. A dried-up creek bed is property of public dominion which is not susceptible to private appropriation and acquisitive prescription, and absent any declaration by the government that a portion of the creek has dried-up does not, by itself, alter its inalienable character. The Court applied this doctrine in ruling that Sapang Bayan cannot be adjudged to any of the parties.

• "Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of 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 his right either has abandoned or declined to assert it. Laches thus operates as a bar in equity." — This passage defines the doctrine of laches and its operation as a bar in equity, which the Court applied to bar the petitioners' claim over Lot 1303.
• "In view of respondents' decades long possession and/or ownership of their respective lots by virtue of a court judgment and the erstwhile registered owners' inaction and neglect for an unreasonable and unexplained length of time in pursuing the recovery of the land, assuming they retained any right to recover the same, it is clear that respondents' possession may no longer be disturbed. The right of the registered owners as well as their successors-in-interest to recover possession of the property is already a stale demand and, thus, is barred by laches." — This passage states the Court's application of laches to the facts, barring the petitioners' claim over Lot 1303.
• "A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and acquisitive prescription. And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable character." — This passage, quoted from Celestial v. Cachopero, establishes the rule that a dried-up creek bed is property of public dominion, which the Court applied to Sapang Bayan.

• Heirs of Anacleto B. Nieto vs. Municipality of Meycauayan, Bulacan, G.R. No. 150654, December 13, 2007 — Cited as the case where the Court recognized the exception to the doctrine of imprescriptibility of Torrens title, holding that the registered landowner may lose his right to recover possession of his registered property by reason of laches.
• Heirs of Batiog Lacamen vs. Heirs of Laruan, 160 Phil. 615 (1975) — Cited for the rule that while a person may not acquire title to registered property through continuous adverse possession, the heir of the original registered owner may lose his right to recover back possession of such property and the title thereto by reason of laches.
• Bartola M. Vda. De Tirona vs. Encarnacion, G.R. No. 168902, September 28, 2007 — Cited for the rule that while jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, registered owners may lose their right to recover possession of property through the equitable principle of laches.
• Medizabel vs. Apao, G.R. No. 143185, February 20, 2006 — Cited for the essence of an action for reconveyance and the rule that the ten-year prescriptive period for reconveyance based on implied trust applies only when the person enforcing the trust is not in possession of the property.
• Republic vs. Court of Appeals, 217 Phil. 483 (1984) — Cited for the rule that portions of the bed of a river are property of the public domain under Articles 420(1) and 502(1) of the Civil Code and are not open to registration.
• Celestial vs. Cachopero, 459 Phil. 903 (2003) — Cited for the rule that a dried-up creek bed is property of public dominion which is not susceptible to private appropriation and acquisitive prescription.

• Section 47, Presidential Decree No. 1529 (Property Registration Decree) — Provides that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. The Court acknowledged this provision but applied the exception of laches.
• Article 1456, Civil Code — Provides that if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The Court applied this provision in holding that the petitioners' ascendants held the erroneously titled property in trust for the true owners.
• Article 457, Civil Code — Provides that to the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. The Court held that the requisites for this provision to apply were not met, as the character of Sapang Bayan was not shown to be an accretion known as alluvion.
• Article 420, paragraph 1, Civil Code — Provides that things intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character, are property of public dominion. The Court applied this provision in ruling that Sapang Bayan, as a dried-up creek bed, is property of public dominion.
• Article 502, paragraph 1, Civil Code — Provides that rivers and their natural beds are of public dominion. The Court applied this provision in ruling that Sapang Bayan cannot be adjudged to any of the parties.

Chief Justice Renato C. Corona (Chairperson), Associate Justice Lucas P. Bersamin, Associate Justice Mariano C. Del Castillo, and Associate Justice Martin S. Villarama, Jr. concurred in the decision.