Heirs of Cayetano Cascayan vs. Spouses Oliver and Evelyn Gumallaoi

In a petition for review on certiorari under Rule 45, the Supreme Court will not review the Court of Appeals’ appreciation of evidence; its factual findings, including a finding that a free patent was obtained through fraud, are binding when supported by substantial evidence. A counterclaim seeking cancellation of a certificate of title is a direct attack on the title and may be entertained in an action for recovery of possession.

The Cascayan Heirs and the Spouses Gumallaoi claimed adjacent parcels in the Bangui Cadastre, Ilocos Norte: Lot No. 20028, covered by OCT No. P-78399 issued under a free patent in the Heirs’ name, and Lot No. 20029, which the Spouses had bought. The dispute implicated the Public Land Act’s free patent system and the Torrens system under Presidential Decree No. 1529, including the rule that a certificate of title cannot be collaterally attacked.

The Cascayan Heirs—La Paz Cascayan-Martinez, Elpidio Cascayan, Evangeline Cascayan-Siapco, Flor Cascayan, Nene Cascayan-Alupay, and Virginia Cascayan-Avida—are the heirs of Cayetano Cascayan. They claimed Lot No. 20028, a 1,083-square-meter cornland in the Bangui Cadastre, Ilocos Norte, covered by OCT No. P-78399 issued under a free patent. The Spouses Oliver and Evelyn Gumallaoi owned the adjacent Lot No. 20029, a 999-square-meter parcel, and built a residential house on it. The Municipal Engineer of Bangui, Ilocos Norte was also named as respondent.

According to the Cascayan Heirs, the Spouses’ house encroached on Lot No. 20028 after renovations and improvements. The Spouses ignored notifications of the encroachment. On May 31, 2001, the Spouses applied for a Building Permit and, due to further renovations, encroached even more on Lot No. 20028. On September 10, 2007, the Heirs filed a complaint for Recovery of Possession, Demolition, and Damages before Branch 19, RTC, Bangui, Ilocos Norte, praying that the Spouses vacate Lot No. 20028 and restore possession, that the municipal engineer issue a demolition permit and cause demolition of the encroaching portion, and that damages be paid.

In their Amended Answer and counterclaim, the Spouses maintained that they were the true owners of both Lot No. 20029 and Lot No. 20028. They claimed that the Cascayan Heirs secured the free patent to Lot No. 20028 through manipulation and that the supporting affidavits were obtained through fraud and deception; they attached affidavits by the same affiants disowning their earlier affidavits. They prayed that they be declared legal owners of Lot No. 20028, that OCT No. P-78399 be annulled, and that damages be awarded. By agreement of the parties, Engr. Gregorio Malacas was appointed to determine whether Lot No. 20028 was included in the lot claimed by the Spouses; his report stated that a two-storey residential building owned by the defendants was erected partly on Lot No. 20028 and partly on Lot No. 20029. The parties then agreed to submit the case for resolution on the basis of their position papers and the evidence on record.

The RTC found that the Cascayan Heirs did not prove that they or their predecessor had been in possession of Lot No. 20028. It noted that the tax declarations in Cayetano’s name contained inconsistent areas and boundaries; that Lot No. 20028 had been surveyed for Marcelino Alupay, not Cayetano; that the Heirs applied for a free patent only in 2004; and that the supporting affidavits and certifications were later retracted. It also found that the Spouses had been in possession of Lot No. 20028 together with Lot No. 20029 and that the bigger portion of their house had been constructed on Lot No. 20028. The Court of Appeals likewise found the evidence insufficient to prove the Heirs’ possession or ownership and that the Spouses sufficiently identified Lot No. 20028 and proved title through a “Recibo Ti Pinaglako Ti Daga” dated January 3, 2002, waivers of rights, and the affidavit of Barangay Chairman Christopher Malapit stating that Raymundo was the actual possessor and occupant of Lot No. 20028 since 1940. The Heirs did not rebut these allegations, and during the March 8, 2008 hearing their counsel brought up Raymundo’s possession of the subject lot.

The RTC and the Court of Appeals both concluded that OCT No. P-78399 had been obtained through fraud and misrepresentation and that the free patent application lacked a valid basis. The Court of Appeals found that the Heirs failed to prove the identity of the land and their title, while the Spouses proved their title and the identity of the land. The Supreme Court thereafter reviewed the Court of Appeals’ appreciation of the evidence.

• Cancellation of Patent by the RTC: Petitioners argued that the Regional Trial Court could not order the cancellation of the patent because they had already been issued a certificate of title pursuant to a public land patent.
• Reversion Action by the Solicitor General: Petitioners maintained that under the Public Land Act, only the Solicitor General could institute an action for reversion of Lot No. 20028.
• New Trial Based on Mistake: Petitioners insisted that their Motion for New Trial should have been granted because of their mistake in believing that the position paper would be the basis of the Regional Trial Court’s decision and because respondents committed fraud in submitting irrelevant documents.
• Ownership Since 1925 and Time Immemorial Possession: Petitioners argued that regardless of any application for free patent, Lot No. 20028 had long been owned by Cayetano since 1925, as shown by a Tax Declaration for 1925 and the debris of his residence still intact on the land, and that they had possessed the lot since time immemorial.
• Respondents’ Lack of Ownership: Petitioners claimed that none of the evidence showed that respondents owned Lot No. 20028.
• Retraction of Waivers: Petitioners insisted that the affidavits of waiver should not have been given weight because affidavits retracting them had been submitted to the Court of Appeals, explaining that the signatories did not understand what they signed.
• Area Discrepancy: Petitioners attempted to explain the discrepancy in area by noting that the 1982 survey was approved in 1984, that there was no road then, and that the present area could be explained by the existence of a road, while the debris of the house and kitchen built by Cayetano served as a monument of ownership.

• Ownership of Both Lots: Respondents maintained in their counterclaim that they were the true owners of both Lot No. 20029 and Lot No. 20028.
• Fraud in Free Patent: Respondents claimed that the Cascayan Heirs secured the free patent to Lot No. 20028 through manipulation and that the supporting affidavits were obtained through fraud and deception, attaching affidavits by the same affiants disowning their earlier affidavits.
• Cancellation and Damages: Respondents prayed that they be declared the legal owners of Lot No. 20028, that OCT No. P-78399 be annulled, and that damages be awarded.
• Adoption of Lower Court Rulings: On appeal, respondents manifested that, in lieu of filing a comment, they adopted the rulings of the Court of Appeals and the Regional Trial Court.

• Appreciation of Evidence: Whether the Court of Appeals properly appreciated the evidence presented by the parties.
• Counterclaim as Direct Attack: Whether a counterclaim seeking cancellation of a certificate of title may be treated as a direct attack on the title.
• Fraud in Free Patent: Whether fraud in obtaining the free patent was established by clear and convincing evidence.

• Appreciation of Evidence: No. The Court of Appeals’ factual findings, supported by substantial evidence, are binding in a Rule 45 petition; it found petitioners’ title obtained through fraud and respondents proved ownership.
• Counterclaim as Direct Attack: Yes. A counterclaim is considered a complaint and may constitute a direct attack on a Torrens title; thus the Court of Appeals could cancel OCT No. P-78399 despite the original action being for recovery of possession.
• Fraud in Free Patent: Yes. Fraud is a factual question requiring clear and convincing evidence; the Regional Trial Court and the Court of Appeals uniformly found fraud based on petitioners’ lack of possession, inconsistent tax declarations, and retracted affidavits and certifications.

• Appreciation of Evidence: Petitions for review on certiorari under Rule 45 shall pertain only to questions of law. The Supreme Court is not a trier of facts and will not entertain questions of fact; the factual findings of the appellate courts are final, binding, or conclusive when supported by substantial evidence. The Court of Appeals examined the evidence and found that petitioners were never in possession of Lot No. 20028 before they applied for the free patent; that the tax declarations in Cayetano’s name contained inconsistent areas and boundaries; that Lot No. 20028 had been surveyed for Marcelino Alupay, not Cayetano; and that the supporting affidavits and certifications were later retracted. Petitioners’ assertions about the road and the retractions were mere factual allegations and matters of appreciation of evidence, not questions of law. The Court of Appeals also found that respondents sufficiently identified Lot No. 20028 and proved title through the “Recibo Ti Pinaglako Ti Daga” dated January 3, 2002, waivers of rights, and the affidavit of Barangay Chairman Christopher Malapit. No cogent reason existed to review the Court of Appeals’ appreciation of the evidence.

• Counterclaim as Direct Attack: Although not raised as an issue before the Supreme Court, when a complaint for recovery of possession is filed against a person in possession of a parcel of land under claim of ownership, that person may validly raise nullity of title as a defense and, by way of counterclaim, seek its cancellation. A certificate of title issued under an administrative proceeding pursuant to a homestead patent covering disposable public land under the Public Land Law or Commonwealth Act No. 141 is as indefeasible as a certificate issued under judicial registration. However, titles secured by fraud and misrepresentation are not indefeasible. The one-year prescriptive period does not apply when the person seeking annulment of title or reconveyance is in possession of the lot, because the action partakes of a suit to quiet title, which is imprescriptible. Under Section 48 of Presidential Decree No. 1529, a certificate of title cannot be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding. An attack is direct when the object is to annul or set aside the judgment or proceeding, or enjoin its enforcement; it is collateral when, in an action for different relief, the attack is made as an incident. A counterclaim is considered a complaint filed by the defendant against the plaintiff, stands on the same footing as an independent action, and may constitute a direct attack. Thus, the Court of Appeals did not commit an error of law in sustaining the cancellation of OCT No. P-78399 pursuant to respondents’ counterclaim.

• Fraud in Free Patent: The presence of fraud is a factual question. It must be established through clear and convincing evidence, though the circumstances showing fraud may be varied. The party alleging fraud bears the burden of proof. The Regional Trial Court and the Court of Appeals uniformly determined that petitioners obtained the free patent fraudulently based on several findings: petitioners were never in possession of Lot No. 20028; the tax declarations were inconsistent; and the affidavits and certifications submitted in support of the free patent application were subsequently retracted. Considering that both lower courts uniformly determined that fraud existed in the free patent application based on the evidence presented, there was no reason for the Supreme Court to delve into the issue. The Court of Appeals therefore did not commit any error of law in affirming the Regional Trial Court Decision, which declared respondents as the legal owners of Lot No. 20028 and cancelled petitioners’ title to it.

• Rule 45 — Questions of Law Only — Petitions for review on certiorari under Rule 45 shall pertain only to questions of law. The Supreme Court is not a trier of facts; it will not entertain questions of fact, and the factual findings of the appellate courts are final, binding, or conclusive when supported by substantial evidence. Applied: the Court refused to review the Court of Appeals’ appreciation of evidence on possession, ownership, tax declarations, affidavits, and fraud.

• Counterclaim as Direct Attack on a Torrens Title — Under Section 48, Presidential Decree No. 1529, a certificate of title cannot be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding. An attack is direct when the object is to annul or set aside the judgment or proceeding, or enjoin its enforcement; it is collateral when, in an action for different relief, the attack is made as an incident. A counterclaim is considered a complaint filed by the defendant against the plaintiff, stands on the same footing as an independent action, and may constitute a direct attack. Applied: respondents’ counterclaim for annulment and cancellation of OCT No. P-78399 allowed the Court to rule on its validity despite the original complaint being for recovery of possession.

• Indefeasibility of Patent Title and Fraud Exception — A certificate of title issued under an administrative proceeding pursuant to a homestead patent covering disposable public land under the Public Land Law or Commonwealth Act No. 141 is as indefeasible as a certificate issued under judicial registration. However, titles secured by fraud and misrepresentation are not indefeasible. The one-year prescriptive period does not apply when the person seeking annulment of title or reconveyance is in possession of the lot, because the action partakes of a suit to quiet title, which is imprescriptible. Applied: OCT No. P-78399 was cancelled because the Regional Trial Court and the Court of Appeals found it was obtained through fraud and misrepresentation.

• Fraud Must Be Established by Clear and Convincing Evidence — The party alleging fraud bears the burden of proof. Fraud may assume different shapes and forms, but it must be established by clear and convincing evidence. Applied: the Regional Trial Court and the Court of Appeals uniformly found fraud based on petitioners’ lack of possession, inconsistent tax declarations, and retracted affidavits and certifications; the Supreme Court found no reason to disturb that finding.

• Accion Reivindicatoria — Plaintiff Must Prove Identity and Title — In an action to recover ownership and possession, the plaintiff must prove the identity of the land claimed and his or her title to it. Applied: the Court of Appeals found the Cascayan Heirs failed to prove identity and title, while the Spouses proved both.

• Free Patent Application — Investigation Requirement — Section 91 of Commonwealth Act No. 141 requires an investigation to ascertain whether the material facts set out in a free patent application are true. Applied: the Regional Trial Court found it more likely that no investigation or verification was made by the Community Environment and Natural Resources Office before the free patent was approved and issued.

• "Petitions for review on certiorari under Rule 45 shall pertain only to questions of law." — This states the threshold limitation on the Supreme Court’s review and supports the denial of the petition insofar as it asked the Court to re-examine factual findings.

• "This court is not a trier of facts. It will not entertain questions of fact as the factual findings of the appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when supported by substantial evidence." — This is the ratio for declining to review the Court of Appeals’ appreciation of the evidence on possession, ownership, and fraud.

• "A counterclaim can be considered a direct attack on the title." — This is the controlling formulation allowing the cancellation of OCT No. P-78399 through respondents’ counterclaim despite the original action being for recovery of possession.

• "The presence of fraud is a factual question. It must be established through clear and convincing evidence, though the circumstances showing fraud may be varied:" — This defines the standard for proving fraud in the free patent application and explains why the lower courts’ uniform factual finding was binding.

• Pascal vs. Burgos, G.R. No. 171722, January 11, 2016 — Cited for the rule that review under Rule 45 is discretionary, not a matter of right, and that only questions of law may be raised; the Court is not a trier of facts.
• Heirs of Santiago vs. Heirs of Santiago, 452 Phil. 238 (2003) — Cited for the indefeasibility of patent titles, the fraud exception, the inapplicability of the one-year prescriptive period when the person seeking annulment or reconveyance is in possession, and the rule that a counterclaim may be a direct attack on a title.
• David vs. Malay — Cited in Heirs of Santiago for the principle that a person in actual possession under claim of ownership may wait until possession is disturbed or title attacked, and undisturbed possession gives a continuing right to seek equitable relief.
• Development Bank of the Philippines vs. Court of Appeals — Cited for the rule that a counterclaim is considered a complaint and may be treated as a direct attack on a certificate of title.
• Firaza, Sr. vs. Spouses Ugay, 708 Phil. 24 (2013) — Cited for the distinction between direct and collateral attacks and for the rule that a counterclaim may constitute a direct attack on a Torrens title.
• Sampaco vs. Hadji Serad Mingca Lantud, 669 Phil. 304 (2011) — Cited as reiterating Heirs of Santiago and holding that a counterclaim for annulment of title and reconveyance based on fraud is a direct attack.
• Republic vs. Heirs of Alejaga, Sr., 441 Phil. 656 (2002) — Cited for the requirement that fraud be established by clear and convincing evidence and for circumstances indicating fraud in a free patent application.
• Cimafranca vs. Intermediate Appellate Court — Distinguished as inapplicable because the complaint there was for partition and damages, and the attack on the title was collateral.

• Rule 45, Section 1, Rules of Court — Provides that a petition for review on certiorari shall raise only questions of law. Applied to deny review of the Court of Appeals’ factual findings on possession, ownership, and fraud.
• Article 434, Civil Code — In an action to recover ownership and possession, the plaintiff must prove the identity of the land claimed and his or her title. Applied by the Court of Appeals, and affirmed, to hold that the Cascayan Heirs failed to prove identity and title while the Spouses proved both.
• Section 48, Presidential Decree No. 1529 — A certificate of title shall not be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding. Applied to hold that respondents’ counterclaim for cancellation was a direct attack on OCT No. P-78399.
• Section 32, Presidential Decree No. 1529 — The one-year prescriptive period for review of a decree of registration; the Court has applied it to patents. The period does not apply when the person seeking annulment or reconveyance is in possession, because the action is an imprescriptible suit to quiet title. Applied to allow respondents’ counterclaim despite the original action being for recovery of possession.
• Section 91, Commonwealth Act No. 141 — Requires an investigation to ascertain whether the material facts in a free patent application are true. The Regional Trial Court found no such investigation or verification was made before the free patent was approved and issued.
• Section 1, Rule 37, Rules of Court — Mistake as a ground for new trial must be a mistake of fact, not of law. The Regional Trial Court cited this in denying petitioners’ motion for new trial. The Supreme Court did not disturb that denial.

Justices Diosdado M. Peralta (Acting Chairperson), Jose Catral Mendoza, and Samuel R. Martires concurred. Justice Antonio T. Carpio was on official leave.