Heirs of Remegia Y. Feliciano vs. Spouses Aurelio and Luz Zaldivar

A new owner’s duplicate certificate of title issued in a reconstitution proceeding is void where the original owner’s duplicate was not lost but remained in the registered owner’s possession; the resulting transfer certificate of title may be annulled, and the Torrens system does not shield fraud.

Remegia Y. Feliciano was the registered owner of a 444-square-meter parcel of land in the District of Lapasan, Cagayan de Oro City, covered by TCT No. T-8502. The spouses Aurelio and Luz Zaldivar claimed a 243-square-meter portion of that parcel under TCT No. T-17993 issued in Aurelio’s name. Pio Dalman, Aurelio’s father-in-law, had leased the subject portion from Remegia. The dispute implicated the Torrens system and the statutory rules on reconstitution of lost owner’s duplicate certificates under the Land Registration Act.

Remegia Y. Feliciano was the registered owner of a 444-square-meter parcel of land in the District of Lapasan, Cagayan de Oro City, covered by TCT No. T-8502. Pio Dalman, the father-in-law of Aurelio Zaldivar, leased from Remegia the 243-square-meter portion later claimed by the Zaldivars, initially for P5.00 a month and later, in 1960, for P100.00 a month. According to Remegia, she once intended to mortgage the subject lot to Ignacio Gil for P100.00, but the transaction did not push through because Gil took back the money without returning the receipt she had signed as evidence of the supposed mortgage contract. In 1974, Aurelio filed with the then Court of First Instance of Misamis Oriental a petition for partial cancellation of TCT No. T-8502, making it appear that he and his wife Luz had acquired the subject lot from Dalman, who in turn had purchased it from Gil. The petition was granted, and TCT No. T-17993 was issued in Aurelio’s name.

Remegia denied selling the subject lot to Gil or Dalman. She impugned as falsified the joint affidavit of confirmation of sale that she and her uncle, Narciso Labuntog, purportedly executed before a notary public, in which she appeared to confirm the sale of the subject property to Gil. She alleged that she never parted with the certificate of title and that it was never lost; as proof that no sale occurred, she pointed out that the transaction was not annotated on TCT No. T-8502.

In their answer, the spouses Zaldivar denied the material allegations and claimed that Aurelio was the absolute owner and possessor of the subject lot under TCT No. 17993 and Tax Declaration No. 26864. Aurelio claimed that he acquired the lot by purchase from Dalman, who had bought it from Gil on April 4, 1951; Gil allegedly purchased it from Remegia, and the sale was conformed and ratified by Remegia and Narciso Labuntog before a notary public on December 3, 1965. After Aurelio obtained a loan from the Government Service Insurance System, the spouses constructed their house on the subject lot. They alleged that they and their predecessors-in-interest had occupied the property since 1947 openly, publicly, adversely, and continuously for over 41 years. Aurelio also filed a petition for a new owner’s duplicate copy of TCT No. T-8502 because, when he asked Remegia about it, she claimed it had been lost.

The CFI granted the petition for a new owner’s duplicate copy on March 20, 1974. Shortly thereafter, Aurelio filed another petition with the same court for partial cancellation of TCT No. T-8502 and for issuance of a new certificate of title in his name over the subject lot. The CFI granted the petition, and on September 10, 1974, the Register of Deeds of Cagayan de Oro City issued TCT No. T-17993 in Aurelio’s name. The spouses later constructed their house on the subject lot sometime in 1974–1975, including a 12-foot firewall made of hollow blocks.

Remegia testified that the owner’s duplicate copy of TCT No. T-8502 was never lost and had remained in her possession from the time it was issued to her. She also testified that she could not read and understand English, having reached only Grade 3, although she could read Visayan; the joint affidavit of confirmation of sale was written entirely in English. Atty. Francisco Velez, who notarized the affidavit, testified that he read and interpreted the document to the affiants and asked them whether the contents were correct before they signed. The affidavit did not state the consideration or price for the alleged sale by Remegia to Gil, did not state whether the conveyance from Gil to Dalman was by sale, donation, or another mode, and did not state how ownership passed from Dalman to Aurelio or the spouses.

Remegia discovered in June 1992, while at the Register of Deeds for the purpose of partitioning her property among her children, that a portion of her land had been titled in the name of the Zaldivars. She knew that the Zaldivars had built their house on the property in 1974–1975 but did not stop them, did not protest to the barangay captain or police, and did not complain about the hollow-block fence, because she was certain she owned the land. She filed the complaint for declaration of nullity of TCT No. T-17993 and reconveyance on August 10, 1992. The RTC found that Aurelio had claimed in his affidavit that Remegia’s title was lost when it still existed, and that no public instrument conveyed title from Remegia to Dalman. The CA, on appeal, gave credence to Exhibit “5,” the deed of sale, and found that Remegia sold the subject lot to Gil, who sold it to Dalman, who sold it to the spouses Zaldivar.

• Late Filing of Appellant’s Brief: Petitioners argued that the CA gravely erred in not dismissing respondents’ appeal motu proprio or expunging the brief for defendants-appellants from the record for failure to file the required brief on time and beyond the last and final extended period, in violation of Sections 7 and 12, Rule 44 of the Revised Rules of Court, and contrary to Catalina Roxas, et al. vs. Court of Appeals, G.R. No. L-76549, December 10, 1987.
• Motion for Reconsideration: Petitioners argued that the CA erred in denying the motion for reconsideration which was filed within the fifteen-day reglementary period, in violation of the Rules of Court.
• Jurisdiction over Reconstitution: Petitioners argued that the CA erred in ruling that the court which ordered the issuance of a new certificate of title despite the existence of an owner’s duplicate copy that was never lost had jurisdiction over the case.
• Laches and Estoppel: Petitioners argued that the CA erred in concluding that Remegia’s claim of ownership over the subject lot was barred by estoppel or laches.
• Ownership under TCT No. T-8502: Petitioners argued that the CA erred in concluding that respondents were the absolute owners of the subject lot based on TCT No. 17993 issued to them.
• Overlooked Essential Facts: Petitioners argued that the CA obviated essential and relevant facts which, if properly appreciated, would maintain Remegia’s absolute ownership over the subject lot as evidenced by existing TCT No. T-8502.

• Ownership under Torrens Title: Respondents denied the material allegations in the complaint and claimed that Aurelio was the absolute owner and possessor of the subject lot as evidenced by TCT No. 17993 and Tax Declaration No. 26864.
• Chain of Title: Respondents claimed that Aurelio acquired the subject lot by purchase from Dalman, who in turn bought it from Gil on April 4, 1951; Gil allegedly purchased it from Remegia, and the sale was conformed and ratified by Remegia and Narciso Labuntog before a notary public on December 3, 1965.
• Possession and Improvements: Respondents claimed that they and their predecessors-in-interest had been occupying the subject property since 1947 openly, publicly, adversely, and continuously for over 41 years, and that after Aurelio obtained a GSIS loan, they constructed their house on the subject lot.
• Loss of Title: Respondents claimed that Aurelio filed a petition for the issuance of a new owner’s duplicate copy of TCT No. T-8502 because Remegia claimed it had been lost; thereafter, TCT No. T-17993 was issued in Aurelio’s name.
• Prescription and Laches: On appeal, respondents argued that Remegia’s action was barred by prescription because an action for reconveyance must be filed within 10 years from the issuance of the title, and that laches or estoppel had set in due to her delay and failure to prevent the construction.
• Validity of Joint Affidavit: Respondents relied on the joint affidavit of confirmation of sale and the testimony of the notary public to prove its due execution, authenticity, and truthfulness.

• Validity of New Owner’s Duplicate and TCT No. T-17993: Whether the CFI acquired jurisdiction to issue a new owner’s duplicate copy of TCT No. T-8502 and whether TCT No. T-17993 issued in Aurelio’s name is void where the owner’s duplicate was not lost but remained in Remegia’s possession.
• Effect of Joint Affidavit of Confirmation of Sale: Whether the joint affidavit of confirmation of sale validly established respondents’ acquisition of the subject lot, considering Remegia’s inability to read English and the omissions in the affidavit.
• Indefeasibility of Torrens Title: Whether respondents may rely on the indefeasibility of TCT No. T-17993 despite the prior existing TCT No. T-8502 and the fraud in procuring the new owner’s duplicate.
• Prescription and Laches: Whether Remegia’s action for annulment and reconveyance was barred by prescription, laches, or estoppel, and whether respondents could acquire registered land by adverse possession.
• Builders in Good Faith / Article 448: Whether respondents are entitled to the rights of a builder in good faith under Article 448 of the Civil Code, or whether Article 453 applies because of mutual bad faith.
• Procedural Issue on Late Brief: Whether the CA erred in not dismissing respondents’ appeal for failure to file their appellant’s brief within the extended period.

• Validity of New Owner’s Duplicate and TCT No. T-17993: No. The CFI lacked jurisdiction to issue the new owner’s duplicate because the original owner’s duplicate was not lost; the new duplicate and TCT No. T-17993 emanating from it are void and may be annulled.
• Effect of Joint Affidavit of Confirmation of Sale: No. An affidavit is not a mode of acquiring ownership; respondents failed to rebut the presumption of fraud or mistake under Article 1332 because the affidavit did not show its terms were fully explained in a language Remegia understood and omitted essential transfer details.
• Indefeasibility of Torrens Title: No. The principle of indefeasibility does not apply where fraud attended issuance; TCT No. T-8502 remained valid and prevails over TCT No. T-17993.
• Prescription and Laches: No. Registered land cannot be acquired by prescription or adverse possession; laches did not set in because Remegia merely tolerated respondents’ occupation and discovered the title only in June 1992.
• Builders in Good Faith / Article 448: Article 453 applies. Because Remegia knew of and did not oppose the construction, both parties are in mutual bad faith, and petitioners must exercise either option under Article 448.
• Procedural Issue on Late Brief: Not resolved. The Court found it unnecessary to resolve the procedural issues in light of the merits.

• Validity of New Owner’s Duplicate and TCT No. T-17993: The CFI that granted Aurelio’s petition for a new owner’s duplicate copy of TCT No. T-8502 did not acquire jurisdiction because the owner’s duplicate had not been lost; it was in Remegia’s possession. The rule is that when the owner’s duplicate certificate has not been lost but is in the possession of another, the reconstituted certificate is void, and reconstitution is valid only in case of loss of the original. The new owner’s duplicate was therefore void, and TCT No. T-17993, emanating from it, was correctly nullified by the RTC. A title issued based on void documents may be annulled.
• Effect of Joint Affidavit of Confirmation of Sale: An affidavit by itself is not a mode of acquiring ownership. More importantly, Article 1332 of the Civil Code applies because Remegia could not read and understand English and the affidavit was entirely in English. When a party is unable to read or the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that its terms were fully explained to that party. The burden was on respondents. The notary’s bare statement that he read and interpreted the document did not establish that Remegia actually comprehended it; the affidavit itself did not state that its contents were fully explained in a language she understood. The affidavit also omitted the consideration for the alleged sale to Gil, the mode of conveyance from Gil to Dalman, and how ownership passed from Dalman to Aurelio. Thus the presumption of fraud or mistake stood unrebutted.
• Indefeasibility of Torrens Title: The principle of indefeasibility does not apply where fraud attended the issuance of the title; a Torrens title does not furnish a shield for fraud. TCT No. T-8502 in Remegia’s name remained valid, and she never parted with or surrendered her owner’s duplicate. Aurelio’s TCT No. T-17993 did not become indefeasible because a previous valid title to the same parcel existed. Upholding Aurelio’s title would allow a registered owner without fault to be divested of her property and would undermine the stability of land titles. TCT No. T-8502 therefore prevails over TCT No. T-17993.
• Prescription and Laches: Registered land cannot be acquired by prescription or adverse possession. Article 1126 of the Civil Code provides that prescription of ownership of land registered under the Land Registration Act is governed by that special law, and Act No. 496 provides that no title to registered land in derogation of the registered owner’s title may be acquired by adverse possession. Respondents’ claim of over 41 years of possession was therefore immaterial. Laches also did not set in because Remegia merely tolerated respondents’ occupation; the right of a lawful owner to recover property possessed without authorization or merely tolerated is never barred by laches. Remegia discovered the title in June 1992 and filed the complaint on August 10, 1992.
• Builders in Good Faith / Article 448: Although Remegia did not stop the construction despite knowledge of it, Article 453 of the Civil Code provides that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. Both respondents and Remegia were thus in mutual bad faith, and their rights are the same as though both had acted in good faith. Article 448 therefore applies. Petitioners, as Remegia’s heirs, must exercise either of two options: appropriate the improvements after paying the required indemnity, or sell the subject lot to respondents. They cannot refuse to exercise either option and compel respondents to remove the house. If they choose to sell and the value of the land is considerably more than the improvements, respondents are not obliged to purchase and must pay rent; if the parties cannot agree on the lease terms, the court shall fix them.
• Procedural Issue on Late Brief: The Court found it unnecessary to resolve the procedural issues raised by petitioners in light of its disposition on the merits.

• Void Reconstitution Where Owner’s Duplicate Is Not Lost — A court that orders the issuance of a new owner’s duplicate certificate of title when the original owner’s duplicate has not been lost but is in the possession of another person acts without jurisdiction; the reconstituted certificate is void, and a transfer certificate of title emanating from it may be annulled. The Court applied this rule to void the new owner’s duplicate of TCT No. T-8502 and TCT No. T-17993.
• Indefeasibility of Torrens Title Does Not Shield Fraud — The principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title; the Torrens title does not furnish a shield for fraud. Because Aurelio procured the new owner’s duplicate through fraud, he could not rely on indefeasibility, and Remegia’s prior valid TCT No. T-8502 prevailed.
• Affidavit Is Not a Mode of Acquiring Ownership — An affidavit, by itself, does not transfer or acquire ownership. The joint affidavit of confirmation of sale could not establish respondents’ ownership of the subject lot.
• Article 1332 Civil Code and the Presumption of Mistake or Fraud — When one party is unable to read or the contract is in a language not understood by that party, and mistake or fraud is alleged, the person enforcing the contract must show that its terms were fully explained to the former. If this burden is not discharged, the presumption of mistake, if not fraud, stands unrebutted. The Court applied this to Remegia, who could not read English, and found the notary’s testimony insufficient.
• Registered Land Not Subject to Prescription or Adverse Possession — Under Article 1126 of the Civil Code and Section 46 of Act No. 496 (now Section 47 of P.D. No. 1529), no title to registered land in derogation of the registered owner’s title may be acquired by prescription or adverse possession. Respondents’ long possession did not defeat Remegia’s registered title.
• Laches and Tolerated Possession — If the claimant’s possession of the land is merely tolerated by its lawful owner, the latter’s right to recover possession is never barred by laches. Remegia’s failure to stop the construction did not amount to laches because she merely tolerated the occupation and discovered the adverse title only in June 1992.
• Mutual Bad Faith and Builders Under Articles 453 and 448 — There is bad faith on the part of the landowner whenever the act of building was done with the landowner’s knowledge and without opposition. When both the builder and the landowner are in bad faith, their rights are the same as though both acted in good faith, and Article 448 applies. The landowner may appropriate the improvements after indemnity or sell the land; the builder cannot be compelled to buy if the land’s value is considerably more than the improvements, in which case the builder pays rent. The owner cannot refuse to choose an option and compel removal.

• “when the owner’s duplicate certificate of title has not been lost, but is in fact in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction. Reconstitution can validly be made only in case of loss of the original certificate.” — This is the ratio for voiding the new owner’s duplicate of TCT No. T-8502 and, consequently, TCT No. T-17993.
• “the principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title. The Torrens title does not furnish a shield for fraud.” — This states the controlling exception to indefeasibility and explains why Aurelio could not rely on TCT No. T-17993 against Remegia’s prior valid title.
• “by itself, an affidavit is not a mode of acquiring ownership.” — This supports the rejection of the joint affidavit of confirmation of sale as proof of respondents’ acquisition of the subject lot.
• “if the claimant’s possession of the land is merely tolerated by its lawful owner, the latter’s right to recover possession is never barred by laches” — This is the ratio for rejecting the CA’s laches ruling and allowing Remegia’s action despite the long period of respondents’ occupation.

• Eastworld Motor Industries Corp. vs. Skunac Corp., G.R. No. 163994, December 16, 2005, 478 SCRA 420 — Cited for the rule that when the owner’s duplicate certificate of title has not been lost, the reconstituted certificate is void because the court had no jurisdiction.
• New Durawood Co., Inc. vs. Court of Appeals, 324 Phil. 109 (1996), citing Serra Serra vs. Court of Appeals, G.R. No. 34080, March 22, 1991, 195 SCRA 482 — Cited for the rule that a decision authorizing the issuance of a new owner’s duplicate certificate of title may be attacked at any time.
• Sacdalan vs. Court of Appeals, G.R. 128967, May 20, 2004, 428 SCRA 586 — Cited for the rule that the principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title.
• Bongalon vs. Court of Appeals, G.R. No. 142441, November 10, 2004, 441 SCRA 553 — Cited for the rule that a title issued based on void documents may be annulled.
• Cequeña vs. Bolante, 386 Phil. 419 (2000) — Cited for the rule that an affidavit is not a mode of acquiring ownership.
• Mayor vs. Belen, G.R. No. 151035, June 3, 2004, 430 SCRA 561 — Cited for the Article 1332 principle that the burden is on the party enforcing a contract to show that its terms were fully explained to a party unable to read or understand the language.
• Ragudo vs. Fabella Estate Tenants Association, Inc., G.R. No. 146823, August 9, 2005, 466 SCRA 136; J.M. Tuason & Co., Inc. vs. Court of Appeals, No. L-23480, September 11, 1979, 93 SCRA 146; Tuason vs. Bolaños, 95 Phil. 106 (1954) — Cited for the rule that lands covered by a title cannot be acquired by prescription or adverse possession.
• Natalia Realty Corporation vs. Vallez, et al., G.R. Nos. 78290-94, May 23, 1989, 173 SCRA 534 — Cited for the rule that proof of possession is immaterial and inconsequential when the land involved is registered land.
• Sanchez vs. Quinio, G.R. No. 133545, July 15, 2005, 463 SCRA 471, citing C.N. Hodges vs. Dy Buncio & Co., Inc., 116 Phil. 595 (1962) — Cited for the rule that a claim of indefeasibility is correct only if no previous valid title to the same parcel exists.
• Bishop vs. Court of Appeals, G.R. No. 86787, May 8, 1992, 208 SCRA 636 — Cited for the rule that the lawful owner’s right to recover property possessed merely by tolerance is never barred by laches.
• Carrascoso, Jr. vs. Court of Appeals, G.R. No. 123672, December 14, 2005, 477 SCRA 666 — Cited for the Article 448 options of the landowner and the rights of the builder.
• Technogas Philippines Manufacturing Corp. vs. Court of Appeals, G.R. No. 108894, February 10, 1994, 268 SCRA 5 — Cited for the rule that the owner cannot refuse to exercise either option under Article 448 and compel the builder to remove the improvement.

• Article 1332, Civil Code — Applied to the joint affidavit; because Remegia could not read English, respondents had the burden to show its terms were fully explained to her, which they failed to discharge.
• Article 1126, Civil Code — Provides that prescription of ownership of lands registered under the Land Registration Act is governed by that special law; used to reject respondents’ claim of acquisitive prescription.
• Section 46, Act No. 496 (now Section 47, P.D. No. 1529) — Provides that no title to registered land in derogation of the registered owner’s title may be acquired by prescription or adverse possession; applied to hold respondents’ long possession immaterial.
• Article 453, Civil Code — Provides that if there was bad faith on the part of both the builder and the landowner, their rights are the same as though both acted in good faith; there is bad faith on the landowner when the act was done with knowledge and without opposition. Applied because Remegia knew of the construction and did not oppose it.
• Article 448, Civil Code — Governs the rights of the landowner and builder in good faith; the landowner may appropriate the improvements after indemnity or sell the land, and if the land’s value is considerably more than the improvements, the builder pays rent. Applied by ordering petitioners to exercise either option.
• Articles 546 and 548, Civil Code — Referenced by Article 448 for the indemnity due for necessary and useful expenses; relevant to the option of appropriating the improvements.

Panganiban, C.J. (Chairperson); Ynares-Santiago, J.; Austria-Martinez, J.; Chico-Nazario, J.