New Regent Sources, Inc. vs. Tanjuatco

Reconveyance does not lie absent proof of ownership, procurement of registration through fraud or other illegal means, and that the property has not passed to an innocent purchaser for value. Applied here, the action failed because accretion was not proved by preponderant evidence, corporate authority and fraud were not established, and title derived from the Republic had passed to a buyer who relied on the correctness of Torrens certificates.

New Regent Sources, Inc. is a corporation that claimed entitlement to lands adjoining its titled properties by right of accretion. Vicente P. Cuevas III was identified as its Chairman and President, while Teofilo Victor Tanjuatco, Jr. was the subsequent assignee of pending Bureau of Lands rights and the registered owner of the disputed lots. The disputed parcels were derived from Original Certificate of Title No. 245 in the name of the Republic of the Philippines, forming part of the Dried San Juan River Bed within Alienable and Disposable Project No. 11-B of Calamba, Laguna.

New Regent Sources, Inc. alleged that in 1994 it authorized Vicente P. Cuevas III, its Chairman and President, to apply on its behalf for the acquisition of two parcels of land by virtue of its right of accretion. Cuevas purportedly applied for the lots in his own name by paying ₱82,400.38 to the Bureau of Lands. On January 2, 1995, Cuevas and his wife executed a Voting Trust Agreement over their shares of stock in the corporation. Thereafter, pending approval of the application with the Bureau of Lands, Cuevas assigned his rights to Teofilo Victor Tanjuatco, Jr. for ₱85,000.

When the application matured, the Director of Lands issued an Order on March 12, 1996 approving the transfer of rights from Cuevas to Tanjuatco. Transfer Certificates of Title Nos. T-369406 and T-369407 were then issued in Tanjuatco's name, with issuance stated to have occurred on May 24, 1996. To support its claim of accretion, petitioner submitted in evidence titles to four parcels allegedly adjoining Tanjuatco's lots, while the record showed Tanjuatco derived his titles from Original Certificate of Title No. 245 registered in the name of the Republic of the Philippines covering part of the Dried San Juan River Bed, verified as within Alienable and Disposable Project No. 11-B of Calamba, Laguna per BFD LC Map No. 3004 certified September 28, 1981.

Petitioner sued for rescission, declaration of nullity, reconveyance and damages against Tanjuatco and the Register of Deeds, later impleading Cuevas, who was served by publication and declared in default. According to Tanjuatco, the complaint stated no cause of action against him because the alleged fraud was committed by Cuevas and no knowledge thereof was charged against him. After petitioner completed its evidence, Tanjuatco moved for dismissal by demurrer to evidence, which the trial court granted upon finding insufficiencies in the complaint and that Tanjuatco was an innocent purchaser for value.

• Sufficiency of Complaint vs. Sufficiency of Evidence: Petitioner argued that supposed insufficiency of allegations in the complaint could not justify dismissal by demurrer to evidence, which should be grounded on insufficiency of evidence presented at trial, and that sufficiency of its allegations was already affirmed when the motion to dismiss was denied.
• Formal Offer of Evidence: Petitioner maintained that the trial court erred in relying on the March 12, 1996 Order of the Director of Lands to find Tanjuatco a buyer in good faith because said Order was not formally offered in evidence and should not have been considered under Section 34, Rule 132 of the Rules of Court.
• Good Faith and Consideration: Petitioner contended that Tanjuatco was not a buyer in good faith, pointing to the below-fair market value consideration of ₱85,000 paid to Cuevas for the assignment of rights.

• No Cause of Action for Reconveyance: Respondent countered that petitioner failed to make a case for reconveyance, the complaint stated no cause of action against him, and the evidence presented established rather than refuted that he was an innocent purchaser.
• Denial of Motion to Dismiss: Respondent argued that the denial of the motion to dismiss and the admission of evidence negated petitioner's claim that the case was decided on the complaint alone.
• Judicial Notice: Respondent maintained that the Order of the Director of Lands was a matter of judicial notice under Section 1, Rule 129 of the Rules of Court, so there was no need to identify, mark and offer it in evidence.

• Demurrer and Sufficiency of Pleading: Whether the alleged insufficiency of the allegations in the complaint may be used as basis to dismiss the same by way of demurrer to evidence.
• Un-offered Document: Whether a complaint may be dismissed on demurrer to evidence based on a document not properly identified, marked and offered in evidence.
• Correctness of Dismissal: Whether the trial court erred in dismissing the case on demurrer to evidence.

• Demurrer and Sufficiency of Pleading: No reversible error was shown. Dismissal on demurrer tests sufficiency of plaintiff's evidence to show right to relief, and review of that calibration raises questions of fact improper under Rule 45.
• Un-offered Document: No. Reliance on Torrens titles duly introduced in evidence sustained the finding of good faith, the titles showing derivation from the Republic, without need to depend on the un-offered Order.
• Correctness of Dismissal: No. Dismissal was correct because the requisites for reconveyance were not proved, accretion was not established, and the property had passed to an innocent purchaser for value.

• Demurrer and Sufficiency of Pleading: A question of law exists only where doubt concerns what the law is on admitted facts and correct application of law and jurisprudence, while doubt on truth or falsity of alleged facts or probative value of evidence presents a question of fact. Because the petition invited recalibration of the evidence to test the factual basis for the demurrer ruling, it raised essentially questions of fact beyond review on certiorari.
• Un-offered Document: By nature a demurrer is filed after plaintiff rests and before defendant presents evidence, with waiver of evidence if dismissal is reversed on appeal, explaining why respondent offered no evidence. More importantly, petitioner itself introduced TCT Nos. T-369406 and T-369407 bearing certification of derivation from OCT No. 245 in the name of the Republic, upon which reliance in good faith was justified.
• Correctness of Dismissal: Reconveyance requires ownership or dominical right, registration through fraud or other illegal means, non-passage to an innocent purchaser, and timely filing after title became final. Accretion under Article 457 additionally requires gradual and imperceptible soil deposition by river waters on land adjacent to river banks, proved by preponderant evidence. Petitioner proved none of these: no evidence of accretion requisites beyond riparian ownership, no Voting Trust provision authorizing registration, no by-laws or board resolution proving Cuevas's corporate authority, and no fraud in registration; the ₱85,000 covered only intangible pending application rights, not sale of real property.

• Reconveyance — An action for reconveyance seeks transfer to the rightful owner of property wrongfully or erroneously registered in another's name, respecting the certificate as incontrovertible. It requires (1) action by one claiming ownership or dominical right over land registered in defendant's name, (2) registration procured through fraud or other illegal means, (3) non-passage to an innocent purchaser for value, and (4) filing after title became final but within four years from discovery of fraud or not later than ten years for implied trust. Applied here, failure to prove ownership, fraud, and non-passage to an innocent purchaser defeated the action.
• Accretion under Article 457 — To owners of lands adjoining river banks belong accretions gradually received from river currents, requiring (1) gradual and imperceptible soil deposition, (2) result of river waters' action, and (3) adjacency to river banks. Mere riparian ownership is insufficient; all conditions must be shown by preponderant evidence. Petitioner failed for offering only adjoining titles without proof of these requisites.
• Innocent purchaser for value — One who buys another's property without notice of another's right or interest and pays full price at purchase or before notice of such claim. Found applicable to Tanjuatco, who relied on Torrens titles derived from the Republic and paid for assignment of pending rights before title issuance.
• Reliance on Torrens title — A person dealing with registered land may safely rely on the correctness of the certificate and need not go behind it to determine the property's condition, especially where the source is the Republic against which no improper motive can be ascribed. This sustained Tanjuatco's good faith.
• Demurrer to evidence — After plaintiff completes evidence, defendant may move for dismissal on the ground that upon facts and law plaintiff has shown no right to relief; denial preserves defendant's right to present evidence, while grant followed by reversal on appeal deems that right waived. This explained respondent's non-presentation of evidence including the Director of Lands Order.
• Questions of law vs. fact under Rule 45 — Only questions of law are reviewable on certiorari; law questions concern applicable law on admitted facts, while fact questions center on truth or falsity of alleged facts and probative value of evidence. The petition's request to recalibrate evidence presented a factual question warranting denial.
• Corporate authority — Even assuming Cuevas was president, his powers are confined to those vested by the board or fixed in by-laws, provable by by-laws or corporate resolution. No such proof was adduced to show authority to acquire the lands for petitioner.

• "An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner." — Defines the nature of reconveyance and frames why petitioner had to prove wrongful registration and better right rather than attack the certificate itself.
• "A person dealing with registered land may safely rely upon the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property." — States the ratio for sustaining Tanjuatco as a buyer in good faith relying on Torrens titles derived from the Republic.
• "An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in such property and pays the full price for the same, at the time of such purchase or before he has notice of the claims or interest of some other person in the property." — Provides the canonical definition applied to defeat reconveyance because the property had passed to such a purchaser.
• "After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief." — Defines demurrer to evidence and underlies the ruling on waiver and why respondent had presented no evidence.

• Bangko Sentral ng Pilipinas vs. Santamaria, G.R. No. 139885, January 13, 2003 — Cited as authority that only questions of law may be reviewed in an appeal by certiorari.
• Morales vs. Skills International Company, G.R. No. 149285, August 30, 2006 — Cited, citing Microsoft Corporation vs. Maxicorp, Inc., for the distinction between questions of law and fact.
• Roman Catholic Archbishop of Manila vs. Court of Appeals, G.R. No. 111324, July 5, 1996 — Cited for when an issue presents a question of law based on admitted facts and application of law and jurisprudence.
• Heirs of Maximo Sanjorjo vs. Heirs of Manuel Y. Quijano, G.R. No. 140457, January 19, 2005 — Cited for the definition of an action for reconveyance.
• Walstrom vs. Mapa, Jr., G.R. No. 38387, January 29, 1990 — Followed on the nature of reconveyance respecting the title as incontrovertible and on requisites including fraud and non-passage to an innocent purchaser.
• Heirs of Ambrocio Kionisala vs. Heirs of Honorio Dacut, G.R. No. 147379, February 27, 2002 — Cited for procurement through other illegal means and the ten-year period for implied trust.
• Balbin vs. Medalla, No. L-46410, October 30, 1981 — Cited for the four-year period from discovery of fraud.
• Meneses vs. Court of Appeals, G.R. Nos. 82220, 82251 and 83059, July 14, 1995 — Followed for the three requisites of accretion under Article 457.
• Dela Cruz vs. Dela Cruz, G.R. No. 146222, January 15, 2004 — Followed for reliance on Torrens title and definition of innocent purchaser for value.

• Article 457, Civil Code — Provides that owners of lands adjoining river banks own gradual accretions from river currents; applied to require proof of gradual imperceptible deposition, river action, and adjacency, which petitioner failed to prove.
• Article 502(1), Civil Code — Classifies rivers and their natural beds as public dominion; applied with the finding that the lands formed part of the Dried San Juan River Bed rightly pertaining to the Republic as transferor.
• Section 34, Rule 132, Rules of Court — Provides courts shall consider no evidence not formally offered with stated purpose; invoked by petitioner to exclude the Director of Lands Order, but reliance was instead placed on formally introduced Torrens titles.
• Section 1, Rule 129, Rules of Court — Requires judicial notice without evidence of official acts of legislative, executive and judicial departments; invoked by respondent to excuse formal offer of the Director of Lands Order.
• Section 1, Rule on Demurrer to Evidence — Governs dismissal motion after plaintiff rests for failure to show right to relief, with waiver consequences on appeal; applied to explain respondent's inability to formally offer evidence.

Conchita Carpio Morales, J., Dante O. Tinga, J., Presbitero J. Velasco, Jr., J., Arturo D. Brion, J.