Ocampo vs. Ocampo

An action for reconveyance based on an implied trust, when the plaintiff remains in actual possession of the disputed property, converts into an action for quieting of title which is imprescriptible. Forgery of the document underlying a Torrens title renders the title void, and the rightful co-owner in possession may seek quieting of title without regard to the prescriptive period applicable to ordinary reconveyance actions.

Petitioner Jose S. Ocampo and respondent Ricardo S. Ocampo, Sr. are full-blooded brothers, sons of the late Basilio Ocampo and Juliana Sunglao. The subject property — a 150-square meter lot with improvements located at 2227 Romblon Street, G. Tuazon, Sampaloc, Manila — was originally registered in their parents' names under TCT No. 36869 as conjugal property. The dispute centers on whether petitioner fraudulently caused the transfer of the property to his own name through a forged Extra-Judicial Settlement with Waiver dated September 30, 1970, which resulted in the cancellation of TCT No. 36869 and the issuance of TCT No. 102822 in petitioner's name on November 24, 1970.

Petitioner Jose S. Ocampo and respondent Ricardo S. Ocampo, Sr. are full-blooded brothers, sons of the late Basilio Ocampo and Juliana Sunglao. The subject property, consisting of a 150-square meter lot and the improvements thereon located at 2227 Romblon Street, G. Tuazon, Sampaloc, Manila, was originally registered in their parents' names under TCT No. 36869 as conjugal property.

According to respondent, he and petitioner are co-owners of the subject property. Respondent alleged that petitioner and his wife, Andrea Mejia Ocampo, conspired in falsifying respondent's signature on a notarized Extra-Judicial Settlement with Waiver dated September 1970, and thereby effected the transfer of the property in petitioner's name under TCT No. 102822, which was issued on November 24, 1970. The NBI found that respondent's signature on the ESW was forged, and an Information was filed against petitioner, the notary public, and two others. Respondent requested partition of the property, but petitioner refused and secretly mortgaged the property for ₱200,000.00.

Petitioner, for his part, claimed that their parents executed a Deed of Donation Propter Nuptias of the subject property in favor of petitioner and his wife as they were getting married, with a promise to demolish the old house and replace it with a new two-storey house, which they did. To build the new house, they obtained a ₱10,000.00 loan from the Development Bank of the Philippines (DBP), with petitioner and his parents as borrowers. Petitioner further alleged that his parents gave respondent several properties outside Metro Manila, which respondent eventually lost, and that petitioner and his wife then allowed respondent to stay at the second floor of the house. Petitioner was able to pay the DBP loan through a loan secured from the Social Security System (SSS) with the consent of his father. He claimed that on September 30, 1970, their father executed the ESW and secured respondent's signature. By virtue of the ESW, petitioner had TCT No. 36869 cancelled and TCT No. 102822 issued in favor of himself and his wife. In an Amended Answer, petitioner additionally alleged that on November 19, 1970, their father executed a Deed of Absolute Sale, selling his interest in the subject property for ₱9,000.00 in favor of petitioner.

Respondent filed the complaint for partition and annulment of title on June 29, 1992, or approximately 21 years and 7 months after the issuance of TCT No. 102822. Petitioner moved to dismiss on the ground of prescription, and the trial court initially granted the dismissal on January 21, 1994. The CA nullified that dismissal, and the SC Second Division affirmed the CA via minute resolution in G.R. No. 149287, which became final on October 16, 2001. The case was then tried on the merits. Respondent presented three witnesses: himself, his wife Francisca Elera Ocampo, and Rhoda B. Flores, the Officer-in-Charge of the Questioned Documents Division of the NBI. Petitioner presented himself as the only witness for the defense. The RTC found that respondent's signature on the ESW was forged, a finding affirmed by the CA, supported by the NBI report, the testimonies of respondent and his wife, and petitioner's own admission on cross-examination that he was not present when the ESW was executed. Both the RTC and CA found that preponderance of evidence weighed in favor of respondent. The complaint itself stated that both parties were residing at the subject property at the time of filing, a fact unqualifiedly admitted by petitioner in his Amended Answer.

• Presumption of Authenticity of Notarized Document: Petitioner argued that the ESW, being a notarized document, enjoys a prima facie presumption of authenticity and due execution, and that there was no clear and convincing evidence to overcome this presumption.
• Estoppel by Laches: Petitioner maintained that the action was barred by laches, since the ESW was executed and notarized on September 30, 1970, but respondent filed the case only on July 1, 1992, constituting an unreasonable delay in asserting his rights.
• Factual Findings on Forgery: Petitioner claimed that the CA erred in finding that the preponderance of evidence favored the view that respondent's signature on the ESW was not genuine.
• Characterization of the ESW: Petitioner argued that the CA erred in sustaining that the ESW is a void or inexistent contract.
• Applicability of Laches: Petitioner argued that the CA erred in ruling that the action to declare the nullity of the ESW was not barred by laches.

• Prior Adjudication: Respondent prayed for the dismissal of the petition, arguing that the issues raised had already been exhaustively and judiciously passed upon by the CA and the trial court.
• Imprescriptibility of Action: Respondent argued that the CA was correct in declaring that the action was not barred by laches since the ESW is a void or inexistent contract, which makes an action declaring it imprescriptible.

• Reviewability of Factual Findings: Whether the CA erred in finding that the preponderance of evidence lies in favor of the view that the signature of the respondent is not genuine.
• Validity of the ESW: Whether the CA erred in sustaining that the ESW is a void or inexistent contract.
• Bar by Laches: Whether the CA erred in ruling that the action to declare the nullity of the ESW is not barred by laches.

• Reviewability of Factual Findings: No. Questions of fact are not reviewable in petitions for review on certiorari under Rule 45, and the factual findings of the lower courts, supported by substantial evidence, are accorded great respect and finality.
• Validity of the ESW: No error by the CA. The ESW was established to be forged through the NBI report, testimonial evidence, and petitioner's own admission, rendering it void and incapable of producing legal effect.
• Bar by Laches: No. The action was not barred by laches because respondent had filed multiple criminal and civil cases asserting his rights over the property, negating any presumption of abandonment or neglect.

• Reviewability of Factual Findings: It is well settled that questions of fact are not reviewable in petitions for review on certiorari under Rule 45 of the Rules of Court; only questions of law distinctly set forth may be raised and resolved. The factual findings of the lower courts, if supported by substantial evidence, are accorded great respect and even finality. The Court found no reason to overturn the factual findings of the trial court as affirmed by the CA, as the records showed that preponderant evidence established the falsity of the ESW and the fraudulent registration of the subject property in petitioner's name. The forgery was supported by the NBI report, the testimonies of respondent and his wife, and petitioner's own admission on cross-examination that he was not present when the ESW was executed.

• Validity of the ESW: The falsity of the ESW was established through preponderant evidence, including the NBI finding that respondent's signature was forged. Because the ESW was forged, petitioner obtained registration of the subject property through fraud. This wrongful registration gave occasion to the creation of an implied or constructive trust under Article 1456 of the Civil Code, which provides that if property is acquired through mistake or fraud, the person obtaining it is considered a trustee of an implied trust for the benefit of the person from whom the property comes. An action for reconveyance based on an implied trust generally prescribes in ten years from the issuance of the Torrens title. However, the Court explained that when the plaintiff remains in actual possession of the disputed property, the prescriptive period does not run against him, and the action is deemed in the nature of a quieting of title, which is imprescriptible. The complaint itself stated that both parties were residing at the subject property at the time of filing, a fact unqualifiedly admitted by petitioner in his Amended Answer. This judicial admission conclusively bound petitioner and could not be contradicted. Since respondent was in actual possession, the action was properly treated as one for quieting of title. The requisites for quieting of title were satisfied: respondent had legal or equitable title to the property as co-owner, and the ESW — the instrument casting a cloud on his title — was in fact invalid due to forgery despite its prima facie appearance of validity as a notarized document.

• Bar by Laches: Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by the exercise of due diligence could or should have been done earlier. Based on the facts, respondent did not sleep on his rights. He had filed several cases to assert his rights over the property, including the present complaint and three separate criminal complaints for falsification of public document, estafa through falsification of public documents, and forgery, all against petitioner. The filing of these cases at different times negated the claim of laches. The Court further noted that under the principle of equity, courts will not be bound strictly by the statute of limitations or the doctrine of laches when doing so would result in manifest wrong or injustice.

• Imprescriptibility of Quieting of Title — An action for quieting of title is imprescriptible when the plaintiff is in actual possession of the disputed property. The plaintiff has the right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right. In this case, respondent's actual possession of the subject property, as judicially admitted by petitioner, converted what would otherwise have been a time-barred reconveyance action into an imprescriptible action for quieting of title.

• Implied Trust Arising from Fraud (Article 1456, 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 provision because petitioner obtained registration of the subject property through the forged ESW, constituting fraud that gave rise to an implied trust in favor of respondent.

• Prescription of Reconveyance Based on Implied Trust — An action for reconveyance based on an implied or constructive trust prescribes in ten years from the date of registration of the deed or the date of issuance of the certificate of title over the property. This prescriptive period does not apply, however, when the plaintiff remains in actual possession of the property, in which case the action converts into one for quieting of title and becomes imprescriptible.

• Judicial Admissions — A party may make judicial admissions in the pleadings, during the trial, or in other stages of the judicial proceeding. A judicial admission conclusively binds the party making it, and the party cannot thereafter take a position contradictory to or inconsistent with his pleadings. Acts or facts admitted do not require proof and cannot be contradicted unless the admission was made through palpable mistake or no such admission was made. Petitioner's failure to refute respondent's possession of the subject property, as stated in the complaint and admitted in the Amended Answer, constituted a judicial admission.

• Requisites for Quieting of Title — Two indispensable requisites must concur: (1) the plaintiff has a legal or equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. A cloud on title exists when there is an instrument or record or claim or encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, unenforceable, extinguished, or barred by extinctive prescription, and may be prejudicial to the title.

• Laches — Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by the exercise of due diligence could or should have been done earlier. It is the negligence or omission to assert a right within a reasonable period, warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. The doctrine did not apply because respondent had filed multiple cases asserting his rights.

• "After all, the Torrens system was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad faith." — This passage, quoted from Walstrom vs. Mapa, Jr. via Pontigon vs. Sanchez, articulates the fundamental principle that the Torrens system does not protect fraudulent registrants, and forms the doctrinal basis for allowing reconveyance even after the one-year indefeasibility period.

• "An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years from the issuance of the Torrens title over the property." — This statement establishes the general prescriptive period for reconveyance actions based on implied trust, a key temporal limitation that the Court then qualified by the exception for plaintiffs in actual possession.

• "However, if the plaintiff remains in possession of the property, the prescriptive period to recover title of possession does not run against him. In such case, his action is deemed in the nature of a quieting of title, an action that is imprescriptible." — This is the critical ratio decidendi: the possession-based exception that converts a prescriptible reconveyance action into an imprescriptible quieting of title action, directly resolving the prescription issue in respondent's favor.

• "Time and again, this Court has ruled that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would result." — This passage states the equitable principle that allowed the Court to reject the laches defense, emphasizing that equity overrides rigid application of prescription and laches where injustice would result.

• Pontigon vs. Sanchez, G.R. No. 221513, December 5, 2016 — Followed. The Court relied on this recent decision for the comprehensive discussion of the Torrens System, reconveyance based on implied trust, and the ten-year prescriptive period, as well as the exception for plaintiffs in actual possession converting the action to quieting of title.

• Walstrom vs. Mapa, Jr. — Followed as quoted within Pontigon vs. Sanchez. The Court quoted this case for the principle that the Torrens system was not designed to shield one who committed fraud or misrepresentation, and that property registered in another's name is deemed held in trust for the real owner.

• Heirs of Delfin and Maria Tappa vs. Heirs of Jose Bacud, G.R. No. 187633, April 4, 2016 — Followed. The Court cited this case for the requisites of an action for quieting of title and the definition of a cloud on title.

• Aniceto Uy vs. Court of Appeals, G.R. No. 173186, September 16, 2015 — Followed. Cited for the proposition that if the plaintiff remains in possession of the property, the prescriptive period does not run against him, and the action is deemed in the nature of quieting of title.

• Virtucio vs. Alegarbes, G.R. No. 187451, August 29, 2012 — Followed. Cited for the doctrine that questions of fact are not reviewable in petitions for review on certiorari under Rule 45, and that factual findings of lower courts supported by substantial evidence are accorded great respect and finality.

• Adolfo vs. Adolfo, G.R. No. 201427, March 18, 2015 — Followed. Cited for the definition and scope of judicial admissions, including that they may be made in pleadings, during trial, or in other stages of the judicial proceeding.

• Extraordinary Development Corporation vs. Samson-Bica, G.R. No. 191090, October 13, 2014 — Followed. Cited for the rule that a judicial admission conclusively binds the party making it and cannot be contradicted unless made through palpable mistake or no such admission was made.

• Raymundo Coderias vs. Estate of Juan Cidoco, G.R. No. 180476, June 26, 2013 — Followed. Cited for the equitable principle that courts will not be strictly bound by the statute of limitations or the doctrine of laches when to do so would result in manifest wrong or injustice.

• 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. Applied because petitioner obtained registration through the forged ESW, constituting fraud that gave rise to an implied trust in favor of respondent.

• Article 476, Civil Code — Governs actions to quiet title, providing that whenever there is a cloud on title to real property by reason of any instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, an action may be brought to remove such cloud or quiet the title. Applied because the forged ESW, though apparently valid as a notarized document, was in fact invalid and cast a cloud on respondent's title.

• Article 477, Civil Code — Provides that the plaintiff in a quieting of title action must have legal or equitable title to or interest in the real property which is the subject of the action, though need not be in possession. Applied because respondent, as co-owner of the subject property, had legal title and interest sufficient to maintain the action.

• Presidential Decree No. 1529 (Property Registration Decree) — Governs the Torrens System. The Court discussed the one-year indefeasibility period of Torrens titles and the exceptions thereto, including actions for reconveyance based on implied trusts and quieting of title.

• Rule 45, Rules of Court — Governs petitions for review on certiorari before the Supreme Court, limited to questions of law. Applied to bar review of the factual findings of the lower courts on the genuineness of respondent's signature.

Lucas P. Bersamin, Bienvenido L. Reyes, Francis H. Jardeleza, and Noel G. Tijam concurred in the decision. No separate concurring opinions were noted.