Ramirez vs. Court of Appeals

A decree of registration procured through an applicant’s deliberate false attestation that no other person has any claim or interest in the land may be reviewed and set aside under Section 38 of Act No. 496 for actual and extrinsic fraud; once public land is registered and a certificate of title is issued, it falls within the Land Registration Act, and an antichretic creditor’s possession cannot ripen into ownership by prescription.

Petitioners-spouses Hilario Ramirez and Valentina Bonifacio are related to private respondents, who are their nephews and nieces and the heirs of the deceased Agapita Bonifacio, Valentina’s sister. The dispute concerns a parcel of riceland in Pamplona, Las Piñas, Rizal, originally held by Gregoria Pascual and later by Agapita Bonifacio. The case arises under the Land Registration Act, Act No. 496, particularly Section 38 on review of decrees of registration for fraud, and involves a contract of antichresis.

On September 15, 1959, petitioners-spouses Hilario Ramirez and Valentina Bonifacio filed an application for registration of a parcel of riceland in Pamplona, Las Piñas, Rizal. They claimed they acquired the land by purchase from Gregorio Pascual during the early part of the American regime, but the corresponding contract of sale was lost and no copy or record of it was available. No one appeared to oppose the application, and an order of general default was issued. The court allowed petitioners to present evidence in support of their claim. On January 30, 1960, the court ordered the issuance of the decree of registration, and Original Certificate of Title No. 2273 of the Registry of Deeds of Rizal was issued in petitioners’ names.

On March 30, 1960, private respondents Francisca Medina, Basilio Martin, Matilde Martin, Delfin Guinto, Teofilo Guinto, Prudencio Guinto, and Margarita Guinto, petitioners’ nephews and nieces, filed a petition to review the decree of registration on the ground of fraud. They alleged that they were the legal heirs of the deceased Agapita Bonifacio, who died intestate on March 11, 1936; that Valentina Bonifacio was a sister of Agapita Bonifacio, both being children of Gregoria Pascual; that Gregoria Pascual previously owned the land as evidenced by Tax Declaration No. 6611 of Las Piñas, Rizal, issued on December 8, 1920; that Agapita Bonifacio acquired the property by purchase from Gregoria Pascual, for which Tax Declaration No. 8777 was issued in her name on May 21, 1928; and that Gregoria Pascual possessed the property in the concept of owner from 1916, publicly and uninterruptedly, and her possession was continued by Agapita Bonifacio in 1928. They further alleged that in 1938 they obtained a loan of P400.00 from petitioners, secured by a mortgage on the land by way of antichresis; that for this reason Tax Declaration No. 8777 was cancelled and substituted by Tax Declaration Nos. 9522 and 2385 issued in petitioners’ names; that petitioners thereafter began paying taxes on the land; and that after several attempts to redeem the land were refused by petitioners, they filed a complaint in the Court of First Instance of Pasay City, docketed as Civil Case No. 272-R, for recovery of possession and ownership. When they learned of the issuance of the certificate of title in petitioners’ names, they filed the petition for review. The previous complaint, Civil Case No. 272-R, was subsequently dismissed on a joint petition filed by the parties after they agreed to have the question of ownership resolved in the registration proceedings.

In their answer, the spouses Ramirez denied the material allegations of the petition and based their claim to the land on two deeds of sale allegedly executed on April 15, 1937 and April 23, 1937, which they allegedly found accidentally in March 1960.

After trial, the court found the deeds of sale spurious. It found that private respondents took possession of the land as owners after the death of Agapita Bonifacio and that in 1938 they mortgaged it to the spouses Ramirez to secure the payment of a loan in the amount of P400.00. It was agreed that private respondents could not redeem the property within a period of five years and that petitioners would take possession of the land, enjoy its fruits, and pay the land taxes thereon. The written agreement was kept by petitioners as creditors. The trial court appreciated petitioners’ failure, despite formal request, to produce the document in court in favor of private respondents. The trial court found that petitioners were merely antichretic creditors and that private respondents and their predecessors-in-interest had possessed the land since time immemorial. The Court of Appeals affirmed these factual findings.

• Jurisdiction to Review Decree: Petitioners questioned whether the Court of First Instance, acting as a land registration court, had jurisdiction to give due course to a petition for review of a decree under Section 38 of Act No. 496 and to reopen the original proceedings when the petition was actually one for reconveyance and not based on actual or extrinsic fraud.
• Applicability of Section 38 to Public Agricultural Land: Petitioners questioned whether Section 38 of Act No. 496 applies to original land registration proceedings under paragraph (b), Section 48 of Commonwealth Act No. 141, as amended by Republic Act No. 1942, where the land involved is public agricultural land.
• Power to Vest Title and Order Partition: Petitioners questioned whether the Court of First Instance, acting as a land registration court, had the power and authority to vest title to the land in private respondents and order its partition among them despite the admitted fact that the land was in the actual possession of petitioners and private respondents had not possessed it at all.
• Legal Capacity to Acquire Title: Petitioners questioned whether private respondents had the legal capacity and qualification to acquire and be vested by the court with title to the land in question.

• Ownership and Inheritance: Private respondents claimed that they are the legal heirs of the deceased Agapita Bonifacio, who acquired the land by purchase from Gregoria Pascual, and that they are therefore the rightful owners of the property.
• Antichresis and Fraud: Private respondents alleged that petitioners were merely antichretic creditors under a P400.00 loan and that petitioners willfully and fraudulently suppressed this fact and falsely declared in their application that no other person had any claim or interest in the land.
• Prior Recovery Case: Private respondents alleged that after attempts to redeem the land were refused, they filed Civil Case No. 272-R for recovery of possession and ownership, which was later dismissed on a joint petition after the parties agreed to resolve ownership in the registration proceedings.

• Jurisdiction to Review Decree: Whether the Court of First Instance, acting as a land registration court, had jurisdiction to give due course to a petition for review of a decree under Section 38 of Act No. 496 and to reopen the original proceedings when the petition is actually one for reconveyance and not based on actual or extrinsic fraud.
• Applicability of Section 38 to Public Agricultural Land: Whether Section 38 of Act No. 496 applies to original land registration proceedings under paragraph (b), Section 48 of Commonwealth Act No. 141, as amended by Republic Act No. 1942, where the land involved is public agricultural land.
• Power to Vest Title and Order Partition: Whether the Court of First Instance, acting as a land registration court, had the power and authority to vest title to the land in private respondents and order its partition among them despite the admitted fact that the land was in the actual possession of petitioners and private respondents had not possessed it at all.
• Legal Capacity to Acquire Title: Whether private respondents had the legal capacity and qualification to acquire and be vested by the court with title to the land in question.

• Jurisdiction to Review Decree: Yes. The land registration court had jurisdiction to entertain the petition for review under Section 38 of Act No. 496 because the allegations and proof established actual and extrinsic fraud, specifically petitioners’ false attestation that no other person had any claim or interest in the land.
• Applicability of Section 38 to Public Agricultural Land: Yes. Under Section 122 of Act No. 496, once public land is registered and a certificate of title is issued, it becomes registered land for all purposes under the Land Registration Act; hence Section 38 applies and the decree may be reviewed for actual and extrinsic fraud.
• Power to Vest Title and Order Partition: Yes. The court could vest title and order partition because petitioners’ actual possession was that of antichretic creditors, not owners, and an antichretic creditor cannot acquire the land by prescription.
• Legal Capacity to Acquire Title: Yes. The trial court’s detailed factual findings, affirmed by the Court of Appeals, established that private respondents were the true and real owners and entitled to registration by strong preponderance of evidence.

• Jurisdiction to Review Decree: The petition alleged that petitioners willfully and fraudulently suppressed the fact that private respondents were the legal and rightful owners and possessed the land merely as antichretic creditors securing a P400.00 loan, and that petitioners falsely declared in their application that no other person had any claim or interest. The application itself stated that, to the best of petitioners’ knowledge and belief, there was no mortgage or incumbrance and no other person having any estate or interest in the land. This was false and made in bad faith because petitioners were not owners and possessed only as antichretic creditors. The allegations were specific, not general, and were supported by competent proof. Knowingly and intentionally omitting or concealing a fact that the law requires to be performed or recorded is fraud when it secures a benefit to the prejudice of a third person (Estiva vs. Alvero, 37 Phil. 497). Under Libundan vs. Palma Gil, 45 SCRA 17, extrinsic or collateral fraud is a fraudulent scheme executed by a prevailing litigant outside the trial, preventing the defeated party from presenting fully and fairly his side; it includes willfully misrepresenting that there are no other claims or deliberately failing to notify a party entitled to notice. Such fraud affects the jurisdiction of the court and justifies review of the decree.
• Applicability of Section 38 to Public Agricultural Land: Section 122 of Act No. 496 provides that whenever public lands are alienated, granted, or conveyed, they shall be brought under the Act and become registered lands; the instrument must be filed with the register of deeds, and after due registration and issuance of the certificate and owner’s duplicate, the land shall be registered land for all purposes under the Act. The law is clear and needs no judicial interpretation. Once the deed, grant, or instrument of conveyance of public land is registered and the corresponding certificate and owner’s duplicate title are issued, the land is deemed registered land and brought within the scope and operation of the Land Registration Law. This doctrine was laid down in a long line of cases, including Heirs of Deogracias Ramos vs. Court of Appeals, 139 SCRA 293; Lahora vs. Dayanghirang, 37 SCRA 346; Ramirez vs. Court of Appeals, 30 SCRA 297; Director of Lands vs. Jugado, 2 SCRA 32; Nelayan vs. Nelayan, 109 Phil. 183; Republic vs. Heirs of Carle, 105 Phil. 1227; El Hogar Filipino vs. Olviga, 60 Phil. 17; and Manolo vs. Lukban, 48 Phil. 973. Because the land was registered and covered by an original certificate of title issued by the Register of Deeds of Rizal, it fell within the Land Registration Act, and the decree could be reviewed under Section 38 for actual and extrinsic fraud.
• Power to Vest Title and Order Partition: The admission that petitioners had been in actual possession since 1938 was made to show that they were only antichretic creditors. Private respondents never admitted that they had not possessed the land at all; they alleged that they and their predecessors-in-interest, Gregoria Pascual and Agapita Bonifacio, had possessed it since time immemorial and that petitioners were placed in possession under a contract of antichresis. The trial court found petitioners to be merely antichretic creditors, and the Court of Appeals affirmed this finding and its factual bases. Such finding is binding on the Supreme Court. An antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor (Trillana vs. Manansala, et al., 96 Phil. 865; Valencia vs. Acala, 42 Phil. 177; Barreto vs. Barreto, 3 Phil. 234). Petitioners were not possessors in the concept of owner but mere holders placed in possession by the owners; their possession could not serve as a title for acquiring dominion (Art. 540, Civil Code). Thus, the court could vest title in private respondents and order partition. Although the courts below did not order payment of the principal, Article 2136 of the Civil Code required private respondents to pay the P400.00 principal before reacquiring enjoyment, with fruits applied to interests.
• Legal Capacity to Acquire Title: The fourth issue is answered by the trial court’s detailed factual findings and conclusions. Ten pages of the record on appeal (Record on Appeal, CA-G.R. No. 40425-R, pp. 56-66) convincingly support the conclusion that Hilario Ramirez and Valentina Bonifacio were not owners of the disputed land and had no registrable right over it, while private respondents established their ownership by a strong preponderance of evidence. Private respondents were declared the true and real owners and entitled to registration in their names, and the Court of Appeals affirmed the trial court’s decision in toto. The Supreme Court found no reversible error. The argument of laches was countered by the close relationship of the parties and the nature of the contract of antichresis: private respondents are nephews and nieces, with their spouses, of petitioners, and there was evidence that long before the filing of the cases, attempts had been made to recover the property.

• Extrinsic Fraud in Land Registration — A decree of registration may be reviewed under Section 38 of Act No. 496 on the ground of actual and extrinsic fraud. Extrinsic or collateral fraud is a fraudulent scheme executed by a prevailing litigant outside the trial of a case against the defeated party, or his agents, attorneys, or witnesses, whereby the defeated party is prevented from presenting fully and fairly his side of the case. It is distinguished from intrinsic fraud, which consists of acts during trial, such as the use of forged instruments or perjured testimony, that did not affect the presentation of the case but prevented a fair and just determination. Examples include willfully misrepresenting that there are no other claims, deliberately failing to notify a party entitled to notice, inducing a party not to oppose an application, and misrepresenting the identity of the lot to the true owner. The overriding consideration is that the fraudulent scheme prevented a party from having his day in court or from presenting his case, thus affecting the jurisdiction of the court. In this case, petitioners’ false attestation that no other person had any claim or interest in the land, while they were merely antichretic creditors, constituted extrinsic fraud.
• Public Land Becomes Registered Land Upon Registration — Under Section 122 of Act No. 496, once public land is alienated, granted, or conveyed and the instrument is registered with the Register of Deeds, and the corresponding certificate and owner’s duplicate title are issued, the land is deemed registered land and brought within the scope and operation of the Land Registration Law. Consequently, Section 38 of the same Act applies, and the decree of registration may be reviewed on the ground of actual and extrinsic fraud. The Court applied this doctrine because the land was covered by Original Certificate of Title No. 2273 issued by the Register of Deeds of Rizal.
• Antichretic Creditor Cannot Acquire by Prescription — An antichretic creditor is not a possessor in the concept of owner but a mere holder placed in possession of the land by its owners. The creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor, and his possession cannot serve as a title for acquiring dominion. The Court applied this doctrine to reject petitioners’ claim based on actual possession since 1938, because they were found to be merely antichretic creditors.
• Antichresis and Redemption — Under Article 2136 of the Civil Code, the debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor. Although private respondents were declared owners, the Court modified the judgment to order them to pay petitioners P400.00 as principal for the contract of antichresis, with the fruits obtained from possession applied to the interests on the loan.
• Laches and Close Relationship — The defense of laches is countered by the close relationship of the parties and the nature of a contract of antichresis. Private respondents are nephews and nieces, with their spouses, of petitioners, and there was evidence that long before the filing of the cases, attempts had been made to recover the property. The Court thus did not bar private respondents’ claim on the ground of laches.

• "The omission and concealment, knowingly and intentionally made, of an act or of a fact which the law requires to be performed or recorded is fraud, when such omission or concealment secures a benefit to the prejudice of a third person (Estiva v. Alvero, 37 Phil. 497)." — This passage states the definition of fraud relied upon by the Court in holding that petitioners’ false declaration of no adverse claims constituted extrinsic fraud.
• "Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any fraudulent scheme executed by a prevailing litigant 'outside the trial of a case against the defeated party, or his agents, attorneys or witnesses, whereby said defeated party is prevented from presenting fully and fairly his side of the case.'" — This excerpt provides the canonical distinction between extrinsic and intrinsic fraud, which was central to the Court’s ruling that the petition for review was properly entertained.
• "Once the deed, grant, or instrument of conveyance of public land is registered with the Register of Deeds and the corresponding certificate and owner's duplicate title is issued, such land is deemed registered land. It is brought within the scope and operation of the Land Registration Law." — This is the ratio for the Court’s holding that Section 38 of Act No. 496 applied to the registered land despite its origin as public agricultural land.
• "This court has on several occasions held that the antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor (Trillana v. Manansala, et al., 96 Phil. 865; Valencia v. Acala, 42 Phil. 177; Barreto v. Barreto, 3 Phil. 234)." — This passage supports the Court’s rejection of petitioners’ claim that their long actual possession converted the land to their ownership.

• Estiva vs. Alvero, 37 Phil. 497 — Cited for the rule that knowingly and intentionally omitting or concealing an act or fact that the law requires to be performed or recorded is fraud when it secures a benefit to the prejudice of a third person; applied to petitioners’ false attestation.
• Libundan vs. Palma Gil, 45 SCRA 17 — Cited for the definition and examples of extrinsic or collateral fraud, and for the rule that relief is granted where fraud prevented a party from having his day in court; applied to uphold the petition for review.
• Heirs of Deogracias Ramos vs. Court of Appeals, 139 SCRA 293; Lahora vs. Dayanghirang, 37 SCRA 346; Ramirez vs. Court of Appeals, 30 SCRA 297; Director of Lands vs. Jugado, 2 SCRA 32; Nelayan vs. Nelayan, 109 Phil. 183; Republic vs. Heirs of Carle, 105 Phil. 1227; El Hogar Filipino vs. Olviga, 60 Phil. 17; Manolo vs. Lukban, 48 Phil. 973 — Cited as a long line of cases holding that once public land is registered and a certificate of title is issued, it is brought within the Land Registration Act; applied to hold Section 38 applicable.
• Trillana vs. Manansala, et al., 96 Phil. 865; Valencia vs. Acala, 42 Phil. 177; Barreto vs. Barreto, 3 Phil. 234 — Cited for the rule that an antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor; applied to reject petitioners’ possession as a source of title.

• Section 38, Act No. 496 (Land Registration Act) — Provides for review of a decree of registration on the ground of actual and extrinsic fraud. Applied because the petition alleged and proved that petitioners falsely declared no adverse claims, preventing private respondents from opposing the registration.
• Section 122, Act No. 496 — Provides that public lands alienated, granted, or conveyed shall be brought under the Land Registration Act and become registered lands; after registration and issuance of the certificate and owner’s duplicate, the land is registered land for all purposes under the Act. Applied to hold that the land, covered by Original Certificate of Title No. 2273, fell within the Act and that Section 38 applied.
• Paragraph (b), Section 48, Commonwealth Act No. 141, as amended by Republic Act No. 1942 — Cited in petitioners’ question as the basis for original registration of public agricultural land. The Court resolved the issue by holding that once registration and certificate issuance occur, Section 122 of Act No. 496 brings the land under the Land Registration Act, making Section 38 applicable.
• Article 540, Civil Code — Provides that possession cannot serve as a title for acquiring dominion. Applied to petitioners, whose possession as antichretic creditors could not ripen into ownership.
• Article 2136, Civil Code — Provides that the debtor cannot reacquire the enjoyment of the immovable without first having totally paid what he owes the creditor. Applied in the modification ordering private respondents to pay the P400.00 principal, with fruits applied to interests.

Justice Feria (Chairman), Justice Fernan, Justice Alampay, and Justice Paras concurred.