Syjuco vs. Bonifacio

A complaint for quieting of title that specifically seeks the nullity and cancellation of a Torrens certificate is a direct attack, not a prohibited collateral attack under Section 48 of P.D. No. 1529; and any certificate of title tracing its source to OCT No. 994 dated April 19, 1917 of the Maysilo Estate is void because only OCT No. 994 registered on May 3, 1917 exists.

The dispute concerns a parcel of land within the Maysilo Estate, originally covered by OCT No. 994. Petitioners trace their title to the OCT No. 994 registered on May 3, 1917, while respondents trace theirs to a purported OCT No. 994 dated April 19, 1917. Before the dispute, Bonifacio was a sub-lessee of Kalayaan Development Corporation, which in turn subleased the property from Manufacturer's Bank, the direct lessee of petitioners. The case implicated the integrity of the Torrens system and the proliferation of titles derived from the Maysilo Estate.

Petitioners Imelda, Leonardo, Fidelino, Azucena, Josefina, Anita, and Sisa Syjuco are the registered co-owners of a parcel of land measuring approximately 2,835 square meters in Balintawak, Caloocan, which originally formed part of the Maysilo Estate. Their title, TCT No. T-108530, was issued on March 26, 1984 by the Register of Deeds of Caloocan City. They trace their title to TCT No. 10301 issued on February 26, 1926 to Monica Jacinto Galauran; that title was replaced by TCT No. 8685 in the names of Avelina Baello, Felisa Baello, Dolores Baello, Eduardo Mesina, and Fausto Galauran; TCT No. 8685 was replaced by TCT No. 12370 in the names of Martin V. Syjuco and Manuel V. Syjuco pursuant to a Deed of Sale of Real Estate dated February 7, 1949; TCT No. 12370 was replaced by TCT No. 4856 issued on July 1, 1964 in Martin's name alone under a Partition Agreement dated June 16, 1964; and after Martin's death, petitioners inherited the land and, following an extrajudicial partition on June 27, 1976, registered it in their names under TCT No. T-108530. Petitioners and their predecessors-in-interest have been in open, continuous, and uninterrupted possession since 1926 and have paid real property taxes since 1949. TCT No. T-108530 carried annotations of a lease agreement dated September 24, 1963 in favor of Manufacturer's Bank and Trust Company over a portion of the land, with buildings to become the lessor's property after the lease, and another lease agreement dated December 20, 1971 in favor of Chan Heng over the remaining portion.

In 1994, petitioners learned that a broker, Exequiel Fajardo, had offered the subject land and improvements for sale to Luis Ong through a letter dated March 9, 1994, identifying Felisa D. Bonifacio as owner under TCT No. 265778. Petitioners discovered that Bonifacio was a sub-lessee of Kalayaan Development Corporation, which in turn was the sub-lessee of Manufacturer's Bank, the direct lessee of petitioners. Bonifacio's TCT No. 265778 was issued on March 29, 1993 by the Register of Deeds of Caloocan City. It was issued pursuant to an Order dated October 8, 1992 of RTC-Branch 125 of Caloocan City in L.R.C. Case No. C-3288, which granted Bonifacio's petition to segregate an area of 5,680.1 square meters from Lot 23-A-4-B-2-A-3-B, PSD-706 (PSU-2345) of the Maysilo Estate and to issue a separate certificate of title in her name. The RTC-Branch 125 order relied on an Order dated May 25, 1962 of the then Court of First Instance of Rizal, Branch 1, in Case No. 4557, substituting Maria de la Concepcion Vidal as one of the registered owners of Maysilo Estate parcels covered by OCT No. 994, with Eleuteria Rivera Bonifacio to the extent of 1/6 of 1-189/1000 per cent, and on a Deed of Assignment dated January 29, 1991 executed by Eleuteria Rivera Bonifacio in favor of Felisa over Lots 23-A-4-B-2-A-3-A and 23-A-4-B-2-A-3-B, both of PSD-706 and covered by OCT No. 994. Before the deed, while negotiations were ongoing, Felisa requested technical descriptions from the DENR Lands Management Sector, and Elpidio T. de Lara issued two technical descriptions on June 20, 1990; Geodetic Engineer Jose R. Rodriguez prepared a sketch plan, which Benjamin V. Roque certified on July 31, 1992 as a true and correct plan. RTC-Branch 125 ordered the Register of Deeds to issue a new transfer certificate of title in Felisa's name upon finality of the order, payment of fees, and presentation of clearances. However, TCT No. 265778 was issued on March 29, 1993, before the Order dated October 8, 1992 became final and executory on April 6, 1993.

To protect their rights, petitioners filed a Petition on July 28, 1994 before RTC-Branch 126 of Caloocan City, docketed as Civil Case No. C-366, praying for the declaration of nullity and cancellation of Bonifacio's TCT No. 265778 in view of petitioners' subsisting TCT No. T-108530. In an Order dated July 28, 1994, RTC-Branch 126 deemed the case a special civil action for quieting of title. Petitioners later discovered that Bonifacio had sold the subject land to VSD Realty & Development Corporation and that TCT No. 265778 had been cancelled and replaced by TCT No. 285313 in VSD's name on September 12, 1994. Petitioners filed an Amended Petition on April 25, 1995 impleading VSD Realty. Petitioners contended that although the certificates of title contained different technical descriptions, they pertained to one and the same property, and that respondents' titles could only have been obtained fraudulently because (a) no subsequent survey could have been obtained, approved, and presented since an original isolated survey existed for which TCT No. 10301 was issued as early as February 26, 1926 to Monica Jacinto Galauran; (b) TCT No. 265778 was issued on March 29, 1993 before the Certificate of Finality was issued on April 6, 1993; and (c) TCT No. 265778 was issued without the Register of Deeds requiring presentation of the owner's duplicate copy of OCT No. 994.

Bonifacio filed her Answer with Compulsory Counterclaim on October 11, 1994, denying knowledge of petitioners' TCT No. T-108530 and maintaining that the technical description of the land in her title differed from that in petitioners' title. She averred that her technical description had been verified and approved by the DENR, that she acquired a valid title under a court order in a land registration case, and that Civil Case No. C-366 was a collateral attack on her title. VSD Realty adopted Bonifacio's Answer. In the Pre-Trial Order dated February 23, 1995, the parties stipulated that petitioners were in possession of the lot and that respondents were never in possession. The issues were whether the technical descriptions in the titles were one and the same and whether TCT No. 265778 was valid.

At trial, petitioners presented Leonardo de Guzman Syjuco, Land Registration Examiner Renato T. Malindog, and Engr. Elpidio T. de Lara. Leonardo testified to petitioners' inheritance, their leases to Manufacturer's Bank and Kalayaan Development Corporation, the discovery of the offer to sell, and the existence of Bonifacio's TCT No. 265778, which he claimed was void because a previously segregated property could not be segregated again. Malindog testified that prior to the issuance of TCT No. 265778, derivative documents were filed, including the October 8, 1992 Order, the April 6, 1993 Certificate of Finality, and subdivision and technical description documents; he could not explain how TCT No. 265778 was issued on March 29, 1993 before the Certificate of Finality. De Lara testified that he certified the technical description of Lot 23-A-4-B-2-A-3-B on July 9, 1990 upon Bonifacio's request, with the notation "Subject for field survey," and that his office had no record of such technical description. Respondents presented Engr. Evelyn G. Celzo, Land Registration Examiner Fernando D. Macaro, and Atty. Kaulayao V. Faylona. Celzo testified that she conducted a verification survey on August 23, 1994, with a report dated April 17, 1995, and found that common points used to identify Bonifacio's technical description did not exist in petitioners' technical description; she also stated that only one technical description is allowed for a particular lot. Macaro affirmed the existence of TCT No. 265778 and testified that the standard procedure required a certification that the court order had become final and executory before issuing a certificate of title, but he could not explain why TCT No. 265778 was issued before the Certificate of Finality. Faylona testified that VSD Realty bought the lots after verifying the court order and a verification survey, and that he believed Bonifacio owned the property. RTC-Branch 126 found that the technical descriptions in the parties' titles were not one and the same, crediting the testimonies of Engrs. De Lara and Celzo, and noted Macaro's inability to explain the premature issuance of TCT No. 265778.

• Identity of the Land: Petitioners maintained that their TCT No. T-108530 and respondents' TCT Nos. 265778 and 285313, despite different technical descriptions, pertained to one and the same parcel within the Maysilo Estate.
• Fraudulent Issuance and Irregularities: Petitioners alleged that respondents' titles were fraudulently obtained because no subsequent survey could have been approved given the original isolated survey behind TCT No. 10301; TCT No. 265778 was issued before the October 8, 1992 order became final; and the Register of Deeds issued it without the owner's duplicate copy of OCT No. 994 and without the requisite tax clearance.
• Quieting of Title and Possession: Petitioners argued that their uninterrupted possession since 1926 gave them a continuing right to seek judicial ascertainment of respondents' adverse claim, and that the action was a direct, not collateral, attack on the certificates of title.
• Supervening Events and OCT No. 994: Petitioners asked the Supreme Court to take judicial notice of DOJ and Senate committee reports validating OCT No. 994 registered on May 3, 1917, declaring OCT No. 994 registered on April 19, 1917 nonexistent, and recommending cancellation of titles derived from the latter.

• Different Technical Descriptions: Respondents countered that the technical descriptions in their TCT Nos. 265778 and 285313 did not pertain to the same land as petitioners' TCT No. T-108530.
• Validity of TCT No. 265778: Respondents argued that TCT No. 265778 was issued pursuant to a valid court order of RTC-Branch 125 in Civil Case No. C-3288.
• Collateral Attack: Respondents contended that Civil Case No. C-366 was a collateral attack on the validity of their titles, prohibited by Section 48 of P.D. No. 1529.
• Opposition to Judicial Notice and Later OCT Theory: Respondents opposed judicial notice of the DOJ and Senate reports as irrelevant, suggested the 1912 reference in Bonifacio's title was a clerical error or mental lapse, and later claimed their titles derived from OCT No. 994 registered on April 19, 1917, invoking MWSS vs. Court of Appeals and Gonzaga vs. Court of Appeals on priority of registration.

• Collateral Attack: Whether the action to quiet title is a prohibited collateral attack under Section 48 of P.D. No. 1529.
• Prescription and Indefeasibility: Whether the action is barred by prescription or the incontrovertibility and indefeasibility of respondents' titles under Section 32 of P.D. No. 1529.
• Validity of Respondents' Titles: Whether respondents' TCT Nos. 265778 and 285313 are valid where they trace to OCT No. 994 dated April 19, 1917, while petitioners' TCT No. T-108530 traces to OCT No. 994 registered on May 3, 1917.
• Remand: Whether remand to the Court of Appeals is necessary to determine which title derives from the legitimate OCT No. 994.

• Collateral Attack: No. A complaint for quieting of title that specifically prays for nullity and cancellation is a direct attack; Section 48 of P.D. No. 1529 does not bar it.
• Prescription and Indefeasibility: No. An action to quiet title is imprescriptible if the plaintiff is in possession; petitioners' uninterrupted possession since 1926 and discovery of the adverse claims in 1994 and 1995 defeat prescription. Incontrovertibility does not apply where the titles originate from different sources and no valid earlier title exists.
• Validity of Respondents' Titles: No. Only one OCT No. 994 exists, registered on May 3, 1917; any title tracing to OCT No. 994 dated April 19, 1917 is void. Respondents' titles are derivatives of the inexistent April 19, 1917 title, so TCT Nos. 265778 and 285313 are null and void.
• Remand: No. Although remand was proper in VSD Realty vs. Uniwide Sales, Inc., supervening events and settled jurisprudence in Manotok and Angeles establish the invalidity of the April 19, 1917 OCT No. 994, so the Court resolved the case in favor of petitioners without further remand.

• Collateral Attack: Section 48 of P.D. No. 1529 provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or canceled except in a direct proceeding. The test, as explained in Catores vs. Afidchao, is the object of the action and the relief sought: a direct attack seeks to annul or set aside the judgment or enjoin its enforcement, while a collateral attack is made as an incident of an action for a different relief. Petitioners' complaint for quieting of title specifically prayed for the declaration of nullity and/or cancellation of respondents' TCT Nos. 265778 and 285313. Under Article 476 of the Civil Code, an action to quiet title precisely seeks to quiet, remove, invalidate, annul, and/or nullify a cloud on title. The action was therefore a direct attack, not a prohibited collateral attack.

• Prescription and Indefeasibility: Section 32 of P.D. No. 1529 makes the decree of registration incontrovertible after one year, but the rule has well-settled exceptions. An action to quiet title is imprescriptible if the disputed real property is in the possession of the plaintiff; one in actual possession may wait until possession is disturbed or title is attacked, because undisturbed possession gives a continuing right to seek the aid of a court of equity to ascertain the nature and effect of an adverse claim. Petitioners established uninterrupted possession by themselves or their predecessors since 1926; they learned only in 1994 that Bonifacio had registered the property and in 1995 that it had been sold to VSD. Moreover, the rule on incontrovertibility or indefeasibility has no application where the contending parties claim ownership based on certificates of title originating from different sources. There cannot be two or more certificates of title over the same parcel; a land registration court has no jurisdiction to order registration of land already decreed in another earlier land registration case, and a second decree for the same land is null and void. Indefeasibility may be claimed only if no previous valid title to the same parcel exists. Fraud cannot vest a valid legal title, and the person in whose name the title was issued cannot transmit it. A certificate is not conclusive evidence of title if the same land had already been registered and an earlier certificate for the same land exists. The action was thus timely and proper.

• Validity of Respondents' Titles: The CA applied the rule that where two certificates purport to include the same land, the earlier in date prevails, and concluded that Bonifacio's title, registered in 1912, prevailed over petitioners' title registered in 1917. The Supreme Court rejected that application because the factual premise had been settled in Manotok Realty, Inc. vs. CLT Realty Development Corporation: there is only one OCT No. 994, registered on May 3, 1917; any title tracing its source to OCT No. 994 dated April 19, 1917 is void because that mother title is inexistent. The Court noted that petitioners' TCT No. T-108530 shows it originated from OCT No. 994 registered on May 3, 1917, pursuant to Decree No. 36455, Record No. 4429. Bonifacio's title presented during trial showed origin from OCT No. 994 registered on the 19th day of an unspecified month in 1912, in the Register of Deeds of Manila, under Decree No. 36455, Record No. 4423. VSD's title, although supposed to be a direct transfer from Bonifacio, certified origin from OCT No. 994 registered on May 3, 1917, Record No. 4429. A later certified copy of Bonifacio's title attached to petitioners' Reply showed the date changed to May 3, 1917 and the place changed to Rizal, with previously blank portions filled up. The Republic intervened through the OSG, which maintained that petitioners' title traced to the authentic May 3, 1917 OCT No. 994 while respondents' titles were null and void as derivatives of the spurious 1912 OCT No. 994. Respondents then contended that their titles derived from OCT No. 994 registered on April 19, 1917, invoking MWSS vs. Court of Appeals and Gonzaga vs. Court of Appeals. But Manotok, reiterated in Angeles vs. The Secretary of Justice, held that MWSS and Gonzaga had become functus officio and could no longer be cited as precedents. Phil-Ville Development and Housing Corporation vs. Bonifacio likewise upheld titles sourced from the May 3, 1917 OCT No. 994 and nullified a title tracing to the April 19, 1917 OCT No. 994, noting that Eleuteria Rivera could not have been an heir of Maria de la Concepcion Vidal because Rivera was older than her alleged grandmother. Because respondents' titles were derivatives of the inexistent April 19, 1917 OCT No. 994, they were void.

• Remand: In VSD Realty & Development Corporation vs. Uniwide Sales, Inc., a remand to the Court of Appeals was ordered to determine which party derived valid title from the legitimate OCT No. 994, and the Court cited Manotok and the authority of the Court of Appeals to receive evidence. In this case, however, supervening events and settled jurisprudence removed the need for further factual determination. The title certifications, the Republic's intervention, and the final rulings in Manotok and Angeles established that only the May 3, 1917 OCT No. 994 exists and that titles tracing to the April 19, 1917 OCT No. 994 are void. The Court therefore resolved the case in favor of petitioners without a remand.

• Direct and Collateral Attack on Torrens Title — Under Section 48 of P.D. No. 1529, a certificate of title cannot be collaterally attacked. The test is the object of the action and the relief sought: a direct attack seeks to annul or set aside the judgment or enjoin its enforcement; a collateral attack is made as an incident of an action for a different relief. An action to quiet title under Article 476 of the Civil Code, which specifically prays for nullity and cancellation of a certificate, is a direct attack. Applied: petitioners' action was not barred.
• Imprescriptibility of Quieting of Title in Case of Possession — An action to quiet title is imprescriptible if the disputed real property is in the possession of the plaintiff. Undisturbed possession gives a continuing right to seek judicial aid to ascertain an adverse claim. Applied: petitioners' possession since 1926 and discovery of adverse claims in 1994 and 1995 made the action timely.
• No Second Certificate of Title for the Same Land; Limits of Indefeasibility — A land registration court has no jurisdiction to order registration of land already decreed in an earlier land registration case; a second decree for the same land is null and void. Indefeasibility of a Torrens title may be claimed only if no previous valid title exists. Fraud cannot vest a valid title, and a certificate is not conclusive if the same land had already been registered under an earlier certificate. Applied: respondents' titles could not prevail over petitioners' existing title.
• One OCT No. 994 in the Maysilo Estate; May 3, 1917 Is the Valid Registration Date — Only one OCT No. 994 exists, registered on May 3, 1917. Any title tracing its source to OCT No. 994 dated April 19, 1917 is void because that mother title is inexistent. Applied: respondents' TCT Nos. 265778 and 285313, claimed to derive from the April 19, 1917 OCT No. 994, were null and void.
• Functus Officio of MWSS and Gonzaga on the Maysilo Estate — The rulings in Metropolitan Waterworks and Sewerage System vs. Court of Appeals and Heirs of Luis J. Gonzaga vs. Court of Appeals, which recognized an OCT No. 994 dated April 19, 1917, have become functus officio and cannot be relied upon as precedents. Applied: respondents' invocation of priority of registration based on those cases failed.

• "To determine whether an attack on a certificate of title is direct or indirect, the relevance of the object of the action instituted and the relief sought therein must be examined." — This states the controlling test for distinguishing a direct attack from a prohibited collateral attack under Section 48 of P.D. No. 1529.
• "The instituted action in this case is clearly a direct attack on a certificate of title to real property." — This is the Court's conclusion that petitioners' quieting-of-title action was not barred as a collateral attack.
• "It is an established doctrine in land ownership disputes that the filing of an action to quiet title is imprescriptible if the disputed real property is in the possession of the plaintiff." — This defines the exception to the incontrovertibility rule and supports the timeliness of petitioners' action.
• "Any title that traces its source to OCT No. 994 dated [19] April 1917 is void, for such mother title is inexistent." — This is the ratio decidendi for nullifying respondents' titles and directing their cancellation.

• Catores vs. Afidchao, 601 Phil. 638, 652 (2009) — Explained the test for determining whether an attack on a certificate of title is direct or collateral; followed in holding that the quieting-of-title action was direct.
• Faja vs. Court of Appeals, 166 Phil. 429, 438 (1977) — Established that an action to quiet title is imprescriptible if the plaintiff is in possession; applied to petitioners' continuous possession since 1926.
• Laburada vs. Land Registration Authority, 350 Phil. 779, 790-791 (1998) — Held that a land registration court has no jurisdiction to order registration of land already decreed in an earlier case and that a second decree is null and void; relied on to reject respondents' titles.
• Register of Deeds of Cotabato vs. Philippine National Bank, 121 Phil. 49, 51-52 (1965), citing C. N. Hodges vs. Dy Buncio & Co., Inc., 116 Phil. 595, 601 (1962) — Held that a certificate is not conclusive evidence of title if the same land had already been registered and an earlier certificate exists; applied to petitioners' prior title.
• Manotok Realty, Inc. vs. CLT Realty Development Corporation, 565 Phil. 59 (2007) and 601 Phil. 571 (2009) — Controlling precedent: only one OCT No. 994 exists, registered on May 3, 1917; any title tracing to OCT No. 994 dated April 19, 1917 is void.
• Angeles vs. The Secretary of Justice, 628 Phil. 381 (2010) — Reiterated Manotok and held that MWSS and Gonzaga had become functus officio; relied on to reject respondents' reliance on priority of registration.
• Phil-Ville Development and Housing Corporation vs. Bonifacio, G.R. No. 167391, June 8, 2011, 651 SCRA 327, 345-346 — Upheld titles sourced from the May 3, 1917 OCT No. 994 and nullified a title tracing to the April 19, 1917 OCT No. 994; supported the conclusion that respondents' titles were void.
• VSD Realty & Development Corporation vs. Uniwide Sales, Inc., G.R. No. 170677, July 31, 2013, 702 SCRA 597 — Discussed remand to the Court of Appeals for factual determination of valid title from OCT No. 994; distinguished because supervening events and settled jurisprudence resolved the issue.
• Metropolitan Waterworks and Sewerage System vs. Court of Appeals, G.R. No. 103558, November 17, 1992, 215 SCRA 783 and Heirs of Luis J. Gonzaga vs. Court of Appeals, 330 Phil. 8 (1996) — Cited by the CA and respondents for the earlier-date rule, but rendered functus officio and no longer reliable as precedents.

• Section 48, Presidential Decree No. 1529 — Provides that 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 petitioners' quieting-of-title action was a direct attack.
• Section 32, Presidential Decree No. 1529 — Provides for review of the decree of registration and makes the certificate incontrovertible after one year, subject to exceptions. Applied to hold that the action was imprescriptible because petitioners were in possession and that incontrovertibility did not apply where titles originated from different sources.
• Article 476, Civil Code — Defines the action to quiet title as one that seeks to quiet, remove, invalidate, annul, and/or nullify a cloud on title. Applied to characterize petitioners' relief as a direct attack.
• Section 6, Rule 46 and Section 2, Rule 32, Rules of Court — Cited in the discussion of remand and the Court of Appeals' authority to receive evidence; considered in VSD Realty vs. Uniwide Sales, Inc. but not applied because no remand was necessary.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson); Associate Justice Lucas P. Bersamin; Associate Justice Jose Portugal Perez; Associate Justice Estela M. Perlas-Bernabe.