413 Phil. 487
KAPUNAN, J.:
Initially, the two cases were heard independently of each other. It was discovered, however, that they were intimately related. Accordingly, the court a quo jointly tried the two cases. After due trial, the trial court rendered separate decisions, both in favor of the plaintiffs therein. The dispositive portion particularly of the decision in Civil Case No. 1816 reads:Civil Case No. 1816
(CA-G.R. CV No. 16645)
From the pleadings and the evidence adduced by the parties the following are not disputed or deemed admitted: that Lot 216 of the Cadastral survey of Nasipit, containing an area of 12,753 square meters, more or less, situated at Anislagan, Nasipit, Agusan (now del Norte) is covered by Original Certificate of Title (OCT) No. RO-238 issued in 1927 in the name of Apolonia Abao and Irenea Tolero in equal undivided shares (Exhibit E); that OCT No. RO-238 was administratively reconstituted on August 8, 1957 and the assigned number of the reconstituted title is OCT No. RO-238 (555) (Exhibit D identical to Exhibit-Samonte); that on August 8, 1957, based on an affidavit of Extra-judicial Settlement and Confirmation of Sale (Exhibit D-1), OCT No. RO-238 (555) was cancelled and lieu thereof Transfer Certificate of Title (TCT) No. RT-476 was issued in the name of Irenea Tolero, ½ share and Nicolas Jadol, ½ share (Exhibit C identical to Exhibit 3-Samonte); that on February 13, 1959, based on subdivision plan, subdividing Lot 216 into Lot 216-A and Lot 216-B, the Register of Deeds of Agusan (now del Norte) cancelled TCT No. RT-476 and issued in its place TCT No. RT-553 in the name of Tiburcio Samonte for Lot 216-A (Exhibit 2-Samonte) and TCT No. RT-554. Irenea Tolero and Nicolas Jadol for Lot 216-B (Exhibit B); that on February 13, 1959 based on a subdivision plan subdividing Lot 216-B to 216-B-1 and 216-B-2, TCT No. RT-554 was cancelled and in its place TCT No. RT-555 was issued in the name of Jacob B. Tagorda for Lot 216-B-1 and TCT No. 556 in the name of Irenea Tolero and Nicolas Jadol for Lot 216-B-2;
Plaintiffs in their evidence claim ownership over the entire lot, Lot 216, as one-half (1/2) of the area of 12.753 square meters was registered in the name of their mother Irenea Tolero (Exhibit E) the other half was registered in the name of their grandmother, Apolonia Abao. After Apolonia Abao died during the Japanese occupation and Irenea Tolero died in 1945, they inherited and became owners of Lot 216. Plaintiffs questioned the series of cancellation of the certificate of title starting from OCT No. RO-238 (555) and the Deed of Extra-judicial Settlement and Confirmation of Sale executed by Ignacio Atupan on August 7, 1957 (Exhibit D-1) adjudicating one-half (1/2) of the area of Lot 216. Plaintiffs maintain that Ignacio Atupan is not a son of Apolonia Abao but he only grew up while living with Apolonia Abao. That when Lot 216 was subdivided into two (2) lots, Lot 216-A and Lot 216-A (sic) which was made as one of the basis in the cancellation of TCT No. 476 and issuance of TCT No. 553 and TCT No. 554 on February 13, 1959, the plaintiffs or their predecessors-in-interest have not signed any document agreeing as to the manner how Lot 216 was to be divided, nor have they consented to the partition of the same.
Defendant Samonte in his evidence claim that he bought portions of the Lot 216 in good faith as he was made to believe that all the papers in possession of his vendors were all in order. One of the documents presented by him is a Deed of Absolute Sale executed in 1939 (Exhibit 8-Samonte). He has been in open, continuous, adverse and exclusive possession of the portions of Lot 216 he bought for more than 20 years and have declared the land for taxation purposes (Exhibits 5 and 7-Samonte) and have paid the real estate taxes thereon (Exhibit 6 to 6-K, inclusive Samonte). The portions he bought is now covered by TCT No. RT-553 (Exhibit 2-Samonte) and TCT No. RT-1658 (Exhibit 4-Samonte).
Defendant Jadols claim that they became owners of one-half (1/2) portion of Lot 216 by purchase from Ignacio Atupan and Apolonia Abao on September 15, 1939 as shown by a document notarized by Jacobo Bello (Exhibit 1-Jadol) and signed by Irenea Tolero (Exhibit 1-D-Jadol) as a witness. They were in possession since they bought the land. The land is covered by Tax Declaration No. 1630 (Exhibit 2-Jadol) and Tax Declaration No. 1676 (Exhibit 3-Jadol) in their name (Decision, pp. 36-39).[2]
Plaintiffs were likewise declared the lawful owners of Lot 216-B-2-G in Civil Case No. 1672. Defendants therein were ordered to, among others, vacate the premises and remove the improvements made thereon.[4]Civil Case No. 1816
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiffs and against the defendants:
a) declaring plaintiffs co-owners of the entire of (sic) Lot 216 being the surviving heirs of Apolonia Abao and Irenea Tolero;
b) directing the reinstatement of Original Certificate of Title No. RO-238(555);
c) directing the cancellation of Transfer Certificate of Title No. RT-476 and all subsequent certificates of title derived therefrom which are all declared null and void;
d) declaring the subdivision survey of Lot 216 null and void and ineffectual;
e) directing the defendants to vacate the premises of Lot 216 and to remove all their improvements therefrom as they are builders in bad faith;
f) directing defendants Jadol and Samonte to pay jointly and severally the plaintiffs the sum of P20,000.00 for the use and occupation of the land;
g) directing defendants Jadol and Samonte to pay P5,000.00 as attorney's fees;
h) ordering the dismissal of the counterclaims of defendants; and
i) directing the defendants Jadol and Samonte to pay the costs.
SO ORDERED.[3]
The petition is bereft of merit.I
THE HONORABLE COURT OF APPEALS ERRED AS A MATTER OF LAW IN DEPARTING FROM THE PREVAILING DOCTRINE SUPPORTED BY THE WEIGHT OF AUTHORITIES THAT "THE DISCOVERY OF THE FRAUD IS DEEMED TO HAVE TAKEN PLACE AT THE TIME OF THE REGISTRATION" (CARANTES VS. COURT OF APPEALS, 76 SCRA 514);[5]II
THE COURT OF APPEALS ERRED AS A MATTER OF LAW AND JURISPRUDENCE IN NOT HOLDING THAT HEREIN PETITIONER WAS A BUYER IN GOOD FAITH FOR VALUE, HENCE HE IS PROTECTED BY LAW.[6]
Art. 1456. 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.As it had been indubitably established that fraud attended the registration of a portion of the subject property, it can be said that the Jadol spouses were trustees thereof on behalf of the surviving heirs of Abao. An action based on implied or constructive trust prescribes in ten (10) years from the time of its creation or upon the alleged fraudulent registration of the property.[9]
It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title.In this case, the CA reckoned the prescriptive period from the time respondents had actually discovered the fraudulent act of Atupan which was, as borne out by the records, only during the trial of Civil Case No. 1672.[13] Citing Adille, the CA rightfully ruled that respondents' action for reconveyance had not yet prescribed.
For the same reason, we cannot dismiss private respondents' claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name [alone]." Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. According to the respondent Court of Appeals, they "came to know [of it] apparently only during the progress of the litigation." Hence, prescription is not a bar.[12]
xxx While it may be true that the second portion was purchased by Samonte from Tagorda in whose name the same was then registered under TCT No. RT-555, Samonte was previously charged with the fact that Jadol lacked the capacity to transmit title over any part of the subject property including that portion which the latter sold to Tagorda. Thus, Samonte was clearly in bad faith when he sought the registration of the deed of sale of July 10, 1972 which effected the cancellation of TCT No. RT-555 and the issuance of TCT No. 1658 in his favor. xxx[18]Petitioner cannot now claim that he already acquired valid title to the property. The inscription in the registry, to be effective, must be made in good faith. The defense of indefeasibility of a Torrens Title does not extend to a transferee who takes the certificate of title with notice of a flaw. A holder in bad faith of a certificate of title is not entitled to the protection of the law, for the law cannot be used as a shield for frauds.[19]