108 OG No. 1, 15 (January 2, 2012) : 658 Phil. 36
Before the Court is a petition for review on
certiorari under Rule 45 of the Rules of Court seeking the reversal and nullification of the Decision
[1] of the Court of Appeals (CA), dated June 14, 2006 and its Resolution
[2] dated August 10, 2006 in CA-G.R. CV No. 82303. The assailed CA Decision reversed the Decision
[3]
of the Regional Trial Court (RTC) of Morong, Rizal, Branch 79, in Civil
Case No. 748-M in favor of herein petitioner, while the questioned CA
Resolution denied petitioner's motion for reconsideration.
The pertinent antecedent facts of the case, as summarized by the CA, are as follows:
On
January 10, 1968, the spouses Vidal Gregorio and Julita Gregorio
[herein respondents] obtained a loan from the Insurance of the
Philippine Islands Corporation [herein petitioner] (formerly known as
Pyramid Insurance Co., Inc.) in the sum of P2,200.00, payable on or
before January 10, 1969, with interest thereon at the rate of 12% per
annum. By way of security for the said loan, [respondents] executed a
Real Estate Mortgage in favor of [petitioner] over a parcel of land
known as Lot 6186 of the Morong Cadastre, then covered by Tax
Declaration No. 7899 issued by the Municipal Assessor's Office of
Morong, Rizal.
On February 14, 1968, [respondents] again obtained
another loan from [petitioner] in the sum of P2,000.00, payable on or
before February 14, 1969, with 12% interest per annum. Another Real
Estate Mortgage, covering a parcel of land known as Lot No. 6190 of the
Morong Cadastre under Tax Declaration No. 10518, was executed by
[respondents] in favor of [petitioner].
On April 10, 1968,
[respondents] obtained, for the third time, another loan from
[petitioner] in the amount of P4,500.00 payable on or before April 10,
1969 with 12% interest per annum. As a security for the loan,
[respondents] again executed a Real Estate Mortgage, this time covering
two parcels of land: Lot 3499 under Tax Declaration No. 10631-Rizal and a
lot situated in Brgy. Kay Kuliat under Tax Declaration No. 3918.
[Respondents]
failed to pay their loans, as a result of which the [mortgaged]
properties were extrajudicially foreclosed. The extrajudicial
foreclosure sale was conducted on December 11, 1969 where [petitioner]
was the highest bidder. Since [respondents] failed to redeem the
property, [petitioner] consolidated its ownership over the properties.
The corresponding Tax Declarations were thereafter issued in the name of
[petitioner].[4]
On February 20, 1996, petitioner filed a Complaint
[5]
for damages against respondents alleging that in 1995, when it was in
the process of gathering documents for the purpose of filing an
application for the registration and confirmation of its title over the
foreclosed properties, it discovered that the said lots were already
registered in the names of third persons and transfer certificates of
title (TCT) were issued to them.
Claiming that respondents acted
in a fraudulent and malevolent manner in enticing it to grant their loan
applications by misrepresenting ownership of the subject properties,
petitioner prayed for the grant of actual and exemplary damages as well
as attorney's fees and litigation expenses.
In their Amended Answer,
[6]
respondents contended that their obligations in favor of petitioner
were all settled by the foreclosure of the properties given as security
therefor. In the alternative, respondents argue that petitioner's cause
of action and right of action are already barred by prescription and
laches.
In its Decision dated February 23, 2004, the RTC of
Morong, Rizal, ruled in favor of petitioner, the dispositive portion of
which reads:
WHEREFORE, premises considered, judgment
is hereby rendered in favor of the plaintiff and as against the
defendants, directing the latter to pay the plaintiff, jointly and
severally, as follows:
a. Actual damages in the
amount of P1,000,000.00, representing the fair market value of the real
properties subject matter of this suit;
b. For defendants' deceit and bad faith, exemplary damage in the sum of P300,000.00;
c. Attorney's fees and litigation expenses in the amount of P200,000.00; and
d. Costs of suit.
SO ORDERED.[7]
Aggrieved, respondents appealed the judgment of the trial court to the CA.
On
June 14, 2006, the CA rendered a Decision reversing and setting aside
the decision of the RTC and dismissing the complaint of petitioner. It
ruled that petitioner's action for damages is barred by prescription and
laches.
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of August 10, 2006.
Hence, the instant petition.
Petitioner's
main contention is that the CA erred in ruling that petitioner's right
to any relief under the law has already prescribed or is barred by
laches. Petitioner argues that the prescriptive period of its action for
damages should be counted from 1995, which it alleges to be the time
that it discovered the fraud committed by respondents against it.
On
the other hand, the CA ruled that petitioner's right of action
prescribed four years after the subject properties were registered with
the Register of Deeds of Morong, Rizal and TCTs were subsequently issued
in the names of third persons in the years 1970, 1973 and 1989.
The Court finds the petition meritorious.
Petitioner
filed an action for damages on the ground of fraud committed against it
by respondents. Under the provisions of Article 1146 of the Civil Code,
actions upon an injury to the rights of the plaintiff or upon a
quasi-delict must be instituted within four years from the time the
cause of action accrued.
[8]The
Court finds no error in the ruling of the CA that petitioner's cause of
action accrued at the time it discovered the alleged fraud committed by
respondents. It is at this point that the four-year prescriptive period
should be counted. However, the Court does not agree with the CA in its
ruling that the discovery of the fraud should be reckoned from the time
of registration of the titles covering the subject properties.
The
Court notes that what has been given by respondents to petitioner as
evidence of their ownership of the subject properties at the time that
they mortgaged the same are not certificates of title but tax
declarations, in the guise that the said properties are unregistered. On
the basis of the tax declarations alone and by reason of respondent's
misrepresentations, petitioner could not have been reasonably expected
to acquire knowledge of the fact that the said properties were already
titled. As a consequence, petitioner may not be charged with any
knowledge of any subsequent entry of an encumbrance which may have been
annotated on the said titles, much less any change of ownership of the
properties covered thereby. As such, the Court agrees with petitioner
that the reckoning period for prescription of petitioner's action should
be from the time of actual discovery of the fraud in 1995. Hence,
petitioner's suit for damages, filed on February 20, 1996, is well
within the four-year prescriptive period.
Neither may the principle of laches apply in the present case.
The
essence of laches or "stale demands" is the failure or neglect for an
unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier, thus,
giving rise to a presumption that the party entitled to assert it either
has abandoned or declined to assert it.
[9] It is not concerned with mere lapse of time; the fact of delay, standing alone, being insufficient to constitute laches.
[10][ ]In
addition, it is a rule of equity and applied not to penalize neglect or
sleeping on one's rights, but rather to avoid recognizing a right when
to do so would result in a clearly unfair situation.
[11]
There is no absolute rule as to what constitutes laches or staleness of
demand; each case is to be determined according to its particular
circumstances.
[12] Ultimately,
the question of laches is addressed to the sound discretion of the
court and, being an equitable doctrine, its application is controlled by
equitable considerations.
[13] It cannot be used to defeat justice or perpetrate fraud and injustice.
[14]
It is the better rule 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 be so, a manifest wrong or injustice would
result.
[15]It is
significant to point out at this juncture that the overriding
consideration in the instant case is that petitioner was deprived of the
subject properties which it should have rightly owned were it not for
the fraud committed by respondents. Hence, it would be the height of
injustice if respondents would be allowed to go scot-free simply because
petitioner relied in good faith on the former's false representations.
Besides, as earlier discussed, even in the exercise of due diligence,
petitioner could not have been expected to immediately discover
respondents' fraudulent scheme.
WHEREFORE, the instant petition is
GRANTED.
The Decision and Resolution, dated June 14, 2006 and August 10, 2006,
respectively, of the Court of Appeals in CA-G.R. CV No. 82303, are
REVERSED and
SET ASIDE. The Decision of the Regional Trial Court of Morong, Rizal, Branch 79, dated February 23, 2004 in Civil Case No. 748-M, is
REINSTATED.
SO ORDERED.
Carpio, (Chairperson), Nachura, Abad, and
Mendoza, JJ., concur.
[1]
Penned by Associate Justice Renato C. Dacudao, with Associate Justices
Hakim S. Abdulwahid and Monina Arevalo-Zenarosa, concurring;
rollo, pp. 28-40.
[2] Id. at 42.
[3] Rollo, pp. 187-194.
[4] Id. at 29-30.
[5] Records, pp. 1-12.
[6] Id. at 77-82.
[7] Id. at 553-554.
[8] Philippine Long Distance Telephone Company v. Dulay, 254 Phil. 30, 36 (1989).
[9] Heirs of Emilio Santioque v. Heirs of Emilio Calma, G.R. No. 160832, October 27, 2006, 505 SCRA 665, 684-685.
[10] GF Equity, Inc. v. Valenzona, G.R. No. 156841, June 30, 2005, 462 SCRA 466, 480.
[11] Bicol Agro-Industrial Producers Cooperative, Inc. (BAPCI) v. Obias, G.R. No. 172077, October 9, 2009, 603 SCRA 173, 196;
Bogo-Medellin Milling Co., Inc. v. Court of Appeals, 455 Phil. 285, 303 (2003).
[12] Department of Education, Division of Albay v. OƱate, G.R. No. 161758, June 8, 2007, 524 SCRA 200, 216-217.
[13] Placewell International Services Corporation v. Camote, G.R. No. 169973, June 26, 2006, 492 SCRA 761, 769.
[14] LICOMCEN, Inc. v. Foundation Specialists, Inc., G.R. Nos. 167022 and 169678, August 31, 2007, 531 SCRA 705, 725;
Amoroso v. Alegre, Jr., G.R. No. 142766, June 15, 2007, 524 SCRA 641, 656;
Galicia v. Manliquez Vda. de Mindo, G.R. No. 155785, April 13, 2007, 521 SCRA 85, 96.
[15] Benatiro v. Heirs of Evaristo Cuyos, G.R. No. 161220, July 30, 2008, 560 SCRA 478, 503.