Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 142938 August 28, 2007
MIGUEL INGUSAN, Petitioner,
vs.
HEIRS OF AURELIANO I. REYES, represented by CORAZON REYES-REGUYAL
and ARTEMIO S. REYES,*Respondents.
DECISION
CORONA, J.:
This is a petition for review on certiorari1 of a decision2 and resolution3 of the Court
of Appeals (CA) dated January 21, 2000 and April 10, 2000, respectively, in CA-G.R.
CV No. 56105 which modified the decision4 dated April 17, 19975 of the Regional
Trial Court (RTC) of Cabanatuan City, Nueva Ecija, Branch 25 in Civil Case No.
2145-A1.
This case involves a 1,254 sq. m. residential land located in Poblacion, San
Leonardo, Nueva Ecija6 originally owned by Leocadio Ingusan who was unmarried
and childless when he died in 1932. His heirs were his two brothers and a sister,
namely, Antonio, Macaria and Juan.7 Antonio died and was succeeded by his son
Ignacio who also later died and was succeeded by his son, petitioner Miguel
Ingusan.8 Macaria also died and was succeeded by her child, Aureliano I. Reyes, Sr.
(father of respondents Artemio Reyes, Corazon Reyes-Reguyal, Elsa Reyes,
Estrella Reyes-Razon, Aureliano Reyes, Jr., Ester Reyes, Reynaldo Reyes and
Leonardo Reyes).9 Thus, petitioner is the grandnephew of Leocadio and Aureliano,
Sr. was the latter's nephew.10
After the death of Leocadio, Aureliano, Sr. was designated by the heirs as
administrator of the land.11 In 1972, while in possession of the land and in breach of
trust, he applied for and was granted a free patent over it. 12 As a result, he was
issued OCT No. P-6176 in 1973.13
In 1976, petitioner filed an accion reivindicatoria against Aureliano, Sr. and his wife
Jacoba Solomon seeking the recovery of Lot 120-A with an area of 502 sq. m. which
was part of the land at issue here.14 But the case was dismissed because petitioner
did not pursue it.
Also in 1976, Aureliano, Sr. executed a special power of attorney (SPA) in favor of
his son Artemio authorizing him to mortgage the land in question to any bank. Using
that SPA, Artemio mortgaged the land to secure a loan of ₱10,000 from the
Philippine National Bank (PNB).15
In 1983, Aureliano, Sr. died intestate. He was survived by his children, the
respondents.16
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 1
In 1986, petitioner paid the PNB loan. The mortgage over the land was released and
the owner’s duplicate copy of OCT No. P-6176 was given to him.17
On June 19, 1988, respondents and petitioner entered into a Kasulatan ng
Paghahati-hati Na May Bilihan wherein they adjudicated unto themselves the land in
question and then sold it to their co-heirs, as follows: (a) to petitioner, 1,171 sq. m.
and (b) to respondent Estrella, 83 sq. m. This deed was notarized but not
registered.18
On January 8, 1990, respondent Corazon, despite signing the Kasulatan, executed
an affidavit of loss, stating that she could not find the owner’s duplicate copy of OCT
No. P-6176. This was registered and annotated on the original copy of said title. 19
Subsequently, the following documents appeared purportedly with the following
dates:
a) April 23, 199420 - notarized deed of donation of titled property supposedly
executed by the spouses Aureliano, Sr. and Jacoba,21 whereby said spouses
donated 297 sq. m. of the subject land to respondent Artemio and the
remaining 957 sq. m. to petitioner;
b) September 5, 1994 - cancellation of affidavit of loss supposedly executed
by respondent Corazon stating that the annotation of the affidavit of loss on
the title should be canceled and the petition for a new title was no longer
necessary because she had already found the missing owner’s duplicate copy
of OCT No. P-6176;
c) September 27, 1994 – agreement of subdivision with sale purportedly
executed by respondent Artemio and petitioner, with the consent of their
wives. Pursuant to this document, the land was subdivided into Lot 120-A with
an area of 297 sq. m. corresponding to the share of Artemio and Lot 120-B
with an area of 957 sq. m. which was the share of petitioner. The document
also indicated that Artemio sold Lot 120-A to one Florentina Fernandez.22
When respondent Corazon learned about the cancellation of the annotation of her
affidavit of loss, she executed an affidavit of adverse claim on January 17, 1995
stating that the cancellation of affidavit of loss and the agreement of subdivision with
sale were both spurious and the signatures appearing thereon were forgeries. This
affidavit of adverse claim was not registered. 23
On April 17, 1995, petitioner brought the owner’s duplicate copy of OCT No. P-6176,
the cancellation of affidavit of loss, deed of donation of titled property and agreement
of subdivision with sale to the Registry of Deeds for registration. Consequently, the
following took place on that same day:
1. Corazon’s annotated affidavit of loss was canceled;
2. by virtue of Aureliano, Sr. and Jacoba’s deed of donation of titled property
to Artemio and petitioner, OCT No. P-6176 was canceled and in lieu thereof,
TCT No. NT-241155 in the name of petitioner and TCT No. NT-241156 in the
name of respondent Artemio were issued and
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 2
3. by virtue of the agreement of subdivision with sale, TCT Nos. NT-241155
and NT-241156 were canceled and TCT Nos. NT-239747 and NT-239748
were issued in the names of petitioner and Florentina Fernandez,
respectively.24
On June 27, 1995, petitioner took possession of his portion and built his house
thereon.25
On July 4, 1995, respondents filed an action for cancellation, annulment and
surrender of titles with damages against petitioner and Florentina Fernandez in the
RTC of Cabanatuan City, Nueva Ecija, Branch 25. In their complaint, they alleged
the following, among others: they inherited the land in question from their father,
Aureliano, Sr.; petitioner caused the preparation of the spurious deed of donation of
titled property, cancellation of affidavit of loss, agreement of subdivision with sale
and forged the signatures appearing thereon except his (petitioner's) own and, in
conspiracy with Fernandez, fraudulently registered said documents which resulted in
the cancellation of OCT No. P-6176 and the eventual issuance to them of TCT Nos.
NT-239747 and NT-239748. They prayed that these titles be declared null and void
and that petitioner and Fernandez be ordered to surrender the land and pay
damages to them.26
In his defense, petitioner alleged that respondents' father, Aureliano, Sr., fraudulently
secured a free patent in his name over the land using a fictitious affidavit dated April
10, 1970 purportedly executed by Leocadio selling to him the land in question and,
as a result, OCT No. P-6176 was issued to him; that it was respondent Artemio who
proposed to petitioner the scheme of partition that would assure the latter of his
share with the condition, however, that he (Artemio) would get a portion of 297 sq.
m. (which included the share of respondent Estrella of 83 sq. m.) because he had
already earlier sold it to Fernandez and in fact had already been partially paid
₱60,000 for it; that to implement this scheme, respondent Artemio caused the
execution of several documents namely: (1) deed of donation of titled property; (2)
agreement of subdivision with sale and (3) cancellation of affidavit of loss and that,
thereafter, he instructed petitioner to present the said documents to the Registry of
Deeds of Nueva Ecija for registration.27
On October 26, 1995, respondents moved that Fernandez be dropped as defendant
because she was no longer contesting their claim and in fact had surrendered to
them her owner’s duplicate copy of TCT No.NT-239748. Thus, she was excluded
from the suit.28
In a decision dated April 17, 1997, the RTC dismissed the case and declared OCT
No. P-6176 as well as the subsequent certificates of title (TCT Nos. NT-239747 and
NT-239748), the deed of donation of titled property, agreement of subdivision with
sale and cancellation of affidavit of loss as null and void. It held that the
aforementioned documents were spurious since the signatures were falsified by
respondent Artemio.
Furthermore, having found that OCT No. P-6176 was issued on the basis of a
document falsified by Aureliano, Sr., the RTC ordered the reversion of the land to its
status before the OCT was issued.
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 3
Finally, it held that petitioner, being an innocent victim, was entitled to damages. 29
On appeal, the CA modified the RTC decision. It ruled that only TCT Nos. NT-
241155, NT-241156, NT-239747 and NT-239748 were null and void. Their source,
OCT No. P-6176, remained valid because it had already become indefeasible and
could no longer be attacked collaterally. It also found that petitioner schemed with
Artemio in defrauding their co-heirs and was therefore in pari delicto. Consequently,
neither party was entitled to claim damages from the other. 30 Petitioner's motion for
reconsideration was denied.
Hence this petition raising the following issues:
1) whether OCT No. P-6176 was valid or invalid, and
2) whether or not petitioner is entitled to damages.
There is no doubt that the deed of donation of titled property, cancellation of affidavit
of loss and agreement of subdivision with sale, being falsified documents, were null
and void. It follows that TCT Nos. NT-241155, NT-241156, NT-239747 and NT-
239748 which were issued by virtue of these spurious documents were likewise null
and void. Neither side disputes these findings and conclusions.
The question is whether the source of these titles, OCT No. P-6176, was valid.
Petitioner argues that it should be invalidated because it was issued based on a
fictitious affidavit purportedly executed in 1970 by Leocadio (who died in 1932)
wherein the latter supposedly sold the land to Aureliano, Sr. According to petitioner,
Aureliano, Sr. used this to fraudulently and in breach of trust secure a free patent
over the land in his name.
We agree with the CA that OCT No. P-6176 remains valid. The issue of the validity
of title (e.g. whether or not it was issued fraudulently or in breach of trust) can only
be assailed in an action expressly instituted for that purpose. 31 A certificate of title
cannot be attacked collaterally. Section 48 of PD 152932 states:
SEC. 48. Certificate not subject to collateral attack. ― A certificate of title shall not
be subject to collateral attack. It cannot be altered, modified, or canceled except in a
direct proceeding in accordance with law.
The rationale behind the Torrens System is that the public should be able to rely on
a registered title. The Torrens System was adopted in this country because it was
believed to be the most effective measure to guarantee the integrity of land titles and
to protect their indefeasibility once the claim of ownership is established and
recognized. In Fil-estate Management, Inc. v. Trono,33 we explained:
It has been invariably stated that the real purpose of the Torrens System is to quiet
title to land and to stop forever any question as to its legality. Once a title is
registered, the owner may rest secure, without the necessity of waiting in the portals
of the court, or sitting on the "mirador su casa" to avoid the possibility of losing his
land.34
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 4
Petitioner merely invoked the invalidity of OCT No. P-6176 as an affirmative defense
in his answer and prayed for the declaration of its nullity. Such a defense partook of
the nature of a collateral attack against a certificate of title. 35
Moreover, OCT No. P-6176 which was registered under the Torrens System on the
basis of a free patent became indefeasible and incontrovertible after the lapse of one
year as provided in Section 32 of PD 1529:
Sec. 32. Review of decree of registration; Innocent purchaser for value. ― The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgment, subject, however, to the right of any
person, including the government and the branches thereof, deprived of land or of
any estate or interest therein by such adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First Instance a petition for reopening and
review of the decree of registration not later than one year from and after the date of
the entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired the
land or an interest therein whose rights may be prejudiced. Whenever the phrase
"innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall
be deemed to include an innocent lessee, mortgagee, or other encumbrancer for
value.
Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy by
action for damages against the applicant or any other person responsible for the
fraud. (Emphasis supplied)
Indeed, both the RTC and CA found that Aureliano, Sr. fraudulently and in breach of
trust secured OCT No. P-6176 in his name. Unfortunately, petitioner chose not to
pursue a direct proceeding to have this certificate of title annulled. In 1976, he filed
an accion reivindicatoria36 against the spouses Aureliano, Sr. and Jacoba
questioning the validity of OCT No. P-6176 and seeking to recover a portion of the
land (specifically, Lot 120-A with an area of 502 sq. m.) but he voluntarily withdrew
the case.37 Now, the title has undeniably become incontrovertible since it was issued
in 1973 or more than 30 years ago.38
We now proceed to the issue of whether petitioner is entitled to damages. The RTC
held that he is entitled to moral damages (₱50,000), exemplary damages (₱30,000)
and attorney's fees (₱20,000) because he was not aware that the documents were
falsified and he was merely instructed by respondent Artemio to have them
registered. The CA shared the finding of the RTC that it was respondent Artemio
who masterminded the preparation and use of the spurious
documents.39 Nevertheless, it did not find petitioner an innocent victim who was
merely dragged into litigation:
...[Petitioner] was far from innocent. [Respondent Artemio] and [petitioner] signed the
bogus "Deed of Donation of Titled Property" and the fraudulently baseless
"Agreement of Subdivision with Sale." It was [petitioner] who personally submitted all
the bogus documents with the Registry of Deeds of Nueva Ecija. He stood to benefit
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 5
from the registration of said fake documents. It was he who received the titles issued
in consequence of said fraudulent registration. In the natural course of things and in
the ordinary experience of man, the conclusion is inevitable that [he] knew [about]
the spurious nature of said documents but he made use of them because of the
benefit which he would derive therefrom. In short, [petitioner] confabulated with
[respondent Artemio] in defrauding all their co-heirs of their shares in said property.40
We agree. Petitioner was not in good faith when he registered the fake documents.
Good faith is ordinarily used to describe that state of mind denoting "honesty of
intention, and freedom from knowledge of circumstances which ought to put the
holder upon inquiry; an honest intention to abstain from taking any unconscientious
advantage of another, even through technicalities of law, together with absence of all
information, notice, or benefit or belief of facts which render the transaction
unconscientious."41
Petitioner claims that he was not aware of the contents of the falsified documents
and their legal consequences because of his low level of intelligence and
educational attainment. But from his own narration, it is clear that he was aware of
the fraudulent scheme conceived by respondent Artemio:
[Respondent Artemio] approached [petitioner] and propose[d] a [scheme] of partition
that [would] assure [petitioner] of getting his share including that which he and his
predecessor-in-interest have purchased from the other heirs of the late LEOCADIO
INGUSAN, but with the condition that in implementing the document known as
PAGHAHATI-HATI NA MAY BILIHAN, the corresponding shares of ESTRELLA
RAZON will go to him [respondent Artemio who] has agreed to have it sold in favor
of one FLORENTINA FERNANDEZ for ₱120,000.00, partial payment of which has
already been received by [respondent Artemio], which negotiation of SALE and the
payment made by FLORENTINA FERNANDEZ was acknowledged to be true.
Without much ado, a survey of Lot No. 120 was conducted by one Restituto
Hechenova upon instruction of [respondent Artemio], partitioning the land into two
(2), one share goes to [petitioner] with an area of 957 square meters and the other
with an area of 297 square meters in the name of [respondent Artemio], the latter
share was to be sold in favor of Florentina Fernandez. To have this IMPLEMENTED,
incidental documentation must be made thus; A DEED OF DONATION OF REAL
PROPERTY allegedly executed by Sps. Aureliano Reyes and JACOBA SOLOMON;
SUBDIVISION AGREEMENT WITH SALE by and between [petitioner] and
[respondent Artemio] as alleged DONEES and SALE in the same document in favor
of Florentina Fernandez, making in the process [petitioner] presentor of all these
questioned documents, adding among others an AFFIDAVIT OF LOSS of Original
Certificate of Title No. P-6176 allegedly falsified by [petitioner] of the signature of
[respondent] CORAZON REYES REGUYAL.42
Petitioner does not deny that he signed the fictitious deed of donation of titled
property and the agreement of subdivision with sale. Even if he reached only grade
3, he could not have feigned ignorance of the net effect of these documents, which
was to exclude the other heirs of the spouses and the original owner Leocadio from
inheriting the property and, in the process, acquiring a big chunk of the property at
their expense. The cancellation of respondent Corazon's affidavit of loss of the
owner's duplicate copy of OCT No. P-6176 also removed all obstacles to the
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 6
registration of the title covering his portion of the lot. In short, by registering the
spurious documents, he had everything to gain.
Although it was respondent Artemio, an educated individual, who engineered the
whole scheme and prepared the fraudulent documents, still petitioner cannot deny
that he was a willing co-conspirator in a plan that he knew was going to benefit him
handsomely.
As a result, there is no basis for the award of damages to petitioner. Coming to the
court with unclean hands, he cannot obtain relief. Neither does he fall under any of
the provisions for the entitlement to damages.
Respondents presented an additional issue involving the recovery of possession of
the subject land. They contend that petitioner, his heirs and relatives illegally
occupied it and constructed houses thereon.43 However, it is well-settled that a party
who has not appealed cannot obtain from the appellate court any affirmative relief
other than those obtained from the lower court whose decision is brought up on
appeal.44 While there are exceptions to this rule, such as if they involve (1) errors
affecting the lower court's jurisdiction over the subject matter; (2) plain errors not
specified and (3) clerical errors, none applies here.45
Lastly, we note that petitioner entered into certain agreements with respondents to
ensure that he would obtain a portion of the subject land. He not only paid the loan
of respondent Artemio to PNB in order to release the mortgage over the land but
also bought from respondents 1,171 sq. m. (almost 94% of the 1,254 sq. m. lot)
under the Kasulatan ng Paghahati-hati Na May Bilihan. These are undisputed facts.
Ultimately, however, he failed to get his portion of the property. Although petitioner
did not demand the return of the amounts he paid, we deem it just and equitable to
direct respondents to reimburse him for these.
Article 1236 of the Civil Code provides:
Art. 1236. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfillment of the obligation, unless there is a
stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor,
he can recover only insofar as the payment has been beneficial to the
debtor. (emphasis ours)
Respondent Artemio was the debtor in this case, PNB the creditor and petitioner the
third person who paid the obligation of the debtor. The amount petitioner may
recover will depend on whether Artemio knew or approved of such
payment.1avvphi1
Petitioner should also be able recover the amount (if any) he paid to respondents
under the Kasulatan since this agreement was never implemented. Otherwise, it will
result in the unjust enrichment of respondents at the expense of petitioner, a
situation covered by Art. 22 of the Civil Code:
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 7
Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without
just or legal ground, shall return the same to him.
Petitioner is not entitled to legal interest since he never made a demand for it.
WHEREFORE, the petition is hereby DENIED. However, respondents are ordered to
return to petitioner the amounts he paid to the Philippine National Bank and under
the Kasulatan ng Paghahati-hati Na May Bilihan. The court a quo is directed to
determine the exact amount due to petitioner. The January 21, 2000 decision and
April 10, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 56105
are AFFIRMED.
G.R. No. 142938 Aug 28, 2007MIGUEL INGUSAN, Petitioner, vs.HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES,*Respondents... 8
