DBT Mar-Bay Construction v. Panes Case Digest

G.R. No. 167232

July 31, 2009

Facts:

• Subject land: 240,146 m² of land in Quezon City
• The property was under the name of BC Regalada & Co.
• It was conveyed by BC Regalado to DBT Mar-Bay through a dacion en pago for services rendered by the former.
• In 1992, Panes et al filed a complaint for quieting of title with cancellation of TCT.
  • In the complaints, Panes alleged that he is the lawful owner of the subject property which he had declared for taxation purposes.
  • Panes et al also claimed that they are still in actual possession of the property and that their possession preceded WW2
• When Panes was in the process of complying with the publication requirements for the Notice of Initial Hearing with the LRA, it was discovered that the there existed an overlapping of the portions of land subject to Panes’ application.
  • By then, the portion had already been conveyed to DBT.
• The RD of Quezon City admitted that he committed a grave mistake when he said earlier that the TCT covered only one lot. He later realized that the TCT had 17 pages.
• Spouses Tabangcura also claimed that they were buyers in good faith and for value when they bought a house and lot from BC Regalado.
• RTC favored Panes et al.
  • Reasons:
    • Testimony of Panes that he occupied the subject property since 1936 when he was only 16 years old was not rebutted.
    • Panes’ occupation and cultivation of the property for more than 30 years in the concept of an owner vested in him the equitable ownership over the same by virtue of an approved plan.
    • The property was declared under Panes for tax declaration.
• DBT filed a motion for reconsideration based on the gorund of prescription and laches.
• A motion for intervention was filed in 2001 by Atty. Pulumbarit, representing the estate of Don Jose de Ocampo.
  • He alleged that the property was part of de Ocampo’s estate.
• RTC denied Atty. Pulumbarit’s motion for intervention.
• RTC then issued an order stating the need for a clarificatory hearing.
• DBT said that it could not secure a certified true copy of the TCT because of the fire in the office of the RD in Quezon City.
  • What they submitted instead is a certified true copy of the Consolidated Subdivision Plan.

Issues:

1. Did the RTC err in upholding DBT’s defenses of prescription and laches raised in the latter’s motion for reconsideration?
2. Which between DBT and the respondents have a better right over the property?

Ruling:

1. Yes. The RTC failed to consider that the action filed before it was not simply for reconveyance but an action for quieting of title which is imprescriptible.

An action for reconveyance can be barred by prescription:

• If based on fraud
  • 4 years from the discovery of the fraud and such discovery is deemed to have taken place from the issuance of the OCT
• If based on implied or constructive trust
  • 10 years from the date of the issuance of the OCT or TCT

However, the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the property. If the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period does not run against him.

Reason: One who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.

Laches will operate not really 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 inequitable situation.

• DBT has the better right.

It is settled that no title to registered land in derogation of the rights of the registered owner shall be acquired by prescription or adverse possession.

Prescription is unavailing not only against the registered owner but also against his hereditary successors.

Possession is a mere consequence of ownership where land has been registered under the Torrens system, the efficacy and integrity of which must be protected.

Panes’ claim of acquisitive prescription over the property is baseless. Under Article 1126 of the Civil Code, acquisitive prescription of ownership of lands registered under the LRA shall be governed by special laws. Act 496 as amended by PD 1529 provides that no titles to registered land in derogation of that of the registered owner shall be acquired by adverse possession.

There was no ample proof that DBT participated in the alleged fraud. The SC has the authority to review and reverse the factual findings of the lower courts when the findings of facts of the trial court are in conflict with those of the appellate court.

Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation.

DBT here is an innocent purchaser for value.