ogcc nha v. evangelista

8/13/2019 OGCC NHA v. Evangelista

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NHA v. EVANGELISTA

1stOption: Reconveyance of title

An action for reconveyance is a legal and equitable remedy granted to therightful owner of land, which has been wrongfully or erroneously registered in thename of another for the purpose of compelling the latter to transfer or reconveythe land to him. 1 Section 96 of PD 1529, which states: that nothing in thisDecree shall be construed to deprive the plaintiff of any action which he mayhave against any persons for such loss or damage or deprivation constitutessufficient statutory authority, under which the remedy of reconveyance may beinvoked.

In the case at bar, the action for reconveyance is the proper remedy toassail the title issued in favor of Evangelista because said title was wrongfully

registered in the latters name. The Court has already rendered judgmentnullifying the auction sale conducted by the Quezon City treasure and declaringthe title issued in the name of Sarte, Evangelistas predecessor in interest, nulland void. This declaration is a recognition of the superior right of NHA over theproperty. As a rightful owner of the land, NHA is entitled to recover the title to thedisputed land. Furthermore, it should be noted that in the case of NHA v.Evanglista, the Supreme Court made a pronouncement that the issue of whetheror not Evanglista is a purchaser in good faith must be threshed out in a full-blowntrial for that purpose in an appropriate case and in the proper forum. It issubmitted that the proper forum for such purpose is a direct proceeding to cancelthe title through an action for reconveyance.

The following cases support the action for reconveyance:

Quiiano, et al. v. Court of Appeals:

The controlling legal norm was set forth in succinct language by Justice Tuasonin a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: Thesole remedy of the land owner whose property has been wrongfully orerroneously registered in another's name is, after one year from the date ofthe decree, not to set aside the decree, as was done in the instant case, but,respecting the decree as incontrovertible and no longer open to review, to bringan ordinary action in the ordinary court of justice for reconveyanceor, if theproperty has passed into the hands of an innocent purchaser for value, fordamages." Such a doctrine goes back to the 1919 landmark decision of Cabanosv. Register of Deeds of Laguna. If it were otherwise the institution of registrationwould, to quote from Justice Torres, serve "as a protecting mantle to cover and

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shelter bad faith ...." In the language of the then Justice, later Chief Justice,Bengzon: "A different view would encourage fraud and permit one personunjustly to enrich himself at the expense of another." It would indeed be a signalfailing of any legal system if under the circumstances disclosed, the aggrievedparty is considered as having lost his right to a property to which he is entitled. It

is one thing to protect an innocent third party; it is entirely a different matter, andone devoid of justification, if [deceit] would be rewarded by allowing theperpetrator to enjoy the fruits of his nefarious deed. As clearly revealed by theundeviating line of decisions coming from this Court, such an undesirableeventuality is precisely sought to be guarded against. So it has been before; so itshould continue to be

Naval v. Court of Appeals:

The fact that petitioner was able to secure a title in her name did notoperate to vest ownership upon her of the subject land. Registration of a

piece of land under the Torrens System does not create or vest title,because it is not a mode of acquiring ownership.A certificate of title is merelyan evidence of ownership or title over the particular property described therein. Itcannot be used to protect a usurper from the true owner; nor can it be used as ashield for the commission of fraud; neither does it permit one to enrich himself atthe expense of others. Its issuance in favor of a particular person does notforeclose the possibility that the real property may be co-owned with persons notnamed in the certificate, or that it may be held in trust for another person by theregistered owner

Walstrom v. Mapa, Jr:

We have ruled before in Amerol vs. Bagumbaran that notwithstanding theirrevocability of the Torrens title already issued in the name of anotherperson, he can still be compelled under the law to reconvey the subjectproperty to the rightful owner. The property registered is deemed to be held intrust for the real owner by the person in whose name it is registered. After all, theTorrens system was not designed to shield and protect one who had committedfraud or misrepresentation and thus holds title in bad faith.

On the issue of Prescription:

It has been settled in this jurisdiction that an action for reconveyance maybe barred by prescription. Jurisprudence has held that an action forreconveyance resulting from fraud prescribes within 4 years after the discovery of


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fraud2or within 10 years from the date of the issuance of the tile if the action isbased on implied trust3.

In the case at bar, however, it may be argued that the prescriptive perioddoesnt apply because the contract of sale to Evangelista is null and void. The

sale to Evangelista conveyed no title for the simple reason that the vendor, Sarte,had no title or interest to transfer. Accordingly, it is an established principle thatthe Torrens system was not established as a means for the acquisition of title toprivate land. It is intended merely to confirm and register the title, which one mayalready have on the land. Where the applicant possesses no title or ownershipover the parcel of land, he cannot acquire one under the Torrens system ofregistration.4

The argument that a void contract is imprescriptible is supported by Art1410 of the Civil Code, which states: The action or defense for the declaration ofthe inexistence of a contract does not prescribe. Jurisprudence likewise

enunciates the doctrine that actions for reconveyance based on a void contract isimprescriptible:

Solid State Multu-Products Corporation v. Court of Appeals GR 83383, May6,1991:

In actions for reconveyance of property predicated on the fact that theconveyance complained of was void ab initio, a claim of prescription of the actionwould be unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil. 722; Agne vs.Director of Lands, G.R. L-40399, February 6, 1990, 181 SCRA 793). Being nulland void, the sale made to Mabini Legaspi and the subsequent titles issuedpursuant thereto produced no legal effects whatsoever. Quod nullum est nullumproducit affectum (Agnes vs. Director of Lands, supra). There being no title to theland that Mabini Legaspi acquired from the government, it follows that no title tothe same land could be conveyed by the former to respondent Virata.

Even assuming that respondent Virata was a purchaser in good faith and forvalue, the law is, as between two persons both of whom are in good faith andboth innocent of any negligence, the law must protect and prefer the lawfulholder of registered title over the transferee of a vendor bereft of anytransmissible rights. Further if a person happened to obtain property by mistakeor to the prejudice of another with or without bad faith, the certificate of title whichmay have been issued to him under the circumstances may and should becancelled or corrected.

Daclag v. Macahilig, GR no. 159578, February 18, 2009:

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The deed of sale executed by Maxima in favor of petitioners was null and void,since Maxima was not the owner of the land she sold to petitioners, and the one-half northern portion of such land was owned by respondents. Being an absolutenullity, the deed is subject to attack anytime, in accordance with Article 1410 of

the Civil Code that an action to declare the inexistence of a void contract doesnot prescribe. Likewise, we have consistently ruled that when there is a showingof such illegality, the property registered is deemed to be simply held in trust forthe real owner by the person in whose name it is registered, and the former thenhas the right to sue for the reconveyance of the property. An action forreconveyance based on a void contract is imprescriptible.

Castillo, et al. v. Madrigal, et al., G.R. No. 62650, June 27, 1991:

Both courts ruled incorrectly. It is evident in paragraphs 9, 10 and 12 of thecomplaint, supra, that petitioners sought the declaration of the inexistence of the

deed of sale because of the absence of their consent. Thus, following theprovision of Article 1410 of the Civil Code, this kind of action is imprescriptible.The action for reconveyance is likewise imprescriptible because its basis is thealleged void contract of sale.

2ndOption: Claim from Assurance Fund

Another remedy granted to an owner of property but which property hasbeen wrongfully or erroneously registered in another name is to file an action forrecovery against the Assurance fund under Section 95 of PD no. 1529 to wit:

Section 95. Action for compensation from funds. A personwho, without negligence on his part, sustains loss ordamage, or is deprived of land or any estate or interesttherein in consequence of the bringing of the land under theoperation of the Torrens system of arising after originalregistration of land, through fraud or in consequence of anyerror, omission, mistake or misdescription in any certificateof title or in any entry or memorandum in the registrationbook, and who by the provisions of this Decree is barred orotherwise precluded under the provision of any law frombringing an action for the recovery of such land or the estateor interest therein, may bring an action in any court ofcompetent jurisdiction for the recovery of damages to bepaid out of the Assurance Fund

Section 95 provides a remedy where a person who sustains loss ordamage or is deprived of any estate or interest in land in consequence of the


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operations of the Torrens system of registration, without negligence on his part.The Assurance Fund is intended to relieve innocent persons from the harshnessof the doctrine that a certificate is conclusive evidence of an indefeasible title toland 5Public policy demands that those unjustly deprived of their rights over realproperty by reason of the operation of our registration laws be afforded remedies.

The case of Sps. Francisco v. National Treasurer provides for the requisites forrecovery from the Assurance Fund while the case of Estrellado v. Martinesenunciates the principle and rational of such remedy. The relevant portions of thedecision are cited below:

Sps. Francisco v. National Treasurer, G.R. No. 143281, August 3, 2000:

It may be discerned from the foregoing provisions that the persons who mayrecover from the Assurance Fund are:1) Any person who sustains loss or damage under the following conditions:a) that there was no negligence on his part; and

b) that the loss or damage sustained was through any omission, mistake ormalfeasance of the court personnel, or the Registrar of Deeds, his deputy, orother employees of the Registry in the performance of their respective dutiesunder the provisions of the Land Registration Act, now, the Property RegistrationDecree; or

2) Any person who has been deprived of any land or interest therein under thefollowing conditions:a) that there was no negligence on his part;b) that he was deprived as a consequence of the bringing of his land or interesttherein under the provisions of the Property Registration Decree; or by theregistration by any other person as owner of such land; or by mistake, omissionor misdescription in any certificate of owners duplicate, or in any entry ormemorandum in the register or other official book or by any cancellation; andc) that he is barred or in any way precluded from bringing an action for therecovery of such land or interest therein, or claim upon the same.

Estrellado v. Martinez, G.R. No. L-23847, November 18, 1925:

The authors of the Torrens system also wisely included provisionsintended to safeguard the rights of prejudiced parties rightfully entitled to aninterest in land but shut off from obtaining titles thereto. As suppletory to theregistration of titles, pecuniary compensation by way of damages was providedfor in certain cases for persons who had lost their property. For this purpose, anassurance fund was created. But the assurance fund was not intended to blockany right which a person might have against another for the loss of his land.Damages were not to be recoverable from the assurance fund when they couldbe recovered from the person who caused the loss.

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According to the scheme of the Torrens system, the indemnity fund is

merely ancillary to the system of registering and transferring titles to real estate.It is intended to relieve innocent persons from the harshness of the doctrine thata certificate is conclusive evidence of an indefeasible title to land, and from any

injustice which may arise to them by operations under the act, making for theconclusiveness of a certificate, whether such injustice arises from the fraud orerror of some one connected with the registry office, or of some third persondealing with the land. It is not intended to relieve from the legal consequences ofhis act any third person who perpetrates a fraud or commits an error, and it is notintended to relieve a person, who is injured by operations under the system, fromthe burden of prosecuting the remedies given to him by the general laws or bythe act establishing the system . . . .

The maxim equity, is "Equity will not suffer a wrong to be without a remedy.The civil law makes it the duty of the courts to protect the owner of property who

may be deprived of it (Civil Code, art. 349). No one should be permitted to enrichhimself at the expense of another. As the title to the land may not be assailed,the only possible way to rectify the situation is by giving compensation to theclaimant to be paid by the holder of the property.

3rdOption: File a case for damages

NHA may file its claim for damages jointly with the action forreconveyance or may institute independently an action for damages against theperson responsible for depriving NHAs right or interest over the property. Asheld in the case of Gonzales v. IAC, the action for damages is an availableremedy even if the property has passed into the hands of an innocent purchaserfor value,6The cases cited below discusses action for damages as an equitableremedy provided for by law to vindicate rights of property owners who wereunlawfully deprived of their title over the properties:

Quiniano v. CA, G.R. No. L-2302, May 31, 1971

The controlling legal norm was set forth in succinct language by Justice Tuasonin a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: "Thesole remedy of the land owner whose property has been wrongfully orerroneously registered in another's name is, after one year from the date of thedecree, not to set aside the decree, as was done in the instant case, but,respecting the decree as incontrovertible and no longer open to review, to bring

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an ordinary action in the ordinary court of justice for reconveyance or, if theproperty has passed into the hands of an innocent purchaser for value, fordamages." Such a doctrine goes back to the 1919 landmark decision ofCabanos v. Register of Deeds of Laguna. If it were otherwise the institution ofregistration would, to quote from Justice Torres, serve "as a protecting mantle to

cover and shelter bad faith ...." In the language of the then Justice, later ChiefJustice, Bengzon,: "A different view would encourage fraud and permit oneperson unjustly to enrich himself at the expense of another." It would indeed be asignal failing of any legal system if under the circumstances disclosed, theaggrieved party is considered as having lost his right to a property to which he isentitled. It is one thing to protect an innocent third party; it is entirely a differentmatter, and one devoid of justification, if deceit would be rewarded by allowingthe perpetrator to enjoy the fruits of his nefarious deed. As clearly revealed bythe undeviating line of decisions coming from this Court, such an undesirableeventuality is precisely sought to be guarded against. So it has been before; so itshould continue to be.

Sumira, et al. vs. Vistan, G.R. No. L-48635 February 26, 1943

As to the action for damages, actual fraud need not be pleaded and proved,constructive fraud being sufficient. Constructive fraud as distinguished fromactual fraud does not mean downright dishonesty of some sort, but anunintentional deception, negligence, mistake of fact or any transaction, whichequity regards as wrongful and to which it attributes the same or similar effectsas those which follow from actual fraud. Here, defendant Vistan may have actedwithout malice in procuring exclusive Torrens title in her name, but as in truth sheis not the owner of the whole land and plaintiffs have been deprived of their rightswith no fault of their own, an equitable remedy for damages may be granted themeven if the property has already been conveyed to an innocent third person. Thereason for the rule is that nobody should be allowed to enrich himself at theexpense of another.

ogcc nha v. evangelista

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