Caveat Emptor - Buyers (of my ideas) beware. Read at your own risk. These digests is for recitation purposes. - JC
CASE 1: RABAJA RANCH DEVELOPMENT VS. AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM 592
SCRA 201
GR NO: 177181, July 7, 2009
PETITIONER: RABAJA RANCH DEVELOPMENT CORPORATION
RESPONDENTS: AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM
PONENTE: J. NACHURA
FACTS:
- Rabaja Ranch Development Corporation (petitioner), a domestic corporation, is a holder of Transfer Certificate of
Title (TCT) No. T-88513 covering the subject property particularly identified as Lot 395, Pls 47, with an area of 211,372
square meters more or less, and located at Barangay (Brgy.) Conrazon, Bansud, Bongabon, Oriental Mindoro.
- Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) is a government
corporation, which manages the pension fund of the Armed Forces of the Philippines (AFP), is a holder of TCT No. T51382 covering the same subject property.
- September 1, 1998, RABAJA filed a Complaint for Quieting of Title and/or Removal of Cloud from Title before
the RTC.
o September 6, 1955, Free Patent No. V-19535 (Free Patent) was issued in the name of Jose
Castromero (Jose), registered, and Original Certificate of Title (OCT) No. P-2612 covering the subject
property was issued in the name of Jose.
o Jose sold the subject property to Spouses Sigfriedo and Josephine Veloso (spouses Veloso), and
TCT No. T-17104 was issued in favor of the latter.
o Spouses Veloso, in turn, sold the subject property to RABAJA RANCH DEVELOPMENT
CORPORATION for the sum of P 634,116.00 on January 17, 1997, and TCT No. T-88513 was issued in
petitioners name.
- AFP-RSBS averred,
o title over the subject property was protected by the Torrens system, as it was a buyer in good faith and
for value; and that it had been in continuous possession of the subject property since November
1989, way ahead of RABAJA's alleged possession in February 1997.
o April 30, 1966, Homestead Patent No. 113074 (Homestead Patent) was issued in the name of Charles
Soguilon (Charles).
o On May 27, 1966, the Homestead Patent was registered and OCT No. RP-110 (P-6339) was issued in
Charles's name, covering the same property.
o On October 18, 1982, Charles sold the subject property to JMC Farm Incorporated (JMC), which was
then issued TCT No. 18529.
o On August 30, 1985, JMC obtained a loan from AFP-RSBS in the amount of P7,000,000.00, with real
estate mortgage over several parcels of land including the subject property. JMC failed to pay;
hence, after extra-judicial foreclosure and public sale, respondent, being the highest bidder, acquired
the subject property and was issued TCT No. T-51382 in its name. AFP-RSBS contended that from the
time it was issued a title, it took possession of the subject property until RABAJA disturbed AFPRSBS's possession thereof sometime in 1997.
- RTC ruled in favor of the RABAJA on the ground that RABAJA's title emanated from a title older than that of AFPRSBS. Moreover, the RTC held that there were substantial and numerous infirmities in the Homestead Patent
of Charles. The RTC found that there was NO record in the Bureau of Lands that Charles was a homestead
applicant or a grantee of Homestead Patent No. 113074. Upon inquiry, the RTC also found that a
similar Homestead Patent bearing No. V-113074 was actually issued in favor of one Mariano Costales over a parcel of
land with an area of 8.7171 hectares and located in Bunawan, Agusan in Mindanao, per Certification issued by the
Lands Management Bureau dated February 18, 1998. Thus, the RTC held that Charles's Homestead Patent was
fraudulent and spurious, and respondent could not invoke the protection of the Torrens system, because the
system does not protect one who committed fraud or misrepresentation and holds title in bad faith.
- Aggrieved, AFP-RSBS appealed to the CA.
o the CA reversed and set aside the RTC's Decision upon the finding that Charles's Homestead
Patent was earlier registered than Jose's Free Patent. The CA held that Jose slept on his
rights, and thus, respondent had a better right over the subject property. Further, the CA opined that
while it is interesting to note that petitioner's claim that Homestead PatentNo. V-113074 was issued to
Mariano Costales, per Certification issued by the Lands Management Bureau, there is nothing on
the
- She asserted the right of inheritance from her deceased parents, couple with alleged continuous and
exclusive possession
petition was opposed by the Provincial Government of Rizal and the Municipal Government of Las Pias Rizal
The Director of Lands did not deem it necessary at the time to file an opposition to Teodocia Lozada's petition
and returned the records of the case to the court a quo through the Solicitor General. However, the Director of
Lands reserved the right to file his opposition thereto should it be found upon investigation that applicant
Lozada is not entitled to the lots in question
- April 25, 1967, an order of general default was issued by the court a quo, excepting therefrom the Provincial
Government of Rizal and the Municipal Government of Las Pias Rizal.
- The court a quo referred the case to the Municipal Court of Las Pias Rizal because the value of the contested lots
does not exceed
P10,000.00.
- June 26, 1967, upon the ex-parte evidence presented by applicant TEODOCIA LOZADA, the Municipal Court of Las
Pias, Rizal, found applicant Lozada to have a registerable title to the two parcels of land and confirmed the title
thereto. A month later, the municipal court ordered the issuance of the corresponding decree of registration and on
September 7, 1967, Original Certificate of Title No. 6314 in the name of TEODOCIA LOZADA was issued by the
Register of Deeds of Rizal.
- The Solicitor General, within one year from entry of the decree filed a petition for review of the decision and decree of
registration on the ground that applicant Lozada had procured the same by actual fraud.
o she deliberately concealed the fact that the lots in question were covered by Revocable Permit Application No.
15849 and Miscellaneous Sales Application No. V 76845, both in the name of her husband, Felix Cristobal,
and that these applications were rejected by the Bureau of Lands since these lots were reserved for school
site purposes pursuant to Resolution No. 114, Series of 1963, of the Municipal Council of Las Pinas, Rizal
o these lots are portions of the public domain and as such belong to the State and are not subject to
private appropriation and, therefore, not registerable under the Torrens System
- In the decision upon petition for review, the court found the Lozada and her husband had deliberately deceived
the State, a revocable permit application and a sales application which had been rejected because the lands had
court accordingly rendered judgment on March 30, 1973 in favor of the Republic
Setting aside the decision of the Municipal Court of Las Pias Rizal of June 26, 1967
Declaring the property in question to be part of the public domain belonging to the Republic of the Philippines
Dismissing the registration application of Teodocia Lozada
Ordering applicant Teodocia Lozada to surrender Original Certificate of Title No. 6314 of the Province of Rizal to
the Register of Deeds of said Province and that the same may be cancelled
Ordering the Register of Deeds of the Province of Rizal to cancel the aforementioned Original Certificate of Title
No. 6314
Ordering Felix Cristobal and Teodocia Lozada to vacate immediately the property in question
- Lozada appealed to the Court of Appeals, however certified the appeal to SC, since it involves question of law.
ISSUE:
WON LOZADA IS ENTITLED OF A TCT COMMITED THROUGH FRAUD
HELD:
Appellant Lozada (and her husband Felix Cristobal) were clearly guilty of fraud
(1) in not disclosing in her application for registration the vital facts that her husband's previous application for a
revocable permit and to purchase the lands in question from the Bureau of Lands had been rejected, because the
lands were already reserved as a site for school purposes;
(2) in thus concealing the fact that the lands were part of the public domain and so known to them;
(3) in stating the deliberate falsehood that the lands were allegedly inherited by her from her parents; and
(4) in filing the application for registration in the name of appellant Lozada and not in that of her husband Felix
Cristobal or the two of them jointly, thus suppressing the fact that Felix Cristobal already had a record in the Bureau of
Lands of having filed a rejected application for the same lands, all of which misled the Bureau of Lands into not filing
an opposition to her application and as aptly observed by the lower court "effectively deprived (the Republic) of its day
in court.
I. Lozada is guilty of extrinsic or collateral fraud, as distinguished from intrinsic fraud [which] connotes any
fraudulent scheme executed by a prevailing litigant outside the trial of a case against the defeated party, or his
agents, attorneys or witnesses, whereby said defeated party is his agents, attorneys or witnesses, whereby said
defeated party is prevent from presenting fully and fairly his side of the case.
Or intrinsic fraud [which] takes the form of acts of a party in a litigation during the trial, such as the use of forged
instruments or perjured testimony, which did not affect the presentation of the case, but did prevent a fair and just
determination of the case, " 3
but will not would not alter the result because the mistake and error into which the officials of the Bureau of Lands were
misled by such a deliberately false application, suppressing the facts known to the applicant that the lands sought to
be registered were lands of the public domain (and not private property) and having been reserved for a school site
were not susceptible of private registration (as in fact her husband's application to purchase the same had been