Spouses Aranas v. Dela Cruz

FIRST DIVISION

[G.R. No. 210199. September 11, 2019.]

SPOUSES RODOLFO A. ARANAS AND EVELYN ARANAS, petitioners, vs.MRS. GRACIA A. DELA CRUZ, REPRESENTED BY NEMESIO A. DELA CRUZ AND BELEN C. GALDO, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedSeptember 11, 2019which reads as follows:

"G.R. No. 210199 (Spouses Rodolfo A. Aranas and Evelyn Aranas v. Mrs. Gracia A. Dela Cruz, represented by Nemesio A. Dela Cruz and Belen C. Galdo). — This petition for review on certiorari assails the Decision 1 dated May 30, 2013 and Resolution 2 dated November 12, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 02109-MIN, which reversed and set aside the December 22, 2009 Judgment of the Butuan City Regional Trial Court (RTC), 10th Judicial Region, Branch No. 2 in Civil Case No. 5727 for quieting of title, recovery of possession, damages and attorney's fees.

Respondent Gracia A. Dela Cruz, represented by Nemesio Dela A. Cruz and Belen C. Galdo, filed Civil Case No. 5727 against petitioners spouses Rodolfo A. Aranas (Rodolfo) and Evelyn Aranas (Evelyn), alleging that she purchased the two parcels of land 3 (collectively, the properties) subject of this case from the Philippine National Bank (PNB) on September 5, 2001. 4 The properties were covered by Transfer Certificate of Title (TCT) No. RT-13461 in the name of PNB. 5 In view of the purchase, TCT No. RT-13461 was cancelled and a new one, TCT No. RT-39517 was issued in the name of respondent. 6

Respondent asserted her rights over the properties against the petitioners who were occupying the same. It appears that the properties were previously owned by Rodolfo's mother, Luz Aranas (Luz), who mortgaged the same to PNB. The properties were extrajudicially foreclosed, with Luz subsequently failing to redeem the properties. Hence, PNB consolidated its ownership over the properties. 7

PNB filed a petition for issuance of writ of possession which the trial court granted. The writ of possession, however, was returned served but unsatisfied because Luz requested for a last opportunity to settle her obligation with the bank. As it turned out, too, Rodolfo managed to secure TCTs (TCT No. RT-15864 covering Lot 20 and TCT No. RT-15863 covering Lot 21) in his name covering the properties. After learning about this, PNB filed SP Civil Action No. 693, an action for quieting of title against petitioners. 8 It was eventually decided by the trial court on the basis of a compromise agreement duly executed by the parties. However, for one reason or another, the judgment based on the said compromise agreement remained dormant. 9

In their answer, petitioners countered that Rodolfo acquired absolute ownership over the properties through purchase from the Butuan City Rural Bank, Inc. in December 1979. A deed of absolute sale was allegedly executed in his favor and which was duly registered with the Registry of Deeds of Butuan City. Petitioners alleged that as a consequence of the purchase, TCT Nos. RT-7891 and RT-7892 in the name of Butuan City Rural Bank, Inc. were cancelled and new ones (TCT Nos. RT-15863 and RT-15864) were issued in Rodolfo's name. 10 Petitioners asserted that they were in possession of the properties since 1981 and that the properties were declared for taxation purposes in their names. 11 Petitioners thusly concluded that the action of respondent was a collateral attack on Rodolfo's titles. 12

The trial court dismissed respondent's complaint on the ground that she failed to meet one of the indispensable requisites for an action to quiet title to prosper, which is, that the deed, claim, encumbrance or proceeding claimed to be casting cloud on her title must be shown to be, in fact, invalid or inoperative despite its primafacie appearance of validity or legal efficacy. The trial court held that respondent failed to adduce enough evidence to show that petitioners' claim of ownership is, in truth and in fact, invalid or inoperative. Although she was able to secure a TCT in her name for the properties, this did not operate as an absolute claim of ownership against the petitioners, who were in actual possession of the properties and who were first to register the same in Rodolfo's name. 13

The trial court also awarded moral and temperate damages, as well as attorney's fees and litigation expenses, in favor of petitioners on the finding that respondent was motivated by bad faith in purchasing the properties. The trial court came to this conclusion by weighing in on the familial ties of the parties and the fact that they were neighbors. 14

The CA reversed the trial court. The CA found that respondent has legal title over the properties by virtue of the Deed of Sale dated January 31, 2001 between her and PNB and the TCT subsequently issued in her name. The CA then disagreed with the RTC, finding preponderant evidence instead that petitioners' titles covering the properties are void or, at most, inferior to that of respondent's. 15 The CA pointed out the compromise agreement entered into by petitioners and PNB in SP Civil Action No. 693, concluding that petitioners would not have agreed to purchase the properties from PNB, but would have, instead, challenged PNB's title and asserted their own titles, if they truly hold superior title over the properties.

The CA pointed out further that even if the evidence of petitioners were to be considered, the right of ownership of respondent would still prevail. The CA noted that Luz, the predecessor-in-interest of PNB and respondent, became the owner of the lots since 1964. On the other hand, Lutgarda Aviola (Lutgarda), the alleged predecessor-in-interest of petitioners who also happened to be the mother of respondent and Luz, 16 was issued TCTs covering the properties only in 1966.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed Judgment is SETASIDE and a new one rendered:

1) Declaring TCT No. 39517 covering the subject lots issued by the Register of Deeds of Butuan City in the name of appellant Grace A. Dela Cruz VALID.

2) Declaring TCT Nos. RT-15863 and RT-15864 covering the subject lots issued by the Register of Deeds of Butuan City in the name of Rodolfo A. Aranas married to Evelyn Solon NULLAND VOID.

3) Ordering appellees Spouses Rodolfo & Evelyn Aranas to vacate the lots in question and surrender possession thereof to appellant.

No pronouncement as to cost.

SO ORDERED.17

Hence, this petition ascribing reversible error on the part of the CA in finding preponderant evidence that respondent has a legal title over the properties and that petitioners' title becloud its validity or efficacy.

It is not the province of the Court in a Rule 45 petition to re-examine the evidence presented by the parties during the trial of the case. We are not a trier of facts and the findings of fact of the CA are, as a general rule, conclusive and binding upon Us. This rule, however, admits of several exceptions and one of which is when the findings of the CA are contrary to those of the trial court. This exception obtains in this case.

We deny the petition.

An action for quieting of title originated in equity jurisprudence to secure an adjudication that a claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under him may be forever free from any danger of hostile claim. Thus, our courts are tasked to determine the respective rights of the contending parties, not only to put things in their proper places, but also to benefit both parties, so that he who has the right would see every cloud of doubt over the property dissipated, and he could afterwards, without fear, introduce the improvements he may desire, and to use and even to abuse the property as he may deem best. 18

In Our jurisdiction, the remedy is governed by Articles 476 and 477 of the Civil Code, which state:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject-matter of the action. He need not be in possession of said property. 19

In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its primafacie appearance of validity or legal efficacy. Respondent was able to establish the concurrence of these two requisites.

As regards the first requisite, We find that respondent was able to establish her title over the properties subject of this action. Respondent submitted in evidence the Deed of Absolute Sale by which she acquired the properties from PNB leading to the cancellation of TCT No. RT-13461 in the name of PNB and the concomitant issuance of TCT No. RT-39517 in her name. Respondent also offered in evidence her motions before the RTC Branch 4 of Butuan City in SP. Proc. No. 665 to revive said case and substitute PNB and for the issuance of alias writ of execution, as well as the Resolution of the RTC on said motions, where the facts reveal that the properties were previously registered in the name of Luz under TCT No. RT-1606. Luz mortgaged the properties to PNB to secure a loan of P8,500.00. She failed to comply with the terms and conditions of the loan, hence, the mortgage was foreclosed. The properties were then sold at public auction to PNB in accordance with law. Luz failed to redeem the properties, hence, the sale in favor of PNB became final and the properties were transferred to its name under TCT No. RT-13461. 20

As to the second requisite, We also find that the titles claimed to be casting cloud on respondent's title are, in fact, invalid. We agree with this conclusion of the CA, albeit on different grounds. In reaching its conclusion, the CA gave weight on the compromise agreement entered into between petitioners and PNB in SP Civil Action No. 693. The CA found that petitioners acknowledged in the compromise agreement that PNB was the owner of the properties, and had, in fact, agreed to buy the properties from PNB. The CA found this act of petitioners to be in contradiction to a true owner of a property. A true owner would not have offered to compromise and would have continuously asserted his or her rights. We do not agree with the CA on this score.

The general rule is that an offer of compromise in a civil case is not an admission of liability. It is not admissible in evidence against the offeror. The rule, however, is not iron-clad. 21 The Court explained in Trans-Pacific Industrial Supplies, Inc. v. Court of Appeals, 22 thus:

To determine the admissibility or non-admissibility of an offer to compromise, the circumstances of the case and the intent of the party making the offer should be considered. Thus, if a party denies the existence of a debt but offers to pay the same for the purpose of buying peace and avoiding litigation, the offer of settlement is inadmissible. If in the course thereof, the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably, then, the admission is admissible to prove such indebtedness (Moran, Comments on the Rules of Court, Vol. 5, p. 233 [1980 ed.]); Francisco, Rules of Court, Vol. VII, p. 325 [1973 ed.] citing McNiel v. Holbrook, 12 Pac. (US) 84, 9 L. ed., 1009). Indeed, an offer of settlement is an effective admission of a borrower's loan balance (L.M. Handicraft Manufacturing Corp. v. Court of Appeals, 186 SCRA 640 [1990]. x x x (Emphasis supplied.)

Here, the compromise agreement provided the following:

xxx xxx xxx

Defendant will buy the properties of the petitioner which are particularly described in, and the subject matter of, this instant petition for PESOS: SEVENTY THOUSAND (P70,000.00) under such terms and conditions acceptable to both parties; and they shall drop or withdraw any and all of their counterclaims against the petitioner alleged in their answer; and

Petitioner agrees to surrender title to these properties once it received full payment thereof and shall likewise relinquishes any and all its claims against defendants.

xxx xxx xxx 23

There is neither an expressed nor implied denial of liability in the above compromise agreement. But before its terms were finally reached, the letters of petitioners to PNB would show their motivation in offering to settle the case. In their letter dated November 23, 1992, 24 petitioners conveyed their willingness to settle the case amicably for a sum of P27,000.00 "notwithstanding [their] sincere and honest belief that [they] are legally entitled [to the properties]." Petitioners were desirous to settle the case amicably "only because of the circumstance that the alleged basis of the bank's claim over the said parcels of land was a transaction with Mrs. [Luz], the mother of respondent [Rodolfo] x x x." In their letter dated February 9, 1993, petitioners increased their offer to P70,000.00 "if only to effect a settlement of the case." 25 In light of these letters, it was erroneous for the CA, therefore, to take it against petitioners their intention to settle the case with PNB.

The law favors compromise agreements. Offers for compromise are irrelevant because they are not intended as admissions by the parties making them. A true offer of compromise does not, in legal contemplation, involve an admission on the part of a defendant that he or she is legally liable, or on the part of a plaintiff, that his or her claim is groundless or even doubtful, since it is made with a view to avoid controversy and save the expense of litigation. It is the distinguishing mark of an offer of compromise that it is made tentatively, hypothetically, and in contemplation of mutual concessions. 26

The foregoing notwithstanding, We find that respondents have not adduced competent evidence to establish their title to the contested properties or to dispute petitioner's claim over the same. 27

Petitioners claim that they purchased the properties from the Butuan City Rural Bank in 1979. The Butuan City Rural Bank, on the other hand, allegedly acquired the properties as a result of a foreclosure of mortgage executed by the spouses Lutgarda and Pedro Alviola, Jr. 28 Luz was glaringly left out in the picture as one of petitioners' predecessors-in-interest. In her cross-examination before the trial court, however, petitioner Evelyn made the following admissions:

Q: So you are telling the Honorable Court that before you occupy (sic) the two lots in question, you and your husband already knew that the two lots were covered by title in the name of the Philippine National Bank?

A: Yes because there was an employee of the PNB went (sic) to that house and said it should be foreclosed. So when we saw the titles, the lot number and the block number, I told my sister-in-law why is it this happens (sic) when we have the same lot number and block number.

xxx xxx xxx

Q: So Luz Aranas, the mother of your husband was actually claiming to be the owner of that house because her children grew up in that house, will you admit that, Madam Witness?

A: She is the owner but at that time of the foreclosure, five (5) years or seven (7) years before the foreclosure of PNB, she was staying in Camiguin, she has a fishing business there.

Q: You said that she was the owner of that house, how did you know that Luz Aranas was actually claiming to be the owner of the house?

A: At that time of my marriage to my husband, they were the ones occupying that house so I presumed that that is their house. 29

The above admissions of Evelyn dovetail with the claims of respondent that Luz, as owner, mortgaged the properties to PNB; that the mortgage was foreclosed; and that the properties were subsequently purchased by PNB.

Petitioners likewise advance as evidence of their title the alleged tax declarations 30 of the properties in their name. It should be stressed, however, that tax declarations and receipts do not by themselves conclusively prove title to the land. They only constitute positive and strong indication that the taxpayer concerned has made a claim either to the title or to the possession of the property for which taxes have been paid. Stated differently, tax declarations and tax receipts are only primafacie evidence of ownership or possession. 31 These tax declarations would, in fact, show that they were dated only in 2008 and contain an entry that the properties were also declared in the name of respondent under different tax declarations. The certification from the Office of the City Treasurer also shows that from 1992-2007, the taxes on the properties were paid by Butuan City Rural Bank. 32 This is in contradiction to petitioners' claim that they were religiously paying the taxes on the properties since they started occupying them in 1981.

Furthermore, petitioners insist that respondent could not be regarded as a purchaser in good faith because she was aware of their possession of the disputed properties. We disagree.

Indeed, one is considered a buyer in bad faith not only when he purchases real estate with knowledge of a defect or lack of title in his seller but also when he has knowledge of facts which should have alerted him to conduct further inquiry or investigation. 33 But respondent's knowledge alone of the possession of petitioners does not prove her bad faith. Respondent does not deny that she knew petitioners were occupying the properties. She candidly admitted that her reasons for purchasing the properties were sentimental because those were previously owned by her sister, Luz. She remained oblivious about the alleged titles of Rolando and the title of PNB bears no notice of the action for quieting of title it filed against petitioners. The exception to the general rule that the vendee for value has the right to rely on what appears on the face of the title vendee where the certificate of title is in the name of the vendor when the land is sold, finds no application here. The exception contemplates a situation wherein there exists a flaw in the title of the vendor and the vendee has knowledge or at least ought to have known of such flaw at the time he acquired the property, in which case, he is not considered as an innocent purchaser for value. The title of PNB, to repeat, bears no encumbrance or notice which would caution of a possible defect in the title. In the absence of any evidence to the contrary, the presumption leans towards the validity of the vendor's title. 34

Therefore, in as much as there was no flaw in the title of PNB, respondent rightly believed that she could and did acquire likewise a flawless title. Indeed, as a result of the deed of sale between PNB and respondent, there was transmission of ownership and the latter stepped into the shoes of the former; hence entitled to all the defenses available to PNB. 35

Finally, another consideration that militates heavily against petitioners is their unusual silence while the ownership of the properties transferred from one entity to another. There were at least three transactions on record involving the properties: first, the contract of mortgage between Luz and PNB where the properties were used as security for the loan contracted by Luz; second, the foreclosure of mortgage upon the failure of Luz to pay the loan and the subsequent sale of the properties at public auction; and, third, the sale of the properties to respondent. Each of these transactions was registered and a corresponding transfer certificate issued in favor of the new owner. Yet in all these, petitioners never instituted any action contesting the same nor registered any objection thereto; instead, they remained silent. 36

WHEREFORE, the petition is DENIED. The Decision dated May 30, 2013 and Resolution dated November 12, 2013 of the Court of Appeals in CA-G.R. CV No. 02109-MIN denying reconsideration are AFFIRMED.

The motion of Atty. Noel G. Bacal of Bacal Namalata Tamala Llesis Bidad, to withdraw as counsel for respondents, with conformity, praying that he be allowed to withdraw his appearance for reasons stated therein and that future notices, processes or orders or pleadings of this Court and that of petitioners be sent directly to herein respondents or to any counsel who may subsequently enter his appearance, and that herein counsel be relieved of all his responsibilities relative to this case; and the entry of appearance of Atty. John Goodlucky V. Nicolas, as counsel for respondents, in substitution of Atty. Noel G. Bacal, requesting that all notices, orders, resolutions, and/or decision be furnished at U-1807 West Trade Center, 132 West Ave., 1104 Quezon City, are both NOTED and GRANTED. The respondents' second motion for early resolution, praying that judgment be rendered in the instant case at the soonest possible time for reasons stated therein is NOTED.

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1.Rollo, pp. 33-42; penned by Associate Justice Renato C. Francisco with the concurrence of Associate Justices Romulo V. Borja and Oscar V. Badelles.

2.Id. at 43-44.

3. Lots 20 and 21, Block 39, (LRC) Pcs-2286.

4.Rollo, p. 34.

5. Records, p. 370.

6.Id. at 31.

7.Id.

8. Records, pp. 31-34.

9.Id. at 32.

10.Id. at 67.

11.Id. at 371.

12.Id. at 69.

13.Id. at 383-385.

14.Id. at 386-390.

15.Rollo, p. 39.

16. Records, p. 226.

17.Rollo, pp. 41-42.

18.Baricuatro, Jr. v. Court of Appeals, G.R. No. 105902, February 9, 2000, 325 SCRA 137, 146-147. Citation omitted.

19.Heirs of Tappa v. Heirs of Bacud, G.R. No. 187633, April 4, 2016, 788 SCRA 13, 26.

20. Records, p. 21.

21.Tan v. Rodil Enterprises, G.R. No. 168071, December 18, 2006, 511 SCRA 162, 181.

22. G.R. No. 109172, August 19, 1994, 235 SCRA 494, 504.

23. Records, p. 19.

24.Id. at 66.

25. Records, p. 66-A.

26.Pentagon Steel Corporation v. Court of Appeals, G.R. No. 174141, June 26, 2009, 591 SCRA 160, 170. Citations omitted.

27.Phil-Ville Development and Housing Corporation v. Bonifacio, G.R. No. 167391, June 8, 2011, 651 SCRA 327, 343.

28. Records, pp. 223-225.

29. TSN, March 11, 2009, pp. 7, 11.

30. Records, pp. 338-339.

31.Heirs of Leopoldo Vencilao, Sr. v. Court of Appeals, G.R. No. 123713, April 1, 1998, 288 SCRA 574, 582.

32. Records, p. 340.

33.Spouses Pudadera v. Ireneo Magallanes, G.R. No. 170073, October 18, 2010, 633 SCRA 332, 334.

34.Heirs of Leopoldo Vencilao, Sr. v. Court of Appeals, supra note 31 at 583.

35.Id. at 583-584.

36.Id. at 584.