G.R. No. 173987 ; February 25, 2012
PADILLA MERCADO, ZULUETA MERCADO, BONIFACIA MERCADO, DAMIAN MERCADO and EMMANUEL MERCADO BASCUG, Petitioners, vs. SPOUSES AGUEDO ESPINA and LOURDES ESPINA, Respondents.

FACTS

Petitioners, heirs of spouses Santiago and Sofronia Mercado, filed a complaint for recovery of property and declaration of nullity of deeds of sale and title against respondents. They alleged ownership by inheritance of a 338-square-meter lot in Maasin, Southern Leyte. Petitioners claimed that the series of sales tracing back from their ancestor Santiago to the respondents’ predecessor-in-interest, Josefa Mercado Espina, were fraudulent and never occurred. They asserted that Josefa fraudulently obtained Original Certificate of Title No. 35 in 1962, which was later transferred to respondents.
Respondents moved to dismiss the original complaint on grounds of lack of jurisdiction due to the omitted assessed value, prescription, laches, indefeasibility of title, and lack of cause of action against them as buyers in good faith. The RTC denied the motion. Petitioners subsequently filed an Amended Complaint stating the assessed value. Respondents filed a second Motion to Dismiss the Amended Complaint reiterating the grounds of prescription, laches, and indefeasibility. The RTC again denied it, but the Court of Appeals granted respondents’ certiorari petition and ordered the complaint dismissed.

ISSUE

Whether the Court of Appeals correctly dismissed the complaint on the grounds of prescription and the indefeasibility of the respondents’ Torrens title.

RULING

The Supreme Court denied the petition and affirmed the CA’s dismissal. On the procedural issue, the Court held that petitioners were estopped from questioning the timeliness of the second Motion to Dismiss, as this objection was raised for the first time only in their Motion for Reconsideration before the CA and not before the RTC. Points of law not raised in the lower court cannot be entertained on appeal.
Substantively, the Court ruled that the action was indeed barred. Josefa’s title, from which respondents derived their title, was registered in 1962. An action for reconveyance based on an implied or constructive trust prescribes in ten years from the date of the registration of the deed or the issuance of the title. Petitioners filed their complaint only in 2000, or 38 years later, which is clearly beyond the prescriptive period. Furthermore, respondents are presumed innocent purchasers for value. The Torrens system aims to guarantee the indefeasibility of a registered title. Under Section 53 of P.D. No. 1529, while a fraudulently obtained title can be attacked, this is without prejudice to the rights of an innocent holder for value. Petitioners’ cause of action, if any, lies against the alleged perpetrators of the fraud and not against the respondents, who are protected as such innocent holders.