G.R. No. 175428 ; April 15, 2013
RICARDO CHU, JR. and DY KOKENG, Petitioners, vs. MELANIA CAPARAS and SPOUSES RUEL and HERMENEGILDA PEREZ, Respondents.

FACTS

The case involves a parcel of land originally owned by Miguela Reyes. On July 5, 1975, Miguela sold 25,000 square meters of the eastern portion of her land to respondent Melania Caparas, retaining the 26,151-square meter western portion (the subject property). The deed described the western boundary of Caparas’s purchase as “ang natitirang lupa ni Miguela Reyes.” Later, Caparas caused the preparation of a consolidated survey plan under her name, which erroneously placed the subject property (Miguela’s retained portion) on the eastern side and included it as part of her consolidated parcels. Based on this erroneous plan, Caparas sold the consolidated parcels to respondent spouses Ruel and Hermenegilda Perez on November 8, 1991. Subsequently, on July 24, 1994, Miguela sold the subject property to petitioners Ricardo Chu, Jr. and Dy Kokeng. Upon discovering the error in the survey plan, petitioners demanded reconveyance from respondents, who refused. Petitioners filed a complaint for recovery of possession and annulment of sale. The Regional Trial Court initially ruled in favor of petitioners but later set aside its decision upon a petition for relief from the spouses Perez, dismissing the complaint. The Court of Appeals affirmed the dismissal.

ISSUE

Whether the Court of Appeals erred in: (1) finding no encroachment by the spouses Perez on the petitioners’ property; (2) declaring the filing of the complaint premature; and (3) upholding the award of moral and exemplary damages and attorney’s fees to the spouses Perez.

RULING

The Supreme Court denied the petition and affirmed the decisions of the lower courts. The Court held that: (1) There was no encroachment, as the alleged error in the survey plan did not constitute a legal encroachment warranting reconveyance, especially since the spouses Perez held a registered title. Petitioners failed to substantiate their claim of technical encroachment with clear evidence. (2) The filing of the complaint was not premature, as an action for reconveyance can be filed even without prior administrative revocation of a survey plan. However, petitioners failed to establish a cause of action for reconveyance because they did not prove that the subject property was indeed included in the sale to the spouses Perez or that the property they purchased from Miguela was the same property claimed. (3) The award of damages and attorney’s fees was proper. Petitioners’ unfounded claims and failure to exercise due diligence in verifying the property’s status before filing suit constituted malicious prosecution, justifying awards under Articles 2219 and 2208 of the Civil Code. The spouses Perez, as registered owners, suffered mental anguish due to the baseless suit.