G.R. No. 193787 , April 7, 2014
SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE, with deceased Jose C. Roque represented by his substitute heir JOVETTE ROQUE-LIBREA, Petitioners, vs. MA. PAMELA P. AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES (NCCP), represented by its Secretary General SHARON ROSE JOY RUIZ-DUREMDES, LAND BANK OF THE PHILIPPINES (LBP), represented by Branch Manager EVELYN M. MONTERO, ATTY. MARIO S.P. DIAZ, in his Official Capacity as Register of Deeds for Rizal, Morong Branch, and CECILIO U. PULAN, in his Official Capacity as Sheriff, Office of the Clerk of Court, Regional Trial Court, Binangonan, Rizal, Respondents.

FACTS

The property in dispute is a 20,862 sq. m. parcel of land known as Lot 18089 in Binangonan, Rizal. On July 21, 1977, petitioners Spouses Roque and the original owners (Rivero, et al.) executed a Deed of Conditional Sale over a 1,231 sq. m. portion (subject portion) for ₱30,775.00. The Spouses Roque made an initial payment and took possession, introducing improvements and operating a balut factory. The balance was payable upon registration of the lot and issuance of a separate title for the subject portion. On August 12, 1991, respondent Fructuoso Sabug, Jr. applied for and was issued a free patent over the entire Lot 18089, resulting in OCT No. M-5955 in his name on October 21, 1991. On June 24, 1993, Sabug, Jr. and Rivero executed a Joint Affidavit acknowledging the Spouses Roque’s ownership of the subject portion and willingness to segregate it. However, on December 8, 1999, Sabug, Jr. sold the entire Lot 18089 to respondent Ma. Pamela Aguado via a Deed of Absolute Sale for ₱2.5 million. Aguado obtained TCT No. M-96692. Aguado then mortgaged the lot to respondent Land Bank for an ₱8 million loan. Upon Aguado’s default, Land Bank foreclosed, purchased the property at auction, and obtained TCT No. M-115895 on July 21, 2003. The Spouses Roque filed a complaint for reconveyance, annulment of sale, mortgage, foreclosure, and damages. The National Council of Churches in the Philippines (NCCP) also filed a complaint, claiming it was the real owner of Lot 18089 by virtue of an earlier oral sale and a 1998 Deed of Absolute Sale from Sabug, Jr., and that Aguado and her parents’ company conspired to defraud it. The RTC consolidated the cases and dismissed both complaints, ruling the Spouses Roque failed to prove ownership and their action had prescribed, and that NCCP failed to establish its right. The CA affirmed the dismissal but found Land Bank was not a mortgagee/purchaser in good faith regarding the subject portion due to the Spouses Roque’s possession. However, the CA did not order reconveyance because the Spouses Roque failed to pay the full purchase price, only directing Land Bank to respect their possession and compensate for improvements. The Spouses Roque appealed.

ISSUE

Whether or not the Court of Appeals erred in not ordering the reconveyance of the subject portion in favor of the Spouses Roque.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA Decision. The Court held that the Spouses Roque are not entitled to reconveyance. While the CA correctly found Land Bank was not a mortgagee in good faith with respect to the subject portion due to the Spouses Roque’s open, continuous, and exclusive possession, reconveyance is a remedy for a landowner whose property was wrongfully registered in another’s name. The Spouses Roque failed to establish they are the lawful owners of the subject portion. Their claim is based on a Deed of Conditional Sale, which is not a deed of conveyance but merely grants a right to compel the vendors to execute a final sale upon full payment. They did not fully pay the purchase price as the balance was payable upon the issuance of a separate title, which never occurred. Their possession, though long, did not ripen into ownership by acquisitive prescription because their possession was merely that of a buyer under a conditional contract, not in the concept of an owner. Furthermore, their action for reconveyance based on an implied or constructive trust prescribed ten years from the issuance of Sabug, Jr.’s OCT in 1991, and they filed only in 2003. The Court also noted that the issue of acquisitive prescription was raised for the first time on appeal and could not be entertained. Therefore, having no superior right of ownership, the Spouses Roque are not entitled to reconveyance. The CA correctly limited the relief to respecting their possession and paying compensation for improvements.