G.R. No. 195500 , March 17, 2021
Heirs of Leonarda Latoja, namely Antonia D. Fabilane, Prudencia D. Bello, represented by Petra F. Negado, Petitioners, vs. Heirs of Gavino Latoja, namely Teodosia Figueroa, Nicasio Latoja III, Rosa Candari and other heirs represented by Friolan Ragay and Maria Obregon, PENRO of Samar, and Register of Deeds of Samar, Respondents.

FACTS

The case involves a 4,125.99-square-meter lot (Lot 5366) in Villareal, Samar. Petitioners, the Heirs of Leonarda Latoja, claim ownership through inheritance from their predecessors, spouses Tomas Dalaruya and Leonarda Latoja, who allegedly possessed and cultivated the lot since 1903, with Leonarda declaring it for taxation in 1945. The heirs’ children later sold their shares to Antonia. Respondents, the Heirs of Gavino Latoja, represented by Friolan Ragay, applied for and were granted a free patent over the lot, resulting in the issuance of Original Certificate of Title No. 20783 (OCT 20783) in their name on March 29, 1999. The Heirs of Leonarda filed a Complaint for Declaration of Nullity of Title, Reconveyance and Damages before the Regional Trial Court (RTC), alleging that the free patent and title were obtained through fraud and false representation, and that the required posting of notice under the Public Land Act was not complied with. The RTC ruled in favor of the Heirs of Leonarda, ordering the cancellation of OCT 20783, reconveyance of the lot, and award of damages. The Court of Appeals (CA) reversed the RTC decision, upholding the indefeasibility of the title and finding the allegations of fraud unsubstantiated.

ISSUE

Whether the Court of Appeals erred in: (1) declaring that the free patent and corresponding OCT 20783 are already indefeasible, irrevocable, and indisputable because more than one year had elapsed since their issuance; and (2) holding that the allegations of fraud by the petitioners are more imaginary than real.

RULING

The Supreme Court granted the petition, reversed the CA decision, and reinstated the RTC decision with modification. The Court held that an action for reconveyance, based on an implied or constructive trust, prescribes in ten years from the date of issuance of the certificate of title. The complaint was filed within this prescriptive period (title issued March 29, 1999; complaint filed August 2001). The Court found that the Heirs of Leonarda established their ownership and possession of the lot through testimonial and documentary evidence, including tax declarations and payments. The Court ruled that the Heirs of Gavino, through Friolan Ragay, committed fraud in securing the free patent by falsely claiming possession since 1920, despite knowing the Heirs of Leonarda were the actual possessors. The processing of the application was irregular, as the land inspector accepted the application without prior inspection and conducted a confirmatory report before the required posting of notice. These irregularities constituted extrinsic fraud, which warranted reconveyance. The Court ordered the cancellation of OCT 20783 and the issuance of a new title in the name of the Heirs of Leonarda, but deleted the award of exemplary damages and attorney’s fees due to lack of basis for bad faith.