G.R. No. 214315 . August 14, 2019.
HEIRS OF BENIGNO SUMAGANG, REPRESENTED BY JESUS S. ABELLANOSA, MARINA BELLITA, RESURRECION CAVAN, ALEX MAPAIT AND TEODORICO SUMAGANG, PETITIONERS, VS. AZNAR ENTERPRISES, INC., AZNAR BROTHERS REALTY COMPANY, STA. LUCIA REALTY AND DEVELOPMENT INC., (CO-DEFENDANTS AND CROSS-CLAIM DEFENDANTS), HEIRS OF PERFECTA LABAYA, WITH ATTORNEY-IN-FACT IN THE PERSON OF FRANCIS R. PESTAÑO (COMPLAINANTS), TERESITA DELA CALZADA-REYES, ET AL. (1st COMPLAINANTS-INTERVENORS), AND CELSO DEIPARINE (2ND COMPLAINANT-INTERVENOR), RESPONDENTS.

FACTS

Respondent Aznar Brothers Realty Company (ABRC) is the registered owner of a parcel of land in Barangay Pardo, Cebu City, covered by Original Certificate of Title (OCT) No. 251 issued on June 17, 1971. The property forms part of a tract developed by respondent Sta. Lucia Realty into the Alta Vista Golf and Country Club. On March 4, 1998, the heirs of Perfecta Labaya filed an action for recovery of ownership, annulment of title, and reconveyance against ABRC, Sta. Lucia Realty, and the heirs of Benigno Sumagang. They claimed to be heirs of Gregorio Labaya, who allegedly owned and possessed the land. Two intervenors, Teresita dela Calzada-Reyes and Celso Deiparine, also asserted claims over the property. The heirs of Sumagang, in their answer, filed a cross-claim against ABRC, alleging that the late Benigno and his successors were in actual possession of the land and that ABRC, through force and intimidation, was able to register it in its name. They prayed for the nullification of OCT No. 251. The Regional Trial Court (RTC) declared ABRC the lawful owner. The Court of Appeals (CA) affirmed the RTC, dismissing the appeals of the other claimants and ruling that the heirs of Sumagang’s cross-claim was a collateral attack on the title, which is not allowed. The heirs of Sumagang filed this Petition for Review.

ISSUE

Whether the Court of Appeals erred in sustaining the trial court’s Decision declaring ABRC as the rightful owner and possessor of the subject property, specifically in ruling that the cross-claim of the heirs of Sumagang constituted an impermissible collateral attack on OCT No. 251.

RULING

The Petition is denied. The Supreme Court affirmed the CA Decision and Resolution.
1. On the Nature of the Attack on the Title: The Court held that the cross-claim filed by the heirs of Sumagang was a direct attack on OCT No. 251, not a collateral attack. Citing Section 48 of Presidential Decree No. 1529 (Property Registration Decree) and jurisprudence (Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago; Leyson v. Bontuyan), the Court ruled that a cross-claim, like a counterclaim, is considered a complaint or an independent action where the defendant becomes the plaintiff against a co-party. Since the object of the cross-claim was to annul OCT No. 251 based on alleged fraud, it constituted a direct attack.
2. On Prescription of Action: Despite the cross-claim being a direct attack, the Court ruled that the action had prescribed. Under Section 32 of P.D. No. 1529, a decree of registration becomes incontrovertible after one year. Furthermore, an action for reconveyance based on fraud prescribes in ten years from the issuance of the title. OCT No. 251 was issued on June 17, 1971. The heirs of Sumagang filed their cross-claim only in 1998, or 27 years later. The Court found they were aware of ABRC’s application for registration as early as 1963 and of the development of the golf course, yet they slept on their rights. Consequently, their right to assert ownership or seek reconveyance was extinguished by prescription.