G.R. No. 223763 , November 23, 2020
Adoracion L. Basilio and Lolita P. Lucero, Petitioners, vs. Perla Callo, Respondent.

FACTS

Petitioners Adoracion L. Basilio and Lolita P. Lucero, direct descendants of Eduveges Bafiaga, filed a complaint for reconveyance, accion publiciana, and cancellation of title with damages against respondent Perla Callo. They sought to recover a 12,459-square meter parcel of land (Lot No. 4462) covered by Original Certificate of Title (OCT) No. P-24666 in respondent’s name and to annul said title. The subject lot was part of the estate of Eduveges Bafiaga and, per a 1973 Final Project of Partition, was awarded to petitioners as children of Eduveges’ daughter, Rufina Pascasio.
On March 25, 1971, Librada Lucero (one of Rufina’s children) mortgaged a one-half undivided portion of the lot to spouses Edilberto and Perla Callo (Sps. Callo). In March 1974, a 5/8 portion of the lot was mortgaged to Sps. Callo by Librada, petitioners, and their sibling Remedios (collectively, the Luceros), redeemable within five years. The mortgage allowed the mortgagees to cultivate the land. Petitioners claimed the mortgage was fully paid on March 29, 1996, and a Release of Mortgage was executed by Sps. Callo. Despite demands, Sps. Callo refused to vacate and instead filed a petition for security of tenure before the DARAB, which was dismissed.
On May 25, 2006, petitioners discovered the lot was already registered in respondent’s name under OCT No. P-24666, allegedly secured through fraud. Respondent claimed she acquired title legally after complying with public land law requirements, had been in uninterrupted possession for over 35 years publicly as owner, and that petitioners had waived any rights.
The Regional Trial Court (RTC) ruled in favor of petitioners, finding respondent committed fraud in procuring the free patent and title by misrepresenting a lawful claim and concealing that her possession was by virtue of a mortgage that had been terminated. It declared OCT No. P-24666 null and void and ordered reconveyance. The Court of Appeals (CA) reversed the RTC, holding petitioners failed to prove their title and fraud by clear and convincing evidence, and dismissed the complaint.

ISSUE

Whether or not the Court of Appeals correctly dismissed the complaint.

RULING

The petition is partly meritorious. The Supreme Court reversed the CA Decision and reinstated the RTC Decision with modification regarding the award of attorney’s fees.
The Court held that respondent was not entitled to a free patent over the subject lot. At the time of her application on February 9, 2006, the governing law was Section 44 of Commonwealth Act No. 141 , as amended by Republic Act No. 6940 , which requires, among others, that the applicant or predecessor-in-interest must have continuously occupied and cultivated the agricultural public land for at least 30 years prior to April 15, 1990, in the concept of an owner.
Respondent admitted her possession and cultivation of the lot began only by virtue of the mortgages executed by the Luceros. Therefore:
1. Her possession was not in the concept of an owner. She effectively affirmed petitioners’ ownership when she and her husband filed the 1996 DARAB petition claiming to be mere tenants.
2. Her possession was not continuous for at least 30 years prior to April 15, 1990 (or since April 15, 1960) as required by law.
3. Payment of real estate taxes was made after the land had been continuously declared under the name of Eduveges Bafiaga.
Possession by virtue of a mortgage, especially one that had been redeemed, is incompatible with possession in the concept of an owner. Respondent’s failure to disclose the mortgage in her free patent application constituted a false statement or omission of a material fact, warranting the cancellation of the title under Section 91 of CA 141.
Furthermore, respondent could not claim ownership by mere lapse of the redemption period, as this would constitute a prohibited pactum commissorium. The mortgagees’ remedy was foreclosure, which they did not pursue; instead, they accepted payment and executed a Release of Mortgage.
While the Court found respondent’s title void ab initio due to her failure to meet the legal requirements for a free patent, it modified the RTC’s award of attorney’s fees. The general rule is that attorney’s fees are not awarded automatically; they must be specifically prayed for and proven. The body of petitioners’ complaint did not contain a specific prayer for attorney’s fees, only a general prayer for “other reliefs.” Therefore, the award of ₱50,000.00 in attorney’s fees was deleted.
DISPOSITIVE:
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated September 30, 2015 and the Resolution dated March 18, 2016 of the Court of Appeals in CA-G.R. CV No. 97617 are REVERSED and SET ASIDE. The Decision dated July 5, 2011 of the Regional Trial Court of Iba, Zambales, Branch 71 in Civil Case No. RTC-2450-I is REINSTATED with MODIFICATION, deleting the award of attorney’s fees.