Testimonial evidence, to be believed, must come not only from the mouth of a credible witness, but must also "be credible, reasonable, and in accord with human experience." A credible witness must, therefore, be able to narrate a convincing and logical story.

"Our Ruling

The Petition is bereft of merit.

The party who alleges a fact has the burden of proving it.

Section 1, Rule 131 of the Rules of Court defines "burden of proof" as "the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law." In civil cases, the burden of proof rests upon the plaintiff, who is required to establish his case by a preponderance of evidence.55 Once the plaintiff has established his case, the burden of evidence shifts to the defendant, who, in turn, has the burden to establish his defense.56

In this case, respondent BPI, as plaintiff, had to prove that petitioner-spouses failed to pay their obligations under the Promissory Note. Petitioner-spouses, on the other hand, had to prove their defense that the obligation was extinguished by the loss of the mortgaged vehicle, which was insured.

However, as aptly pointed out by the MeTC, the mere loss of the mortgaged vehicle does not automatically relieve petitioner-spouses of their obligation57 as paragraph 7 of the Promissory Note with Chattel Mortgage provides that:

7. The said MORTGAGOR covenants and agrees to procure and maintain through the MORTGAGEE, a comprehensive insurance from a duly accredited and responsible insurance company approved by the MORTGAGEE, over the personalty hereinabove mortgaged to be insured against loss or damage by accident, theft, and fire for a period of one (1) year from date hereof and every year thereafter until the mortgage DEBTS are fully paid with an insurance company or companies acceptable to the MORTGAGEE in an amount not less than the outstanding balance of the mortgage DEBTS; that he/it will make all loss, if any, under such policy or policies payable to the MORTGAGEE forthwith. x x x

x x x x

MORTGAGOR shall immediately notify MORTGAGEE in case of loss, damage or accident suffered by herein personalty mortgaged and submit proof of such loss, damages or accident. Said loss damage or accident for any reason including fortuitous event shall not suspend, abate, or extinguish [petitioner spouses’] obligation under the promissory note or sums due under this contract x x x

In case of loss or damage, the MORTGAGOR hereby irrevocably appoints the MORTGAGEE as his/its attorney-in-fact with full power and authority to file, follow-up, prosecute, compromise or settle insurance claims; to sign, execute and deliver the corresponding papers, receipts and documents to the insurance company as may be necessary to prove the claim and to collect from the latter the insurance proceeds to the extent of its interest. Said proceeds shall be applied by the MORTGAGEE as payment of MORTGAGOR’s outstanding obligation under the Promissory Note and such other sums and charges as may be due hereunder or in other instruments of indebtedness due and owing by the MORTGAGOR to the MORTGAGEE and the excess, if any, shall thereafter be remitted to the MORTGAGOR. MORTGAGEE however shall be liable in the event there is a deficiency.

x x x x58

Based on the foregoing, the mortgagor must notify and submit proof of loss to the mortgagee.1âwphi1 Otherwise, the mortgagee would not be able to claim the proceeds of the insurance and apply the same to the remaining obligation.

This brings us to the question of whether petitioner-spouses sent notice and proof of loss to Citytrust or respondent BPI.

Testimonial evidence must also be credible, reasonable, and in accord with human experience.

Testimonial evidence, to be believed, must come not only from the mouth of a credible witness, but must also "be credible, reasonable, and in accord with human experience."59 A credible witness must, therefore, be able to narrate a convincing and logical story.

In this case, petitioner Manolito's testimony that he sent notice and proof of loss of the mortgaged vehicle to Citytrust through fax lacks credibility especially since he failed to present the facsimile report evidencing the transmittal.60 His failure to keep the facsimile report or to ask for a written acknowledgement from Citytrust of its receipt of the transmittal gives us reason to doubt the truthfulness of his testimony. His testimony on the alleged theft is likewise suspect. To begin with, no police report was presented.61 Also, the insurance policy was renewed even after the mortgaged vehicle was allegedly stolen.62 And despite repeated demands from respondent BPI, petitioner-spouses made no effort to communicate with the bank in order to clarify the matter. The absence of any overt act on the part of petitioner-spouses to protect their interest from the time the mortgaged vehicle was stolen up to the time they received the summons defies reason and logic. Their inaction is obviously contrary to human experience. In addition, we cannot help but notice that although the mortgaged vehicle was stolen in November 1997, petitioner-spouses defaulted on their monthly amortizations as early as August 10, 1997. All these taken together cast doubt on the truth and credibility of his testimony.

Thus, we are in full accord with the findings of the MeTC and the CA that petitioner Manolito's testimony lacks credence as it is dubious and self-serving.63 Failing to prove their defense, petitioner-spouses are liable to pay their remaining obligation.

WHEREFORE the Petition is hereby DENIED. The assailed November 16, 2007 Decision and the September 19, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 91217 are hereby AFFIRMED.

SO ORDERED."

G.R. No. 184565 November 20, 2013

MANOLITO DE LEON and LOURDES E. DE LEON, Petitioners,

vs.

BANK OF THE PHILIPPINES, Respondent.

D E C I S I O N

DEL CASTILLO, J.

https://lawphil.net/judjuris/juri2013/nov2013/gr_184565_2013.html

Recoveyance and recovery of possession based on constructive trust and fraud vs. the principle of indefeasibility of a Torrens title

"The Court’s Ruling

The Court finds the petition meritorious.

The Court is not unmindful of the principle of indefeasibility of a Torrens title and Section 48 of P.D. No. 1528 where it is provided that a certificate of title shall not be subject to collateral attack.14 A Torrens title cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. When the Court says direct attack, it means that the object of an action is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment or proceeding is nevertheless made as an incident thereof.15 In its decision, the MCTC wrote:

Obviously, the bone of contention in this case are the deed of sale by and between Romulo Marquez and Runsted Tagufa, the estranged husband of defendant Gregoria Tagufa, and OCT No. P-84609 registered in the name of Gregoria Tagufa who, according to the plaintiff, fraudulently caused the titling of the same.

In their lamentations, plaintiff pointed out the following indicia of fraud committed by GregoriaTagufa that would allegedly justify reconveyance:

First, Gregoria Tagufa made it appear in the extrajudicial settlement of the estate of spouses Leandro Tagufa and Remedios Talosig that she is an heir when, in truth, she is only a grand daughter-in-law,

Second, she already knew when she applied for free patent that plaintiff was already the owner of the land she was applying for;

Third, she already knew that when she applied for free patent that plaintiff’s parents were not anymore the owners of the land as the same was mortgaged with the DBP; and

Fourth, defendant has never been in actual possession of the property when she applied for it.

All in all, plaintiff argued, Gregoria Tagufa never acquired any valid right or legal title over the property.

Studying the merits of this case and removing all its superfluities, plaintiffs plainly question the title generated in the name of defendant Gregoria Tagufa having been obtained by fraud and misrepresentation. However, in the judicious analysis by this court, plaintiffs have resorted to a wrong cause of action.16

From the foregoing, it can be deduced that the MCTC was convinced that fraud was attendant in the registration of the land but was not convinced that reconveyance was an accepted remedy. Contrary to the pronouncements of the MCTC and the CA, however, the complaint of Hortizuela was not a collateral attack on the title warranting dismissal. As a matter of fact, an action for reconveyance is a recognized remedy, an action in personam, available to a person whose property has been wrongfully registered under the Torrens system in another’s name. In an action for reconveyance, the decree is not sought to be set aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always available as long as the property has not passed to an innocent third person for value.17 There is no quibble that a certificate of title, like in the case at bench, can only be questioned through a direct proceeding. The MCTC and the CA, however, failed to take into account that in a complaint for reconveyance, the decree of registration is respected as incontrovertible and is not being questioned. What is being sought is the transfer of the property wrongfully or erroneously registered in another's name to its rightful owner or to the one with a better right. If the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of the property.18

The fact that Gregoria was able to secure a title in her name does not operate to vest ownership upon her of the subject land. "Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner."19

Furthermore, respondents’ argument that the overriding reason why Hortizuela chose to file a complaint for reconveyance and recovery of possession was that she failed to avail of the remedy provided under Section 38 of Act 496 within the prescribed period of one (1) year, counted from the issuance of the patent by the government, is weak. As was similarly held in Cervantes v. CA,20 with the land obtained by respondent Gregoria through fraudulent machinations by means of which a free patent and a title were issued in her name, she was deemed to have held it in trust for the benefit of Hortizuela who was prejudiced by her actions. Article 1456 provides: ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

The remedy of reconveyance, based on Section 53 of P.D. No. 1529 and Article 1456, prescribes in ten (10) years from the issuance of the Torrens title over the property.

The Court is not unaware of the rule that a fraudulently acquired free patent may only be assailed by the government in an action for reversion pursuant to Section 101 of the Public Land Act.21 In Sherwill Development Corporation v. Sitio Sto. Niño Residents Association, Inc.,22 this Court pointed out that:

x x x It is to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru its duly-authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, may file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of Lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.23

An action for reconveyance is proper

The foregoing rule is, however, not without exception. A recognized exception is that situation where plaintiff-claimant seeks direct reconveyance from defendant of publicland unlawfully and in breach of trust titled by him, on the principle of enforcement of a constructive trust. This was the ruling in Larzano v. Tabayag, Jr.,24 where it was written:

A private individual may bring an action for reconveyance of a parcel of land even if the title thereof was issued through a free patent since such action does not aim or purport to re-open the registration proceeding and set aside the decree of registration, but only to show that the person who secured the registration of the questioned property is not the real owner thereof.

In Roco, et al. v. Gimeda, we stated that if a patent had already been issued through fraud or mistake and has been registered, the remedy of a party who has been injured by the fraudulent registration is an action for reconveyance, thus:

It is to be noted that the petition does not seek for a reconsideration of the granting of the patent or of the decree issued in the registration proceeding. The purpose is not to annul the title but to have it conveyed to plaintiffs. Fraudulent statements were made in the application for the patent and no notice thereof was given to plaintiffs, nor knowledge of the petition known to the actual possessors and occupants of the property. The action is one based on fraud and under the law, it can be instituted within four years from the discovery of the fraud. (Art. 1146, Civil Code, as based on Section 3, paragraph 43 of Act No. 190.) It is to be noted that as the patent here has already been issued, the land has the character of registered property in accordance with the provisions of Section 122 of Act No. 496, as amended by Act No. 2332, and the remedy of the party who has been injured by the fraudulent registration is an action for reconveyance. (Director of Lands vs. Registered of Deeds, 92 Phil., 826; 49 Off. Gaz. [3] 935; Section 55 of Act No. 496.)

In the same vein, in Quiñiano, et al. v. Court of Appeals, et al., we stressed that:

The controlling legal norm was set forth in succinct language by Justice Tuason in a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: "The sole remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, as was done in the instant case, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages." Such a doctrine goes back to the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. If it were otherwise the institution of registration would, to quote from Justice Torres, serve "as a protecting mantle to cover and shelter bad faith ...." In the language of the then Justice, later Chief Justice, Bengzon: "A different view would encourage fraud and permit one person unjustly to enrich himself at the expense of another." It would indeed be a signal failing of any legal system if under the circumstances disclosed, the aggrieved party is considered as having lost his right to a property to which he is entitled. It is one thing to protect an innocent third party; it is entirely a different matter, and one devoid of justification, if [deceit] would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed. As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against. So it has been before; so it should continue to be. (Citations omitted)

In this case, in filing the complaint for reconveyance and recovery of possession, Hortizuela was not seeking a reconsideration of the granting of the patent or the decree issued in the registration proceedings. What she was seeking was the reconveyance of the subject property on account of the fraud committed by respondent Gregoria. An action for reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or reconvey the land to him.25 Thus, the RTC did not err in upholding the right of Hortizuela to ask for the reconveyance of the subject property. To hold otherwise would be to make the Torrens system a shield for the commission of fraud. To reiterate,

The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land.1âwphi1 Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.26

Finally, respondents' supposition that Hortizuela was ineligible to own the subject property pursuant to B.P. Blg. 223 because she was no longer a Filipino citizen cannot be considered for having been raised only for the first time on appeal. It must be noted that points of law, theories, issues, and arguments not brought to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal.27 The reason therefor is due process.

WHEREFORE, the petition is GRANTED. The September 13, 2012 Decision and the January 25, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 122648 are hereby REVERSED and SET ASIDE. The July 1, 2011 Decision of the Regional Trial Court, Branch 22, Cabagan, Isabela, is hereby RE INST A TED.

SO ORDERED."

SECOND DIVISION

G.R. No. 205867 February 23, 2015

MARIFLOR T. HORTIZUELA, represented by JOVIER TAGUFA, Petitioner,

vs.

GREGORIA TAGUFA, ROBERTO TAGUFA and ROGELIO LUMABAN, Respondents.

D E C I S I O N

MENDOZA, J.

https://lawphil.net/judjuris/juri2015/feb2015/gr_205867_2015.html

Definition, Purpose, and Concept of an Action for Declaratory Relief

"Ruling of the Court

We grant the Petition.

Definition, Purpose, and Concept of an Action for Declaratory Relief

Declaratory relief is a special civil action filed by any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation, before breach or violation thereof, to determine any question of construction or validity arising, and for a declaration of his rights thereunder.15

The purpose of the action for declaratory relief is for the court to interpret or determine the validity of the written instrument, statute, executive order, or any other governmental regulation and to secure from the court an authoritative statement of the parties' rights and obligations thereunder for their guidance in its enforcement or compliance,16 but not to settle issues arising from its alleged breach.17 The issue is thus limited to the question of construction or validity of the provisions in a written instrument or statute.18 In a declaratory relief action, "the [r]elief is confined to a case of actual controversy within the Court's jurisdiction, without the need of injunction, execution, or other relief beyond the adjudication of the legal rights which are the subject of controversy between the parties."19

In Aquino v. Municipality of Malay,20 the Court explained the concept of declaratory relief, viz.:

An action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of the rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, or contract for their guidance in the enforcement thereof, or compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be entertained before the breach or violation of the statute, deed or contract to which it refers. A petition for declaratory relief gives a practical remedy for ending controversies that have not reached the state where another relief is immediately available; and supplies the need for a form of action that will set controversies at rest before they lead to a repudiation of obligations, an invasion of rights, and a commission of wrongs.21 (Emphases and underscoring supplied.)

Thus, a court can no longer assume jurisdiction over an action for declaratory relief if its subject, i.e., statute, deed, or contract, has already been contravened prior to the filing of the action.22 Where the statute, deed, or contract has already been breached or violated, the remedy of the aggrieved party is to file the appropriate ordinary civil action in court.23 In Tambunting, Jr. v. Spouses Sumabat,24 the Court stressed that an action for declaratory relief, filed after an infraction of the mortgage terms, did not interrupt the running of the ten-year prescriptive period to enforce petitioners' right under the mortgage since the lower court lacked jurisdiction over such action and all proceedings therein were without legal effect.

Requisites for an Action for Declaratory Relief

The requisites of an action for declaratory relief are: (1) the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; (2) the terms of said documents and the validity thereof are doubtful and require judicial construction; (3) there must have been no breach of the documents in question; (4) there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; (5) the issue must be ripe for judicial determination; and (6) adequate relief is not available through other means or other forms of action or proceeding.25

Actual Case or Controversy Requirement

A petition for declaratory relief is not exempt from the actual case or controversy requirement. Jurisprudence reveals a common ground in applying the actual case or controversy requirement – there must be sufficient facts to enable the Court to intelligently adjudicate the issues, such that the questions raised may be resolved without relying on speculations or hypothetical scenarios.

The determination of sufficient facts is more nuanced in petitions for declaratory relief. Applying the third and fourth requisites for a declaratory relief action, We must locate the fine point where there exists an actual case or controversy, yet there is no breach of the documents in question. On this note, former Chief Justice Moran opined that accomplished physical wrong need not be alleged in a petition for declaratory relief.26

This is best explained in the case of Republic v. Roque,27 where a petition for declaratory relief was filed by private respondents to assail the constitutionality of RA 9372, or the Human Security Act of 2007. We explained that a justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory. The term 'ripening seeds' means "not that sufficient accrued facts may be dispensed with, but that a dispute may be tried at its inception before it has accumulated the asperity, distemper, animosity, passion, and violence of a full-blown battle that looms ahead." The concept describes "a state of facts indicating imminent and inevitable litigation provided that the issue is not settled and stabilized by tranquilizing declaration."28

Following the disquisition in Roque, in a petition for declaratory relief, there are "sufficient facts" when there is a showing of an imminent and inevitable litigation if the issue is not judicially settled. The same rule was declared in CJH Development v. BIR29 where We ruled that ripeness in declaratory relief cases means that litigation is inevitable or there is no adequate relief available in any other form or proceeding.30 To require more than this standard will already negate the requirement that declaratory relief cases should be filed before any breach.

Admittedly, the standard of imminent and inevitable litigation in declaratory relief petitions is easier to overcome than the general standard on ripeness that petitioner must have suffered injury or been held liable under an assailed governmental act. However, this should not be construed to mean that declaratory relief cases are exceptions to the restrictive application of judicial restraint. It must be remembered that the Supreme Court does not have original jurisdiction over declaratory relief cases. Moreover, the last requisite of declaratory relief is that there must be a showing that adequate relief is not available through other means. Section 5, Rule 63 of the Rules of Court also states that "the court, motu proprio or upon motion, may refuse to exercise the power to declare rights and to construe instruments in any case where a decision would not terminate the uncertainty or controversy which gave rise to the action, or in any case where the declaration or construction is not necessary and proper under the circumstances." All of these suggest a restrictive interpretation in taking cognizance of declaratory relief cases.

Thus, in the recent cases of Universal Robina Corporation v. Department of Trade and Industry31 and Executive Secretary v. Pilipinas Shell,32 We emphasized that the standard rules of justiciability apply in a petition for declaratory relief, which assails the constitutionality of a statute. The petitioner in a declaratory petition must establish that there is a legally demandable and enforceable right under the Constitution and that the resolution of the statute's constitutionality is necessary to protect such right.33 Nevertheless, We clarified that the exercise of judicial review may not always require actual facts resulting from the assailed law, as applied, since a clear and convincing demonstration of a contrariety of rights may suffice.34

An Action for Declaratory Relief is proper in this case

At the outset, the Court finds that all the elements of declaratory relief are present in this case. Section l, Rule 63 of the Rules of Court provides that a petition for declaratory relief may be filed before the RTC by any person whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation, before breach or violation thereof, to determine any question of construction or validity arising, and for a declaration of his rights or duties thereunder.

Contrary to petitioners' assertion, the terms of the assailed statutes, especially in relation to the pertinent IRR, have created doubts on the proper application of the 20% discount on funeral and burial services. Respondent, a corporation engaged in selling memorial lots and providing interment services, is directly affected by the assailed statutes and the IRR. Xxxx."

EN BANC

[ G.R. No. 243133. March 08, 2023 ]

REPUBLIC OF THE PHILIPPINES, THROUGH THE OFFICE OF THE SOLICITOR GENERAL, OFFICE OF THE SENIOR CITIZENS AFFAIRS (OSCA), DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT (DSWD), PETITIONERS, VS. PRYCE CORPORATION, INC., RESPONDENT.

https://lawphil.net/judjuris/juri2023/mar2023/gr_243133_2023.html