In Mariflor T. Hortizuela v. Gregoria Tagufa, et al., the Supreme Court reiterated that an action for reconveyance, which aims to transfer property wrongfully registered under another’s name to the rightful owner, is permissible and does not constitute a collateral attack on the Torrens title. This ruling protects individuals from losing their property due to fraudulent land registrations, emphasizing that holding a Torrens title does not automatically equate to rightful ownership, especially when acquired through deceit. The Court underscored that registration under the Torrens System serves as evidence of ownership but cannot shield those who usurp the property of true owners.

Can a Reconveyance Action Undo Title Fraud?

The case revolves around a parcel of land originally owned by Mariflor Hortizuela’s parents. After the land was foreclosed by the Development Bank of the Philippines (DBP) and later repurchased, it was titled under the name of Gregoria Tagufa through a free patent application. Hortizuela, believing Gregoria fraudulently titled the land, filed a complaint for reconveyance and recovery of possession. The central legal question is whether such an action constitutes a prohibited collateral attack on the Torrens title.

The Municipal Circuit Trial Court (MCTC) initially dismissed Hortizuela’s complaint, a decision later reversed by the Regional Trial Court (RTC). However, the Court of Appeals (CA) sided with the respondents, arguing that the action constituted a collateral attack on the Torrens title, which is prohibited under Section 48 of Presidential Decree (P.D.) No. 1529. This provision states:

Sec. 48. Certificate not subject to collateral attack.- A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.

The Supreme Court disagreed with the CA’s assessment, clarifying the distinction between a direct and a collateral attack on a title. A direct attack is when the object of an action is to annul or set aside a judgment or to enjoin its enforcement. In contrast, an indirect or collateral attack occurs when an attack on the judgment or proceeding is made as an incident to an action seeking a different relief.

The Court emphasized that an action for reconveyance respects the decree of registration as incontrovertible. It does not seek to nullify the title but aims to transfer the property from the registered owner to the rightful owner. As the Supreme Court articulated:

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.

The Court highlighted that Gregoria’s securing of a title in her name does not automatically vest ownership. Registration under the Torrens System is not a mode of acquiring ownership but merely evidence of title. The Court referenced Lorzano v. Tabayag, Jr., stating:

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.

Furthermore, the Court addressed the respondents’ argument regarding Hortizuela’s failure to avail herself of the remedy under Section 38 of Act 496 within the one-year prescriptive period. The Court, citing Cervantes v. CA, clarified that because Gregoria obtained the land through fraudulent machinations, she is deemed to have held it in trust for Hortizuela’s benefit. Article 1456 of the Civil Code 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. This is due to the fact that registration of land does not shield the perpetrator from their fraudulent activity.

The Court also acknowledged the rule that a fraudulently acquired free patent may only be assailed by the government in an action for reversion under Section 101 of the Public Land Act. However, it recognized an exception where the plaintiff seeks direct reconveyance from the defendant who unlawfully titled public land in breach of trust. As the Court stated in Larzano v. Tabayag, Jr.:

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.

The Court, therefore, concluded that the RTC did not err in upholding Hortizuela’s right to seek reconveyance of the subject property. The ruling emphasizes that the Torrens system should not be used as a shield for fraud. This reinforces that a certificate of title is merely evidence of ownership and cannot protect a usurper from the true owner.

FAQs

What is a reconveyance action?	A legal action to transfer ownership of land from the registered owner to the rightful owner when the property was wrongfully or erroneously registered. It respects the original decree but seeks to correct unjust enrichment.
Does a Torrens title guarantee absolute ownership?	No, a Torrens title is evidence of ownership, but it does not create ownership. It cannot protect someone who obtained the title through fraud or misrepresentation from the claims of the true owner.
What is a collateral attack on a title?	A collateral attack is an attempt to challenge the validity of a title in a proceeding that has a different primary purpose. Philippine law generally prohibits collateral attacks on Torrens titles.
How long do I have to file a reconveyance action based on fraud?	The prescriptive period for filing a reconveyance action based on fraud is typically ten years from the issuance of the Torrens title. This is based on the concept of an implied trust.
What is the difference between direct and collateral attack on a title?	A direct attack is when the specific purpose of the action is to challenge or nullify the title. A collateral attack is an attempt to challenge the title in a proceeding with a different purpose.
Can a private individual file an action for reconveyance of land with a free patent?	Yes, a private individual can file an action for reconveyance even if the title was issued through a free patent. This action aims to show that the registered owner is not the real owner.
What is the effect of fraud in land registration?	If land is registered through fraud, the registered owner holds the property in trust for the benefit of the true owner. The true owner can file an action for reconveyance.
What is the significance of Article 1456 of the Civil Code in reconveyance cases?	Article 1456 establishes an implied trust. If property is acquired through mistake or fraud, the person obtaining it is considered a trustee for the benefit of the person from whom the property comes.
What is the government’s role in cases of fraudulently acquired public land?	The government, through the Solicitor General, can file an action for reversion to return fraudulently acquired public land to the public domain. This is to ensure that public lands are disposed of properly.

The Supreme Court’s decision in Hortizuela v. Tagufa underscores the importance of protecting rightful landowners from fraudulent schemes. It clarifies that the Torrens system, while providing security of title, cannot be used as a tool for unjust enrichment. This case serves as a reminder that courts will look beyond the certificate of title to ensure fairness and equity in land ownership disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: MARIFLOR T. HORTIZUELA vs. GREGORIA TAGUFA, G.R. No. 205867, February 23, 2015