G.R. No.

148846

September 25, 2007

with Deed of Absolute Sale in favor of AZNAR, claiming that their purported signatures thereon were forged.19 Trial on the merits ensued. The RTC's Decision On February 18, 1993, the RTC dismissed AZNAR's complaint and declared Go Kim Chuan as the real owner of the subject property. The RTC ratiocinated that the signatures of the Amodias in the ExtraJudicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by the document examiner of the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said deed did not convey anything in favor of AZNAR. Moreover, the subject property had been brought under the Land Registration Act; hence, all transactions involving the same should have complied with the said law. Finally, the RTC held that AZNAR failed to show that Go Kim Chuan acquired the subject property in bad faith. Aggrieved, AZNAR appealed the RTC Decision to the CA. 20 The CA's Decision On March 30, 2001, the CA rendered a Decision holding that the ExtraJudicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article 1544 of the New Civil Code, the former deed should be given preference over the latter; that AZNAR's adverse claim was annotated earlier than the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan; hence, the latter should have respected said adverse claim and should have made inquiries as to possible defects that may exist in the title over the subject property; and that in the absence of a final determination by a court of proper jurisdiction on the alleged forged signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, the finding of the document examiner was insufficient for the RTC to rule in favor of the petitioners. The CA disposed of the case in this wise: WHEREFORE, premises considered, the assailed decision dated February 18, 1993 of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L is hereby REVERSED and SET ASIDE and a new one is hereby entered as follows: (1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the real owner of the land in question; (2) Declaring both the Deed of Extra-judicial Settlement with Absolute Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia Amodia, Veneranda A. Ibag and Eustaquio Amodia in favor of Go Kim Chuan and the Transfer Certificate of Title No. 20626 in the name of Go Kim Chuan as NULL AND VOID; (3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-appellant the possession of the land in question and to execute a registrable deed of conveyance of the subject property to the said plaintiff-appellant. No costs. SO ORDERED.21 Petitioners filed a Motion for Reconsideration22 which the CA denied in its Resolution23 dated June 5, 2001. Hence, this Petition based on the following grounds: I

CECILIA AMODIA VDA. DE MELENCION, VENERANDA AMODIA, FELIPE AMODIA, EUTIQUIO AMODIA and GO KIM CHUAN, Petitioners, vs. HONORABLE COURT OF APPEALS and AZNAR BROTHERS REALTY COMPANY, Respondents. DECISION NACHURA, J.: Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated March 30, 2001 and praying that the Decision3 of the Regional Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld. The Facts The subject property is a 30,351 square meter parcel of land (subject property) particularly denominated as Lot No. 3368, located at Subabasbas, Marigondon, Lapu-Lapu City, Cebu, and part of a total area of 30,777 square meters covered by Transfer Certificate of Title (TCT) No. 206264 (entire property) in the name of the late petitioner Go Kim Chuan (Go Kim Chuan).5 The entire property was originally owned by Esteban Bonghanoy 6 who had only one child, Juana Bonghanoy-Amodia, 7 mother of the late Leoncia Amodia and petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia 8 (the Amodias). The entire property was brought under the operation of the Torrens System.9 However, the title thereto was lost during the Second World War. On July 10, 1964, the Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale 10 whereby they extra-judicially settled the estate of Esteban Bonghanoy and conveyed the subject property to respondent Aznar Brothers Realty Company (AZNAR) for a consideration of P10,200.00. On August 10, 1964, the said Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act 3344 11 as there was no title on file at the Register of Deeds of Lapu-Lapu City (Register of Deeds). Thereafter, AZNAR made improvements and constructed a beach house thereon. some

On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia and Eutiquio Amodia 12 (petitioners Amodias) executed a Deed of Extra-Judicial Settlement with Absolute Sale,13conveying the subject property in favor of Go Kim Chuan for and in consideration of P70,000.00. The lost title covering the subject property was reconstituted pursuant to Republic Act (RA) No. 26. 14 A reconstituted title particularly designated as Original Certificate of Title (OCT) No. RO-2899 was issued in the name of Esteban Bonghanoy15 and, subsequently, a derivative title (TCT No. 20626) was issued in the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and dominion over the subject property in an adverse and continuous manner and in the concept of an owner. On February 14, 1990, AZNAR wrote a letter16 to petitioners Amodias asking the latter to withdraw and/or nullify the sale entered into between them and Go Kim Chuan. On the same date, a Notice of Adverse Claim17 was annotated by AZNAR on TCT No. 20626. Because petitioners did not heed AZNAR's demand, on April 25, 1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan for Annulment of Sale and Cancellation of TCT No. 20626 18 alleging that the sale to Go Kim Chuan was an invalid second sale of the subject property which had earlier been sold to it. Petitioners Amodias denied that they executed the Extra-Judicial Partition of Real Estate

Lot 3368 was already a registered land under Act 496, thus, the registration by respondent of the Deed of Sale in 1964 under Act 3344 produces no legal effect whatsoever; II Even assuming arguendo that the lot in question was duly registered under Act 3344 as an unregistered land, it is without prejudice to better rights and the provision of Article 1544 of the New Civil Code would be inapplicable; III The Honorable Court of Appeals erred in holding that an adverse claim was already existing at the time the subject land was sold to petitioner Go Kim Chuan; on the contrary, the latter had purchased the said land in good faith and for value, without notice of any fact that would reasonably impel a closer inquiry as to the possibility of a defect in the vendor's title; and IV The Court of Appeals has misapplied the case of Heirs of Severa Gregorio v. CA, 300 SCRA 565, cited in support of its ruling that the court a quo committed error in appreciating the testimony of an expert witness as to the forgery of the first Deed of Sale.24 In its Comment25 dated September 18, 2001, AZNAR argued, among others, that the Petition is dismissible because the Verification and Certification of Non-forum Shopping were not signed by all the petitioners, invoking this Court's Decision in the case of Loquias v. Office of the Ombudsman,26 and that the same were signed only by one April Socorro Go, daughter of the late Go Kim Chuan, who did not even appear to be authorized to file the instant case in behalf of the other petitioners. In their Reply27 dated October 22, 2001, petitioners contended that April Socorro Go is one of the legitimate children and an heir of the late Go Kim Chuan and, as such, she has personal knowledge of the truth of the facts alleged in the Petition. Petitioners submitted that they substantially complied with the Rules of Court by attaching the required Verification and Certification of Non-Forum Shopping and since the same are required simply to facilitate and promote the orderly administration of justice, compliance therewith should not be imposed with absolute literalness. On December 19, 2001, petitioners, through counsel, filed a Motion28 for Leave to Admit Amended Petition 29 for Review on Certiorari (Amended Petition). Petitioners manifested that they were seeking to correct a defect in the designation of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella S. Go, Sonia Beth GoReynes, Daryl Go, and April Socorro Go be impleaded as petitioners instead of the earlier designated petitioners, Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners admitted that he inadvertently included the petitioners Amodias in the initial Petition for Review on Certiorari (Original Petition), as they were parties before the RTC and CA. The counsel also manifested that he was only representing the Heirs of Go Kim Chuan in this case. Lastly, he claimed that other than the substitution of the original petitioners, both the Original Petition and Amended Petition uniformly raised the same issues and should be given due course in the greater interest of justice and that the instant Motion was not interposed for delay. Per directive of the Court,30 AZNAR filed its Comment31 on the said motion wherein AZNAR manifested that it had no serious objection to the admission of the Amended Petition if the same was intended merely to implead the Heirs of Go Kim Chuan as petitioners. However, AZNAR interposed strong opposition to the Amended Petition's admission since the names of the petitioners Amodias were deleted without their written consent.

In their Reply,32 the Heirs of Go Kim Chuan, through counsel, claimed that petitioners Amodias were excluded from the Amended Petition because they can no longer be located despite diligent efforts exerted by counsel. The counsel claims that after the rendition of the assailed CA Decision, he sent several letters to petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left with no choice, filed the instant case before this Court on their own. The Court issued a Resolution33 dated September 16, 2002 giving due course to the Petition and requiring the parties to submit their respective Memoranda. In their Memorandum,34 petitioners Heirs of Go Kim Chuan reiterate the same issues raised in the Original Petition and the Amended Petition. They argue that Act 3344 only refers to transactions affecting lands or interests therein not previously registered under the Spanish Mortgage Law or under the Torrens system; that if AZNAR could not have registered the sale in 1964 under Act 496 because the title over the subject property was lost, AZNAR should have availed itself of the remedy of reconstitution; that registration under Act 3344 is without legal effect and could not operate as constructive notice to petitioners and third persons, hence, may not be used as basis for the application of Art. 1544 of the New Civil Code; that the Notice of Adverse Claim of AZNAR was annotated on TCT No. 20626 only on February 14, 1990 after the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan on February 18, 1989, hence, the CA erred when it held that Go Kim Chuan was not a buyer in good faith for supposedly having knowledge of such adverse claim; and that the doctrine laid down in Heirs of Severa Gregorio v. CA 35 is inapplicable since it referred to a case wherein the original copy of the document under review was not produced in evidence while in the instant case, the original copy of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was presented before the trial court judge. On the other hand, in its Memorandum, 36 AZNAR maintains that the Original Petition is dismissible because the Verification and Certification of Non-Forum Shopping thereof were not signed by all the petitioners. AZNAR further claims that the Amended Petition was filed in order to cure a fatal defect which should not be countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer in bad faith as he had prior constructive notice that the subject property was sold to AZNAR because the sale was registered with the Register of Deeds under Act 3344; that the 1964 sale was registered under Act 3344 because the subject property was not actually covered by a Torrens title at the time; that there was no other mode of registration except under Act 3344; that Go Kim Chuan had to wait for the reconstitution of the lost title, hence, it could not be said that he examined any certificate of title and could feign ignorance of the sale in favor of AZNAR; that the second sale did not transfer the subject property to Go Kim Chuan since it was no longer within the vendors' power to convey; that with respect to the issue of forgery, the finding of the document examiner is not conclusive; and that such issue was belied by petitioner Veneranda Amodia herself when she declared that the negotiated sale in 1964 between AZNAR and the Amodias was not consummated because the latter did not receive the full consideration for the subject property. Before resolving the main issues raised, the Court shall first deal with an apparent procedural lapse in this case. Counsel for petitioners filed a Motion for Leave to Admit Amended Petition for Review on Certiorari in order to implead the Heirs of the late Go Kim Chuan as the new petitioners and to delete the names of petitioners Amodias because they could no longer be located. Said petitioners sought the relaxation of the rules so that in the interest of justice, the case can be decided on the merits. AZNAR opposes the Amended Petition because it was allegedly filed to cure a fatal defect in the original petition non-compliance with the rules on Verification and Certification of Non-Forum Shopping. In this regard, the case of Iglesia ni Cristo v. Ponferrada 37 is instructive, viz.:

The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement. The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, not merely speculative. The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. Thus, we held in Iglesia ni Cristo that the commonality of interest is material and crucial to relaxation of the Rules. In the case at bench, the petitioners in the Amended Petition are Heirs of the late Go Kim Chuan. They represent their predecessor-in-interest in whose favor a title was issued covering the subject property and said title is sought to be canceled by AZNAR. Clearly, there is presence of the commonality of interest referred to in Iglesia ni Cristo. Under the circumstances, the rules may be reasonably and liberally construed to avoid a patent denial of substantial justice, because it cannot be denied that the ends of justice are better served when cases are determined on the merits after all parties are given full opportunity to ventilate their causes and defenses rather than on technicality or some procedural imperfections.38 The Issues We now proceed to the merits of the case. From the issues raised, there are ultimately two questions that require resolution: First, did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in ruling that the RTC committed an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale? Second, who between Go Kim Chuan and AZNAR has the better right over the subject property? We resolve the first question in the negative. Forgery cannot be presumed. It must be proved by clear, positive and convincing evidence and the burden of proof rests on the party alleging forgery. Handwriting experts are usually helpful in the examination of forged documents because of the technical procedure involved in analyzing them. But 1resort to these experts is not mandatory or indispensable. A finding of forgery does not depend entirely on the testimonies of handwriting experts, because the judge must conduct an

independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its authenticity.39 The RTC's finding with respect to the issue of forgery reads: After a thorough study of the pleadings and evidence of the parties, the court finds that preponderance of evidence heavily tilts in favor of the defendants. The document relied upon by the plaintiff in its claim of ownership over the land in question, the extrajudicial partition and sale, has been found by the document examiner of the PC Crime Laboratory to be a forgery. Being a forgery, said document conveyed nothing in favor of the plaintiff. Hence, plaintiff's claim of ownership over the same has no more leg to stand on. x x x40 While it is true that the original document was produced before the RTC, the finding of forgery relies wholly on the testimony of the document examiner. It falls short of the required independent examination to be conducted by the trial court judge. Other than the statement of the document examiner, the RTC decision contains no other basis to support its conclusion of the existence of forgery. Accordingly, the CA was correct in rejecting the RTCs finding and in applying the doctrine laid down in the case of Heirs of Severa Gregorio v. CA. However, we resolve the second question in favor of Go Kim Chuan. Without doubt, we have here a case of double sale of registered land. Apropos is Article 1544 of the New Civil Code which provides: ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. We have already ruled that the registration contemplated in this provision refers to registration under the Torrens System, which considers the act of registration as the operative act41 that gives validity to the transfer or creates a lien upon the land.42 This rule precisely applies to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties.43 Thus, we held that registration must be done in the proper registry in order to bind the same.44 In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded by such a lame excuse. Act 3344 provides for the system of recording of transactions or claims over unregistered real estate45 without prejudice to a third party with a better right.46 But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the term is used under Art. 1544 of the New Civil Code.47 In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not

registered.48 Rather, it was the sale in favor of Go Kim Chuan which was registered under Act No. 496. AZNAR insists that since there was no Torrens title on file in 1964, insofar as the vendors, AZNAR, and the Register of Deeds are concerned, the subject property was unregistered at the time. The contention is untenable. The fact that the certificate of title over the registered land is lost does not convert it into unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein.49This Court agrees with the petitioners that AZNAR should have availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registration under Act 3344. We note that in Aznar Brothers Realty Company v. Aying,50 AZNAR, beset with the similar problem of a lost certificate of title over a registered land, sought the reconstitution thereof. It is unfortunate that, in the instant case, despite the sale of the subject property way back in 1964 and the existence of the remedy of reconstitution at that time, AZNAR opted to register the same under the improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did not bother to have the lost title reconstituted or even have the subject property declared under its name for taxation purposes. Vigilantibus, non dormientibus, jura subveniunt. Laws must come to the assistance of the vigilant, not of the sleepy.51 Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496 while AZNAR did not, we still cannot make an outright award of the subject property to the petitioners solely on that basis. For the law is clear: mere registration of title is not enough. Good faith must accompany the registration. Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no knowledge of the previous alienation of the property by the vendor to another. Notably, what is important for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the second sale in good faith, meaning, he does so without knowledge of any defect in the title over the property sold. 52 To fully resolve the second question, therefore, it is imperative that we determine whether Go Kim Chuan was a registrant in good faith. The CA found that AZNAR registered its Notice of Adverse Claim ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan. Because of this, the CA declared that Go Kim Chuan was not a buyer in good faith, because he should have respected such adverse claim or, at least, inquired into the validity thereof. We do not agree. While factual issues are not within the province of this Court, as it is not a trier of facts and is not required to examine the oral and documentary evidence de novo, this Court has the authority to review and, in proper cases, reverse the factual findings of lower courts in the following instances: (a) when the findings of fact of the trial court are in conflict with those of the appellate court; (b) when the judgment of the appellate court is based on a misapprehension of facts; and, (c) when the appellate court manifestly overlooked certain relevant facts which, if properly considered, would justify a different conclusion.53 The instant case falls squarely within the foregoing exceptions.

an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled by a claim which he did not have any knowledge of.1awp++i1 Citing Santiago v. Court of Appeals, 55 AZNAR contends that even if the adverse claim was annotated on TCT No. 20626 only on February 4, 1990, the prior registration of the sale in its favor under Act 3344 served as constructive notice to Go Kim Chuan and thus negates the latter's claim of good faith, since the Court held in that case, "Registration, however, by the first buyer under Act 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer in good faith." AZNAR's reliance on Santiago is misplaced. In Santiago, the first buyers registered the sale under the Torrens System, as can be inferred from the issuance of the TCT in their names. There was no registration under Act 3344. Conversely, in the instant case, AZNAR registered the sale in its favor under Act 3344 despite its full knowledge that the subject property is under the operation of the Torrens System. To repeat, there can be no constructive notice to the second buyer through registration under Act 3344 if the property is registered under the Torrens system.56 Moreover, before buying the subject property, Go Kim Chuan made verifications with the Office of the City Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the premises of the subject property and found that nobody interposed any adverse claim against the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial Settlement with Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost certificate of title and caused the issuance of the assailed TCT in his name.57 Given these antecedents, good faith on the part of Go Kim Chuan cannot be doubted. We also note that AZNAR's complaint for cancellation of title contains no allegation that the (second) purchaser was aware of defects in his title. In the absence of such an allegation and proof of bad faith, it would be grossly inappropriate for this Court to render judgment against the purchaser who had already acquired title not only because of lack of evidence, but also because of the indefeasibility and conclusiveness of such title.58 Finally, it is worth stressing that the Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to insure their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of losing his acquisition. If this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership.59 WHEREFORE, the instant petition for review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L, is REINSTATED. No costs.

G.R. No. 171571 Concededly, inscription of an adverse claim serves as a warning to third parties dealing with a piece of real property that someone claims an interest therein or that there is a right superior to that of the titled owner.54However, as pointed out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim was annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of title was reconstituted and after the issuance of said TCT in the name of Go Kim Chuan on December 1, 1989. It is, therefore, absurd to say that Go Kim Chuan should be bound by

March 24, 2008

REPUBLIC OF THE PHILIPPINES, Represented by MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner, vs. HEIRS OF FRANCISCA DIGNOS-SORONO, namely: TEODORO SORONO, LUCIO SORONO, JR., ARSENIO T. SORONO, RODULFO S. OLIVAR, ALFONSA T. SORONO, CONSTANCIO S. LUMONGSOD, EULALIA S. LIMPANGOG, and FLORENCIA S. BAGUIO; HEIRS OF JUAN L. AMISTOSO, 1 namely: MARIO L. AMISTOSO, LYN-LYN AMISTOSO, ALLAN L. AMISTOSO, RAQUEL

S. AMISTOSO, EUFRONIO S. AMISTOSO, JR., and ROGELIO S. AMISTOSO; HEIRS OF BRIGILDA D. AMISTOSO, namely: VICTOR A. YAGONG, HEDELIZA A. YAGONG, and CIRIACA A. YAGONG; HEIRS OF PASTOR DIGNOS; HEIRS OF ISABEL DIGNOS, namely: DR. NAPOLEON A. AMORES, VICENTE A. BASMAYOR, DOMINGO A. BASMAYOR, and LYDIA A. BASMAYOR; HEIRS OF DONATA DIGNOS, namely: TRINIDAD D. FUENTES, NICASIA D. FUENTES, and IRINEO D. FUENTES; HEIRS OF SEGUNDA DIGNOS, namely: HONORATA D. CORTES and BENIGNO D. CORTES; HEIRS OF GREGORIA DIGNOS, namely: RITA D. FUENTES and JOSE D. FUENTES; HEIRS OF DOMINGO FUENTES, namely: CIRILA P. DIGNOS and BASILIO P. DIGNOS; and HEIR OF ISABELO DIGNOS, namely: TERESITA R. DIGNOS,2 Respondents.

MCIAA later caused the issuance in its name of Tax Declaration No. 00548 covering Lot No. 2296 and Tax Declaration No. 00568 covering Lot No. 2316. Respondents soon asked the agents of MCIAA to cease giving third persons permission to occupy the lots but the same was ignored.1avvphi1 Respondents thereupon filed on January 8, 1996 a Complaint for Quieting of Title, Legal Redemption with Prayer for a Writ of Preliminary Injunction against MCIAA before the RTC of Lapu-lapu City,7 alleging that the existence of the tax declarations "would cast a cloud on their valid and existing titles" to the lots. They alleged that "corresponding original certificates of title in favor of the decreed owners were . . . issued but the same could no longer be found and located, and in all probability, were lost during the Second World War."8 (This claim was not specifically denied by petitioner in its Answer with Counterclaim.)9 Respondents further alleged that neither they nor their predecessorsin-interests sold, alienated or disposed of their shares in the lots of which they have been in continuous peaceful possession.

DECISION CARPIO MORALES, J.:

Assailed via petition for review on certiorari is the April 23, 2005 decision of the Court of Appeals3 affirming that of the Regional Trial Court (RTC) of Lapu-lapu City, Branch 54.4 Lot Nos. 2296 and 2316 of the Cadastral Survey of Opon, Lapu-lapu City were adjudicated on December 7, 1929 by the then Court of First Instance of Cebu in favor of the following in four equal shares: a) b) c) Francisca Dignos, married to Blas Sorono share in the two lots; Tito Dignos, married to Candida Torrebillas share in the two lots; Isabel Dignos, married to Fabiano Amores; Donata Dignos, married to Estanislao Fuentes; Segunda Dignos, married to Demetrio Cortes; Gregoria Dignos, married to Severo Fuentes; Domingo Dignos, married to Venturada Potot; and Isabelo Dignos, married to Petronilla Gamallo share in the two lots; and Silveria Amistuoso, married to Melecio Tumulak; Mario Amistuoso, married to Rufina Tampus; Juan Amistuoso, married to Narcisa Cosef; Brigilda Amistuoso, married to Casimiro Yagong; and Pastor Amistuoso, widower share in the 5 two lots.

Respondents furthermore alleged that neither petitioner nor its predecessor-in-interest had given them any written notice of its acquisition of the share of Tito Dignos. Respondents thus prayed as follows: 1) Upon the filing of this complaint, that a restraining order be issued enjoining the defendant and any of its officers, agents, employees, and any third person acting on their behest, to desist from occupying their portions of Lots 2296 and 2316, Opon Cadastre, and upon due notice and hearing, to issue the corresponding writ of preliminary injunction for the same purpose; 2) To declare the tax declarations of the defendant or any of its predecessors-in-interests covering Lots 2296 and 2316, Opon Cadastre, to be null and void: 3) To grant unto the plaintiffs the right of preemption in the sale of the one-fourth share of Tito Dignos in the abovementioned parcels of land under the provisions of Articles 1620 and 1623 of the Civil Code; 4) To order the defendant to reimburse plaintiffs the sum of P10,000.00 acceptance fee, the sums ofP1,000.00 per appearance fee, the sum of P10,000.00 for costs of litigation; 5) To order the defendant to pay the plaintiffs the sum of P100,000.00 for moral damages. Plaintiffs further pray for such orders as may be just and equitable under the premises.10 (Underscoring supplied) Republic of the Philippines, represented by the MCIAA (hereafter petitioner), in its Answer with Counterclaim,11maintained that from the time the lots were sold to its predecessor-in-interest CAA, it has been in open, continuous, exclusive, and notorious possession thereof; through acquisitive prescription, it had acquired valid title to the lots since it was a purchaser in good faith and for value; and assuming arguendo that it did not have just title, it had, by possession for over 30 years, acquired ownership thereof by extraordinary prescription. At all events, petitioner contended that respondents action was barred by estoppel and laches. The trial court found for respondents. It held that respondents and their predecessors-in-interest were in peaceful and continuous possession

d)

It appears that the two lots were not partitioned by the adjudicatees. It appears further that the heirs of Tito Dignos, who, as reflected above, was awarded share in the two lots, sold for P2,565.59 the entire two lots to the then Civil Aeronautics Administration (CAA) via a public instrument entitled "Extrajudicial Settlement and Sale" executed on October 11, 1957, without the knowledge of respondents whose predecessors-in-interest were the adjudicatees of the rest of the portion of the two lots.6 In 1996, CAAs successor-in-interest, the Mactan Cebu International Airport Authority (MCIAA), erected a security fence traversing Lot No. 2316 and relocated a number of families, who had built their dwellings within the airport perimeter, to a portion of said lot to enhance airport security in line with the standards set by the International Civil Aviation Organization and the Federal Aviation Authority.

of their shares in the lots, and were disturbed of such possession only in 1996 when petitioner put up the security fence that traversed Lot No. 2316 and relocated families that had built their houses within the airport perimeter to a portion of said lot. On petitioners claim that it had acquired ownership by extraordinary prescription, the trial court brushed it aside on the ground that registered lands cannot be the subject of acquisitive prescription. Neither, held the trial court, had respondents action prescribed, as actions for quieting of title cannot prescribe if the plaintiffs are in possession of the property in question, as in the case of herein respondents. On petitioners defense of laches, the trial court also brushed the same aside in light of its finding that respondents, who have long been in possession of the lots, came to know of the sale only in 1996. The trial court added that respondents could not be charged with constructive notice of the 1957 Extrajudicial Settlement and Sale of the lots to CAA as it was erroneously registered under Act No. 3344, 12 the law governing recording of instruments or deeds relating to real estate which are not registered under the Torrens system. The subject lots being registered, the trial court found, the registration of the deed should have been made under Act No. 496,13the applicable law in 1957. In fine, the trial court held that the registration of the deed under Act No. 3344 did not operate as constructive notice to the whole world.14 Concluding, the trial court held that the questioned sale was valid only with respect to Tito Dignos share of the lots, and that the sale thereof was subject to the right of legal redemption by respondents following Article 1088 of the Civil Code, reading: Should any of the heirs sell his hereditary rights to a stranger before partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor. In light of its finding that the heirs of Tito Dignos did not give notice of the sale to respondents, the trial court held that the period for legal redemption had not yet lapsed; and the redemption price should be of the purchase price paid by the CAA for the two lots. The trial court thus disposed: WHEREFORE, all premises considered, the Court rules in favor of plaintiffs and hence renders judgment: a) Declaring Tax Declarations Nos. 00915 and 00935, as well as all other tax declarations covering Lot 2296 and Lot 2316 under the names of the Civil Aeronautics Administration, the Bureau of Air Transportation and the defendant Mactan Cebu International Airport Authority, as null and void and directing the City Assessor of Lapu-Lapu City to cancel them; b) Declaring the Extrajudicial Settlement and Sale affecting Lot 2296 and Lot 2316 (Exhibit "H" for plaintiffs) as void and ineffective as regards the three-fourth[s] (3/4) shares of plaintiffs in both lots and declaring the herein plaintiffs as owners of such three fourth[s] shares and; c) Ordering the defendant to resell to plaintiffs for a total price of Six Hundred forty Pesos (P640.00) the one-fourth (1/4) shares in Lot 2296 and Lot 2316 it had purchased from the heirs of the late Tito Dignos in 1957; No pronouncement as to costs. SO ORDERED. 15

As priorly stated, the Court of Appeals affirmed the trial courts decision. Hence, the present petition for review on certiorari which proffers the following GROUNDS FOR ALLOWANCE OF THE PETITION THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS DECISION WHEN RESPONDENTS NO LONGER HAVE ANY RIGHT TO RECOVER LOTS 2296 AND 2316 DUE TO THE PRIOR SALE THEREOF TO THE REPUBLIC AND UPON THE EQUITABLE GROUNDS OF ESTOPPEL AND LACHES. 16 The petition fails. Article 493 of the Civil Code provides: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation of the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. Apropos is the following pertinent portion of this Courts decision in Bailon-Casilao v. CA: As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)]. From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one coowner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property.17 (Emphasis and underscoring supplied) Petitioners predecessor-in-interest CAA thus acquired only the rights pertaining to the sellers-heirs of Tito Dignos, which is only undivided share of the two lots. Petitioners insistence that it acquired the property through acquisitive prescription, if not ordinary, then extraordinary, does not lie. The trial courts discrediting thereof is well taken. It bears emphasis at this juncture that in the Extrajudicial Settlement and Sale forged by CAA and Tito Dignos heirs in 1957, the following material portions thereof validate the claim of respondents that the two lots were registered: xxxx 4. That since the Original Transfer Certificate of Title of the abovementioned property/ies has/have been lost and/or destroyed, or since the said lot/s is/are covered by Cadastral Case No. 19, and a decree issued on March 19, 1930, bearing Decree No./s 474824 & 474825, and the VENDEE hereby binds itself to reconstitute said title/s at its own expense and that the HEIRS-VENDORS, their heirs, successors

and assigns bind themselves to help in the reconstitution of title so that the said lot/s may be registered in the name of the VENDEE in accordance with law[.]18 xxxx The trial courts discrediting of petitioners invocation of laches and prescription of action is well-taken too. As for petitioners argument that the redemption price should be of the prevailing market value, not of the actual purchase price, since, so it claims, "(1) they received just compensation for the property at the time it was purchased by the Government; and, (2) the property, due to improvements introduced by petitioner in its vicinity, is now worth several hundreds of millions of pesos," 19 the law is not on its side. Thus, Article 1088 of the Civil Code provides: Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor. (Emphasis and underscoring supplied) The Court may take judicial notice of the increase in value of the lots. As mentioned earlier, however, the heirs of Tito Dignos did not notify respondents about the sale. At any rate, since the Extrajudicial Settlement and Sale stipulates, thus: That the HEIRS-VENDORS, their heirs, assigns and successors, undertake and agree to warrant and defend the possession and ownership of the property/ies herein sold against any and all just claims of all persons whomsoever and should the VENDEE be disturbed in its possession, to prosecute and defend the same in the Courts of Justice20 (Emphasis and underscoring supplied), petitioner is not without any remedy. This decision is, therefore, without prejudice to petitioners right to seek redress against the vendors-heirs of Tito Dignos and their successors-in-interest. WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.

Respondents, who are the descendants of Pablo Pascua (Pablo), filed a complaint seeking reconveyance of a parcel of land with an area of 23.7229 hectares situated in Cabitaugan, Subic, Zambales and covered by Original Certificate of Title (OCT) No. 404 in the name of Pablo.5 In the alternative, the respondents prayed that damages be awarded in their favor.6 OCT No. 4047 was attached as one of the annexes of respondents complaint. It contained several annotations in the memorandum of encumbrances which showed that the property had already been sold by Pablo during his lifetime to Alejandria Marquinez and Restituto Morales. Respondents also attached copies of the following documents as integral parts of their complaint: Transfer Certificate of Title (TCT) No. T-8241,8 TCT No. T-8242,9TCT No. T-10863,10 the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales11 executed by Cipriano Pascua, Sr. (Cipriano), and the Deed of Sale with Mortgage12 between spouses Albino Rodolfo and Fabia Rodolfo (spouses Rodolfo) and petitioner. In their complaint,13 respondents alleged that Pablo died intestate sometime in June 1945 and was survived by his four children, one of whom was the deceased Cipriano.14 On 13 February 1967, Cipriano executed a document denominated as "Extrajudicial Settlement of a Sole Heir and Confirmation of Sales," 15 wherein he declared himself as the only heir of Pablo and confirmed the sales made by the decedent during his lifetime, including the alleged sale of the disputed property to spouses Rodolfo. Respondents likewise averred that on the following day 14 February 1967, TCT No. T-824116 was issued in the name of Cipriano "without OCT No. 404 having been cancelled." 17 However, TCT No. T-8241 was not signed by the Register of Deeds. On the same day, TCT No. T8242 was issued in the name of the spouses Rodolfo and TCT No. T8241 was thereby cancelled.18 Subsequently, on 31 October 1969, the spouses Rodolfo sold the disputed property to petitioner by virtue of a Deed of Sale with Mortgage. Consequently, on 5 November 1969, TCT No. T-8242 was cancelled and TCT No. T-10863 19 was issued in the name of petitioner.20 It was further averred in the complaint that Jorge Pascua, Sr., son of Cipriano, filed on 24 January 1997 a petition before the RTC of Olongapo City, Branch 75, for the issuance of a new owners duplicate of OCT No. 404, docketed as Other Case No. 04-0-97. 21 The RTC denied the petition.22 The trial court held that petitioner was already the owner of the land, noting that the failure to annotate the subsequent transfer of the property to it at the back of OCT No. 404 did not affect its title to the property. Petitioner filed a motion to dismiss23 the complaint on the grounds that the action is barred by the Statute of Limitations, more than 28 years having elapsed from the issuance of TCT No. T-10863 up to the filing of the complaint, and that the complaint states no cause of action as it is an innocent purchaser for value, it having relied on the clean title of the spouses Rodolfo. Impleaded as defendants, the heirs of Cipriano filed an answer to the complaint in which they denied knowledge of the existence of the extrajudicial settlement allegedly executed by Cipriano and averred that the latter, during his lifetime, did not execute any document transferring ownership of the property.24 The Register of Deeds and the National Treasurer filed, through the Office of the Solicitor General, an answer averring that the six (6)-year period fixed in Section 102 of Presidential Decree (P.D.) No. 1529 for the filing of an action against the Assurance Fund had long prescribed since the transfer of ownership over the property was registered through the issuance of TCT No. T-10863 in favor of petitioner as early as 1969. They also claimed that respondents have no cause of action against the Assurance Fund since they were not actually deprived of ownership over the property, as they could have recovered the property had it not been for their inaction for over 28 years.25 The RTC granted petitioners motion to dismiss. 26 Noting that respondents had never claimed nor established that they have been in

G.R. No. 171531

January 30, 2009

GUARANTEED HOMES, INC., Petitioner, vs. HEIRS OF MARIA P. VALDEZ, (EMILIA V. YUMUL and VICTORIA V. MOLINO), HEIRS OF SEVERINA P. TUGADE (ILUMINADA and LEONORA P. TUGADE, HEIRS OF ETANG P. GATMIN (LUDIVINA G. DELA CRUZ (by and through ALFONSO G. DELA CRUZ), HILARIA G. COBERO and ALFREDO G. COBERO) and SIONY G. TEPOL (by and through ELENA T. RIVAS and ELESIO TEPOL, JR.), AS HEIRS OF DECEDENT PABLO PASCUA, Respondents. DECISION Tinga, J.: This is a petition for review 1 under Rule 45 of the Rules of Court of the Court of Appeals Decision dated 22 March 2005 2 and Resolution dated 9 February 20063 in CA-G.R. CV No. 67462. The Court of Appeals reversed the 12 November 1999 Order of the Regional Trial Court (RTC) of Olongapo City, Branch 734 which granted the motion to dismiss filed by Guaranteed Homes, Inc. (petitioner). The appellate court denied petitioners motion for reconsideration. The factual antecedents are as follows:

possession of the property and that they did not present any evidence to show that petitioner has not been in possession of the property either, the RTC applied the doctrine that an action to quiet title prescribes where the plaintiff is not in possession of the property. The trial court found that the complaint per its allegations presented a case of implied or constructive trust on the part of Cipriano who had inaccurately claimed to be the sole heir of Pablo in the deed of extrajudicial settlement of estate which led to the issuance of TCT No. T- 8241 in his favor. As the prescriptive period for reconveyance of a fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the title, the trial court held that the action for reconveyance had already prescribed with the lapse of more than 28 years from the issuance of TCT No. T-10863 on 5 November 1969 as of the filing of the complaint on 21 November 1997. The RTC added that it is an enshrined rule that even a registered owner of property may be barred from recovering possession of property by virtue of laches. The RTC further held that petitioner had the right to rely on TCT No. T8242 in the name of spouses Rodolfo. Petitioner is not obliged to go beyond the title considering that there were no circumstances surrounding the sale sufficient to put it into inquiry. Concerning the Assurance Fund, the RTC held that the claim against it had long prescribed since Section 102 of P.D. No. 1529 provides for a six-year period within which a plaintiff may file an action against the fund and in this case the period should be counted from the time of the issuance of the challenged TCT No. T-10863 on 5 November 1969 and thus expired in 1975. Undaunted, respondents appealed to the Court of Appeals.27 The Court of Appeals reversed the RTCs order. 28 In ordering the reinstatement of the complaint, the appellate court ruled that the averments in respondents complaint before the RTC make out a case for quieting of title which has not prescribed. Respondents did not have to prove possession over the property since petitioner as the movant in a motion to dismiss hypothetically admitted the truth of the allegations in the complaint. The appellate court found that possession over the property was sufficiently alleged in the complaint which stated that "neither petitioner nor the Rodolfo spouses ever had possession of the disputed property" as "a number of the Pascua heirs either had been (still are) in actual, continuous and adverse possession thereof or had been enjoying (still are enjoying) the use thereof." 29 By the same token, laches had not set in, the Court of Appeals added. The appellate court further held that the ruling of the RTC that petitioner is an innocent purchaser for value is contrary to the allegations in respondents complaint. Hence, the present petition for review. The sole issue before this Court revolves around the propriety of the RTCs granting of the motion to dismiss and conversely the tenability of the Court of Appeals reversal of the RTCs ruling. The petition is meritorious. It is well-settled that to sustain a dismissal on the ground that the complaint states no cause of action, the insufficiency of the cause of action must appear on the face of the complaint, and the test of the sufficiency of the facts alleged in the complaint to constitute a cause of action is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the complaint. For the purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint.30 The admission, however, is limited only to all material and relevant facts which are well pleaded in the complaint.31

The factual allegations in respondents complaint should be considered in tandem with the statements and inscriptions on the documents attached to it as annexes or integral parts. In a number of cases, the Court held that in addition to the complaint, other pleadings submitted by the parties should be considered in deciding whether or not the complaint should be dismissed for lack of cause of action.32 Likewise, other facts not alleged in the complaint may be considered where the motion to dismiss was heard with the submission of evidence, or if documentary evidence admitted by stipulation discloses facts sufficient to defeat the claim.33 For while the court must accept as true all well pleaded facts in the complaint, the motion does not admit allegations of which the court will take judicial notice are not true, nor does the rule apply to legally impossible facts, nor to facts inadmissible in evidence, nor to facts which appear by record or document included in the pleadings to be unfounded.34 In the case at bar, the trial court conducted a hearing on the motion to dismiss. At the hearing, the parties presented documentary evidence. Among the documents marked and offered in evidence are the annexes of the complaint.35 Based on the standards set by this Court in relation to the factual allegations and documentary annexes of the complaint as well as the exhibits offered at the hearing of the motion to dismiss, the inescapable conclusion is that respondents complaint does not state a cause of action against petitioner. Firstly, the complaint does not allege any defect with TCT No. T-8242 in the name of the spouses Rodolfo, who were petitioners predecessors-in-interest, or any circumstance from which it could reasonably be inferred that petitioner had any actual knowledge of facts that would impel it to make further inquiry into the title of the spouses Rodolfo.36 It is basic that a person dealing with registered property need not go beyond, but only has to rely on, the title of his predecessor-in-interest. Since "the act of registration is the operative act to convey or affect the land insofar as third persons are concerned," it follows that where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens system seeks to insure would entirely be futile and nugatory. The public shall then be denied of its foremost motivation for respecting and observing the Torrens system of registration. In the end, the business community stands to be inconvenienced and prejudiced immeasurably.37 Contrary to the assertion of respondents, OCT No. 404 was expressly cancelled by TCT No. T-8241. The alleged non-signature by the Register of Deeds Soliman Achacoso, , does not affect the validity of TCT No. T-8241 since he signed TCT No. T- 8242 and issued both titles on the same day. There is a presumption of regularity in the performance of official duty. The presumption is further bolstered by the fact that TCT No. T-8241 was certified to be on file with the Registry of Deeds and registered in the name of Cipriano. It is enough that petitioner had examined the latest certificate of title which in this case was issued in the name of the immediate transferor, the spouses Rodolfo. The purchaser is not bound by the original certificate but only by the certificate of title of the person from whom he had purchased the property.38 Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales executed by Cipriano alone despite the existence of the other heirs of Pablo, is not binding on such other heirs, nevertheless, it has operative effect under Section 44 of the Property Registration Decree, which provides that: SEC. 44. Statutory Liens Affecting Title. Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting, namely:

xxxx Even assuming arguendo that the extrajudicial settlement was a forgery, the Court still has to uphold the title of petitioner. The case law is that although generally a forged or fraudulent deed is a nullity and conveys no title, there are instances when such a fraudulent document may become the root of a valid title. 39 And one such instance is where the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate.40 The Court cannot give credence to respondents claims that the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales was not registered and that OCT No. 404 was not cancelled by the Register of Deeds. The Register of Deeds of Zambales certified that the extrajudicial settlement was recorded on 14 February 1967, per Entry No. 18590. This is in compliance with Section 56 of Act No. 496, 41 the applicable law at the time of registration, which provides that: Sec. 56. Each register of deeds shall keep an entry book in which he shall enter in the order of their reception all deeds and other voluntary instruments, and all copies of writs and other process filed with him relating to registered land. He shall note in such book the year, month, day, hour, and minute of reception of all instruments, in the order in which they are received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument when made on the certificate of title to which it refers shall bear the same date. [Emphasis supplied] Registration in the public registry is notice to the whole world. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall be, if registered, filed or entered in the Office of the Register of Deeds of the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.42 Thirdly, respondents cannot make out a case for quieting of title since OCT No. 404 had already been cancelled. Respondents have no title to anchor their complaint on.43 Title to real property refers to that upon which ownership is based. It is the evidence of the right of the owner or the extent of his interest, by which means he can maintain control and, as a rule, assert right to exclusive possession and enjoyment of the property.44 Moreover, there is nothing in the complaint which specified that the respondents were in possession of the property. They merely alleged that the occupants or possessors are "others not defendant Spouses Rodolfo"45who could be anybody, and that the property is in actual possession of "a number of the Pascua heirs"46 who could either be the respondents or the heirs of Cipriano. The admission of the truth of material and relevant facts well pleaded does not extend to render a demurrer an admission of inferences or conclusions drawn therefrom, even if alleged in the pleading; nor mere inferences or conclusions from facts not stated; nor conclusions of law; nor matters of evidence; nor surplusage and irrelevant matters.47 The other heirs of Pablo should have filed an action for reconveyance based on implied or constructive trust within ten (10) years from the date of registration of the deed or the date of the issuance of the certificate of title over the property.48 The legal relationship between Cipriano and the other heirs of Pablo is governed by Article 1456 of the Civil Code which provides that if a 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. From the above discussion, there is no question that petitioner is an innocent purchaser for value; hence, no cause of action for

cancellation of title will lie against it. 49 The RTC was correct in granting petitioners motion to dismiss. Lastly, respondents claim against the Assurance Fund also cannot prosper. Section 101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be liable for any loss, damage or deprivation of any right or interest in land which may have been caused by a breach of trust, whether express, implied or constructive. Even assumingarguendo that they are entitled to claim against the Assurance Fund, the respondents claim has already prescribed since any action for compensation against the Assurance Fund must be brought within a period of six (6) years from the time the right to bring such action first occurred, which in this case was in 1967. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 67462 isREVERSED and SET ASIDE. The 12 November 1999 Order of the Regional Trial Court of Olongapo City, Branch 73 in Civil Case No. 432-097 is REINSTATED. SO ORDERED.

G.R. No. 177181

July 7, 2009

RABAJA RANCH DEVELOPMENT CORPORATION, Petitioner, vs. AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM, Respondent. DECISION NACHURA, J.: Before this Court is a Petition 1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision 2 dated June 29, 2006, which reversed and set aside the Decision3of the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro, Branch 41, dated June 3, 2004. The Facts Petitioner Rabaja Ranch Development Corporation (petitioner), a domestic corporation, is a holder of Transfer Certificate of Title (TCT) No. T-885134 covering the subject property particularly identified as Lot 395, Pls 47, with an area of 211,372 square meters more or less, and located at Barangay (Brgy.) Conrazon, Bansud, Bongabon, Oriental Mindoro (subject property). Respondent Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) is a government corporation, which manages the pension fund of the Armed Forces of the Philippines (AFP), and is duly organized under Presidential Decree (P.D.) No. 361,5 as amended by P.D. No. 16566 (respondent). Respondent is a holder of TCT No. T-513827 covering the same subject property. On September 1, 1998, petitioner filed a Complaint 8 for Quieting of Title and/or Removal of Cloud from Title before the RTC. Trial on the merits ensued. Petitioner averred that on September 6, 1955, Free Patent No. V195359 (Free Patent) was issued in the name of Jose Castromero (Jose). On June 1, 1982, the Free Patent was registered, and Original Certificate of Title (OCT) No. P-261210 covering the subject property was issued in the name of Jose. Sometime in the first half of 1982, Jose sold the subject property to Spouses Sigfriedo and Josephine Veloso11 (spouses Veloso), and TCT No. T-17104 12 was issued in favor of the latter. Spouses Veloso, in turn, sold the subject property to petitioner for the sum of P634,116.00 on January 17, 1997, 13 and TCT

No. T-88513 was issued in petitioners name. Petitioner alleged that it was the lawful owner and possessor of the subject property. Traversing the complaint, respondent, in its Answer, 14 claimed that its title over the subject property was protected by the Torrens system, as it was a buyer in good faith and for value; and that it had been in continuous possession of the subject property since November 1989, way ahead of petitioner's alleged possession in February 1997. Respondent stated that on April 30, 1966, Homestead Patent No. 113074 (Homestead Patent) was issued in the name of Charles Soguilon (Charles). On May 27, 1966, the Homestead Patent was registered15 and OCT No. RP-110 (P-6339)16 was issued in Charles's name, covering the same property. On October 18, 1982, Charles sold the subject property to JMC Farm Incorporated (JMC), which was then issued TCT No. 18529.17 On August 30, 1985, JMC obtained a loan from respondent in the amount of P7,000,000.00, with real estate mortgage over several parcels of land including the subject property.18 JMC failed to pay; hence, after extra-judicial foreclosure and public sale, respondent, being the highest bidder, acquired the subject property and was issued TCT No. T-51382 in its name. Respondent contended that from the time it was issued a title, it took possession of the subject property until petitioner disturbed respondent's possession thereof sometime in 1997. Thus, respondent sent petitioner a Demand Letter19 asking the latter to vacate the subject property. Petitioner replied that it was not aware of respondent's claim.20 Presently, the subject property is in the possession of the petitioner.21 The RTC's Ruling On June 3, 2004, the RTC ruled in favor of the petitioner on the ground that petitioner's title emanated from a title older than that of the respondent. Moreover, the RTC held that there were substantial and numerous infirmities in the Homestead Patent of Charles. The RTC found that there was no record in the Bureau of Lands that Charles was a homestead applicant or a grantee of Homestead Patent No. 113074. Upon inquiry, the RTC also found that a similar Homestead Patent bearing No. V-113074 was actually issued in favor of one Mariano Costales over a parcel of land with an area of 8.7171 hectares and located in Bunawan, Agusan in Mindanao, per Certification 22issued by the Lands Management Bureau dated February 18, 1998. Thus, the RTC held that Charles's Homestead Patent was fraudulent and spurious, and respondent could not invoke the protection of the Torrens system, because the system does not protect one who committed fraud or misrepresentation and holds title in bad faith. The RTC disposed of the case in this wise: IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendant, as follows: 1. DECLARING as valid OCT No. P-2612, in the name of Jose Castromero, and the subsequent TCT No. T-17104 in the name of the spouses, Siegfriedo A. Veloso and Josephine Sison Veloso and TCT No. T-88513, in the name of plaintiff Rabaja Ranch & Development Corporation; 2. DECLARING plaintiff as the true and lawful owner of the lot in question covered by TCT No. T-88513; 3. DECLARING as null and void OCT No. RP-110 (P-6339), in the name of Charles Soguilon and its derivative titles, TCT No. T- 18529 registered in the name of J.M.C. Farm Incorporated and TCT No. T-51392, in the name of the defendant AFP Retirement Separation and Benefits System; 4. DIRECTING the Register of Deeds, City of Calapan, Oriental Mindoro, to cancel TCT No. T-51392, in the name of defendant AFP Retirement Separation & Benefits System and its registration from the Records of the Registry of Deeds;

5. NO PRONOUNCEMENT as to damages and attorney's fees for plaintiff and defendant's counterclaim is hereby dismissed. No Cost. SO ORDERED. Aggrieved, respondent appealed to the CA.23 The CA's Ruling On June 29, 2006, the CA reversed and set aside the RTC's Decision upon the finding that Charles's Homestead Patent was earlier registered than Jose's Free Patent. The CA held that Jose slept on his rights, and thus, respondent had a better right over the subject property. Further, the CA opined that while "it is interesting to note that petitioner's claim that Homestead Patent No. V-113074 was issued to Mariano Costales, per Certification issued by the Lands Management Bureau, there is nothing on record which would show that said Homestead Patent No. V-113074 and Homestead Patent No. 113074 granted to Charles were one and the same." Petitioner filed a Motion for Reconsideration,24 which the CA, however, denied in its Resolution25 dated March 26, 2007. The Issues Hence, this Petition based on the following grounds: a) The CA decided a question of substance not in accordance with existing law and jurisprudence. b) The CA Decision was based on a gross misapprehension or non-apprehension of facts. Petitioner asseverates that Homestead Patent No. 113074 is not found in the files of the Land Management Bureau, nor does Charles's name appear as an applicant or a patentee; that, similarly, Homestead Patent No. V-113074 was actually issued to Mariano Costales over a parcel of land in Mindanao and not in Mindoro; that, being fake and spurious, Charles's Homestead Patent is void ab initio and, as such, does not produce or transmit any right; that the CA completely ignored the RTC's factual findings based on documentary and testimonial evidence, particularly of the invalidity and infirmities of the Homestead Patent; that said Homestead Patent does not legally exist, hence, is not registrable; that respondent's assertion -- that since the issuance of the Homestead Patent in 1966, records and documents have not been properly kept -- should be discarded, as petitioner's Free Patent which was issued way back in 1955 is still intact and is of record; that a Homestead Patent, being a contract between the Government and the grantee, must bear the consent of the Government; and, Charles's Homestead Patent being a simulation, cannot transmit any right; that the earlier registration of the Homestead Patent has no legal effect, as the same is merely simulated; and that OCT No. No. RP-110 (P-6339) and all derivative titles issued, including respondent's title, are null and void. Petitioner submits that it has a better right over the subject property than respondent.26 Respondent takes issue with petitioners claim that the Homestead Patent is spurious or fake, the same being a question of fact not proper in a petition for review on certiorari before this Court. Respondent also posits that the factual findings of the CA are conclusive and binding on this Court, as such findings are based on record; that respondent has a better right over the subject property because only the certified copy and not the original copy of the Free Patent was transcribed and registered with the Register of Deeds of Calapan, Oriental Mindoro; that the Homestead Patent was duly transcribed on May 27, 1966, way ahead of the registration of the Free Patent on June 1, 1982; that the CA was correct in ruling that Section 122 27 of Act No. 496 (The Land Registration Act) as amended by Section 103 28 of P.D. No. 1529 (The Property Registration Decree) provides that registration of the Patent

with the Register of Deeds is the operative act to affect and convey the land; and that the fact that the Homestead Patent was duly registered, said Patent became indefeasible as a Torrens Title. Moreover, respondent avers that the petitioner failed to prove by preponderance of evidence that the Homestead Patent is spurious or fake. Respondent maintains that it is the Free Patent which is spurious since what was registered was only the certified and not the original copy of the Free Patent.29 The issues may, thus, be summed up in the sole question of WHETHER OR NOT RESPONDENT'S TITLE WHICH ORIGINATED FROM A FAKE AND SPURIOUS HOMESTEAD PATENT, IS SUPERIOR TO PETITIONER'S TITLE WHICH ORIGINATED FROM A VALID AND EXISTING FREE PATENT.30 Simply put, the issue is who, between the petitioner and respondent, has a better right over the subject property. Our Ruling The instant Petition is bereft of merit. While this Court, is not a trier of facts and is not required to examine or contrast the oral and documentary evidence de novo, nonetheless, it may review and, in proper cases, reverse the factual findings of lower courts when the findings of fact of the trial court are in conflict with those of the appellate court.31 In this case, we see the need to review the records. The special circumstances attending this case cannot be disregarded. Two certificates of title were issued covering the very same property, deriving their respective authorities from two different special patents granted by the Government. The Free Patent was issued to Jose on September 6, 1955 as opposed to the Homestead Patent which was issued to Charles on April 30, 1966. The latter was registered on May 27, 1966, ahead of the former which was registered only on June 1, 1982. Each patent generated a certificate of title issued to a different set of individuals. Over the years, the subject property was eventually sold to the contending parties herein, who both appear to be buyers in good faith and for value. Petitioner now seeks relief before this Court on the main contention that the registered Homestead Patent from which respondent derived its title, is fake and spurious, and is, therefore, void ab initio because it was not issued, at all, by the Government. We are not convinced. Our ruling in Republic v. Guerrero,32 is instructive: Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by means of the misrepresentation or concealment of a material fact. Constructive fraud is construed as a fraud because of its detrimental effect upon public interests and public or private confidence, even though the act is not done with an actual design to commit positive fraud or injury upon other persons. Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein. The fraud is extrinsic if it is employed to deprive parties of their day in court and thus prevent them from asserting their right to the property registered in the name of the applicant. The distinctions assume significance because only actual and extrinsic fraud had been accepted and is contemplated by the law as a ground to review or reopen a decree of registration. Thus, relief is granted to a party deprived of his interest in land where the fraud consists in a

deliberate misrepresentation that the lots are not contested when in fact they are; or in willfully misrepresenting that there are no other claims; or in deliberately failing to notify the party entitled to notice; or in inducing him not to oppose an application; or in misrepresenting about the identity of the lot to the true owner by the applicant causing the former to withdraw his application. In all these examples, the overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court or from presenting his case. The fraud, therefore, is one that affects and goes into the jurisdiction of the court. We have repeatedly held that relief on the ground of fraud will not be granted where the alleged fraud goes into the merits of the case, is intrinsic and not collateral, and has been controverted and decided. Thus, we have underscored the denial of relief where it appears that the fraud consisted in the presentation at the trial of a supposed forged document, or a false and perjured testimony, or in basing the judgment on a fraudulent compromise agreement, or in the alleged fraudulent acts or omissions of the counsel which prevented the petitioner from properly presenting the case.33 No actual and extrinsic fraud existed in this case. In our jurisdiction, fraud is never presumed.34 Mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner, injure him must be specifically alleged and proved. 35 The burden of proof rests on petitioner, and the petitioner failed to discharge the burden. Petitioner did not convincingly show that the Homestead Patent issued to Charles is indeed spurious. More importantly, petitioner failed to prove that respondent took part in the alleged fraud which dated back as early as 1966 when Charles supposedly secured the fake and spurious Homestead Patent. In Estate of the Late Jesus S. Yujuico v. Republic,36 citing Republic v. Court of Appeals,37 this Court stressed the fact that it was never proven that private respondent St. Jude was a party to the fraud that led to the increase in the area of the property after it was sub-divided. In the same case, citing Republic v. Umali,38 we held that, in a reversion case, even if the original grantee of a patent and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and the fraudulent acquisition cannot affect the titles of innocent purchasers for value. This conclusion rests very firmly on Section 32 of P.D. No. 1529, which states: SECTION 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value. Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other person responsible for the fraud. (Underscoring ours) Settled is the rule that no valid TCT can issue from a void TCT, unless an innocent purchaser for value had intervened. An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right to or interest in the property, for which a full and fair price is paid by the buyer at the time of the purchase or

before receipt of any notice of the claims or interest of some other person in the property. The protection given to innocent purchasers for value is necessary to uphold a certificate of title's efficacy and conclusiveness, which the Torrens system ensures.39 Clearly, respondent is an innocent purchaser in good faith and for value. Thus, as far as respondent is concerned, TCT No. 18529, shown to it by JMC, was free from any flaw or defect that could give rise to any iota of doubt that it was fake and spurious, or that it was derived from a fake or spurious Homestead Patent. Likewise, respondent was not under any obligation to make an inquiry beyond the TCT itself when, significantly, a foreclosure sale was conducted and respondent emerged as the highest bidder. In Republic v. Court of Appeals, 40 this Court distinguished a Homestead Patent from a Free Patent, to wit: Homestead Patent and Free Patent are some of the land patents granted by the government under the Public Land Act. While similar, they are not exactly the same. A Homestead Patent is one issued to: any citizen of this country; over the age of 18 years or the head of a family; who is not the owner of more than twenty-four (24) hectares of land in the Philippines or has not had the benefit of any gratuitous allotment of more than twenty-four (24) hectares of land since the occupation of the Philippines by the United States. The applicant must show that he has complied with the residence and cultivation requirements of the law; must have resided continuously for at least one year in the municipality where the land is situated; and must have cultivated at least one-fifth of the land applied for. On the other hand, a Free Patent may be issued where the applicant is a natural-born citizen of the Philippines; not the owner of more than twelve (12) hectares of land; that he has continuously occupied and cultivated, either by himself or through his predecessors-in-interests, a tract or tracts of agricultural public lands subject to disposition for at least 30 years prior to the effectivity of Republic Act No. 6940; and that he has paid the real taxes thereon while the same has not been occupied by any person.41 It bears stressing that a Homestead Patent, once registered under the Land Registration Act, becomes as indefeasible as a Torrens Title.42 Verily, Section 103 of P.D. No. 1529 mandates the registration of patents, and such registration is the operative act to convey the land to the patentee, thus: Sec. 103. . . . . . The deed, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the land, and in all cases under this Decree, registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for registration shall be paid by the grantee. After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree. (Emphasis supplied) The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of titles to lands. However, justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto. Otherwise, the integrity of the Torrens system shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.43 The general rule that the direct result of a previous void contract cannot be valid will not apply in this case as it will directly contravene the Torrens system of registration. Where innocent third persons,

relying on the correctness of the certificate of title thus issued, acquire rights over the property, this Court cannot disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on the correctness of the certificate of title issued therefor, and the law will, in no way, oblige him to go behind the certificate to determine the condition of the property.44 Respondent's transfer certificate of title, having been derived from the Homestead Patent which was registered under the Torrens system on May 27, 1966, was thus vested with the habiliments of indefeasibility. WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision is AFFIRMED. No costs. G.R. No. 147928 January 11, 2005

EMMANUEL F. CONCEPCION, HEIRS OF JESUS F. CONCEPCION, Namely: BETTY CONCEPCION and JIMMY CONCEPCION; and HEIRS OF REGINO F. CONCEPCION, JR. Namely: ROSARIO VDA. DE CONCEPCION and JERNIE CONCEPCION, petitioners, vs. HEIRS OF JOSE F. CONCEPCION, Namely: ANTONIO CONCEPCION, LOURDES C. WATTS and IDA C. HORVAT, (and HON. COURT OF APPEALS), respondents. DECISION GARCIA, J.: Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the decision dated November 27, 2000 of the Court of Appeals in CA-G.R. CV No. 28665, dismissing, for lack of merit, the appeal thereto taken by the herein petitioners contra an earlier order dated January 22, 1988 of the Regional Trial Court, Branch V, Cebu City, then sitting as a land registration court. All the parties in this case are descendants of the late spouses Regino Concepcion, Sr. and Concepcion Famador. Petitioner Emmanuel is a son of the late spouses while the other petitioners Betty, Jimmy, Rosario and Jernie (all surnamed Concepcion) and the respondents Antonio Concepcion, Lourdes C. Watts and Ida C. Horvat are grandchildren of the spouses. The deceased spouses Regino Concepcion, Sr. and Concepcion Famador had seven children namely: Jose (father of respondents Antonio Concepcion, Lourdes Watts and Ida Horvat), Jesus (father of petitioners Betty Concepcion and Jimmy Concepcion), Maria, Vicente, Regino, Jr. (father of petitioners Rosario Vda. De Concepcion and Jernie Concepcion), Elena and Emmanuel. During their marriage, the couple acquired the following real properties: 1. A parcel of land situated at Zulueta Street, Cebu City containing an area of 110 sq. meters, more or less, and with an assessed value of P11,000.00 hereinafter referred to as the Zulueta property, the realty involved in this case; 2. A parcel of agricultural land situated at Pit-os, Cebu City, now known as Lot No. 10110, covered by Tax Dec. No. 007441, with an assessed value of P2,732.00; 3. A parcel of agricultural land also situated at Pit-os, Cebu City, now known as Lot No. 10132, covered by Tax Dec. No. III-05158, with an assessed value of P740.00; and

4. A parcel of agricultural land likewise situated at Pit-os, Cebu City, now known as Lot No. 10129 and covered by Tax Dec. No. 23728 with an assessed value of P223.00. Regino, Sr. died in 1944. Ten (10) years later or in 1954, his wife, Concepcion Famador, also passed away. Upon the latters death, she left a will1 disposing of all her paraphernal properties as well as her share in the conjugal partnership of gains. The will was subjected to probate in Special Proceedings No. 1257-R of the then Court of First Instance of Cebu City. Jose, one of the sons of the late spouses and father of the herein respondents, contested the probate on the ground that the disposition made therein impaired his legitime.1a\^/phi1.net Eventually, the will was allowed probate. However, on July 6, 1960, the probate court motu proprio dismissed the probate proceedings because Jesus, as the estates executor, neglected to perform his duties after the will was probated. Consequently, the probate court was not able to adjudicate to the heirs their respective shares in the estate. On account thereof, Jose filed a complaint for partition with damages against his six (6) brothers and sisters before the then Court of First Instance of Cebu, Branch XIII, thereat docketed as Civil Case No. R13850. In a decision2dated August 10, 1978, said court rendered judgment as follows: IN VIEW OF THE FOREGOING, judgment is hereby rendered: 1. Declaring the plaintiff (i.e., Jose) entitled to a share of 1,183.57 square meters as his legitime from his mothers estate and 1,829 square meters as his intestate share from the estate of Regino Concepcion, Sr.; 2. Ordering defendants Regino, Jesus and Emmanuel Concepcion to contribute proportionately to the completion of plaintiffs legitime. 3. Confirming the titles of the additional defendants over the properties conveyed to them. SO ORDERED. (Emphasis supplied) The decision became final and executory as no appeal was taken there from by the herein petitioners. Thereafter, the same court (CFICebu, Branch XIII) issued a writ of execution3 dated February 23, 1982. However, the writ was returned unsatisfied. Hence, on February 12, 1987, said court issued an alias writ of execution .4 To this, aSheriffs Report was submitted stating, among others, that the "writ of execution is only partially complied with pending the turn over of the share of the plaintiff (Jose) by the defendants (Jesus, Regino, Jr. and Emmanuel)." Inasmuch as the herein respondents have not yet complied with the aforementioned August 10, 1978 decision of CFI-Cebu, Branch XIII, the same court issued an Order dated 27 May 1987 5 , directing its branch sheriff Candido A. Gadrinab to execute a deed of conveyance covering the Zulueta property in favor of Jose. Complying with the above, Sheriff Gadrinab executed a Deed of Conveyance over the Zulueta property in favor of Jose. Unfortunately, when Jose presented the same deed for registration, the Register of Deeds required him to surrender the owners duplicate copy of TCT No. T-52227 covering the Zulueta property, which title was then in the possession of the petitioners. Despite demands, petitioners refused delivery of the title.1awphi1.nt Hence, Jose filed with the Regional Trial Court at Cebu City, Branch V, then sitting as a land registration court, a Petition for the Cancellation of TCT No. T-52227. In an Order dated January 22, 1988 6 , said court granted Joses petition thus:

WHEREFORE, the foregoing premises considered, defendant Mr. Jesus F. Concepcion, defendant in Civil Case No. R-13850, is hereby ordered to surrender and/or deliver to the Register of Deeds of the City of Cebu the owners copy of TCT No. 52227 covering Lot No. 204-BSWO-24914 [Zulueta property] within ten (10) days after this Order becomes final and executory.l^vvphi1.net SO ORDERED. There from, herein petitioners went to the Court of Appeals via an ordinary appeal in CA-G.R. CV No. 28665. As stated at the threshold hereof, the Court of Appeals, in the herein assailed decision dated November 27, 2000,7 dismissed the appeal for lack of merit. Petitioners are now with us via the present recourse, on their following submissions: I. THE DECISION OF THE HONORABLE COURT OF APPEALS IN CA G.R.-CV NO. 28665 AND SUBJECT HEREOF IS A TOTAL DEPARTURE FROM ESTABLISHED DOCTRINES, EXPRESS LEGAL PROVISIONS AND PRINCIPLES OF LAW; THUS SAID APPELLATE COURT, IN SUSTAINING THE FINAL ORDER OF THE TRIAL COURT, GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO A WANT, IF NOT TOTAL LACK, OF JURISDICTION; II. THE HONORABLE COURT OF APPEALS ALSO REVERSIBLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN IGNORING AND DEFYING THE OVERWHELMING EVIDENCE FOR PETITIONERS (OPPOSITORS-APPELLANTS THEREAT) WHICH SHOW THE GLARING VIOLATION OF SAID COURT IN ITS DECISION OVER THE BASIC RIGHTS OF HEREIN PETITIONERS. It is petitioners thesis that the cadastral court (RTC, Cebu City, Branch V), had no authority to order the surrender and/or delivery to the respondents of the owners copy of TCT No. T-52227 covering the Zulueta property, because the parcel of land subject thereof had been devised to them by their common ascendant, the late Concepcion Famador, as indicated in her will. The pivotal issue, then, is whether or not the Court of Appeals erred in dismissing petitioners appeal in CA-G.R. CV 28665, thereby effectively sustaining the cadastral courts order dated January 22, 1988.8 We resolve the issue in the affirmative. Before going any further, we find it necessary to speak herein on the jurisdiction of cadastral courts in the light of what transpired in this case prior to the issuance of the questioned order of January 22, 1988. The pleadings before us disclose that in the proceedings before the cadastral court, petitioners filed an opposition claiming that the action of Sheriff Gadrinab in levying the Zulueta property was with grave abuse of authority since said property is not within the scope of the dispositive portion of the decision dated August 10, 1978 of CFI-Cebu, Branch XIII, in Civil Case No. R-13850. In dismissing said opposition and in eventually ordering the surrender and/or delivery of the title covering the Zulueta property, the cadastral court explained in its same order of January 22, 1988: "The matters brought out by the oppositors in their written opposition are not within the province of this Court to resolve, acting as a Cadastral Court with special and limited jurisdiction. Oppositors

complaint on the way the decision in said civil case was executed must be brought before the Court which tried the civil case and which have already resolved the issue of ownership between the parties therein", a view evidently shared by the Court of Appeals in its impugned decision of November 27, 2000. In Junio vs. De Los Santos and Register of Deeds of Pangasinan ,9 we made clear the following: [d]octrinal jurisprudence holds that the Court of First Instance (now the Regional Trial Court), as a Land Registration Court, can hear cases otherwise litigable only in ordinary civil actions, since the Court of First Instance are at the same time, [c]ourts of general jurisdiction and could entertain and dispose of the validity or invalidity of respondents adverse claim, with a view to determining whether petitioner is entitled or not to the relief that he seeks. (Emphasis supplied) In Ligon vs. Court of Appeals,10 we even went further by saying: Under Sec. 2 of P.D. 1529, it is now provided that Courts of First Instance (now Regional Trial Courts) shall have exclusive jurisdiction over all applications for original registration of titles to lands, including improvements and interest therein and over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions. The above provision has eliminated the distinction between the general jurisdiction vested in the regional trial court and the limited jurisdiction conferred upon it by the former law when acting merely as a cadastral court. Aimed at avoiding multiplicity of suits the change has simplified registration proceedings by conferring upon the regional trial courts the authority to act not only on applications for original registration but also over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions. (Emphasis supplied) Clear it is from the foregoing that both the cadastral court and the Court of Appeals gravely erred in holding that the former is without jurisdiction to entertain and resolve the opposition thereat filed by the petitioners. Be that as it may, it is, to us, improper for the cadastral court to issue its order of January 22, 1988, directing the petitioners to surrender and/or deliver the title covering the Zulueta property. That order is void and definitely without force and effect. As it were, said order is premised on an earlier order issued on May 27, 1987 by the RTC-Cebu (former CFI-Cebu) Branch XIII in its Civil Case No. R-13850, which latter order is very much challenged by the herein petitioners. Accordingly, the propriety or validity of the cadastral courts order of January 22, 1988 is, in turn, dependent on the propriety or validity of the order dated May 27, 1987 of RTC-Cebu, Branch XIII, in Civil Case No. R-13850. It is undisputed that the August 10, 1978 decision of RTC-Cebu, Branch XIII, in the main case (Civil Case No. R-13850) has long become final and executory. In fact, a writ of execution as well as two (2) alias writs of execution have been previously issued by the same court. It was the non-satisfaction of these writs that prompted said court to issue its order dated May 27, 1987, directing Branch Sheriff Gadrinab to execute a deed of conveyance on the Zulueta property in favor of Jose Concepcion. By issuing its order of May 27, 1987, RTC-Cebu, Branch XIII, sought to amend its August 10, 1978 decision. We must emphasize, however, that there is nothing in the August 10, 1978 decision of said court which authorizes the surrender and/or delivery of the title covering the Zulueta property. It merely required the defendants therein to "contribute proportionately to the completion of the plaintiffs legitime." In fact, said court has previously denied a "Motion for Projected Partition and Execution of Judgment" filed before it by the respondents precisely because, according to it, to allow partition of the Zulueta property will "in effect amend or alter the decision (referring to its

earlier decision dated August 10, 1978) which has long become final and executory." The subsequent issuance of the order dated May 27, 1987 which amends the final and executory decision dated August 10, 1978 cannot be allowed. We have repeatedly held that a judgment that has become final and executory can no longer be amended or corrected except for clerical errors and mistakes. This rule holds true regardless of whether the modification is to be made by the magistrate who rendered the judgment or by an appellate tribunal which reviewed the same.11 Doubtless, then, the order dated May 27, 1987 of RTC-Cebu, Branch XIII, in Civil Case No. R-13850 is a nullity. And because a spring cannot rise higher than its source, it follows that the cadastal courts order of January 22, 1988 which merely seeks to implement the earlier void order dated May 27, 1987 in Civil Case No. R-13850 is infected with the same nullity. WHEREFORE, the instant petition is hereby GRANTED and the assailed decision dated November 27, 2000 of the Court of Appeals VACATED and SET ASIDE.

G.R. No. L-19615

December 24, 1964

IN THE MATTER OF THE APPLICATION FOR REGISTRATION OF LAND. LEONOR DE LOS ANGELES, FEDERICO DE LOS ANGELES, ET AL., applicants-appellants, vs. ISIDORO O. SANTOS, ANTONIO ASTUDILLO, ET AL., THE DIRECTOR OF LANDS and THE PROVINCE OF RIZAL, oppositorsappellees. Antonio G. Ibarra and H. I. Benito for other oppositors-appellees. Jose W. Diokno for applicants-appellants Office of the Solicitor General for oppositors-appellees Director of Lands and Province of Rizal. BENGZON, JP, J.: Squarely before this Court in this appeal is the important and fundamental question of whether a land registration court which has validly acquired jurisdiction over a parcel of land for registration of title thereto could be divested of said jurisdiction by a subsequent administrative act consisting in the issuance by the Director of Lands of a homestead patent covering the same parcel of land. The court a quo held in effect that it could be, as it dismissed the application to register title to the land in its order brought here on appeal. On November 21, 1959 an application for registration of title to 12 parcels of land in Ampid San Mateo Rizal was filed in the Court of First Instance of Rizal by Leonor de los Angeles and seven co-applicants. Among other things it alleged that "applicants are owners pro-indiviso and in fee simple of the aforesaid land." The required notices were given in which May 27, 1960 was set for the initial hearing. On March 3, 1960 the Director of Lands filed an opposition stating that the land "is a portion of the public domain". The Province of Rizal also interposed an opposition on May 24, 1960, asserting "the required 3.00 meters strips of public easement" on lots along Ampid River and a creek. At the initial hearing on May 27, 1960 an order of general default was issued except as against the Director of Lands, the Province of Rizal and eleven private oppositors who appeared therein. On July 10, 1960 the aforesaid private oppositors, Julio Hidalgo among them, filed their

written opposition claiming they "are the lawful owners of the parcels of land in question for having acquired homestead patents over said lots". On July 25, 1961 a "Report" was filed in court by the Land Registration Commissioner, stating: 1. That the parcel of land described as Lot 11 of plan Psu158857, applied for in the above-entitled land registration case, is a portion of that described on plan Psu-148997, previously patented on June 12, 1961 under Patent No. 95856 in the name of Julio Hidalgo; and 2. That Case No. N-2671, LRC Record No. N-18332, was set for hearing on May 27, 1960 but no decision has as yet been received by this Commissioner. WHEREFORE, it is respectfully recommended to this Honorable Court that Case No. N-2671, LRC Record No. N18332, be dismissed with respect to Lot 11 of plan Psu158857 only, giving due course, however, to the other lots in the application. Acting thereon, the court required applicants in its order of July 29, 1961, to show cause why their application should not be dismissed as to Lot 11 (10.6609 hectares). On August 15, 1961 applicants filed an "opposition to motion to dismiss". But on September 18, 1961 the court issued an order dismissing the application with respect to Lot 11 "without prejudice on the part of applicants to pursue the corresponding remedy in any ordinary action". After a motion for reconsideration was filed and denied, applicants appealed to this Court. As lone assignment of error it is alleged that "the lower, court grievously erred in dismissing the application for registration as regards Lot No. 11, over which a homestead patent was issued by the Director of Lands during the pendency of the registration proceeding". (Emphasis supplied.) To start with, it is well settled that the Director of Lands' jurisdiction, administrative supervision and executive control extend only over lands of the public domain and not to lands already of private ownership. (Susi vs. Razon, 48 Phil. 424; Vital vs. Anore 53 O.G. 3739; Republic vs. Heirs of Carle L-12485, July 31, 1959; Director of Lands vs. De Luna, L-1441, Nov. 23, 1960.) Accordingly, a homestead patent issued by him over land not of the public domain is a nullity, devoid of force and effect against the owner (Zarate vs. Director of Lands, 34 Phil. 416; Vital vs. Anore supra). Now, in the land registration proceedings applicants contended that as of November 21, 1959 the date they applied for registration they were already "owners pro-indiviso and in fee simple of the aforesaid land". As a result, if applicants were to successfully prove this averment, and thereby show their alleged registrable title to the land, it could only result in the finding that when Julio Hidalgo's homestead patent was issued over Lot 11 on June 12, 1961 said lot was no longer public. The land registration court, in that event, would have to order a decree of title issued in applicants' favor and declare the aforesaid homestead patent a nullity which vested no title in the patentee as against the real owners (Rodriguez vs. Director of Lands, 31 Phil. 273; Zarate vs. Director of Lands,supra; Lacaste vs. Director of Lands, 63 Phil. 654). Since the existence or non-existence of applicants' registrable title to Lot 11 is decisive of the validity or nullity of the homestead patent issued as aforestated on said lot the court a quo's jurisdiction in the land registration proceedings could not have been divested by the homestead patent's issuance. Proceedings for land registration are in rem whereas proceedings for acquisition of homestead patent are not (De los Reyes vs. Razon, 38 Phil. 480; Philippine National Bank vs. Ortiz Luis, 53 Phil. 649). A homestead patent, therefore, does not finally dispose of the public or private character of the land as far as courts upon proceedings in

rem are concerned (De los Reyes vs. Razon, supra). Applicants should thus be given opportunity to prove registrable title to Lot 11. WHEREFORE, we hereby set aside the orders appealed from and remand the case to the court a quo for further proceedings, without costs. So ordered.