SECONDDIVISION

[G.R.No.129471.April28,2000]

DEVELOPMENTBANKOFTHEPHILIPPINES,petitioner,vs.COURTOFAPPEALS
andCARLOSCAJES,respondents.
DECISION
MENDOZA,J.:Misact
Thisisapetitionforcertiorariseekingtoreversethedecision[1]andresolution[2]oftheCourtof
AppealsdatedAugust30,1996andApril23,1997,respectively,declaringprivaterespondentCarlos
Cajestheownerof19.4hectaresoflandembracedinTCTNo.10101andorderingthesegregation
andreconveyanceofsaidportiontohim.
Theantecedentfactsareasfollows:
Thelandindispute,consistingof19.4hectareslocatedinSanMiguel,ProvinceofBohol,was
originallyownedbyUlpianoMumar,whoseownershipsince1917wasevidencedbyTaxDeclaration
No.3840.[3]In1950,[4]MumarsoldthelandtoprivaterespondentwhowasissuedTaxDeclarationNo.
R1475thatsameyear.[5]ThetaxdeclarationwaslatersupersededbyTaxDeclarationNos.R799
issuedin1961[6]andD2247issuedin1974.[7]Privaterespondentoccupiedandcultivatedthesaid
land,[8]plantingcassavaandcamoteincertainportionsoftheland.[9]
In1969,unknowntoprivaterespondent,JoseAlvarezsucceededinobtainingtheregistrationofa
parceloflandwithanareaof1,512,468.00squaremeters,[10]inhisnameforwhichhewasissued
OCTNo.546onJune16,1969.[11]Theparceloflandincludedthe19.4hectaresoccupiedbyprivate
respondent.Alvarezneveroccupiednorintroducedimprovementsonsaidland.[12]
In1972,AlvarezsoldthelandtothespousesGaudencioandRosarioBeduyatowhomTCTNo.
10101wasissued.[13]Thatsameyear,thespousesBeduyaobtainedaloanfrompetitioner
DevelopmentBankofthePhilippinesforP526,000.00and,assecurity,mortgagedthelandcovered
byTCTNo.10101tothebank.[14]In1978,theSAADInvestmentCorp.,andtheSAADAgro
Industries,Inc.,representedbyGaudencioBeduya,andthespousesBeduyapersonallyexecuted
anothermortgageoverthelandinfavorofpetitionertosecurealoanofP1,430,000.00.[15]Sdjad
ThespousesBeduyalaterfailedtopaytheirloans,asaresultofwhich,themortgageontheproperty
wasforeclosed.[16]IntheresultingforeclosuresaleheldonJanuary31,1985,petitionerwasthe
highestbidder.[17]AsthespousesBeduyafailedtoredeemtheproperty,petitionerconsolidatedits
ownership.[18]
Itappearsthatprivaterespondenthadalsoappliedforaloanfrompetitionerin1978,offeringhis19.4
hectarepropertyunderTaxDeclarationNo.D2247assecurityfortheloan.Aspartoftheprocessing
oftheapplication,arepresentativeofpetitioner,PattonR.Olano,inspectedthelandandappraisedits
value.
Privaterespondentsloanapplicationwaslaterapprovedbypetitioner.[19]Howeverafterreleasingthe
amountoftheloantoprivaterespondent,petitionerfoundthatthelandmortgagedbyprivate
respondentwasincludedinthelandcoveredbyTCTNo.10101inthenameofthespousesBeduya.

Petitioner,therefore,cancelledtheloananddemandedimmediatepaymentoftheamount.[20]Private
respondentpaidtheloantopetitionerforwhichtheformerwasissuedaCancellationofMortgage,
datedMarch18,1981,releasingthepropertyinquestionfromencumbrance.[21]
SometimeinAprilof1986,morethanayearaftertheforeclosuresale,areappraisaloftheproperty
coveredbyTCTNo.10101wasconductedbypetitionersrepresentatives.Itwasthendiscoveredthat
privaterespondentwasoccupyingaportionofsaidland.Privaterespondentwasinformedthat
petitionerhadbecometheownerofthelandhewasoccupying,andhewasaskedtovacatethe
property.Asprivaterespondentrefusedtodoso,[22]petitionerfiledacomplaintforrecoveryof
possessionwithdamagesagainsthim.ThecasewasassignedtoBranch1oftheRegionalTrial
Court,TagbilaranCity,[23]whichaftertrial,renderedadecision,datedAugust22,1989,declaring
petitionerthelawfulowneroftheentirelandcoveredbyTCTNo.10101onthegroundthatthedecree
ofregistrationwasbindingupontheland.[24]Thedispositiveportionofthedecisionreads:
WHEREFORE,foregoingconsidered,thecourtrendersjudgment:
1.......DeclaringplaintiffbankDevelopmentBankofthePhilippinesthetrueandlegal
ownerofthelandinquestioncoveredbyTCTNo.10101farmofGaudencioBeduya
2.......DismissingdefendantscounterclaimSppedsc
3.......Orderingdefendanttovacatefromthelandinquestiontheportionofwhichhe
claimstobelongtohimforwithoutbasisinfactandlaw
4.......Orderingdefendant,hisagentsoranypersonrepresentinghimorthosewhomay
claimsubstantialrightsonthelandtovacatetherefrom,ceaseanddesistfrom
disturbing,molestingandinterferingplaintiffspossessionofthelandinquestion,and
fromcommittinganysuchactaswouldtendtomitigate,denyordepriveplaintiffofits
ownershipandpossessionoversaidland.
SOORDERED.
Onappeal,theCourtofAppealsreversedandgavejudgmentforprivaterespondent,declaringhim
theownerofthe19.4hectaresoflanderroneouslyincludedinTCTNo.10101.Thedispositiveportion
oftheappellatecourtsdecisionreads:
WHEREFORE,theappealeddecisionisherebyREVERSEDANDSETASIDE.Anew
decisionisherebyrendered:
1.Dismissingthecomplaint.
2.Declaringthedisputed19.4000hectaresoflandembracedinTCT10101as
exclusivelybelongingtodefendantappellant,orderingitssegregationfromplaintiff
appelleestitleanditsreconveyancetoappellant.
Nopronouncementastocosts.
SOORDERED.[25]
PetitionermovedforareconsiderationbutitsmotionwasdeniedinaresolutiondatedApril23,1997.
[26]
Hencethispetition.
Petitionercontendsthat:

I.......THEDECISIONOFTHERESPONDENTCOURTISNOTINACCORDWITHTHE
APPLICABLEPROVISIONSOFLAW(Sections38and46ofACT496)ANDTHE
APPLICABLEDECISIONSOFTHESUPREMECOURT,PARTICULARLYINTHE
CASEOFBENINVS.TUASON,57SCRA531.
II.......THERESPONDENTCOURTOVERLOOKEDTHEISSUESABOUTTHEDBP
BEINGANINNOCENTMORTGAGEEFORVALUEOFTHELANDINQUESTIONAND
OFHAVINGPURCHASEDLATERTHESAMEDURINGAPUBLICAUCTIONSALE.
Calrsc

III.THERESPONDENTCOURTSRULINGDECLARINGDBPINESTOPPELIS
ILLOGICAL.[27]
First.PetitionerinvokestherulingofthisCourtinBeninv.Tuason[28]insupportofitsclaimthatits
predecessorininterest,JoseAlvarez,becametheownerofthelandbyvirtueofthedecreeof
registrationissuedinhisname.InBenin,threesetsofplaintiffsfiledseparatecomplaintsagainst
MarianoSeveroTuasonandJ.M.Tuason&Co.,Inc.,prayingforthecancellationofOCTNo.735
coveringtwoparcelsoflandcalledtheSta.MesaEstate,orParcel1,withanareaof8,798,617.00
squaremeters,andtheDilimanEstate,orParcel2,withanareaof15,961,246.00squaremeters.
Theyaskedthattheybedeclaredtheownersandlawfulpossessorsofsaidlands.
Beninisdistinguishedfromthiscase.Inthefirstplace,Benininvolvedvasttractsoflandswhichhad
alreadybeensubdividedandboughtbyinnocentpurchasersforvalueandingoodfaithatthetimethe
claimantsobtainedregistration.Secondly,whentheclaimantsancestorsoccupiedthelandsin
questionanddeclaredthemfortaxpurposesin1944,thelandswerealreadycoveredbythetax
declarationsinthenameofJ.M.Tuason&Co.,Inc.In1914,OCTNo.735wasissuedinthenameof
Tuasonsothat,fromthattimeon,nopossessioncoulddefeatthetitleoftheregisteredownersofthe
land.Thirdly,thevalidityofOCTNo.735hadalreadybeenrecognizedbythisCourtinseveral
cases[29]and,asaresultthereof,thetransfercertificatesoftitleacquiredbytheinnocentpurchasers
forvaluewerealsodeclaredvalid.Itwasheldthatneithercouldtheclaimantsfileanactiontoannul
thesetitlesfornotonlyhadtheseactionsprescribed,butthefactwasthattheclaimantswerealso
barredfromdoingsobylaches,havingfiledthecomplaintonlyin1955,or41yearsaftertheissuance
ofOCTNo.735toJ.M.Tuason&Co.,Inc.Thus,itwasnotsolelythedecreeofregistrationwhichwas
consideredinresolvingtheBenincase.Whatwasconsidereddecisivewasthevalidtitleorrightof
ownershipofJ.M.Tuason&Co.,Inc.andthatoftheotherinnocentpurchasersforvalueandingood
faithcomparedtothefailureoftheclaimantstoshowtheirrighttoownorpossessthequestioned
properties.Sccalr
Petitionermaintainsthatthepossessionbyprivaterespondentandhispredecessorininterestofthe
19.4hectaresoflandformorethan30yearscannotovercomethedecreeofregistrationissuedin
favorofitspredecessorininterestJoseAlvarez.Petitionerquotesthefollowingstatementinthe
Benincase:
Itfollowsalsothattheallegationofprescriptivetitleinfavorofplaintiffsdoesnotsuffice
toestablishacauseofaction.Ifsuchprescriptionwascompletedbeforetheregistration
ofthelandinfavoroftheTuasons,theresultingprescriptivetitlewascutoffand
extinguishedbythedecreeofregistration.If,onthecontrary,theprescriptionwaseither
begunorcompletedafterthedecreeofregistration,itconferrednotitlebecause,by
expressprovisionoflaw,prescriptioncannotoperateagainsttheregisteredowner(Act
496).[30]
Petitionerwouldthusinsistthat,byvirtueofthedecreeofregistration,JoseAlvarezandthose
claimingtitlefromhim(i.e.,thespousesBeduya)acquiredownershipofthe19.4hectaresofland,
despitethefactthattheyneitherpossessednoroccupiedtheselands.

Thisviewismistaken.Aconsiderationofthecasesshowsthatadecreeofregistrationcutoffor
extinguishedarightacquiredbyapersonwhensuchrightreferstoalienorencumbranceontheland
nottotherightofownershipthereofwhichwasnotannotatedonthecertificateoftitleissuedthereon.
Thus,ActNo.496provides:
Sec.39.Everypersonreceivingacertificateoftitleinpursuanceofadecreeof
registration,andeverysubsequentpurchaserofregisteredlandwhotakesacertificate
oftitleforvalueingoodfaithshallholdthesamefreeofallencumbrancesexceptthose
notedonsaidcertificate,andanyofthefollowingencumbranceswhichmaybe
subsisting,namely:Calrspped
First.Liens,claims,orrightsarisingorexistingunderthelawsofConstitutionofthe
UnitedStatesorofthePhilippineIslandswhichthestatutesofthePhilippineIslands
cannotrequiretoappearofrecordintheRegistry.
Second.Taxeswithintwoyearsafterthesamebecamedueandpayable.
Third.Anypublichighway,way,privatewayestablishedbylaw,oranyGovernment
irrigationcanalorlateralthereof,wherethecertificateoftitledoesnotstatethatthe
boundariesofsuchhighway,way,orirrigationcanalorlateralthereof,havebeen
determined.
Butifthereareeasementsorotherrightsappurtenanttoaparcelofregisteredland
whichforanyreasonhavefailedtoberegistered,sucheasementsorrightsshallremain
soappurtenantnotwithstandingsuchfailure,andshallbeheldtopasswiththelanduntil
cutofforextinguishedbytheregistrationoftheservientestate,orinanyothermanner.
Hence,inCidv.Javier,[31]itwashelds:
...Consequently,evenconcedingarguendothatsuchaneasementhasbeenacquired,
ithadbeencutoffandextinguishedbytheregistrationoftheservientestateunderthe
Torrenssystemwithouttheeasementbeingannotatedonthecorrespondingcertificate
oftitle,pursuanttoSection39oftheLandRegistrationAct.
ThisprinciplewasreiteratedinPuruggananv.Paredes[32]whichalsoinvolvedaneasementoflight
andviewthatwasnotannotatedonthecertificateoftitleoftheservientestate.Scedp
Buttomakethisprincipleapplicabletoasituationwhereintitleacquiredbyapersonthrough
acquisitiveprescriptionwouldbeconsideredcutoffandextinguishedbyadecreeofregistrationwould
runcountertoestablishedjurisprudencebeforeandaftertherulinginBenin.Indeed,registrationhas
neverbeenamodeofacquiringownershipoverimmovableproperty.Asearlyas1911,inthecaseof
CityofManilav.Lack,[33]theCourtalreadyruledonthepurposeofregistrationoflands,viz.:
TheCourtofLandRegistrationwascreatedforasinglepurpose.TheActisentitled"An
ActtoprovidefortheadjudicationandregistrationoftitlestolandsinthePhilippine
Islands."ThesolepurposeoftheLegislatureinitscreationwastobringthelandtitlesof
thePhilippineIslandsunderonecomprehensiveandharmonioussystem,thecardinal
featuresofwhichareindefeasibilityoftitleandtheinterventionoftheStateasa
prerequisitetothecreationandtransferoftitlesandinterest,withtheresultantincrease
intheuseoflandasabusinessassetbyreasonofthegreatercertaintyandsecurityof
title.Itdoesnotcreateatitlenorvestone.Itsimplyconfirmsatitlealreadycreatedand
alreadyvested,renderingitforeverindefeasible...
Again,inthecaseofAngelesv.Samia[34]wherelandwaserroneouslyregisteredinfavorofpersons
whoneitherpossessednoroccupiedthesame,totheprejudiceoftheactualoccupant,theCourt

held:
...ThepurposeoftheLandRegistrationAct,asthiscourthashadoccasiontosostate
morethanonce,isnottocreateorvesttitle,buttoconfirmandregistertitlealready
createdandalreadyvested,andofcourse,saidoriginalcertificateoftitleNo.8995could
nothavevestedinthedefendantmoretitlethanwhatwasrightfullydueherandher
coowners.Itappearingthatsaidcertificategrantedhermuchmorethansheexpected,
naturallytotheprejudiceofanother,itisbutjustthattheerror,whichgaverisetosaid
anomaly,becorrected(CityofManilavs.Lack,19Phil.,324).Thedefendantandher
coownersknewor,atleast,cametoknowthatitwasthrougherrorthattheoriginal
certificateoftitleinquestionwasissuedbythecourtwhichheardcadastralcaseNo.11
ofBacolor,notonlyinorpriortoMarch,1933,butfromthetimesaidcertificatewas
issuedintheirfavor,thatis,fromDecember15,1921.Thisisevidencedbythefactthat,
eversince,theyremainedpassivewithoutevenattemptingtomaketheleastshowingof
ownershipoverthelandinquestionuntilafterthelapseofmorethanelevenyears.The
LandRegistrationActaswellastheCadastralActprotectsonlytheholdersofatitlein
goodfaithanddoesnotpermititsprovisionstobeusedasashieldforthecommission
offraud,orthatoneshouldenrichhimselfattheexpenseofanother(Gustilovs.
Maravilla,48Phil.,442Angelovs.DirectorofLands,49Phil.,838).Theabovestated
Actsdonotgiveanybody,whoresortstotheprovisionsthereof,abettertitlethanhe
reallyandlawfullyhas.Ifhehappenedtoobtainitbymistakeortosecure,tothe
prejudiceofhisneighbor,morelandthanhereallyowns,withorwithoutbadfaithonhis
part,thecertificateoftitle,whichmayhavebeenissuedtohimunderthecircumstances,
mayandshouldbecancelledorcorrected(LegardaandPrietovs.Saleeby,31Phil.,
590).Thisispermittedbysection112ofActNo.496,whichisapplicabletothe
CadastralActbecauseitissoprovidedexpresslybytheprovisionsofsection11ofthe
latterAct.Itcannotbeotherwisebecause,asstatedinthecaseofDomingovs.Santos,
Ongsiako,LimyCia.(55Phil.,361),errorsintheplansoflandssoughttoberegistered
intheregistryandreproducedinthecertificateoftitleissuedlater,donotannulthe
decreeofregistrationonthegroundthatitisnottheplanbutthelanditselfwhichis
registeredintheregistry.Inotherwords,iftheplanofanapplicantforregistrationor
claimantinacadastralcaseallegesthatthelandreferredtoinsaidplanis100or1,000
hectares,andthelandwhichhereallyownsanddesirestoregisterintheregistryisonly
80ares,hecannotclaimtobetheowneroftheexistingdifferenceifafterwardsheis
issuedacertificateoftitlegrantinghimsaidareaof100or1,000hectares.[35]Edpsc
Theprinciplelaiddowninthis1938caseremainstheprevailingdoctrine,itslatestapplicationbeingin
thecaseofReyesv.CourtofAppeals[36]whereinweruledthatthefactthatapartywasabletosecure
atitleinhisfavordidnotoperatetovestownershipuponheroftheproperty.
Inthepresentcase,privaterespondenthasbeeninactual,open,peacefulandcontinuous
possessionofthepropertysince1950.ThisfactwascorroboratedbythetestimonyofEleuterio
CambangaywhopersonallyknewthatUlpianoMumartransferredthelandcoveredbyTax
DeclarationNo.3840[37]infavorofprivaterespondentin1950.[38]Privaterespondentsclaimbasedon
actualoccupationofthelandisbolsteredbyTaxDeclarationNos.R1475,R799andD2247[39]
whichwereissuedinhisnamein1950,1961and1974,respectively.Togetherwithhisactual
possessionoftheland,thesetaxdeclarationsconstitutestrongevidenceofownershipoftheland
occupiedbyhim.AswesaidinthecaseofRepublicvs.CourtofAppeals:[40]
Althoughtaxdeclarationsorrealtytaxpaymentsofpropertyarenotconclusiveevidence
ofownership,nevertheless,theyaregoodindiciaofpossessionintheconceptofowner
fornooneinhisrightmindwouldbepayingtaxesforapropertythatisnotinhisactual
oratleastconstructivepossession.Theyconstituteatleastproofthattheholderhasa
claimoftitleovertheproperty.Thevoluntarydeclarationofapieceofpropertyfor

taxationpurposesmanifestsnotonlyonessincereandhonestdesiretoobtaintitletothe
propertyandannounceshisadverseclaimagainsttheStateandallotherinterested
parties,butalsotheintentiontocontributeneededrevenuestotheGovernment.Such
anactstrengthensonesbonafideclaimofacquisitionofownership.
Moreimportantly,itwasestablishedthatprivaterespondent,havingbeeninpossessionoftheland
since1950,wastheownerofthepropertywhenitwasregisteredbyJoseAlvarezin1969,his
possessiontackedtothatofhispredecessorininterest,UlpianoMumar,whichdatesbackto1917.[41]
Clearly,morethan30yearshadelapsedbeforeadecreeofregistrationwasissuedinfavorofJose
Alvarez.Thisuninterruptedadversepossessionofthelandformorethan30yearscouldonlyripen
intoownershipofthelandthroughacquisitiveprescriptionwhichisamodeofacquiringownershipand
otherrealrightsoverimmovableproperty.Prescriptionrequirespublic,peaceful,uninterruptedand
adversepossessionofthepropertyintheconceptofanownerforten(10)years,incasethe
possessionisingoodfaithandwithajusttitle.Suchprescriptioniscalledordinaryprescription,as
distinguishedfromextraordinaryprescriptionwhichrequirespossessionfor30yearsincase
possessioniswithoutjusttitleorisnotingoodfaith.[42]Edp
Incontrasttoprivaterespondent,ithasbeenshownthatneitherJoseAlvareznorthespouses
Beduyawereatanytimeinpossessionofthepropertyinquestion.Infact,despiteknowledgeby
GaudencioBeduyathatprivaterespondentoccupiedthis19.4hectaresincludedintheareacovered
byTCTNo.10101,[43]heneverinstitutedanyactiontoejectorrecoverpossessionfromthelatter.
Hence,itcanbeconcludedthatneitherJoseAlvareznorthespousesBeduyaeverexercisedany
rightofownershipovertheland.Thefactofregistrationintheirfavornevervestedinthemthe
ownershipofthelandindispute."IfapersonobtainsatitleundertheTorrenssystem,whichincludes
bymistakeoroversightlandwhichcannolongerberegisteredunderthesystem,hedoesnot,by
virtueofthesaidcertificatealone,becometheownerofthelandsillegallyincluded."[44]
Consideringthecircumstancespertaininginthiscase,therefore,weholdthatownershipofthe19.4
hectaresoflandpresentlyoccupiedbyprivaterespondentwasalreadyvestedinhimandthatits
inclusioninOCTNo.546and,subsequently,inTCTNo.10101,waserroneous.Accordingly,theland
inquestionmustbereconveyedinfavorofprivaterespondent,thetrueandactualownerthereof,
reconveyancebeingclearlytheproperremedyinthiscase.
"Thetrueownermaybringanactiontohavetheownershiportitletothelandjudicially
settledandtheCourtintheexerciseofitsequityjurisdiction,withoutorderingthe
cancellationoftheTorrenstitleissueduponthepatent,maydirectthedefendants,the
registeredownertoreconveytheparceloflandtotheplaintiffwhohasbeenfoundtobe
thetrueownerthereof."(Vitalvs.Amore,90Phil.955)"Thereconveyanceisjustand
properinordertoterminatetheintolerableanomalythatthepatenteesshouldhavea
torrenstitleforthelandwhichtheyandtheirpredecessorsneverpossessedwhichhas
beenpossessedbyNovointheconceptofowner."(Bustargav.Novo,129SCRA125)
[45]

Second.Generally,anactionforreconveyancebasedonanimpliedorconstructivetrust,suchasthe
instantcase,prescribesin10yearsfromthedateofissuanceofdecreeofregistration.[46]However,
thisruledoesnotapplywhentheplaintiffisinactualpossessionoftheland.Thus,ithasbeenheld:
Misedp

...[A]nactionforreconveyanceofaparceloflandbasedonimpliedorconstructive
trustprescribesintenyears,thepointofreferencebeingthedateofregistrationofthe
deedorthedateoftheissuanceofthecertificateoftitleovertheproperty,butthisrule
appliesonlywhentheplaintifforthepersonenforcingthetrustisnotinpossessionof
theproperty,sinceifapersonclaimingtobetheownerthereofisinactualpossessionof
theproperty,asthedefendantsareintheinstantcase,therighttoseekreconveyance,

whichineffectseekstoquiettitletotheproperty,doesnotprescribe.Thereasonforthis
isthatonewhoisinactualpossessionofapieceoflandclaimingtobetheowner
thereofmaywaituntilhispossessionisdisturbedorhistitleisattackedbeforetaking
stepstovindicatehisright,thereasonfortherulebeing,thathisundisturbedpossession
giveshimacontinuingrighttoseektheaidofacourtofequitytoascertainand
determinethenatureoftheadverseclaimofathirdpartyanditseffectonhisowntitle,
whichrightcanbeclaimedonlybyonewhoisinpossession.[47]
Havingbeenthesoleoccupantofthelandinquestion,privaterespondentmayseekreconveyanceof
hispropertydespitethelapseofmorethan10years.
NoristhereanyobstacletothedeterminationofthevalidityofTCTNo.10101.Itistruethatthe
indefeasibilityoftorrenstitlescannotbecollaterallyattacked.Intheinstantcase,theoriginal
complaintisforrecoveryofpossessionfiledbypetitioneragainstprivaterespondent,notanoriginal
actionfiledbythelattertoquestionthevalidityofTCTNo.10101onwhichpetitionerbasesitsright.
Toruleontheissueofvalidityinacaseforrecoveryofpossessionistantamounttoacollateralattack.
However,itshouldnotbeoverlookedthatprivaterespondentfiledacounterclaimagainstpetitioner,
claimingownershipoverthelandandseekingdamages.Hence,wecouldruleonthequestionofthe
validityofTCTNo.10101forthecounterclaimcanbeconsideredadirectattackonthesame."A
counterclaimisconsideredacomplaint,onlythistime,itistheoriginaldefendantwhobecomesthe
plaintiff....Itstandsonthesamefootingandistobetestedbythesamerulesasifitwerean
independentaction."[48]Inananalogouscase,[49]weruledonthevalidityofacertificateoftitledespite
thefactthattheoriginalactioninstitutedbeforethelowercourtwasacaseforrecoveryofpossession.
TheCourtreasonedthatsinceallthefactsofthecasearebeforeit,todirectthepartytoinstitute
cancellationproceedingswouldbeneedlesslycircuitousandwouldunnecessarilydelaythe
terminationofthecontroversywhichhasalreadydraggedonfor20years.
Third.Petitionernonethelesscontendsthatanactionforreconveyancedoesnotlieagainstit,
becauseitisaninnocentpurchaserforvalueintheforeclosuresaleheldin1985.
Thiscontentionhasnomerit.Sec.38ofActNo.496,theLandRegistrationAct,provides:Misoedp
Ifthecourtafterhearingfindsthattheapplicantoradverseclaimanthastitleasstatedin
hisapplicationoradverseclaimandproperforregistration,adecreeofconfirmationand
registrationshallbeentered.Everydecreeofregistrationshallbindtheland,andquiet
titlethereto,subjectonlytotheexceptionsstatedinthefollowingsection.Itshallbe
conclusiveuponandagainstallpersons,includingtheInsularGovernmentandallthe
branchesthereof,whethermentionedbynameintheapplication,notice,orcitation,or
includedinthegeneraldescription"Toallwhomitmayconcern."Suchdecreeshallnot
beopenedbyreasonoftheabsence,infancy,orotherdisabilityofanypersonaffected
thereby,norbyanyproceedinginanycourtforreversingjudgmentsordecreessubject,
however,totherightofanypersondeprivedoflandorofanyestateorinteresttherein
bydecreeofregistrationobtainedbyfraudtofileinthecompetentCourtofFirstInstance
apetitionforreviewwithinoneyearafterentryofthedecree,providednoinnocent
purchaserforvaluehasacquiredaninterest.Upontheexpirationofsaidtermofone
year,everydecreeorcertificateoftitleissuedinaccordancewiththissectionshallbe
incontrovertible.Ifthereisanysuchpurchaser,thedecreeofregistrationshallnotbe
opened,butshallremaininfullforceandeffectforever,subjectonlytotherightof
appealhereinbeforeprovided:Provided,however,Thatnodecreeorcertificateoftitle
issuedtopersonsnotpartiestotheappealshallbecancelledorannulled.Butany
personaggrievedbysuchdecreeinanycasemaypursuehisremedybyactionfor
damagesagainsttheapplicantoranyotherpersonforfraudinprocuringthedecree.
Wheneverthephrase"innocentpurchaserforvalue"oranequivalentphraseoccursin
thisAct,itshallbedeemedtoincludeaninnocentlessee,mortgagee,orother

encumbrancerforvalue.(AsamendedbySec.3,Act3621andSec.1,ActNo.3630.)
Edpmis

Succinctlyput,38providesthatacertificateoftitleisconclusiveandbindinguponthewholeworld.
Consequently,abuyerneednotlookbehindthecertificateoftitleinordertodeterminewhoisthe
actualowneroftheland.However,thisissubjecttotherightofapersondeprivedoflandthrough
fraudtobringanactionforreconveyance,providedthatitdoesnotprejudicetherightsofaninnocent
purchaserforvalueandingoodfaith."Itisaconditionsinequanonforanactionforreconveyanceto
prosperthatthepropertyshouldnothavepassedtothehandsofaninnocentpurchaserforvalue."[50]
Thesameruleappliestomortgagees,likepetitioner.Thus,weheld:
Wherethecertificateoftitleisinthenameofthemortgagorwhenthelandismortgaged,
theinnocentmortgageeforvaluehastherighttorelyonwhatappearsonthecertificate
oftitle.Intheabsenceofanythingtoexcitesuspicion,saidmortgageeisunderno
obligationtolookbeyondthecertificateandinvestigatethetitleofthemortgagor
appearingonthefaceofsaidcertificate.AlthoughArticle2085oftheCivilCode
providesthatabsoluteownershipofthemortgagedpropertybythemortgagoris
essential,thesubsequentdeclarationofatitleasnullandvoidisnotagroundfor
nullifyingthemortgagerightofamortgageeingoodfaith.[51]
Theevidencebeforeus,however,indicatesthatpetitionerisnotamortgageeingoodfaith.Tobe
sure,aninnocentmortgageeisnotexpectedtoconductanexhaustiveinvestigationonthehistoryof
themortgagorstitle.Nonetheless,especiallyinthecaseofabankinginstitution,amortgageemust
exerciseduediligencebeforeenteringintosaidcontract.Judicialnoticeistakenofthestandard
practiceforbanks,beforeapprovingaloan,tosendrepresentativestothepremisesoftheland
offeredascollateralandtoinvestigatewhoaretherealownersthereof.Banks,theirbusinessbeing
impressedwithpublicinterest,areexpectedtoexercisemorecareandprudencethanprivate
individualsintheirdealings,eventhoseinvolvingregisteredlands.[52]Jjsc
Inthiscase,petitionersrepresentative,PattonR.Olano,admittedthathecametoknowofthe
propertyforthefirsttimein1979whenheinspectedittodeterminewhethertheportionoccupiedby
privaterespondentandmortgagedbythelattertopetitionerwasincludedinTCTNo.10101.This
meansthatwhenthelandwasmortgagedbythespousesBeduyain1972,noinvestigationhadbeen
madebypetitioner.Itisclear,therefore,thatpetitionerfailedtoexerciseduecareanddiligencein
establishingtheconditionofthelandasregardsitsactualownersandpossessorsbeforeitentered
intothemortgagecontractin1972withtheBeduyas.Haditdoneso,itwouldnothavefailedto
discoverthatprivaterespondentwasoccupyingthedisputedportionof19.4hectares.Forthisreason,
petitionercannotbeconsideredaninnocentpurchaserforvaluewhenitboughtthelandcoveredby
TCTNo.10101in1985attheforeclosuresale.
Indeed,twocircumstancesnegatepetitionersclaimthatitwasaninnocentpurchaserforvaluewhen
itboughtthelandinquestion,includingtheportionoccupiedbyprivaterespondent:(1)petitionerwas
alreadyinformedbyGaudencioBeduyathatprivaterespondentoccupiedaportionoftheproperty
coveredbyTCTNo.10101and(2)petitionersrepresentativeconductedaninvestigationofthe
propertyin1979toascertainwhetherthelandmortgagedbyprivaterespondentwasincludedinTCT
No.10101.Inotherwords,petitionerwasalreadyawarethatapersonotherthantheregisteredowner
wasinactualpossessionofthelandwhenitboughtthesameattheforeclosuresale.Apersonwho
deliberatelyignoresasignificantfactwhichwouldcreatesuspicioninanotherwisereasonablemanis
notaninnocentpurchaserforvalue."Itisawellsettledrulethatapurchasercannotclosehiseyesto
factswhichshouldputareasonablemanuponhisguard,andthenclaimthatheactedingoodfaith
underthebeliefthattherewasnodefectinthetitleofthevendor."[53]
Petitionerdeliberatelydisregardedboththefactthatprivaterespondentalreadyoccupiedtheproperty
andthathewasclaimingownershipoverthesame.Itcannotfeignignoranceofprivaterespondents

claimtothelandsincethelattermortgagedthesamelandtopetitionerassecurityfortheloanhe
contractedin1978onthestrengthofthetaxdeclarationsissuedunderhisname.Insteadofinquiring
intoprivaterespondentsoccupationovertheland,petitionersimplyproceededwiththeforeclosure
sale,pretendingthatnodoubtssurroundtheownershipofthelandcoveredbyTCTNo.10101.
Consideringthesecircumstances,petitionercannotbedeemedaninnocentmortgagee/purchaserfor
value.Asweruled:Scjj
"Thefailureofappelleestotaketheordinaryprecautionswhichaprudentmanwould
havetakenunderthecircumstances,speciallyinbuyingapieceoflandintheactual,
visibleandpublicpossessionofanotherperson,otherthanthevendor,constitutesgross
negligenceamountingtobadfaith.
Inthisconnection,ithasbeenheldthatwhere,asinthiscase,thelandsoldisinthe
possessionofapersonotherthanthevendor,thepurchaserisrequiredtogobeyond
thecertificatesoftitleandma[k]einquiriesconcerningtherightsoftheactualpossessor.
(Citationsomitted.)
....
Onewhopurchasesrealpropertywhichisintheactualpossessionofanothershould,at
least,makesomeinquiryconcerningtherightofthoseinpossession.Theactual
possessionbyotherthanthevendorshould,atleastputthepurchaseruponinquiry.He
canscarcely,intheabsenceofsuchinquiry,beregardedasabonafidepurchaseras
againstsuchpossessors."[54]
Fourth.Fromtheforegoing,wefindthattheresolutionoftheissueofestoppelwillnotaffectthe
outcomeofthiscase.Petitionerclaimsthatthefactthatitapprovedaloaninfavorofprivate
respondentandexecutedamortgagecontractcoveringthe19.4hectarescoveredbytaxdeclarations
issuedunderprivaterespondentsnamedoesnotmeanthatitisestoppedfromquestioningthelatters
title.Petitioneraccusesprivaterespondentofhavingmademisrepresentationswhichledittobelieve
inhisvalidtitleandownership.
Theclaimhasnobasis.Privaterespondentmadenomisrepresentationwithregardtotheland
occupiedbyhimasheisactuallytherealownerthereof.Moreover,whenprivaterespondententered
intoamortgagecontractwithpetitioner,hisclaimofownershipwassupportednotonlybythetax
declarationsbutalsobyacertificationoftheClerkofCourtoftheCourtofFirstInstanceofBoholthat
nocivil,landregistrationorcadastralcasehasbeenfiledorinstitutedbeforethecourtaffectingthe
validityofTaxDeclarationNo.D2247coveringthelandlocatedinBugang,SanMiguel,Boholand
declaredinthenameofCarlosCajes.[55]Thesedocumentswererelieduponbyprivaterespondentin
supportofhisclaimofownership.Wecannotconsiderthesubmissionofthesedocumentsas
misrepresentationsbyprivaterespondentastotheactualownershipoftheland.Rather,private
respondentbelievedingoodfaithandwithgoodreasonthathewastheownerofthe19.4hectares
occupiedbyhim.Sjcj
Astothequestionofestoppel,wedonotfindpetitionertobeestoppedfromquestioningprivate
respondentstitle."Estoppelinpaisariseswhenone,byhisacts,representationsoradmission,orby
hisownsilencewhenheoughttospeakout,intentionallyorthroughculpablenegligence,induces
anothertobelievecertainfactstoexistandsuchotherrightfullyreliesandactsonsuchbelief,sothat
hewillbeprejudicediftheformerispermittedtodenytheexistenceofsuchfacts."[56]Inthecaseat
bar,uponlearningthatthelandoccupiedbyprivaterespondentwasalsocoveredbyTCTNo.10101,
petitionerimmediatelydemandedfullpaymentoftheloanandthereaftercancelledthemortgage
contract,afactthatisadmittedbyprivaterespondenthimself.[57]Indeed,nothinginrecordindicates
thatpetitionerimpliedlyacquiescedtothevalidityofprivaterespondentstitlewhenitfoundoutthat
thelatterwasoccupyingaportionofthelandcoveredbyTCTNo.10101.

However,forreasonsaforestated,weupholdprivaterespondentsownershipof19.4hectares
occupiedbyhim.Asanecessaryconsequencethereof,suchportionoflandincludedinTCTNo.
10101mustbesegregatedandreconveyedinhisfavor.
WHEREFORE,thedecisionoftheCourtofAppealsisAFFIRMEDintoto.
SOORDERED.Supreme
Bellosillo,(Chairman),Quisumbing,Buena,andDeLeon,Jr.,JJ.,concur.

[1] PerJusticeRubenT.ReyesandconcurredinbyJusticesFidelP.Purisima(nowAssociateJusticeoftheSupremeCourt)and

ConradoM.Vasquez,Jr.
[2] PerJusticeRubenT.ReyesandconcurredinbyJusticesRomeoA.BrawnerandConradoM.Vasquez,Jr.
[3] Exh.4.
[4] TSN,p.8,Jan.19,1989.
[5] Exh.4.
[6] Exh.2.
[7] Exh.3.
[8] TSN,p.7,April6,1989.
[9] Exh.C.
[10] TSN,p.28,Oct.7,1988.
[11] TSN,p.5,April6,1989Exh.A.
[12] TSN,p.6,April6,1989.
[13] Exh.A.
[14] Exh.A2.
[15] Exh.A3.
[16] TSN,p.6,Oct.7,1988.
[17] Exh.B.
[18] TSN,p.7,Oct.7,1988.
[19] Id.,pp.911.
[20] BrieffortheAppellant,p.3CARollo,p.22.
[21] Exh.5.
[22] TSN,pp.1718,Oct.7,1988.
[23] Records,pp.13.
[24] Decision,pp.23Records,pp.6970.
[25] CADecision,p.11Rollo,p.51.
[26] Rollo,p.59.
[27] Id.,p.8.
[28] 57SCRA531(1974)
[29] BankofthePhilippineIslandsv.Acua,59Phil.183(1933)Alcantarav.Tuason,92Phil.796(1953)Santiagov.J.M.Tuason&
Co.,Inc.,110Phil.16(1960)
[30] Beninv.Tuason,supraat597,citingSantiagov.J.M.Tuason&Co.,Inc,supra.
[31] 108Phil.850,853(1960).(Emphasisadded)
[32] 161Phil.91(1976)
[33] 19Phil.324,328(1911)
[34] 66Phil.444(1938)
[35] Supraat448450.
[36] G.R.No.127608,Sept.30,1999.SeealsoSantiagov.CourtofAppeals,278SCRA(1997)
[37] Exh.4.
[38] TSN,pp.2526,January19,1999.
[39] Exh.4Exh.2Exh.3.
[40] 328Phil.238,248(1996)
[41] Exh.4.

[42] Gesmundov.CourtofAppeals,G.R.No.119870,Dec.23,1999.
[43] TSN,p.9,Oct.7,1988.
[44] Avilav.Tapucar,201SCRA148,155(1991)
[45] Linazav.IntermediateAppellateCourt,182SCRA855,860861(1990)
[46] Ramosv.CourtofAppeals,302SCRA589(1999)
[47] Vda.DeCabrerav.CourtofAppeals,335SCRA19,32(1997)HeirsofJoseOlvigav.CourtofAppeals,227SCRA330(1993)
[48] A.FranciscoRealtyandDevelopmentCorp.v.CourtofAppeals,298SCRA349,358(1998)
[49] Mendozav.CourtofAppeals,158SCRA508(1988)
[50] Lucenav.CourtofAppeals,G.R.No.L77468,Aug.25,1999.
[51] RuralBankofSariaya,Inc.v.Yacon,175SCRA62(1989)
[52] CaviteDevelopmentBankv.Lim,G.R.No.13169,Feb.1,2000citingTomasv.Tomas,98SCRA280(1980)
[53] Lucenav.CourtofAppeals,supracitingSantiagov.CourtofAppeals,247SCRA336(1995)
[54] Ibid.
[55] Exh.8.
[56] IbaanRuralBank,Inc.v.CourtofAppeals,G.R.No.123817,Dec.17,1999.
[57] BrieffortheAppellant,p.3CARollo,p.22.