G.R. No.

78903 February 28, 1990

SPS. SEGUNDO DALION AND EPIFANIA SABESAJE-DALION, petitioners,

vs.
THE HONORABLE COURT OF APPEALS AND RUPERTO SABESAJE,
JR., respondents.

Francisco A. Puray, Sr. for petitioners.

Gabriel N. Duazo for private respondent.

MEDIALDEA, J.:

This is a petition to annul and set aside the decision of the Court of Appeals rendered on
May 26, 1987, upholding the validity of the sale of a parcel of land by petitioner Segundo
Dalion (hereafter, "Dalion") in favor of private respondent Ruperto Sabesaje, Jr.
(hereafter, "Sabesaje"), described thus:

A parcel of land located at Panyawan, Sogod, Southern Leyte, declared in

the name of Segundo Dalion, under Tax Declaration No. 11148, with an
area of 8947 hectares, assessed at P 180.00, and bounded on the North,
by Sergio Destriza and Titon Veloso, East, by Feliciano Destriza, by
Barbara Bonesa (sic); and West, by Catalino Espina. (pp. 36-37, Rollo)

1
The decision affirms in toto the ruling of the trial court issued on January 17, 1984,
the dispositive portion of which provides as follows:

WHEREFORE, IN VIEW OF THE FOREGOING, the Court hereby

renders judgment.

(a) Ordering the defendants to deliver to the plaintiff the parcel of land
subject of this case, declared in the name of Segundo Dalion previously
under Tax Declaration No. 11148 and lately under Tax Declaration No.
2297 (1974) and to execute the corresponding formal deed of
conveyance in a public document in favor of the plaintiff of the said
property subject of this case, otherwise, should defendants for any
reason fail to do so, the deed shall be executed in their behalf by the
Provincial Sheriff or his Deputy;
 (b) Ordering the defendants to pay plaintiff the amount of P2,000.00 as
attorney's fees and P 500.00 as litigation expenses, and to pay the
costs; and

(c) Dismissing the counter-claim. (p. 38, Rollo)

The facts of the case are as follows:

On May 28, 1973, Sabesaje sued to recover ownership of a parcel of land, based on a
private document of absolute sale, dated July 1, 1965 (Exhibit "A"), allegedly executed
by Dalion, who, however denied the fact of sale, contending that the document sued upon
is fictitious, his signature thereon, a forgery, and that subject land is conjugal property,
which he and his wife acquired in 1960 from Saturnina Sabesaje as evidenced by the
"Escritura de Venta Absoluta" (Exhibit "B"). The spouses denied claims of Sabesaje that
after executing a deed of sale over the parcel of land, they had pleaded with Sabesaje,
their relative, to be allowed to administer the land because Dalion did not have any
means of livelihood. They admitted, however, administering since 1958, five (5) parcels
of land in Sogod, Southern Leyte, which belonged to Leonardo Sabesaje, grandfather of
Sabesaje, who died in 1956. They never received their agreed 10% and 15% commission
on the sales of copra and abaca, respectively. Sabesaje's suit, they countered, was
intended merely to harass, preempt and forestall Dalion's threat to sue for these unpaid
commissions.

From the adverse decision of the trial court, Dalion appealed, assigning errors some of
which, however, were disregarded by the appellate court, not having been raised in the
court below. While the Court of Appeals duly recognizes Our authority to review matters
even if not assigned as errors in the appeal, We are not inclined to do so since a review
of the case at bar reveals that the lower court has judicially decided the case on its
merits.

As to the controversy regarding the identity of the land, We have no reason to dispute
the Court of Appeals' findings as follows:

To be sure, the parcel of land described in Exhibit "A" is the same

property deeded out in Exhibit "B". The boundaries delineating it from
adjacent lots are identical. Both documents detail out the following
boundaries, to wit:

On the North-property of Sergio Destriza and Titon Veloso;

On the East-property of Feliciano Destriza;

 On the South-property of Barbara Boniza and

On the West-Catalino Espina.

(pp. 41-42, Rollo)

The issues in this case may thus be limited to: a) the validity of the contract of sale of a
parcel of land and b) the necessity of a public document for transfer of ownership
thereto.

The appellate court upheld the validity of the sale on the basis of Secs. 21 and 23 of
Rule 132 of the Revised Rules of Court.

SEC. 21. Private writing, its execution and authenticity, how proved.-
Before any private writing may be received in evidence, its due
execution and authenticity must be proved either:

(a) By anyone who saw the writing executed;

(b) By evidence of the genuineness of the handwriting of the maker; or

(c) By a subscribing witness

xxx xxx xxx

SEC. 23. Handwriting, how proved. The handwriting of a person may be

proved by any witness who believes it to be the handwriting of such
person, and has seen the person write, or has seen writing purporting to
be his upon which the witness has acted or been charged, and has thus
acquired knowledge of the handwriting of such person. Evidence
respecting the handwriting may also be given by a comparison, made by
the witness or the court, with writings admitted or treated as genuine
by the party against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge. (Rule 132, Revised Rules of
Court)

And on the basis of the findings of fact of the trial court as follows:

Here, people who witnessed the execution of subject deed positively

testified on the authenticity thereof. They categorically stated that it
had been executed and signed by the signatories thereto. In fact, one of
such witnesses, Gerardo M. Ogsoc, declared on the witness stand that
he was the one who prepared said deed of sale and had copied parts
thereof from the "Escritura De Venta Absoluta" (Exhibit B) by which
one Saturnina Sabesaje sold the same parcel of land to appellant
Segundo Dalion. Ogsoc copied the bounderies thereof and the name of
appellant Segundo Dalion's wife, erroneously written as "Esmenia" in
Exhibit "A" and "Esmenia" in Exhibit "B". (p. 41, Rollo)

xxx xxx xxx

Against defendant's mere denial that he signed the document, the

positive testimonies of the instrumental Witnesses Ogsoc and Espina,
aside from the testimony of the plaintiff, must prevail. Defendant has
affirmatively alleged forgery, but he never presented any witness or
evidence to prove his claim of forgery. Each party must prove his own
affirmative allegations (Section 1, Rule 131, Rules of Court).
Furthermore, it is presumed that a person is innocent of a crime or
wrong (Section 5 (a), Idem), and defense should have come forward with
clear and convincing evidence to show that plaintiff committed forgery
or caused said forgery to be committed, to overcome the presumption of
innocence. Mere denial of having signed, does not suffice to show
forgery.

In addition, a comparison of the questioned signatories or specimens

(Exhs. A-2 and A-3) with the admitted signatures or specimens (Exhs. X
and Y or 3-C) convinces the court that Exhs. A-2 or Z and A-3 were
written by defendant Segundo Dalion who admitted that Exhs. X and Y
or 3-C are his signatures. The questioned signatures and the specimens
are very similar to each other and appear to be written by one person.

Further comparison of the questioned signatures and the specimens with

the signatures Segundo D. Dalion appeared at the back of the summons
(p. 9, Record); on the return card (p. 25, Ibid.); back of the Court
Orders dated December 17, 1973 and July 30, 1974 and for October 7,
1974 (p. 54 & p. 56, respectively, Ibid.), and on the open court notice of
April 13, 1983 (p. 235, Ibid.) readily reveal that the questioned
signatures are the signatures of defendant Segundo Dalion.

It may be noted that two signatures of Segundo D. Dalion appear on the

face of the questioned document (Exh. A), one at the right corner
bottom of the document (Exh. A-2) and the other at the left hand
 margin thereof (Exh. A-3). The second signature is already a surplusage.
A forger would not attempt to forge another signature, an unnecessary
one, for fear he may commit a revealing error or an erroneous stroke.
(Decision, p. 10) (pp. 42-43, Rollo)

We see no reason for deviating from the appellate court's ruling (p. 44, Rollo) as we
reiterate that

Appellate courts have consistently subscribed to the principle that

conclusions and findings of fact by the trial courts are entitled to great
weight on appeal and should not be disturbed unless for strong and
cogent reasons, since it is undeniable that the trial court is in a more
advantageous position to examine real evidence, as well as to observe the
demeanor of the witnesses while testifying in the case (Chase v.
Buencamino, Sr., G.R. No. L-20395, May 13, 1985, 136 SCRA 365; Pring v.
Court of Appeals, G.R. No. L-41605, August 19, 1985, 138 SCRA 185)

Assuming authenticity of his signature and the genuineness of the document, Dalion
nonetheless still impugns the validity of the sale on the ground that the same is
embodied in a private document, and did not thus convey title or right to the lot in
question since "acts and contracts which have for their object the creation,
transmission, modification or extinction of real rights over immovable property must
appear in a public instrument" (Art. 1358, par 1, NCC).

This argument is misplaced. The provision of Art. 1358 on the necessity of a public
document is only for convenience, not for validity or enforceability. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument.

A contract of sale is a consensual contract, which means that the sale is perfected by
mere consent. No particular form is required for its validity. Upon perfection of the
contract, the parties may reciprocally demand performance (Art. 1475, NCC), i.e., the
vendee may compel transfer of ownership of the object of the sale, and the vendor may
require the vendee to pay the thing sold (Art. 1458, NCC).

The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the parcel
of land and to execute corresponding formal deed of conveyance in a public document.
Under Art. 1498, NCC, when the sale is made through a public instrument, the execution
thereof is equivalent to the delivery of the thing. Delivery may either be actual (real) or
constructive. Thus delivery of a parcel of land may be done by placing the vendee in
control and possession of the land (real) or by embodying the sale in a public instrument
(constructive).

As regards petitioners' contention that the proper action should have been one for
specific performance, We believe that the suit for recovery of ownership is proper. As
earlier stated, Art. 1475 of the Civil Code gives the parties to a perfected contract of
sale the right to reciprocally demand performance, and to observe a particular form, if
warranted, (Art. 1357). The trial court, aptly observed that Sabesaje's complaint
sufficiently alleged a cause of action to compel Dalion to execute a formal deed of sale,
and the suit for recovery of ownership, which is premised on the binding effect and
validity inter partes of the contract of sale, merely seeks consummation of said
contract.

... . A sale of a real property may be in a private instrument but that

contract is valid and binding between the parties upon its perfection.
And a party may compel the other party to execute a public instrument
embodying their contract affecting real rights once the contract
appearing in a private instrument hag been perfected (See Art. 1357).

... . (p. 12, Decision, p. 272, Records)

ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals
upholding the ruling of the trial court is hereby AFFIRMED. No costs.

SO ORDERED.

G.R. No. 115402 July 15, 1998

LEONCIO LEE TEK SHENG, petitioner,

vs.

COURT OF APPEALS, HON. ANTONIO J. FINEZA, and LEE

TEKSHENG, respondents.

MARTINEZ, J.:

After his mother's death, petitioner 1 filed a complaint against his father, herein private
respondent, to partition the conjugal properties of his parents. 2 In his answer with
counterclaim, private respondent alleged that four (4) parcels of land registered solely
in petitioner's name under Transfer Certificate of Title (TCT) 8278 are conjugal
properties. Private respondent contends that the lots are owned by the conjugal regime
but was registered in petitioner's name only as a trustee considering that at that time,
the latter was then the only Filipino citizen in the family. Accordingly, private
respondent prayed for the dismissal of the partition case and for the reconveyance of
the lots to its rightful owner the conjugal regime.

Meantime, to protect the interest of the conjugal regime during the pendency of the
case, private respondent caused the annotation of a notice of lis pendens on TCT 8278.
Petitioner moved for the cancellation of said annotation which was denied by the trial
court ruling that (a) the notice was not for the purpose of molesting or harassing
petitioner and (b) also to keep the property within the power of the court pending
litigation. 3 Petitioner assailed the denial of his motion to cancel the notice of lis pendens
via petition for certiorari and prohibition to the Court of Appeals (CA), but to no avail. 4

Resorting to this Court, petitioner primarily contends that in the resolution of an

incidental motion for cancellation of the notice of lis pendens (a) it was improper to
thresh out the issue of ownership of the disputed lots since ownership cannot be passed
upon in a partition case, otherwise, (b) it would amount to a collateral attack of his title
obtained more than 28 years ago. He argues that his sole ownership as shown in the TCT
would be improperly assailed in a partition case and should be done through a separate
suit. On the contrary, private respondent posits that evidence of ownership is admissible
in a partition case as this is not a probate or land registration proceedings where the
court's jurisdiction is limited.

Though the postulates respectively proffered by both parties are not at point, luckily
for private respondent, petitioner's claim is not legally tenable. There is no dispute that
a Torrens certificate of title cannot be collaterally attacked 5 but that rule is not
material to this case. The annotation of a notice of lis pendens does not in any case
amount nor can it be considered as equivalent to a collateral attack of the certificate of
title for a parcel of land. The concept of no collateral attack of title is based on Section
48 of P.D. 1529 which states that:

Certificate not Subject to Collateral attack. A certificate of title

shall not be subject to collateral attack. It cannot be altered, modified,
or cancelled except in a direct proceeding in accordance with
law. 6 (Emphasis Supplied).

What cannot be collaterally attacked is the certificate of title and not the title.
The certificate referred to is that document issued by the Register of Deeds
 known as the Transfer Certificate of Title (TCT). By title, the law refers to
ownership which is represented by that document. Petitioner apparently
confuses certificate with title. Placing a parcel of land under the mantle of the
Torrens system does not mean that ownership thereof can no longer be disputed.
Ownership is different from a certificate of title. The TCT is only the best
proof of ownership of a piece of land. 7 Besides, the certificate cannot always be
considered as conclusive evidence of ownership. 8 Mere issuance of the
certificate of title in the name of any person does not foreclose the possibility
that the real property may be under co-ownership with persons not named in the
certificate or that the registrant may only be a trustee or that other parties
may have acquired interest subsequent to the issuance of the certificate of
title. To repeat, registration is not the equivalent of title, but is only the best
evidence thereof. Title as a concept of ownership should not be confused with
the certificate of title as evidence of such ownership although both are
interchangeably used. In this case, contrary to petitioner's fears, his certificate
of title is not being assailed by private respondent. 9 What the latter disputes is
the former's claim of sole ownership. Thus, although petitioner's certificate of
title may have become incontrovertible one year after issuance, 10 yet contrary
to his argument, it does not bar private respondent from questioning his
ownership. 11

It should be noted that what is being challenged in this case is the denial of the motion
to cancel the notice of lis pendens. But whether as a matter of procedure 12 or
substance, 13 a notice of lis pendens may be cancelled only on two grounds, which are: (1)
if the annotation was for the purpose of molesting the title of the adverse party, or, (2)
when the annotation is not necessary to protect the title of the party who caused it to
be recorded. Neither ground for cancellation of the notice was convincingly shown to
concur in this case. It would not even be fair to justify the cancellation of the notice on
the legally untenable grounds that such annotation amounts to a collateral attack of
petitioner's certificate of title or that ownership cannot be adjudicated in a partition
case. It must be emphasized that the annotation of a notice of lis pendens is only for the
purpose of announcing "to the whole world that a particular real property is in litigation,
serving as a warning that one who acquires an interest over said property does so at his
own risk, or that he gambles on the result of the litigation over said property." 14 Here,
the parties are still locked in a legal battle to settle their respective claims of
ownership. The lower court allowed the annotation pending litigation only for the purpose
of giving information to the public that parcel of land is involved in a suit and that those
who deal with the property is forewarned of such fact.

On the contention that ownership cannot be passed upon in a partition case, suffice it to
say that until and unless ownership is definitely resolved, it would be premature to
effect partition of the property. 15 For purposes of annotating a notice of lis pendens,
there is nothing in the rules which requires the party seeking annotation to prove that
the land belongs to him. 16 Besides, an action for partition is one case where the
annotation of a notice of lis pendens is proper. 17

Further, contrary to petitioner's argument, one of the issues agreed upon by the parties
at pre-trial is to determine what are the properties acquired by the spouses during their
marriage. 18 In addition, private respondent in his answer with counterclaim prayed for
the reconveyance of the disputed lots. Accordingly, the issue of ownership has been put
in issue and each claimant must present their respective evidence to substantiate their
respective allegations. 19Considering that this is a partition case, the court is required to
inquire into the "nature and extent of title" of the supposed claimant. 20 The title
referred to by the rule is the purported ownership of the claimants and not the
certificate of title mentioned in Section 48 of P.D. 1529, although the latter may be
considered in the determination of the former.

WHEREFORE, by virtue of the foregoing, the petition is DENIED and the assailed
decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

G.R. Nos. L-46626-27 December 27, 1979

REPUBLIC OF THE PHILIPPINES, petitioner-appellant,

vs.
COURT OF APPEALS, A & A TORRIJOS ENGINEERING CORPORATION,
FRANCISCA S. BOMBASI, HERCULINO M. DEO, FRUCTUOSA LABORADA and
REGISTER OF DEEDS OF CALOOCAN CITY, respondents-appellees.

Office of the Solicitor General for petitioner.

Gonzalo D. David for respondents.

AQUlNO, J.:

These two cases are about the cancellation and annulment of reconstituted Torrens
titles whose originals are existing and whose reconstitution was, therefore, uncalled for.
1. Lots Nos. 915 and 918 of the Tala Estate, with areas of more than twenty-five and
twenty-four hectares, respectively, located at Novaliches, Caloocan, now Quezon City,
are registered in the name of the Commonwealth of the Philippines, as shown in Transfer
Certificates of Title Nos. 34594 and 34596 of the Registry of Deeds of Rizal
both dated April 30, 1938.

The originals of those titles are on file in the registry of deeds in Pasig, Rizal. They were
not destroyed during the war. Even the originals of the preceding cancelled titles for
those two lots, namely, Transfer Certificates of Title Nos. 15832 and 15834 in the name
of the Philippine Trust Company, are intact in the registry of deeds.

2. The reconstitution proceeding started when Fructuosa Laborada, a widow residing at

1665 Interior 12 Dart Street, Paco, Manila, filed in the Court of First Instance of Rizal
at Caloocan City a petition dated November, 1967 for the reconstitution of the title
covering the above-mentioned Lot No. 915. She alleged that she was the owner of the lot
and that the title covering it, the number of which she could not specify, was "N.A." or
not available (Civil Case No. C-677). The petition was sworn to on November 16, 1967
before Manila notary Domingo P. Aquino (48-52, Consolidated Record on Appeal).

3. On April 2, 1968, the lower court issued an order setting the petition for hearing on
June 14, 1968. The notice of hearing was published in the Official Gazette. Copies
thereof were posted in three conspicuous places in Caloocan City and were furnished the
supposed adjoining owners (53-54, Consolidated Record on Appeal). The registers of
deeds of Caloocan City and Rizal were not served with copies of the petition and notice
of hearing.

4. State Prosecutor Enrique A. Cube, as supposed counsel for the Government, did not
oppose the petition. Laborada presented her evidence before the deputy clerk of court.
Judge Serafin Salvador in his "decision" dated July 6, 1968 granted the petition.

He found that Lot No. 915 was covered by a transfer certificate of title which was not
available and which was issued to Maria Bueza who sold the lot to Laborada. The transfer
certificate of title covering the lot was allegedly destroyed during the war. The plan and
technical description for the lot were approved by the Commissioner of Land
Registration who recommended favorable action on the petition (pp. 53-56, Consolidated
Record on Appeal).

5. The lower court directed the register of deeds of Caloocan City to reconstitute the
title for Lot No. 915 in the name of Laborada. The order of reconstitution was not
appealed. It became final and executory.
6. Acting on the court's directive, the register of deeds issued to Laborada on August
14, 1968 Transfer Certificate of Title No. (N.A.) 3-(R) Lot No. 915 was later subdivided
into seven lots, Lots Nos. 915-A to 915-G. The Acting Commissioner of Land Registration
approved the subdivision plan. The register of deeds cancelled TCT No. (N.A.) 3-(R) and
issued on October 15, 1968 seven titles to Laborada, namely, TCT Nos. 30257 to 30263
(pp. 56-59, 61-83, Consolidated Record on Appeal).

7. In another and later case, Civil Case No. C-763 of the lower court, one Francisco S.
Bombast, single, residing at 2021 San Marcelino Street, Malate, Manila filed in the lower
court a petition dated November 16, 1967 for the reconstitution of the title of another
lot, the aforementioned Lot No. 918.

She could not specify the number of the title. She alleged that the title was "N.A" or
not available. She claimed to be the owner of the lot and that the title covering it was
destroyed during the war. Like the first petition, the second petition was sworn to on
the same date, November 16, 1967, before Manila notary Domingo P. Aquino. Why it was
not filed simultaneously with Laborada's petition was not explained. (17-21, Consolidated
Record on Appeal.)

8. The lower court set the second petition for hearing on January 31, 1969. As in
Laborada's petition, the notice of hearing for Bombast's petition was published in the
Official Gazette. It was posted in three conspicuous places in Caloocan City and copies
thereof were sent to the supposed adjoining owners (22, Consolidated Record on Appeal).
But no copies of the petition and notice of hearing were served upon the registers of
deeds of Caloocan City and Rizal, the officials who would be interested in the
reconstitution of the supposed lost title and who could certify whether the original of
the title was really missing.

9. Bombast's petition was assigned also to Judge Salvador. It was not opposed by the
government lawyers, Enrique A. Cube and Conrado de Leon, Judge Salvador in his order
of April 3, 1969 granted the petition.

The court found from the evidence that the allegedly missing or "not available" title was
issued to Regino Gollez who sold the land to petitioner Bombast. The owner's duplicate
of Gollez's title was supposedly destroyed during the war. Taxes were paid for that land
by Gollez and Bombast. The technical description of the land the plan were approved by
the Commissioner of Land Registration who submitted a report recommending the
reconstitution of the title (pp. 22-25, Consolidated Record on Appeal).

10. The lower court ordered the register of deeds to reconstitute the missing title of
Lot No. 918 in the name of Bombast. Acting on that directive, the register of deeds
issued to Bombast Transfer Certificate of Title No. N.A. 4(R) dated August 27, 1969(pp.
24-27, Consolidated Record on Appeal).

11. On March 25, 1969 or five months before the issuance of the reconstituted title,
Francisca Bombast, now Identified as single (not widow) and a resident of 1665 Interior
12 Dart Street Paco, Manila, which was the same address used by Fructuosa
Laborada (Bombast used first the address 2021 San Marcelino Street) sold Lot No. 918
to Herculano M. Deo allegedly for P249,880. Transfer Certificate of Title No. 34146R
was issued to Deo.

On October 28, 1969, Deo sold the lot to A & A Torrijos Engineering Corporation
allegedly for P250,000. Transfer Certificate of Title No. 34147-R was issued to the
corporation (pp. 10-11, 29-34, Consolidated Record on Appeal).

12. On May 25 and 26, 1970, the State filed two petitions for the cancellation and
annulment of the reconstituted titles and the titles issued subsequent thereto (Civil
Cases Nos. 1784 and 1785). Judge Salvador, who had ordered the reconstitution of the
titles and to whom the two cases for cancellation were assigned, issued on June 5, 1970
restraining orders enjoining the register of deeds, city engineer and Commissioner of
Land Registration from accepting or recording any transaction regarding Lots Nos. 915
and 918.

13. The respondents in the two cases, through a common lawyer, filed separate answers
containing mere denials. The Commissioner of Land Registration filed pro forma answers
wherein he interposed no objection to the issuance of the preliminary injunction sought
by the State. After a joint trial of the two cases, respondents corporation and Laborada
filed amended answers wherein they pleaded the defense that they were purchasers in
good faith and for value.

14. On June 22, 1972, Judge Salvador (who did not bother to inhibit himself) rendered a
decision in the two cases holding that the State's evidence was insufficient to establish
its ownership and possession of Lots Nos. 915 and 918 and that Laborada and A & A
Torrijos Engineering Corporation were purchasers in good faith and for value and,
consequently, their titles are not cancellable and annullable.

Judge Salvador further held that the titles, whose reconstitution he had ordered
allegedly in conformity with law, could not be attacked collaterally and, therefore, "the
reconstituted titles and their derivatives have the same validity, force and effect as the
originals before the reconstitution" (pp. 160-161, Consolidated Record on Appeal). The
State appealed.
15. The Court of Appeals, in affirming the lower court's judgment, held that the orders
of reconstitution dated July 6, 1968 and April 3, 1969 could no longer be set aside on
May 26, 1970, when the petitions for annulment and cancellation of the reconstituted
titles were filed, and that if there were irregularities in the reconstitution, then, as
between two innocent parties, the State, as the party that made possible the
reconstitution, should suffer the loss. The Court of Appeals cited section 101 of Act 496
to support its view that a registered owner may lose his land "by the registration of any
other person as owner of such land".

The State appealed to this Court. We hold that the appeal is justified. The Appellate
Court and the trial court grievously erred in sustaining the validity of the reconstituted
titles which, although issued with judicial sanction, are no better than spurious and
forged titles.

In all candor, it should be stated that the reconstitution proceedings, Civil Cases Nos. C-
677 and C-763, were simply devices employed by petitioners Laborada and Bombast
for landgrabbing or for the usurpation and illegal appropriation of fifty hectares of
State-owned urban land with considerable value.

The crucial and decisive fact, to which no importance was attached by the lower court
and the Fifth Division of the Court of Appeals (Reyes, L.B., Domondon and Ericta, JJ.), is
that two valid and existing Torrens titles in the name of the Commonwealth of the
Philippines were needlessly reconstituted in the names of Laborada and Bombast on the
false or perjurious assumption that the two titles were destroyed during the war.

That kind of reconstitution was a brazen and monstrous fraud foisted on the courts of
justice. It was a stultification of the judicial process. One and the same judge (1)
allowed the reconstitution and then (2) decided the two subsequent cases for the
cancellation and annulment of the wrongfully reconstituted titles.

The existence of the two titles of the Government for Lots Nos. 915 and 918 ipso
facto nullified the reconstitution proceedings and signified that the evidence in the said
proceedings as to the alleged ownership of Laborada and Bombast cannot be given any
credence. The two proceedings were sham and deceitful and were filed in bad faith.
Such humbuggery or imposture cannot be countenanced and cannot be the source of
legitimate rights and benefits.

Republic Act No. 26 provides for a special procedure for the reconstitution of Torrens
certificates of title that are missing and not fictitious titles or titles which are existing.
It is a patent absurdity to reconstitute existing certificates of title that are on file and
available in the registry of deeds. The reconstitution proceedings in Civil Cases Nos. C-
677 and C- 763 are void because they are contrary to Republic Act No. 26 and beyond
the purview of that law since the titles reconstituted are actually subsisting in the
registry of deeds and do not require reconstitution at all. As a rule, acts executed
against the provisions of mandatory laws are void (Art. 5, Civil Code).

To sustain the validity of the reconstituted titles in these cases would be to allow
Republic Act No. 26 to be utilized as an instrument for landgrabbing (See Republic vs.
Court of Appeals, Ocampo and Anglo, L-31303-04, May 31, 1978, 83 SCRA 453, 480, per
J. G.S. Santos) or to sanction fraudulent machinations for depriving a registered owner
of his land, to undermine the stability and security of Torrens titles and to impair the
Torrens system of registration. The theory of A & A Torrijos Engineering Corporation
that it was a purchaser in good faith and for value is indefensible because the title of
the lot which it purchased unmistakably shows that such title was reconstituted. That
circumstance should have alerted its officers to make the necessary investigation in the
registry of deeds of Caloocan City and Rizal where they could have found that Lot 918 is
owned by the State.

WHEREFORE, the decisions of the Court of Appeals and the trial court are reversed and
set aside. The reconstitution proceedings in Civil Cases Nos. C-677 and C-763 are
declared void and are set aside. The reconstituted titles, Transfer Certificates of Title
Nos. N.A. 3-(R) and N.A. 4-(R) and Transfer Certificates of Title Nos. 34146-R, 34147-R
and 30257 to 30263 and the survey plans and subdivision plan connected therewith are
likewise declared void. The register of deeds is directed to cancel the said titles.

The Republic of the Philippines, as the successor of the Commonwealth of the Philippines,
is hereby declared the registered owner of Lots 915 and 918 of the Tala Estate, as
shown in Transfer Certificates of Title Nos. 34594 and 34596 of the registry of deeds
of Rizal. Costs against the private respondents-appellees.

SO ORDERED.

G.R. No. L-8539 December 24, 1914

MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN, petitioner-appellee,

vs.
RAFAEL ENRIQUEZ, ET AL., objectors-appellants.

Southworth and Faison for appellants.

D. R. Williams for appellee.

JOHNSON, J.:

It appears from the record that on the 12th day of January, 1906, the said petitioner,
Maria del Consuelo Felisa Roxas y Chuidian, presented a petition in the Court of Land
Registration for the purpose of having registered, under the Torrens system, four
parcels of land, known as Parcel A, Parcel B, Parcel C, and Parcel D, all of which were
located in the city of Manila. The only one of said parcels to which attention need be
given in the present appeal is Parcel A.

From an examination of said petition we find that parcel A was described generally and
technically.

I. General description. It is a parcel of land with the buildings erected

thereon, located in the district of Binondo of this city between Nos. 84, 90, 92,
94, and 96 Calle Escolta and the northern bank of the Pasig River; bounded on
the north by Calle Escolta for 31.08 meters, on the south by the Pasig River for
25.19 meters, on the east by the estate of Pedro P. Roxas for 66.48 meters, and
on the west by the estate of the heirs of Antonio Enriquez for 62.10 meters;
with an area of 1,817.03 square meters as set forth in the attached plan.

II. Technical description. The undersigned on the 26th of the present month
proceeded to survey and fix the boundaries for preparing the topographical plan
of a lot occupied by buildings of strong materials one and two stories high
belonging to Maria del Consuelo Roxas y Chuidian, located in the district of
Binondo of this city between Nos. 84, 90, 92, 94, and 96 Calle Escolta and the
northern bank of the Pasig River. The point marked on the plan with the letter
"X," located at the vertex of the angle formed by the northeastern side of Calle
Escolta and the corner of the Pasaje de Perez was selected as the basic point,
whence S. 49 40' W., 27.75 meters is located Point A, chosen as the point of
beginning for the topographical operations, the result whereof is as
follows:1awphil.net

| Points
or | Directions in | Distances | Boundaries |
| stations. | degrees. | in meters. | |

| A to B | S. 44 30' W | 31.08 | Calle Escolta. |
| B to C | S. 46 15' E | 16.15 | Heirs of Antonio |
| C to D | S. 42 00' E | 32.75 | } Enriquez. |
 | D to E | S. 40 50' E | 13.20 | |
| E to F | N. 49 45' E | 14.25 | } Pasig River. |
| F to G | N. 52 00' E | 10.94 | |
| G to H | N. 37 10' W | 24.90 | |
| H to I | N. 35 45' W | 6.56 | |
| I to J | N. 50 30' E | 1.92 | } Pedro P. Roxas. |
| J to K | N. 35 00' W | 7.60 | |
| K to A | N. 42 05' W | 25.50 | |

The lot described has an area of 1,817.03 square meters; all the points specified
are marked on the attached plan, the bearings are magnetic, and its boundaries
are: on the north, Calle Escolta; on the south, the Pasig River; on the east, the
estate of Pedro P. Roxas; and on the west, the estate of the heirs of Antonio
Enriquez.

The plan to which reference is made in the above technical description and which
accompanied the petition is as follows and is marked "Exhibit A."

{bmc 029035a.bmp}

By comparing the above technical description with the plan presented (Exhibit A), it will
be noted that the line A-B in the technical description runs S. 44, 30' W., and that the
distance between A and B was 31.08 meters, while in the plan line A-B runs S. 46, 30'
W., a distance of 31.08 meters. Attention is called to this difference between the
technical description and the plan at this time, but its importance to the questions
presented will be discussed below.

Attached to said petition was a number of documents presented as exhibits, showing the
chain of title of the petitioner.

We find that said petition contains a statement of the names of the adjoining owners of
the land in question. The petition gives the names of said persons, as follows:

The names, surnames, and post-office addresses of the owners of the parcels of
land conterminous with this estate are, according to my information:
 The heirs of Antonio Enriquez, whose representatives are the attorneys
Hartigan, Marple, Solignac & Gutierrez, 7 Anda, Intramuros, Manila, Pedro P.
Roxas, 154 Malacaang, San Miguel.

Upon the presentation of said petition, the plan, and the documents showing the chain of
title of the petitioner, the matter was referred to the examiner of titles of the Court
of Land Registration, who made a very careful examination of the title of the petitioner
to the land in question, and on the 5th day of March, 1906, presented a very carefully
prepared report, in which he sets out in detail the title of the petitioner to said Parcel
A, as well as the other parcels, the recommends the registration of said Parcel A, as well
as the others, in the name of the petitioner.

Upon the issue thus presented we find that the Honorable Simplicio del Rosario, judge,
on the 23d day of March, 1906, in accordance with the provisions of section 31 of Act
No. 496, issued the following notice:

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
[Registration of title. Court of Land Registration.
Case No. 1895.]

To the Attorney-General of the Philippine Islands; the Municipal Board

of the city of Manila; A. Sing, Nos. 84-88; A. Burke, No. 90; Messrs.
Macke and Chandler and F. M. Sousa, these two No. 90 interior; Ramon
Genato, No. 142; Tomas Serreno, No. 92; Rosendo Comas, No. 94; Cheng
Tao Sang, No. 96; Luciano Cordoba, No. 28; Messrs. Salgado, Gordillo and
Martinez, No. 32; Messrs. Greilsammer Bros., No. 36; and Messrs.
Williams & Chandler, No. 34, upstairs; these on Calle Escolta; Antonio Vy
Chuico, No. 226, and Lim Tinco, No. 200, these two on Calle Rosario; Ang
Seng Queng, Calle Nueva No. 149; and Candido Lim, Calle Jaboneros No.
113; all these of the district of Binondo; Messrs. Hartigan, Rohde &
Gutierrez, attorneys of the heirs of Antonio Enriquez, Calle Santo
Tomas, corner of Calle Cabildo, district of Intramuros; Carmen Ayala de
Roxas, No. 154; and Maximo Cortes and Dolores Ochoa, these two No.
330, the three on Calle Malacaang, district of San Miguel; Francisco
Saez, Plaza de Goiti No. 14, Alfonso Tiaoqui, Calle Lacoste No. 122, and
Gervasio Rosario Ventura, Calle Dulumbayan No. 111, these three of the
district of Santa Cruz; and Enrique Somes, Calle Alix No. 140, district of
Sampaloc; all of the city of Manila, P. I., and to all whom it may concern:
 Whereas an application has been presented to said court by Maria del Consuelo
Felisa Roxas y Chuidian, through her attorney in fact Antonio Bonifas, Calle
Padre Herrera No. 59, district of Tondo, city of Manila, P. I., to register and
confirm her title in the following described land: Four parcels of land with the
improvements of strong materials thereon, situated in the district of Binondo,
Manila, P. I., more particularly bounded and described as follows:

Parcel A. Situated on the Escolta Nos. 84-96, beginning at a pt. marked "A" on
plan, being S. 49 40' W., 27.75 m. from the W. end of the chaflan at the S.
intersection of the Escolta and Pasaje de Perez; thence S. 46 30' W., 31.08 m.
along the SE. line of the Escolta, to pt. "B"; S. 46 15' E., 16.15 m. to pt. "C"; S.
42 E., 32.75 m. to pt. "D"; S. 40 50' E., 13.20 m. to pt. "E"; N. 49 45' E., 14.25
m. to pt. "F"; N. 52 E., 10.94 m. to pt. "G"; N. 36 20' W., 14.20 m. to pt. "H"; N.
38 40' W., 17.16 m. to pt. "I"; N. 52 35' E., 2.27 m. to pt. "J"; N. 38 50' W.,
4.12 m. to pt. "K"; N. 53 30' E., 0.30 m. to pt. "L"; N. 40 05' W., 14 m. to pt.
"M"; N. 44 W., 15.35 m. to pt. "E" to "G" follow the NW. bank of the Pasig River.

Bounded on the NE. by property of Carmen Ayala de Roxas; SE. by the Pasig
River; SW. by property of the heirs of Antonio Enriquez and NW. by the Escolta.

Date of survey, December 26, 1905.

You are hereby cited to appear at the Court of Land Registration to be held at
the City Hall, Calzada de las Aguadas, city of Manila, P. I., on the 25th day of
April, A. D. nineteen hundred and six, at 8 o'clock in the forenoon, to show
cause, if any you have, why the prayer of said application shall not be granted;
and unless you appear at such court at the time and place aforesaid your default
will be recorded and the said application will be taken as confessed, and you will
be forever barred from contesting said application or any decree entered
thereon.

Witness the Hon. S. del Rosario, judge of said court, this 23d day of March in
the year nineteen hundred and six.

Attest: A. K. JONES,
Clerk of said Court.

In accordance with said order of publication, the clerk of the Court of Land
Registration, on the 28th day of March, 1906, sent a copy of said order to each of the
persons mentioned therein, by registered mail. The record shows that each of said
persons received a copy of said notice, including the representative of the heirs of
Antonio Enriquez (Hartigan, Rohde & Gutierrez). The record further shows, by the
certificate of James J. Peterson, sheriff of the city of Manila, that said notice was
posted upon the land in question. The record further shows that said notice had been
published in two daily newspapers of the city of Manila. The Manila Times and La
Democracia.

On the 17th day of April, 1906, A. K. Jones, clerk of the Court of Land Registration,
made the following certificate relating to the notice and to the publication of the
notices required by section 31 of Act No. 496.

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.

Case No. 1895.

Maria del Consuelo Felisa Roxas y Chuidian, Applicant.

I, A. K. Jones, clerk of the Court of Land Registration of the Philippine Islands,

certify that, in compliance with the order issued by said court, a notice
referring to the application for registry No. 1895, presented by Antonio Bonifas,
as representative of Maria del Consuelo Felisa Roxas y Chuidian, was published
once only in the daily newspapers of this city, The Manila Times on March 28,
1906, and La Democracia on the 31st of the same month and year, in English and
Spanish respectively, and notice was served upon the Attorney-General of the
Philippine Islands; the Municipal Board of the city of Manila; A. Sing; A. Burke;
Macke & Chandler; F. M. Sousa; Ramon Genato; Tomas Serrano; Rosendo Comas;
Cheng Tao Sang; Luciano Cordoba; Salgado, Gordillo & Martinez; Greilsammer
Hermanos; Williams & Chandler; Antonio Vy Chuico; Lim Tinco; Ang Seng Queng;
Candido Lim; Hartigan, Rohde & Gutierrez; Carmen Ayala de Roxas; Maximo
Cortes and Dolores Ochoa, Francisco Saez; Alfonso Tiaoqui; Gervasia Rosario
Ventura; and Enrique Somes, a copy of said notice in Spanish having been sent to
each one on March 28, 1906, by registered mail. And for the purposes of the
necessary procedure, I issue the present in Manila on the 17th day of April,
1906.

A. K. JONES,
Clerk of the Court.

On the 19th day of April, 1906, the record shows that Modesto Reyes, attorney for the
city of Manila (p. 131, record) presented a written statement to the court calling its
attention to the fact that there existed an "error of closure" in the plan of said Parcel
A, and asked the court to correct the error. The said attorney also called the attention
of the other plans of the other parcels of land, included in the original petition. Our
attention has not been called to any order made by the lower court, relating to said
request of the attorney of the city of Manila.

In accordance with said notice to all of the interested parties, the hearing on the said
petition was brought on for trial on the 25th day of April, 1906, at 9 o'clock a. m., at the
place mentioned in said notice. At the hearing the petitioner was represented. No one
appeared to represent the "heirs of Antonio Enriquez."

On said date (April 25, 1906, at 9 o'clock a. m.) the cause relating to said Parcel A was
brought on for trial. Mr. Antonio Bonifas appeared for the petitioner and My. Modesto
Reyes, attorney for the city of Manila, appeared for the city of Manila. Mr. Reyes called
the attention of the court again to the fact that there existed certain errors in the
measurement of some of the sides of the plan presented by the petitioner. In view of
said fact (the existence of errors) the court ordered that said errors be corrected. So
far as the record shows no correction whatever was made in the plan of said Parcel A.

On the 21st day of July, 1906, the cause having been brought on for hearing, the
honorable Simplicio del Rosario, judge, distated the following order or judgment in
default against all persons:

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.

No. 1895.

Application of Maria del Consuelo Felisa Roxas y Chuidian for

registration of the real estate described herein,

vs.

The Attorney-General of the Philippine Islands; the Municipal Board of

the city of Manila; A. Sing; A. Burke: Macke & Chandler; F. M. Sousa;
Ramon Geneto; Tomas Serrano; Rosendo Comas; Cheng Tao Sang; Luciano
Cordoba; Salgado, Gordillo & Martinez; Greilsammer Hermanos; Williams
& Chandler; Antonio Vy Chuico; Lim Tinco; And Seng Queng; Candido Lim;
Hartigan, Rohde & Gutierrez; Carmen Ayala de Roxas; Maximo Cortes
and Dolores Ochoa; Francisco Saez; Alfonso Tiaoqui; Gervasia Rosario
 Ventura; and Enrique Somes; and whomsoever it may concern,
defendants.

The present case having been duly tried, and

Whereas, the clerk of this court caused to be published once only a notice in due
from referring to the application mentioned, in two newspapers of general
circulation, one printed in the English language and another in the Spanish
language, to wit, The Manila Times of this city, and La Democracia of the same
city; and 119 days have elapsed since publication of said notice was effected;

Whereas, said clerk caused to be sent by registered mail, within seven days
after the publication of the said notice, a copy thereof in the Spanish language
to each one of the persons named in the application or who appeared to be
concerned therein;

Whereas, the sheriff of Manila posted in a conspicuous place on each of the

parcels of land included in the application a certified copy of the notice in
Spanish, and also in a conspicuous place in the principal municipal building of the
city of Manila, before the fourteen days preceding that set for the termination
of the period fixed;

Whereas, all of the persons cited as defendants have failed to appear to impugn
the application, within the period fixed by the law;

This court orders a declaration of default against all the defendants and other
persons who may be concerned in opposing the application, which is granted.

Given by the Honorable S. del Rosario, judge of the said Court of Land
Registration, in Manila, this 21st day of July, 1906.

Attest: A. K. JONES,
Clerk of the Court.

Later the Honorable Simplicio del Rosario dictated the following order, decreeing that
said parcel of land, A, be registered as the absolute property of Maria del Consuelo
Felisa Roxas Y Chuidian. Said decree was as follows:

Having tried case No. 1895, this court decrees that Maria del Consuelo Felisa
Roxas y Chuidian, of Manila, Philippine Islands, applicant, spinster, is the absolute
owner of the real property, which is adjudicated to her, located in the city of
Manila, the description whereof is hereinafter set forth:

A parcel of land, situated at Nos. 84 to 96 Calle Escolta, district of Binondo;

bounded on the NE. by the property of Carmen Ayala de Roxas; on the SE. by
the Pasig River; on the SW. by the property of the heirs of Antonio Enriquez;
and on the NW. by Calle Escolta.

Beginning at a point marked A on the plan, which point is 27.75 m. S., 49 40' W.
from the extreme W. of the angle situated at the intersection S. of Calle
Escolta and Passage de Perez; and from said point A., S., 46 30' W., 31.08 m. to
point B; thence S., 46 15' E., 16.15 m. to point C; thence S., 42 E., 32.75 m. to
point D; thence S., 40 50' E., 13.20 m. to point E.; thence N., 49 45' E., 14.25
m. to point F; thence N., 52 E., 10.94 m. to point G; thence N., 36 20' W., 14.20
m. to point H; thence N., 38 40' W., 17.16 m. to point I; thence N., 52 35' E.,
2.27 m. to point J; thence N., 38 50' W., 4.12 m. to point K; thence N., 53 30'
E., 0.30 m. to point L; thence N., 40 05' W., 14 m. to point M; thence N., 44 W.,
15.35 m. to point of beginning; having an area of 1,817.03 square meters.

All the points named are marked on the plan; the bearings are magnetic; date of
survey, December 26, 1905.

Wherefore this court orders that the said real property be registered in
accordance with the provisions of the Land Registration Act in the name of the
aforesaid Maria del Consuelo Felisa Roxas y Chuidian, subject however to any of
the encumbrances set forth in section 39 of said Act that may be in force and
effect.

Given by the Honorable S. del Rosario, judge of the said Court of Land
Registration, in Manila, this twenty-first day of July, nineteen hundred and six,
at eight o'clock and ten minutes ante meridian.

Attest:
[SEAL.] (Sgd.) A. K. Jones,
Clerk of the Court.

A copy of this decree was sent to the register of deeds of Manila, September
25, 1906.
On the 21st day of July, 1906, the court issued the certificate of title known as No.
742, and delivered to the petitioner the owner's duplicate, and the property became
registered under the Torrens system, in the name of the petitioner.

After the registration of said Parcel A in the name of the petitioner, on the 21st day of
July, 1906, nothing further seems to have been done in the Court of Land Registration
until on or about the 19th day of December, 1911, nearly five years and a half after said
land had been registered, when we find that the assistant attorney of the city of Manila
filed the following petition:

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.

Case No. 1895.

Roxas y Cuyugan, applicant.

MOTION.

The city of Manila, through its undersigned attorney, comes now into the court
and respectfully represents;

I. That the plan of the property with which the present case deals is affected
by an error of closure greater than 1/1500;

II. That the city of Manila is interested in the correction of said error as it has
to expropriate a portion of said land for use as a public street;

Therefore, the petitioner prays the court to order a new survey of said property
described in the plan filed in this case.

Manila, P. I., December 18, 1911.

It is not clear whether said petition refers to the incorrections in the plan of Parcel A
or to the incorrections in the plans of the other parcels of land (B, C, and D), which were
included in the petition of the petitioner.

On the 23d date of December, 1911, the honorable Charles H. Smith, judge of the Court
of Land Registration, referred the petition of the city of Manila to the chief surveyor of
the court. On the 27th day of December, 1911, the said surveyor reported to the court
that there existed "errors of closure in said plans."

On the 5th day of January, 1912, the judge of the Court of Land Registration ordered
the chief surveyor to prepare new plans, in accordance with section 4 of Act No. 1875,
and directed that notice be given to the adjoining owners.

On the 28th day of February, 1912, the original petitioner, Maria del Consuelo Felisa
Roxas y Chuidian, presented a petition for the correction of the certificate issued to
her on the 21st day of July, 1906, so as to include the buildings upon the lands included
in her petition. Said petition was as follows:

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION:

Case No. 1895.

Maria del Consuelo Felisa Roxas y Chuidian, applicant.

Comes now the applicant into the Honorable Court of Land Registration and
represents:

1. That on January 10, 1906, Don Antonio Bonifas, in the name and
representation of the applicant, sought the legalization of property title to four
estates, among them the following:

(a) A parcel of land with the buildings erected thereon, located at Nos. 84 to 96
Calle Escolta, district of Binondo.

(b) Another parcel of land with the buildings erected thereon located at Nos. 28
to 36 Calle Escolta, district of Binondo.

(c) Another parcel of land with the buildings erected thereon, located at No. 149
Calle Nueva, corner of Callejon Carvajal, district of Binondo.

2. That the other estate mentioned in the said application refers to a parcel of
land, with the buildings erected thereon, located at Nos. 222 to 230 Calle
Rosario, district of Binondo, which buildings were totally destroyed by the fire
that occurred on the 2d of November of the year just past, and it cannot
therefore be included in the purpose of the present application.
3. That in the said application it is stated that the land of the estate designated
by the letter (a) was assessed at 65,072 dollars and 50 cents United States
currency, and the buildings at 18,500 dollars United States currency; that the
land of the estate designated by the letter (b) was assessed at 55,020 dollars
and 50 cents, United States currency, and the buildings at 15,000 dollars,
United States currency; and the land of the estate designated by the letter (c)
was assessed at 5,658 dollars Unites States currency, and the buildings at 5,000
dollars United States currency.

4. That both in the property titles to the said estates and in the plans and
technical descriptions thereof which accompany said application and are annexed
to the above-entitled case, it appears that on the parcels of land which form
part of the estates under consideration there are erected buildings, consisting
of two houses of strong materials, one behind the other, in the estate
designated by the letter (a); a house of stone and masonry in that designated by
the letter (b); and another house of stone and masonry in that designated by the
letter (c).

5. That in the record of the register of deeds, in the registration entries

referring to the said estates, it appears that they consist of the parcels of land
and the buildings stated.

6. That in the notice to the Attorney-General, the Municipal Board, the tenants,
and owners conterminous with the estates referred to therein, the buildings
erected on them are likewise mentioned.

7. That by decree of June 21, 1906, adjudication and registration of the estates
were ordered in applicant's favor in the terms set forth in the application; but in
the certificate of the decree or resolution under consideration, issued by the
clerk of the court, the description of the parcel of land corresponding to each
estate was given, but the respective building on each was omitted, and in this
form were issued the certificates of title, Nos. 472, 764, and 743, which
accompany this application.

8. That on January 12, September 21, October 9 and 22, 1906, the legal
representative of the applicant guaranteed by deposit, as assurance fund, the
rights of issuance of title and one-tenth of 1 per cent of the assessed valuation,
the sum of P943.70 Philippine currency, the receipts and vouchers wherefore do
not accompany this application because the applicant destroyed them in the
belief that there was no need to exhibit them, but averring that the amounts
paid for those purposes are credited in the accounting division of the Court of
 Land Registration and the office of the register of deeds, as has been
ascertained by a person delegated therefor by the applicant.

9. That when applicant attempted to alienate one of the estates mentioned she
observed the omission in the corresponding certificate of title of the building
existing thereon, the same as in the certificates of title corresponding to the
other two estates; and as it is to be supposed that said omission is due solely to
a simple clerical error, which nevertheless greatly affects the applicant's right,
she appeals to your honorable court with the request that you order the
correction of said omission, especially as there at present exist on the said
parcels of land, without modification or alteration, the same buildings that
existed when legalization of title thereto was applied for and which appear in
the titles of acquisition annexed to the above-entitled case, reference whereto
has been made in the third paragraph.

10. That for greater assurance and for the purpose of proving that the said
estates consist not only in the parcel of land or lot but also in the building
erected on each, the applicant attaches hereto the assessment or property-tax
receipts for each of the said estates, wherein are stated the two points
mentioned.

11. That in view of what has been set forth and explained, the applicant prays
the honorable court to decree, after the necessary legal proceedings, correction
of the omission referred to by ordering the free issuance of a new certificate
of title to each of the said estates, wherein record be made of the building
erected on each, consisting of those enumerated in the third paragraph of this
application.

Manila, February 28, 1912.

MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN.

On the 9th of April, 1912, the Masonic Temple Association of Manila sent a
communication to Honorable Charles H. Smith, judge of the Court of Land Registration,
accompanied by a contract, showing that on the 20th day of March, 1912, Maria del
Consuelo Felisa Roxas y Chuidian had sold all her rights, title, and interest in said Parcel
A, including the buildings thereon, to the said Masonic Temple Association of Manila.
Said Masonic Temple Association of Manila requested the judge of the Land Court to
attach said contract to the record in the case and issue a new certificate to it.
On the 19th day of April, 1912, a new plan of said Parcel A, prepared by Mr. B. W. Hay,
surveyor of the Bureau of Lands, was presented, in accordance with the order of the
court of the 23d of December, 1911. Said new plan was made for the purpose of
correcting the errors in closure in the original plan presented by the petitioner on the
10th day of January, 1906. Said new plan is as follows (see page 48):

After the presentation of said new or corrected plan, the motions:

(a) That of the city of Manila to have corrected the error of closure in the original plan;

(b) That of Maria del Consuelo Felisa Roxas y Chuidian, to have included in her
certificate of title the buildings located upon the lands registered in accordance with
her original petition; and

(c) That of the Masonic Temple Association of Manila, to have a certificate issued to it
in accordance with its contract of purchase of said lands from Maria del Consuelo

{bmc 029048.bmp}

Felisa Roxas y Chuidian after notice had been given to all the interested parties, were
set down for hearing. For one reason or another, the hearings on said motion were
transferred from one date to another from the 22d of April, 1912, until the 24th of
August, 1912. During said various hearings, in addition to the appointment of a
commission to view the premises, certain proof was taken upon the question of the
correctness of the original plan presented by the petitioner, in January, 1906. During
said hearings the heirs of Don Antonio Enriquez appeared and apparently made some
objection to the granting of said motions. They presented no written statement in which
their specific objections appear. The nearest approach to a definite and specific
statement of their objections appears in the argument of their counsel at the close of
said several hearings, in which it appears that their objections to the correction of the
original plan and certificate and the issuance of a new certificate to the Masonic Temple
Association of Manila was based upon the ground that they claimed
easements or servitudes in the land in the question.

After hearing all of the parties, the Honorable Charles H. Smith, judge of the Court of
Land Registration, and his associates, the Honorable James A. Ostrand and the
Honorable Norberto Romualdez, auxiliary judges of said court, sitting in banc, on the
24th day of August, 1912, by a unanimous decision, granted the motions of the city of
Manila, of Maria del Consuelo Felisa Roxas y Chuidian, and of the Masonic Temple
Association of Manila.

On the 10th day of September, 1912, the attorneys for the objectors presented a
motion for new trial, basing it upon the ground that the conclusions of the lower court
were manifestly contrary to the proof. After a due consideration of said motion for a
new trial and after hearing the respective parties, the Court of Land Registration,
sitting in banc, composed of Charles H. Smith, James A. Ostrand, and Norberto
Romualdez, denied said motion, and the case was appealed to this court. In this court the
respondents presented the following assignments of error:

1. That the court below erred in holding that the proceedings of the Court of
Land Registration were valid in entering judgment in favor of the plaintiff and
appellee, confirming the title to lot 4, which is in controversy in this suit.

2. That the judgment of the lower court is contrary to law.

3. That the judgment of the court below is against the manifest weight of the
evidence.

After a careful examination of the argument of the appellants in support of each of said
assignments of error, we are of the opinion that they may be discussed together.

In the argument of the appellants in support of their assignments of error, there is but
little argument against the decision of the court rendered on the 24th of August, 1912.
Practically the whole argument of the appellants is based upon the ground that the
original certificate (No. 742, issued July 21, 1906) is absolutely void, for the reason that
"the appellants had no notice of the pendency of the original action to confirm the title
of said property." Appellants now admit that a notice of the pendency of the original
action was sent to attorneys Hartigan, Rohde & (Marple?) Gutierrez. Appellants now
allege that it affirmatively appears that neither this firm nor any of its members
represented the defendants and appellants in that action. The record shows, as we have
pointed out above, that the original petition showed that Hartigan, Rohde & Gutierrez
were the representatives of the heirs of Don Antonio Enriquez, and that notice was duly
sent to them. We have searched the record now in vain to find the slightest denial of
the fact that they were the representatives of said heirs, even though one of said
attorneys represented them, or at least some of them, in the present proceedings. So
far as the record shows there is not even a suggestion found in the various hearings and
proceedings taken and had under the above motions, that said attorneys were not the
representation of the heirs of Don Antonio Enriquez at the time of the original
proceedings. Neither does the record show any attempt on their part to deny the fact
that they received the notices given in the original action. The appellants assert in their
argument that "personal notice was absolutely necessary in order to justify the court
below in rendering a decree in favor of the plaintiff and appellee, in the first instance"
(the original proceeding). The appellants, by that argument, attempt to show, not that
the judgment of the 24th of August, 1912, was invalid, but that the original certificate
(No. 742) was void, because they had not been served with personal notice. This brings
us to the question whether or not personal notice to all of the persons interested in an
action for the registration of real property under the Torrens system, is an absolute
prerequisite to the validity of said registration. It will be remembered that we noted
above that personal notice of the pendency of the original petition had been given and
that a publication of the same had been made in accordance with the provisions of
sections 31 and 32 of Act No. 496. After the expiration of the period during which
notice must be given, the original cause was set down for hearing. The record also shows
that the clerk of the Land Court made a certificate showing that that notice had been
issued and published in accordance with the law. Section 32 provides, in part, that said
"certificate of the clerk that he had served the notice as directed by the court, by
publishing or mailing, shall be filed in the case before the return day, and shall be
conclusive proof of such service."

On the day set for the hearing of said original petition, no one appeared to oppose the
granting of the prayer which it contained. Section 35 of Act No. 496 provides: "If no
person appears and answer within the time allowed, the court may at once, upon motion
of the applicant, no reason to the contrary appearing, order a general default to be
recorded and the application ( petition) be taken for confessed. By the description in the
notice. "To all whom it may concern," all the world are made parties defendant and shall
be concluded by the default and order. The court shall not be bound by the report of the
examiner of titles, but may require other and further proof."

The provisions of section 35 seem to be directly contrary to the contention of the

appellants. It seems to directly contradict the requirements of personal notice as an
absolute prerequisite to the granting of a valid title under the Torrens system.

The same idea is further confirmed by the provisions of section 38 of said Act No. 496.
Said section 38 provides that: "Every decree of registration shall bind the land and quite
the title thereto, subject only to the exceptions stated in the following section. It shall
be conclusive upon and against all persons, including the Insular Government, and all the
branches thereof, whether mentioned by name in the application, notice or citations, or
included in the general description 'To all whom it may concern.'"
There is a further and very strong intimation in the law that personal notice is not
absolutely a prerequisite to the validity of title under the Torrens system. Section 32
(Act No. 496) provides that: "The court shall, so far as it deems it possible, require
proof of actual notice to all the adjoining owners and to all persons who appear to have
an interest in or claim to the land included in the application." It will be noted also that
the petitioner in registration cases is not by law required to give any notice to any
person. The law requires the clerk of the court to give the notices. (Sections 31 and 32
of Act No. 496.) It is true that "the court may also cause other or further notice of the
application to be given in such a manner and to such persons as it may deem proper."
Thus it is seen that the applicant is by express provision of law relieved from any
obligation whatsoever to give motive to any person of the pendency of his application to
have his land registered under the Torrens system. That being true, upon what theory
may the applicant be subjected to harassment or delay or additional expense, because
some person claims that he did not receive actual personal notice? Section 101 and 102
(Act No. 496) seem to contain a remedy for persons who have suffered damages for the
failure on the part of court officials to comply with the law. (Noble State
Bank vs. Haskell, 219 U. S., 104.) His remedy is not to have the registration and
certificate annulled, unless he comes within the provisions of section 38, and even then
he is without a remedy against the applicant unless he can show, within a period of one
year after the decree of registration and the granting of the certificate, at he has been
"deprived of land or any estate or interest therein," by fraud, and not even then, if an
"innocent purchaser for the value has acquired and interest." In the present case five
years and a half had transpired and negotiations for the sale of the land to an innocent
purchaser had been terminated. There is not intimation that the petitioner is guilty of
fraud, in the slightes degree.

While the Torrens Land Law is a law of modern times, is has been adopted in many
States and its provisions have been attacked at almost every point. The requirements
relating to notices has been a fruitful source of litigation. The constitutionality of the
law has been attacked many times, because of the provision of said law relating to
notices. This is not the first time that the question has been presented to this court.
The same question was presented to this court in the case of Grey Alba vs. De la
Cruz (17 Phil. Rep., 49). In that case the registered title was attacked upon the ground
that fraud existed, simply because personal notice had not been given. The existence of
fraud was predicated upon the failure of actual personal notice. In passing upon that
question, this court, speaking through Mr. Justice Trent, said (quoting from the
syllabus):

In original proceedings for the registration of land under Act No. 496, the
appellee herein was made a party- defendant by publication, but was not
 personally served with notice: Held, That the decree of the Court of Land
Registration is conclusive against his as well as all the world.

The proceedings for the registration of land, under Act No. 496, are in rem and
not in personam. A proceeding in rem, dealing with a tangible res, may be
instituted and carried to judgment without personal service upon the claimants
within the state or notice by name to those outside of it. Jurisdiction is secured
by the power of the court over the res. Such a proceeding would be impossible
were this not so, for it would hardly do to make a distinction between the
constitutional rights of claimants who were known and those who were not known
to the plaintiff, when the proceeding is to bar all. (Tyler vs. Judges, 175 Mass.,
71.)

In the present case there is not the slightest intimation that the original applicant
(Maria del Consuelo Felisa Roxas y Chuidan) was guilty of fraud. The record shows that
she named all the persons who might have an interest in the registration of her land, in
her petition. The applicant is not charged even with negligence. The record shows that
she did all the law required her to do.

In discussing the Torrens Land Law we must keep in mind that its primary purpose is the
registration of the title which the applicant or petitioner has and to relieve his land of
unknown liens or claims, just or unjust, against it. The Torrens system of land
registration is a system for the registration of title to land only, and not a system
established for the acquisition of land. It is not intended that lands may be acquired by
said system of registration. It is intended only that the title, which the petitioner has,
shall be registered and thereby cleared of all liens and burdens of whatsoever
character, except those which shall be noted in the order of registration and in the
certificate issued.

If there exists known and just claims against the title of the applicant, he gains nothing
in effect by his registration, except in the simplicity of subsequent transfer of his title.
The registration either relieves the land of all known as well as unknown claims,
absolutely, or it compels the claimants to come into court and to make there a record, so
that thereafter there may be no uncertainly concerning either the character or the
extent of such claims.

The requirement that personal notice shall be a prerequisite to the validity of

registration would absolutely prohibit the foreclosure of unknown claims, for the reason
that personal notice could never be given to "unknown claimants." The great difficulty in
land titles arises from the existence of possible unknown claimants. Known claimants can
be dealt with. They furnish no valid impediment, in fact, to the transfer of titles.
Courts have held that in actions in rem personal notice to owners of a res is not
necessary to give the courts jurisdiction to deal with and to dispose of the res. (Grey
Alba vs. De la Cruz, 17 Phil. Rep., 49; Tyler vs. Judges, 175 Mass., 71; American Land
Company vs. Zeis, 219 U.S., 47.) This rule was first established in admiralty proceedings.
It was established out of the very necessities of the case. The owner of a ship, for
instance, lived in London. His ship was found in the most distant ports of the earth. Its
operation necessarily required supplies, such as men, coal, and food. The very nature of
its business necessitated the making of contracts. The continuance of its voyage
depended upon its capacity to make contracts and to get credit. It might also,
perchance, cause damage to other craft, in like conditions. To be able to secure all such
necessities, to satisfy all possible obligations, to continue its voyage and its business on
the high seas, merchants and courts came to regard the "ship" as a person, with whom or
with which they were dealing, and not its real owner. Consequently there came into
existence this action in rem. For the purpose of carrying into effect the broader
purposes of the Torrens land law, it has been universally considered that the action
should be considered as one in rem. Mr. Justice Holmes, then of the Supreme Court of
the State of Massachusetts, and now a member of the Supreme Court of the United
State, in the case of Tyler vs. Judges (175 Mass., 71), in discussing this question, said:

Looked at either from the point of view of history or of the necessary

requirements of justice, a proceeding in rem, dealing with a tangible res, may be
instituted and carried to judgment without personal service upon claimants
within the State or notice by name to those outside of it, and not encounter any
provision of either constitution (of the State of Massachusetts or the United
States). Jurisdiction is secured by the power of the court over the res. As we
have said, such a proceeding would be impossible were this not so, for it hardly
would dot to make a distinction between the constitutional rights of claimants
who were known and those who were not known to the plaintiff, when the
proceeding is to bar all. (Pennoyer vs. Neff, 95 U.S., 714, 727; The Mary, 9
Cranch 126, 144.)

There are many classes of cases where men may be deprived of their property and of
their rights, without personal notice of the proceedings in which that may occur. For
instance, in attachment cases, notice or service upon the defendant may be had by
publication. (Pennoyer vs. Neff, 95 U.S., 714, 727.) So also in divorce proceedings, as well
as the rights of claimants against estates of deceased persons, personal notice is not a
prerequisite. Notice by publication may be had. Also unknown claimants or owners may be
brought into court without personal notice in an action for the condemnation of private
property for public use. There exists a multitude of cases in which personal service is
not necessary and service by publication is sufficient.
The law, even before the Torrens Law, provided means by which title to land might be
quited "by notice by publication to all persons." (Hamilton vs. Brown, 101 U.S., 256, 274;
Huling vs. Kaw Valley, etc., Co., 130 U.S., 559, 564; Parker vs. Overman, 18 Howard (N.Y.)
137; American Land Company vs. Zeiss, 219 U.S., 47; Arndt vs. Griggs, 134 U.S., 316;
Perkins vs. Wakeman, 86 Cal., 580.)

Even before the Torrens Law was adopted, the states had the power and right to provide
a procedure for the adjudication of title to real estate. The state had control over real
property within its limits. The conditions of ownership of real estate in a state, whether
the owner be a stranger or a citizen, are subject to its rules, concerning the holding,
transfer, liability to obligations, private or public, and the models of establishing title
thereto; and for the purpose of determining these question, it (the state) may provide
any reasonable rules or procedure. (Clark vs. Smith, 13 Peters, 195; Barker vs. Harvey,
181 U.S., 481; Mitchell vs. Furman, 180 U.S., 402; Botiller vs. Domingues, 130 U.S., 238;
Moore vs. Steinbach, 127 U.S., 70; Arndt vs. Griggs, 134 U.S., 316; American Land
Company vs. Zeiss, 219 U.S., 47.)

The state possesses not only the power to determine how title to real estate may be
acquired and proved, but it is also within its legislative competency to establish the
method of procedure. (American Land Co. vs. Zeiss, 219 U.S., 47; Bertrand vs. Taylor, 87
Ill., 235; Title, Document, etc., Company vs. Kerrigan, 150 Cal., 208, 305;
Perkins vs. Wakeham, 86 Cal., 580.)

The estate, as sovereign over the lands situated within it, may provide for the
adjudication of title in a proceeding in rem, or in the nature of a proceeding in rem,
which shall be binding upon all persons known and unknown. (State vs. McGlynn, 20 Cal.,
233; 81 Am. Dec., 118; Perkins vs. Wakeham, 86 Cal., 580; 21 Am.t. Rep., 67;
McLaughlin vs. McCrory, 55 Ark., 442; 29 Am. St. Rep., 56; People's National
Bank vs. Cleveland, 117 Ga., 908; People vs. Simon, 176 Ill., 165; 68 Am. St. Rep., 175;
Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662; Ruppin vs. McLaughlin, 122 Iowa, 343;
Young vs. Upshur, 42 La. An., 362; 21 Am. St. Rep., 381; Tyler vs. Judges, 175 Mass., 71;
51 L.R.A., 571; 57 L.R.A., 297; Rohrer vs. Ader, 124 Mo., 24; Sandiford vs. Town of
Hempstead, 90 N.Y. Supp., 76, 79, 97; Arndt vs. Griggs, 134 U.S., 316.)

If the state can provide for substituted service for the purpose of quieting title to real
estate against an unknown resident, it may provide a reasonable method for securing
substituted services against residents. The power of the state to provide methods of
quieting title should not be limited to known persons. In order to make such a law
valuable and effective to its fullest extent, it is necessary that it be made to operate on
all interest and persons known or unknown.
Mr. Justice Holmes, in the case of Tyler vs. Judges (175 Mass., 71) in discussing this
question, said: "If it (the procedure) does not satisfy the Constitution, a judicial
proceeding to clear titles against all the world hardly is possible, for the very meaning of
such a proceeding is to get rid of unknown as well as known claims indeed certainly
against the unknown may be said to be its chief end and unknown claims cannot be
dealt with by personal service upon the claimant."

Mr. Chief Justice White of the Supreme Court of the United States, in the case of the
American Land Company vs. Zeiss (219 U. S., 47) said: "To argue that the provisions of
the statute are repugnant to the due process clause (of the Constitution) because a case
may be conceived where rights in and to property would be adversely affected without
notice being actually conveyed by the proceedings is in effect to deny the power of the
state to deal with the subject. The criterion is not the possibility of conceivable injury,
but the just and reasonable character of the requirements, having reference to the
subject with which the statute deals."

The court of appeals of the State of New York, in the case of In re Empire City Bank (18
N.Y., 199, 215) in speaking of the right of the state to prescribe in suitable cases for
substituted service, said: "Various prudential regulations are made with respect to these
remedies by it may possibly happen, notwithstanding all these precautions, that a citizen
who owes nothing, and has done none of the acts mentioned in the statutes, may be
deprived of his estate without any actual knowledge of the process by which it has been
taken from him. If we hold, as we must, in order to sustain this legislation, that the
Constitution does not positively require personal notice in order to constitute a legal
proceedings due process of law, it then belongs to the legislature to determine in the
particular instance whether the case calls for this kind of exceptional legislation, and
what manner of constructive notice shall be sufficient to reasonably apprise the party
proceeded against of the Legal steps which are taken against him. (American Land
Company vs. Zeiss, 219 U.S., 47; Title, Document, etc., Company vs. Kerrigan, 150 Cal.,
289.)"

The only case cited by the appellants in support of their argument, is the case of the
American Land Company vs. Zeiss (219 U.S., 47). In view of the facts and the decisions
of the different courts which are cited in that case, it is difficult to understand how it
is authority in support of the contention of the appellants here. The facts in that case
are as follows:

Zeiss, on the 22d of August, 1906, commenced an action in the superior court of the
country San Francisco, alleging in substance that on the 18th and 19th days of April,
1906, a material part of the public records contained in the office of the county
recorder of the city and county of San Francisco was destroyed by fire; that on the
18th day of April, 1906, and at the time of the filing of the complaint, he was the owner
and in the actual and peaceable possession of the parcels of land in controversy: that his
estate, title, interest in and to said parcels of land, and each of them, was that of owner
in fee simple, absolute, free from all encumbrances, liens, defect, claims or demands of
any kind or nature whatsoever. Under these facts the plaintiff, Zeiss, prayed that the
be adjudged to be the owner of and entitled to the possession of said parcels of land,
and each of them, was that of owner in fee simple, absolute, free from all encumbrance,
liens, defects, claims or demands of any kind or nature whatsoever. Under these facts
the plaintiff, Zeiss, prated that he be adjudged to be the owner of and entitled to the
possession of said described parcels of land in fee simple, and that no one else had any
estate, rights, title, interest or claim in or to the same, or any part thereof, either legal
or equitable, present or future, vested or contingent.

Upon the presentation of the petition by Zeisss, a summons was issued and notice of the
pendency of the action was published in certain newspaper, as was required by law.
Notice was also posted upon the property, as required by the statute. No one having
appeared and opposed the granting of the petition of the complaint, or claimed any
interest in or lien upon the property described in the complaint, a default was ordered
against all persons, and on the 19th days of December, 1906, a decree was entered in
favor of Zeiss, adjudging that he was the owner in fee simple, absolute, and entitled to
the possession of the land described in the complaint and that no other person had any
right title, interest, or estate in and to the same, or any part thereof, either legal or
equitable, present or future, vested or contingent.

Nothing else seems to have transpired after said decree was issued in favor of Zeiss,
until the 26th day of May, 1908, or one year and five months after the entry of the
decree of the superior court, in the city and county of San Francisco. On that date (the
26th of May, 1908) an action was brought in the United States Circuit Court for the
Northern District of California, in which the plaintiffs claimed title to the parcels of
land, as owners in fee simple, absolute, which had theretofore been decreed to Zeiss.
The plaintiff alleged that the decree issued by the superior court of the city and county
of San Francisco was void and of no force and effect and was made and maintained
without due process of law, and that said superior court, in said action and
proceedings never had any jurisdiction over the persons holding the title during such
proceedings, and that said court did not have or obtain jurisdiction to divest the right,
title, interest or estate of plaintiff . The complaint alleged that "Zeiss had no right
whatever in said parcels of land, other than his rights of possession and occupation." The
bill further alleged that the plaintiffs had been at all times citizens and residents of
California, not seeking to evade, but ready to accept service of summons and easily
reached for that purpose; that, notwithstanding that fact, no service was made upon
them nor did they in any way receive notice of the pendency of the action (Zeiss vs. All
persons claiming any interest in or lien upon the real property herein described); nor did
they gain any knowledge of existence of the decree until more than a year after its
entry. To the complaint the defendant, Zeiss, demurred.

Upon the issue thus presented, the Circuit Court of Appeals for the Ninth District
certified the question involved to the Supreme Court of the United States. The
Supreme Court of the United States, after a careful analysis of the facts and of the
law, in a very lengthy and instructive opinion (219 U. S., 47), decided each of the question
submitted by the Circuit Court of Appeals against the contention of the plaintiff and
returned the cause to the court below.

The original action by Zeiss was brought to quiet the title to two parcels of land for the
purpose of registrating his title to the same under an act of the legislature of the State
of California, entitled "An act to provide for the establishment and quieting of title to
real property in case of loss or destruction of public records." Said law is known as the
McEnerney Law. It was intended by said act to provide a method whereby owners in
possession of real estate, where records had been destroyed to such an extent as to
make it impossible to trace a record title, might secure a degree in the court which
would furnish public, authenticated evidence of title. The special occasion for the law
was the fact that practically all of the public records of title in several counties in the
State of California had recently theretofore been destroyed as the result of an
earthquake and fire. Said law provided that whenever the public records in the office of
the county recorded had been, or shall hereafter be lost or destroyed, in whole or in any
material part, by flood, fire, or earthquake, any person who claims an estate of
inheritance or have title in, and who had by himself or his tenants, or other persons
holding under him, in actual and peaceable possession any real property in said county,
may bring and maintain an action in rem, against all the world, in the superior court for
the county in which said real property is situate, to establish his title, and to determine
all adverse claims thereto.

The law further provides that an action shall be commenced by the filing of a verified
complaint, in which he shall name the defendants as "all persons claiming any interest in
or lien upon the real property herein described, or any part thereof." He was required to
give in his complaint a particular description of the property. The law provided that upon
the filing of the complaint, a summons or notice was required to be issued, containing the
names of the court and the country in which the action was brought, the name of the
plaintiff, and a particular description of the property involved, which notice was directed
to "all persons claiming any interest in or lien upon the real property herein described, or
any part thereof," as defendants.
The law further provided that said summons or notice should be published in a newspaper
of general circulation in the county where the action was brought, at least once a week
for a period of two months.

The law further provided that personal notice should be given to any person claiming an
interest in the property or a lien thereon adverse to the plaintiff.

The said law further provided that upon the publication and posting of the summons and
its service upon and mailing to the person, if any, upon whom it is herein directed to be
specially served, the court shall have full and complete jurisdiction over the plaintiff and
said property and of the person and every one claiming any estate, right, title, or
interest in or to or lien upon said property, or any part thereof, and shall be deemed to
have obtained the possession and control of said property, for the purpose of the action,
and shall have full and complete jurisdiction to render judgment therein, which is
provided for in the law.

In the case of the American Land Company vs. Zeiss, cited and relied upon by the
appellants, the validity of said law was attacked and the legality of the title granted to
Zeiss was impugned for the reason that the law was unconstitutional and void, and
because the plaintiff had not received actual notice of the application to Zeiss to have
his title quieted, under said law. The Supreme Court of the United States (219 U.S., 47)
held, as has been above indicated, that the law was constitutional and that a compliance
with the requirements of the notice provided for in said law was sufficient to give the
court jurisdiction over the res and to enter a valid decree. There seems to be but little
in the decision in the case of the American Land Company vs. Zeiss to support the
contention of the appellants.

Considering that the Legislature of the Philippine Islands had full power to adopt the
procedure provided for in Act No. 496, for the registration of the title of lands; and

Considering that the court in the original action followed strictly the procedure adopted
by said law; and

Considering that there is no claim of fraud, actual or constructive, upon the part of any
of the parties connected with said action, we are forced to the conclusion that the
appellants here are not now entitled to have that judgment or decree of registration and
certificate amended or set aside.

There remains another question, however, which the appellants have not discussed and
which we deem of importance. It is the question of the right of the Land Court
to correct an error of closure in a plan or of a statement contained in a certificate. A
plan is prepared and is presented with the petition for the registration of a parcel of
land. No opponents appear. No opposition is presented to the registration. All the steps
in the procedure required by law have been taken. The land is registered. It is then
discovered for the first time that by reason of a wrong direction given to one of the
lines in the plan, said plan will not close that if a wall were built upon the lines of the
plan, one of the four corners of the wall would not meter. We believe that an error of
the character may be corrected by the court, provided that such correction does not
include land not included in the original petition. Upon the question whether the amended
plan (p.252, record) included more or different lands than were included in the original
petition, we find the following statements made by one of the judges who ordered said
plan amended. The statements is:

At this stage of the proceedings and on his particular point nothing further is
incumbent upon the court than to determine the property as it was adjudicated
in this case.

Therein no new portion was either added or subtracted, and this court finds
that such should be the holding on this particular point.

We have a further statement made by one of the judges, the Honorable Charles H.
Smith, relating to the same question, in an answer presented by him to a petition for a
writ of prohibition, presented by some the appellants herein, to the Supreme Court. That
petition for a writ of prohibition involved practically the same question presented by the
appellants here now. Upon the question whether or not additional lands had been included
in the new plan (p.252, record), Judge Smith, in answering for himself and his associates
(Ostrand and Romualdez) said:

Respondents deny that a new dividing line between the premises in question
(premises of the plaintiff and appellant) was determined and established by an
order of the court issued at the conclusion of said proceedings, but, on the
contrary, respondents charge the truth to be that the dividing line between said
properties was not changed but simply approved and so indicated upon the
record title. For instance, the line between said properties beginning on the
south side of the Escolta is exactly at the same point indicated in the original
description and approved by the court; in other words, the premises in question
of the said Maria del Consuelo Felisa Roxas y Chuidian have not been enlarged;
the boundary lines thereof have not been changed; the real descriptions of the
properties have been left undisturbed; the adjoining land owned by the
petitioners is undiminished, except possibly as to alleged easements claimed to
have been created by the projection of some of the roots of the petitioners'
building over the aforesaid registered property of the said Roxas. That matter
 is settled clearly by the provisions of the last paragraph of section 39 of Act
No. 496."

We called attention above to the fact that the petitioner alleged that the line A-B of
her property ran S., 44 30' W., a distance of 31.08 meters, while the plan accompanying
said petition (see Exhibit A, page 35, ante) made said line to run S., 46 30' W., a
distance of 31.08 meters An examination of the certificate issued to the petitioner (see
page 39, ante) also states that the line A-B runs S., 46 30' W., for a distance of 31.08
meters. The record contains no application why the original plan (see Exhibit A, page 35,
ante) did not conform to the description of the land given in the petition. That error, in
our judgment, seems to have constituted the real difficulty with the closure of the plan.
Under said conditions we are of the opinion that the Land Court is entirely justified in
ordering the plan corrected for the purposes above indicated.

There is still another question involved in the case, which the appellants have not
discussed, and that is the right of Maria del Consuelo Felisa Roxas y Chuidian to have her
original certificate of registration corrected, for the purpose of showing that she was
the owner of the buildings located upon the parcel of land in question. It will be
remembered that in her petition presented January 12, 1906, she alleged that she was
the owner of the parcel of land in question, together with the buildings thereon. No
opposition was presented. No objection was made to the registration of the land as
described in her petition. The record shows no reason why the buildings should have
been omitted in the certificate of registration. The omission must have been an errors.
on the part of the clerk. We find that Act No. 496 contains an express provision for the
correction of such errors. Section 112 provides that the registered owner may, at any
time, apply by petition to have corrected any "error, omission, or mistake made in
entering a certificate, or any memorandum thereon, or on any duplicate certificate." We
think the petition presented by Miss Roxas for the correction of such original
certificate was entirely within her right under the law. It might be claimed, and we
believe that the proposition is sustained by law, that the registration of a parcel of land,
unless the record contains something to the contrary, necessarily includes the buildings
and edifices located thereon, even though they are not mentioned. Without relying upon
that proposition of law, however, and in view of the petition of the plaintiff, it is hereby
ordered that the original certificate be amended so as to include not only the land
described in the original petition, but the buildings located thereon as well.

With reference to the petition of the Masonic Temple Association of Manila, the record
contains no sufficient reasons for not granting the same.

Therefore, and in view of all of the foregoing, we are of the opinion that the judgment
of the court below should be and it is hereby affirmed, with costs.
G.R. No. L-8936 October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs-appellants,

vs.
N.M. SALEEBY, defendant-appellee.

Singson, Ledesma and Lim for appellants.

D.R. Williams for appellee.

JOHNSON, J.:

From the record the following facts appear:

First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the
district of Ermita in the city of Manila.

Second. That there exists and has existed a number of years a stone wall between the
said lots. Said wall is located on the lot of the plaintiffs.

Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the
Court of Land Registration for the registration of their lot. After a consideration of
said petition the court, on the 25th day of October, 1906, decreed that the title of the
plaintiffs should be registered and issued to them the original certificate provided for
under the torrens system. Said registration and certificate included the wall.

Fourth. Later the predecessor of the defendant presented a petition in the Court of
Land Registration for the registration of the lot now occupied by him. On the 25th day
of March, 1912, the court decreed the registration of said title and issued the original
certificate provided for under the torrens system. The description of the lot given in
the petition of the defendant also included said wall.

Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered
that the wall which had been included in the certificate granted to them had also been
included in the certificate granted to the defendant .They immediately presented a
petition in the Court of Land Registration for an adjustment and correction of the error
committed by including said wall in the registered title of each of said parties. The lower
court however, without notice to the defendant, denied said petition upon the theory
that, during the pendency of the petition for the registration of the defendant's land,
they failed to make any objection to the registration of said lot, including the wall, in the
name of the defendant.

Sixth. That the land occupied by t he wall is registered in the name of each of the
owners of the adjoining lots. The wall is not a joint wall.

Under these facts, who is the owner of the wall and the land occupied by it?

The decision of the lower court is based upon the theory that the action for the
registration of the lot of the defendant was a judicial proceeding and that the judgment
or decree was binding upon all parties who did not appear and oppose it. In other words,
by reason of the fact that the plaintiffs had not opposed the registration of that part
of the lot on which the wall was situate they had lost it, even though it had been
theretofore registered in their name. Granting that theory to be correct one, and
granting even that the wall and the land occupied by it, in fact, belonged to the
defendant and his predecessors, then the same theory should be applied to the
defendant himself. Applying that theory to him, he had already lost whatever right he
had therein, by permitting the plaintiffs to have the same registered in their name, more
than six years before. Having thus lost hid right, may he be permitted to regain it by
simply including it in a petition for registration? The plaintiffs having secured the
registration of their lot, including the wall, were they obliged to constantly be on the
alert and to watch all the proceedings in the land court to see that some one else was not
having all, or a portion of the same, registered? If that question is to be answered in the
affirmative, then the whole scheme and purpose of the torrens system of land
registration must fail. The real purpose of that system is to quiet title to land; to put a
stop forever to any question of the legality of the title, except claims which were noted
at the time of registration, in the certificate, or which may arise subsequent thereto.
That being the purpose of the law, it would seem that once a title is registered the
owner may rest secure, without the necessity of waiting in the portals of the court, or
sitting in the "mirador de su casa," to avoid the possibility of losing his land. Of course,
it can not be denied that the proceeding for the registration of land under the torrens
system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with
all the forms of an action and the result is final and binding upon all the world. It is an
action in rem. (Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil.
rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American
Land Co. vs. Zeiss, 219 U.S., 47.)

While the proceeding is judicial, it involves more in its consequences than does an
ordinary action. All the world are parties, including the government. After the
registration is complete and final and there exists no fraud, there are no innocent third
parties who may claim an interest. The rights of all the world are foreclosed by the
decree of registration. The government itself assumes the burden of giving notice to all
parties. To permit persons who are parties in the registration proceeding (and they are
all the world) to again litigate the same questions, and to again cast doubt upon the
validity of the registered title, would destroy the very purpose and intent of the law.
The registration, under the torrens system, does not give the owner any better title
than he had. If he does not already have a perfect title, he can not have it registered.
Fee simple titles only may be registered. The certificate of registration accumulates in
open document a precise and correct statement of the exact status of the fee held by
its owner. The certificate, in the absence of fraud, is the evidence of title and shows
exactly the real interest of its owner. The title once registered, with very few
exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or
diminished, except in some direct proceeding permitted by law. Otherwise all security in
registered titles would be lost. A registered title can not be altered, modified, enlarged,
or diminished in a collateral proceeding and not even by a direct proceeding, after the
lapse of the period prescribed by law.

For the difficulty involved in the present case the Act (No. 496) providing for the
registration of titles under the torrens system affords us no remedy. There is no
provision in said Act giving the parties relief under conditions like the present. There is
nothing in the Act which indicates who should be the owner of land which has been
registered in the name of two different persons.

The rule, we think, is well settled that the decree ordering the registration of a
particular parcel of land is a bar to future litigation over the same between the same
parties .In view of the fact that all the world are parties, it must follow that future
litigation over the title is forever barred; there can be no persons who are not parties to
the action. This, we think, is the rule, except as to rights which are noted in the
certificate or which arise subsequently, and with certain other exceptions which need
not be dismissed at present. A title once registered can not be defeated, even by an
adverse, open, and notorious possession. Registered title under the torrens system can
not be defeated by prescription (section 46, Act No. 496). The title, once registered, is
notice to the world. All persons must take notice. No one can plead ignorance of the
registration.

The question, who is the owner of land registered in the name of two different persons,
has been presented to the courts in other jurisdictions. In some jurisdictions, where the
"torrens" system has been adopted, the difficulty has been settled by express statutory
provision. In others it has been settled by the courts. Hogg, in his excellent discussion
of the "Australian Torrens System," at page 823, says: "The general rule is that in the
case of two certificates of title, purporting to include the same land, the earlier in date
prevails, whether the land comprised in the latter certificate be wholly, or only in part,
comprised in the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy,
7 N.Z.R., 155; Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152;
Register of Titles, vs. Esperance Land Co., 1 W.A.R., 118.)" Hogg adds however that, "if it
can be very clearly ascertained by the ordinary rules of construction relating to written
documents, that the inclusion of the land in the certificate of title of prior date is a
mistake, the mistake may be rectified by holding the latter of the two certificates of
title to be conclusive." (See Hogg on the "Australian torrens System," supra, and cases
cited. See also the excellent work of Niblack in his "Analysis of the Torrens System,"
page 99.) Niblack, in discussing the general question, said: "Where two certificates
purport to include the same land the earlier in date prevails. ... In successive
registrations, where more than one certificate is issued in respect of a particular estate
or interest in land, the person claiming under the prior certificates is entitled to the
estate or interest; and that person is deemed to hold under the prior certificate who is
the holder of, or whose claim is derived directly or indirectly from the person who was
the holder of the earliest certificate issued in respect thereof. While the acts in this
country do not expressly cover the case of the issue of two certificates for the same
land, they provide that a registered owner shall hold the title, and the effect of this
undoubtedly is that where two certificates purport to include the same registered land,
the holder of the earlier one continues to hold the title" (p. 237).

Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be
conclusive upon and against all persons, including the Insular Government and all the
branches thereof, whether mentioned by name in the application, notice, or citation, or
included in the general description "To all whom it may concern." Such decree shall not
be opened by reason of the absence, infancy, or other disability of any person affected
thereby, nor by any proceeding in any court for reversing judgments or decrees; subject,
however, to the right of any person deprived of land or of any estate or interest therein
by decree of registration obtained by fraud to file in the Court of Land Registration a
petition for review within one year after entry of the decree (of registration), provided
no innocent purchaser for value has acquired an interest.

It will be noted, from said section, that the "decree of registration" shall not be opened,
for any reason, in any court, except for fraud, and not even for fraud, after the lapse
of one year. If then the decree of registration can not be opened for any reason, except
for fraud, in a direct proceeding for that purpose, may such decree be opened or set
aside in a collateral proceeding by including a portion of the land in a subsequent
certificate or decree of registration? We do not believe the law contemplated that a
person could be deprived of his registered title in that way.

We have in this jurisdiction a general statutory provision which governs the right of the
ownership of land when the same is registered in the ordinary registry in the name of
two persons. Article 1473 of the Civil Code provides, among other things, that when one
piece of real property had been sold to two different persons it shall belong to the
person acquiring it, who first inscribes it in the registry. This rule, of course,
presupposes that each of the vendees or purchasers has acquired title to the land. The
real ownership in such a case depends upon priority of registration. While we do not now
decide that the general provisions of the Civil Code are applicable to the Land
Registration Act, even though we see no objection thereto, yet we think, in the absence
of other express provisions, they should have a persuasive influence in adopting a rule
for governing the effect of a double registration under said Act. Adopting the rule
which we believe to be more in consonance with the purposes and the real intent of the
torrens system, we are of the opinion and so decree that in case land has been
registered under the Land Registration Act in the name of two different persons, the
earlier in date shall prevail.

In reaching the above conclusion, we have not overlooked the forceful argument of the
appellee. He says, among other things; "When Prieto et al. were served with notice of the
application of Teus (the predecessor of the defendant) they became defendants in a
proceeding wherein he, Teus, was seeking to foreclose their right, and that of orders, to
the parcel of land described in his application. Through their failure to appear and
contest his right thereto, and the subsequent entry of a default judgment against them,
they became irrevocably bound by the decree adjudicating such land to Teus. They had
their day in court and can not set up their own omission as ground for impugning the
validity of a judgment duly entered by a court of competent jurisdiction. To decide
otherwise would be to hold that lands with torrens titles are above the law and beyond
the jurisdiction of the courts".

As was said above, the primary and fundamental purpose of the torrens system is to
quiet title. If the holder of a certificate cannot rest secure in this registered title then
the purpose of the law is defeated. If those dealing with registered land cannot rely
upon the certificate, then nothing has been gained by the registration and the expense
incurred thereby has been in vain. If the holder may lose a strip of his registered land
by the method adopted in the present case, he may lose it all. Suppose within the six
years which elapsed after the plaintiff had secured their title, they had mortgaged or
sold their right, what would be the position or right of the mortgagee or vendee? That
mistakes are bound to occur cannot be denied, and sometimes the damage done thereby
is irreparable. It is the duty of the courts to adjust the rights of the parties under such
circumstances so as to minimize such damages, taking into consideration al of the
conditions and the diligence of the respective parties to avoid them. In the present case,
the appellee was the first negligent (granting that he was the real owner, and if he was
not the real owner he can not complain) in not opposing the registration in the name of
the appellants. He was a party-defendant in an action for the registration of the lot in
question, in the name of the appellants, in 1906. "Through his failure to appear and to
oppose such registration, and the subsequent entry of a default judgment against him, he
became irrevocably bound by the decree adjudicating such land to the appellants. He had
his day in court and should not be permitted to set up his own omissions as the ground
for impugning the validity of a judgment duly entered by a court of competent
jurisdiction." Granting that he was the owner of the land upon which the wall is located,
his failure to oppose the registration of the same in the name of the appellants, in the
absence of fraud, forever closes his mouth against impugning the validity of that
judgment. There is no more reason why the doctrine invoked by the appellee should be
applied to the appellants than to him.

We have decided, in case of double registration under the Land Registration Act, that
the owner of the earliest certificate is the owner of the land. That is the rule between
original parties. May this rule be applied to successive vendees of the owners of such
certificates? Suppose that one or the other of the parties, before the error is
discovered, transfers his original certificate to an "innocent purchaser." The general
rule is that the vendee of land has no greater right, title, or interest than his vendor;
that he acquires the right which his vendor had, only. Under that rule the vendee of the
earlier certificate would be the owner as against the vendee of the owner of the later
certificate.

We find statutory provisions which, upon first reading, seem to cast some doubt upon
the rule that the vendee acquires the interest of the vendor only. Sections 38, 55, and
112 of Act No. 496 indicate that the vendee may acquire rights and be protected against
defenses which the vendor would not. Said sections speak of available rights in favor of
third parties which are cut off by virtue of the sale of the land to an "innocent
purchaser." That is to say, persons who had had a right or interest in land wrongfully
included in an original certificate would be unable to enforce such rights against an
"innocent purchaser," by virtue of the provisions of said sections. In the present case
Teus had his land, including the wall, registered in his name. He subsequently sold the
same to the appellee. Is the appellee an "innocent purchaser," as that phrase is used in
said sections? May those who have been deprived of their land by reason of a mistake in
the original certificate in favor of Teus be deprived of their right to the same, by virtue
of the sale by him to the appellee? Suppose the appellants had sold their lot, including
the wall, to an "innocent purchaser," would such purchaser be included in the phrase
"innocent purchaser," as the same is used in said sections? Under these examples there
would be two innocent purchasers of the same land, is said sections are to be applied
.Which of the two innocent purchasers, if they are both to be regarded as innocent
purchasers, should be protected under the provisions of said sections? These questions
indicate the difficulty with which we are met in giving meaning and effect to the phrase
"innocent purchaser," in said sections.
May the purchaser of land which has been included in a "second original certificate" ever
be regarded as an "innocent purchaser," as against the rights or interest of the owner of
the first original certificate, his heirs, assigns, or vendee? The first original certificate
is recorded in the public registry. It is never issued until it is recorded. The record
notice to all the world. All persons are charged with the knowledge of what it contains.
All persons dealing with the land so recorded, or any portion of it, must be charged with
notice of whatever it contains. The purchaser is charged with notice of every fact shown
by the record and is presumed to know every fact which the record discloses .This rule
is so well established that it is scarcely necessary to cite authorities in its support
(Northwestern National Bank vs. Freeman, 171 U.S., 620, 629; Delvin on Real Estate,
sections 710, 710 [a]).

When a conveyance has been properly recorded such record is constructive notice of its
contents and all interests, legal and equitable, included therein. (Grandin vs. Anderson, 15
Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97; Buchanan vs. Intentional Bank, 78
Ill., 500; Youngs vs. Wilson, 27 N.Y., 351; McCabe vs. Grey, 20 Cal., 509;
Montefiore vs. Browne, 7 House of Lords Cases, 341.)

Under the rule of notice, it is presumed that the purchaser has examined every
instrument of record affecting the title. Such presumption is irrebutable. He is charged
with notice of every fact shown by the record and is presumed to know every fact which
an examination of the record would have disclosed. This presumption cannot be overcome
by proof of innocence or good faith. Otherwise the very purpose and object of the law
requiring a record would be destroyed. Such presumption cannot be defeated by proof of
want of knowledge of what the record contains any more than one may be permitted to
show that he was ignorant of the provisions of the law. The rule that all persons must
take notice of the facts which the public record contains is a rule of law. The rule must
be absolute. Any variation would lead to endless confusion and useless litigation.

While there is no statutory provision in force here requiring that original deeds of
conveyance of real property be recorded, yet there is a rule requiring mortgages to be
recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a mortgage is
indispensable to its validity. (Art .1875.) In the face of that statute would the courts
allow a mortgage to be valid which had not been recorded, upon the plea of ignorance of
the statutory provision, when third parties were interested? May a purchaser of land,
subsequent to the recorded mortgage, plead ignorance of its existence, and by reason of
such ignorance have the land released from such lien? Could a purchaser of land, after
the recorded mortgage, be relieved from the mortgage lien by the plea that he was
a bona fide purchaser? May there be a bona fide purchaser of said land, bona fide in the
sense that he had no knowledge of the existence of the mortgage? We believe the rule
that all persons must take notice of what the public record contains in just as obligatory
upon all persons as the rule that all men must know the law; that no one can plead
ignorance of the law. The fact that all men know the law is contrary to the presumption.
The conduct of men, at times, shows clearly that they do not know the law. The rule,
however, is mandatory and obligatory, notwithstanding. It would be just as logical to
allow the defense of ignorance of the existence and contents of a public record.

In view, therefore, of the foregoing rules of law, may the purchaser of land from the
owner of the second original certificate be an "innocent purchaser," when a part or all of
such land had theretofore been registered in the name of another, not the vendor? We
are of the opinion that said sections 38, 55, and 112 should not be applied to such
purchasers. We do not believe that the phrase "innocent purchaser should be applied to
such a purchaser. He cannot be regarded as an "innocent purchaser" because of the
facts contained in the record of the first original certificate. The rule should not be
applied to the purchaser of a parcel of land the vendor of which is not the owner of the
original certificate, or his successors. He, in nonsense, can be an "innocent purchaser" of
the portion of the land included in another earlier original certificate. The rule of notice
of what the record contains precludes the idea of innocence. By reason of the prior
registry there cannot be an innocent purchaser of land included in a prior original
certificate and in a name other than that of the vendor, or his successors. In order to
minimize the difficulties we think this is the safe rule to establish. We believe the
phrase "innocent purchaser," used in said sections, should be limited only to cases where
unregistered land has been wrongfully included in a certificate under the torrens
system. When land is once brought under the torrens system, the record of the original
certificate and all subsequent transfers thereof is notice to all the world. That being
the rule, could Teus even regarded as the holder in good fifth of that part of the land
included in his certificate of the appellants? We think not. Suppose, for example, that
Teus had never had his lot registered under the torrens system. Suppose he had sold his
lot to the appellee and had included in his deed of transfer the very strip of land now in
question. Could his vendee be regarded as an "innocent purchaser" of said strip? Would
his vendee be an "innocent purchaser" of said strip? Certainly not. The record of the
original certificate of the appellants precludes the possibility. Has the appellee gained
any right by reason of the registration of the strip of land in the name of his vendor?
Applying the rule of notice resulting from the record of the title of the appellants, the
question must be answered in the negative. We are of the opinion that these rules are
more in harmony with the purpose of Act No. 496 than the rule contended for by the
appellee. We believe that the purchaser from the owner of the later certificate, and his
successors, should be required to resort to his vendor for damages, in case of a mistake
like the present, rather than to molest the holder of the first certificate who has been
guilty of no negligence. The holder of the first original certificate and his successors
should be permitted to rest secure in their title, against one who had acquired rights in
conflict therewith and who had full and complete knowledge of their rights. The
purchaser of land included in the second original certificate, by reason of the facts
contained in the public record and the knowledge with which he is charged and by reason
of his negligence, should suffer the loss, if any, resulting from such purchase, rather
than he who has obtained the first certificate and who was innocent of any act of
negligence.

The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting
from double registration under the torrens system and the subsequent transfer of the
land. Neither do we now attempt to decide the effect of the former registration in the
ordinary registry upon the registration under the torrens system. We are inclined to the
view, without deciding it, that the record under the torrens system, supersede all other
registries. If that view is correct then it will be sufficient, in dealing with land
registered and recorded alone. Once land is registered and recorded under the torrens
system, that record alone can be examined for the purpose of ascertaining the real
status of the title to the land.

It would be seen to a just and equitable rule, when two persons have acquired equal
rights in the same thing, to hold that the one who acquired it first and who has complied
with all the requirements of the law should be protected.

In view of our conclusions, above stated, the judgment of the lower court should be and
is hereby revoked. The record is hereby returned to the court now having and exercising
the jurisdiction heretofore exercised by the land court, with direction to make such
orders and decrees in the premises as may correct the error heretofore made in
including the land in the second original certificate issued in favor of the predecessor of
the appellee, as well as in all other duplicate certificates issued.

Without any findings as to costs, it is so ordered.

G.R. No. L-13479 October 31, 1959

MARCELINO TIBURCIO, ET AL, plaintiffs-appellants,

vs.
PEOPLE'S HOMESITE & HOUSING CORPORATION, ET AL., defendants-appellees.

Office of the Solicitor General Edilberto Barot and Solicitor Camilo D. Quiason for
appellee UP.

BAUTISTA ANGELO, J.:

This is an action for reconveyance of a parcel of land located in Quezon City containing
an area of about 430 hectares.

On October 11, 1957, plaintiffs filed an action before the Court of First Instance of
Quezon City alleging that for many years prior to March 25, 1877 and up to the present
they and their ancestors have been in actual, adverse, open, public, exclusive and
continuous possession as owners of the land in litigation; that they have been cultivating
the land and enjoying its fruits exclusively; that from time immemorial up to the year
1955, they have been paying the land taxes thereon; that in 1955 defendant People's
Homesite & Housing Corporation began asserting title thereto claiming that its Transfer
Certificate of Title No. 1356 embraces practically all of plaintiff's property, while the
other defendant University of the Philippines began also asserting title thereto claiming
that its Transfer of Certificate of Title No. 9462 covers the remaining portion; that
defendants are not innocent purchasers for value, having had full notice of plaintiff's
actual possession and claim for ownership thereof; and that the inclusion of plaintiff's
property within the technical boundaries set out in defendants' titles was a clear
mistake and that at no time had defendants' predecessors in-interest exercised
dominical rights over plaintiff's property.

On October 31, 1957, defendant University of the Philippines filed a motion to dismiss
alleging that the complaint states no cause of action; that it is barred by the statute of
limitations; that the court has no jurisdiction over the case; and that in the event the
motion is not granted, defendant is separated from the case and be impleaded in a
separate action. To this motion plaintiffs filed a reply alleging that the complaint on its
faces alleges a valid and sufficient cause of action upon which the court could render a
valid judgment. Defendant People's Homesite & Housing Corporation, on the other hand,
filed a motion for bill of particulars to which plaintiffs filed also a reply. On November
20, 1957, Leonila G. de Perucho and Jose Pearanda filed a motion for intervention which
was likewise opposed by plaintiffs. On December 11, 1957, the trial court issued an order
dismissing the complaint on the ground of lack of cause of action and that it is already
barred by the statute of limitations, leaving unresolved the other points raised in the
pleadings for being unnecessary. From this order plaintiffs took the present appeal.

Appellants contend that the lower court erred in dismissing the complaint on the ground
of lack of sufficient cause of action for the reason that on its face said complaint
alleges sufficient facts on which a valid judgment could be rendered against defendants.
Thus, it is claimed that the complaint alleges the following facts: that plaintiffs are the
sole heirs of Eladio Tiburcio who died intestate in 1910; that upon his death Eladio
Tiburcio left to plaintiffs as his sole heirs a tract of land located in Quezon City; that
said plaintiffs have always been actual, open, notorious and exclusive possession of the
land as owners pro indiviso; that sometime in 1955 defendants began asserting title to
the land claiming that the same is embraced and covered by their respective certificates
of title; that defendants acquired their respective titles with full notice of the actual
possession and claim of ownership of plaintiffs, and as such they cannot be considered
innocent purchasers for value.

It appears, however, that the land in question has been placed under the operation of
the Torrens system since 1914 when it has been originally registered in the name of
defendant's predecessor-in-interest. It further appears that sometime in 1955
defendant People's Homesite & Housing Corporation acquired from the original owner a
parcel of land embracing practically all of plaintiff's property for which Transfer
Certificate of Title No. 1356 was issued in its favor, while defendant University of the
Philippines likewise acquired from the same owner another portion of the land which
embraces the remainder of the property for which Transfer Certificate of Title No.
9462 was issued in its favor. It is therefore, clear that the land in question has been
registers in the name of defendant's predecessor-in-inters since 1914 under the
Torren's system and that notwithstanding what they now claim that the original title
lacked the essential requirements prescribed by law for their validity, they have never
taken any step to nullify said title until 1957 when they instituted the present action. In
other words, they allowed a period of 43 years before they woke up to invoke what they
now claim to be erroneous when the court decreed in 1914 the registration of the land in
the name of defendant's predecessor-in-interest. Evidently, this cannot be done for
under our law and jurisprudence, a decree of registration can only be set aside within
one year after entry on the ground of fraud provided no innocent purchaser for value
has acquired the property (Section 38, Act No. 496; Apurado vs. Apurado, 26 Phil., 581;
Salmon vs. Bacando, 40 Off. Gaz., 13th Supp. 1607; Rivera vs. Moran, 48 Phil., 836).

On the other hand, our law is clear that upon the expiration of the one-year period
within to review the decree of registration, the decree as well as the title issued in
pursuance thereof becomes incontrovertible (Section 38 Act No. 496). The purpose of
the law in limiting to one year the period within which the decree may be reviewed is to
put a limit to the time within which a claimant may ask for its revocation. If after title
to property is decreed an action may be instituted beyond the one-year period to set
aside the decree, the object of the Torrens system which is to guarantee the
indefeasibility of the Title would be defeated (Cabanos vs. Register of Deeds, 40 Phil.,
520).

Plaintiffs likewise contend that since the complaint alleges that defendants acquired
their respective titles with full notice of the actual possession and claim of ownership of
plaintiffs with respect to the land in question, it is error to dismiss the complaint for
such averment is sufficient to establish a cause of action against defendants. This
contention overlooks the fact that the land in question is covered by Torrens title. Thus,
it appears that defendant People's Homesite & Housing Corporation bought the portion
of the property in question from its predecessor-in-interest sometime in 1955 for which
Transfer Certificate of Title No. 1356 was issued in its favor. There is nothing in the
complaint to show that when it acquired the property said defendant knew of any defect
in the title appearing on its face in the form of any lien or encumbrance. The same thing
is true with regard to defendant University of the Philippines. It likewise acquired the
portion of the property on question sometime in 1955 from its predecessor-in-interest
for which Transfer Certificate of Title No. 9462 was issued in its favor. There is also
nothing in the complaint to show that when it acquired the property it knew of any
defect in the title appealing on its face in the form of any lien or incumbrace. Said
defendants are therefore, presumed to be purchasers for value and in good faith and as
such are entitled to protection under the law.

The foregoing finds support in the following well-settled principle: "A person dealing
with registered land is not required to go behind the register to determine the condition
of the property. He is only charged with notice of the burdens on the property which are
noted on the face of the register or the certificate of title. To require him to do more
is to defeat one of the primary objects of the Torrens System." (William H.
Anderson vs. Garcia, 64 Phil., 306; Castillo vs. Sian, 105 Phil., 622;
Paraiso vs. Camon, supra, p. 187, 1959).

Assuming arguendo that plaintiffs' action for reconveyance had not yet prescribed as
contended, their right however to bring the instant action may be considered barred by
laches for not having taken the action seasonably after title to the property had been
issued under the Torrens system. It appears that the property in question was originally
registered on May 3, 1914 and it was only on October 11, 1957 that appellants asserted
their claim thereto when they brought the present action. In the recent case of
Domingo vs. Mayon Realty Corporation, 102 Phil., 32; 54 Off. Gaz., 4954), September 30,
1957 this Court said: "Like Ciriaco Allingag in the previous case, appellants herein could
have raised the issue of the validity of the certificate of title issued to Valle Cruz since
1928, when the foreclosure sale in her favor was confirmed. They failed to do so until 18
years afterwards, and their action (if any) now should be held by their own laches and
negligence."

Appellants finally claim that the lower court erred in dismissing the complaint on the
ground of res judicata by taking judicial notice of its own records in Land Registration
Case No. L-3 invoking in support of their contention the principle that a court cannot
take judicial notice of the contents of the records of other case even when such case
had been tried by the same court and notwithstanding the facts that both cases may
have been tried before the same judge. While the principle invoked is considered to be
the general rule, the same is not absolute. There are exceptions to this rule. Thus, as
noted by former Chief Justice Moran:

In some instance, courts have taken judicial notice of proceedings in other

causes, because of their close connection with the matter in the controversy.
Thus, in a separate civil action against the administrator of an estate arising
from an appeal against the report of the committee on claims appointed in the
administration proceedings of the said estate, to determine whether or not the
appeal was taken on time, the court took judicial notice of the record of the
administration proceedings. Courts have also taken judicial notice of previous
cases to determine whether or not the case pending is a moot one or whether or
not a previous ruling is applicable in the case under consideration.

Moreover, appellants' objection to the action of the trial court on this matter is merely
technical because they do not dispute the fact that appellant Marcelino Tiburcio, who
instituted the present case, is the same person who filed the application in Land
Registration Case No. L-3 for the registration of the same parcel of land which
application was denied by the court. It appears that in the registration case the
oppositors were the People's Homesite & Housing Corporation, Tuason and Co., and the
Bureau of Lands. Although the University of the Philippines was not an oppositor in that
case, in effect it was represented by its predecessor-in-interest, Tuason and Co. from
which it acquired the property. It may therefore be said that in the two case there is
not only identity of subject matter but identity of parties and causes of action. Indeed,
the trial court did not err in dismissing the complaint on the ground of res judicata.

Wherefore, the order appealed from is affirmed, with costs against appellants.

G.R. No. 165427 March 21, 2011

BETTY B. LACBAYAN, Petitioner,

vs.
BAYANI S. SAMOY, JR., Respondent.

DECISION

VILLARAMA, JR., J.:

This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan
against respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision 1 of
the Court of Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February
10, 2000 Decision2 of the Regional Trial Court (RTC), Branch 224, of Quezon City
declaring respondent as the sole owner of the properties involved in this suit and
awarding to him P100,000.00 as attorneys fees.

This suit stemmed from the following facts.

Petitioner and respondent met each other through a common friend sometime in 1978.
Despite respondent being already married, their relationship developed until petitioner
gave birth to respondents son on October 12, 1979.3

During their illicit relationship, petitioner and respondent, together with three more
incorporators, were able to establish a manpower services company. 4 Five parcels of land
were also acquired during the said period and were registered in petitioner and
respondents names, ostensibly as husband and wife. The lands are briefly described as
follows:

1. A 255-square meter real estate property located at Malvar St., Quezon City
covered by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr.
"married to Betty Lacbayan."5

2. A 296-square meter real estate property located at Main Ave., Quezon City
covered by TCT No. 23301 and registered in the name of "Spouses Bayani S.
Samoy and Betty Lacbayan."6

3. A 300-square meter real estate property located at Matatag St., Quezon City
covered by TCT No. RT-38264 and registered in the name of Bayani S. Samoy,
Jr. "married to Betty Lacbayan Samoy."7

4. A 183.20-square meter real estate property located at Zobel St., Quezon City
covered by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr.
"married to Betty L. Samoy."8

5. A 400-square meter real estate property located at Don Enrique Heights,

Quezon City covered by TCT No. 90232 and registered in the name of Bayani S.
Samoy, Jr. "married to Betty L. Samoy." 9

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In
1983, petitioner left her parents and decided to reside in the property located in Malvar
St. in Project 4, Quezon City. Later, she and their son transferred to Zobel St., also in
Project 4, and finally to the 400-square meter property in Don Enrique Heights.10
Eventually, however, their relationship turned sour and they decided to part ways
sometime in 1991. In 1998, both parties agreed to divide the said properties and
terminate their business partnership by executing a Partition Agreement. 11 Initially,
respondent agreed to petitioners proposal that the properties in Malvar St. and Don
Enrique Heights be assigned to the latter, while the ownership over the three other
properties will go to respondent.12 However, when petitioner wanted additional demands
to be included in the partition agreement, respondent refused. 13 Feeling aggrieved,
petitioner filed a complaint for judicial partition14 of the said properties before the RTC
in Quezon City on May 31, 1999.

In her complaint, petitioner averred that she and respondent started to live together as
husband and wife in 1979 without the benefit of marriage and worked together as
business partners, acquiring real properties amounting to P15,500,000.00.15 Respondent,
in his Answer,16 however, denied petitioners claim of cohabitation and said that the
properties were acquired out of his own personal funds without any contribution from
petitioner.17

During the trial, petitioner admitted that although they were together for almost 24
hours a day in 1983 until 1991, respondent would still go home to his wife usually in the
wee hours of the morning.18 Petitioner likewise claimed that they acquired the said real
estate properties from the income of the company which she and respondent
established.19

Respondent, meanwhile, testified that the properties were purchased from his personal
funds, salaries, dividends, allowances and commissions. 20 He countered that the said
properties were registered in his name together with petitioner to exclude the same
from the property regime of respondent and his legal wife, and to prevent the possible
dissipation of the said properties since his legal wife was then a heavy
gambler.21 Respondent added that he also purchased the said properties as investment,
with the intention to sell them later on for the purchase or construction of a new
building.22

On February 10, 2000, the trial court rendered a decision dismissing the complaint for
lack of merit.23 In resolving the issue on ownership, the RTC decided to give considerable
weight to petitioners own admission that the properties were acquired not from her own
personal funds but from the income of the manpower services company over which she
owns a measly 3.33% share.24

Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro
indiviso owner of one-half of the properties in dispute. Petitioner argued that the trial
courts decision subjected the certificates of title over the said properties to collateral
attack contrary to law and jurisprudence. Petitioner also contended that it is improper to
thresh out the issue on ownership in an action for partition.25

Unimpressed with petitioners arguments, the appellate court denied the appeal,
explaining in the following manner:

Appellants harping on the indefeasibility of the certificates of title covering the

subject realties is, to say the least, misplaced. Rather than the validity of said
certificates which was nowhere dealt with in the appealed decision, the record shows
that what the trial court determined therein was the ownership of the subject realties
itself an issue correlative to and a necessary adjunct of the claim of co-ownership upon
which appellant anchored her cause of action for partition. It bears emphasizing,
moreover, that the rule on the indefeasibility of a Torrens title applies only to original
and not to subsequent registration as that availed of by the parties in respect to the
properties in litigation. To our mind, the inapplicability of said principle to the case at
bench is even more underscored by the admitted falsity of the registration of the
selfsame realties in the parties name as husband and wife.

The same dearth of merit permeates appellants imputation of reversible error against
the trial court for supposedly failing to make the proper delineation between an action
for partition and an action involving ownership. Typically brought by a person claiming to
be co-owner of a specified property against a defendant or defendants whom the
plaintiff recognizes to be co-owners, an action for partition may be seen to present
simultaneously two principal issues, i.e., first, the issue of whether the plaintiff is indeed
a co-owner of the property sought to be partitioned and, second assuming that the
plaintiff successfully hurdles the first the issue of how the property is to be divided
between plaintiff and defendant(s). Otherwise stated, the court must initially settle the
issue of ownership for the simple reason that it cannot properly issue an order to divide
the property without first making a determination as to the existence of co-ownership.
Until and unless the issue of ownership is definitely resolved, it would be premature to
effect a partition of the properties. This is precisely what the trial court did when it
discounted the merit in appellants claim of co-ownership.26

Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case.

II. The partition agreement duly signed by respondent contains an admission

against respondents interest as to the existence of co-ownership between the
parties.
 III. An action for partition cannot be defeated by the mere expedience of
repudiating co-ownership based on self-serving claims of exclusive ownership of
the properties in dispute.

IV. A Torrens title is the best evidence of ownership which cannot be

outweighed by respondents self-serving assertion to the contrary.

V. The properties involved were acquired by both parties through their actual
joint contribution of money, property, or industry. 27

Noticeably, the last argument is essentially a question of fact, which we feel has been
squarely threshed out in the decisions of both the trial and appellate courts. We deem it
wise not to disturb the findings of the lower courts on the said matter absent any
showing that the instant case falls under the exceptions to the general rule that
questions of fact are beyond the ambit of the Courts jurisdiction in petitions under Rule
45 of the 1997 Rules of Civil Procedure, as amended. The issues may be summarized into
only three:

I. Whether an action for partition precludes a settlement on the issue of

ownership;

II. Whether the Torrens title over the disputed properties was collaterally
attacked in the action for partition; and

III. Whether respondent is estopped from repudiating co-ownership over the

subject realties.

We find the petition bereft of merit.

Our disquisition in Municipality of Bian v. Garcia28 is definitive. There, we explained that

the determination as to the existence of co-ownership is necessary in the resolution of
an action for partition. Thus:

The first phase of a partition and/or accounting suit is taken up with the determination
of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not
otherwise legally proscribed) and may be made by voluntary agreement of all the parties
interested in the property. This phase may end with a declaration that plaintiff is not
entitled to have a partition either because a co-ownership does not exist, or partition is
legally prohibited. It may end, on the other hand, with an adjudgment that a co-
ownership does in truth exist, partition is proper in the premises and an accounting of
rents and profits received by the defendant from the real estate in question is in order.
xxx

The second phase commences when it appears that "the parties are unable to agree upon
the partition" directed by the court. In that event[,] partition shall be done for the
parties by the [c]ourt with the assistance of not more than three (3) commissioners.
This second stage may well also deal with the rendition of the accounting itself and its
approval by the [c]ourt after the parties have been accorded opportunity to be heard
thereon, and an award for the recovery by the party or parties thereto entitled of their
just share in the rents and profits of the real estate in question. x x x29 (Emphasis
supplied.)

While it is true that the complaint involved here is one for partition, the same is
premised on the existence or non-existence of co-ownership between the parties.
Petitioner insists she is a co-owner pro indiviso of the five real estate properties based
on the transfer certificates of title (TCTs) covering the subject properties. Respondent
maintains otherwise. Indubitably, therefore, until and unless this issue of co-ownership
is definitely and finally resolved, it would be premature to effect a partition of the
disputed properties.30 More importantly, the complaint will not even lie if the claimant, or
petitioner in this case, does not even have any rightful interest over the subject
properties.31

Would a resolution on the issue of ownership subject the Torrens title issued over the
disputed realties to a collateral attack? Most definitely, it would not.

There is no dispute that a Torrens certificate of title cannot be collaterally

attacked,32 but that rule is not material to the case at bar. What cannot be collaterally
attacked is the certificate of title and not the title itself. 33 The certificate referred to
is that document issued by the Register of Deeds known as the TCT. In contrast, the
title referred to by law means ownership which is, more often than not, represented by
that document.34 Petitioner apparently confuses title with the certificate of title. Title
as a concept of ownership should not be confused with the certificate of title as
evidence of such ownership although both are interchangeably used. 35

Moreover, placing a parcel of land under the mantle of the Torrens system does not
mean that ownership thereof can no longer be disputed. Ownership is different from a
certificate of title, the latter only serving as the best proof of ownership over a piece
of land. The certificate cannot always be considered as conclusive evidence of
ownership.36 In fact, mere issuance of the certificate of title in the name of any person
does not foreclose the possibility that the real property may be under co-ownership with
persons not named in the certificate, or that the registrant may only be a trustee, or
that other parties may have acquired interest over the property subsequent to the
issuance of the certificate of title. 37 Needless to say, registration does not vest
ownership over a property, but may be the best evidence thereof.1avvphi1

Finally, as to whether respondents assent to the initial partition agreement serves as an

admission against interest, in that the respondent is deemed to have admitted the
existence of co-ownership between him and petitioner, we rule in the negative.

An admission is any statement of fact made by a party against his interest or

unfavorable to the conclusion for which he contends or is inconsistent with the facts
alleged by him.38 Admission against interest is governed by Section 26 of Rule 130 of
the Rules of Court, which provides:

Sec. 26. Admissions of a party. The act, declaration or omission of a party as to a

relevant fact may be given in evidence against him.

To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be
categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the
admitters interests, otherwise it would be self-serving and inadmissible. 39

A careful perusal of the contents of the so-called Partition Agreement indicates that
the document involves matters which necessitate prior settlement of questions of law,
basic of which is a determination as to whether the parties have the right to freely
divide among themselves the subject properties. Moreover, to follow petitioners
argument would be to allow respondent not only to admit against his own interest but
that of his legal spouse as well, who may also be lawfully entitled co-ownership over the
said properties. Respondent is not allowed by law to waive whatever share his lawful
spouse may have on the disputed properties. Basic is the rule that rights may be waived,
unless the waiver is contrary to law, public order, public policy, morals, good customs or
prejudicial to a third person with a right recognized by law. 40

Curiously, petitioner herself admitted that she did not assent to the Partition
Agreement after seeing the need to amend the same to include other matters. Petitioner
does not have any right to insist on the contents of an agreement she intentionally
refused to sign.

As to the award of damages to respondent, we do not subscribe to the trial courts view
that respondent is entitled to attorneys fees. Unlike the trial court, we do not
commiserate with respondents predicament. The trial court ruled that respondent was
forced to litigate and engaged the services of his counsel to defend his interest as to
entitle him an award of P100,000.00 as attorneys fees. But we note that in the first
place, it was respondent himself who impressed upon petitioner that she has a right over
the involved properties. Secondly, respondents act of representing himself and
petitioner as husband and wife was a deliberate attempt to skirt the law and escape his
legal obligation to his lawful wife. Respondent, therefore, has no one but himself to
blame the consequences of his deceitful act which resulted in the filing of the complaint
against him.

WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court
of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent
Bayani S. Samoy, Jr. is hereby declared the sole owner of the disputed properties,
without prejudice to any claim his legal wife may have filed or may file against him. The
award of P100,000.00 as attorneys fees in respondents favor is DELETED.

No costs.

SO ORDERED.

G.R. No. 147072 May 7, 2002

FRANCISCO H. LU, petitioner,

vs.
Spouses ORLANDO and ROSITA MANIPON, respondents.

PANGANIBAN, J.:

The registration of a sale of real estate will not protect a buyer in bad faith, for the law
cannot be used as a shield for fraud. On the other hand, the preferential right of a first
registrant in a double sale is always qualified by good faith.

The Case

Before us is a Petition for Review on Certiorari challenging the October 25, 2000
Decision and the February 9, 2001 Resolution of the Court of Appeals1 (CA) in CA-GR CV
No. 55149. The assailed Decision disposed as follows:

"WHEREFORE, premises considered, the appealed Decision is hereby AFFIRMED

with MODIFICATION in the sense that [petitioner] is directed to convey Lot
5582-B-7-D covered by TCT No. 171497 to [respondent] Rosita C. Manipon
without being entitled to any payment from the latter."2

The assailed Resolution denied the Motion for Reconsideration. 3

 The Facts

The facts of the case are summarized in the assailed Decision as follows:

"On May 9, 1981, Juan Peralta executed a [D]eed of [S]ale by installment in

favor of spouses Orlando and Rosita Manipon [herein respondents]. Therein,
Juan Peralta agreed to sell by installment to the said spouses 350 square meters
of the 2,078 square-meter lot he owned, covered by Transfer Certificate of
Title (TCT) No. 137911 and located at Barrio Dilan, Urdaneta, Pangasinan. The
said [D]eed was not registered with the Registry of Deeds.

"On June 10, 1981, Juan Peralta mortgaged the aforesaid lot to Thrift Savings
and Loan Association, Inc. (TSLAI). He however failed to pay the loan he
obtained for which the mortgage was constituted and so the same was judicially
foreclosed and sold to TSLAI for P62,789.18 which was the highest bidder. The
latter in turn sold the same on July 15, 1988 in the amount of P80,000.00 to the
[petitioner]. Thereafter, on August 30, 1989, [petitioner] caused the subdivision
of the said lot into five (5) lots, one of which is Lot 5582-B-7-D, with an area of
339 square meters covering the lot which was earlier sold by installment to
[respondents]. The said lot is now covered by TCT No. 171497. In the interim, or
on July 30, 1983, Juan Peralta executed a [D]eed of [S]ale in favor of
[respondents] after the couple paid a total amount of P8,000.00 for the subject
lot. The aforesaid [D]eed was however also not registered.1wphi1.nt

"On January 22, 1990, [petitioner] through counsel wrote the [respondents]
regarding the presence of the latter's house, which was also being occupied by
them, on the lot in question. Efforts were apparently made by both parties to
settle the brewing dispute but to [no] avail. Hence, on February 26, 1990,
[petitioner] filed the present action alleging therein that he is the owner of the
lot in question including that which was being occupied by [respondents.
Petitioner] further claims that his ownership was confirmed by the Regional
Trial Court of Urdaneta, Pangasinan, Branch 49, in Civil Case No. U-4399. He also
averred that for reasons unknown to him, [respondents] were claiming ownership
of Lot 5582-B-7-D and have constructed a house thereon on January 22, 1990.

"In the Answer filed by [respondents], they claim that [petitioner] is a buyer in
bad faith because even before he bought the 2,078 square-meter lot, he knew
for a fact that they already bought Lot 5582-B-7-D from the original owner of
the said lot and have been residing therein since 1981. [Respondents] also
asserted that [petitioner] had knowledge of their claim over the said property
 because when the whole lot was foreclosed they shared the same problem as
[petitioner] also bought a lot with the 2,078 square-meter lot of Juan Peralta.

"Trial ensued and thereafter, the trial court rendered the questioned judgment.
x x x."4 (Citations omitted)

Ruling of the Trial Court

The trial court ruled that petitioner was not a buyer in good faith despite the fact that
he was able to register his ownership of the disputed lot. He admitted knowing that
respondents had constructed a house on the disputed lot in 1984, even before he
purchased the property from the loan association in 1990. Indeed, he waited more than
ten (10) years before contesting respondents' occupation and possession of the land. The
RTC disposed as follows:

"WHEREFORE, IN THE LIGHT OF THE FOREGOING, the Court renders

judgment as follows:

"1). The [petitioner] is hereby ordered to convey to the herein [respondent]

Rosita Manipon, (defendant Orlando Manipon is already dead) the lot consisting
of 339 square meters denominated as Lot 5582-B-7-D and covered by Transfer
Certificate of Title No. 171497 after paying the sum of P13,051.50 plus legal
interest to the herein [petitioner] anytime after the finality of this decision.

"2). The third-party defendant, Juan Peralta, is ordered to refund to the

defendants Manipons the amount of P18,000.00 paid by the latter to him;

"3). x x x no pronouncement as to damages in favor [of] or against either of the

parties."5

Ruling of the Court of Appeals

The CA affirmed the Decision of the trial court with the modification that respondents
would no longer be required to pay petitioner the value of the disputed portion in a
"forced sale." The appellate court said that petitioner knew that Lot 5582-B-7-D had
already been sold by Juan Peralta to respondents before the mother lot was mortgaged,
foreclosed and eventually purchased. He bought the entire property from the
foreclosing bank, because he feared that he might lose what he had earlier bought in
1981 a 350 square meter lot which also formed part of the mother lot.

Hence, this Petition.6

 The Issues

In his Memorandum,7 petitioner raises the following issues:

"1. Who between petitioner and respondents have a better right of ownership
over the lot in question, Lot 5582-B-7-D, with an area of 339 square meters?

"2. Whether respondents' claim over the lot can rise [above that of] their
predecessor in interest Juan Peralta[.]

"3. Whether respondents are under estoppel to question petitioner's ownership

over the lot in question[.]

"4. Whether petitioner was in bad faith in the acquisition of the lot in question[.]

"5. And even assuming without admitting that petitioner is under obligation to
convey the lot in question in favor of respondents, whether the consideration of
the lot be paid by respondent is P2,000.00 per square meter[.]"8

These issues can be summed up into three questions: (1) who has a better right to the
disputed property? (2) was petitioner a purchaser in bad faith? and (3) what should be
the purchase price of the disputed lot?

This Court's Ruling

The Petition is partly meritorious.

First Issue:

Better Right to the Disputed Lot

Petitioner claims to have a better right to the disputed portion of the real
property. First, although respondents had bought it first, he was the first to register
his purchase of the mother lot. Second, respondents' ownership follows that of their
vendor who mortgaged to the bank his title to the mother lot and failed to redeem it.

Petitioner avers that, although respondents purchased the disputed lot by installment on
May 9, 1981 and fully paid for it on May 30, 1983, they failed to register their sale with
the Registry of Deeds. In the meantime, on June 18, 1981, Juan Peralta mortgaged the
mother lot including the disputed portion to the Thrift Savings and Loan Association,
Inc. (TSLAI). The mortgage was foreclosed and the property sold on July 10, 1988.
Petitioner, on the other hand, bought the whole lot from the bank for P80,000 on July
15, 1988 and registered it in his name on September 23, 1988.

Third, petitioner claims that from the time respondents fully paid for the lot until they
received a Notice to Vacate, they did not do anything to perfect their title thereto;
hence, they are now estopped from questioning his ownership of it.

We are not convinced. In estoppel, a person who by deed or conduct induces another to
act in a particular manner is barred from adopting an inconsistent position, attitude or
course of conduct that thereby causes loss or injury to another. 9 This equitable principle
will not apply to respondents, because they exercised dominion over the property by
occupying and building their house on it. On the other hand, it was petitioner who,
despite having knowledge of the existence of respondents' house on the disputed
portion, bought the whole lot. Before acquiring the mother lot from the bank, he knew of
respondents' claim of ownership and occupation. He cannot now pretend to be an
innocent buyer in good faith.

Registration is not the equivalent of title. 10 Under the Torrens system, registration only
gives validity to the transfer or creates a lien upon the land.11 It was not established as a
means of acquiring title to private land because it merely confirms, but does not confer,
ownership.12 Moreover, the RTC and the CA have correctly ruled that the preferential
right of the first registrant of a real property in a case of double sale is always qualified
by good faith under Article 154413 of the Civil Code.14 A holder in bad faith of a
certificate of title is not entitled to the protection of the law, for the law cannot be
used as a shield for fraud. 15

"When the registration of a sale is not made in good faith, a party cannot base
his preference of title thereon, because the law will not protect anything done in
bad faith. Bad faith renders the registration futile. Thus, if a vendee registers
the sale in his favor after he has acquired knowledge that there was a previous
sale of the same property to a third party, or that another person claims said
property under a previous sale, or that the property is in the possession of one
who is not a vendor, or that there were flaws and defects in the vendor's title,
or that this was in dispute, the registration will constitute x x x bad faith, and
will not confer upon him any preferential right. The situation will be the same as
if there had been no registration, and the vendee who first took possession of
the real property in good faith shall be preferred."16

Equally important, under Section 44 of the Property Registration Decree (Presidential

Decree No. 1529), every registered owner receiving a certificate of title in pursuance of
a decree of registration and every subsequent purchaser of registered land taking such
certificate for value and in good faith shall hold the same free from all encumbrances,
except those noted on the certificate and enumerated therein. Petitioner is evidently
not a subsequent purchaser in good faith. Therefore, between the parties, respondents
have a better right to the property based on the concurring factual findings of both the
trial and the appellate courts. We quote with approval the following ruling of the CA:

"x x x We are persuaded that [petitioner] knew of the fact that Lot 5582-B-7-
D was sold by Juan Peralta to [respondents] before Lot 5582-B-7, the mother
lot of Lot 5582-B-7-D, was mortgaged, foreclosed, sold and [its ownership]
transferred x x x to him. In fact, [w]e are convinced that the main reason why
[petitioner] bought the entire lot from the TSLAI was hi fear of losing the 350
square meter-lot he bought sometime in 1981 which also forms part of Lot 5582-
B-7. Having been aware of the 'defects' in the title of TSLAI as far as Lot
5582-B-7-D is concerned, he cannot now claim to be a purchaser in good faith
and for value even if he traces his ownership [to] TSLAI which [w]e believe was
a purchaser in good faith the latter not being aware of the sale that transpired
between the [respondents] and Juan Peralta before Lot 5582-B-7 was sold to it
in a public auction.

"One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as against
the true owner of the land or an interest therein. Thus, even
assuming arguendo that [petitioner] was not aware of the sale between Juan
Peralta and the [respondents], still he cannot be considered as a purchaser in
good faith because he had personal knowledge of [respondents'] occupation of
the lot in question. This fact alone should have put him on guard before buying
the land. But as he admitted during the trial, he was not interested in the
[respondents'] reason for occupying the said lot[;] all that he was interested in
was to buy the entire lot. This 'devil-may-care' attitude of [petitioner] has
placed him where he is now. Consequently, he cannot be entitled to the relief he
is seeking before this [c]ourt.

"True, the purchaser of a registered land is not required to go behind the title
to determine the condition of the property. However, a purchaser cannot close
his eyes to facts which should put a reasonable man upon his guard and then
claim that he acted in good faith under the belief that there was no defect in
the title of the vendor. His mere refusal to believe that such defect exists, or
his willful closing of his eyes to the possibility of the existence of a defect in
his vendor's title, will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective, and it appears that he
had such notice of the defect as would have led to its discovery had he acted
 with that measure of precaution which may reasonably be required of a prudent
man in a like situation."17

All told, the right of a buyer to rely upon the face of the title certificate and to
dispense with the need of inquiring further is upheld only when the party concerned had
no actual knowledge of facts and circumstances that should impel a reasonably cautious
man to conduct further inquiry.18

Second Issue:

Bad Faith

Petitioner denies being a purchaser in bad faith. He alleges that the only reason he spoke
to the respondents before he bought the foreclosed land was to invite them to share in
the purchase price, but they turned him down. This, he argues, was not an indication of
bad faith.

Petitioner's contention is untenable. He might have had good intentions at heart, but it is
not the intention that makes one an innocent buyer. A purchaser in good faith or an
innocent purchaser for value is one who buys property and pays a full and fair price for
it, at the time of the purchase or before any notice of some other person's claim on or
interest in it.19 One cannot close one's eyes to facts that should put a reasonable person
on guard and still claim to have acted in good faith. As aptly explained by Vitug:

"The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first
buyer's rights except when the second buyer first registers in good faith the
second sale (Olivares vs. Gonzales, 159 SCRA 33.) Conversely, knowledge gained
by the second buyer of the first sale defeats his rights even if he is first to
register, since such knowledge taints his registration with bad faith (see
also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz
vs. Cabaa (G.R. No. 56232, 22 June 1984; 129 SCRA 656), it was held that it is
essential, to merit the protection of Art. 1544, second paragraph, that the
second realty buyer must act in good faith in registering his deed of sale
(citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
95843, 02 September 1992).1wphi1.nt

"The registration contemplated under Art. 1544 has been held to refer to
registration under Act 496 Land Registration Act (now PD 1529) which considers
the act of registration as the operative act that binds the land (see Mediante
vs. Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by
 the Torrens System, the purchaser acquires such rights and interest as they
appear in the certificate of title, unaffected by any prior lien or encumbrance
not noted therein. The purchaser is not required to explore farther than what
the Torrens title, upon its face, indicates. The only exception is where the
purchaser has actual knowledge of a flaw or defect in the title of the seller or
of such liens or encumbrances which, as to him, is equivalent to registration
(see Sec. 39, Act 496; Bernales vs. IAC, G.R. 75336, 18 October
1988; Hernandez vs. Sales, 69 Phil 744; Tajonera vs. Court of Appeals, L-26677,
27 March 1981)."20

By his own allegations, petitioner admits he was not a purchaser in good faith. A buyer of
real property which is in the possession of another must be wary and investigate the
rights of the latter. Otherwise, without such inquiry, the buyer cannot be said to be in
good faith.21

Basic is the rule that the factual findings of the appellate court are given great weight,
even finality, when they affirm those of the trial court,22 unless they fall under the
exceptions enumerated in Fuentes v. Court of Appeals.23 Petitioner has not shown that
this case falls under any of those exceptions; hence, we find no cogent reason to depart
from this general rule.

Third Issue:

Proper Purchase Price

Petitioner protests respondents' exception from paying him P13,051.50 with legal
interest for the conveyance of the disputed portion. Instead, he pleads that this Court
modify the price to P2,000 per square meter.

We are not persuaded. While neither party appealed the issue of the purchase price,
petitioner did question the conveyance of Lot 5582-B-7-D to respondents upon payment
of the said price. Hence, the payment was also effectively put in issue. It is well-settled
that appellate courts have ample authority to rule on matters not specifically assigned as
errors in an appeal, if these are indispensable or necessary to the just resolution of the
pleaded issues.24

However, the CA modification exempting respondents from paying petitioner is flawed,

because the RTC had ordered Juan Peralta to refund the P18,000 paid to him by
petitioner as the purchase price of the disputed lot. Thus, the trial court correctly
ordered (1) respondents to pay petitioner 13,051.5025 plus legal interest for Lot 5582-B-
7-D and (2) the third-party defendant Peralta to refund to respondents the P18,000
they had paid for the lot. The CA ruling would unjustly enrich respondents, who would
receive double compensation. In short, the RTC ruling should have been affirmed in its
entirety.1wphi1.nt

WHEREFORE, the Petition is PARTLY GRANTED. The assailed Decision and Resolution
are AFFIRMED without the MODIFICATION ordered by the CA. No pronouncement as
to costs.

SO ORDERED.

G.R. No. L-16257 January 31, 1963

CAPITOL SUBDIVISION, INC., plaintiff-appellant,

vs.
PROVINCE OF NEGROS OCCIDENTAL, defendant-appellee.

San Juan, Africa & Benedicto for plaintiff-appellant.

Eduardo P. Arboleda and Jesus S. Rodriguez for defendant-appellee.

CONCEPCION, J.:

Plaintiff, Capitol Subdivision, Inc., seeks to recover from defendant, the Province of
Negros Occidental, the possession of Lot 378 of the cadastral survey of Bacolod,
Negros Occidental, and a reasonable compensation for the use and occupation of said lot
by the defendant from November 8, 1935, in addition to attorney's fees and costs. On
June 28, 1951, the Court of First Instance of Negros Occidental rendered judgment for
the plaintiff. On appeal taken by the defendant, this judgment was, however, set aside
by the Supreme Court (see G.R. No. L-6204, decided on July 31, 1956), which, likewise,
ordered the case remanded to the lower court "for further trial", after which another
decision was rendered by said court of first instance dismissing plaintiff's complaint and
ordering plaintiff to execute a deed conveying Lot 378 to the defendant. The case is,
once again, before us, this time on appeal by the plaintiff, the subject matter of
litigation being worth more than P200,000, exclusive of interest and costs.

The main facts are not in dispute. Said Lot 378 is part of Hacienda Mandalagan,
consisting of Lots 378, 405, 407, 410, 1205, 1452 and 1641 of the aforementioned
cadastral survey, with an aggregate area of over 502 hectares, originally registered in
the name of Agustin Amenabar and Pilar Amenabar. Lot 378 has an area of 22,783 sq.
meters, more or less, and was covered by Original Certificate of Title No. 1776 (Exhibit
4), issued on August 25, 1916, in the name of the Amenabars. On November 30, 1920, the
latter sold the aforementioned hacienda to Jose Benares (also referred to in some
documents as Jose Benares Montelibano) for the sum of P300,000, payable installments,
as set forth in the deed of sale, Exhibit 21. On February 8, 1924, said Original
Certificate of Title No. 1776 was cancelled and Jose Benares obtained, in lieu thereof,
Transfer Certificate of Title No. 6295 in his name. Meanwhile, or on March 12, 1921, the
Hacienda, including Lot 378, had been mortgaged by Jose Benares to the Bacolod-Murcia
Milling Co. for the sum of P27,991.74 (Exhibit Y-2). On December 6, 1926, Jose Benares
again mortgaged the Hacienda, including said Lot 378, on the Philippine National Bank,
subject to the first mortgage held by the Bacolod-Murcia Milling Co. (Exhibit Y-1). These
transactions were duly recorded in the office of the Register of Deeds of Negros
Occidental and annotated on the corresponding certificate of title, including said
Transfer Certificate of Title No. 6295, covering Lot 378.

The mortgage in favor of the Bank was subsequently foreclosed, in pursuance of a

decision of the Court of First Instance of Negros Occidental dated September 29, 1931
(Exhibit U-1), and the Bank acquired the Hacienda, including Lot 378, as purchaser at the
foreclosure sale. Accordingly, said Transfer Certificate of Title No. 6295 was cancelled
and, in its stead, transfer Certificate of Title No. 17166 0151 which, owing to its
subsequent loss, had to be reconstituted as Transfer Certificate of Title No. RT-1371
in the name of the Bank, was issued on March 14, 1934 (Exhibit P). Soon, later, or on
November 8, 1935, the Bank agreed to sell the Hacienda to Carlos P. Benares, son of
Jose Banares, for the sum of P400,000, payable in annual installments, subject to the
condition that, until full payment thereof, title would remain in the Bank (Exhibit R).
Thereafter, Carlos P. Benares transferred his rights, under this contract with the Bank,
to plaintiff herein, which completed the payment of the installments due to the Bank in
1949. Hence, on September 29, 1949, the Bank executed the corresponding deed of
absolute sale to the plaintiff (Exhibit Q) and Transfer Certificate of Title No. 1798,
covering 378 was issued, in lieu of Transfer Certificate of Title No. 17166 (or
reconstituted Transfer Certificate of Title RT-1371), in plaintiff's name (Exhibit O).

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1wph1.t

At this juncture, it should be noted that, despite the acquisition of the Hacienda in 1934
by the Bank, the latter did not take possession of the property for Jose Benares claimed
to be entitled to retain it under an alleged right of lease. For this reason, the deed of
promise to sell, executed by the Bank in favor of Carlos P. Benares, contained a caveat
emptor stipulation. When, upon the execution of the deed of absolute sale (Exhibit Q) by
the Bank, on September 29, 1949, plaintiff took steps to take possession the Hacienda,
it was discovered that Lot 378 was the land occupied by the Provincial Hospital of
Negros Occidental. Immediately, thereafter, or on October 4, 1949, plaintiff made
representations with the proper officials to clarify the status of said occupation and,
not being satisfied with the explanations given by said officials, it brought the present
action on June 10, 1950.

In its answer dated June 24, 1950, defendant maintained that it had acquired Lot 378 in
the year; 1924-1925, through expropriation proceedings; that immediately after the
commencement of said proceedings in 1924, it took possession of said lot and began the
construction thereon of the provincial hospital, which was completed in 1926; that since
then it had occupied said lot publicly, adversely, notoriously and continuously as owner
thereof; that, "for some reason or other and for cause beyond comprehension of the
defendant title thereto was never transferred in the name of said defendant"; that said
lot had been placed in defendant's name for assessment purposes under Tax Declaration
No. 16269 (dated December 31, 1937); and that plaintiff had acted in bad faith in
purchasing said lot from the Bank in 1935, for plaintiff knew then that the provincial
hospital was where it is up to the present, and did not declare said lot in its name for
assessment purposes until 1950, aside from the fact that Alfredo Montelibano, the
controlling stockholder, president and general manager of plaintiff corporation, was the
first City Mayor of Bacolod which contributed to the support, operation and maintenance
of said hospital. In an amended answer, dated November 8, 1950, defendant alleged,
also, that the aforementioned expropriation case was "amicably settled as between the
parties herein, in the sense that the ... Province of Negros Occidental would pay ... and
did in fact pay to Jose Benares the assessed value of Lot 378 ... and whatever
consideration pertaining to said lot in excess of its assessed value which was paid by the
Province would be donated and was in fact donated by said ... Jose Benares in favor of
the Province purposely for hospital site".

The main question for determination in this case is whether or not defendant herein had
acquired Lot 378 in the aforementioned expropriation proceedings. This decision
appealed from in effect decided this question in the affirmative and declared that
plaintiff merely holds it in trust for the defendant, in view of which it ordered the
former to convey said lot to the latter. This conclusion is predicated, substantially, upon
the following premises, namely that case No. 3041 of the Court of First Instance of
Negros Occidental for the expropriation of the hospital site of said province, was
actually commenced on January 26, 1924; that, among the lands sought to be
expropriated in said case was Lot 377 of the aforementioned cadastral survey, belonging
to one Anacleta Agsam, who sold it, on July 10, 1926, to the defendant (Exhibit BB), in
whose favor the corresponding transfer certificate of title (Exhibit BB-2) was issued on
July 12, 1926; that, according the testimony of Jose Benares, the expropriation of Lot
378 was settled amicably upon payment to him of the sum of P12,000; and that
defendant's failure to secure the corresponding transfer certificate of title to Lot 378
was due to "the mistaken notion or belief that said lot forms part of Lot No. 405-B" in
the plan (Exhibit X.).

The testimony of Jose Benares does not deserve, however, full faith and credence,
because:

1. Jose Benares appears to be strongly biased and prejudiced against the

plaintiff and its president, for the former believes that the latter had
"manipulated" to exclude him from plaintiff corporation, and there have been
four (4) litigations between Jose Benares and plaintiff, all of which have been
finally decided against the former;

2. The testimony of Jose Benares is extremely contradictory. Thus: (a) he

testified to having been paid P12,000 by the Government, although, at the rate
of P1,000 a hectare at which, he would have us believe, he agreed to sell Lot
378; he should have received less than P3,000 for its 22,783 sq. meters; (b) he
claimed to have received said sum of P12,000.00 "in the year 1924 or 1925",
about "2 or 3 days" after the Government had taken possession of the land, and
to have sent the money next day to Pilar Amenabar, but the latter acknowledged
to have received the said sum of P12,000 on November 7, 1928;

3. Said testimony was contradicted by that of defendant's witness Jose Marco,

former deputy clerk of court of Negros Occidental, for: (a) Jose Benares
asserted that there was a written compromise agreement between him and the
Government, whereas Marco averred that agreement was merely oral; and (b)
Marco stated that Benares had agreed to accept, as compensation for Lot 378,
the assessed value thereof, which was P430, and to donate to the Government
the difference between this sum and the true value of the property, but
Benares affirmed that he was first offered P300 per hectare, which he
rejected, and that he later demanded P1,000 a hectare, which the Government
agreed to pay, although, subsequently, he said that Rafael Alunan and Mariano
Yulo had prevailed upon him to accept P1,000 per hectare;

4. Jose Benares was, also, contradicted by defendant's witness Ildefonso

Coscolluela, the provincial treasurer of Negros Occidental at the time of the
expropriation, who positively assured the Court that the expropriation case "was
not yet terminated" and that "negotiations were still pending" for the acquisition
of Lot 378 by the Government when he retired from the service in 1934.
Upon the other hand, several circumstances strongly indicate that no compromise
agreement for the acquisition of the land by the Government had been reached and that
the expropriation had not been consummated. For instance:

1. The only entries in the docket relative to the expropriation case refer to its
filing and the publication in the newspaper of the corresponding notices (Exhibit
1);.

2. The registration of the deed of sale of Lot 377 by Anacleta Agsam to the
Government, followed by the cancellation of the certificate of title in her name
and the issuance, in lieu thereof, of another title in the name of the Province,
when contrasted with the absence of a similar deed of assignment and of a
transfer certificate title in favor of the Province as regards Lot 378, strongly
suggest that no such assignment or agreement with respect to Lot 378 had been
made or reached;.

3. The property was mortgaged to the Bacolod-Murcia Milling Co. since March 12,
1921, and this mortgage, duly registered and annotated, inter alia, on Transfer
Certificate of Title No. 1776, in the name of Jose Benares, was not cancelled
until September 28, 1935. Moreover, Lot 378 could not have been expropriated
without the intervention of the Milling Co. Yet, the latter was not made a party
in the expropriation proceedings;

4. On December 26, 1926, Jose Benares constituted second mortgage in favor of

the Bank, which would not have accepted the mortgage had Lot 378 not belonged
then to the mortgagor. Neither could said lot have been expropriated
subsequently thereto without the Bank's knowledge and participation. What is
more, in the deed executed by the Bank, on November 8, 1935 (Exhibit R),
promising to sell the Hacienda Mandalagan to Carlos Benares, it was explicitly
stated that portions of Lots 405, 407 and 410, forming part of said Hacienda
and designated as Lots 405-A, 407-A; 407-B and 410-A, had been expropriated
by the Provincial Government of Negros Occidental, thus indicating, by
necessary implication, that Lot 378 had not been expropriated.

The decision appealed from says:

... It is evident that there were no further proceedings in connection with the
expropriation case and the chances are that the case was dismissed. The Court
had to examine carefully and minutely every single piece of evidence adduced by
both parties in order to arrive at the correct solution of the mystery. The Court
believes that the failure of the government to secure the corresponding
 transfer of title to Lot 378 lies in the mistaken notion or belief that said lot
forms a part of Lot 405-B. This conclusion was arrived at after examining closely
the plan, Exhibit X. The plan shows that while all the subdivided lots were
properly identified by lot numbers, that particular portion at the lower corner of
the plan encircled with red pencil, marked Exhibit X-1, is not labelled with the
corresponding lot number and that portion is precisely lot No. 378, now in
question, where the hospital building was constructed. This plan was prepared
for the government on May 12, 1927 by public land surveyor, Mr. Formento,
embracing lots covering over 22 hectares for the Capitol and hospital sites. The
fact that this particular portion was not labelled with the corresponding lot
number might have misled the authorities to believe that it formed a part of lot
405-B, which adjoins it, although separated by the creek. This lack of reasonable
explanation why the government failed to secure the corresponding certificate
of title to lot 378, when there is sufficient proof that Jose Benares was paid
and he executed the deed of sale in favor of the government.

Although said decision appears to have been prepared with the conscientiousness and
moral courage that account for the well earned reputation and prestige of the Philippine
judiciary, we find ourselves unable to concur in the foregoing view. To begin with, there
is no evidence, and defendant has not even tried to prove, that the expropriation case
had ever been dismissed insofar as Lot 378 is concerned. Hence, the lower court merely
speculated about the "chances that the (expropriation) case was dismissed." By the way,
the contrary was intimated by defendant's witness, Ildefonso Coscolluela, for he
testified that the expropriation case was still pending in 1934, when he ceased to be the
provincial treasurer, and the record before us suggests that since the Province took
possession of the land in 1924 or 1925 and completed the construction of the hospital in
1926, there were no further proceedings in said case..

With respect to the plan, Exhibit X, there is, likewise, no evidence whatsoever that the
authorities had been "misled ... to believe" that the portion at the lower corner of said
plan which was enclosed, during the trial, within a circle in red pencil, and marked as
Exhibit X-1 formed part of Lot 405-B, which had been expropriated by the Province
of Negros Occidental. In fact, said portion, Exhibit X-1, is not part of the land covered
by the plan Exhibit X. A close examination of the latter shows that the boundaries of
said portion are not delimited on the plan. More important still, on the right hand side of
Exhibit X, the following appears in bold letters: "Subdivision & Consolidation PLAN of
Lots Nos. 400, 401, 403,405, 406, 407 and 410 Bacolod Cadastre as surveyed for the
Provincial Government of Bacolod, Negros Occidental (Capitol site)". The absence of Lot
378 from said enumeration and the explicit statement in Exhibit X to the effect that it
refers to the "Capitol Site", negates the possibility of its being mistaken by any body,
much less by government engineers, as including the hospital site, and, hence, said Lot
378. Lastly, the very evidence for the defendant herein, specially the assessor's field
sheets and declarations of real property for tax purposes (Exhibits 9, 10, 11, 12 and 13)
show that the Government had always regarded Lot 378, not Lot 405, as part of the
Provincial Hospital Site. In any event, said possibility of mistake, if any, which would be
remote, cannot suffice to warrant in the face of documentary evidence to the
contrary the conclusion that Lot 378 has already been acquired by the Government.

How about the P12,000 received by Jose Benares from the Government and applied by
him to the payment of his debt to Pilar Amenabar? Said amount could not possibly be the
price of Lot 378, for, at the rate of P1,000 a hectare allegedly agreed therefor, its
price could not have exceeded P3,000.00. In this connection, it should be noted that,
aside from the expropriation proceedings for the hospital site, another expropriation
case for the Capitol site, affecting another property of Jose Benares, appears to have
been instituted in the Court of First Instance of Negros Occidental. Jose Benares may
have mistaken the payment for his land included in the Capitol site, as one intended for
Lot 378, which was affected by the hospital site. And this possibility may amount to a
probability when we consider that he erroneously believed that there had been
only one expropriation case, instead of two cases, against him, and that Lot 378, was not
included in the mortgage constituted by him in favor of the Philippine National Bank.
Evidently, he did not have, at least, an accurate recollection of the events or
transactions affecting his properties, and, hence, his testimony may not be relied upon.

Thus, the evidence on record is far from sufficient to establish the alleged acquisition
by the defendant of Lot 378, which must be held, therefore, to be the exclusive
property of plaintiff herein.

The lower court entertained no doubts about the veracity of the testimony of plaintiff's
president to the effect that he did not know until 1949 that the land on which the
Provincial Hospital Building stands is Lot 378. Yet, it held that plaintiff was "not a
purchaser in good faith for having constructive knowledge of defendant's possession of
the property at the time it was bought by the plaintiff", because Carlos P. Benares
whose right to buy the Hacienda Mandalagan from the Bank was acquired by plaintiff
"is a part owner of the Capitol Subdivision and holds a responsible position therein";
because the hospital was already constructed in Lot 378 since 1926 and the lot was
declared in the name of the Government" and "when plaintiff bought the lot in 1935 the
purchaser should have inquired as to its location and improvement"; because "it took the
plaintiff 14 years to sleep over the supposed rights to take possession of lot No. 378";
and because "of the overwhelming fact that lot No. 378 was erroneously or inadvertently
included by the deeds of sale (Exhibits Q & R) executed by the Philippine National Bank
in favor of the plaintiff subdivision and that same lot was occupied by the defendant
government for the provincial hospital for the last 34 years, as owner thereof".
As above stated, however, and the lower court conceded, plaintiff's president did not
know until 1949 that lot 378 was the very land occupied by the provincial hospital.
Moreover, there is a total absence of evidence that this fact was known to Carlos P.
Benares before 1949. Neither may such knowledge be deduced from the circumstances
that he is a son of its former owner, Jose Benares, for even the latter appears not to be
well-posted on the status of his properties. Indeed, Jose Benares did not apparently
know that there were two (2) expropriation proceedings effecting said properties: that
the P12,000 received by him from the Government was not meant for Lot 378; and that
this lot was one of the properties mortgaged by him to the Bank.

"Upon the other hand, the main purpose of the Torrens System is to avoid possible
conflicts of title in and to real estate, and to facilitate transactions relative thereto
giving the public the right to rely upon the face of Torrens certificate of title and to
dispense with the of inquiring further, except when the party concerned has actual
knowledge of facts and circumstances that should impel a reasonably cautious man to
make such further inquiry (Tiburcio vs. PHHC, L-13479, October 31, 1959; Revilla vs.
Galindez, G.R. No. L-19940, March 30, 1960; Manacop, Jr. vs. Cansino, G.R. No. L-13791,
February 27, 1961). In the case at bar plaintiff had no such actual knowledge, it being an
established fact that he was not aware until 1949 that the land on which the provincial
hospital stood was Lot 378. Furthermore, since the year 1921, or before the
expropriation case for the hospital site had begun, said lot was mortgaged to the
Bacolod-Murcia Milling Co., and the mortgage, duly registered, as well as annotated on
the corresponding certificate of title, was not cancelled until September 28, 1935. Prior
to this date, or on December 26, 1926, Lot 378 was subjected to a second mortgage in
favor of the Bank, which acquired title thereto, thru foreclosure proceedings, in 1934.
When the Bank agreed on November 8, 1935, to sell the property to Carlos P. Benares
and the latter, subsequently conveyed his rights to plaintiff herein, as well as when the
bank executed the deed of absolute sale in plaintiff's favor on September 20, 1949, the
title to the property was in the name of the Bank. Considering that sugar centrals as well
as banks are known to have an array of experienced and competent lawyers, it cannot be
said that plaintiff was not justified in assuming that said institutions had scrutinized the
background of Lot 378 and were satisfied that the same belonged to the mortgagor
when said mortgages were constituted, and to the Bank when said deed of sale was
executed. In short, we find that plaintiff herein is a purchaser in good faith and for
value..

As regards the compensation that, as such, it may collect from the defendant, we are of
the opinion, and so hold, that, since the latter's right to expropriate Lot 378 is not
contested, and is seemingly conceded, the plaintiff may demand what is due by reason of
the expropriation of said lot. In short, plaintiff is entitled to recover from the
defendant the fair and full equivalent to Lot 378, as of the time when possession
thereof was actually taken by the defendant, plus consequential damages including
attorney's fees from which consequential damages the consequential benefits, if any,
should be deducted, with interests, at the legal rate, on the aggregate sum due to the
plaintiff, from and after the date of said actual taking. The case should be remanded,
therefore, to the lower court for the reception of evidence on the date of said actual
taking and the amount of compensation collectible from the defendant, and the
rendition, thereafter, of the corresponding decision thereon..

WHEREFORE, the decision appealed from is hereby reversed and the records remanded
to the lower court for further proceedings, as above stated, with costs against the
defendant. It is so ordered..

G.R. No. 129760 December 29, 1998

RICARDO CHENG, petitioner,

vs.
RAMON B. GENATO and ERNESTO R. DA JOSE & SOCORRO DA
JOSE, respondents.

MARTINEZ, J.:

This petition for review on certiorari seeks to annul and set aside the Decision of the
Court of Appeals (CA) 1 dated July 7, 1997 in CA-G.R. No. CV No. 44706 entitled
"Ricardo Cheng, plaintiff-appellee vs. Ramon B. Genato, defendant-appellant, Ernesto R.
Da Jose & Socorro B. Da Jose, Intervenors-Appellants" which reversed the ruling of the
Regional Trial Court, Branch 96 of Quezon City dated January 18, 1994. The dispositive
portion of the CA Decision reads:

WHEREFORE, based on the foregoing, appealed decision is hereby

REVERSED and SET ASIDE and judgment is rendered ordering;

1. The dismissal of the complaint;

2. The cancellation of the annotations of the defendant-appellant's

Affidavit to Annul Contract to Sell and plaintiff-appellee's Notice of
Adverse Claim in the subject TCT's, namely, TCT No. T-76.196 (M) and
TCT No. T-76.197 (M);
 3. Payment by the intervenors-appellants of the remaining balance of the
purchase price pursuant to their agreement with the defendant-
appellant to suspend encashment of the three post-dated checks issued
since 1989.

4. Ordering the execution by the defendant-appellant Genato of the

Deed of Absolute Sale over the subject two lots covered by TCT No. T-
76.196 (M) and TCT No. T-76.197 (M) in favor of intervenors-appellants
Spouses Da Jose;

5. The return by defendant-appellant Genato of the P50,000.00 paid to

him by the plaintiff-appellee Cheng, and

6. Payment by plaintiff-appellee Cheng of moral damages to herein

intervenors-appellants Da Jose of P100,000.00, exemplary damages of
P50,000.00, attorney's fees of P50,000.00, and costs of suit; and to
defendant-appellant, of P100,000.00 in exemplary damages, P50,000.00
in attorney's fees. The amounts payable to the defendant-appellant may
be compensated by plaintiff appellee with the amount ordered under the
immediately foregoing paragraph which defendant-appellant has to pay
the plaintiff-appellee.

2
SO ORDERED.

The antecedents of the case are as follows:

Respondent Ramon B. Genato (Genato) is the owner of two parcels of land located at
Paradise Farms, San Jose del Monte, Bulacan covered by TCT No. T-76.196 (M) 3 and
TCT No. T-76.197 (M) 4 with an aggregate area of 35,821square meters, more or less.

On September 6, 1989, respondent Genato entered into an agreement with respondent-

spouses Ernesto R. Da Jose and Socorro B. Da Jose (Da Jose spouses) over the above-
mentioned two parcels of land. The agreement culminated in the execution of a contract
to sell for which the purchase price was P80.00 per square meter. The contract was in a
public instrument and was duly annotated at the back of the two certificates of title on
the same day. Clauses 1and 3 thereof provide:

1. That the purchase price shall be EIGHTY (P80.00) PESOS, Philippine

Currency per square meter, of which the amount of FIFTY THOUSAND
(P50,000.00) PESOS shall be paid by the VENDEE to the VENDOR as
partial down payment at the time of execution of this Contract to Sell.
 xxx xxx xxx

3. That the VENDEE, Thirty (30) DAYS after the execution of this
contract, and only after having satisfactorily verified and confirmed the
truth and authenticity of documents, and that no restrictions,
limitations, and developments imposed on and/or affecting the property
subject of this contract shall be detrimental to his interest, the
VENDEE shall pay to the VENDOR, NINE HUNDRED FIFTY
THOUSAND (P950,00.00) PESOS. Philippine Currency, representing the
full payment of the agreed Down Payment, after which complete
possession of the property shall be given to the VENDEE to enable him
to prepare the premises and any development therein.

On October 4, 1989, the Da Jose spouses, not having finished verifying the titles
mentioned in clause 3 as aforequoted, asked for and was granted by respondent Genato
an extension of another 30 days or until November 5, 1989. However, according to
Genato, the extension was granted on condition that a new set of documents is made
seven (7) days from October 4, 1989. 6 This was denied by the Da Jose spouses.

Pending the effectivity of the aforesaid extension period, and without due notice to the
Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell, 7 on
October 13, 1989. Moreover, no annotation of the said affidavit at the back of his titles
was made right away. The affidavit contained, inter alia, the following paragraphs;

xxx xxx xxx

That it was agreed between the parties that the agreed downpayment of
P950,000.00 shall be paid thirty (30) days after the execution of the
Contract, that is on or before October 6, 1989;

The supposed VENDEES failed to pay the said full downpayment even up
to this writing, a breach of contract;

That this affidavit is being executed to Annul the aforesaid Contract to

Sell for the vendee having committed a breach of contract for not
having complied with the obligation as provided in the Contract to Sell; 8

On October 24, 1989, herein petitioner Ricardo Cheng (Cheng) went to Genato's
residence and expressed interest in buying the subject properties. On that occasion,
Genato showed to Ricardo Cheng copies of his transfer certificates of title and the
annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato
also showed him the aforementioned Affidavit to Annul the Contract to Sell which has
not been annotated at the back of the titles.

Despite these, Cheng went ahead and issued a check for P50,000.00 upon the assurance
by Genato that the previous contract with the Da Jose spouses will be annulled for which
Genato issued a handwritten receipt (Exh. "D"), written in this wise:

10/24/89

Received from Ricardo Cheng

the Sum of Fifty Thousand Only (P50.000-)

as partial for T-76196 (M)

T-76197 (M) area 35.821 Sq.m.

Paradise Farm, Gaya-Gaya, San Jose Del Monte

P70/m2 Bulacan

plus C. G. T. etc.

Check # 470393 (SGD.) Ramon B. Genato

9
10/24/89

On October 25, 1989, Genato deposited Cheng's check. On the same day, Cheng called up
Genato reminding him to register the affidavit to annul the contract to sell. 10

The following day, or on October 26, 1989, acting on Cheng's request, Genato caused the
registration of the Affidavit to Annul the Contract to Sell in the Registry of Deeds,
Meycauayan, Bulacan as primary entry No. 262702. 11

While the Da Jose spouses were at the Office of the Registry of Deeds of Meycauayan,
Bulacan on October 27, 1989, they met Genato by coincidence. It was only then that the
Da Jose spouses discovered about the affidavit to annul their contract. The latter were
shocked at the disclosure and protested against the rescission of their contract. After
being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day
period to finish their verification of his titles, that the period was still in effect, and
that they were willing and able to pay the balance of the agreed down payment, later on
in the day, Genato decided to continue the Contract he had with them. The agreement to
continue with their contract was formalized in a conforme letter dated October 27,
1989.

Thereafter, Ramon Genato advised Ricardo Cheng of his decision to continue his contract
with the Da Jose spouses and the return of Cheng's P50,000.00 check. Consequently, on
October 30, 1989, Cheng's lawyer sent a letter 12 to Genato demanding compliance with
their agreement to sell the property to him stating that the contract to sell between
him and Genato was already perfected and threatening legal action.

On November 2, 1989, Genato sent a letter 13 to Cheng (Exh. "6") enclosing a BPI
Cashier's Check for P50,000.00 and expressed regret for his inability to "consummate
his transaction" with him. After having received the letter of Genato on November 4,
1989, Cheng, however, returned the said check to the former via RCPI telegram 14 dated
November 6, 1989, reiterating that "our contract to sell your property had already been
perfected."

Meanwhile, also on November 2, 1989, Cheng executed an affidavit of adverse

claim 15 and had it annotated on the subject TCT's.

On the same day, consistent with the decision of Genato and the Da Jose spouses to
continue with their Contract to Sell of September 6, 1989, the Da Jose spouses paid
Genato the complete down payment of P950,000.00 and delivered to him three (3)
postdated checks (all dated May 6, 1990, the stipulated due date) in the total amount of
P1,865,680.00 to cover full payment of the balance of the agreed purchase price.
However, due to the filing of the pendency of this case, the three (3) postdated checks
have not been encashed.

On December 8, 1989, Cheng instituted a complaint 16 for specific performance to

compel Genato to execute a deed of sale to him of the subject properties plus damages
and prayer for preliminary attachment. In his complaint, Cheng averred that the
P50,000.00 check he gave was a partial payment to the total agreed purchase price of
the subject properties and considered as an earnest money for which Genato acceded.
Thus, their contract was already perfected.

In Answer 17 thereto, Genato alleged that the agreement was only a simple receipt of an
option-bid deposit, and never stated that it was a partial payment, nor is it an earnest
money and that it was subject to condition that the prior contract with the Da Jose
spouses be first cancelled.
The Da Jose spouses, in their Answer in Intervention, 18 asserted that they have a
superior right to the property as first buyers. They alleged that the unilateral
cancellation of the Contract to Sell was without effect and void. They also cited Cheng's
bad faith as a buyer being duly informed by Genato of the existing annotated Contract
to Sell on the titles.

After trial on the merits, the lower court ruled that the receipt issued by Genato to
Cheng unerringly meant a sale and not just a priority or an option to buy. It cannot be
true that the transaction was subjected to some condition or reservation, like the
priority in favor of the Da Jose spouses as first buyer because, if it were otherwise, the
receipt would have provided such material condition or reservation, especially as it was
Genato himself who had made the receipt in his own hand. It also opined that there was a
valid rescission of the Contract to Sell by virtue of the Affidavit to Annul the Contract
to Sell. Time was of the essence in the execution of the agreement between Genato and
Cheng, under this circumstance demand, extrajudicial or judicial, is not necessary. It
falls under the exception to the rule provided in Article 1169 19 of the Civil Code. The
right of Genato to unilaterally rescind the contract is said to be under Article 1191 20 of
the Civil Code. Additionally, after reference was made to the substance of the
agreement between Genato and the Da Jose spouses, the lower court also concluded that
Cheng should be preferred over the intervenors-Da Jose spouses in the purchase of the
subject properties. Thus, on January 18, 1994 the trial court rendered its decision the
decretal portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Declaring the contract to sell dated September 6, 1989 executed

between defendant Ramon Genato, as vendor, and intervenors Spouses
Ernesto and Socorro Da Jose, as vendees, resolved and rescinded in
accordance with Art. 1191, Civil Code, by virtue of defendant's affidavit
to annul contract to sell dated October 13, 1989 and as the consequence
of intervenors' failure to execute within seven (7) days from October 4,
1989 another contract to sell pursuant to their mutual agreement with
defendant;

2. Ordering defendant to return to the intervenors the sum of

P1,000,000.00, plus interest at the legal rate from November 2, 1989
until full payment;

3. Directing defendant to return to the intervenors the three (3)

postdated checks immediately upon finality of this judgment;
 4. Commanding defendant to execute with and in favor of the plaintiff
Ricardo Cheng, as vendee, a deed of conveyance and sale of the real
properties described and covered in Transfer Certificates of Title No.
T-76-196 (M) and T-76.197 (M) of the Registry of Deeds of Bulacan,
Meycauayan Branch, at the rate of P70.000/square meter, less the
amount of P50,000.00 alreaddy paid to defendant, which is considered
as part of the purchase price, with the plaintiff being liable for payment
of the capital gains taxes and other expenses of the transfer pursuant
to the agreement to sell dated October 24, 1989; and

5 Ordering defendant to pay the plaintiff and the intervenors as

follows:

a/ P50,000.00, as nominal damages, to

plaintiff;

b/ P50,000.00, as nominal damages, to

intervenors;

c/ P20,000.00, as and for attorney's

fees, to plaintiff;

d/ P20,000.00, as and for attorney's

fees, to intervenors; and

e/ Cost of the suit.

xxx xxx xxx

Not satisfied with the aforesaid decision, herein respondents Ramon Genato and Da Jose
spouses appealed to the court a quo which reversed such judgment and ruled that the
prior contract to sell in favor of the Da Jose spouses was not validly rescinded; that the
subsequent contract to sell between Genato and Cheng, embodied in the handwritten
receipt, was without force and effect due to the failure to rescind the prior contract;
and that Cheng should pay damages to the respondents herein being found to be in bad
faith.

Hence this petition. 21

This petition for review, assails the Court of Appeals' Decision on the following grounds:
(1) that the Da Jose spouses' Contract to Sell has been validly rescinded or resolved; (2)
that Ricardo Cheng's own contract with Genato was not just a contract to sell but one of
conditional contract of sale which gave him better rights, thus precluding the application
of the rule on double sales under Article 1544, Civil Code; and (3) that, in any case, it was
error to hold him liable for damages.

The petition must be denied for failure to show that the Court of Appeals committed a
reversible error which would warrant a contrary ruling.

No reversible error can be ascribed to the ruling of the Court of Appeals that there was
no valid and effective rescission or resolution of the Da Jose spouses Contract to Sell,
contrary to petitioner's contentions and the trial court's erroneous ruling.

In a Contract to Sell, the payment of the purchase price is a positive suspensive

condition, the failure of which is not a breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey title from acquiring an obligatory
force. 22 It is one where the happening of the event gives rise to an obligation. Thus, for
its non-fulfillment there will be no contract to speak of, the obligor having failed to
perform the suspensive condition which enforces a juridical relation. In fact with this
circumstance, there can be no rescission of an obligation that is still non-existent, the
suspensive condition not having occurred as yet. 23 Emphasis should be made that the
breach contemplated in Article 1191 of the New Civil Code is the obligor's failure to
comply with an obligation already extant, not a failure of a condition to render binding
that obligation. 24

Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the
instant case because no default can be ascribed to the Da Jose spouses since the 30-day
extension period has not yet expired. The Da Jose spouses' contention that no further
condition was agreed when they were granted the 30-days extension period from
October 7, 1989 in connection with clause 3 of their contract to sell dated September 6,
1989 should be upheld for the following reason, to wit; firstly, If this were not true,
Genato could not have been persuaded to continue his contract with them and later on
agree to accept the full settlement of the purchase price knowing fully well that he
himself imposed such sine qua non condition in order for the extension to be
valid; secondly, Genato could have immediately annotated his affidavit to annul the
contract to sell on his title when it was executed on October 13, 1989 and not only on
October 26, 1989 after Cheng reminded him of the annotation; thirdly, Genato could
have sent at least a notice of such fact, there being no stipulation authorizing him for
automatic rescission, so as to finally clear the encumbrance on his titles and make it
available to other would be buyers. It likewise settles the holding of the trial court that
Genato "needed money urgently."
Even assuming in gratia argumenti that the Da Jose spouses defaulted, as claimed by
Genato, in their Contract to Sell, the execution by Genato of the affidavit to annul the
contract is not even called for. For with or without the aforesaid affidavit their non-
payment to complete the full downpayment of the purchase price ipso facto avoids their
contract to sell, it being subjected to a suspensive condition. When a contract is subject
to a suspensive condition, its birth or effectivity can take place only if and when the
event which constitutes the condition happens or is fulfilled. 25 If the suspensive
condition does not take place, the parties would stand as if the conditional obligation had
never
existed. 26

Nevertheless, this being so Genato is not relieved from the giving of a notice, verbal or
written, to the Da Jose spouses for his decision to rescind their contract. In many
cases, 27 even though we upheld the validity of a stipulation in a contract to sell
authorizing automatic rescission for a violation of its terms and conditions, at least a
written notice must be sent to the defaulter informing him of the same. The act of a
party in treating a contract as cancelled should be made known to the other. 28 For such
act is always provisional. It is always subject to scrutiny and review by the courts in case
the alleged defaulter brings the matter to the proper courts. In University of the
Philippines vs. De Los Angeles, 29 this Court stressed and we quote:

In other words, the party who deems the contract violated may consider
it resolved or rescinded, and act accordingly, without previous court
action, but it proceeds at its own risk. For it is only the final judgment
of the corresponding court that will conclusively and finally settle
whether the action taken was or was not correct in law. But the law
definitely does not require that the contracting party who believes
itself injured must first file suit and wait for a judgment before taking
extrajudicial steps to protect its interest. Otherwise, the party injured
by the other's breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final judgment of
rescission is rendered when the law itself requires that he should
exercise due diligence to minimize its own damages (Civil Code, Article
2203).

This rule validates, both in equity and justice, contracts such as the one at bat, in order
to avoid and prevent the defaulting party from assuming the offer as still in effect due
to the obligee's tolerance for such non-fulfillment. Resultantly, litigations of this sort
shall be prevented and the relations among would-be parties may be preserved. Thus,
Ricardo Cheng's contention that the Contract to Sell between Genato and the Da Jose
spouses was rescinded or resolved due to Genato's unilateral rescission finds no support
in this case.

Anent the issue on the nature of the agreement between Cheng and Genato, the records
of this case are replete with admissions 30 that Cheng believed it to be one of a Contract
to Sell and not one of Conditional Contract of Sale which he, in a transparent turn-
around, now pleads in this Petition. This ambivalent stance of Cheng is even noted by the
appellate court, thus:

At the outset, this Court notes that plaintiff-appellee was inconsistent

in characterizing the contract he allegedly entered into. In his
complaint. 31 Cheng alleged that the P50,000.00 down payment was
earnest money. And next, his testimony 32 was offered to prove that the
transaction between him and Genato on October 24, 1989 was actually a
perfected contract to sell. 33

Settled is the rule that an issue which was not raised during the trial in the court below
cannot be raised for the first time on appeal. 34 Issues of fact and arguments not
adequately brought to the attention of the trial court need not be and ordinarily will not
be considered by a reviewing court as they cannot be raised for the first time on
appeal. 35 In fact, both courts below correctly held that the receipt which was the result
of their agreement, is a contract to sell. This was, in fact Cheng's contention in his
pleadings before said courts. This patent twist only operates against Cheng's posture
which is indicative of the weakness of his claim.

But even if we are to assume that the receipt, Exh. "D," is to be treated as a conditional
contract of sale, it did not acquire any obligatory force since it was subject to
suspensive condition that the earlier contract to sell between Genato and the Da Jose
spouses should first be cancelled or rescinded a condition never met, as Genato, to his
credit, upon realizing his error, redeemed himself by respecting and maintaining his
earlier contract with the Da Jose spouses. In fact, a careful reading of the receipt, Exh.
"D," alone would not even show that a conditional contract of sale has been entered by
Genato and Cheng. When the requisites of a valid contract of sale are lacking in said
receipt, therefore the "sale" is neither valid or enfoceable. 36

To support his now new theory that the transaction was a conditional contract of sale,
petitioner invokes the case of Coronel vs. Court of Appeals 37 as the law that should
govern their Petition. We do not agree. Apparently, the factual milieu in Coronel is not on
all fours with those in the case at bar.
In Coronel, this Court found that the petitioners therein clearly intended to transfer
title to the buyer which petitioner themselves admitted in their pleading. The agreement
of the parties therein was definitively outlined in the "Receipt of Down Payment" both as
to property, the purchase price, the delivery of the seller of the property and the
manner of the transfer of title subject to the specific condition that upon the transfer
in their names of the subject property the Coronels will execute the deed of absolute
sale.

Whereas, in the instant case, even by a careful perusal of the receipt, Exh. "D," alone
such kind of circumstances cannot be ascertained without however resorting to the
exceptions of the Rule on Parol Evidence.

To our mind, the trial court and the appellate court correctly held that the agreement
between Genato and Cheng is a contract to sell, which was, in fact, petitioner connection
in his pleadings before the said courts. Consequently, both to mind, which read:

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 possession; and in the absence thereof, to
the person who presents he oldest title, provided there is good faith.

However, a meticulous reading of the aforequoted provision shows that said law is not
apropos to the instant case. This provision connotes that the following circumstances
must concur:

(a) The two (or more) sales transactions in issue must pertain to exactly
the same subject matter, and must be valid sales transactions.

(b) The two (or more) buyers at odds over the rightful ownership of the
subject matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the
subject matter must each have bought from the very same seller.
These situations obviously are lacking in a contract to sell for neither a transfer of
ownership nor a sales transaction has been consummated. The contract to be binding
upon the obligee or the vendor depends upon the fulfillment or non-fulfillment of an
event.

Notwithstanding this contrary finding with the appellate court, we are of the view that
the governing principle of Article 1544, Civil Code, should apply in this situation.
Jurisprudence 38 teaches us that the governing principle is PRIMUS TEMPORE,
PORTIOR JURE (first in time, stronger in right). For not only was the contract between
herein respondents first in time; it was also registered long before petitioner's intrusion
as a second buyer. This principle only applies when the special rules provided in the
aforcited article of the Civil Code do not apply or fit the specific circumstances
mandated under said law or by jurisprudence interpreting the article.

The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to
displace the first buyer are:

(1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the
first sale and of the first buyer's rights) from the time of acquisition until title is
transferred to him by registration or failing registration, by delivery of possession; 39

(2) the second buyer must show continuing good faith and innocence or lack of knowledge
of the first sale until his contract ripens into full ownership through prior registration
as provided by law. 40

Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers,
of the new agreement between Cheng and Genato will not defeat their rights as first
buyers except where Cheng, as second buyer, registers or annotates his transaction or
agreement on the title of the subject properties in good faith ahead of the Da Jose
spouses. Moreover, although the Da Jose spouses, as first buyers, knew of the second
transaction it will not bar them from availing of their rights granted by law, among them,
to register first their agreement as against the second buyer.

In contrast, knowledge gained by Cheng of the first transaction between the Da Jose
spouses and Genato defeats his rights even if he is first to register the second
transaction, since such knowledge taints his prior registration with bad faith.

"Registration", as defined by Soler and Castillo, means any entry made in the books of
the registry, including both registration in its ordinary and strict sense, and cancellation,
annotation, and even marginal notes. 41 In its strict acceptation, it is the entry made in
the registry which records solemnly and permanently the right of ownership and other
real rights. 42 We have ruled 43 before that when a Deed of Sale is inscribed in the
registry of property on the original document itself, what was done with respect to said
entries or annotations and marginal notes amounted to a registration of the sale. In this
light, we see no reason why we should not give priority in right the annotation made by
the Da Jose spouses with respect to their Contract to Sell dated September 6, 1989.

Moreover, registration alone in such cases without good faith is not sufficient. Good
faith must concur with registration for such prior right to be enforceable. In the instant
case, the annotation made by the Da Jose spouses on the titles of Genato of their
"Contract To Sell" more than satisfies this requirement. Whereas in the case of
Genato's agreement with Cheng such is unavailing. For even before the receipt, Exh. "D,"
was issued to Cheng information of such pre-existing agreement has been brought to his
knowledge which did not deter him from pursuing his agreement with Genato. We give
credence to the factual finding of the appellate court that "Cheng himself admitted that
it was he who sought Genato in order to inquire about the property and offered to buy
the same. 44 And since Cheng was fully aware, or could have been if he had chosen to
inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated
on the transfer certificates of titles of Genato, it now becomes unnecessary to further
elaborate in detail the fact that he is indeed in bad faith in entering into such
agreement. As we have held in Leung Yee vs. F.L. Strong Machinery Co.: 45

One who purchases real estate with knowledge of a defect . . . of title in

his vendor cannot claim that he has acquired title thereto in good faith
as against . . . . an interest therein; and the same rule must be applied to
one who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the
defects in the title of his vendor. A purchaser cannot close his eyes to
facts which should put a reasonable man upon his guard, and then claim
that he acted in good faith under the belief that there was no defect in
the title of the vendor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the
existence of a defect in his vendor's title, will not make him an innocent
purchaser for value, if it afterwards develops that the title was in fact
defective, and it appears that he had such notice of the defect as would
have led to its discovery had he acted with that measure of precaution
which may reasonably be required of a prudent man in a like situation.
Good faith, or lack of it, is in its last analysis a question of intention; but
in ascertaining the intention by which one is actuated on a given
occasion, we are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may with
safety, be determined. So it is that "the honesty of intention," "the
 honest lawful intent," which constitutes good faith implies a "freedom
from knowledge and circumstances which ought to put a person on
inquiry," and so it is that proof of such knowledge overcomes the
presumption of good faith in which the courts always indulge in the
absence of the proof to the contrary. "Good faith, or the want of it, is
not a visible, tangible fact that can be seen or touched, but rather a
state or condition of mind which can only be judge of by actual or
fancied tokens or signs." (Wilder vs. Gilman, 55 Vt. 504, 505; Cf.
Cardenas vs. Miller, 108 Cal., 250; Breaux-Renoudet, Cypress Lumber Co.
vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromely, 119
Mich., 8, 10, 17.) (Emphasis ours)

Damages were awarded by the appellate court on the basis of its finding that petitioner
"was in bad faith when he filed the suit for specific performance knowing fully well that
his agreement with Genato did not push through. 46Such bad faith, coupled with his
wrongful interference with the contractual relations between Genato and the Da Jose
spouses, which culminated in his filing of the present suit and thereby creating what the
counsel for the respondents describes as "a prolonged and economically unhealthy
gridlock 47 on both the land itself and the respondents' rights provides ample basis for
the damages awarded. Based on these overwhelming evidence of bad faith on the part of
herein petitioner Ricardo Cheng, we find that the award of damages made by the
appellate court is in order.

WHEREFORE, premises considered, the instant petition for review is DENIED and the
assailed decision is hereby AFFIRMED EN TOTO.

SO ORDERED.