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CHAPTER VI CERTIFICATE OF TITLE (Section 39 50)

Decree Binds the Land
Calalang v. Register of Deeds of Quezon City, G.R. No. 76265, April 22, 1992

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 76265 April 22, 1992

VIRGINIA CALALANG, petitioner,

vs.
REGISTER OF DEEDS OF QUEZON CITY, ADMINISTRATOR OF NATIONAL LAND TITLES AND
DEEDS REGISTRATION ADMINISTRATION, LUCIA DE LA CRUZ, CONSTANCIO SIMANGAN and
IGLESIA NI KRISTO, respondents.

G.R. No. 83280 April 22, 1992

AUGUSTO M. DE LEON, JOSE M. DE CASTRO, JOSE A. PANLILEO, FELICIDAD VERGARA VDA.

DE PINEDA, FERNANDO L. VITUG I, FERNANDO M. VITUG II, FERNANDO M. VITUG III, FAUSTINO
TOBIA, ELENA M. OSTREA and FELISA C. CRISTOBAL-GENEROSO, petitioners,
vs.
THE HON. COURT OF APPEALS and BISHOP ERAO MANALO, respondents.

GUTIERREZ, JR., J.:

The subject of controversy in these two consolidated petitions is a parcel of land Lot 671-A of the
Piedad Estate located in Barrio Culiat, Diliman.

The petitioners are individual lot owners who claim to have bought their respective portions from Amando
Clemente in the 1950's.

Amando Clemente is alleged to be the registered owner of said land evidenced by Transfer of Certificate
Title No. 16212 covering about 81,160 square meters who converted it into a subdivision known as
Clemville Subdivision.

Lot 671-A is actually part of a bigger parcel known as Lot 671 which is claimed by respondent Iglesia ni
Kristo (INK), which bought said property from Lucia dela Cruz in 1975. Dela Cruz was adjudged the
rightful owner of Lot 671 in the case of dela Cruz v. dela Cruz (130 SCRA 666 [1984]). INK began fencing
the whole area and placed the following sign "NO TRESPASSING IGLESIA NI KRISTO PROPERTY
SUPREME COURT CASE NO. 61969, July 25, 1984."

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Briefly, the dela Cruz v. dela Cruz case is an action for reconveyance founded on breach of trust filed by
Augustina dela Cruz, et al. against Lucia dela Cruz and INK. Augustina and her co-plaintiffs charged that
the parcel of land purchased by the INK from Lucia dela Cruz was actually a part of their inheritance
share in the estate of their late grandfather, Policarpio dela Cruz but which, in breach of trust known to
the INK, Lucia sold to the latter.

Augustina's suit was originally decided in her favor by the trial court. On appeal to the Court of Appeals,
the judgment was reversed and the questioned sale by Lucia dela Cruz to the INK was upheld.
Consequently, Augustina went to the Supreme Court on a petition for review on certiorari, docketed as G.
R. No. 61969.

On July 25, 1984, the Court rendered a decision in affirming the decision of the Court of Appeals. The
validity of the sale of Lucia to the INK was thereby upheld and the title of INK to the subject realty (Lot
671) was validated as well.

This Supreme Court decision spawned the two (2) petitions now before us assailing the validity of Lucia
dela Cruz's title over Lot 671 which in turn was sold to INK.

In G.R. No. 76265, petitioner Virginia Calalang alleged that she is the registered owner of a portion of Lot
671-A (subdivision plan PSD 32221) as evidenced by TCT Nos. 17556, 17564 and 17562. She
allegedly came to know of INK'S claim only when a prospective buyer inspected the land on August 1986
and saw the "no trespassing" sign.

Petitioner Calalang lost no time in inquiring into the status of the land and learned about the
pending consulta case (LRC 1978) filed before the Administrator of the National Land Titles and Deeds
Registration Administration (NLTDRA). This consulta came about when the Register of Deeds doubted
the registrability of the documents presented before it in the light of his findings that the land affected was
covered by two (2) sets of titles issued in the names of different owners.

On September 9, 1986, the petitioner filed a Motion to Intervene requesting the Administrator to conduct
an investigation of the supposed anomaly committed in connection with the reconstitution of TCT No. RT-
58 in the name of Lucia dela Cruz. This was denied by the Administrator invoking our ruling in dela Cruz
v. dela Cruz to the effect that TCT RT-58 in the name of respondent Lucia dela Cruz is the valid title.
(Rollo, pp. 44-47)

Consequently, a Motion for Reconsideration was filed by herein petitioner but this was likewise denied by
the Administrator on October 20, 1986 on the ground that the issues raised therein have already been
passed upon and that the issues being litigious in nature cannot be decided in a consulta case "where the
only question to be determined is the registrability of the document presented for registration."

Hence, on October 27, 1986, the petitioner file the instant Special Civil Action for Certiorari and
Prohibition in G.R. No. 76265 against the Administrator of the NLTDRA, the Register of Deeds of Quezon
City and private respondents Lucia dela Cruz, Constancio Simangan and Iglesia ni Kristo. Lucia dela
Cruz and Constancio Simangan were impleaded as they were predecessors-in-interest of INK.

INK and the Administrator filed their comments on January 5, 1987 and June 29, 1987 respectively. For
failure to locate Constancio Simangan's whereabouts despite diligent efforts and considering further that
INK is the indispensable party and the one interested in upholding the validity of the reconstituted title of

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respondent Lucia dela Cruz, the petitioner moved to drop him as respondent. This was granted by the
Court in a resolution dated April 13, 1988. (Rollo, p. 189)

Taking the cue from the Administrator that present certificates of title must be cancelled to avoid
duplication, the Register of Deeds, instead of filing its comment initiated cancellation proceedings of more
than 100 titles, against 81 defendants which included herein petitioner on the basis of this Court's
declaration in the case of dela Cruz that the reconstituted title of respondent Lucia dela Cruz is the valid
title. This petition was filed by the Office of the Solicitor-General (OSG) on January 5, 1987 with the
Regional Trial Court of Quezon City docketed as Civil Case No. Q-49900.

Consequently, the petitioner moved to dismiss on the ground that the complaint was premature and
maliciously filed with knowledge of the instant petition with this Court. INK, on the other hand, filed a
Motion to Intervene in said case. Claiming ownership over Lot 671, it prayed for damages against some
of the defendants namely Augusto de Leon, Jose M. Panlilio and Felicidad Vda. de Pineda who filed an
injunction suit against it (Civil Case No. Q-45767) with the Regional Trial Court (RTC) of Quezon City on
September 12, 1985.

Despite opposition of the petitioner to respondent INK's Motion to Intervene, presiding Judge Benigno T.
Dayaw granted the motion of INK and denied petitioner's Motion to Dismiss on the ground that the issues
raised in the instant petition (G. R. No. 76265) will not substantially affect said civil case. The subsequent
motion for reconsideration filed by the petitioner was likewise denied considering that no restraining order
has been issued (Rollo, pp. 198-216).

However, instead of filing an answer to the complaint in Civil Case No. Q-49900, the petitioners filed on
July 15, 1988 a supplemental petition before this Court to include as additional respondent, the Honorable
Judge Benigno T. Dayaw and petitioner's children who were named as defendants in said Civil Case, as
additional petitioners. At the same time the petitioner prayed for a restraining order (Rollo, p.197).

To this supplemental petition, the OSG in behalf of the Republic filed its comment pursuant to the Court's
resolution granting the petitioner's motion for leave to include additional parties and to admit supplemental
petition (Rollo, p. 228).

In the meantime, fire gutted the records of the Register of Deeds in Quezon City, so respondent Judge
required the parties to agree to a stipulation of facts instead of trial.

In G.R. No. 83280, the petitioners alleged that they and/or their predecessors in interest were issued their
corresponding titles to the lots purchased from Amando Clemente in the 1950's yet.

They alleged that they took physical possession of their lots in Clemville Subdivision by actually
occupying the same, declaring them in their names for tax purposes, fencing or marking them off and
entrusting their care to "katiwalas". From the time they acquired their Torrens Title they and they alone to
the exclusion of INK exercised all acts of undisturbed, peaceful and uninterrupted ownership and
possession including the payment of their realty taxes.

On or about the second week of August, 1985, INK started to enclose the entire Clemville Subdivision
with "sawali" fences with billboards randomly posted which read:

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NO TRESPASSING
I.N.C. PROPERTY
SC DECISION
2ND DIVISION
G. R. NO. L 61969
JULY 25, 1984

INK also destroyed the concrete/hollow block fence surrounding the lot of petitioner de Castro and started
the construction of housing structures therein. At the same time, it commenced the delivery of
construction materials to the former premises of petitioner Panlilio to erect a permanent structures of
strong materials on it.

Thus, on August 22, 1985, the petitioners filed with the RTC-Branch 101 a petition for injunction with
damages. This case was docketed an Civil Case No. 45767. Later, this petition was amended to include
Elena Ostrea and Feliza C. Cristobal-Generoso as additional petitioners.

August 25, 1985, presiding Judge Santiago issued a restraining order and set the case for hearing the
writ for preliminary injunction on September 5, 1985.

The September 5 hearing was however, reset to September 19, 1985 with respondent Erao Manalo
volunteering to maintain the status quo until then or until the matter had been resolved by the trial court.

On September 19, by agreement of the parties and in open court, the Judge issued an order, granting the
parties' motion to enter into a stipulation of facts instead of going on with the hearing and to maintain
the status quo.

In the course of the exchange of pleadings between the parties, the trial judge issued an Order on
December 6, 1985 denying the petitioners' prayer for the issuance of a writ of preliminary injunction on
the grounds that:

From the exchange of written arguments and the authorities cited, it appears that the
petitioners' titles which were issued some ten years earlier than that of respondent's
emanated from a reconstituted TCT No. RT-52, which covered portion of Lot 671 of the
Piedad Estate of Quezon City. Petitioner's parcels of land are within that estate. This
reconstituted TCT No. RT-52 was the subject of a case, "De la Cruz v. De la Cruz", 130
SCRA 66 [1984], wherein the Honorable Supreme Court declared the said reconstituted
title null and void.

The principal argument of petitioners that they were not parties thereto can not be given
serious extended discussion as they could acquire no more rights than the source of their
titles. For brevity, at this initial stage, suffice it to say that under the foregoing discussed
circumstances, the petitioners have not shown a clear and positive right to a temporary
relief. (Emphasis supplied) (Rollo, p. 35)

Assailing this order, the petitioners by way of certiorari elevated the matter to the Court of Appeals in CA-
G.R. SP No. 08146.

On April 9, 1986, the Court of Appeals promulgated a Decision with the following dispositive portion:

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WHEREFORE, the petition is given due course and is hereby RESOLVED by setting
aside the Order dated December 6, 1985 in Civil Case No. Q-45767 and directing that
the application for preliminary injunctive relief therein be properly heard and evidence for
or against the same be adduced in due course. (Rollo, p. 39)

On February 12, 1987, respondent INK filed with the lower court a motion to dismiss the petitioners'
complaint for injunction on the ground that it does not state a cause of action.

On August 7, 1987, the lower court issued an Order with the following dispositive portion:

WHEREFORE, premises considered, finding respondent's Motion to Dismiss justified, the

instant petition is hereby DISMISSED, with costs against petitioners. (Rollo, p. 48)

Seeking relief from the dismissal, the petitioners filed the two pleadings, to wit:

1) "Motion for Reconsideration Ad Cautelam" dated September 18, 1987 filed with the
RTC, NCR, Branch 101 Quezon City; and

2) "Omnibus Motion Incident to Execution of the Decision dated April 9, 1986" dated
September 29, 1987 filed with the Court of Appeals.

On December 10, 1987, the Court of Appeals denied petitioners' Omnibus Motion. The petitioners' motion
for reconsideration was likewise denied in a resolution by the RTC dated May 4, 1988.

Hence, the instant petition with the following assignment of errors.

THE HONORABLE COURT OF APPEALS, IN ITS DECEMBER 10, 1987 RESOLUTION,

ERRED IN HOLDING THAT THE ORDERS OF DECEMBER 12, 1986 AND AUGUST 7,
1986 RELATE TO INCIDENTS IN CIVIL CASE NO. 45767 TOTALLY ALIEN TO THE
SUBJECT MATTER OF CA-G.R. SP NO. 08146.

THE HONORABLE COURT OF APPEALS ERRED IN VALIDATING THE ORDER OF

AUGUST 7, 1986. (Rollo, p. 16)

In a resolution dated August 30, 1989, G.R. No. 83280 was consolidated with G.R. No. 76265.

Although other minor issues are involved in these consolidated cases, the principal and crucial issue that
alone needs to be resolved is the applicability of this Court's decision in the dela Cruz case to these
cases now before us.

The petitioners argue that the dela Cruz case could not be applied to them since they were not parties in
that case nor were they ever notified of such case pending between the parties. The petitioners explained
that the de la Cruz case was a case among the heirs of Policarpio de la Cruz. Since they acquired their
properties from an entirely different person, Amando Clemente and not from any of the heirs of Policarpio
de la Cruz, they could not be considered privies to any of them.

In denying applicability, however, the petitioners assail the Court's ruling that "the reconstituted title of
Lucia dela Cruz over Lot 671 (TCT No. RT 58) was valid. As the registered and rightful owner, Lucia dela

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Cruz had the perfect and legal right to sell, assign, and convert the property to respondent INK who as
purchaser for value in good faith holds the same free from all encumbrances except those noted in said
certificate."

With this Court's ruling promulgated in 1984, it is our considered view that the petitioner can not raise
anew the question of ownership of Lucia dela Cruz over Lot 671 which had been determined by the Court
of Appeals and affirmed by the Supreme Court in the dela Cruz case. Well-settled is the rule enunciated
in Church Assistance Program, Inc. v. Sibulo, 171 SCRA 408 [1989] that:

When a right or fact has been judicially tried and determined by a court of competent
jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties
and those in privity with them in law or estate.

The Court's ruling has long been final and the issue on ownership of Lot 671 finally disposed of several
years ago. This declaration must be respected and followed in the instant case applying the principle
of res judicata or, otherwise, the rule on conclusiveness of judgment. The less familiar concept or less
terminological usage of res judicata as a rule on conclusiveness of judgment refers to the situation where
the judgment in the prior action operates as an estoppel only as to the matters actually determined
therein or which were necessarily included therein (De la Cruz v. Court of Appeals, 187 SCRA 165
[1990]).

Inevitably, the dela Cruz ruling should be applied to the present petitions since the facts on which such
decision was predicated continue to be the facts of the case before us now (See Rivas v. SEC, 190
SCRA 295 [1990]). Even the petitioners substantially adopt the same findings of facts in their pleadings.
The factual inquiry with regards to the history of Lot 671 has already been laid to rest and may no longer
be disturbed. We quote:

The undisputed facts indicate that the parcel of land in question is Lot 671 of the Piedad
Estate, GLRO Rec. No. 5975, with an area of 184, 268 square meters, more or less,
situated in Barrio Culiat, Quezon City; that the totality of the Piedad Estate consists of a
vast tract of land, registered on March 12, 1912, in the name of the Philippine
Government, under Original Certificate of Title (OCT) No. 614 of the Register of Deeds of
the Province of Rizal; that when the Piedad Estate was subdivided (with Lot No. 671 as
one of the resulting parcels) whoever was in possession of a particular lot was given
priority and/or preference in the acquisition thereof provided that the price and the cost of
titling would be paid; that upon such payment, the government would issue the
corresponding certificate of title; that Policarpio dela Cruz and his wife Luciana Rafael
were originally in possession of the land; that they had three children, namely

(1) Maximo de la Cruz (married to Feliza Yabut);

(2) Filomeno de la Cruz (married to Narcisa Santiago); and

(3) defendant-appellant Lucia de la Cruz (a widow);

that the plaintiffs-appellees herein are the descendants of the two sons (Maximo and
Filomeno) of Policarpio; that on April 25, 1940, Lot No. 671 was segregated from the

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totality of the Piedad Estate, covered by OCT No. 614 and a separate title was issued in
the name of

"Eugenia de la Paz, soltera" and "Dorotea de la Cruz, viuda"

(this was Transfer Certificate of Title (TCT) No. 40355 of the Register of Deeds for the
Province of Rizal); that on November 29, 1941, a deed of sale over Lot No. 671 was
executed by Eugenia de la Paz and Dorotea de la Cruz (the registered owners) in favor
of defendant-appellant Lucia de la Cruz; that said deed of sale was registered with the
office of the Register of Deeds on July 17, 1943 and the corresponding certificate of title
was issued to Lucia de la Cruz; that in 1971, Lucia de la Cruz obtained from the land
registration court a reconstituted title (TCT No. RT-59 over Lot No. 671), the transfer
certificate of title previously issued to her in 1943 having been lost; that subsequently, Lot
No. 671 (this time, already covered by TCT No. RT-58) was subdivided into three (3) lots,
each of which was issued a separate title, as follows:

(a) Lot No. 671-A containing an area of 30,000 square meters and covered by TCT No.
168320;

(b) Lot No. 671-B, containing an area of 4,268 square meters and covered by TCT No.
168321; and

(c) Lot No. 671-C, containing an area of 150,000 square meters and covered by TCT No.
168322;

that meanwhile TCT No. 40355 (already previously issued to and in the names of
Eugenia de la Paz and Dorotea de la Cruz) continued to exist; that when the title was
transferred from the Rizal Registry to the Quezon City Registry, from the latter Registry
assigned to this TCT a new number, RT-52; that this same Lot (No. 671) was later
subdivided into two lots, each with a title:

(a) Lot No. 671-A (TCT No. 16212)

(b) Lot No. 671-B (TCT No. 16213)

both in the names of Eugenia de la Paz and Dorotea de la Cruz; that the second lot (lot
No. 671-B, with an area of 103,108 square meters) was sold on December 17, 1952 to
one Narcisa Vda. de Leon (to whom TCT No. 2009 was later issued); that on May 6,
1964, Narcisa Vda. de Leon transferred the same Lot 671-B to Nieves Paz Eraa (who
was later issued in her own name TCT No. 79971).

The undisputed facts further show that in 1971, Nieves Paz Eraa filed before the Court
of First instance of Quezon City Civil Case No. 16125 for 'quieting of title' against Lucia
de la Cruz, et al., praying that TCT No. RT-58, (the reconstituted title of Lucia de la Cruz),
as well as all titles derived therefrom, be declared null and void; that the case ended with
the parties submitting a compromise agreement with Lucia de la Cruz, among other
things, paying plaintiff Eraa the amount of P250,000.00 to cover the acquisitive cost of
the 103,108 square meters of land included in the certificate of title of defendant Lucia de

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la Cruz; that on July 17, 1975, Lucia de la Cruz sold a portion of Lot No. 671-C (one of
the three portions to which the lot included in RT-58 had been subdivided, and which
portion was covered by TCT No. 168322), consisting of 103,108 square meters to
defendant-appellant Iglesia Ni Cristo, for the amount of P2,108,850.00; that this sale was
later registered in the Registry of Deeds of Quezon City, with a new title, TCT No. 209554
being issued in the name of the Iglesia Ni Cristo; that another deed of absolute sale was
executed for the remaining 84,356 square meters in favor also of the Iglesia and said
sale was annotated on TCT No. 168322. In view of said sales and the fact that
registration of the involved parcels is now in the name (separately) of Lucia de la Cruz
and the Iglesia Ni Cristo, the present action for reconveyance with damages was
instituted. (Emphasis supplied)

Apparently, there is no mention of Amando Clemente in the above recital of facts. A closer perusal of the
records in G. R. 76265 would, however, reveal that TCT No. 16212 was issued for Lot 671-A in the name
of Amando Clemente on August 9, 1951 per report of the Acting Administrator of the NLTDRA (Rollo, p.
92). Amando Clemente's TCT No. 16212 emanated from TCT No. 40355 in the name of Eugenia de la
Paz and Dorotea dela Cruz. Thus, Amando Clemente's predecessors-in-interest are Eugenia dela Paz
and Dorotea dela Cruz whom the Court found to have lost their rights over Lot 671 by virtue of the sale
made to Lucia dela Cruz.

The Register of Deeds correctly observed that this is a clear case where there is a duplication or
overlapping of titles issued to different names over the same land which thereby compelled him to file
the consulta case with the NLTDRA:

(1) Lucia dela Cruz's reconstituted title (RT-58) which was divided into 3 Lots, Lot 671-A, Lot 671-B and
Lot 671-C and was subsequently sold to INK;

(2) Eugenia dela Paz and Dorotea dela Cruz's reconstituted title (RT-52) which was divided into 2 lots, Lot
671-A and Lot 671-B.

Notwithstanding, it is undisputed that Lot 671 was sold to Lucia dela Cruz by Eugenia dela Paz and
Dorotea dela Cruz as evidenced by Entry No. 258, page 7, Vol. 7, Primary Entry Book of the Registry of
Deeds of Manila. (de la Cruz v. de la Cruz, supra, pp. 697-698) This is a finding which can not be
disturbed.

We need not emphasize the fact that the Supreme Court by tradition and in our system of
judicial administration, has the last word on what the law is. It is the final arbiter of any
justiciable controversy. There is only one Supreme Court from whose decisions all other
courts should take their bearings. Consequently, we cannot and should not review a case
already passed upon by the Highest Tribunal. It is only proper to allow the case to take its
rest. (Church assistance Program, Inc. v. Sibulo, supra.).

The sale of the land to Lucia dela Cruz and the subsequent registration thereof in the Primary Book of the
Registry of Deeds, Manila constitutes constructive notice to the whole world. (Heirs of Maria Marasigan v.
Intermediate Appellate Court, 152 SCRA 253 [1987]; People v. Reyes, 175 SCRA 597 [1988])

Since it is the act of registration which transfers ownership of the land sold (Government Service
Insurance System v. Court of Appeals, 169 SCRA 244 [1989]). Lot 671 was already owned by Lucia dela

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Cruz as early as 1943. Amando Clemente's alleged title meanwhile which was issued on August 9, 1951
was very much later. Thus, the petitioners, who merely stepped into the shoes of Amando Clemente
cannot claim a better right over said land. "Prior est temporae, prior est in jura" (he who is first in time is
preferred in right) (Garcia v. Court of Appeals, 95 SCRA 380 [1980]). The fact that Amando Clemente
possessed a certificate of title does not necessarily make him the true owner. And not being the owner,
he cannot transmit any right to nor transfer any title or interest over the land conveyed (Beaterio del
Santisimo Rosario de Molo v. Court of Appeals, 137 SCRA 459 [1985]; Treasurer of the Phil. v. Court of
Appeals, 153 SCRA 359 [1987]).

Moreover, the petition for reconstitution of title by Lucia dela Cruz which the court held to be valid was a
proceeding in rem. It is well established that in rem proceedings such as land registration constitute
constructive notice to the whole world. The petitioners cannot now claim that they were not notified of the
reconstitution proceedings over said lot. Under the facts of the case, the title in the name of Lucia dela
Cruz (TCT No. RT 58) has become indefeasible and incontrovertible.

Likewise, the INK was also issued a Torrens Title over Lot 671 as a result of the sale made to it by the
rightful owner, Lucia dela Cruz in 1975. Under the Torrens System of registration, the Torrens Title
became indefeasible and incontrovertible one year from its final decree (Tirado v. Sevilla, 188 SCRA 321
[1990]). A Torrens Title is generally a conclusive evidence of the ownership of the land referred to therein.
(Ching v. Court of Appeals, 181 SCRA 9 [1990]) It is, therefore, too late in the day for the petitioners to
reopen or question the legality of INK's title over Lot 671 at this time.

The petitioners also contend that what INK purchased from Lucia dela Cruz in 1975 was Lot 671-C-4 LRC
322534 which corresponds roughly to Lot 671-B (Psd-32221) and did not affect Lot 671-A of Amando
Clemente at all. This is, however, belied by the fact that the sale made by Dorotea dela Cruz to Lucia dela
Cruz (as indicated in Entry No. 258) was Lot 671 which was later on conveyed to INK.

In challenging the validity of the reconstitution of Lucia dela Cruz's title, the petitioners are not alleging
fraud, collusion and illegality in the procurement of the certificate of title of Lucia dela Cruz. It must be
recalled that G.R. No. 76265 stemmed merely from a consulta case with the National Land Titles and
Deeds Administration. Undeniably, the arguments and issues raised by the petitioner require adjudication
of facts which, under the circumstances of this case, we are not prepared to do as this Court is not a trier
of facts. Moreover, the present petition is not the proper remedy in challenging the validity of certificates
of titles since the judicial action required is a direct and not a collateral attack. (Natalia Realty Corp. v.
Vallez, 173 SCRA 534 [1989]).

The Court had this to say:

We note with approval the lower court's patient explanation that, inter alia the certificate
of title issued in the name of the plaintiff in accordance with the Land Registration Act
(Act No. 496) is indefeasible after the expiration of one year from the entry of the decree
of registration. Under Section 38 thereof, a petition for review of the decree must be
presented within one year after its entry as described and defined in Section 40 of the
same. After the lapse of one year, the decree of registration becomes incontrovertible
and is binding upon and conclusive against all persons whether or not they were notified
of or participated in the registration proceedings. . . .

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Even assuming arguendo that said titles may still be challenged, the present case does
not provide the vehicle for that remedy since the judicial action required is a direct, and
not a collateral attack. In fact, under the existing law, Section 48 of the Property
Registration Decree expressly provides that a certificate of title cannot be subject to
collateral attack and can be altered, modified or cancelled only in a direct proceeding in
accordance with law. (at p. 542)

In our capacity as the court of last resort, the petitioners try to convince us to look or inquire into the
validity of the reconstitution proceedings initiated by Lucia dela Cruz, contending that the implementation
of de la Cruz ruling would deprive them of their properties without due process of law. We have looked
long and hard into the records of the case but the facts and circumstances plus law and jurisprudence on
the matter do not warrant such action from the Court. INK's title over Lot 671 which necessarily included
Lot 671-A had already become incontrovertible and indefeasible. To reopen or to question the legality of
INK's title would defeat the purpose of our Torrens system which seeks to insure stability by quieting titled
lands and putting to a stop forever any question of the legality of the registration in the certificate or
questions which may arise therefrom. (de la Cruz v. de la Cruz, supra.) In fairness to INK, as registered
owner it is entitled to rest secure in its land title.

In view of all the foregoing, it would be for the public interest and the maintenance of the integrity and
stability of the Torrens system of land registration that all transfer certificates of title derived from the
reconstituted title of Eugenia dela Paz and Dorotea dela Cruz be annulled in order to prevent the
proliferation of derivative titles which are null and void. The legality or validity of INK's title over Lot 671
has been settled. The Court has spoken and it has done so with finality, logically and rightly so as to
assure stability in legal relations and avoid confusion. (see Ver v. Quetulio, 163 SCRA 80 [1988])

WHEREFORE, the petitions in G. R. Nos. 76265 and 83280 are hereby DISMISSED for lack of merit.

SO ORDERED.

Owners Duplicate Certificate

Reyes v. Raval-Reyes, G.R. No. L-21703, August 31, 1966

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. Nos. L-21703-04 August 31, 1966

MATEO H. REYES and JUAN H. REYES, petitioners and appellants,

vs.
MATEO RAVAL REYES, respondent and appellee.

Harold M. Hernando for petitioners and appellants.

Rafael Ruiz for respondent and appellee.

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REYES, J.B.L., J.:

Direct appeal on pure question of law from an order of the Court of First Instance of Ilocos Norte, in its
Cadastral Cases Nos. 31, L. R. C. Rec. No. 1188, and 42, L. R. C. Rec. No. 1994, denying petitioners'
motion to compel respondent to surrender their owners' duplicates of Original Certificates of Title Nos.
22161 and 8066, as well as from a subsequent order of the same court, refusing, upon petitioners'
motion, to reconsider the first order of denial.

The undisputed facts are: three brothers, Mateo H., Juan H., and Francisco H., all surnamed Reyes, are
the registered owners of several parcels of land, to wit; Lots Nos. 15891, 15896, 15902 and 15912, of the
Laoag (Ilocos Norte) Cadastre, embraced in and covered by Original Certificate of Title No. 22161, and
also Lots Nos. 20481 and 20484, of the same cadastral survey, embraced in and covered by Original
Certificate of Title No. 8066, both of the Registry of Deeds of Ilocos Norte. These titles were issued
pursuant to a decree of registration, dated 31 May 1940.

On 17 July 1962, petitioners Mateo H. Reyes and Juan H. Reyes filed, in the above stated cadastral
cases, a motion for issuance of writs of possession over all the lots covered by both Certificates of Title
above referred to.

Respondent Mateo Raval Reyes opposed the motion, admitting that he is only in possession of the lots
covered by Original Certificate of Title No. 22161, but denying that he possesses the lots covered by
Original Certificate of Title No. 8066; however, he claimed that he has been in, and is entitled to, the
possession thereof (i.e., Lots Nos. 20481 and 20484), having acquired by way of absolute sale (not
recorded) from petitioners' brother, Francisco H. Reyes, the latter's undivided one-third (1/3) share,
interest and participation to these disputed lots.

After due hearing of this appellant, the court a quo issued, on 20 December 1962, the writ of possession
with respect to Lot Nos. 15891 and 15896, which writ was, upon petitioners' motion for reconsideration,
amended, on 7 January 1963, to include all the other lots covered by both titles.

Respondent did not appeal from this order amending the writ of possession.

Subsequently, petitioners in the above cadastral cases, as plaintiffs, commenced, on 15 January 1963,
before the same court of first instance, an ordinary civil action seeking to recover the products of the
disputed lots, or their value, and moral damages against respondent Mateo Raval Reyes, as defendant.
This case was docketed as its Civil Case No. 3659.

Defendant therein (now respondent M. Raval Reyes) answered the complaint and pleaded a counterclaim
for partition of all the disputed lots, alleging the same ground he had heretofore raised in his answer
and/or opposition to the motion for issuance of writ of possession, i.e., he is their (plaintiffs') co-owner, he
having bought from plaintiffs' brother, Francisco H. Reyes, the latter's undivided one-third (1/3) share,
interest and participation to these disputed lots.

Pending trial on this ordinary civil case (No. 3659), petitioners presented, on 25 February 1963, in the
cadastral cases aforementioned, a motion to compel respondent Mateo Raval Reyes to surrender and
deliver to them the owners' duplicates of Original Certificates of Title Nos. 22161 and 8066. Respondent
opposed this motion.

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 Page 12 of 540

The court a quo denied petitioners' motion, on the ground that the parcels of land covered by both titles
are subjects of litigation in Civil Case No. 3659 and the same has not yet been decided on the merits by
it. Petitioners subjected the foregoing order to a motion for reconsideration, but without success; hence,
the present appeal.

Petitioners-appellants dispute the above ruling of the trial court contending that, since the subject matter
of Civil Case No. 3659 are not the lots covered by the titles in question but their products or value, and
moral damages, these lots are not in litigation in this ordinary civil case; and that since respondent had
already raised the issue of ownership and possession of these lots in his opposition to the (petitioners')
motion for issuance of writ of possession and, despite this opposition, the court a quo granted the writ,
without any appeal being taken, respondent is barred and estopped from raising the same issue in the
ordinary civil case, under the principle of res judicata.1wph1.t

On the other hand, respondent-appellee maintains that, having pleaded a counterclaim for partition of the
lots in question in said Civil Case No. 3659, the trial court correctly held that these lots are subjects of
litigation in this ordinary civil case. He also maintains that petitioners not having impleaded their brother,
Francisco H. Reyes, or his heirs, as parties in their motion for issuance of writ of execution, and because
these heirs have not intervened in this particular incident, the writ of possession issued by the trial court
is, at most, valid only with respect to their (petitioners) undivided two-thirds (2/3) share and participation in
these disputed lots; hence, he concludes that he is not barred and estopped from raising the issue of
ownership and possession of the undivided one-third (1/3) share and participation of petitioners' brother,
Francisco H. Reyes, which share respondent allegedly bought from the latter.

In their reply brief, petitioners-appellants refute the latter argument of respondent-appellee by showing
that they had previously obtained special authority from the heirs of their deceased brother to represent
them in the proceedings had in the court below.

The sole issue to be resolved in the instant appeal is: who between petitioners-appellants or respondent-
appellee has a better right to the possession or custody of the disputed owners' duplicates of certificates
of title.

While we agree with the court a quo that the disputed lots are subjects of litigation in Civil Case No. 3659,
it appearing that respondent, as defendant therein, had presented a counterclaim for partition of the lots
covered by the titles, we see no valid and plausible reason to justify, on this ground, the withholding from
the registered owners, such as the petitioners-appellants herein, the custody and possession of the
owners' duplicates of certificates of title. In a decided case, this Court has already held that the owner of
the land in whose favor and in whose name said land is registered and inscribed in the certificate of title
has a more preferential right to the possession of the owners' duplicate than one whose name does not
appear in the certificate and has yet to establish his right to the possession thereto. Thus, this Court said:

Como acertadamente dijo el Juzgado, lo unico que se suscita es si Ana Umbao de Carpio tiene
derecho a la possession del duplicado para el dueno del Certificado de Titulo Original No. 698,
con preferencia a la opositora-apelante. A nuestro juicio, la solucion es clara e ineludible.
Hallandose admitido que el decreto final que se dicto en el expediente catastral en 28 de mayo
de 1936, en relacion con el lote No. 778, fue a favor de Ana Umbao y que el duplicado para el
dueo del Certificado de Titulo Original No. 698 se expidio por el Registrador de Titulos a favor
de la misma es obvious que quien tiene derecho a poseer el certificado de titulo es ella y no la
apelante (art. 41 de la Ley No. 496, tal como ha sido reformado).

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 Page 13 of 540

Alega la apelante que ella tiene tanto derecho como la apelada a poseer el titulo porque el
terreno a que se refiere es de la propiedad de las tres hermanas. La pretension no es meritoria
Segun el articulo 41 de la Ley No. 496, conforme ha sido enmendado, el duplicado para el dueno
debe expedirse por el Registrador a nombre de la persona a cuyo favor se ha decretado el
terreno y dispone, ademas, que dicho duplicado debe entregarsele al dueo inscrito. Si la
apelante cree que tiene derecho a participar en el lote No. 778, como coheredera, debe ejercitar
una accion independiente, encaminada a obtener su participacion. (El Director de
Terrenos contra Abacahin 72 Phil. 326).

It being undisputed that respondent had already availed of an independent civil action to recover his
alleged co-owner's share in the disputed lots by filing a counterclaim for partition in said Civil Case No.
3659, his rights appear to be amply protected; and considering that he may also avail of, to better protect
his rights thereto, the provision on notice of lis pendens under Section 24, Rule 14, of the Revised Rules
of Court, for the purpose of recording the fact that the lots covered by the titles in question are litigated in
said Civil Case No. 3659, we again see no justifiable reason for respondent to retain the custody of the
owners' duplicates of certificates of titles.

In view of the above considerations, we deem it unnecessary to pass on the merits of the second
contention of petitioners-appellants.

Wherefore, the orders appealed from should be, as they are hereby, reversed; and, in accordance with
this opinion, respondent Mateo Raval Reyes is hereby ordered to deliver to petitioners the owners'
duplicates of Original Certificates of Title No. 22161 and 8066. With costs against respondent-appellee,
Mateo Raval Reyes.

Abrigo v. De Vera, G.R. No. 154409, June 21, 2004

FIRST DIVISION

[G.R. No. 154409. June 21, 2004]

Spouses NOEL and JULIE ABRIGO, petitioners, vs. ROMANA DE VERA, respondent.

DECISION

PANGANIBAN, J.:

Between two buyers of the same immovable property registered under the Torrens system, the law
gives ownership priority to (1) the first registrant in good faith; (2) then, the first possessor in good faith;
and (3) finally, the buyer who in good faith presents the oldest title. This provision, however, does not
apply if the property is not registered under the Torrenssystem.

The Case

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Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the
March 21, 2002 Amended Decision[2] and the July 22, 2002 Resolution[3] of the Court of Appeals (CA) in
CA-GR CV No. 62391. The Amended Decision disposed as follows:

WHEREFORE, the dispositive part of the original DECISION of this case, promulgated on November 19,
2001, is SET ASIDE and another one is entered AFFIRMING in part and REVERSING in part the
judgment appealed from, as follows:

1. Declaring [Respondent] Romana de Vera the rightful owner and with better right to possess
the property in question, being an innocent purchaser for value therefor;

2. Declaring Gloria Villafania [liable] to pay the following to [Respondent] Romana de Vera and
to [Petitioner-]Spouses [Noel and Julie] Abrigo, to wit:

As to [Respondent] Romana de Vera:

1. P300,000.00 plus 6% per annum as actual damages;

2. P50,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P30,000.00 as attorneys fees; and
5. Cost of suit.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo:

1. P50,000.00 as moral damages;

2. P50,000.00 as exemplary damages;
3. P30,000.00 as attorneys fees;
4. Cost of suit.[4]

The assailed Resolution denied reconsideration.

The Facts

Quoting the trial court, the CA narrated the facts as follows:

As culled from the records, the following are the pertinent antecedents amply summarized by the trial
court:

On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang, Mangaldan, Pangasinan
and covered by Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita Cave-Go. The said sale
became a subject of a suit for annulment of documents between the vendor and the vendees.

On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City rendered judgment
approving the Compromise Agreement submitted by the parties.In the said Decision, Gloria Villafania was
given one year from the date of the Compromise Agreement to buy back the house and lot, and failure to
do so would mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-Go shall

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 Page 15 of 540

remain valid and binding and the plaintiff shall voluntarily vacate the premises without need of any
demand. Gloria Villafania failed to buy back the house and lot, so the [vendees] declared the lot in their
name.

Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania obtained a free
patent over the parcel of land involved [on March 15, 1988 as evidenced by OCT No. P-30522]. The said
free patent was later on cancelled by TCT No. 212598 on April 11, 1996.

On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house and lot to the herein
[Petitioner-Spouses Noel and Julie Abrigo].

On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de Vera x x x. Romana de
Vera registered the sale and as a consequence, TCT No. 22515 was issued in her name.

On November 12, 1997, Romana de Vera filed an action for Forcible Entry and Damages against
[Spouses Noel and Julie Abrigo] before the Municipal Trial Court of Mangaldan, Pangasinan docketed as
Civil Case No. 1452. On February 25, 1998, the parties therein submitted a Motion for Dismissal in view
of their agreement in the instant case that neither of them can physically take possession of the property
in question until the instant case is terminated. Hence the ejectment case was dismissed.[5]

Thus, on November 21, 1997, [petitioners] filed the instant case [with
the Regional Trial Court of Dagupan City] for the annulment of documents, injunction, preliminary
injunction, restraining order and damages [against respondent and Gloria Villafania].

After the trial on the merits, the lower court rendered the assailed Decision dated January 4, 1999,
awarding the properties to [petitioners] as well as damages. Moreover, x x x Gloria Villafania was ordered
to pay [petitioners and private respondent] damages and attorneys fees.

Not contented with the assailed Decision, both parties [appealed to the CA]. [6]

Ruling of the Court of Appeals

In its original Decision promulgated on November 19, 2001, the CA held that a void title could not
give rise to a valid one and hence dismissed the appeal of Private Respondent Romana de Vera. [7] Since
Gloria Villafania had already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the
subsequent sale to De Vera was deemed void.

The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found no sufficient basis to
award them moral and exemplary damages and attorneys fees.

On reconsideration, the CA issued its March 21, 2002 Amended Decision, finding Respondent De
Vera to be a purchaser in good faith and for value. The appellate court ruled that she had relied in good
faith on the Torrens title of her vendor and must thus be protected.[8]

Hence, this Petition.[9]

Issues

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 Page 16 of 540

Petitioners raise for our consideration the issues below:

1. Whether or not the deed of sale executed by Gloria Villafania in favor of [R]espondent Romana
de Vera is valid.

2. Whether or not the [R]espondent Romana de Vera is a purchaser for value in good faith.

3. Who between the petitioners and respondent has a better title over the property in question. [10]

In the main, the issues boil down to who between petitioner-spouses and respondent has a better
right to the property.

The Courts Ruling

The Petition is bereft of merit.

Main Issue:
Better Right over the Property

Petitioners contend that Gloria Villafania could not have transferred the property to Respondent De
Vera because it no longer belonged to her.[11] They further claim that the sale could not be validated,
since respondent was not a purchaser in good faith and for value.[12]

Law on Double Sale

The present case involves what in legal contemplation was a double sale. On May 27, 1993, Gloria
Villafania first sold the disputed property to Rosenda Tigno-Salazar and Rosita Cave-Go, from whom
petitioners, in turn, derived their right. Subsequently, on October 23, 1997, a second sale was executed
by Villafania with Respondent Romana de Vera.

Article 1544 of the Civil Code states the law on double sale thus:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is
good faith.

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Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the
first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in
good faith presents the oldest title.[13] There is no ambiguity in the application of this law with respect to
lands registered under the Torrens system.

This principle is in full accord with Section 51 of PD 1529 [14] which provides that no deed, mortgage,
lease or other voluntary instrument -- except a will -- purporting to convey or affect registered land shall
take effect as a conveyance or bind the land until its registration. [15] Thus, if the sale is not registered, it is
binding only between the seller and the buyer but it does not affect innocent third persons. [16]

In the instant case, both Petitioners Abrigo and respondent registered the sale of the property. Since
neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that the property was
covered by the Torrens system, they registered their respective sales under Act 3344.[17] For her part,
respondent registered the transaction under the Torrens system[18]because, during the sale, Villafania had
presented the transfer certificate of title (TCT) covering the property.[19]

Respondent De Vera contends that her registration under the Torrens system should prevail over
that of petitioners who recorded theirs under Act 3344. De Vera relies on the following insight of Justice
Edgardo L. Paras:

x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is
sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as
amended, such sale is not considered REGISTERED, as the term is used under Art. 1544 x x x.[20]

We agree with respondent. It is undisputed that Villafania had been issued a free patent registered
as Original Certificate of Title (OCT) No. P-30522.[21] The OCT was later cancelled by Transfer Certificate
of Title (TCT) No. 212598, also in Villafanias name.[22] As a consequence of the sale, TCT No. 212598
was subsequently cancelled and TCT No. 22515 thereafter issued to respondent.

Soriano v. Heirs of Magali[23] held that registration must be done in the proper registry in order to bind
the land. Since the property in dispute in the present case was already registered under
the Torrens system, petitioners registration of the sale under Act 3344 was not effective for purposes of
Article 1544 of the Civil Code.

More recently, in Naawan Community Rural Bank v. Court of Appeals,[24] the Court upheld the right
of a party who had registered the sale of land under the Property Registration Decree, as opposed to
another who had registered a deed of final conveyance under Act 3344. In that case, the priority in time
principle was not applied, because the land was already covered by the Torrens system at the time the
conveyance was registered under Act 3344. For the same reason, inasmuch as the registration of the
sale to Respondent De Vera under the Torrens system was done in good faith, this sale must be upheld
over the sale registered under Act 3344 to Petitioner-Spouses Abrigo.

Radiowealth Finance Co. v. Palileo[25] explained the difference in the rules of registration under Act
3344 and those under the Torrens system in this wise:

Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third
party with a better right. The aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in ones favor does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody else even if the earlier sale
was unrecorded.

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The case of Carumba vs. Court of Appeals[26] is a case in point. It was held therein that Article 1544 of the
Civil Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba
dealt with a double sale of the same unregistered land. The first sale was made by the original owners
and was unrecorded while the second was an execution sale that resulted from a complaint for a sum of
money filed against the said original owners. Applying [Section 33], Rule 39 of the Revised Rules of
Court,[27] this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at
the execution sale though the latter was a buyer in good faith and even if this second sale was
registered. It was explained that this is because the purchaser of unregistered land at a sheriffs execution
sale only steps into the shoes of the judgment debtor, and merely acquires the latters interest in the
property sold as of the time the property was levied upon.

Applying this principle, x x x the execution sale of unregistered land in favor of petitioner is of no effect
because the land no longer belonged to the judgment debtor as of the time of the said execution sale. [28]

Petitioners cannot validly argue that they were fraudulently misled into believing that the property
was unregistered. A Torrens title, once registered, serves as a notice to the whole world.[29] All persons
must take notice, and no one can plead ignorance of the registration. [30]

Good-Faith Requirement

We have consistently held that Article 1544 requires the second buyer to acquire the immovable in
good faith and to register it in good faith.[31] Mere registration of title is not enough; good faith must concur
with the registration.[32] We explained the rationale in Uraca v. Court of Appeals,[33] which we quote:

Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property.Article 1544 requires that such registration must be
coupled with good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat
the first buyers rights except where the second buyer registers in good faith the second sale ahead of the
first, as provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of
her rights under the law, among them, to register first her purchase as against the second buyer. But
in converso, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register the second sale, since such knowledge taints his prior registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that
before the second buyer can obtain priority over the first, he must show that he acted in good faith
throughout (i.e. in ignorance of the first sale and of the first buyers rights) ---- from the time of acquisition
until the title is transferred to him by registration, or failing registration, by delivery of
possession.[34] (Italics supplied)

Equally important, under Section 44 of PD 1529, every registered owner receiving a certificate of title
pursuant to 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
and enumerated in the certificate.[35] Thus, a person dealing with registered land is not required to go
behind the registry to determine the condition of the property, since such condition is noted on the face of
the register or certificate of title.[36] Following this principle, this Court has consistently held as regards
registered land that a purchaser in good faith acquires a good title as against all the transferees thereof
whose rights are not recorded in the Registry of Deeds at the time of the sale.[37]

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Citing Santiago v. Court of Appeals,[38] petitioners contend that their prior registration under Act 3344
is constructive notice to respondent and negates her good faith at the time she registered the
sale. Santiago affirmed the following commentary of Justice Jose C. 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. Cabana (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).

xxxxxxxxx

Registration of the second buyer under Act 3344, providing for the registration of all instruments on land
neither covered by the Spanish Mortgage Law nor the Torrens System (Act 496), cannot improve his
standing since Act 3344 itself expresses that registration thereunder would not prejudice prior rights in
good faith (see Carumba vs. Court of Appeals, 31 SCRA 558). Registration, however, by the first
buyer under Act 3344 can have the effect of constructive notice to the second buyer that can
defeat his right as such buyer in good faith (see Arts. 708-709, Civil Code; see also Revilla vs.
Galindez, 107 Phil. 480; Taguba vs. Peralta,132 SCRA 700). Art. 1544 has been held to be inapplicable
to execution sales of unregistered land, since the purchaser merely steps into the shoes of the debtor and
acquires the latter's interest as of the time the property is sold (Carumba vs. Court of Appeals, 31 SCRA
558; see also Fabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only one sale (Remalante vs.
Tibe, 158 SCRA 138).[39] (Emphasis supplied)

Santiago was subsequently applied in Bayoca v. Nogales,[40] which held:

Verily, there is absence of prior registration in good faith by petitioners of the second sale in their
favor. As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the
effect of constructive notice to the second buyer that can defeat his right as such buyer. On account of
the undisputed fact of registration under Act No. 3344 by [the first buyers], necessarily, there is absent
good faith in the registration of the sale by the [second buyers] for which they had been issued certificates
of title in their names. x x x.[41]

Santiago and Bayoca are not in point. In Santiago, the first buyers registered the sale under
the Torrens system, as can be inferred from the issuance of the TCT in their names. [42]There was no
registration under Act 3344. In Bayoca, when the first buyer registered the sale under Act 3344, the
property was still unregistered land.[43] Such registration was therefore considered effectual.

Furthermore, Revilla and Taguba, which are cited in Santiago, are not on all fours with the present
case. In Revilla, the first buyer did not register the sale.[44] In Taguba, registration was not an issue.[45]

As can be gathered from the foregoing, constructive notice to the second buyer through registration
under Act 3344 does not apply if the property is registered under the Torrenssystem, as in this case.

We quote below the additional commentary of Justice Vitug, which was omitted in Santiago. This
omission was evidently the reason why petitioner misunderstood the context of the citation therein:

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"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),"[46]

Respondent
in Good Faith

The Court of Appeals examined the facts to determine whether respondent was an innocent
purchaser for value.[47] After its factual findings revealed that Respondent De Vera was in good faith, it
explained thus:

x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the registered owner. The subject
land was, and still is, registered in the name of Gloria Villafania. There is nothing in her certificate of title
and in the circumstances of the transaction or sale which warrant [Respondent] De Vera in supposing that
she need[ed] to look beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She
ascertained and verified that her vendor was the sole owner and in possession of the subject property by
examining her vendors title in the Registry of Deeds and actually going to the premises. There is no
evidence in the record showing that when she bought the land on October 23, 1997, she knew or had the
slightest notice that the same was under litigation in Civil Case No. D-10638 of
the Regional Trial Court of Dagupan City, Branch 40, between Gloria Villafania and [Petitioners]
Abrigo. She was not even a party to said case. In sum, she testified clearly and positively, without any
contrary evidence presented by the [petitioners], that she did not know anything about the earlier sale and
claim of the spouses Abrigo, until after she had bought the same, and only then when she bought the
same, and only then when she brought an ejectment case with the x x x Municipal Court of Mangaldan,
known as Civil Case No. 1452. To the [Respondent] De Vera, the only legal truth upon which she had to
rely was that the land is registered in the name of Gloria Villafania, her vendor, and that her title under
the law, is absolute and indefeasible. x x x.[48]

We find no reason to disturb these findings, which petitioners have not rebutted. Spouses Abrigo
base their position only on the general averment that respondent should have been more vigilant prior to
consummating the sale. They argue that had she inspected the property, she would have found
petitioners to be in possession.[49]

This argument is contradicted, however, by the spouses own admission that the parents and the
sister of Villafania were still the actual occupants in October 1997, when Respondent De Vera purchased
the property.[50] The family members may reasonably be assumed to be Villafanias agents, who had not
been shown to have notified respondent of the first sale when she conducted an ocular inspection. Thus,
good faith on respondents part stands.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.

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SO ORDERED.

Republic v. Mendoza, G.R. No. 185091, August 8, 2010

DECISION

ABAD, J.:

This case is about the propriety of filing an ejectment suit against the Government for its failure to
acquire ownership of a privately owned property that it had long used as a school site and to pay just
compensation for it.

The Facts and the Case

Paninsingin Primary School (PPS) is a public school operated by petitioner Republic of

the Philippines (the Republic) through the Department of Education. PPS has been using 1,149 square
meters of land in Lipa City, Batangas since 1957 for its school. But the property, a portion of Lots 1923
and 1925, were registered in the name of respondents Primo and Maria Mendoza (the Mendozas) under
Transfer Certificate of Title (TCT) T-11410.[1]

On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and subdivided
into four lots, as follows:

Lot 1 292 square meters in favor of Claudia Dimayuga

Lot 2 292 square meters in favor of the Mendozas
Lot 3 543 square meters in favor of Gervacio Ronquillo; and
Lot 4 1,149 square meters in favor of the City Government of Lipa[2]

As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and issued new
titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2 remained in the name of
the Mendozas but no new title was issued in the name of the City Government of Lipa
for Lot 4.[3] Meantime, PPS remained in possession of the property.

The Republic claimed that, while no title was issued in the name of the City Government of Lipa,
the Mendozas had relinquished to it their right over the school lot as evidenced by the consolidation and
subdivision plan. Further, the property had long been tax-declared in the name of the City Government
and PPS built significant, permanent improvements on the same. These improvements had also been
tax-declared.[4]

The Mendozas claim, on the other hand, that although PPS sought permission from them to use the
property as a school site, they never relinquished their right to it. They allowed PPS to occupy the
property since they had no need for it at that time. Thus, it has remained registered in their name under
the original title, TCT T-11410, which had only been partially cancelled.

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 Page 22 of 540

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed
property.[5] When PPS declined to do so, on January 12, 1999 the Mendozas filed a complaint with the
Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99 against PPS for unlawful
detainer with application for temporary restraining order and writ of preliminary injunction.[6]

On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of the
Republics immunity from suit.[7] The Mendozas appealed to the Regional Trial Court (RTC)
of Lipa City which ruled that the Republics consent was not necessary since the action before the MTCC
was not against it.[8]
In light of the RTCs decision, the Mendozas filed with the MTCC a motion to render judgment in
the case before it.[9] The MTCC denied the motion, however, saying that jurisdiction over the case had
passed to the RTC upon appeal.[10] Later, the RTC remanded the case back to the MTCC,[11] which then
dismissed the case for insufficiency of evidence.[12] Consequently, the Mendozas once again appealed to
the RTC in Civil Case 2001-0236.

On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the
property. It held that the Mendozas had the better right of possession since they were its registered
owners. PPS, on the other hand, could not produce any document to prove the transfer of ownership of
the land in its favor.[13] PPS moved for reconsideration, but the RTC denied it.

The Republic, through the Office of the Solicitor General (OSG), appealed the RTC decision to
the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the Mendozas were barred by
laches from recovering possession of the school lot; (2) sufficient evidence showed that the Mendozas
relinquished ownership of the subject lot to the City Government of Lipa City for use as school; and (3)
Lot 4, Pcs-5019 has long been declared in the name of the City Government since 1957 for taxation
purposes.[14]

In a decision dated February 26, 2008, the CA affirmed the RTC decision. [15] Upholding the
Torrens system, it emphasized the indefeasibility of the Mendozas registered title and the imprescriptible
nature of their right to eject any person occupying the property. The CA held that, this being the case, the
Republics possession of the property through PPS should be deemed merely a tolerated one that could
not ripen into ownership.

The CA also rejected the Republics claim of ownership since it presented no documentary
evidence to prove the transfer of the property in favor of the government.Moreover, even assuming that
the Mendozas relinquished their right to the property in 1957 in the governments favor, the latter never
took steps to have the title to the property issued in its name or have its right as owner annotated on
the Mendozas title. The CA held that, by its omissions, the Republic may be held in estoppel to claim that
the Mendozaswere barred by laches from bringing its action.

With the denial of its motion for reconsideration, the Republic has taken recourse to this
Court via petition for review on certiorari under Rule 45.

The Issue Presented

The issue in this case is whether or not the CA erred in holding that the Mendozas were entitled
to evict the Republic from the subject property that it had used for a public school.

The Courts Ruling

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 Page 23 of 540

A decree of registration is conclusive upon all persons, including the Government of the Republic
and all its branches, whether or not mentioned by name in the application for registration or its
notice.[16] Indeed, title to the land, once registered, is imprescriptible.[17] No one may acquire it from the
registered owner by adverse, open, and notorious possession. [18] Thus, to a registered owner under
the Torrens system, the right to recover possession of the registered property is equally imprescriptible
since possession is a mere consequence of ownership.

Here, the existence and genuineness of the Mendozas title over the property has not been
disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149 square
meter lot had been designated to the City Government, the Republic itself admits that no new title was
issued to it or to any of its subdivisions for the portion that PPS had been occupying since 1957. [19]

That the City Government of Lipa tax-declared the property and its improvements in its name
cannot defeat the Mendozas title. This Court has allowed tax declarations to stand as proof of ownership
only in the absence of a certificate of title.[20] Otherwise, they have little evidentiary weight as proof of
ownership.[21]

The CA erred, however, in ordering the eviction of PPS from the property that it had held as
government school site for more than 50 years. The evidence on record shows that
the Mendozas intended to cede the property to the City Government of Lipa permanently. In fact, they
allowed the city to declare the property in its name for tax purposes.And when they sought in 1962 to
have the bigger lot subdivided into four, the Mendozas earmarked Lot 4, containing 1,149 square meters,
for the City Government of Lipa.Under the circumstances, it may be assumed that the Mendozas agreed
to transfer ownership of the land to the government, whether to the City Government of Lipa or to the
Republic, way back but never got around to do so and the Republic itself altogether forgot about
it. Consequently, the Republic should be deemed entitled to possession pending the Mendozas formal
transfer of ownership to it upon payment of just compensation.
The Court holds that, where the owner agrees voluntarily to the taking of his property by the
government for public use, he thereby waives his right to the institution of a formal expropriation
proceeding covering such property. Further, as the Court also held in Eusebio v. Luis,[22] the failure for a
long time of the owner to question the lack of expropriation proceedings covering a property that the
government had taken constitutes a waiver of his right to gain back possession. The Mendozas remedy is
an action for the payment of just compensation, not ejectment.

In Republic of the Philippines v. Court of Appeals,[23] the Court affirmed the RTCs power to award
just compensation even in the absence of a proper expropriation proceeding. It held that the RTC can
determine just compensation based on the evidence presented before it in an ordinary civil action for
recovery of possession of property or its value and damages. As to the time when just compensation
should be fixed, it is settled that where property was taken without the benefit of expropriation
proceedings and its owner filed an action for recovery of possession before the commencement of
expropriation proceedings, it is the value of the property at the time of taking that is controlling. [24]

Since the MTCC did not have jurisdiction either to evict the Republic from the land it had taken for
public use or to hear and adjudicate the Mendozas right to just compensation for it, the CA should have
ordered the complaint for unlawful detainer dismissed without prejudice to their filing a proper action for
recovery of such compensation.

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 Page 24 of 540

WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26, 2008
decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R. 96604,
and ORDERS the dismissal of respondents Primo and Maria Mendozas action for eviction before the
Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without prejudice to their filing an action
for payment of just compensation against the Republic of the Philippines or, when appropriate, against
the City of Lipa.

SO ORDERED.

Statement of Personal Circumstances (Section 45)

Litam v. Espiritu, G.R. No. L-7644, November 27, 1956

DECISION
CONCEPCION, J.:
This is an appeal from a decision of the Court of First Instance of Rizal in the above entitled case, which
were jointly tried.
On May 21, 1952, Gregorio Dy Tam instituted Special Proceeding No. 1537 of said court, entitled In the
matter of the Intestate Estate of the Deceased Rafael Litam. The petition therein filed, dated April 24,
1952, states that Petitioner is the son of Rafael Litam, who died in Manila on January 10, 1951; chan
roblesvirtualawlibrarythat the deceased was survived by:chanroblesvirtuallawlibrary
Li Hong Hap 40 years
Li Ho 37 years
Gregorio Dy Tam 33 years
Henry Litam alias Dy Bun Pho 29 years
Beatriz Lee Tam alias Lee Giak Ian 27 years
Elisa Lee Tam alias Lee Giok Bee 25 years
William Litam alias Li Bun Hua 23 years
Luis Litam alias Li Bun Lin 22 years
that the foregoing children of the decedent by a marriage celebrated in China in 1911 with Sia Khin, now
deceased; chan roblesvirtualawlibrarythat after the death of Rafael Litam, Petitioner and his co-heirs
came to know that the decedent had, during the subsistence of said marriage with Sia Khin, contracted
in 1922 in the Philippines cralaw another marriage with Marcosa Rivera, Filipino citizen; chan
roblesvirtualawlibrarythat the decedent left as his property among others, his one-half (1/2) share valued
at P65,000 in the purported conjugal properties between him and Marcosa Rivera,
which cralaw partnership consisted of the following real property acquired during the marriage between
him and Marcosa Rivera, to wit:chanroblesvirtuallawlibrary
(1) Three (3) parcels of land covered by Transfer Certificate of Title No. 1228 of the Registry of Deeds of
the province of Pampanga:chanroblesvirtuallawlibrary
(2) One (1) parcel of land covered by Transfer Certificate of Title No. 26011 of the Registry of Deeds of
the province of Bulacan.

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 Page 25 of 540

and that the decedent had left neither a will nor debt. Petitioner prayed, therefore, that, after appropriate
proceedings, letters of administration be issued to Marcosa Rivera, the surviving spouse of the
decedent. Soon thereafter, Marcosa Rivera filed a counter- petition:chanroblesvirtuallawlibrary (1)
substantially denying the alleged marriage of the decedent to Sia Khin, as well as the alleged filiation of
the persons named in the petition; chan roblesvirtualawlibrary(2) asserting that the properties described
herein are her paraphernal properties, and that the decedent had left unpaid debts, and certain properties
in Bulan and Casiguran, Sorsogon, and in Virac, Catanduanes, apart from shares of stock in a private
corporation known by the name of Litam Co., Inc.; chan roblesvirtualawlibraryand (3) praying that her
nephew, Arminio Rivera, be appointed administrator of the intestate estate of the deceased.
In due course, the court granted this petition and letters of administration were issued to Arminio Rivera,
who assumed his duties as such, and, later, submitted an inventory of the alleged estate of Rafael Litam.
Inasmuch as said inventory did not include the properties mentioned in the petition, dated April 24, 1952,
of Gregorio Dy Tam, the latter filed, on November 29, 1952, a motion for the removal of Rivera as
administrator of the aforementioned estate. This led to a number of incidents hinging on the question
whether said properties belong in common to the decedent and Marcosa Rivera or to the latter
exclusively.
Meanwhile, Remedios R. Espiritu was appointed, in Special Proceeding No. 1709 of the Court of First
Instance of Rizal, guardian of Marcosa Rivera, who had been declared incompetent. Thereafter, or on
April 20, 1953, Gregorio Dy Tam and his alleged brothers and sisters aforementioned, filed the complaint
in Civil Case No. 2071 of the same court, against Remedios R. Espiritu, as guardian of Marcosa Rivera,
and Arminio Rivera. In said complaint, Plaintiffs therein reproduced substantially the allegations made in
the aforementioned petition of Gregorio Dy Tam dated April 24. 1952, except that the properties acquired
during the existence of marriage between Rafael Litam and Marcosa Rivera and/or with their joint
efforts during the time that they lived as husband and wife were said to be more than those specified in
said petition, namely:chanroblesvirtuallawlibrary
(1) 3 parcels of land situated in the Municipality of Macabebe, Province of Pampanga, covered by
Transfer Certificate of Title No. 1228 of the Registry of Deeds for the Province of Pampanga, issued on
July 29, 1947;
(2) 2 Parcels of land, together with all buildings and improvements thereon except those expressly noted
in the title as belonging to other persons, situated in the Municipality of Navotas, Province of Rizal,
covered by Transfer Certificate of Title No. 35836 of the Registry of Deeds for the Province of Rizal,
issued on October 4, 1938;
(3) 1 parcel of land situated in the Municipality of Malabon, Province of Rizal, covered by Transfer
Certificate of Title No. 23248 of the Registry of Deeds for the Province of Rizal, issued on June 12, 1933;
(4) 1 parcel of land situated in Barrio of Kay-Badia, Municipality of Obando, Province of Bulacan,
covered by Transfer Certificate of Title No. 21809 of the Registry of Deeds for the Province of Bulacan,
issued on May 25, 1939;
(5) 1 parcel of land (plan psu-93067, swo-16049) situated in Barrio of Quibadia, Municipality of Obando,
Province of Bulacan, covered by Transfer Certificate of Title No. 26011 of the Registry of Deeds for the
Province of Bulacan, issued on April 9, 1943;
Other properties are located in Bataan province.
All properties total an assessed value of approximately P150,000.00.
In said complaint, Plaintiffs prayed that the judgment be rendered:chanroblesvirtuallawlibrary

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 Page 26 of 540

(1) declaring the aforesaid properties as belonging to the conjugal partnership or tenancy in common
which existed between the deceased Rafael Litam and the incompetent Marcosa Rivera;
(2) ordering the Defendants to deliver the aforesaid properties to the administration of the estate of the
deceased Rafael Litam (Rule 75, section 2, Rules of Court);
(3) ordering the said Defendants further to render an accounting of the fruits they collected from the
aforesaid properties and to deliver the same to the administration of the estate of the deceased Rafael
Litam;
(4) ordering the said Defendants to pay the administration of the estate of the deceased Rafael Litam
damages in double the value of the fruits mentioned in the preceding paragraph which they
embezzled; chan roblesvirtualawlibraryand
(5) ordering the Defendants to pay the costs. The Plaintiffs further pray for such other remedy as the
Court may deem just and equitable in the premises.
In her answer to the complaint, Marcosa Rivera reiterated, in effect, the allegations in her counter-petition,
dated July 12, 1952, in Special Proceeding No. 1537, and set up some affirmative and special defenses,
as well as a counter-claim for attorneys fees and damages in the aggregate sum of P110,000.00.
Owning to the identity of the issue raised in said Civil Case No. 2071 and in the aforementioned incidents
in Special Proceeding No. 1537, both were jointly heard. Later on, the court rendered a decision.
(1) Dismissing Civil Case No. 2071, with costs against the Plaintiffs;
(2) Sentencing the Plaintiff in Civil Case No. 2071, under the Defendants counterclaim, to pay jointly
and severally each of the Defendants the sum of P5,000.00 as actual damages and P25,000.00 as moral
damages;
(3) Declaring that the properties in question, namely:chanroblesvirtuallawlibrary the fishponds,
consisting of three parcels, situated in Macabebe, Pampanga, with Transfer certificate of Title No. 1228 of
the land records of Pampanga, one-half undivided portion of the fishponds, consisting of two parcels,
situated in Navotas, Rizal, covered by Transfer Certificate of Title No. 35836, the parcel of land with the
improvements thereon situated in Malabon, Rizal, covered by Transfer Certificate of Title No. 23248, both
of the land records of Rizal, and the fishponds, consisting of two parcels, situated in Obando, Bulacan,
covered by Transfer Certificates of Title Nos. 21809 and 26011, both of the land records of Bulacan, are
the exclusive, separate and paraphernal properties of Marcosa Rivera; chan roblesvirtualawlibraryand
(4) Declaring that the Plaintiffs in Civil Case No. 2071 (who are the same persons alleged to be children
of Rafael Litam in the petition, dated April 24, 1952, filed by the Petitioner in Sp. Proc. No. 1537) are not
the children of the deceased Rafael Litam, and that his only heir is his surviving wife, Marcosa Rivera.
The two (2) Cases are now before us on appeal taken by the Petitioner in Special Proceeding No. 1537
and the Plaintiffs in Civil Case No. 2071. The issues for determination are:chanroblesvirtuallawlibrary(1)
Are Appellants the legitimate children of Rafael Litam? (2) Is Marcosa Rivera the exclusive owner of the
properties in question, or do the same constitute a common property of her and the decedent?
The first issue hinges on whether Rafael Litam and Sia Khin were married in 1911, and whether Rafael
Litam is the father of Appellants herein. In this connection, the lower court had the following to
say:chanroblesvirtuallawlibrary
cralaw the evidence weikhs very heavily in favor of the theory of the Defendants in Civil Case No. 2071
to the effect that the said deceased Rafael Litam was not married to Sia Khin and that Plaintiffs, are not
the children of the said decedent. The Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp. Proc. No.

Page 26 of 540
 Page 27 of 540

1537 have utterly failed to prove their alleged status as children of Rafael Litam by a marriage with Sia
Khin.
It appears from the evidence presented by the Defendants in civil Case No. 2071 and the administrator
and the counter-Petitioner in Sp. Proc. No. 1537 that there was no such marriage between the deceased
Rafael Litam and Sia Khin and that the Plaintiffs named in Civil Case No. 2071 are not children of said
deceased. The various official and public documents executed by Rafael Litam himself convincingly show
that he had not contracted any marriage with any person other than Marcosa Rivera, and that he had no
child. In the marriage certificate, (Exhibit 55) it was clearly stated that he was single when he married
Marcosa Rivera on June 10, 1922. In the sworn application for alien certificate of registration dated July 7,
1950 (Exhibit 1), Rafael Litam unequivocably declared under oath that he had no child. In the several
other documents executed by him and presented in evidence, (Exhibits 19, 21, 22, 23, 46 and 46-A)
Rafael Litam had consistently referred to Marcosa Rivera alone as his wife; chan roblesvirtualawlibraryhe
had never mentioned of Sia Khin as his wife, or of his alleged children.
The witnesses presented by the Defendants in Civil Case No. 2071 and the administrator and
counter Petitioner in Sp. Proc. No. 1537 positively testified to the effect that they know that Rafael Litam
did not have any child, nor was he married with Sia Khin. An impartial and disinterested witness, Felipe
Cruz, likewise testified that he has known Rafael Litam even before his marriage with Marcosa Rivera and
that said Rafael Litam did not have any child.
On the other hand, the Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp. Proc. No. 1537
presented in support of their theory the testimony of their lone witness, Luis Litam, and certain
documentary evidence. It is noteworthy that the said Plaintiffs and said Petitioner did not present in
evidence the marriage certificate of Rafael Litam and Sia Khin, which in the opinion of the Court, is the
competent and best evidence of the alleged marriage between them. No explanation has been given for
the non-presentation of said marriage certificate, nor has there been any showing of its loss. Neither have
said Plaintiffs and said Petitioner presented any competent secondary evidence of the supposed
marriage.
The testimony of the lone witness, Luis Litam, cannot be given any credence and value at all. His
testimony is mostly hearsay, as according to him, he was merely informed by Rafael Litam of the latters
supposed marriage with Sia Khin. His testimony is uncorroborated. The court noticed that the said
witness was only 22 years old when he testified, and it appears in the petition filed by the Petitioner in Sp.
Proc. No. 1537 that said witness is the youngest of all the alleged eight children of Rafael Litam. The
Court is at a loss to understand why one or some of the older alleged children of Rafael Litam were not
presented as witnesses in view of the unreliable testimony of Luis Litam, and considering that older
persons are better qualified to testify on the matters sought to be proved which allegedly happened a long
time ago.
The birth certificate presented by the Plaintiff in Civil Case No. 2071 and Petitioner in Sp. Proc. No. 1537
cannot be given even little consideration, because the name of the father of the children appearing
therein is not Rafael Litam, but different persons. It is very significant to note that the names of the father
of the persons appearing in said birth certificates are Dy Tham, Li Tam, Lee Tham, Rafael Dy Tam, and
that said persons were born in different places, some in Amoy, China, another Fukien, China, and the
other in Limtao, China. It also appears in said birth certificates that the childrens mothers named therein
are different, some being Sia Khim, others Sia Quien, the other Sia Khun, and still another Sia Kian.
These documents do not establish the identity of the deceased Rafael Litam and the persons named
therein as father. Besides, it does not appear in the said certificates of birth that Rafael Litam had in any
manner intervened in the preparation and filing thereof.

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 Page 28 of 540

The other documentary evidence presented by the said Plaintiffs and Petitioner are entirely immaterial
and highly insufficient to prove the alleged marriage between the deceased Rafael Litam and Sia Khin
and the alleged statue of the Plaintiffs as children of said decedent.
It is, therefore, the finding of this Court that the Plaintiffs named in Civil Case No. 2071 are not heirs of
the said decedent, his only heir being his surviving wife, Marcosa Rivera. (Emphasis ours.)
The findings of fact thus made in the decision appealed from are borne out by the records and the
conclusion drawn from said facts is, to our mind, substantially correct.
Appellants evidence on this point consists of the testimony of Appellant Li Bun Lin, who said that he is,
also known as Luis Litam; chan roblesvirtualawlibrarythat his co-Appellants are his brothers and
sisters; chan roblesvirtualawlibrarythat their parents are the decedent and Sia Khin, who were married in
China in 1911; chan roblesvirtualawlibraryand that Sia Khin died in Manila during the Japanese
occupation. He likewise, identified several pictures, marked Exhibits I to S, which were claimed to be
family portraits, but the lower court rejected their admission in evidence. Although we agree with
herein Appellants that this was an error, it is clear to us that said pictures and the testimony of Luis Litam,
as well as the other evidence adverted to in the above-quoted portion of the decision appealed from, are
far from sufficient to outweigh, or even offset, the evidence in favor of the Appellees.
It should be noted that the decedent had admittedly married Marcosa Rivera in 1922. In the very petition
of Appellant Gregorio Dy Tam, in Special Proceeding No. 1537, dated April 24, 1952, he alleged that
Marcosa Rivera is the surviving spouse of the decedent. In their complaint in Civil Case No.
2071, Appellants specifically admitted and averred the existence of the marriage between said Rafael
Litam and Marcosa Rivera which would have been void ab initio, and, hence, inexistent legally,
if Appellants pretense were true or they believed it to be so and that they had lived as husband and
wife. Again, although Gregorio Dy Tam, asserted, in his aforementioned petition, that he and his co-heirs
came to know about the marriage of the decedent and Marcosa Rivera after the death of Rafael Litam,
the very testimony of Li Bun Lin, as witness for the Appellants, show, beyond doubt, that
said Appellants knew, during the lifetime of Rafael Litam that he and Marcosa Rivera were living in
Malabon, Rizal, openly and publicly, as husband and wife, and regarded her as his lawful wife. Indeed, in
the course of his testimony, said Li Bun Lin alluded to her as his mother. In other words, aside from the
circumstance that the wedding and marital life of Marcosa Rivera and Rafael Litam is undisputed, it is,
also, an established fact that they had the general reputation of being legally married and were so
regarded by the community and by Appellants herein, during the lifetime of Rafael Litam.
Upon the other hand, Appellants maintain, in effect, that Rafael Litam was guilty of the crime of
bigamy; chan roblesvirtualawlibrarythat he had, likewise, willfully and maliciously falsified public and
official documents; chan roblesvirtualawlibraryand that, although Appellants and Sia Khin were living in
Manila and Marcosa Rivera whom Appellants knew resided only a few kilometers away, in Malabon,
Rizal where Rafael Litam returned daily, after attending to his business in Manila, the decedent had
succeeded, for about thirty (30) years, in keeping each party in complete ignorance of the nature of his
alleged relations with the other. Apart from the highly improbable nature of the last part of Appellants
pretense, it is obvious that the same cannot be sustained unless the evidence in support thereof is of the
strongest possible kind, not only because it entails the commission by Rafael Litam of grave criminal
offenses which are derogatory to his honor, but, also, because death has sealed his lips, thus depriving
him of the most effective means of defense. The proof for Appellants herein does not satisfy such
requirement.
As regards the title to the properties in dispute, the evidence thereon was analyzed by the lower court in
the following language:chanroblesvirtuallawlibrary

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 Page 29 of 540

It has been established by the evidence that the properties in question were bought by Marcosa Rivera
with her separate and exclusive money. The fishponds situated in Obando, Bulacan, covered by Transfer
Certificate of Title Nos. 21809 and 26011, the one-half (1/2) undivided portion of the fishponds situated in
Navotas, Rizal with Transfer Certificate of Title No. 35836, and the property situated in Hulong-Duhat,
Malabon, Rizal, with Transfer Certificate of Title No. 23248 were all purchased by Marcosa Rivera with
the money she earned and accumulated while she was still single; chan roblesvirtualawlibrarywhile the
fishponds situated in Macabebe, Pampanga with Transfer Certificate of Title No. 1228 were purchased by
her with the money she inherited from her late sister, Rafaela Rivera and with the money she received
from the proceeds of the sale of the pieces of jewelry she inherited from her father Eduardo Rivera and
her sister Rafaela Rivera. The properties in question, having been bought by Marcosa Rivera, although
during her marriage with Rafael Litam, with her exclusive and separate money, said properties are
undeniably her paraphernal properties. (Art. 1396, Spanish Civil Code, which is the same as Art. 148 of
the Civil Code of the Phil.)
Great importance should be given to the documentary evidence, vis:chanroblesvirtuallawlibrary Exhibits
21, 22, 23, 19, 46 and 46-A, presented by the Defendants, in Civil Case No. 2071 and the administrator
and counter- Petitioner in Sp. Proc. No. 1537, which prove beyond peradventure of any doubt that the
properties in question are the paraphernal properties of Marcosa Rivera. In Exhibit 21, Rafael Litam
unequivocably declared under his oath that the money paid by Marcosa Rivera for the fishponds in
Obando, Bulacan was her exclusive and separate money which was earned by her while she was still
single. In Exhibits 22 and 23, both dated June 16, 1947, same Rafael Litam, also under oath,
acknowledge the fact that the sums of P13,000.00 and P10,000.00 loaned by Marcosa Rivera to the
spouses Catalino Pascual and Juliana Pascual, and to Juliana Pascual, respectively, are the separate
and exclusive money of Marcosa Rivera, in which money Rafael Litam had no interest whatsoever. In
Exhibit 19, same Rafael Litam acknowledged the fact that he had obtained, before the outbreak of the
second world war, from Marcosa Rivera the sum of P135,000.00 which belongs exclusively to the latter,
and that after the liberation, or more specifically, on January 4, 1946, he stole from Marcosa Rivera the
further sum of P62,000.00, also belonging exclusively to the latter, which amounts, totalling P197,000.00,
exclusive of interests, have not, according to the evidence, been paid to her up to the present. In Exhibits
46 and 46-A, it was acknowledged by Rafael Litam that he had not given any money to his wife, Marcosa
Rivera, and that they have actually adopted a system of separation of property, each of them not having
any interest or participation whatsoever in the property of the other. These declarations and admission of
fact made by Rafael Litam against his interest are binding upon him, his heirs and successors in interests
and third persons as well. (Secs. 7 & 29, Rule 123, Rules of Court).
The finding of this Court that the properties in question are paraphernal properties of Marcosa Rivera,
having been bought by her with her separate and exclusive money, is further strengthened by the fact
that, as it is clearly disclosed by the evidence when Marcosa Rivera married Rafael Litam in 1922, she
was already rich, she having already earned and saved money as consignataria while she was still
single. It also appears that she was born of a rich family, her father, Eduardo Rivera, being the owner of
fishponds, commercial and residential lands and buildings, (Exhibits 5 to 18, inclusive), with an assessed
value of around P150,000.00 (Exhibits 25 and 42, inclusive), now worth approximately a million pesos,
and most of which properties as may be seen from the certificates of title were acquired by him way back
in the years 1916 and 1919. When Eduardo Rivera died on February 5, 1942, his cash and jewelry were
inherited by his eldest daughter, Rafaela Rivera, and when the latter died single on July 2, 1943, Marcosa
Rivera inherited her cash amounting to P150,000.00, Philippine currency, and and her pieces of jewelry.
It is with this amount and with the proceeds of the sale of some of said pieces of jewelry that Marcosa
Rivera purchased the fishponds in question, situated in Macabebe, Pampanga.

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On the other hand, it appears from the evidence that when Rafael Litam was on June 10, 1922, married
to Marcosa Rivera, he was poor. He had to borrow from Marcosa Rivera, the sum of P135,000.00
belonging exclusively to her before the outbreak of the war, and to steal from her further sum of
P62,000.00 after the liberation (Exhibit 10). The said amounts totalling P197,000.00, exclusive of the
stipulated interests, according to the evidence, have not been paid to Marcosa Rivera up to the present.
Rafael Litam did not contribute any amount of money or labor to the properties in question, as he and
Marcosa Rivera maintained an absolute separation of property (Exhibits 46 and 46-A). Besides, during
his lifetime he used to go his office in Manila everyday.
Another circumstance which clearly proves that the properties in question belong exclusively to Marcosa
Rivera is the established fact that before she became incompetent sometime in the early part of the year,
1953, she had been administering said properties, to the exclusion of Rafael Litam. In fact, as may be
seen from the very documentary evidence (Exhibit EE, same as Nxh. 50) presented by the Plaintiffs in
Civil Case No. 2071 themselves and Petitioner in Sp. Proc. No. 1537, she alone leased the properties in
question, situated in Macabebe, Pampanga, and the corresponding lease contract, dated July 13, 1948
was signed by her as lessor and by Rafael Suarez, Jr. as lessees. Furthermore, the properties in question
have been declared in the name of Marcosa Rivera alone, and she alone pays the real estate taxes due
thereon. (Exhibits 43, 44 & 45.)
Further strong proofs that the properties in question are the paraphernal properties of Marcosa Rivera,
are the very Torrens Titles covering said properties. All the said properties are registered in the name of
Marcosa Rivera, married to Rafael Litam. This circumstance indicates that the properties in question
belong to the registered owner, Marcosa Rivera, as her paraphernal properties, for if they were conjugal,
the titles covering the same should have been issued in the names of Rafael Litam and Marcosa Rivera.
The words married to Rafael Litam written after the name of Marcosa Rivera, in each of the above
mentioned titles are merely descriptive of the civil status of Marcosa Rivera, the registered owner of the
properties covered by said titles.
On the other hand, the evidence presented by the Plaintiffs in Civil Case No. 2071 and Petitionerin Sp.
Proc. No. 1537 in support of their contention that the properties in question are conjugal is, in the mind of
the Court, very weak, unreliable, and mostly incompetent, and cannot overcome the clear, convincing and
almost conclusive proofs presented by the opposite party. Scant or no consideration at all could be given
by the Court to the immaterial, incompetent and unbelievable testimonies of the witnesses presented by
the said Plaintiffs and Petitioners. The disputable presumption of law that the properties acquired during
the marriage are conjugal properties, upon which legal presumption said Plaintiffs and Petitioner mainly
rely has been decisively overcome by the overwhelming preponderance of evidence adduced in these
cases that the properties in question are the paraphernal properties of Marcosa Rivera. (Emphasis ours.)
Appellants counsel assail the decision appealed from upon the ground that the lower court had been
partial to the Appellees and had not accorded to the Appellants a fair and just hearing.
As above pointed out, His Honor the trial Judge could have been, and should have been, more liberal in
the reception of evidence. Appellants witnesses (Li Bun Lin, Dominador Gadi, Benigno Musni and Rafael
B. Suarez) should have been allowed to testify on the alleged title of Rafael Litam to certain properties
and on his alleged reasons for the language used in the public and official documents relied upon by
the Appellees. However, it is apparent to us that said evidence cannot affect the decision in these cases.
The evidenciary value of the testimony of said witnesses would have depended mainly upon their
individual appraisal of certain facts, upon their respective inferences therefrom and their biases or view
points, and upon a number of other factors affecting their credibility. At best, said testimony could not
possibly prevail over the repeated admissions made by the decedent against his own interest in Exhibits
19, 21, 22, 23, 46 and 46-A (adverted to in the abovequoted portion of the decision appealed from), which

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admissions are corroborated by the fact that the deceased father of Marcosa Rivera was well to do; chan
roblesvirtualawlibrarythat aside from her share in his estate, she had, likewise, inherited from a sister who
died single and without issue; chan roblesvirtualawlibrarythat the lands in dispute were registered, and
some were, also, leased, in her name, instead of hers and that of the decedent; chan
roblesvirtualawlibraryand that the latter lived in her house in Malabon, Rizal.
Appellants contend that the transactions covered by said Exhibits 19, 21 to 23 and 46 and 46-A, as well
as by the other deeds referred to in the decision appealed from, were caused to be made in the name of
Marcosa Rivera, to the exclusion of her husband, in order to evade the constitutional provision
disqualifying foreigners from the acquisition of private agricultural lands, except by succession. Apart from
being based, solely, upon a surmise, without any evidentiary support, this pretense is refuted by the fact
that said residential property in Hulong-Duhat, Malabon, Rizal, was acquired on April 12, 1933, or prior to
the adoption of our Constitution (see Exhibits Z and AA). Her transactions subsequently thereto, merely
followed, therefore, the pattern of her activities before the drafting of said fundamental law.
This notwithstanding, we do not believe that Appellants should be sentenced to pay damages. The
petition of Gregorio Dy Tam in Special Proceeding No. 1537 and the complaint in Civil Case No. 2071
contain nothing derogatory to the good name or reputation of the herein Appellees. On the contrary, it
may be surmised from said pleadings that Marcosa Rivera had no knowledge of the alleged previous
marriage of the decedent to Sia Khin. Moreover, the records do not show that Appellants have acted in
bad faith.
Likewise, we are of the opinion that the lower court should not have declared, in the decision appealed
from, that Marcosa Rivera is the only heir of the decedent, for such declaration is improper in Civil Case
No. 2071, it being within the exclusive competence of the court in Special Proceeding No. 1537, in which
it is not as yet, in issue, and, will not be, ordinarily, in issue until the presentation of the project of partition.
Wherefore, with the elimination of the award for damages in favor of the herein Appellees, and of said
declaration of heirship, the decision appealed from is hereby affirmed in all other respects, with costs
against the Appellants. It is SO ORDERED.

Parulan v. Garcia, G.R. No. 184148, June 9, 2014

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 184148 June 9, 2014

NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG, Petitioners,

vs.
ROSARIO CALALANG-GARCIA, LEONORA CALALANG-SABILE, and CARLITO S.
CALALANG, Respondents.

DECISION

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VILLARAMA, JR., J.:

Before us is a petition for review on certiorari assailing the Decision1 dated December 21, 2007 and
Resolution2dated July 25, 2008 of the Thirteenth Division of the Court of Appeals (CA) in CA-G.R. CV No.
72531. The CA modified the Decision3 dated July 10, 2001 of the Regional Trial Court (RTC), Branch 21,
of Malolos, Bulacan, in Civil Case No. 370-M-91.

The facts, as culled from the records, follow:

In a Complaint4 for Annulment of Sale and Reconveyance of Property filed with the RTC of Malolos,
Bulacan on June 10, 1991, the respondents Rosario Calalang-Garcia, Leonora Calalang-Sabile, and
Carlito S. Calalang asserted their ownership over a certain parcel of land against the petitioners Nora B.
Calalang-Parulan and Elvira B. Calalang. The said lot with an area of 1,266 square meters and
specifically identified as Lot 1132, Cad. 333, Bigaa Cadastre situated in Brgy. Burol 2nd, Municipality of
Balagtas, Province of Bulacan, was allegedly acquired by the respondents from their mother Encarnacion
Silverio, through succession as the latters compulsory heirs.

According to the respondents, their father, Pedro Calalang contracted two marriages during his lifetime.
The first marriage was with their mother Encarnacion Silverio. During the subsistence of this marriage,
their parents acquired the above-mentioned parcel of land from their maternal grandmother Francisca
Silverio. Despite enjoying continuous possession of the land, however, their parents failed to register the
same. On June 7, 1942, the first marriage was dissolved with the death of Encarnacion Silverio.

On November 6, 1967, Pedro Calalang entered into a second marriage with Elvira B. Calalang who then
gave birth to Nora B. Calalang-Parulan and Rolando Calalang. According to the respondents, it was only
during this time that Pedro Calalang filed an application for free patent over the parcel of land with the
Bureau of Lands. Pedro Calalang committed fraud in such application by claiming sole and exclusive
ownership over the land since 1935 and concealing the fact that he had three children with his first
spouse. As a result, on September 22, 1974, the Register of Deeds of Bulacan issued Original Certificate
of Title (OCT) No. P-28715 in favor of Pedro Calalang only.

On February 17, 1984, Pedro Calalang sold the said parcel of land to Nora B. Calalang-Parulan as
evidenced by a Deed of Sale6 executed by both Pedro Calalang and Elvira B. Calalang. Accordingly, the
Register of Deeds of Bulacan cancelled OCT No. P-2871 and issued Transfer Certificate of Title (TCT)
No. 283321 in the name of Nora B. Calalang-Parulan. On December 27, 1989,7 Pedro Calalang died.

The respondents assailed the validity of TCT No. 283321 on two grounds. First, the respondents argued
that the sale of the land was void because Pedro Calalang failed to obtain the consent of the respondents
who were co-owners of the same. As compulsory heirs upon the death of Encarnacion Silverio, the
respondents claimed that they acquired successional rights over the land. Thus, in alienating the land
without their consent, Pedro Calalang allegedly deprived them of their pro indiviso share in the property.
Second, the respondents claimed that the sale was absolutely simulated as Nora B. Calalang-Parulan did
not have the capacity to pay for the consideration stated in the Deed of Sale.

In their Answer,8 the petitioners argued that the parcel of land was acquired during the second marriage
of Pedro Calalang with Elvira B. Calalang. They stressed that OCT No. P-2871 itself stated that it was
issued in the name of "Pedro Calalang, married to Elvira Berba [Calalang]." Thus, the property belonged
to the conjugal partnership of the spouses Pedro Calalang and Elvira B. Calalang. The petitioners

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likewise denied the allegation that the sale of the land was absolutely simulated as Nora B. Calalang-
Parulan was gainfully employed in Spain at the time of the sale. Moreover, they alleged that the
respondents did not have a valid cause of action against them and that their cause of action, if any, was
already barred by laches, estoppel and prescription. By way of counterclaim, the petitioners also sought
the payment to them of moral and exemplary damages plus costs of suit for the filing of the clearly
unfounded suit.

On July 10, 2001, the trial court rendered decision in favor of the respondents. The dispositive portion of
the RTC decision reads as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants in the
following manner:

1. Ordering the defendants to reconvey in favor of the plaintiffs, their rightful share to three-fourth
(3/4) of one-half (1/2) or a total of 474.75 square meters at 158.25 square meters for each of the
three plaintiffs, namely: Rosario, Leonora, and Juanito all surname[d] Calalang, of the real
property covered by TCT No. 283321 of the Registry of Deeds of Bulacan corresponding to their
shares in the conjugal estate of the late Encarnacion S. Calalang [sic];

2. Ordering defendants to pay plaintiffs the amount of 50,000.00 for moral damages;
50,000.00 for attorneys fees and another 50,000.00 for litigation expenses.

3. Dismissing the defendants counterclaims.

With costs against the defendants.

SO ORDERED.9

The trial court declared that the parcel of land was jointly acquired by the spouses Pedro Calalang and
Encarnacion Silverio from the parents of the latter. Thus, it was part of the conjugal property of the first
marriage of Pedro Calalang. When this marriage was dissolved upon the death of Encarnacion Silverio
on June 7, 1942,the corresponding shares to the disputed property were acquired by the heirs of the
decedent according to the laws of succession. In particular, the trial court allocated half of the disputed
property to Pedro Calalang as his share in the conjugal partnership and allocated the other half to the
three respondents and Pedro Calalang to be divided equally among them. The trial court then ordered all
of Pedros share to be given to Nora B. Calalang-Parulan on account of the sale. The trial court also ruled
that because the application for free patent filed by Pedro Calalang was attended by fraud and
misrepresentation, Pedro Calalang should be considered as a trustee of an implied trust.

Aggrieved by the adverse ruling, the petitioners appealed the case to the CA which rendered the assailed
Decision on December 21, 2007. The dispositive portion of the CA decision reads,

WHEREFORE, in light of the foregoing premises, the Decision dated July 10, 2001of the Regional Trial
Court of Malolos, Bulacan is hereby MODIFIED to read as follows:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs, and against the defendants in the
following manner:

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 Page 34 of 540

1. Ordering the defendants to reconvey in favor of the plaintiffs, their rightful share to the property
owned by their common father Pedro Calalang, equivalent to one half(1/2) portion of the whole
area or 633 square meters to be divided equally by the three plaintiffs, namely:

Rosario, Leonora and Carlito, all surnamed Calalang, each getting an area of 211 square
meters of the property covered by TCT No. 2883321 of the Registry of Deeds of Bulacan
corresponding to their shares in the property of their late father Pedro Calalang;

2. Ordering defendants to pay plaintiffs the amount of 50,000.00 for moral damages;
50,000.00 for attorneys fees and another 50,000.00 for litigation expenses.

3. Dismissing the defendants counterclaims.

With costs against the defendants.

SO ORDERED.

SO ORDERED.10

The CA reversed the factual findings of the trial court and held that Pedro Calalang was the sole and
exclusive owner of the subject parcel of land. Firstly, it held that there was insufficient evidence to prove
that the disputed property was indeed jointly acquired from the parents of Encarnacion Silverio during the
first marriage. Secondly, the CA upheld the indefeasibility of OCT No. P-2871. It held that although the
free patent was issued in the name of "Pedro Calalang, married to Elvira Berba [Calalang]" this phrase
was merely descriptive of the civil status of Pedro Calalang at the time of the registration of the disputed
property. Thus, contrary to the ruling of the trial court, upon the death of Encarnacion Silverio on June 7,
1942, the respondents did not acquire any successional rights to the parcel of land which was exclusively
owned by Pedro Calalang. However, applying the rules of succession, Pedros heirs namely, Rosario
Calalang-Garcia, Leonora Calalang-Sabile, Carlito Calalang, Nora B. Calalang-Parulan, Elvira B.
Calalang, and Rolando Calalang, succeeded Pedro to the land in equal shares upon his death. Thus, the
CA ordered the petitioners to reconvey in favor of the respondents their rightful shares to the land. The
CA ruled that the sale by Pedro Calalang to Nora B. Calalang-Parulan was fraudulent and fictitious as the
vendee was in bad faith and the respondents were unlawfully deprived of their pro indiviso shares over
the disputed property. As regards the issue of prescription, the CA ruled that the prescriptive period for
reconveyance of fraudulently registered real property is ten years. Since the property was registered in
the name of Nora in1984 and the action for reconveyance was filed in 1991, the action has not yet
prescribed.

On January 23, 2008, petitioners filed their Motion for Reconsideration. The CA, however, denied their
motion in its Resolution dated July 25, 2008.

Hence, this petition raising the sole issue:

Whether or not the court a quo gravely erred in rendering its December 21, 2007 Decision modifying the
July 10, 2001 Decision of the trial court, and in issuing its July 25, 2008 Resolution denying petitioners
Motion for Reconsideration dated January 23, 2008.11

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Essentially, the only issue in this case is whether Pedro Calalang was the exclusive owner of the disputed
property prior to its transfer to his daughter Nora B. Calalang-Parulan.

The petitioners argue that the disputed property belonged to the conjugal partnership of the second
marriage of Pedro Calalang with Elvira B. Calalang as evidenced by OCT No. P-2871 which was issued
to Pedro Calalang during the subsistence of his marriage to Elvira B. Calalang. On the other hand, the
respondents claim that the disputed property was transferred by their maternal grandmother, Francisca
Silverio, to their parents, Pedro Calalang and Encarnacion Silverio, during the latters marriage. Thus, the
respondents argue that it belonged to the conjugal partnership of the first marriage of Pedro Calalang with
Encarnacion Silverio.

The petition is meritorious.

Preliminarily, we note that the resolution of the issue in this case requires a reevaluation of the probative
value of the evidence presented by the parties in order to trace the title of the disputed property. What is
involved is indeed a question of fact which is generally beyond the jurisdiction of this Court to resolve in a
petition for review on certiorari.12 However, a recognized exception to the rule is when the RTC and CA
have conflicting findings of fact as in this case.13 Here, while the trial court ruled that the disputed property
belonged to the conjugal partnership of the first marriage of Pedro Calalang with Encarnacion Silverio, the
court a quo declared that the evidence proved the sole and exclusive ownership of the disputed property
of Pedro Calalang.

We have carefully reviewed the records of this case and sustain the finding of the CA that Pedro Calalang
is the sole and exclusive owner of the disputed property.

The trial court ruled that the respondents were able to establish that Lot 1132, Cad. 333 originated from
the parents of Encarnacion, and therefore said property "either became property of Encarnacion in her
own right or jointly with her husband Pedro Calalang in 1936." In so ruling, the trial court relied on the
testimony of Rosario Calalang-Garcia that her parents built a nipa house on the subject lot and lived there
before and after World War II. The trial court further noted that Rosarios testimony was corroborated by
her cousin and adjacent neighbor Manolo Calalang.14

However, as correctly pointed out by the CA, a close perusal of the records of this case would show that
the records are bereft of any concrete proof to show that the subject property indeed belonged to
respondents maternal grandparents. The evidence respondents adduced merely consisted of testimonial
evidence such as the declaration of Rosario Calalang-Garcia that they have been staying on the property
as far as she can remember and that the property was acquired by her parents through purchase from
her maternal grandparents. However, she was unable to produce any document to evidence the said
sale, nor was she able to present any documentary evidence such as the tax declaration issued in the
name of either of her parents. Moreover, we note that the free patent was issued solely in the name of
Pedro Calalang and that it was issued more than 30 years after the death of Encarnacion and the
dissolution of the conjugal partnership of gains of the first marriage. Thus, we cannot subscribe to
respondents submission that the subject property originally belonged to the parents of Encarnacion and
was acquired by Pedro Calalang and Encarnacion.

We likewise cannot sustain the argument of the petitioners that the disputed property belongs to the
conjugal partnership of the second marriage of Pedro Calalang with Elvira B. Calalang on the ground that
the title was issued in the name of "Pedro Calalang, married to Elvira Berba [Calalang]."

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The contents of a certificate of title are enumerated by Section 45 of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree:

SEC. 45. Statement of personal circumstances in the certificate. Every certificate of title shall set forth
the full names of all persons whose interests make up the full ownership in the whole land, including their
civil status, and the names of their respective spouses, if married, as well as their citizenship, residence
and postal address. If the property covered belongs to the conjugal partnership, it shall be issued in the
names of both spouses.1wphi1

A plain reading of the above provision would clearly reveal that the phrase "Pedro Calalang, married to
Elvira Berba [Calalang]" merely describes the civil status and identifies the spouse of the registered
owner Pedro Calalang. Evidently, this does not mean that the property is conjugal. In Litam v.
Rivera,15 we declared:

Further strong proofs that the properties in question are the paraphernal properties of Marcosa Rivera,
are the very Torrens Titles covering said properties. All the said properties are registered in the name of
"Marcosa Rivera, married to Rafael Litam." This circumstance indicates that the properties in question
belong to the registered owner, Marcosa Rivera, as her paraphernal properties, for if they were conjugal,
the titles covering the same should have been issued in the names of Rafael Litam and Marcosa Rivera.
The words "married to Rafael Litam" written after the name of Marcosa Rivera, in each of the above
mentioned titles are merely descriptive of the civil status of Marcosa Rivera, the registered owner of the
properties covered by said titles.

It must likewise be noted that in his application for free patent,16 applicant Pedro Calalang averred that
the land was first occupied and cultivated by him since 1935 and that he had planted mango trees,
coconut plants, caimito trees, banana plants and seasonal crops and built his house on the subject lot.
But he applied for free patent only in 1974 and was issued a free patent while already married to Elvira B.
Calalang. Thus, having possessed the subject land in the manner and for the period required by law after
the dissolution of the first marriage and before the second marriage, the subject property ipso jure
became private property and formed part of Pedro Calalangs exclusive property. 17 It was therefore
excluded from the conjugal partnership of gains of the second marriage. 18

As the sole and exclusive owner, Pedro Calalang had the right to convey his property in favor of Nora B.
Calalang-Parulan by executing a Deed of Sale on February 17, 1984. The CA therefore erred in ruling
that Pedro Calalang deprived his heirs of their respective shares over the disputed property when he
alienated the same.

It is hornbook doctrine that successional rights are vested only at the time of death. Article 777 of the New
Civil Code provides that "[t]he rights to the succession are transmitted from the moment of the death of
the decedent." In Butte v. Manuel Uy and Sons, Inc., 19 we proclaimed the fundamental tenets of
succession:

The principle of transmission as of the time of the predecessor's death is basic in our Civil Code, and is
supported by other related articles. Thus, the capacity of the heir is determined as of the time the
decedent died (Art. 1034); the legitime is to be computed as of the same moment (Art. 908), and so is the
in officiousness of the donation inter vivas (Art. 771). Similarly, the legacies of credit and remission are
valid only in the amount due and outstanding at the death of the testator (Art. 935), and the fruits accruing
after that instant are deemed to pertain to the legatee (Art. 948).

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Thus, it is only upon the death of Pedro Calalang on December 27, 1989 that his heirs acquired their
respective inheritances, entitling them to their pro indiviso shares to his whole estate. At the time of the
sale of the disputed property, the rights to the succession were not yet bestowed upon the heirs of Pedro
Calalang. And absent clear and convincing evidence that the sale was fraudulent or not duly supported by
valuable consideration (in effect an in officious donation inter vivas), the respondents have no right to
question the sale of the disputed property on the ground that their father deprived them of their respective
shares. Well to remember, fraud must be established by clear and convincing evidence. Mere
preponderance of evidence is not even adequate to prove fraud.20 The Complaint for Annulment of Sale
and Reconveyance of Property must therefore be dismissed.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated December 21, 2007
and Resolution dated July 25, 2008 of the Thirteenth Division of the Court of Appeals in CA-G.R. CV No.
72531 are REVERSED and SET ASIDE. Civil Case No. 370-M-91, or the Complaint for Annulment of
Sale and Reconveyance of Property filed by the respondents with the Regional Trial Court, Branch 21 of
Malolos, Bulacan, on June 10, 1991, is hereby DISMISSED for lack of merit.

No pronouncement as to costs.

SO ORDERED.

Borromeo v. Descallar, G.R. No. 159310, February 4, 2009

DECISION

PUNO, C.J.:

What are the rights of an alien (and his successor-in-interest) who acquired real properties in the country
as against his former Filipina girlfriend in whose sole name the properties were registered under
the Torrens system?

The facts are as follows:

Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was assigned by his
employer, Simmering-Graz Panker A.G., an Austrian company, to work at a project in Mindoro. In 1984,
he transferred to Cebu and worked at the Naga II Project of the National Power Corporation. There, he
met respondent Antonietta Opalla-Descallar, a separated mother of two boys who was working as a
waitress at St. Moritz Hotel. Jambrich befriended respondent and asked her to tutor him in English. In dire
need of additional income to support her children, respondent agreed. The tutorials were held in
Antoniettas residence at a squatters area in Gorordo Avenue.

Jambrich and respondent fell in love and decided to live together in a rented house in Hernan
Cortes, Mandaue City. Later, they transferred to their own house and lots at Agro-Macro Subdivision,
Cabancalan, Mandaue City. In the Contracts to Sell dated November 18, 1985[1] and March 10,
1986[2] covering the properties, Jambrich and respondent were referred to as the buyers. A Deed of
Absolute Sale dated November 16, 1987[3] was likewise issued in their favor. However, when the Deed of

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Absolute Sale was presented for registration before the Register of Deeds, registration was refused on
the ground that Jambrich was an alien and could not acquire alienable lands of the public
domain. Consequently, Jambrichs name was erased from the document. But it could be noted that his
signature remained on the left hand margin of page 1, beside respondents signature as buyer on page 3,
and at the bottom of page 4 which is the last page. Transfer Certificate of Title
(TCT) Nos. 24790, 24791 and 24792 over the properties were issued in respondents name alone.

Jambrich also formally adopted respondents two sons in Sp. Proc. No. 39-MAN,[4] and per
Decision of the Regional Trial Court of Mandaue City dated May 5, 1988.[5]

However, the idyll lasted only until April 1991. By then, respondent found a new boyfriend while
Jambrich began to live with another woman in Danao City. Jambrich supported respondents sons for only
two months after the break up.

Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was engaged in the
real estate business. He also built and repaired speedboats as a hobby. In 1989, Jambrich purchased an
engine and some accessories for his boat from petitioner, for which he became indebted to the latter for
about P150,000.00. To pay for his debt, he sold his rights and interests in the Agro-Macro properties to
petitioner for P250,000, as evidenced by a Deed of Absolute Sale/Assignment.[6] On July 26, 1991, when
petitioner sought to register the deed of assignment, he discovered that titles to the three lots have been
transferred in the name of respondent, and that the subject property has already been mortgaged.

On August 2, 1991, petitioner filed a complaint against respondent for recovery of real property
before the Regional Trial Court of Mandaue City. Petitioner alleged that the Contracts to Sell dated
November 18, 1985 and March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987 over
the properties which identified both Jambrich and respondent as buyers do not reflect the true agreement
of the parties since respondent did not pay a single centavo of the purchase price and was not in fact a
buyer; that it was Jambrich alone who paid for the properties using his exclusive funds; that Jambrich was
the real and absolute owner of the properties; and, that petitioner acquired absolute ownership by virtue
of the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor.

In her Answer, respondent belied the allegation that she did not pay a single centavo of the
purchase price. On the contrary, she claimed that she solely and exclusively used her own personal funds
to defray and pay for the purchase price of the subject lots in question, and that Jambrich, being an alien,
was prohibited to acquire or own real property in the Philippines.

At the trial, respondent presented evidence showing her alleged financial capacity to buy the
disputed property with money from a supposed copra business. Petitioner, in turn, presented Jambrich as
his witness and documentary evidence showing the substantial salaries which Jambrich received while
still employed by the Austrian company, Simmering-Graz Panker A.G.

In its decision, the court a quo found

Evidence on hand clearly show that at the time of the purchase and acquisition of
[the] properties under litigation that Wilhelm Jambrich was still working and earning
much. This fact of Jambrich earning much is not only supported by documentary
evidence but also by the admission made by the defendant Antoniet[t]a Opalla. So

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that, Jambrichs financial capacity to acquire and purchase the properties . . . is not
disputed.[7]

xxx

On the other hand, evidence . . . clearly show that before defendant met
Jambrich sometime in the latter part of 1984, she was only working as a waitress at the
St. Moritz Hotel with an income of P1,000.00 a month and was . . . renting and living only
in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu City; that Jambrich took pity
of her and the situation of her children that he offered her a better life which she readily
accepted. In fact, this miserable financial situation of hers and her two children . . . are all
stated and reflected in the Child Study Report dated April 20, 1983 (Exhs. G and G-1)
which facts she supplied to the Social Worker who prepared the same when she was
personally interviewed by her in connection with the adoption of her two children by
Wilhelm Jambrich. So that, if such facts were not true because these are now denied by
her . . . and if it was also true that during this time she was already earning as much
as P8,000.00 to P9,000.00 as profit per month from her copra business, it would be
highly unbelievable and impossible for her to be living only in such a miserable condition
since it is the observation of this Court that she is not only an extravagant but also an
expensive person and not thrifty as she wanted to impress this Court in order to have a
big saving as clearly shown by her actuation when she was already cohabiting and living
with Jambrich that according to her . . . the allowance given . . . by him in the amount of
$500.00 a month is not enough to maintain the education and maintenance of her
children.[8]

This being the case, it is highly improbable and impossible that she could
acquire the properties under litigation or could contribute any amount for their
acquisition which according to her is worth more than P700,000.00 when while she
was working as [a] waitress at St. Moritz Hotel earning P1,000.00 a month as salary
and tips of more or less P2,000.00 she could not even provide [for] the daily needs
of her family so much so that it is safe to conclude that she was really in financial
distress when she met and accepted the offer of Jambrich to come and live with
him because that was a big financial opportunity for her and her children who were
already abandoned by her husband.[9]

xxx
The only probable and possible reason why her name appeared and was
included in [the contracts to sell dated November 18, 1985 and March 10, 1986 and
finally, the deed of absolute sale dated November 16, 1987] as buyer is because as
observed by the Court, she being a scheming and exploitive woman, she has taken
advantage of the goodness of Jambrich who at that time was still bewitched by her
beauty, sweetness, and good attitude shown by her to him since he could still very well
provide for everything she needs, he being earning (sic) much yet at that time.In fact, as
observed by this Court, the acquisition of these properties under litigation was at the time
when their relationship was still going smoothly and harmoniously. [10] [Emphasis
supplied.]

The dispositive portion of the Decision states:

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WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and

against the defendant Antoniet[t]a Opalla by:

1) Declaring plaintiff as the owner in fee simple over the residential house of
strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5 which are
covered by TCT Nos. 24790, 24791 and 24792 issued by the Register of Deeds of
Mandaue City;

2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the
name of defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;

3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790,
24791 and 24792 in the name of defendant Antoniet[t]a Descallar and to issue new ones
in the name of plaintiff Camilo F. Borromeo;

4) Declaring the contracts now marked as Exhibits I, K and L as avoided insofar

as they appear to convey rights and interests over the properties in question to the
defendant Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorneys fees in the amount

of P25,000.00 and litigation expenses in the amount of P10,000.00; and,

6) To pay the costs.[11]

Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002,[12] the
appellate court reversed the decision of the trial court. In ruling for the respondent, the Court of Appeals
held:
We disagree with the lower courts conclusion. The circumstances involved in the
case cited by the lower court and similar cases decided on by the Supreme Court which
upheld the validity of the title of the subsequent Filipino purchasers are absent in the
case at bar. It should be noted that in said cases, the title to the subject property has
been issued in the name of the alien transferee (Godinez et al., vs. Fong Pak Luen et al.,
120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United
Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case of
Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138
SCRA 78). In the case at bar, the title of the subject property is not in the name of
Jambrich but in the name of defendant-appellant. Thus, Jambrich could not have
transferred a property he has no title thereto.[13]

Petitioners motion for reconsideration was denied.

Hence, this petition for review.

Petitioner assigns the following errors:

I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
DISREGARDING RESPONDENTS JUDICIAL ADMISSION AND OTHER

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OVERWHELMING EVIDENCE ESTABLISHING JAMBRICHS PARTICIPATION,

INTEREST AND OWNERSHIP OF THE PROPERTIES IN QUESTION AS
FOUND BY THE HONORABLE TRIAL COURT.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

HOLDING THAT JAMBRICH HAS NO TITLE TO THE PROPERTIES IN
QUESTION AND MAY NOT THEREFORE TRANSFER AND ASSIGN ANY
RIGHTS AND INTERESTS IN FAVOR OF PETITIONER.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

REVERSING THE WELL-REASONED DECISION OF THE TRIAL COURT AND
IN IMPOSING DOUBLE COSTS AGAINST HEREIN PETITIONER (THEN,
PLAINTIFF-APPELLEE).[14]

First, who purchased the subject properties?

The evidence clearly shows, as pointed out by the trial court, who between respondent and
Jambrich possesses the financial capacity to acquire the properties in dispute. At the time of the
acquisition of the properties in 1985 to 1986, Jambrich was gainfully employed at Simmering-Graz Panker
A.G., an Austrian company. He was earning an estimated monthly salary of P50,000.00. Then, Jambrich
was assigned to Syria for almost one year where his monthly salary was approximately P90,000.00.

On the other hand, respondent was employed as a waitress from 1984 to 1985 with a monthly
salary of not more than P1,000.00. In 1986, when the parcels of land were acquired, she was
unemployed, as admitted by her during the pre-trial conference. Her allegations of income from a copra
business were unsubstantiated. The supposed copra business was actually the business of her mother
and their family, with ten siblings. She has no license to sell copra, and had not filed any income tax
return. All the motorized bancas of her mother were lost to fire, and the last one left standing was already
scrap. Further, the Child Study Report[15] submitted by the Department of Social Welfare and
Development (DSWD) in the adoption proceedings of respondents two sons by Jambrich disclosed that:

Antonietta tried all types of job to support the children until she was accepted as
a waitress at St. Moritz Restaurant in 1984. At first she had no problem with money
because most of the customers of St. Moritz are (sic) foreigners and they gave good tips
but towards the end of 1984 there were no more foreigners coming because of the
situation in the Philippines at that time. Her financial problem started then. She was even
renting a small room in a squatters area in Gorordo Ave., Cebu City. It was during her
time of great financial distress that she met Wilhelm Jambrich who later offered her a
decent place for herself and her children.[16]

The DSWD Home Study Report[17] further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta
Descallar, one of the waitresses of the said Restaurants. He made friends with the girl
and asked her to tutor him in [the] English language. Antonietta accepted the offer
because she was in need of additional income to support [her] 2 young children who
were abandoned by their father. Their session was agreed to be scheduled every
afternoon at the residence of Antonietta in the squatters area in Gorordo
Avenue, Cebu City. The Austrian was observing the situation of the family particularly the

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children who were malnourished. After a few months sessions, Mr. Jambrich offered to
transfer the family into a decent place. He told Antonietta that the place is not good for
the children. Antonietta who was miserable and financially distressed at that time
accepted the offer for the sake of the children.[18]

Further, the following additional pieces of evidence point to Jambrich as the source of fund used
to purchase the three parcels of land, and to construct the house thereon:
(1) Respondent Descallar herself affirmed under oath, during her re-direct examination and
during the proceedings for the adoption of her minor children, that Jambrich was the owner of the
properties in question, but that his name was deleted in the Deed of Absolute Sale because of legal
constraints. Nonetheless, his signature remained in the deed of sale, where he signed as buyer.
(2) The money used to pay the subject parcels of land in installments was in postdated checks
issued by Jambrich. Respondent has never opened any account with any bank. Receipts of the
installment payments were also in the name of Jambrich and respondent.
(3) In 1986-1987, respondent lived in Syria with Jambrich and her two children for ten months,
where she was completely under the support of Jambrich.
(4) Jambrich executed a Last Will and Testament, where he, as owner, bequeathed the subject
properties to respondent.

Thus, Jambrich has all authority to transfer all his rights, interests and participation over the
subject properties to petitioner by virtue of the Deed of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts. The findings of fact of the trial court
are accorded great weight and respect, if not finality by this Court, subject to a number of exceptions. In
the instant case, we find no reason to disturb the factual findings of the trial court. Even the appellate
court did not controvert the factual findings of the trial court. They differed only in their conclusions of law.

Further, the fact that the disputed properties were acquired during the couples cohabitation also
does not help respondent. The rule that co-ownership applies to a man and a woman living exclusively
with each other as husband and wife without the benefit of marriage, but are otherwise capacitated to
marry each other, does not apply.[19] In the instant case, respondent was still legally married to another
when she and Jambrich lived together. In such an adulterous relationship, no co-ownership exists
between the parties.It is necessary for each of the partners to prove his or her actual contribution to the
acquisition of property in order to be able to lay claim to any portion of it. Presumptions of co-ownership
and equal contribution do not apply.[20]

Second, we dispose of the issue of registration of the properties in the name of respondent
alone. Having found that the true buyer of the disputed house and lots was the Austrian Wilhelm
Jambrich, what now is the effect of registration of the properties in the name of respondent?

It is settled that registration is not a mode of acquiring ownership. [21] It is only a means of
confirming the fact of its existence with notice to the world at large. [22]Certificates of title are not a source
of right. The mere possession of a title does not make one the true owner of the property. Thus, the mere

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fact that respondent has the titles of the disputed properties in her name does not necessarily,
conclusively and absolutely make her the owner. The rule on indefeasibility of title likewise does not apply
to respondent. A certificate of title implies that the title is quiet,[23] and that it is perfect, absolute and
indefeasible.[24] However, there are well-defined exceptions to this rule, as when the transferee is not a
holder in good faith and did not acquire the subject properties for a valuable consideration. [25] This is the
situation in the instant case. Respondent did not contribute a single centavo in the acquisition of the
properties. She had no income of her own at that time, nor did she have any savings. She and her two
sons were then fully supported by Jambrich.

Respondent argued that aliens are prohibited from acquiring private land. This is embodied in
Section 7, Article XII of the 1987 Constitution,[26] which is basically a reproduction of Section 5, Article XIII
of the 1935 Constitution,[27] and Section 14, Article XIV of the 1973 Constitution. [28] The capacity to
acquire private land is dependent on the capacity to acquire or hold lands of the public
domain. Private land may be transferred only to individuals or entities qualified to acquire or hold lands of
the public domain. Only Filipino citizens or corporations at least 60% of the capital of which is owned by
Filipinos are qualified to acquire or hold lands of the public domain. Thus, as the rule now stands, the
fundamental law explicitly prohibits non-Filipinos from acquiring or holding title to private lands, except
only by way of legal succession or if the acquisition was made by a former natural-born citizen.[29]

Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to
Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich
conveyed the properties to petitioner who is a Filipino citizen. In United Church Board for World
Ministries v. Sebastian,[30] the Court reiterated the consistent ruling in a number of cases[31] that if land
is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino,
the flaw in the original transaction is considered cured and the title of the transferee is rendered
valid. Applying United Church Board for World Ministries, the trial court ruled in favor of petitioner, viz.:

[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the
properties under litigation [were] void ab initio since [they were] contrary to the
Constitution of the Philippines, he being a foreigner, yet, the acquisition of these
properties by plaintiff who is a Filipino citizen from him, has cured the flaw in the original
transaction and the title of the transferee is valid.

The trial court upheld the sale by Jambrich in favor of petitioner and ordered the cancellation of the TCTs
in the name of respondent. It declared petitioner as owner in fee simple of the residential house of strong
materials and three parcels of land designated as Lot Nos. 1, 3 and 5, and ordered the Register of Deeds
of Mandaue City to issue new certificates of title in his name. The trial court likewise ordered respondent
to pay petitioner P25,000 as attorneys fees and P10,000 as litigation expenses, as well as the costs of
suit.

We affirm the Regional Trial Court.

The rationale behind the Courts ruling in United Church Board for World Ministries, as
reiterated in subsequent cases,[32] is this since the ban on aliens is intended to preserve the nations land
for future generations of Filipinos, that aim is achieved by making lawful the acquisition of real estate by
aliens who became Filipino citizens by naturalization or those transfers made by aliens to Filipino
citizens. As the property in dispute is already in the hands of a qualified person, a Filipino citizen, there

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would be no more public policy to be protected. The objective of the constitutional provision to keep our
lands in Filipino hands has been achieved.

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in C.A.
G.R. CV No. 42929 dated April 10, 2002 and its Resolution dated July 8, 2003 are REVERSED and SET
ASIDE. The Decision of the Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is
REINSTATED.

SO ORDERED.

Ventura v. Abuda, G.R. No. 202932, October 23, 2013

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 202932 October 23, 2013

EDILBERTO U. VENTURA JR., Petitioner,

vs.
SPOUSES PAULINO and EVANGELINE ABUDA, Respondents.

DECISION

CARPIO, J.:

The Case

This petition for review on certiorari seeks to annul the Decision1 dated 9 March 2012 of the Court of
Appeals (CA) in CA-G.R. CV No. 92330 and the Resolution2 dated 3 August 2012 denying the motion for
reconsideration. The Decision and Resolution dismissed the Appeal dated 23 October 2009 and affirmed
with modification the Decision3dated 24 November 2008 of the Regional Trial Court of Manila, Branch 32
(RTC-Manila).

The Facts

The RTC-Manila and the CA found the facts to be as follows:

Socorro Torres (Socorro) and Esteban Abletes (Esteban) were married on 9 June 1980. Although
Socorro and Esteban never had common children, both of them had children from prior marriages:
Esteban had a daughter named Evangeline Abuda (Evangeline), and Socorro had a son, who was the
father of Edilberto U. Ventura, Jr. (Edilberto), the petitioner in this case.

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Evidence shows that Socorro had a prior subsisting marriage to Crispin Roxas (Crispin) when she
married Esteban. Socorro married Crispin on 18 April 1952. This marriage was not annulled, and Crispin
was alive at the time of Socorros marriage to Esteban.

Estebans prior marriage, on the other hand, was dissolved by virtue of his wifes death in 1960.
According to Edilberto, sometime in 1968, Esteban purchased a portion of a lot situated at 2492 State
Alley, Bonifacio Street, Vitas, Tondo, Manila (Vitas property). The remaining portion was thereafter
purchased by Evangeline on her fathers behalf sometime in 1970. 4 The Vitas property was covered by
Transfer Certificate of Title No. 141782, dated 11 December 1980, issued to "Esteban Abletes, of legal
age, Filipino, married to Socorro Torres."5

Edilberto also claimed that starting 1978, Evangeline and Esteban operated small business
establishments located at 903 and 905 Delpan Street, Tondo, Manila (Delpan property). 6

On 6 September 1997, Esteban sold the Vitas and Delpan properties to Evangeline and her husband,
Paulino Abuda (Paulino).7 According to Edilberto:

when Esteban was diagnosed with colon cancer sometime in 1993, he decided to sell the Delpan and
Vitas properties to Evangeline. Evangeline continued paying the amortizations on the two (2) properties
situated in Delpan Street. The amortizations, together with the amount of Two Hundred Thousand Pesos
(Php 200,000.00), which Esteban requested as advance payment, were considered part of the purchase
price of the Delpan properties. Evangeline likewise gave her father Fifty Thousand Pesos (Php
50,000.00) for the purchase of the Vitas properties and she shouldered his medical expenses. 8

Esteban passed away on 11 September 1997, while Socorro passed away on 31 July 1999.

Sometime in 2000, Leonora Urquila (Leonora), the mother of Edilberto, discovered the sale. Thus,
Edilberto, represented by Leonora, filed a Petition for Annulment of Deeds of Sale before the RTC-
Manila. Edilberto alleged that the sale of the properties was fraudulent because Estebans signature on
the deeds of sale was forged. Respondents, on the other hand, argued that because of Socorros prior
marriage to Crispin, her subsequent marriage to Esteban was null and void. Thus, neither Socorro nor her
heirs can claim any right or interest over the properties purchased by Esteban and respondents. 9

The Ruling of the RTC-Manila

The RTC-Manila dismissed the petition for lack of merit.

The RTC-Manila ruled that the marriage between Socorro and Esteban was void from the
beginning.10 Article 83 of the Civil Code, which was the governing law at the time Esteban and Socorro
were married, provides:

Art. 83. Any marriage subsequently contracted by any person during the lifetime of the first spouse of
such person shall be illegal and void from its performance unless:

1. The first marriage was annulled or dissolved; or

2. The first spouse had been absent for seven consecutive years at the time of the second
marriage without the spouse present having news of the absentee being alive, or if the absentee,

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though he has been absent for less than seven years, is generally considered as dead and
believed to be so by the spouse present at the time of contracting such subsequent marriage, or if
the absentee is presumed dead according to articles 390 and 391. The marriage so contracted
shall be valid in any of the three cases until declared null and void.

During trial, Edilberto offered the testimony of Socorros daughter-in-law Conchita Ventura (Conchita). In
her first affidavit, Conchita claimed that Crispin, who was a seaman, had been missing and unheard from
for 35 years. However, Conchita recanted her earlier testimony and executed an Affidavit of Retraction. 11

The RTC-Manila ruled that the lack of a judicial decree of nullity does not affect the status of the union. It
applied our ruling in Nial v. Badayog:12

Jurisprudence under the Civil Code states that no judicial decree is necessary in order to establish the
nullity of a marriage. x x x

Under ordinary circumstances, the effect of a void marriage, so far as concerns the conferring of legal
rights upon the parties, is as though no marriage had ever taken place. And therefore, being good for no
legal purpose, its invalidity can be maintained in any proceeding in which [the] fact of marriage may be
material, either direct or collateral, in any civil court between any parties at any time, whether before or
after the death of either or both the husband and the wife, and upon mere proof of the facts rendering
such marriage void, it will be disregarded or treated as non-existent by the courts.13

According to the RTC-Manila, the Vitas and Delpan properties are not conjugal, and are governed by
Articles 144 and 485 of the Civil Code, to wit:

Art. 144. When a man and a woman live together as husband and wife, but they are not married, or their
marriage is void from the beginning, the property acquired by either or both of them through their work or
industry or their wages and salaries shall be governed by the rules on co-ownership.

Art. 485. The share of the co-owners, in the benefits as well as in the charges, shall be proportional to
their respective interests. Any stipulation in a contract to the contrary shall be void.

The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the
contrary is proved.

The RTC-Manila then determined the respective shares of Socorro and Esteban in the properties. It found
that:

with respect to the property located at 2492 State Alley, Bonifacio St. Vitas, Tondo, Manila covered by
TCT No. 141782, formerly Marcos Road, Magsaysay Village, Tondo, Manila, [Evangeline] declared that
part of it was first acquired by her father Esteban Abletes sometime in 1968 when he purchased the right
of Ampiano Caballegan. Then, in 1970, she x x x bought the right to one-half of the remaining property
occupied by Ampiano Caballegan. However, during the survey of the National Housing Authority, she
allowed the whole lot to be registered in her fathers name. As proof thereof, she presented Exhibits "8" to
"11" x x x. These documents prove that that she has been an occupant of the said property in Vitas,
Tondo even before her father and Socorro Torres got married in June, 1980.14

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Anent the parcels of land and improvements thereon 903 and 905 Del Pan Street, Tondo, Manila, x x x
Evangeline professed that in 1978, before her father met Socorro Torres and before the construction of
the BLISS Project thereat, her father [already had] a bodega of canvas (lona) and a sewing machine to
sew the canvas being sold at 903 Del Pan Street, Tondo Manila. In 1978, she was also operating
Vangies Canvas Store at 905 Del Pan Street, Tondo, Manila, which was evidenced by Certificate of
Registration of Business Name issued in her favor on 09 November 1998 x x x. When the BLISS project
was constructed in 1980, the property became known as Units D-9 and D-10. At first, her father [paid] for
the amortizations for these two (2) parcels of land but when he got sick with colon cancer in 1993, he
asked respondents to continue paying for the amortizations x x x. [Evangeline] paid a total of
195,259.52 for Unit D-9 as shown by the 37 pieces of receipts x x x and the aggregate amount of
188,596.09 for Unit D-10, as evidenced by 36 receipts x x x.15

The RTC-Manila concluded that Socorro did not contribute any funds for the acquisition of the properties.
Hence, she cannot be considered a co-owner, and her heirs cannot claim any rights over the Vitas and
Delpan properties.16

Aggrieved, Edilberto filed an appeal before the CA.

The Ruling of the CA

In its Decision17 dated 9 March 2012, the CA sustained the decision of the RTC-Manila. The dispositive
portion of the CA Decision reads:

WHEREFORE, the Appeal is hereby DENIED and the challenged Decision of the court a quo STANDS.

SO ORDERED.18

The CA ruled, however, that the RTC-Manila should have applied Article 148 of the Family Code, and not
Articles 144 and 485 of the Civil Code. Article 148 of the Family Code states that in unions between a
man and a woman who are incapacitated to marry each other:

x x x only the properties acquired by both of the parties through their actual joint contribution of money,
property, or industry shall be owned by them in common in proportion to their respective contributions. In
the absence of proof to the contrary, their contributions and corresponding shares are presumed to be
equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the
absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad
faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last
paragraph of the preceding Article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

The CA applied our ruling in Saguid v. Court of Appeals,19 and held that the foregoing provision applies
"even if the cohabitation or the acquisition of the property occurred before the effectivity of the Family
Code."20 The CA found that Edilberto failed to prove that Socorro contributed to the purchase of the Vitas
and Delpan properties. Edilberto was unable to provide any documentation evidencing Socorros alleged
contribution.21

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On 2 April 2012, Edilberto filed a Motion for Reconsideration,22 which was denied by the CA in its
Resolution dated 3 August 2012.23

Hence, this petition.

The Ruling of this Court

We deny the petition.

Edilberto admitted that in unions between a man and a woman who are incapacitated to marry each
other, the ownership over the properties acquired during the subsistence of that relationship shall be
based on the actual contribution of the parties. He even quoted our ruling in Borromeo v. Descallar 24 in
his petition:

It is necessary for each of the partners to prove his or her actual contribution to the acquisition of property
in order to be able to lay claim to any portion of it. Presumptions of co-ownership and equal contribution
do not apply.25

This is a reiteration of Article 148 of the Family Code, which the CA applied in the assailed decision:

Art 148. In cases of cohabitation [wherein the parties are incapacitated to marry each other], only the
properties acquired by both of the parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective contributions. In the absence
of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The
same rule and presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the
absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad
faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last
paragraph of the preceding Article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

Applying the foregoing provision, the Vitas and Delpan properties can be considered common property if:
(1) these were acquired during the cohabitation of Esteban and Socorro; and (2) there is evidence that
the properties were acquired through the parties actual joint contribution of money, property, or industry.

Edilberto argues that the certificate of title covering the Vitas property shows that the parcel of land is co-
owned by Esteban and Socorro because: (1) the Transfer Certificate of Title was issued on 11 December
1980, or several months after the parties were married; and (2) title to the land was issued to "Esteban
Abletes, of legal age, married to Socorro Torres."26

We disagree. The title itself shows that the Vitas property is owned by Esteban alone.1wphi1 The
phrase "married to Socorro Torres" is merely descriptive of his civil status, and does not show that
Socorro co-owned the property.27The evidence on record also shows that Esteban acquired ownership
over the Vitas property prior to his marriage to Socorro, even if the certificate of title was issued after the
celebration of the marriage. Registration under the Torrens title system merely confirms, and does not

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vest title. This was admitted by Edilberto on page 9 of his petition wherein he quotes an excerpt of our
ruling in Borromeo:

Registration is not a mode of acquiring ownership. It is only a means of confirming the fact of its existence
with notice to the world at large. Certificates of title are not a source of right. The mere possession of a
title does not make one the true owner of the property. Thus, the mere fact that respondent has the titles
of the disputed properties in her name does not necessarily, conclusively and absolutely make her the
owner. The rule on indefeasibility of title likewise does not apply to respondent. A certificate of title implies
that the title is quiet, and that it is perfect, absolute and indefeasible. However, there are well-defined
exceptions to this rule, as when the transferee is not a holder in good faith and did not acquire the subject
properties for a valuable consideration.

Edilberto claims that Esteban s actual contribution to the purchase of the Delpan property was not
sufficiently proven since Evangeline shouldered some of the amortizations. 28 Thus, the law presumes that
Esteban and Socorro jointly contributed to the acquisition of the Del pan property.

We cannot sustain Edilberto s claim. Both the RTC-Manila and the CA found that the Delpan property
was acquired prior to the marriage of Esteban and Socorro.29 Furthermore, even if payment of the
purchase price of the Delpan property was made by Evangeline, such payment was made on behalf of
her father. Article 1238 of the Civil Code provides:

Art. 1238. Payment made by a third person who does not intend to be reimbursed by the debtor is
deemed to be a donation, which requires the debtor s consent. But the payment is in any case valid as to
the creditor who has accepted it.

Thus, it is clear that Evangeline paid on behalf of her father, and the parties intended that the Delpan
property would be owned by and registered under the name of Esteban.

During trial, the Abuda spouses presented receipts evidencing payments of the amortizations for the
Delpan property.1wphi1 On the other hand, Edilberto failed to show any evidence showing Socorro s
alleged monetary contributions. As correctly pointed out by the CA:

settled is the rule that in civil cases x x x the burden of proof rests upon the party who, as determined by
the pleadings or the nature of the case, asserts the affirmative of an issue. x x x. Here it is Appellant who
is duty bound to prove the allegations in the complaint which undoubtedly, he miserably failed to do so.30

WHEREFORE, the petition is DENIED. The Decision dated 9 March 2012 of the Court of Appeals in CA-
G.R. CV No. 92330 is AFFIRMED.

SO ORDERED.

Registered Land not Subject to Prescription (Section 47)

Supapo v. De Jesus, G.R. No. 198356, April 20, 2015

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DECISION

BRION, J.:

We resolve the petition for review on certiorari1 filed by petitioners Esperanza Supapo and Romeo
Supapo2 (Spouses Supapo) to assail the February 25, 2011 decision3 and August 25, 2011 resolution4of
the Court of Appeals (CA) in CA-G.R. SP No. 111674.

Factual Antecedents

The Spouses Supapo filed a complaint5 for accion publiciana against Roberto and Susan de Jesus
(Spouses de Jesus), Macario Bernardo (Macario), and persons claiming rights under them (collectively,
the respondents), with the Metropolitan Trial Court (MeTC) of Caloocan City.

The complaint sought to compel the respondents to vacate a piece of land located in Novaliches, Quezon
City, described as Lot 40, Block 5 (subject lot). The subject lot is covered by Transfer Certificate of Title
(TCT) No. C-284416 registered and titled under the Spouses Supapo's names. The land has an assessed
value of thirty-nine thousand nine hundred eighty pesos (39,980.00) as shown in the Declaration of Real
Property Value (tax declaration) issued by the Office of the City Assessor of Caloocan.7

The Spouses Supapo did not reside on the subject lot. They also did not employ an overseer but they
made sure to visit at least twice a year.8 During one of their visits in 1992, they saw two (2) houses built
on the subject lot. The houses were built without their knowledge and permission. They later learned that
the Spouses de Jesus occupied one house while Macario occupied the other one.9

The Spouses Supapo demanded from the respondents the immediate surrender of the subject lot by
bringing the dispute before the appropriate Lupong Tagapamayapa. The Lupon issued a
Katibayan Upang Makadulog sa Hukuman (certificate to file action) for failure of the parties to settle
amicably.10

The Spouses Supapo then filed a criminal case11 against the respondents for violation of Presidential
Decree No. 772 or the Anti-Squatting Law.12 The trial court convicted the respondents. The dispositive
portion of the decision reads:

WHEREFORE, in view of all the foregoing, this Court finds accused ROBERTO DE JESUS, SUSAN DE
JESUS and MACARIO BERNARDO, GUILTY beyond reasonable doubt for Violation of Presidential
Decree No. 772, and each accused is hereby ordered to pay a fine of ONE THOUSAND PESOS
(P1,000.00), and to vacate the subject premises.

SO ORDERED.13 (Emphasis supplied.)

The respondents appealed their conviction to the CA.14 While the appeal was pending, Congress enacted
Republic Act (RA) No. 8368, otherwise known as "An Act Repealing Presidential Decree No. 772," which
resulted to the dismissal of the criminal case. 15

On April 30, 1999, the CA's dismissal of the criminal case became final. 16

Notwithstanding the dismissal, the Spouses Supapo moved for the execution of the respondents' civil
liability, praying that the latter vacate the subject lot. The Regional Trial Court (RTC) granted the motion

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and issued the writ of execution. The respondents moved for the quashal of the writ but the RTC denied
the same. The RTC also denied the respondents' motion for reconsideration.

The respondents thus filed with the CA a petition for certiorari to challenge the RTC's orders denying the
quashal of the writ and the respondent's motion for reconsideration.17 The CA granted the petition and
held that with the repeal of the Anti-Squatting Law, the respondents' criminal and civil liabilities were
extinguished.18 The dispositive portion of the decision reads:

WHEREFORE, premises considered, the petition for certiorari with prayer for injunction is GRANTED.
The orders dated June 5, 2003 and July 24, 2003 of Branch 131 of the Regional Trial Court of Caloocan
City in Criminal Case No. C-45610 are REVERSED and SET ASIDE. Said court is hereby
permanently ENJOINED from further executing or implementing its decision dated March 18, 1996.

SO ORDERED.

The CA, however, underscored that the repeal of the Anti-Squatting Law does not mean that people now
have unbridled license to illegally occupy lands they do not own, and that it was not intended to
compromise the property rights of legitimate landowners.19 In cases of violation of their property rights,
the CA noted that recourse may be had in court by filing the proper action for recovery of possession.

The Spouses Supapo thus filed the complaint for action publiciana.20

After filing their Answer,21 the respondents moved to set their affirmative defenses for preliminary
hearing22 and argued that: (1) there is another action pending between the same parties; (2) the
complaint for accion publiciana is barred by statute of limitations; and (3) the Spouses Supapo's cause of
action is barred by prior judgment.

The MeTC Ruling23

The MeTC denied the motion to set the affirmative defenses for preliminary hearing. It ruled that the
arguments advanced by the respondents are evidentiary in nature, which at best can be utilized in the
course of the trial. The MeTC likewise denied the respondents' motion for reconsideration.

From the MeTC's ruling, the respondents filed a petition for certiorari with the RTC.24

The RTC Ruling25

The RTC granted the petition for certiorari on two grounds, viz.: (i) the action has prescribed; and
(ii) accion publiciana falls within the exclusive jurisdiction of the RTC.

It held that in cases where the only issue involved is possession, the MeTC has jurisdiction if the action
for forcible entry or unlawful detainer is filed within one (1) year from the time to demand to vacate was
made. Otherwise, the complaint for recovery of possession should be filed before the RTC.

The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED.

The Orders dated October 24, 2008 and February 23, 2009 are hereby declared NULL and VOID.

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The Public Respondent is hereby directed to DISMISS Civil Case No. 08-29245 for lack of jurisdiction.

SO ORDERED.26

In their motion for reconsideration,27 the Spouses Supapo emphasized that the court's jurisdiction over an
action involving title to or possession of land is determined by its assessed value; that the RTC does not
have an exclusive jurisdiction on all complaints for accion publiciana; and that the assessed value of the
subject lot falls within MeTC's jurisdiction.

The RTC denied the petitioners' motion for reconsideration.

It held that although the MeTC had jurisdiction based on the assessed value of the subject lot, the
Spouses Supapos' cause of action had already prescribed, the action having been filed beyond the ten
(l0)-year prescriptive period under Article 555 of the Civil Code.28 As it was not proven when the actual
demand to vacate was made, the RTC ruled that the reckoning period by which the ejectment suit should
have been filed is counted from the time the certificate to file action was issued. The certificate to file
action was issued on November 25, 1992, while the complaint for accion publiciana was filed only on
March 7, 2008, or more than ten (10) years thereafter.

Dissatisfied with the RTC ruling, the Spouses Supapo appealed to the CA.29

The CA Ruling30

The CA dismissed the appeal and held that the complaint for accion publiciana should have been lodged
before the RTC and that the period to file the action had prescribed.

The dispositive portion of the CA decision reads:

WHEREFORE, the appeal is DENIED. The Decision dated June 30, 2009 and Order dated October 19,
2009 are AFFIRMED.

SO ORDERED

The Spouses Supapo moved31 but failed32 to secure a reconsideration of the CA decision; hence, they
came to us through the present petition.

The Petition

In seeking reversal of the CA's ruling, the Spouses Supapo essentially argue that:

(1) the MeTC exercises exclusive original jurisdiction over accion publiciana where the assessed
value of the property does not exceed P20,000.00, or P50,000.00 if the property is located in
Metro Manila; and that
(2) prescription had not yet set in because their cause of action is imprescriptible under the
Torrens system.

The Respondents' Case33

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The respondents argue that the complaint for accion publiciana was (1) filed in the wrong court; (2) barred
by prescription; and (3) barred by res judicata.

Issues

The issues for resolution are:

I. Whether the MeTC properly acquired jurisdiction;

II. Whether the cause of action has prescribed; and
III. Whether the complaint for accion publiciana is barred by res judicata.

Our Ruling

The petition is meritorious.

We hold that: (1) the MeTC properly acquired jurisdiction; (2) the cause of action has not prescribed; and
(3) the complaint is not barred by res judicata.

Accion Publiciana and

the Jurisdiction of the
MeTC

Accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty
independent of title. It refers to an ejectment suit filed after the expiration of one year from the accrual of
the cause of action or from the unlawful withholding of possession of the realty. 34

In the present case, the Spouses Supapo filed an action for the recovery of possession of the subject lot
but they based their better right of possession on a claim of ownership.

This Court has held that the objective of the plaintiffs in accion publiciana is to recover possession only,
not ownership. However, where the parties raise the issue of ownership, the courts may pass upon the
issue to determine who between the parties has the right to possess the property. 35

This adjudication is not a final determination of the issue of ownership; it is only for the purpose of
resolving the issue of possession, where the issue of ownership is inseparably linked to the issue of
possession. The adjudication of the issue of ownership, being provisional, is not a bar to an action
between the same parties involving title to the property. The adjudication, in short, is not conclusive on
the issue of ownership.36

Thus, while we will dissect the Spouses Supapo's claim of ownership over the subject property, we will
only do so to determine if they or the respondents should have the right of possession.

Having thus determined that the dispute involves possession over a real property, we now resolve which
court has the jurisdiction to hear the case.

Under Batas Pambansa Bilang 129,37 the jurisdiction of the RTC over actions involving title to or
possession of real property is plenary.38

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RA No. 7691,39 however, divested the RTC of a portion of its jurisdiction and granted the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts the exclusive and original
jurisdiction to hear actions where the assessed value of the property does not exceed Twenty Thousand
Pesos (P20,000.00), or Fifty Thousand Pesos (P50,000.00), if the property is located in Metro Manila.

Section 1 of RA No. 7691 states:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act
of 1980," is hereby amended to read as follows:
Section. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
jurisdiction:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00)
or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) x
x x. (Emphasis supplied.)

Section 3 of the same law provides:

Section. 3. Section 33 of the same law is hereby amended to read as follows:
Section. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property,
or any interest therein where the assessed value of the property or interest therein does not exceed
Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses and costs x x x. (Emphasis supplied.)

In view of these amendments, jurisdiction over actions involving title to or possession of real property is
now determined by its assessed value.40 The assessed value of real property is its fair market value
multiplied by the assessment level. It is synonymous to taxable value. 41

In Quinagoran v. Court of Appeals,42 we explained:

[D]oes the RTC have jurisdiction over all cases of recovery of possession regardless of the value of the
property involved?

The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to Dismiss, as
affirmed by the CA that all cases of recovery of possession or accion publiciana lies with the regional
trial courts regardless of the value of the property no longer holds true. As tilings now stand, a
distinction must be made between those properties the assessed value of which is below
P20,000.00, if outside Metro Manila; and P50,000.00, if within.43 (Emphasis supplied.)

In this regard, the complaint must allege the assessed value of the real property subject of the complaint
or the interest thereon to determine which court has jurisdiction over the action. This is required because

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the nature of the action and the court with original and exclusive jurisdiction over the same is determined
by the material allegations of the complaint, the type of relief prayed for by the plaintiff, and the law in
effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims
asserted therein.44

In the present case, the Spouses Supapo alleged that the assessed value of the subject lot, located in
Metro Manila, is P39,980.00. This is proven by the tax declaration45 issued by the Office of the City
Assessor of Caloocan. The respondents do not deny the genuineness and authenticity of this tax
declaration.

Given that the Spouses Supapo duly complied with the jurisdictional requirements, we hold that the MeTC
of Caloocan properly acquired jurisdiction over the complaint for accion publiciana.

The cause of action

has not prescribed

The respondents argue that the complaint for accion publiciana is dismissible for being filed out of time.

They invoke Article 555 of the Civil Code, which states: Art. 555. A possessor may lose his possession:

xxxx

(4) By the possession of another, subject to the provisions of Article 537, if the new possession has
lasted longer than one year. But the real right of possession is not lost till after the lapse of ten
years. (Emphasis supplied.)

The respondents point out that the Spouses Supapo filed the complaint for accion publiciana on March 7,
2008 or more than ten (10) years after the certificate to file action was issued on November 25, 1992. The
respondents contend that the Spouses Supapo may no longer recover possession of the subject
property, the complaint having been filed beyond the period provided by law.

Further, while the respondents concede that the Spouses Supapo hold a TCT over the subject property,
and assuming a Torrens title is imprescriptible and indefeasible, they posit that the latter have lost their
right to recover possession because of laches.

On their part, the Spouses Supapo admit that they filed the complaint for accion publiciana more than ten
(10) years after the certificate to file action was issued. Nonetheless, they argue that their cause of action
is imprescriptible since the subject property is registered and titled under the Torrens system.

We rule that the Spouses Supapo's position is legally correct.

At the core of this controversy is a parcel of land registered under the Torrens system. The Spouses
Supapo acquired the TCT on the subject lot in 1979.46 Interestingly, the respondents do not challenge
the existence, authenticity and genuineness of the Supapo's TCT.47

In defense, the respondents rest their entire case on the fact that they have allegedly been in actual,
public, peaceful and uninterrupted possession of the subject property in the concept of an owner since
1992. The respondents contend that they built their houses on the subject lot in good faith. Having
possessed the subject lot for more than ten (10) years, they claim that they can no longer be disturbed in

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their possession.48

Under the undisputed facts of this case, we find that the respondents' contentions have no legal basis.

In a long line of cases, we have consistently ruled that lands covered by a title cannot be acquired by
prescription or adverse possession. We have also held that a claim of acquisitive prescription is
baseless when the land involved is a registered land because of Article 1126 49 of the Civil Code in
relation to Act 496 [now, Section 47 of Presidential Decree (PD) No. 1529 50].51

The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under the Torrens system. The
most essential insofar as the present case is concerned is Section 47 of PD No. 1529 which states:

Section 47. Registered land not subject to prescriptions. No title to registered land in derogation of the
title of the registered owner shall be acquired by prescription or adverse possession.

In addition to the imprescriptibility, the person who holds a Torrens Title over a land is also entitled to the
possession thereof.52 The right to possess and occupy the land is an attribute and a logical consequence
of ownership.53 Corollary to this rule is the right of the holder of the Torrens Title to eject any person
illegally occupying their property. Again, this right is imprescriptible. 54

In Bishop v. CA,55 we held that even if it be supposed that the holders of the Torrens Title were aware of
the other persons' occupation of the property, regardless of the length of that possession, the lawful
owners have a right to demand the return of their property at any time as long as the possession was
unauthorized or merely tolerated, if at all.56

Even if the defendant attacks the Torrens Title because of a purported sale or transfer of the property, we
still rule in favor of the holder of the Torrens Title if the defendant cannot adduce, in addition to the deed
of sale, a duly-registered certificate of title proving the alleged transfer or sale.

A case in point is Umpoc v. Mercado57 in which we gave greater probative weight to the plaintiffs TCT vis-
a-vis the contested unregistered deed of sale of the defendants. Unlike the defendants in Umpoc,
however, the respondents did not adduce a single evidence to refute the Spouses Supapo's TCT. With
more reason therefore that we uphold the indefeasibility and imprescriptibility of the Spouses Supapo's
title.

By respecting the imprescriptibility and indefeasibility of the Spouses Supapo's TCT, this Court merely
recognizes the value of the Torrens System in ensuring the stability of real estate transactions and
integrity of land registration.

We reiterate for the record the policy behind the Torrens System, viz.:

The Government has adopted the Torrens system due to its being the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the seller's title
thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all,
which will not only be unfair to him as the purchaser, but will also erode public confidence in the system
and will force land transactions to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence will be that land conflicts can be even
more abrasive, if not even violent.58

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With respect to the respondents' defense59 of laches, suffice it to say that the same is evidentiary in
nature and cannot be established by mere allegations in the pleadings.60 In other words, the party
alleging laches must adduce in court evidence proving such allegation. This Court not being a trier of
facts cannot rule on this issue; especially so since the lower courts did not pass upon the same.

Thus, without solid evidentiary basis, laches cannot be a valid ground to deny the Spouses Supapo's
petition.61 On the contrary, the facts as culled from the records show the clear intent of the Spouses
Supapo to exercise their right over and recover possession of the subject lot, viz.: (1) they brought the
dispute to the appropriate Lupon; (2) they initiated the criminal complaint for squatting; and (3) finally,
they filed the action publiciana. To our mind, these acts negate the allegation of laches.

With these as premises, we cannot but rule that the Spouses Supapo's right to recover possession of the
subject lot is not barred by prescription.

The action is not barred

by prior judgment

As a last-ditch effort to save their case, the respondents invoke res judicata. They contend that the
decision of the CA in CA-G.R. SP No. 78649 barred the filing of the action publiciana.

To recall, CA-G.R. SP No. 78649 is the petition for certiorari filed by the respondents to challenge the
RTC's issuance of the writ enforcing their civil liability (i.e., to vacate the subject property) arising from
their conviction under the Anti-Squatting Law. The CA granted the petition and permanently enjoined the
execution of the respondents' conviction because their criminal liability had been extinguished by the
repeal of the law under which they were tried and convicted. It follows that their civil liability arising from
the crime had also been erased.

The respondents' reliance on the principle of res judicata is misplaced.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of
the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).62

"Bar by prior judgment" means that when a right or fact had already been judicially tried on the merits and
determined by a court of competent jurisdiction, the final judgment or order shall be conclusive upon the
parties and those in privity with them and constitutes an absolute bar to subsequent actions involving the
same claim, demand or cause of action.63

The requisites64 for res judicata under the concept of bar by prior judgment are:

(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and

(4) There must be between the first and second actions, identity of parties, subject matter, and
cause of action.

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Res judicata is not present in this case.

While requisites one to three may be present, it is obvious that the there is no identity of subject matter,
parties and causes of action between the criminal case prosecuted under the Anti-Squatting Law and
the civil action for the recovery of the subject property.

First, there is no identity of parties. The criminal complaint, although initiated by the Spouses Supapo,
was prosecuted in the name of the people of the Philippines. The accion publiciana, on the other hand,
was filed by and in the name of the Spouses Supapo.

Second, there is no identity of subject matter. The criminal case involves the prosecution of a crime
under the Anti-Squatting Law while the accion publiciana is an action to recover possession of the subject
property.

And third, there is no identity of causes of action. The people of the Philippines filed the criminal case
to protect and preserve governmental interests by prosecuting persons who violated the statute. The
Spouses Supapo filed the accion publiciana to protect their proprietary interests over the subject property
and recover its possession.

Even casting aside the requirement of identity of causes of action, the defense of res judicata has still no
basis.

The concept of "conclusiveness of judgment" does not require that there is identity of causes of action
provided that there is identity of issue and identity of parties. 65

Under this particular concept of res judicata, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies, whether or not the claim, demand, purpose, or subject matter of the
two actions is the same.66

As already explained, there is no identity of parties between the criminal complaint under the Anti-
Squatting law and the civil action for accion publiciana. For this reason alone, "collusiveness of judgment"
does not apply.

Even if we assume, for the sake of argument, that there is identity of parties, "conclusiveness of
judgment" still does not apply because there is no identity of issues. The issue in the criminal case is
whether the respondents (accused therein) committed the crime alleged in the information, while the only
issue in accion publiciana is whether the Spouses Supapo have a better right than the respondents to
possess and occupy the subject property.

For all these reasons, the defense of res judicata is baseless.

Final Note

As a final note, we stress that our ruling in this case is limited only to the issue of determining who
between the parties has a better right to possession. This adjudication is not a final and binding
determination of the issue of ownership. As such, this is not a bar for the parties or even third persons to

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file an action for the determination of the issue of ownership.

WHEREFORE, premises considered, we GRANT the petition, and consequently REVERSE and SET
ASIDE the February 25, 2011 decision and August 25, 2011 resolution of the Court of Appeals in CA-
G.R. SP No. 111674.

SO ORDERED.

Cabrera v. CA, G.R. No. 108547, 267 SRCA 339, February 3, 1997

SECOND DIVISION

[G.R. No. 108547. February 3, 1997]

FELICIDAD VDA. DE CABRERA, MARYJANE CABRERA and FELICIDAD TEOKEMIAN, plaintiff, vs.
COURT OF APPEALS and VIRGILIA ORAIS DE FELICIO, represented by her Attorney-in-
Fact, ERNESTO M. ORAIS, defendants.

DECISION

TORRES, JR., J.:

Assailed in this Petition for Review on Certiorari is the Decision[1] of the respondent Court of Appeals
dated January 7, 1993 in CA-G.R. No. 22407-CV, the dispositive portion of which reads:

WHEREFORE, the decision of the lower court is hereby REVERSED and judgment is hereby entered
ordering defendants Felicidad Vda. de Cabrera and Marykane Cabrera to vacate the portion of Lot 2238
occupied by them and surrender possession thereof to plaintiff.

SO ORDERED.

Reversed by the foregoing pronouncements was the decision[2] of the Regional Trial Court, Branch 7,
Baganga, Davao Oriental in Civil Case No. 379, an action for Quieting of Title to Real Property, Damages
with Preliminary Injunction. The trial courts disposition reads:

WHEREFORE, the plaintiff is hereby ordered:

(a) to execute a reconveyance within thirty (30) days after this decision shall have become final and
executory in favor of defendant Felicidad Vda. De Cabrera corresponding only to that portion of Lot No.
2239 actually and physically possessed and occupied by the defendant as seen from the sketch plan of
Engr. Enecio Magno (Exh. 2) and pinpointed and identified during the ocular investigation as to its extent
and boundaries of the said portion bought by defendants Felicidad Vda. De Cabrera from Felicidad
Teokemian;

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(b) To reimburse defendants for litigation expenses and attorneys fees in the amount of P7,000.00; and

(c) To pay the cost.

SO ORDERED.

We are restating the facts as determined by the appellate court, viz:

On January 16, 1950, a Deed of Sale (Exh. B) was executed by Daniel Teokemian and Albertana
Teokemian in favor of Andres Orais over a parcel of unregistered land situated at Abejod, Cateel, Davao
Oriental with an area described as 7.3720 hectares. The property was owned in common by Daniel and
Albertana and their sister Felicidad Teokemian, having inherited the same from their late father, Domingo
Teokemian. However, the Deed of Sale was not signed by Felicidad, although her name was printed
therein as one of the vendors. On January 26, 1950, the parcel of land was surveyed in the name of
Virgilia Orais, daughter of the vendee Andres Orais, and denominated as Lot No. 2239, PLS-287, Cateel
Cadastre. As surveyed, the property had an area of 11.1000 hectares.

On June 24, 1957, Virgilia Orais was issued Free Patent No. V-79089. Original Certificate of Title No. P-
10908 was issued in her name (Exh. A).

On July 27, 1972, Alberto (sic. Albertana) Teokemian executed a Deed of Absolute Sale conveying to
Elano Cabrera, husband of Felicidad Cabrera, ONE HALF PORTION OF LOT NO. 2239, Cad-287,
eastern portion, containing an area of FIFTY FIVE THOUSAND FIVE HUNDRED TEN (55,510) SQUARE
METERS, more or less (Exh. 3), which portion supposedly corresponded to the one-third share in Lot
2239 of Felicidad Teokemian who was not a party to the Deed of Sale earlier executed by her brother and
sister in favor of Andres Orais, Virgilia Orais predecessor-in-interest. It was explained by Felicidad
Cabrera that the Deed of Sale was signed by Albertana Teokemian, not by Felicidad Teokemian,
because the whole of Lot 2239 was adjudicated to Albertana in a decision of a cadastral court dated June
8, 1965 as evidenced by a Certification of an officer-in-charge of the Office of the Clerk of Court, RTC, Br.
7, Baganga, Davao Oriental (Exh. 4). Felicidad Cabrera and her husband immediately took possession of
the western portion of Lot 2239.

In 1974 and 1978, Virgilia Orais brothers, Rodolfo and Jimmy Orais went to Cateel, Davao Oriental and
confronted the Cabreras of the latters alleged encroachment and illegal occupation of their sisters land,
but no concrete action on the matter was pursued by Virgilia Orais until February 11, 1988 when she filed
Civil Case No. 379 against Felicidad Cabrera, now a widow, and her daughter Marykane Cabrera for
Quieting of Title to Real Property, Damages with Preliminary Mandatory Injunction.

The complaint, which was amended on June 22, 1988 by including Felicidad Teokemian as party
defendant (pp. 42-47, Records), alleged that sometime in 1972 and 1973 the late Elano Cabrera and
defendant Felicidad Cabrera, knowing that Lot 2239 was already registered in the name of the plaintiff,
prepared a document of sale and had Felicidad Teokemian sign it conveying a portion of said lot to them
as described in the Sketch Map (Annex D of the Complaint), after which they entered and possessed said
portion and enjoyed the fruits thereon. Plaintiff further averred that by reason of the document of sale and
the declaration of the property involved in the name of defendant Felicidad Vda. De Cabrera, there
created a cloud of doubt on the formers title on said property.

Plaintiff prayed as follows:

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WHEREFORE, premises considered, plaintiff through the undersigned counsel respectfully prays this
Honorable Court that:

a) After due notice and hearing, a Writ of Preliminary Mandatory Injunction be issued restraining the
defendants from further dispossessing the plaintiff of the land in question;

b) Ordering the defendants to pay jointly the plaintiff the amount of not less than Sixteen Thousand Two
Hundred (P16,200) as total value of the rice produced from the riceland in question, and the amount of
Twenty One Thousand Six Hundred (P21,600.00) Pesos as the total proceeds of the nuts of the coconut
land in question;

c) The Defendants be ordered to pay the plaintiff the amount of Twenty Thousand (P20,000.00) Pesos
and Ten Thousand (P10,000.00) Pesos as litigation expenses;

d) The defendants be ordered to pay Six Thousand (P6,000.00) Pesos for attorneys fees; Four Hundred
(P400.00) Pesos as expenses for every appearance in Court;

e) The document of sale executed by Felicidad Teokemian and the Tax Declarations issued to the late
Elano Cabrera and Felicidad Vda. De Cabrera and the subsequent Tax Declaration creating a cloud of
doubt on the title, possession, rights and interest be declared null and void for being fraudulent and
without any legal basis and inexistent; and

f) Such other reliefs and remedies which this Honorable Court may deem just, proper, and equitable in
the premises.

In their answer with counterclaim (pp.10-18, Records), defendants alleged that they acquired a portion of
Lot 2239 in good faith and for value; that said portion was owned by Felicidad Teokemian who was not a
party to the Deed of Sale executed by Daniel and Albertana Teokemian on January 16, 1950 in favor of
Andres Orais over Lot 2239; that not having signed the Deed of Sale, Felicidad Teokemians one-third
share in Lot 2239 could not have been legally conveyed to Andres Orais; that Virgilia Orais (successor-in-
interest of Andres Orais) committed fraud in including the portion owned by Felicidad Teokemian in her
applying for free patent over Lot 2239 is concerned pursuant to Art. 1456 of the Civil Code; and that
plaintiff is guilty of laches for not initiating an action against defendants to recover the western portion of
Lot 2239 despite plaintiffs knowledge of defendants acquisition thereof in 1972, as in fact it was only in
1988 when the complaint for quieting of title was filed in court.

Defendants prayed, thus:

WHEREFORE, this Honorable Court, after due notice and hearing on the merits of this case; to issue
order or orders;

1. Finding the defendants as the rightful, lawful, and legal owner of that portion which was sold to them by
Felicidad Teokemian and which was included in the title of plaintiff;

2. To find that the plaintiff did not own the said portion and that they have personal knowledge of the
same when the plaintiff filed and secured the title under the Administrative Proceeding;

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3. Finding that the plaintiff is only holding the title to that portion only in an implied trust in favor of the real
owner;

4. Finding the plaintiff legally obligated to cause the segregation of the portion at their expense and
deliver formally the said portion to the real owners, the defendants.

5. To order the plaintiff to execute, prepare and or make any instrument or document to finally vest in the
Defendants absolute, clear and flawless title or ownership over the portion which the plaintiff holds title in
trust in defendants favor.

6. To Order the Plaintiff to pay actual damages in the sum of P2,000.00 as litigation expense and
Attorneys fees in the sum of P5,000.00 in favor of defendants;

7. To direct the plaintiff to account for the share of the real owner of the portion of land illegally cultivated
and planted by plaintiff to rice in favor of FELICIDAD TEOKEMIAN to be paid thru the Defendants who
are the owners, which consisted in ONE THIRD OF THE RICE HARVEST every year since the year 1950
to 1972 when the portion was sold and cultivated by defendant based on the computation of income by
the plaintiff in Paragraph 16, a paragraph in the Second Cause of Action of the complaint;

and to grant the defendants such other reliefs and remedies proper and equitable in the premises. [3]

On April 27, 1989, the lower court rendered judgment in favor of defendants and against the plaintiff,
ruling that the latter can no longer recover the western portion of Lot 2239 conveyed in 1972 by Felicidad
Teokemian in favor of the late Elano Cabrera and Felicidad Cabrera due to laches. In support of its
findings, the trial court referred to the Courts pronouncements in Lola vs. Court of Appeals,[4] where it was
held that although the defense of prescription is unavailing to the petitioners, because, admittedly, the title
to the subject lot was still registered in the name of the respondent, still the petitioners have acquired title
to it by virtue of the equitable principle of laches due to the respondents failure to assert her claim and
ownership for thirty-two years; and in Republic vs. Court of Appeals[5] that, while it is true that by
themselves tax receipts and declaration of ownership for taxation purposes are not incontrovertible
evidence of ownership, they become strong evidence of ownership acquired by prescription when
accompanied by proof of actual possession of the property; and in Miguel vs. Catalino,[6] that even
granting appellants proposition that no prescription lies against their fathers recorded title, their passivity
and inaction for more than thirty four years justifies the defendant appellee in setting up the equitable
defense of laches in his own behalf.

The respondent Court of Appeals reversed such findings upon appeal.

Even as the appellate court observed that the registration made by the plaintiffs was fraudulent
insofar as it involved the one-third interest of Felicidad Teokemian, which was not included in the sale
executed by them and Albertana and Daniel Teokemian, it nevertheless upheld its effects, on the
justification that the defendants action for reconveyance based on an implied trust had already been
barred by prescription. Furthermore, the action of the plaintiffs is not barred by laches, as was held by the
lower court. Said the appellate court:

We disagree with the lower courts ruling that plaintiff is barred from bringing an action for recovery of
ownership. Parenthetically, while the complaint filed by plaintiff is designated as one for quieting of title,
the allegations therein show that it is actually for recovery of ownership/possession.

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First. The Deed of Absolute Sale dated May 27, 1972 (Exh. 3) executed by Albertana Teokemian in favor
of Elcano Cabrera over the portion of 55,510 square meters of Lot 2238 which allegedly pertained to the
one-third interest of Felicidad Teokemian did not convey any title to Elcano Cabrera, assuming that
Felicidad Teokemian still owned a one-third portion of Lot 2238 which was already registered in plaintiffs
name, considering that Albertana did not have any authority from Felicidad Teokemian to effect such
conveyance. Consequently, defendants Felicidad vda. De Cabrera and Marykane Cabrera had acquired
no title upon which to anchor their claim of ownership over the one-third portion. Such being the case,
plaintiffs cannot be barred by laches from instituting the action to quiet title against defendants

xxx

Second. There was no allegation, much less proof, that Lot 2239 had been partitioned among the co-
owners Daniel, Albertana, and Felicidad, all surnamed Teokemian, before the land was sold to Andres
Orais in 1950 when the same was still unregistered. This being the case, and assuming that Felicidad
Teokemian had retained ownership over an undivided one-third portion of Lot 2239 despite its being titled
in plaintiffs name in 1958, Felicidad Teokemian could only dispose her undivided interest, not a definite
portion described in the Deed of Sale executed on July 27, 1972 (Exh. 3) as eastern part. Worse, the
supposed vendee, Elcano Cabrera, and her successors-in-interest, defendants Felicidad vda. de Cabrera
and Marykane Cabrera, occupied the western portion of Lot 2239, not the eastern portion which was the
subject of the sale. Their occupation of a definite portion of an undivided property, without any color of
title, could not have ripened into ownership on the principle of laches.

Third. As testified to by Jimmy Orais, plaintiffs brother, it was only in 1974 when plaintiff came to know
that her property was occupied by Elcano Cabrera.According to Jimmy, he and his elder brother Dr.
Rodolfo Orais went to the house of Elcano Cabrera three times in 1974 and in 1979 complaining of the
latters occupancy of their sisters property. Jimmy further declared that after Elcano Cabrera was shown
plaintiffs title to the property, Elcano Cabrera proposed a relocation survey of the area to determine
whether the premises occupied by him were included in the plaintiffs title (T.S.N. pp. 39-44, January 3,
1989). It appears, however, that nothing came out of the proposal to conduct a relocation survey. From
the time plaintiff became aware of Cabreras possession of the western portion of Lot 2239, which was in
1974, up to the time she instituted the action for quieting of title in 1988, only fourteen (14) years had
elapsed. This case, therefore, has no congruency with those cases where the Supreme Court ruled that
the registered owner is barred by laches from recovering his property.Thus, in Lola vs. Court of Appeals
(145 SCRA 439), the petitioners acquired title to the land owned by respondent by virtue of the equitable
principles of laches due, according to the Supreme Court, to respondents failure to assert her claims and
ownership for thirty-two (32) years. In Miguel vs. Catalino (26 SCRA 234), the Supreme Court said that
appellants passivity and inaction for more than 34 years (1928-1962) justifies the defendant-appellee in
setting up the equitable defense of laches in his behalf. In Mejia vs. Gampomana (100 Phil 277), it was
held that the original owners right to recover back the possession of the property and title thereto from the
defendant has by the long period of 37 years and by the patentees inaction and neglect been converted
into a stale demand.

Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to
do that which, by the exercise of due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it (Tijam vs. Sibonghanoy, 32 SCRA 29). Since imprescriptibility is one of the basic features of a
Torrens title, it is not an ordinary delay in asserting ones right that will give rise to the application of the
principle of laches, otherwise, registered title can easily be defeated by prescription. This is precisely the

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reason why, in the cases cited, the delay or inaction by the registered owners in asserting their rights was
considered unreasonable and unexplained because it took them from 32 to 37 years to do so. In contrast,
the delay in the case at bar was only fourteen years.

While possession of defendants Felicidad vda. De Cabrera and Marykane Cabrera could not have
ripened into ownership as already discussed, they are possessors in good faith of the portion occupied by
them and, therefore, entitled to the benefits accorded by the Civil Code as such. [7]

Sisters Felicidad vda. de Cabrera and Marykane Cabrera, together with Felicidad Teokemian are
now before the Court as Petitioners in this Petition for Review on Certiorari, seeking relief from the
respondent courts decision, assigning as errors the following:

RESPONDENT COURT OF APPEALS ERRED IN RULING THAT PRIVATE RESPONDENTS

COMPLAINT FILED IN 1988 FOR QUIETING OF TITLE WHICH ACTUALLY IS ONE FOR RECOVERY
OF OWNERSHIP AND POSSESSION AS FOUND BY RESPONDENT COURT IS NOT BARRED BY
LACHES BECAUSE:

1. A PERIOD OF 30 YEARS HAD ELAPSED FROM 1958 WHEN TORRENS TITLE WAS ISSUED TO
PRIVATE RESPONDENT TO 1988 WHEN HER COMPLAINT BELOW WAS FILED DURING WHICH
PERIOD OF TIME THE PROPERTY HAS BEEN IN OPEN, CONTINUOUS AND ADVERSE
POSSESSION OF THE ORIGINAL OWNER, FELICIDAD TEOKEMIAN, FROM 1958, OR EVEN
EARLIER IN 1941 WHEN SHE INHERITED THE PROPERTY, TO 1972 WHEN SHE SOLD IT TO THE
CABRERAS WHO CONTINUED THE PRIOR POSSESSION UNTIL 1988 WHEN PRIVATE
RESPONDENTS COMPLAINT WAS FILED.

2. ASSUMING ARGUENDO RESPONDENT COURTS HOLDING THAT ONLY 14 YEARS HAD ELAPSED
COUNTED FROM 1974 WHEN CABRERAS POSSESSION WAS QUESTIONED BY PRIVATE
RESPONDENTS BROTHERS, STILL THAT PERIOD CONSTITUTES LACHES.

RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT LACHES DOES NOT APPLY
BECAUSE WHAT WAS SOLD TO THE CABRERAS WAS A DEFINITE PORTION OF THE
COMMUNITY PROPERTY BEFORE PARTITION, HENCE, VOID AND THAT ALBERTANA TEOKEMIAN
WHO SIGNED THE DOCUMENT OF SALE IN FAVOR OF THE CABRERAS HAD NO AUTHORITY
FROM HER SISTER-CO-OWNER FELICIDAD TEOKEMIAN TO EXECUTE THE DEED OF
CONVEYANCE.[8]

The bone of the petitioners contention rests on the alleged waiver of the plaintiff to recover any
interest she had in the one-third portion of the property inherited by Daniel, Albertana and Felicidad
Teokemian from their late father, Domingo, due to the long period of time which lapsed from the time the
plaintiffs title was registered until the action for quieting of title was instituted.

We find merit in the petition.

At the outset, it must be observed that the Certificate of Title of the plaintiff, which was derived from
Free Patent No. V-79089, issued in the name of Virgilia Orais, leaves much to be desired in propriety,
considering that the Deed of Sale executed by Daniel and Albertana Teokemian, on one hand and

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Andres Orais on the other, did not bear the signature of Felicidad Teokemian, and therefore, did not cover
the latters share.

It was the respondent appellate court which observed that the registration of the plaintiffs title over
the subject property was fraudulent insofar as it involved the one-third interest of Felicidad Teokemian
who did not sign the Deed of Sale in favor of plaintiffs predecessor-in-interest and, therefore, the latter
held that portion as a trustee of an implied trust for the benefit of Felicidad, pursuant to Art. 1456 of the
Civil Code.[9] Needless to state, these conclusions, being matters of fact, are entitled to our full
affirmation, since they are congruent with the findings of the trial court, thus:

It would seem from the facts of the case that the basis of the right of plaintiff over the land in litigation
specifically Lot No. 2239 now titled in the name of the plaintiff, located at Buayahon, Abejod, Cateel,
Davao Oriental, proceeded from the Deed of Sale executed by Daniel Teokemian and Albertana
Teokemian on January 16, 1950 acknowledged before Judge Proserador Danao as Notary Ex
Oficio. Taking a hard look over the aforesaid deed of sale (Exh. B) the said document apparently included
the third heir of Domingo Teokemian Felicidad Teokemian because her name was typewritten together
with her sister Albertana and brother Daniel all surnamed Teokemian in the said document. Again this
fact will come to mind that the vendee Andres Orais was anticipating at the time Felicidad Teokemian will
also sell her share in this portion of land (Lot No. 2239) which at the time of the sale it was still
unregistered land. The non-signing of Felicidad Teokemian over her typewritten name in this deed of sale
(Exh. B) will attest to the fact that she did not sell her share in the lot in question. After this sale the
vendee Andres Orais through his encargado Melecio Capilitan and later Servillano Abarca immediately
took possession of the two third portion of said parcel of land respecting the third portion owned by
Felicidad Teokemian.[10]

However, the appellate court stated further that nonetheless, the plaintiffs attempt to recover the
property is justified because defendant Felicidad Teokemians own action for reconveyance has already
been barred by prescription,[11] which is the same as stating that the very tardiness of the plaintiffs in
pursuing the present action for reconveyance of the subject property has rendered the defendants
defense nugatory, and has made the fortress of the plaintiffs case impregnable.

This conclusion is incorrect. As can be discerned from the established facts, the Certificates of Title
of the vendees Orais are, to say the least, irregular, and were issued in a calculated move to deprive
Felicidad Teokemian of her dominical rights over the property reserved to her by descent. Plaintiff could
not have registered the part reserved to Felicidad Teokemian, as this was not among those ceded in the
Deed of Sale between Daniel/Albertana Teokemian and Andres Orais. It must be remembered that
registration does not vest title, it is merely evidence of such title over a particular property. (Embrado vs.
Court of Appeals)[12]

The defense of indefeasibility of the Torrens Title does not extend to a transferee who takes the
certificate of title with notice of a flaw in his title. (Anonuevo vs. Court of Appeals)[13] The principle of
indefeasibility of title is unavailing where there was fraud that attended the issuance of the free patents
and titles. (Meneses vs. Court of Appeals)[14]

Be that as it may, that the right of the defendants for reconveyance of the subject property arising
from an implied trust under Article 1456 of the Civil Code is material to the instant case, such remedy has
not yet lapsed, as erroneously submitted by the plaintiffs, and, is thus, a bar to the plaintiffs action. In the
case of Heirs of Jose Olviga vs. Court of Appeals,[15] we observed that an action for reconveyance of a
parcel of land based on implied or constructive trust prescribes in ten years, the point of reference being
the date of registration of the deed or the date of the issuance of the certificate of title over the property,

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but this rule applies only when the plaintiff or the person enforcing the trust is not in possession of the
property, since if a person claiming to be the owner thereof is in actual possession of the property, as the
defendant is in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land
claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him
a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse
claim of a third party and its effect on his own title, which right can be claimed only by one who is in
possession.

As it is, before the period of prescription may start, it must be shown that (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such
positive acts of repudiation have been made known to the cestui que trust; and, (c) the evidence thereon
is clear and positive.[16]

In the case at bar, the defendant Felicidad Teokemian, and thereafter, the Cabreras, were in actual
possession of the property since it was left to Felicidad Teokemian by her father in 1941, which
possession had not been interrupted, despite the sale of the two-third portion thereof to the plaintiff in
1950, and the latters procurement of a Certificate of Title over the subject property in 1957. Until the
institution of the present action in 1988, plaintiffs, likewise, have not displayed any unequivocal act of
repudiation, which could be considered as an assertion of adverse interest from the defendants, which
satisfies the above-quoted requisites. Thus, it cannot be argued that the right of reconveyance on the part
of the defendants, and its use as defense in the present suit, has been lost by prescription.

On the other hand, the action for reconveyance (quieting of title) of the plaintiff was instituted only in
1988, that is, thirty years from the time the plaintiffs husband was able to acquire Certificate of Title
covering the properties inherited by the Teokemians, and apparently including that portion belonging to
Felicidad Teokemian. In the meantime, defendant Felicidad vda. De Cabrera and her late husband have
been actively in possession of the same, tilling it, and constructing an irrigation system thereon. This must
surely constitute such tardiness on the part of the plaintiff constituting the basis for laches.

Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been done earlier; it is negligence
or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it. [17]The defense of laches is an equitable one and
does not concern itself with the character of the defendants title, but only with whether or not by reason of
plaintiffs long inaction or inexcusable neglect, he should be barred from asserting his claim at all, because
to allow him to do so would be inequitable and unjust to defendant. Laches is not concerned merely with
lapse of time, unlike prescription. While the latter deals with the fact of delay, laches deals with the effect
of unreasonable delay.[18]

This Court emphasized in Mejia de Lucas vs. Gampona,[19] the reason upon which the rule is based
is not alone the lapse of time during which the neglect to enforce the right has existed, but the changes of
condition which may have arisen during the period in which there has been neglect. In other words, where
a court finds that the position of the parties has to change, that equitable relief cannot be afforded without
doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it
will not exert its equitable powers in order to save one from the consequences of his own neglect.

In our jurisdiction, it is an enshrined rule that even a registered owner of property may be barred from
recovering possession of property by virtue of laches. Under the Land Registration Act (now the Property
Registration Decree), no title to registered land in derogation to that of the registered owner shall be

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acquired by prescription or adverse possession. The same is not true with regard to Laches.[20] As we
have stated earlier in Mejia de Lucas vs. Gamponia, while the defendant may not be considered as
having acquired title by virtue of his and his predecessors long continued possession (37 years) the
original owners right to recover back the possession of the property and the title thereto from the
defendant has, by the latters long period of possession and by patentees inaction and neglect, been
converted into a stale demand.

The argument that laches does not apply because what was sold to the Cabreras was a definite
portion of the community property, and, therefore, void, is likewise untenable.

Under Article 493 of the Civil Code:

Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto,
and even he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.

In Go Ong vs. Court of Appeals,[21] this Court ruled that the heirs, as co-owners, shall each have the
full ownership of his part and the fruits and benefits pertaining to it. An heir may, therefore, alienate,
assign or mortgage it, and even substitute another person in its enjoyment, except when the personal
rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of the co-
ownership.

Undisputed is the fact that since the sale of the two-third portion of the subject property to the
plaintiff, the latter had allowed Felicidad Teokemian to occupy that one-third portion allotted to her. There
has, therefore, been a partial partition, where the transferees of an undivided portion of the land allowed a
co-owner of the property to occupy a definite portion thereof and has not disturbed the same, for a period
too long to be ignored--the possessor is in a better condition or right (Potior est conditio possidentis).

Clearly, the plaintiff in this instance is barred from asserting her alleged right over the portion subject
matter in the instant case on the ground that their right has been lost by laches. In Bailon-Casilao vs.
Court of Appeals, we ruled that:

As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not consent to the sale
(Punzalan vs. Boon Liat, 44 Phil 320 [1923]). This is because under the aforementioned codal provision,
the sale or other dispostion affects only his undivided share and the transferee gets only what would
correspond to his grantor in the partition of the things owned in common (Ramirez vs. Bautista, 14 Phil
528 [1909]). xxx For Article 494 of the Civil Code explicitly declares: No prescription shall lie in favor of a
co-owner or co-heir so long as he expressly or impliedly recognizes the co-ownership.[22]

IN VIEW WHEREOF, the petition is hereby GRANTED. The decision of the Court of Appeals dated
January 7, 1993 is hereby SET ASIDE. The decision of the trial court dated April 27, 1989 is hereby
REINSTATED in toto.

SO ORDERED.

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Tiongco v. Tiongco, G.R. No. 161360, October 19, 2011

DECISION

VILLARAMA, JR., J.:

Before us on appeal by way of a petition for review on certiorari under Rule 45 is the Court of
Appeals (CA) August 28, 2003 Decision[1] which dismissed petitioner Estrella Tiongco Yareds appeal and
affirmed the Decision[2] of the Regional Trial Court (RTC), Branch 26, of Iloilo City, dismissing petitioners
complaint for annulment of affidavit of adjudication, deeds of sale and Transfer Certificates of Title
(TCTs), reconveyance and damages. Also assailed is the appellate courts November 27,
2003Resolution[3] denying petitioners motion for reconsideration.

The factual antecedents, as culled from the records, follow:

Matilde, Jose, Vicente, and Felipe, all surnamed Tiongco, were born to Atanacio and Maria Luis
Tiongco. Together they were known as the Heirs of Maria Luis de Tiongco.

The present dispute involves three parcels of land namely, Lots 3244, 3246 and 1404, all located
in Iloilo City. Lots 3244 and 1404 used to be covered by Original Certificates of Title (OCTs) Nos. 484 and
1482, respectively, in the names of Matilde (wife of Vicente Rodriguez), Jose (married to Carmen
Sonora), Vicente (married to Ursula Casador), and Felipe (married to Sabina Montelibano), each in
undivided share, while Lot 3246 used to be covered by OCT No. 368 in the name of Heirs of Maria Luis
de Tiongco.[4]

While all of the Heirs of Maria Luis de Tiongco have died, they were survived by their children and
descendants. Among the legitimate children of Jose were petitioner and Carmelo Tiongco, the father of
respondent Jose B. Tiongco.[5]

Sometime in 1965, petitioner built her house on Lot 1404[6] and sustained herself by collecting
rentals from the tenants of Lots 3244 and 3246. In 1968, petitioner, as one of the heirs of Jose, filed an
adverse claim affecting all the rights, interest and participation of her deceased father on the disputed
lots, but the adverse claim was annotated only on OCT No. 484 and OCT No. 1482, respectively covering
Lots 3244 and 1404.[7]

In 1983, respondent Jose prohibited petitioner from collecting rentals from the tenants of Lots
3244 and 3246. In December 1983, respondent Jose filed a suit for recovery of possession with
preliminary injunction against several tenants of Lots 3244 and 3246 wherein he obtained a judgment in
his favor.[8] Respondent Jose also filed a case for unlawful detainer with damages against petitioner as
she was staying on Lot 1404. While the RTC, Branch 33, of Iloilo City ruled in respondent Joses favor, the
CA reversed the RTCs decision and ruled in favor of petitioner. [9] As such, respondent Jose never took
possession of the properties.

In 1988, when petitioner inquired at the Office of the Register of Deeds of Iloilo City, she
discovered that respondent Jose had already executed an Affidavit of Adjudication [10] dated April 17,

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1974, declaring that he is the only surviving heir of the registered owners and adjudicating unto himself
Lots 3244, 3246 and 1404. Consequently, the OCTs of the aforementioned lots were cancelled, and in
place thereof, the Register of Deeds of Iloilo City issued TCT No. T-37195 for Lot 3244, TCT No. T-4665
for Lot 3246, and TCT No. T-37193 for Lot 1404, all in the name of respondent Jose.[11]

Based on the records with the Register of Deeds, it also appears that on May 10, 1974, the same
day when the TCTs covering Lots 3244 and 1404 were issued, respondent Jose sold the said lots to
Catalino Torre. TCT Nos. T-37195 and T-37193 were thus cancelled and TCT Nos. T-37196 and T-37194
were issued in the name of Catalino Torre.[12]

Similarly, the records of the Register of Deeds showed that Lot 3246 was likewise disposed of by
respondent Jose. On March 30, 1979, or barely two days after obtaining TCT No. T-4665, respondent
Jose sold Lot 3246 to respondent Antonio G. Doronila, Jr. who was issued TCT No. T-4666 which
cancelled TCT No. T-4665. Catalino Torre also sold Lots 3244 and 1404 on the same date to Doronila
who was issued the corresponding new TCTs.[13] However, just a few days later, or on April 2, 1979,
Doronila sold Lot 1404 back to respondent Jose. Lots 3244 and 3246 were also sold back to respondent
on January 17, 1980.[14]

On October 2, 1990, petitioner filed a complaint before the court a quo against her nephew
respondent Jose and respondent Antonio G. Doronila, Jr. Petitioner argued that respondent Jose
knowingly and wilfully made untruthful statements in the Affidavit of Adjudication because he knew that
there were still other living heirs entitled to the said properties. [15] Petitioner claimed that the affidavit was
null and void ab initio and as such, it did not transmit or convey any right of the original owners of the
properties. Any transfer whatsoever is perforce likewise null and void. [16] Moreover, the petitioner averred
that since respondent Jose executed said documents through fraud, bad faith, illegal manipulation and
misrepresentation, Lots 3244 and 1404 should be reconveyed to its original registered owners
and Lot 3246 to the heirs of Maria Luis de Tiongco subject to subsequent partition among the
heirs.[17] Petitioner also posited that granting for the sake of argument that the affidavit of adjudication was
simply voidable, respondent Jose became a trustee by constructive trust of the property for the benefit of
the petitioner.[18]

Respondent Jose, for his part, argued that the petitioners father, Jose, was not an heir of Maria
Luis de Tiongco but an heir of Maria Cresencia de Loiz y Gonzalez vda. De Tiongco. Respondent Jose
claimed that he was the only legitimate son and that while it was true that he has two other siblings, he
refused to acknowledge them because they are illegitimate. [19] Respondent Jose denied that the series of
sales of the properties was fraudulent. He claimed that Lot 3244 was bought by the City of Iloilo from its
own auction sale for tax delinquency and was merely resold to him. Respondent Jose averred that he has
been paying real property taxes on the said properties for more than ten (10) years and that petitioner
collected rentals from Lots 3244 and 3246 only because he allowed her. [20]

After trial, the Iloilo City RTC ruled in favor of respondent Jose. The court a quo ruled that
prescription has set in since the complaint was filed only on October 2, 1990 or some sixteen (16) years
after respondent Jose caused to be registered the affidavit of adjudication on May 10, 1974.[21]

Aggrieved, petitioner appealed to the CA[22] which, however, sustained the trial courts ruling. The
CA agreed with the trial court that an action for reconveyance can indeed be barred by prescription.

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According to the CA, when an action for reconveyance is based on fraud, it must be filed within four years
from discovery of the fraud, and such discovery is deemed to have taken place from the issuance of the
original certificate of title. On the other hand, an action for reconveyance based on an implied or
constructive trust prescribes in ten (10) years from the date of issuance of the original certificate of title or
transfer certificate of title. For the rule is that the registration of an instrument in the Office of the Register
of Deeds constitutes constructive notice to the whole world and therefore the discovery of fraud is
deemed to have taken place at the time of registration. [23]

Petitioner filed a motion for reconsideration of the above ruling, but the CA as aforesaid, denied
petitioners motion. Hence, the present petition for review on certiorari.

Petitioner raised the following arguments in the petition, to wit:

A. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE

LOWER COURT THAT THE AFFIDAVIT OF ADJUDICATION EXECUTED BY
RESPONDENT JOSE B. TIONGCO, WHO IS A LAWYER AND IS AWARE OF
ITS NULLITY, IS MERELY VOIDABLE; ON THE CONTRARY, SAID
DOCUMENT IS A COMPLETE NULLITY BECAUSE RESPONDENT JOSE B.
TIONGCO HAS MALICIOUSLY AND IN BAD FAITH ADJUDICATED IN FAVOR
OF HIMSELF THE PROPERTIES IN QUESTION OVER WHICH HE, AS A
LAWYER, KNOWS HE HAS NO RIGHTS WHATSOEVER AND HE ALSO
KNOWS HAS BEEN IN POSSESSION OF THE PETITIONER AND HER
PREDECESSORS-IN-INTEREST UNTIL THE PRESENT.

B. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE

DISMISSAL OF PETITIONERS COMPLAINT BY THE LOWER COURT ON THE
GROUND OF PRESCRIPTION BECAUSE THE RESPONDENT JOSE B.
TIONGCOS AFFIDAVIT OF ADJUDICATION, BEING A TOTAL NULLITY, THE
ACTION TO DECLARE SUCH NULLITY AND OF THOSE SUBSEQUENT
TRANSACTIONS ARISING FROM SAID ADJUDICATION DOES NOT
PRESCRIBE, ESPECIALLY BECAUSE IN THIS CASE THE PETITIONER AND
HER PREDECESSORS-IN-INTEREST HAVE ALWAYS BEEN IN POSSESSION
OF THE LOTS IN QUESTION AND RESPONDENT JOSE B. TIONGCO HAS
NEVER BEEN IN POSSESSION THEREOF.[24]

C. FURTHER, EVEN IF ARGUENDO, THE AFFIDAVIT OF ADJUDICATION IS

VOIDABLE, THE HONORABLE COURT OF APPEALS STILL ERRED IN
AFFIRMING THE DISMISSAL OF THE COMPLAINT BY THE LOWER COURT
ON THE GROUND OF PRESCRIPTION BECAUSE THE RESPONDENT, JOSE
B. TIONGCO, BEING A LAWYER AND BEING AWARE OF PETITIONERS
OWNERSHIP OF THE LOTS IN QUESTION, THE SAID AFFIDAVIT OF
ADJUDICATION MAKES THE RESPONDENT AN IMPLIED TRUSTEE
THEREOF FOR THE PETITIONER AND THE ACTION FOR RECONVEYANCE
BASED ON TRUST DOES NOT PRESCRIBE SO LONG AS THE
BENEFICIARY LIKE THE PETITIONER HAS BEEN IN ACTUAL PHYSICAL
POSSESSION OF THE PROPERTY SUBJECT THEREOF, AS HELD IN THE
CASE OF VDA. DE CABRERA VS. COURT OF APPEALS (267 SCRA 339).[25]

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The only issue in this case is who has a better right over the properties.

The petition is meritorious.

The Court agrees with the CAs disquisition that an action for reconveyance can indeed be barred
by prescription. In a long line of cases decided by this Court, we ruled that an action for reconveyance
based on implied or constructive trust must perforce prescribe in ten (10) years from the issuance of
the Torrens title over the property.[26]

However, there is an exception to this rule. In the case of Heirs of Pomposa Saludares v. Court of
Appeals,[27] the Court reiterating the ruling in Millena v. Court of Appeals,[28] held that there is but one
instance when prescription cannot be invoked in an action for reconveyance, that is, when the plaintiff is
in possession of the land to be reconveyed. In Heirs of Pomposa Saludares,[29] this Court explained that
the Court in a series of cases,[30] has permitted the filing of an action for reconveyance despite the lapse
of more than ten (10) years from the issuance of title to the land and declared that said action, when
based on fraud, is imprescriptible as long as the land has not passed to an innocent buyer for value. But
in all those cases, the common factual backdrop was that the registered owners were never in
possession of the disputed property. The exception was based on the theory that registration proceedings
could not be used as a shield for fraud or for enriching a person at the expense of another.

In Alfredo v. Borras,[31] the Court ruled that prescription does not run against the plaintiff in actual
possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed
or his title is questioned before initiating an action to vindicate his right. His undisturbed possession gives
him the continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of
a third party and its effect on his title. The Court held that where the plaintiff in an action for reconveyance
remains in possession of the subject land, the action for reconveyance becomes in effect an action to
quiet title to property, which is not subject to prescription.

The Court reiterated such rule in the case of Vda. de Cabrera v. Court of Appeals,[32] wherein we
ruled that the imprescriptibility of an action for reconveyance based on implied or constructive trust
applies only when the plaintiff or the person enforcing the trust is not in possession of the property. In
effect, the action for reconveyance is an action to quiet the property title, which does not prescribe.

Similarly, in the case of David v. Malay[33] the Court held that there was no doubt about the fact
that an action for reconveyance based on an implied trust ordinarily prescribes in ten (10) years. This rule
assumes, however, that there is an actual need to initiate that action, for when the right of the true and
real owner is recognized, expressly or implicitly such as when he remains undisturbed in his possession,
the statute of limitation would yet be irrelevant. An action for reconveyance, if nonetheless brought, would
be in the nature of a suit for quieting of title, or its equivalent, an action that is imprescriptible. In that case,
the Court reiterated the ruling in Faja v. Court of Appeals[34] which we quote:

x x x There is settled jurisprudence that one who is in actual possession of a piece of

land claiming to be owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession. No better

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situation can be conceived at the moment for Us to apply this rule on equity than that of
herein petitioners whose mother, Felipa Faja, was in possession of the litigated property
for no less than 30 years and was suddenly confronted with a claim that the land she had
been occupying and cultivating all these years, was titled in the name of a third
person. We hold that in such a situation the right to quiet title to the property, to seek
its reconveyance and annul any certificate of title covering it, accrued only from the time
the one in possession was made aware of a claim adverse to his own, and it is only then
that the statutory period of prescription commences to run against such possessor.

In this case, petitioners possession was disturbed in 1983 when respondent Jose filed a case
for recovery of possession.[35] The RTC of Iloilo City ruled in respondent Joses favor but the CA
on November 28, 1991, during the pendency of the present controversy with the court a quo, ruled in
favor of petitioner. [36] Petitioner never lost possession of the said properties, and as such, she is in a
position to file the complaint with the court a quo to protect her rights and clear whatever doubts has
been cast on her title by the issuance of TCTs in respondent Joses name.

The Court further observes that the circuitous sale transactions of these properties from
respondent Jose to Catalino Torre, then to Antonio Doronila, Jr., and back again to respondent Jose were
quite unusual. However, this successive transfers of title from one hand to another could not cleanse the
illegality of respondent Joses act of adjudicating to himself all of the disputed properties so as to entitle
him to the protection of the law as a buyer in good faith. Respondent Jose himself admitted that there
exists other heirs of the registered owners in the OCTs. Even the RTC found that [t]hese allegations
contained in the Affidavit of Adjudication executed by defendant Jose B. Tiongco are false because
defendant Jose B. Tiongco is not the only surviving heir of Jose Tiongco, Matilde Tiongco, Vicente
Tiongco and Felipe Tiongco as the latters have other children and grandchildren who are also their
surviving heirs.[37]

In the case of Sandoval v. Court of Appeals,[38] the Court defined an innocent purchaser for value
as one who buys property of another, without notice that some other person has a right to, or interest in,
such property and pays a full and fair price for the same, at the time of such purchase, or before he has
notice of the claim or interest of some other persons in the property. He is one who buys the property with
the belief that the person from whom he receives the thing was the owner and could convey title to the
property. A purchaser can not close his eyes to facts which should put a reasonable man on his guard
and still claim that he acted in good faith.

And while it is settled that every person dealing with a property registered under the Torrens title
need not inquire further but only has to rely on the title, this rule has an exception. The exception is when
the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to
make such inquiry or when the purchaser has some knowledge of a defect or the lack of title in his vendor
or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. The presence of anything which excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said
certificate. One who falls within the exception can neither be denominated an innocent purchaser for
value nor a purchaser in good faith and hence does not merit the protection of the law. [39]

In this case, when the subject properties were sold to Catalino Torre and subsequently to
Doronila, respondent Jose was not in possession of the said properties. Such fact should have put the

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vendees on guard and should have inquired on the interest of the respondent Jose regarding the subject
properties.[40] But regardless of such defect on transfer to third persons, the properties again reverted
back to respondent Jose. Respondent Jose cannot claim lack of knowledge of the defects surrounding
the cancellation of the OCTs over the properties and benefit from his fraudulent actions. The subsequent
sale of the properties to Catalino Torre and Doronila will not cure the nullity of the certificates of title
obtained by respondent Jose on the basis of the false and fraudulent Affidavit of Adjudication.

WHEREFORE, the petition for review on certiorari is GRANTED. The August 28, 2003 Decision
and November 27, 2003 Resolution of the Court of Appeals in CA-G.R. CV No. 44794 are
hereby REVERSED and SET ASIDE. The Register of Deeds of Iloilo City is ordered
to RESTORE Original Certificates of Title Nos. 484, 1482, and 368, respectively covering Lots 3244,
1404 and 3246, under the name/s of the registered original owners thereof.

Furthermore, respondent Atty. Jose B. Tiongco is ORDERED to SHOW CAUSE, within ten (10)
days from notice hereof, why he should not be sanctioned as a member of the bar for executing the April
17, 1974 Affidavit of Adjudication and registering the same with the Register of Deeds.

No pronouncement as to costs.

SO ORDERED.

Certificate of Title not Subject to Collateral Attack (Section 48)

Taparuc v. Vda. de Mende, G.R. No. 152007, 512 SCRA 97, January 22, 2007

DECISION

GARCIA, J.:

Under consideration is this petition for review under Rule 45 of the Rules of Court to nullify and set aside
the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 64548, to wit:

1. Decision[1] dated September 21, 2001, affirming an earlier decision of the

Regional Trial Court (RTC) of Tagbilaran City, Branch 47, in an action
for Declaration of Nullity of Deed of Sale, Cancellation of Transfer Certificate of
Title (TCT) No. (8585) T-4767 and all Subsequent Documents and
Damages, thereat commenced by the herein petitioners against the respondents;
and

2. Resolution[2] dated January 23, 2002, denying the petitioners motion for
reconsideration.

The petition embodies an alternative prayer for this Court to remand the case to the trial court for the
presentation of an expert witness.

The facts:

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On September 19, 1996, in the RTC of Tagbilaran City, a Complaint for Declaration of Nullity of Deed
of Sale, Cancellation of TCT No. (8585) T-4767 and all Subsequent Documents and Damages [3] was filed
by the petitioners against respondents Carmelita Loquellano Vda. de Mende, the Heirs of Evans B.
Mende, and the Register of Deeds of the City of Tagbilaran. Thereat docketed as Civil Case No. 5970
and raffled to Branch 47 of the court, the Complaint alleges that petitioners Procopio Tapuroc and all the
successors-in-interest of deceased co-owner Antonia Ebe are the co-owners, co-heirs and/or
descendants of the original owners of a parcel of land with an area of 5,795 square meters, more or less,
situated in the Barrio (now District) of Booy, Tagbilaran, Bohol and previously covered by TCT No. 3444;
that sometime in 1992, when the petitioners decided to partition the subject property, they discovered
from the Office of the City Assessor that the title covering the land was already in the name of a certain
Evans Mende by virtue of a Deed of Sale purportedly executed in favor of the latter by their
predecessors-in-interest on December 30, 1967; that said Deed of Sale is a forged document because
the alleged vendors therein, who were Procopio Tapuroc and the predecessors-in-interest of the other
petitioners, did not sign the conveying deed nor receive any consideration therefor; and that one of the
alleged vendors, Antonia Ebe, had already passed away in 1960, or long before the purported Deed of
Sale was said to have been executed in 1967. Petitioners, as plaintiffs, thus pray for the nullification of the
same Deed of Sale, the cancellation of the title issued pursuant thereto in the name of Evans Mende and
the restoration of the previous title in their names, plus damages.
In their Answer,[4] the respondent Mendes, as defendants, denied the material allegations of the
Complaint and averred that the late Evans Mende, husband of respondent Carmelita Loquellano Vda. de
Mende and father of the herein co-respondents, bought the subject parcel of land from its previous
owners on December 12, 1967 as evidenced by a Deed of Sale duly notarized by Atty. Rodolfo Yap. They
further assert that they had been in open, continuous, and peaceful possession of the land in
question from the time of said sale, and had been religiously paying the realty taxes due thereon. By way
of affirmative defense, the respondents assert that petitioners cause of action, if any, had already
prescribed in view of the unreasonable delay in filing the suit in court, let alone the fact that their
(respondents) title has become indefeasible.

On June 7, 1999, after due proceedings, the trial court came out with its decision [5] finding that the
evidence adduced by the plaintiffs (now petitioners) was insufficient to establish their claim that the
questioned Deed of Sale was a forgery. The court explained that despite the opportunity given them, the
plaintiffs failed to present a handwriting expert to determine whether the said Deed of Sale was indeed a
forged instrument, adding that laches had already set in because of plaintiffs inaction and neglect in
questioning the supposed forged character of the document after the lapse of more than twenty-nine (29)
years from the time of its execution. Accordingly, the trial court rendered judgment dismissing the
Complaint, thus:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered

DISMISSING the complaint for lack of merit. No compensation for damages, moral,
exemplary and litigation expenses is awarded for failure of plaintiffs (sic) to prove by
preponderance of evidence the existence of malice or bad faith in filing the instant case.

SO ORDERED.

From the adverse decision of the trial court, the petitioners went on appeal to the CA in CA-G.R. CV No.
64548, faulting the court of origin in ruling that they failed to present convincing evidence to prove the fact

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of forgery in the execution of the assailed Deed of Sale. They likewise faulted the lower court in denying
their motion to have the original copy of the Deed of Sale in dispute and their own Special Power of
Attorney containing the genuine signatures of their predecessors-in-interest, be examined by a
handwriting expert.

As stated at the outset hereof, the appellate court, in its Decision [6] of September 21, 2001, dismissed the
petitioners appeal and affirmed that of the trial court. Their motion for reconsideration having been denied
by the CA in its Resolution[7] of January 23, 2002, the petitioners are now with this Court via the instant
recourse on their main submission that -

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN

IT DISMISSED THE APPEAL OF THE PETITIONERS DESPITE SUFFICIENCY OF
SUPPORTING EVIDENCE TO WARRANT A FAVORABLE JUDGMENT ON THE PART
OF THE PETITIONERS,

and presenting for our resolution the following issues:

WHETHER OR NOT THE DEED OF SALE ALLEGEDLY EXECUTED

ON DECEMBER 30, 1967 BETWEEN THE PETITIONERS
PREDECESSORS-IN-INTEREST AND THE RESPONDENTS IS VALID.

II

WHETHER OR NOT THE COURT OF APPEALS HAS CONTRADICTED

ITSELF AND ARRIVED AT A CONCLUSION CONTRARY TO THE
RECORDS, LAW AND THE APPLICABLE JURISPRUDENCE.

The recourse must fail.

As it is, the petitioners call for a review of the facts of the case. This is evident from the pleadings they
filed with this Court. In their main petition[8] and Memorandum,[9] the petitioners emphatically state:

The issue in the case at bar boils down to whether or not the signatures of the
petitioners predecessors-in-interest and Procopio Tapuroc (the only surviving vendor to
the alleged deed of sale) were forged; and if they were, is the declaration of nullity of the
said deed of sale dated December 13, 1967 is proper (sic).

Clearly, the foregoing statement calls for a determination of the truth or falsehood of an alleged fact, a
matter not for this Court to resolve. Well-settled is the rule that factual questions may not be raised in a
petition for review on certiorari. Section 1 of Rule 45 of the Revised Rules of Court is explicit. It reads:

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan,

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the Regional Trial Court or other courts whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth. (Emphasis supplied)

Evident it is from the above that the function of the Court in petitions for review on certiorari is
limited to reviewing errors of law that may have been committed by the lower courts. And, as a matter of
sound practice and procedure, the Court defers and accords finality to the factual findings of trial courts,
more so when, as here, such findings are undisturbed by the appellate court. This factual determination,
as a matter of long and sound appellate practice, deserves great weight and shall not be disturbed on
appeal, save only for the most compelling reasons, [10] such as when that determination is clearly without
evidentiary support or when grave abuse of discretion has been committed. [11]This is as it should be since
the Court, in petitions for review of CA decisions under Rule 45 of the Rules of Court, usually limits its
inquiry only to questions of law. Stated otherwise, it is not the function of the Court to analyze and weigh
all over again the evidence or premises supportive of the factual holdings of lower courts. [12] The Court
refrains from further scrutiny of factual findings of trial courts, more so when those findings are affirmed by
the CA, as here. To do otherwise would defeat the very essence of Rule 45 and would convert the Court
into a trier of facts, which it is not meant to be.[13]
What is more, it appears undisputed that the assailed Deed of Sale is a public document, having been
duly notarized by a certain Atty. Rodolfo Yap who, unfortunately, had already passed away. Being a
notarial instrument, the deed in question is a public document and as such enjoys the presumption of
regularity in its execution. To overthrow that presumption, sufficient, clear and convincing evidence is
required, otherwise the document should be upheld.[14]

Petitioners maintain, however, that by merely examining the signatures in the questioned Deed of Sale
and the genuine signatures of their predecessors-in-interest in their Special Power of Attorney, the glaring
dissimilarities between the two sets of signatures are immediately evident to support their claim of forgery.

We are not convinced.

As a rule, forgery cannot be presumed. It must be proved by clear, positive and convincing
evidence. Mere allegation of forgery is not evidence and the burden of proof lies on the party alleging
it.[15] Here, the petitioners failed to discharge their burden.

As it were, the petitioners merely alleged that they filed two motions before the trial court to have
the original copy of the documents in the Office of the Register of Deeds of Tagbilaran City be examined
by handwriting experts but their motions were ignored by the trial court. They then harp on the excuse
that they could not be expected to prove forgery if the trial court denied them the opportunity to do so.

We are not persuaded.

The trial court correctly ruled that the parties themselves dictate the course and flow of the presentation of
evidence, as well as the witnesses for each side. Considering that the case before it is civil, not criminal,
the lower court certainly cannot, on its own, issue an order requiring a handwriting expert to appear
before it and compare the documents presented by the parties. It behooves upon the parties themselves
to call forth their own set of witnesses and present their own evidence to bolster their respective claims. If
the petitioners failed to present an expert witness, only themselves ought to be blamed. For, as the trial
court itself pointed out in its decision:
x x x. Plaintiffs, despite the opportunity given them by this Court, failed to present
a handwriting expert to determine whether there was indeed forgery in the execution of
the subject Deed of Sale. In the absence of the testimony of the handwriting expert, the

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allegations of forgery by the plaintiffs is merely self-serving. Unfortunately, this Court is

not in the position to assess or evaluate the differences and similarities in the questioned
signatures, much less, categorically state whether or not forgery exists. Neither could this
court rely on the observation of the plaintiffs as to the alleged glaring differences and
dissimilarities of the questioned signatures. (Underscoring ours)

Moreover, the technical procedure utilized by handwriting experts, while usually helpful in the examination
of forged documents, is not mandatory or indispensable to the examination or comparison of
handwritings.[16]

In Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian Church in the
USA,[17] the Court identified and explained the factors involved in the examination and comparison of
handwritings:

xxx [T]he authenticity of a questioned signature cannot be determined solely

upon its general characteristics, similarities or dissimilarities with the genuine
signature. Dissimilarities as regards spontaneity, rhythm, pressure of the pen, loops in
the strokes, signs of stops, shades, etc., that may be found between the questioned
signatures and the genuine one are not decisive on the question of the formers
authenticity. The result of examinations of questioned handwriting, even with the benefit
of aid of experts and scientific instruments, is, at best, inconclusive. There are other
factors that must be taken into consideration. The position of the writer, the condition of
the surface on which the paper where the questioned signature is written is placed, his
state of mind, feelings and nerves, and the kind of pen and/or paper used, play an
important role on the general appearance of the signature. Unless, therefore, there is, in
a given case, absolute absence, or manifest dearth, of direct or circumstantial competent
evidence on the character of the questioned handwriting, much weight should not be
given to characteristic similarities, or dissimilarities, between that questioned handwriting
and an authentic one.

And to determine forgery, the Court in Cesar v. Sandiganbayan[18] (quoting Osborn, The Problem
of Proof) wrote:

The process of identification, therefore, must include the determination of the

extent, kind, and significance of this resemblance as well as of the variation. It then
becomes necessary to determine whether the variation is due to the operation of a
different personality, or is only the expected and inevitable variation found in the genuine
writing of the same writer. It is also necessary to decide whether the resemblance is the
result of a more or less skillful imitation, or is the habitual and characteristic resemblance
which naturally appears in a genuine handwriting.When these two questions are correctly
answered the whole problem of identification is solved.

In the present case, all that the petitioners had to offer by way of evidence on the issue of forgery was
their bare denial that their predecessors-in-interest signed the subject Deed of Sale. Such denial will not
suffice to overcome the presumption of regularity of notarized documents, to overthrow which,
the countervailing evidence must be clear, convincing and more than merely preponderant. [19]

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Moreover, and as aptly pointed out by the lower court in its decision of June 7, 1999:

However, even if it were true that the signature of Antonia Ebe is forged, it cannot
brush aside the fact that all the heirs of Antonia Ebe, namely: Celedonia Putong, Eufemio
Putong, Gregorio Putong and Mariano Putong all signed in the Deed of Absolute Sale. As
earlier discussed their signatures cannot be said to have been forged as evidence
presented to prove the same is found to be insufficient. Henceforth, all the rightful heirs
who could question the subject sale are themselves signatories of the supposed
questionable transaction.

Meanwhile, granting that Procopio Tapurocs signature found on Exh. C is indeed

a forgery, he testified in open court that he discovered the sale and the fact of Mendes
possession of the subject land in 1967 yet and did not do anything about it.

At the other end of the spectrum, the respondents presented sufficient proof of their claim of ownership
over the property in dispute. The respondent Mendes maintain that they had been in continuous, peaceful
and open possession of the property since 1967, the year of the alleged sale, or for more than thirty (30)
years now. No less than the petitioners themselves acknowledged this in their pleadings[20] before this
Court. And beginning the year 1968, the respondents have been religiously paying the realty taxes due
on the same property. Likewise, when TCT No. 3444 was lost, respondent Carmelita Loquellano Vda. de
Mende filed a petition for judicial reconstitution to secure a second owners copy of the lost title. Said
petition went through the proper procedure and thereafter Carmelita was issued a second owners copy of
TCT No. 3444 which was later changed to TCT No. (8585) T-4767.

All told, we find that the petitioners, who initiated in the court of origin the basic complaint in this case,
have not sufficiently met the burden of proof to sustain their cause. Additionally, we agree with the CA in
ruling that laches had barred the petitioners:

xxx The records show that they [petitioners] did not institute any action against the order
of the then Court of First Instance, 14th Judiciary District. Their inaction and failure to
assert any right, if any, over the disputed lot, bars them from recovering the same as said
failure clearly asserts to laches.

Not to be overlooked is the fact that the petitioners filed their complaint of declaration of nullity only after
twenty-nine (29) years from the execution of the alleged forged deed of sale. In the meanwhile, title to the
property had already been in the name of respondent Mendes since 1967. The Mendes had been in
open, continuous and peaceful possession of the subject land, and had been religiously paying the realty
taxes due thereon. These are hard facts that ought not to be disregarded. The Court, in a long line of
cases,[21] has uniformly held in favor of the registered owner who had been in possession of a disputed
property for a considerable period of time. With the Mendes possession in this case having been in the
concept of an owner and the land itself registered in their names for more than thirty (30) years now, their
title thereto had become indefeasible and their possession could no longer be disturbed. The petitioners
failure to take the necessary steps to assert their alleged right for at least twenty-nine (29) years from
date of registration of title is fatal to their cause of action on the ground of laches.

As a final note, we emphasize that a Torrens title cannot be collaterally attacked. The question on the
validity of a Torrens title, whether fraudulently issued or not, can be raised only in an action expressly

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instituted for that purpose. The title represented by the certificate cannot be changed, altered, modified,
enlarged, diminished, or cancelled in a collateral proceeding. The action for the declaration of nullity of
deed of sale commenced by the petitioners in the RTC of Tagbilaran City is not the direct proceeding
required by law to attack a Torrens certificate of title.

WHEREFORE, the instant petition is DENIED and the challenged decision of the CA is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Rodriguez v. Rodriguez, G.R. No. 175720, 532 SCRA 642, September 11, 2007

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the Decision[1] of the Court of Appeals in CA-G.R. SP No.
91442 dated June 27, 2006, which set aside the Decision of the Regional Trial Court (RTC) of Makati
City, Branch 134, in Civil Case No. 03-517, and reinstated the Decision of the Metropolitan Trial Court
(MTC) of Makati City, Branch 63, in Civil Case No. 75717, dismissing the complaint for ejectment; as well
as the Resolution denying the motion for reconsideration.

Juanito Rodriguez owned a five-door apartment located at San Jose Street, Guadalupe
Nuevo, Makati City, and covered by TCT No. 144865.[2] On October 27, 1983, Juanito executed a Huling
Habilin at Testamento giving petitioner Cresenciana Tubo Rodriguez, his live-in partner, apartments D
and E, and his children Benjamin Rodriguez (the deceased husband of respondent Evangeline
Rodriguez), apartment A, respondent Buenaventura Rodriguez, apartment B, and respondent Belen
Rodriguez, apartment C.[3]

However, on June 14, 1984, Juanito executed a Deed of Absolute Sale over the property in favor
of petitioner.[4] Thus, TCT No. 144865 was cancelled and a new TCT No. 150431 was issued in the name
of the petitioner.[5]

The case arose when petitioner filed on September 20, 2001 a complaint for unlawful detainer
against the respondents, alleging that she is the lawful and registered owner of the property; and that in
1984, she allowed respondents Evangeline, Buenaventura and Belen, out of kindness and tolerance, to
personally occupy units A, B and D, respectively. However, without her knowledge and consent,
respondents separately leased the units to Montano Magpantay, Mel Navarro and Socorro Escota, who
despite repeated demands, failed and refused to vacate the premises and to pay the rentals thereof. [6]

In their Answer, respondents claimed ownership over the subject property by succession. They alleged
that while petitioner is the registered owner of the property, however, she is not the lawful owner thereof
because the June 14, 1984 Deed of Absolute Sale was simulated and void. As in Civil Case No. 01-1641
now pending before the RTC of Makati City, Branch 141, which they filed to assail the validity of the said
sale, respondents maintain that petitioner exerted undue influence over their father, who at that time was
seriously ill, to agree to the sale of the property for only P20,000.00 after knowing that only two

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apartments were given to her in the Huling Habilin at Testamento. Further, she had no cause of action
against them for being a party to the August 23, 1990 Partition Agreement wherein they recognized each
other as co-owners and partitioned the property in accordance with the provision of the last will and
testament.[7]

On February 26, 2002, the MTC rendered a judgment in favor of the respondents and held that the deed
of sale was simulated otherwise petitioner would not have entered into the Partition Agreement, which
legally conferred upon each heir exclusive ownership over their respective shares, thus:

WHEREFORE, the Complaint is DISMISSED. Plaintiff is ordered to pay attorneys

fees of P10,000.00 and the costs of suit in favor of defendants.

SO ORDERED.[8]

On appeal, the RTC reversed the decision of the MTC. It held that petitioners certificate of title is
a conclusive evidence of ownership of the land described therein; and that unless and until said title has
been annulled by a court of competent jurisdiction, such title is existing and valid. This is true also with
respect to the deed of sale. The present action, which involves only the issue of physical or material
possession, is not the proper action to challenge it. Further, the MTC erred when it relied heavily on
the Huling Habilin at Testamento, which was not probated hence has no effect and no right can be
claimed therein. The Partition Agreement which was allegedly entered into pursuant to the Huling Habilin
at Testamento should not also be considered. Thus:

WHEREFORE, premises considered, the decision rendered by the Metropolitan Trial

Court, Branch 63, Makati City, is hereby ordered REVERSED AND SET
ASIDE. Consequently, judgment is hereby rendered ordering the defendants and all
persons claiming rights under them to vacate the premises and surrender the possession
thereof to the plaintiff. Defendants are likewise ordered to pay jointly and severally the
plaintiff an amount of P5,000.00 a month per unit beginning 13 August 2001 until they
finally vacate the premises and the costs of this suit.

SO ORDERED.[9]

Aggrieved, respondents filed a petition for review before the Court of Appeals which reversed and
set aside the decision of the RTC and reinstated the decision of the MTC. It held that the MTC correctly
received evidence on ownership since the question of possession could not be resolved without deciding
the issue of ownership. Further, the Huling Habilin at Testamento transmitted ownership of the specific
apartments not only to the respondents but also to the petitioner; and pursuant thereto, the parties
executed the Partition Agreement in accordance with the wishes of the testator, thus:

WHEREFORE, this Court resolves to REVERSE and SET ASIDE the Decision of
the Regional Trial Court. The decision dated February 26, 2002 of the Metropolitan Trial
Court, Branch 63, Makati City in Civil Case No. 75717 dismissing the complaint for
ejectment is hereby REINSTATED.

SO ORDERED.[10]

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The motion for reconsideration was denied hence, petitioner filed the present petition for review raising
the following errors:

I.

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW AND

GRAVE ABUSE OF DISCRETION IN REVERSING AND SETTING ASIDE THE
DECISION OF THE REGIONAL TRIAL COURT AND REINSTATING THE DECISION
OF THE METROPOLITAN TRIAL COURT DISMISSING PETITIONERS COMPLAINT
FOR UNLAWFUL DETAINER.

II.

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW AND

GRAVE ABUSE OF DISCRETION IN DECLARING THAT THE PROPERTY, A PARCEL
OF LAND UPON WHICH A FIVE-UNIT APARTMENT STANDS, BECAME THE
SUBJECT OF JUANITO RODRIGUEZS HULING HABILIN AT
TESTAMENTO WHEREIN THE PROPERTY WAS DISTRIBUTED TO HIS HEIRS
(HEREIN RESPONDENTS) INCLUDING THE RESPONDENT (PETITIONER
HEREIN).[11]

Petitioner alleges that as the registered owner of the subject property, she enjoys the right of
possession thereof and that question of ownership cannot be raised in an ejectment case unless it is
intertwined with the issue of possession. While the court may look into the evidence of title or ownership
and possession de jure to determine the nature of possession, it cannot resolve the issue of ownership
because the resolution of said issue would effect an adjudication on ownership which is not proper in the
summary action for unlawful detainer. Petitioner insists that the Court of Appeals erred in ruling that
the Huling Habilin at Testamento transmitted ownership of the specific apartments disregarding the fact
that the same is not probated yet and that the testator changed or revoked his will by selling the property
to petitioner prior to his death.

Contrarily, respondents pray that the instant petition for review be dismissed since the resolution of the
question of ownership by the MTC and the Court of Appeals was provisional only to resolve the issue of
possession. Petitioner can always avail of legal remedies to have the issue of ownership passed upon by
the proper court. Aware of the provisional nature of the resolution on ownership in ejectment cases,
respondents filed Civil Case No. 01-1641 to assail the validity of the deed of sale of the property and the
registration thereof in petitioners name.

The petition has merit.

An action for unlawful detainer exists when a person unlawfully withholds possession of any land or
building against or from a lessor, vendor, vendee or other persons, after the expiration or termination of
the right to hold possession, by virtue of any contract, express or implied. [12] The sole issue to be resolved
is the question as to who is entitled to the physical or material possession of the premises or
possession de facto.[13] Being a summary proceeding intended to provide an expeditious means of
protecting actual possession or right to possession of property, the question of title is not involved [14] and
should be raised by the affected party in an appropriate action in the proper court.[15]

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However, when the issue of ownership is raised the court is not ousted of its jurisdiction. Section
16 of Rule 70 of the Rules of Court provides:

SEC 16. Resolving defense of ownership. When the defendant raises the
defense of ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.

Thus, all that the trial court can do is to make an initial determination of who is the owner of the property
so that it can resolve who is entitled to its possession absent other evidence to resolve ownership. [16] But
this adjudication is only provisional and does not bar or prejudice an action between the same parties
involving title to the property.[17]

In the case at bar, petitioners cause of action for unlawful detainer was based on her alleged
ownership of land covered by TCT No. 150431 and that she merely tolerated respondents stay
thereat. However, when respondents leased the apartments to other persons without her consent, their
possession as well as those persons claiming right under them became unlawful upon their refusal to
vacate the premises and to pay the rent. On the other hand, respondents assailed petitioners title by
claiming that the deed of sale upon which it was based was simulated and void. They insisted that they
were co-owners thus, they have the right to possess the said property. To prove their claim, they
presented the Huling Habilin at Testamento of Juanito Rodriguez and the Partition Agreement.

The lower courts considered the following documentary evidence in arriving at their respective
decisions, albeit the RTC decision contradicts that of the MTC and Court of Appeals: 1) Huling Habilin at
Testamento executed by Juanito Rodriguez on October 27, 1983; 2) Deed of Sale of the property
executed by Juanito Rodriguez and the petitioner on June 14, 1984; 3) TCT No. 150431 in the name of
the petitioner; and 4) the August 23, 1990 Partition Agreement executed by both the respondents and the
petitioner.

Based on the foregoing documentary evidence, we find that there is preponderance of evidence
in favor of the petitioners claim. Respondents failed to prove their right of possession, as the Huling
Habilin at Testamento and the Partition Agreement have no legal effect since the will has not been
probated. Before any will can have force or validity it must be probated. This cannot be dispensed with
and is a matter of public policy.[18] Article 838 of the Civil Code mandates that [n]o will shall pass either
real or personal property unless it is proved and allowed in accordance with the Rules of Court. As the will
was not probated, the Partition Agreement which was executed pursuant thereto can not be given
effect. Thus, the fact that petitioner was a party to said agreement becomes immaterial in the
determination of the issue of possession.

Moreover, at the time the deed of sale was executed in favor of the petitioner, Juanito Rodriguez
remained the owner thereof since ownership would only pass to his heirs at the time of his death. Thus,
as owner of the property, he had the absolute right to dispose of it during his lifetime. Now, whether or not
the disposition was valid is an issue that can be resolved only in Civil Case No. 01-1641, an action
instituted by the respondents for that purpose.

We are, thus, left with the deed of sale and the certificate of title over the property to consider.

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We agree with the RTC that a certificate of title is a conclusive evidence of ownership of the land
described therein; the validity of which shall not be subject to a collateral attack, especially in an
ejectment case which is summary in nature.

In Ross Rica Sales Center, Inc. v. Ong,[19] the Court held that:

The long settled rule is that the issue of ownership cannot be subject of a
collateral attack.

In Apostol v. Court of Appeals, this Court had the occasion to clarify this:

. . . Under Section 48 of Presidential Decree No. 1529, a

certificate of title shall not be subject to collateral attack. It cannot be
altered, modified or cancelled, except in a direct proceeding for that
purpose in accordance with law. The issue of the validity of the title of the
respondents can only be assailed in an action expressly instituted for
that purpose. Whether or not the petitioners have the right to claim
ownership over the property is beyond the power of the court a quo to
determine in an action for unlawful detainer.

Further, in Co v. Militar,[20] it was held that:

[T]he Torrens System was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized.

It is settled that a Torrens Certificate of title is indefeasible and binding upon the whole
world unless and until it has been nullified by a court of competent jurisdiction. Under
existing statutory and decisional law, the power to pass upon the validity of such
certificate of title at the first instance properly belongs to the Regional Trial Courts in a
direct proceeding for cancellation of title.

As the registered owner, petitioner had a right to the possession of the property, which is
one of the attributes of ownership. x x x

We emphasize, however, that our ruling on the issue of ownership is only provisional to determine who
between the parties has the better right of possession. It is, therefore, not conclusive as to the issue of
ownership, which is the subject matter of Civil Case No. 01-1641. Our ruling that petitioner has a better
right of possession was arrived at on the basis of evidence without prejudice to the eventual outcome of
the annulment case, where the issue as to who has title to the property in question is fully threshed out.
As the law now stands, in an ejectment suit, the question of ownership may be provisionally ruled upon
for the sole purpose of determining who is entitled to possession de facto.

WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CA-G.R. SP No. 91442
dated June 27, 2006 is REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Makati City, Branch 134, in Civil Case No. 03-517, reversing the Decision of
the Metropolitan Trial Court (MTC) of Makati City, Branch 63, in Civil Case No. 75717, is REINSTATED.

SO ORDERED.

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 Page 84 of 540

Corpuz v. Agustin, G.R. No. 183822, January 18, 2010

DECISION

SERENO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision [1] dated 08
January 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 90645, which affirmed the Decision of the
Regional Trial Court (RTC) of Laoag City and its Resolution [2] dated 15 July 2008 denying the Motion for
Reconsideration. The RTC, in the exercise of its appellate jurisdiction, affirmed the Decision of the
Municipal Trial Court (MTC) of Laoag City, which had dismissed the unlawful detainer case filed by herein
petitioner.

The Factual Antecedents

The Court adopts the findings of fact of the CA as follows:
Ruben C. Corpuz (Ruben) filed a complaint for ejectment against Spouses Hilarion
and Justa Agustin on the allegation that he is the registered owner of two parcels of
land located in Santa Joaquina, Laoag City covered by TCT No. 12980 issued on
October 29, 1976 by the Laoag City Register of Deeds and with technical descriptions
as follows:

1) A parcel of land (Lot No. 20 of the Cadastral Survey of Laoag), with

improvements thereon, situated in the barrio of Santa
Joaquina, Municipality of Laoag. Bounded x x x containing an area of
five thousand seven hundred and fifty nine (5,759) square meters more
or less x x x.

2) A parcel of land (Lot No. 11711 of the Cadastral Survey of Laoag), with
the improvements thereon, situated in the barrio of Santa
Joaquina, Municipality of Laoag. Bounded x x x, containing an area of
twenty thousand seven hundred and forty five (20,745) square meters,
more or less x x x.

Aforesaid parcels of land were formerly owned by Elias Duldulao in whose name
Original Certificate of Title No. O-1717 was issued. Duldulao sold said properties on
August 27, 1951 to Francisco D. Corpuz, father of Ruben C. Corpuz. The elder
Corpuz allowed spouses Agustin to occupy subject properties, the latter being
relatives.

Despite demand to vacate, the Agustins refused to leave the premises.

Ruben alleged further that he has the better right to possess subject property having
acquired the same from his father, Francisco, who executed a Deed of Quitclaim in
his favor on March 15, 1971.

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Spouses Agustin, in their Answer, interposed the defense that on June 5, 1971
Francisco Corpuz, Ruben's father, disposed of subject property by executing a Deed
of Absolute Sale in their favor for a consideration of Eleven Thousand One Hundred
Fifty Pesos (P11,150.00).

The Municipal Trial Court found for the spouses Agustin and dismissed the complaint.

In sum, considering the evidence of the defendants which shows that

they entered into and occupied Lot No. 20 and the 9,657 sq. m. portion
of Lot No. 11711 as buyers or owners, disproving the allegation of the
plaintiff that defendants were merely allowed by Francisco Corpuz to
occupy the subject properties, being his relatives, and considering further
the length of time that the defendants have been in possession, as
owners, of Lot No. 20 and the 9,657 sq. m. portion of Lot No. 11711, and
have been continuously exercising their rights of ownership thereon, this
court is of the view and holds, in so far as this case is concerned, that
the defendants are the ones entitled to the possession of Lot No. 20 and
the 9,657 sq. m. portion of Lot No. 11711.

WHEREFORE, premises considered, this case, is hereby

dismissed.

SO ORDERED.

On appeal, Branch XVI, Regional Trial Court of Laoag City affirmed said dismissal,
the dispositive portion of said decision states:

WHEREFORE, premises considered, the Appeal is hereby DISMISSED

for lack of merit and the JUDGMENT of the Municipal Trial Court in
Cities, Branch 01, Laoag City is hereby AFFIRMED, with costs against
the plaintiff-appellant.

SO ORDERED.[3]

Petitioner assailed the Decision of the RTC, affirming the earlier dismissal of the case by the MTC, by
instituting an appeal with the CA. On 08 January 2008, the appellate court through its Fourteenth Division
dismissed his appeal.[4] It noted that his father engaged in a double sale when he conveyed the disputed
properties to petitioner and respondents. The Quitclaim executed by the elder Corpuz in favor of
petitioner was dated 15 March 1971, while the Deed of Sale with respondents was later, on 15 June
1971; both documents were notarized shortly after their execution. [5] The Quitclaim, which was
subsequently inscribed at the back of Original Certificate of Title (OCT) No. O-1717 on 29 October
1976,[6] resulted in the issuance of Transfer Certificate of Title (TCT) No. T-12980 in the name of
petitioner. The Deed of Sale executed with respondents was, however, not annotated at the back of OCT
No. O-1717 and remained unregistered.[7]

Based on the above findings, the CA ruled that petitioner had knowledge of the sale of the
disputed real property executed between Francisco Corpuz, petitioner's father, and respondents. Due to
this conveyance by the elder Corpuz to respondents, the latter's possession thereof was in the nature of

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ownership. Thus, in the context of an unlawful detainer case instituted by petitioner against respondents,
the appellate court concluded that respondents possession of the property was not by mere tolerance of
its former owner petitioner's father but was in the exercise of ownership.[8]

The CA noted that petitioner had knowledge of his fathers sale of the properties to respondents as early
as 1973. However, despite knowledge of the sale, petitioner failed to initiate any action to annul it and
oust respondents from the subject properties.[9] The appellate court rejected his contention that, as
registered owner of the disputed properties, he had a better right to possession thereof, compared to the
unregistered Deed of Sale relied upon by respondents in their defense of the same properties. The CA
ruled that the inaction on his part despite knowledge of the sale in 1973 was equivalent to registration of
respondents unregistered deed.[10] In dismissing his appeal, the CA concluded that respondents
possession was not ... anchored on mere tolerance nor on any of the grounds for forcible entry or
unlawful detainer; hence the complaint for ejectment must fail. [11]The dispositive portion of the assailed
Decision reads:

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. The
decision of Branch XVI, Regional Trial Court of Laoag City in Civil Case No. 13293-16 is
hereby AFFIRMED.

SO ORDERED.[12]

The Issues
Petitioner assigns the following errors in this Petition for Review on Certiorari:

I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

FAILING TO CONSIDER THE LEGAL OWNERSHIP OF PETITIONER ON THE
DISPUTED PROPERTY TO CLAIM BETTER RIGHT TO POSSESSION.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN THE

APPRECIATION OF THE ALLEGED SALE IN FAVOR OF RESPONDENTS TO
RULE THAT THEY HAVE BETTER RIGHT TO POSSESSION.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING

TO CONSIDER THE CASE OF JACINTO CO VS. MILITAR, ET AL. (421 SCRA 455)
WHICH IS SIMILAR TO THE INSTANT CASE.

IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DENYING

THE PETITION FOR REVIEW RAISED BEFORE IT.[13]

Petitioner presents to this Court for resolution the core issue of his Petition: who between the parties has
the right to possession of the disputed properties -- petitioner, who is the registered owner under TCT No.
T-12980; or respondents, who have a notarized yet unregistered Deed of Absolute Sale over the same
properties?

The Court's Ruling

We DENY the Petition.
Although this case does not present a novel question of law, there is a need to discuss the nature of an
ejectment case for the recovery of physical possession in relation to the Torrens system. A resolution of

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 Page 87 of 540

the issue would be relevant to the determination of who has the better right to possession in this unlawful
detainer case.

One of the three kinds of action for the recovery of possession of real property is accion interdictal, or an
ejectment proceeding ... which may be either that for forcible entry (detentacion) or unlawful detainer
(desahucio), which is a summary action for the recovery of physical possession where the dispossession
has not lasted for more than one year, and should be brought in the proper inferior court. [14] In ejectment
proceedings, the courts resolve the basic question of who is entitled to physical possession of the
premises, possession referring to possession de facto, and not possession de jure.[15]

Where the parties to an ejectment case raise the issue of ownership, the courts may pass upon
that issue to determine who between the parties has the better right to possess the property. However,
where the issue of ownership is inseparably linked to that of possession, adjudication of the ownership
issue is not final and binding, but only for the purpose of resolving the issue of possession. The
adjudication of the issue of ownership is only provisional, and not a bar to an action between the same
parties involving title to the property.[16]

In the instant case, the position of respondents is that they are occupying the disputed properties as
owners, having acquired these from petitioner's father through a Deed of Absolute Sale executed in 1971.
Respondents believe that they cannot be dispossessed of the disputed properties, since they are the
owners and are in actual possession thereof up to this date. Petitioner, however, rebuts this claim of
ownership, contending that he has registered the disputed properties in his name and has been issued a
land title under the Torrens system. He asserts that, having registered the properties in his name, he is
the recognized owner and consequently has the better right to possession.

Indeed, a title issued under the Torrens system is entitled to all the attributes of property ownership,
which necessarily includes possession.[17] Petitioner is correct that as a Torrens title holder over the
subject properties, he is the rightful owner and is entitled to possession thereof. However, the lower
courts and the appellate court consistently found that possession of the disputed properties by
respondents was in the nature of ownership, and not by mere tolerance of the elder Corpuz. In fact, they
have been in continuous, open and notorious possession of the property for more than 30 years up to this
day.

Petitioner cites Jacinto Co v. Rizal Militar, et al.,[18] which has facts and legal issues identical to
those of the instant case. The petitioner therein filed an unlawful detainer case against the respondents
over a disputed property. He had a Torrens title thereto, while the respondents as actual occupants of
the property claimed ownership thereof based on their unregistered Deeds of Sale. The principal issue
was who between the two parties had the better right to possess the subject property.

This Court resolved the issue by upholding the title holder as the one who had the better right to
possession of the disputed property based on the following justification:
We have, time and again, held that the only issue for resolution in an unlawful detainer
case is physical or material possession of the property involved, independent of any
claim of ownership by any of the party litigants. Moreover, an ejectment suit is summary
in nature and is not susceptible to circumvention by the simple expedient of asserting
ownership over the property.

In forcible entry and unlawful detainer cases, even if the defendant raises the
question of ownership in his pleadings and the question of possession cannot be

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 Page 88 of 540

resolved without deciding the issue of ownership, the lower courts and the Court of
Appeals, nonetheless, have the undoubted competence to provisionally resolve the
issue of ownership for the sole purpose of determining the issue of Possession.

Such decision, however, does not bind the title or affect the ownership of the land
nor is conclusive of the facts therein found in a case between the same parties upon a
different cause of action involving possession.

In the instant case, the evidence showed that as between the parties, it is the
petitioner who has a Torrens Title to the property. Respondents merely showed their
unregistered deeds of sale in support of their claims. The Metropolitan Trial Court
correctly relied on the transfer certificate of title in the name of petitioner.

In Tenio-Obsequio v. Court of Appeals, it was held that the Torrens System was
adopted in this country because it was believed to be the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized.

It is settled that a Torrens Certificate of title is indefeasible and binding upon the
whole world unless and until it has been nullified by a court of competent jurisdiction.
Under existing statutory and decisional law, the power to pass upon the validity of such
certificate of title at the first instance properly belongs to the Regional Trial Courts in a
direct proceeding for cancellation of title.

As the registered owner, petitioner had a right to the possession of the property,
which is one of the attributes of his ownership. Respondents' argument that petitioner is
not an innocent purchaser for value and was guilty of bad faith in having the subject land
registered in his name is a collateral attack on the title of petitioner, which is not allowed.
A certificate of title cannot be subject to a collateral attack and can be altered, modified
or cancelled only in a direct proceeding in accordance with law. [19]

The pronouncement in Co v. Militar was later reiterated in Spouses Pascual v. Spouses

Coronel[20] and in Spouses Barias v. Heirs of Bartolome Boneo, et al.,[21] wherein we consistently held the
age-old rule that the person who has a Torrens Title over a land is entitled to possession thereof. [22]

However, we cannot lose sight of the fact that the present petitioner has instituted an unlawful detainer
case against respondents. It is an established fact that for more than three decades, the latter have been
in continuous possession of the subject property, which, as such, is in the concept of ownership and not
by mere tolerance of petitioners father. Under these circumstances, petitioner cannot simply oust
respondents from possession through the summary procedure of an ejectment proceeding.

Instructive on this matter is Carbonilla v. Abiera,[23] which reads thus:

Without a doubt, the registered owner of real property is entitled to its
possession. However, the owner cannot simply wrest possession thereof from whoever
is in actual occupation of the property. To recover possession, he must resort to the
proper judicial remedy and, once he chooses what action to file, he is required to satisfy
the conditions necessary for such action to prosper.

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 Page 89 of 540

In the present case, petitioner opted to file an ejectment case against

respondents. Ejectment casesforcible entry and unlawful detainerare summary
proceedings designed to provide expeditious means to protect actual possession or the
right to possession of the property involved. The only question that the courts resolve in
ejectment proceedings is: who is entitled to the physical possession of the premises, that
is, to the possession de facto and not to the possession de jure. It does not even matter
if a partys title to the property is questionable. For this reason, an ejectment case will
not necessarily be decided in favor of one who has presented proof of ownership
of the subject property. Key jurisdictional facts constitutive of the particular ejectment
case filed must be averred in the complaint and sufficiently proven.
The statements in the complaint that respondents possession of the building was
by mere tolerance of petitioner clearly make out a case for unlawful detainer. Unlawful
detainer involves the persons withholding from another of the possession of the real
property to which the latter is entitled, after the expiration or termination of the formers
right to hold possession under the contract, either expressed or implied.
A requisite for a valid cause of action in an unlawful detainer case is that
possession must be originally lawful, and such possession must have turned unlawful
only upon the expiration of the right to possess. It must be shown that the possession
was initially lawful; hence, the basis of such lawful possession must be established. If, as
in this case, the claim is that such possession is by mere tolerance of the plaintiff, the
acts of tolerance must be proved. (Emphasis supplied.)

In this case, petitioner has not proven that respondents continued possession of the subject
properties was by mere tolerance of his father, except by a mere allegation thereof. In fact, petitioner has
not established when respondents possession of the properties became unlawful a requisite for a valid
cause of action in an unlawful detainer case.

In Canlas v. Tubil,[24] we enumerated the elements that constitute the sufficiency of a complaint for
unlawful detainer, as follows:

Well-settled is the rule that what determines the nature of the action as well as the court
which has jurisdiction over the case are the allegations in the complaint. In ejectment
cases, the complaint should embody such statement of facts as to bring the party clearly
within the class of cases for which the statutes provide a remedy, as these proceedings
are summary in nature. The complaint must show enough on its face to give the court
jurisdiction without resort to parol evidence.

Unlawful detainer is an action to recover possession of real property from one

who illegally withholds possession after the expiration or termination of his right to hold
possession under any contract, express or implied. The possession of the defendant in
unlawful detainer is originally legal but became illegal due to the expiration or termination
of the right to possess.

An unlawful detainer proceeding is summary in nature, jurisdiction of which lies in

the proper municipal trial court or metropolitan trial court. The action must be brought
within one year from the date of last demand and the issue in said case is the right to
physical possession.
... ... ...

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In Cabrera v. Getaruela, the Court held that a complaint sufficiently alleges a cause of
action for unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by

tolerance of the plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to

defendant of the termination of the latters right of possession;

(3) thereafter, the defendant remained in possession of the property and

deprived the plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property,
the plaintiff instituted the complaint for ejectment.

Based on the above, it is obvious that petitioner has not complied with the requirements sufficient
to warrant the success of his unlawful detainer Complaint against respondents. The lower courts and the
CA have consistently upheld the entitlement of respondents to continued possession of the subject
properties, since their possession has been established as one in the concept of ownership. Thus, the
courts correctly dismissed the unlawful detainer case of petitioner.

We concur in the appellate courts findings that petitioners father engaged in a double sale of the
disputed properties. The records of the case show that it took petitioner more or less five years from 1971
when he acquired the property from his father to 1976 when petitioner registered the conveyance and
caused the issuance of the land title registered in his name under the Torrens system. Respondents, on
the other hand, continued their possession of the properties, but without bothering to register them or to
initiate any action to fortify their ownership.

We cannot, however, sustain the appellate courts conclusion that petitioner's failure to initiate any
action to annul the sale to respondents and oust them from the disputed properties had the effect of
registration of respondents unregistered Deed of Absolute Sale. We held thus in Ruiz, Sr. v. Court of
Appeals [25]:

(But) where a party has knowledge of a prior existing interest which is

unregistered at that time he acquired a right to the same land, his knowledge of that
prior unregistered interest has the effect of registration as to him. Knowledge of an
unregistered sale is equivalent to registration. As held in Fernandez v. Court of
Appeals [189 SCRA 780 (1990)],

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides

that the registration of the deed is the operative act to bind or affect the
land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time he
acquired a right to the same land, his knowledge of that prior
unregistered interest has the effect of registration as to him. The Torrens
system cannot be used as a shield for the commission of fraud (Gustillo
v. Maravilla, 48 Phil. 442). [Emphasis supplied.]

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In this case, the Quitclaim executed by the elder Corpuz in favor of petitioner was executed
ahead of the Deed of Sale of respondents. Thus, the sale of the subject properties by petitioners father to
respondents cannot be considered as a prior interest at the time that petitioner came to know of the
transaction.

We also note that, based on the records, respondents do not dispute the existence of TCT No. T-12980
registered in the name of petitioner. They allege, though, that the land title issued to him was an act of
fraud [26] on his part. We find this argument to be equivalent to a collateral attack against the Torrens title
of petitioner an attack we cannot allow in the instant unlawful detainer case.

It is settled in jurisprudence that a Torrens certificate of title cannot be the subject of collateral
attack.[27]Such attack must be direct and not by a collateral proceeding.[28] It is a well-established doctrine
that the title represented by the certificate cannot be changed, altered, modified, enlarged, or diminished
in a collateral proceeding.[29]Considering that this is an unlawful detainer case wherein the sole issue to
be decided is possession de facto rather than possession de jure, a collateral attack by herein
respondents on petitioner's title is proscribed.

Our ruling in the present case is only to resolve the issue of who has the better right to
possession in relation to the issue of disputed ownership of the subject properties. Questions as to the
validity of petitioner's Torrens title can be ventilated in a proper suit instituted to directly attack its validity,
an issue that we cannot resolve definitively in this unlawful detainer case.

WHEREFORE, in view of the foregoing, we deny the instant Petition for lack of merit. The
Decisions of the Court of Appeals in CA-G.R. SP No. 90645 (dated January 08, 2008), of the Regional
Trial Court of Laoag City in Civil Case No. 3111-13293-65, as well as of the Municipal Trial Court of
Laoag City in Civil Case No. 3111 -- all dismissing the unlawful detainer case of petitioner
are AFFIRMED.

We make no pronouncements as to attorney's fees for lack of evidence.

SO ORDERED.

Tuazon v. Isagon, G.R. No. 191432, September 2, 2015

DECISION

BRION, J.:

We resolve the petition for review on certiorari filed by petitioner Teresa Tuazon (Teresa) to challenge the
October 28, 2009 Decision and February 11, 2010 Resolution of the Court of Appeals in CA-G.R. SP No.
107937, penned by Associate Justice Marlene Gonzales-Sison with Associate Justices Andres B. Reyes,
Jr. and Vicente S.E. Veloso, concurring.

The Facts

During their lifetime, spouses Melencio Diaz and Dolores Gulay (Dolores) owned Lot 103 of the Santa

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Rosa Estate, Barangay Aplaya, Sta. Rosa, Laguna, consisting of 499 square meters (Lot 103). They had
three daughters named Maria, Paciencia, and Esperanza. Melencio and Maria predeceased Dolores. On
May 28, 1955, Dolores, Paciencia, and Esperanza adjudicated Lot 103 to Dolores through a Deed of
Extrajudicial Settlement. Maria's children who were still minors at that time were not included in the
settlement.

On March 17, 1956, Dolores sold Lot 103 to Isabel Torres through a Bilihang Tuluyan (Deed of Absolute
Sale). Subsequently, Isabel Torres sold Lot 103 to Teresa on September 29, 1973.

On October 12, 1973, Maria's children, namely Gloria, Angel, Felix, and Flaviano, all surnamed Isagon,
executed a Deed of Conformity. In this instrument, they honored the Deed of Extrajudicial Settlement
executed by their grandmother and aunts, subject to the condition that they would get one-sixth of Lot 103
as their share.

Gloria, Felix, and Flaviano also sold their.shares to Teresa. On the other hand, Angel mortgaged his
share to Teresa on October 20, 1975, through a Kasulatan ng Sanglaan. His share consisted of 20.75
square meters which was one-fourth of the one-sixth share in the property. Angel Isagon thereafter
refused and failed to redeem the mortgaged property.

Teresa has been paying the real estate taxes due on Lot 103 since 1974 up to the present. Lot 103 is
covered by an undated and reconstituted Transfer Certificate of Title (TCT) No. (N.A.) RT-1925issued
in Teresa's name.

Sometime in 1972, the petitioner's brother, Antonio Tuazon (Antonio), allowed Spouses Angel and
Marcosa Isagon (respondents) to build a small hut on a portion of Lot 103 without Teresa's knowledge.
The respondents and their children were then living by the seashore and Antonio feared that their house
could be swept away by the floods during a typhoon.

In 2000, the respondents started to construct a house on the disputed property despite Teresa's protest.
For years, however, Teresa tolerated their possession and use of the contested area.

In 2007, Teresa filed a complaint against the respondents before the Lupon
Tagapamayapa of Barangay Aplaya. The parties failed to reach any amicable settlement.

On January 24, 2007, Teresa sent a final demand letter to respondents to vacate and to pay rental fees.
The respondents did not reply.

On September 11, 2007, Teresa filed a complaint for unlawful detainer against the respondents before
the Municipal Trial Court in Cities (MTCC), City of Sta. Rosa, Laguna. She prayed that the respondents
be ordered to vacate the subject property and to pay compensation for its use and occupancy.

In their answer, the respondents alleged that they were occupying the subject property as owners. They
also alleged that Teresa fraudulently obtained TCT No. (N.A.) RT-1925.

The MTCC and RTC Rulings

The MTCC, in its judgment on January 25, 2008, decided in favor of Teresa and ordered the respondents
to vacate the subject property and to pay reasonable rent and attorney's fees. The MTCC held that
Teresa was the owner of the property as shown by TCT No. (N.A.) RT-1925, and as owner, she was

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entitled to enjoy the right of possession over the subject property. It added that a property registered
under the Torrens system could not be collaterally attacked in an action for unlawful retainer.

On appeal, the Regional Trial Court (RTC) in Bifian, Laguna, affirmed in toto the decision of the MTCC.
The RTC denied the respondents' motion for reconsideration.

The CA Ruling

The respondents appealed the RTC's ruling to the CA.

In its October 28, 2009 Decision, the CA reversed the RTC's ruling. The CA noted that Angel Isagon
executed a real estate mortgage in favor of Teresa over a portion of Lot 103 but had failed to redeem it.
Citing Article 2088 of the Civil Code, the CA concluded that Teresa was a mere mortgagee and had no
right to eject the respondents. Instead of foreclosing the property, Teresa filed this action for unlawful
detainer. The CA added that a mortgage was not an instrument that transferred ownership; thus, the
disputed property still belonged to the respondents.

The Petition

Teresa's present petition for review on certiorari argues that she is the registered owner, not a mere
mortgagee, of the property as shown by TCT No. (N.A.) RT-1925. Section 51 of Presidential Decree No.
1929 expressly states that registration is the operative act that conveys registered land. Thus, the TCT is
the best proof of ownership.

She adds that the only issue in an unlawful detainer case is the physical possession of the property. As
the registered owner, she has the right to enjoy all the rights of an owner under Articles 428 and 429 of
the Civil Code, including actual possession.

Our Ruling

We grant the petition.

The sole issue here is who has the better right of physical possession between the registered owner as
shown in the certificate of title and the mortgagor as shown in the Kasulatan ng Sanglaan.

While the CA is correct that a mortgage does not transfer ownership, the indefeasibility of a Torrens title
should have been given primary consideration.

An action for unlawful detainer is summary in nature and cannot be delayed by a mere assertion of
ownership as a defense.1 When the parties to an ejectment case raise the issue of ownership, the court
may pass upon that issue only if needed to determine who between the parties has a better right to
possess the property.2 Furthermore, the adjudication on the issue of ownership is only provisional,3 and
subject to a separate proceeding that the parties may initiate to settle the issue of ownership.

A person who possesses a title issued under the Torrens system is entitled to all the attributes of
ownership including possession.4 A certificate of title cannot be subject to a collateral attack in an action
for unlawful detainer. A collateral attack is made when, in an action to obtain a different relief, the validity

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of a certificate of title is questioned.5

In the present case, the respondents alleged in their answer that the certificate of title issued in the name
of Teresa was fraudulently obtained. This defense constitutes a collateral attack on the title and should
not therefore be entertained. To directly assail the validity of TCT No. (N.A.) RT-1925, a direct action for
reconveyance must be filed.6

In the present case, based on the certificate of title, Teresa is the owner of the subject property and is
entitled to its physical possession.

WHEREFORE, we hereby GRANT the petition for review on certiorari. The Decision dated October 28,
2009, and the Resolution dated February 11, 2010, of the Court of Appeals in CA-G.R. SP No. 107937
are hereby REVERSED and SET ASIDE. The decision dated October 15, 2008, of Branch 25 of the
Regional Trial Court, Bian, Laguna, in Civil Case No. B-7472, is hereby REINSTATED.

SO ORDERED.

VII. Subsequent Registration

CHAPTER V SECTION 51 77

1. Voluntary Dealings with Registered Lands

a. Primary Entry Book (Sec. 56)
DBP v. Register of Deeds of Nueva Ecija, UDK No. 7671, June 23, 1988

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

UDK No. 7671 June 23, 1988

DEVELOPMENT BANK OF THE PHILIPPINES, registrant-appellant,

vs.
THE ACTING REGISTER DEEDS OF NUEVA ECIJA, respondent-appellee.

NARVASA, J.:

This case, rather cut-and-dried as far as factual background is concerned, turns upon a determination of
the true meaning and intendment of Section 56 of Presidential Decree No. 1529, 1 which in part reads:

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Sec. 56. Primary Entry Book; fees, certified copies. Each Register of Deeds shall keep
a primary entry book in which, upon payment of the entry fee, he shall enter, in the order
of their reception, all instruments including copies of writs and processes filed with him
relating to registered land. He shall, as a preliminary process in registration, note in such
book the date, hour and minute of reception of all instruments, in the order in which they
were received. They shall be regarded as registered from the time so noted, and the
memorandum of each instrument, when made on the certificate of title to which it refers,
shall bear the same date: Provided, that the national government as well as the provincial
and city governments shall be exempt from the payment of such fees in advance in order
to be entitled to entry and registration.

xxx xxx xxx

The facts are few and undisputed. On June 13, 1980, the Development Bank of the Philippines (hereafter,
DBP) presented for registration to the Register of Deeds of Nueva Ecija, Cabanatuan City, a sheriff's
certificate of sale in its favor of two parcels of land covered by Transfer Certificates of Title Nos. NT-
149033 and NT-149034, both in the names of the spouses Andres Bautista and Marcelina Calison, which
said institution had acquired as the highest bidder at an extrajudicial foreclosure sale. The transaction
was entered as Entry No. 8191 in the Registry's Primary Entry Book and DBP paid the requisite
registration fees on the same day. Annotation of the sale on the covering certificates of title could not,
however be effected because the originals of those certificates were found to be missing from the files of
the Registry, where they were supposed to be kept, and could not be located. 2 On the advice of the
Register of Deeds, DBP instituted proceedings in the Court of First Instance of Nueva Ecija to reconstitute
said certificates, and reconstitution was ordered by that court in a decision rendered on June 15,
1982. 3For reasons not apparent on the record, the certificates of title were reconstituted only on June
19,1984. 4

On June 25, 1984, DBP sought annotation on the reconstituted titles of the certificate of sale subject of
Entry No. 8191 on the basis of that same four-year-old entry. The Acting Register of Deeds, being in
doubt of the proper action to take on the solicitation, took the matter to the Commissioner of Land
Registration by consulta raising two questions: (a) whether the certificate of sale could be registered
using the old Entry No. 8191 made in 1980 notwithstanding the fact that the original copies of the
reconstituted certificates of title were issued only on June 19, 1984; and (b) if the first query was
answered affirmatively, whether he could sign the proposed annotation, having assumed his duties only
in July 1982.5

The resolution on the consulta held that Entry No. 8191 had been rendered "... ineffective due to the
impossibility of accomplishing registration at the time the document was entered because of the non-
availability of the certificate (sic) of title involved. For said certificate of sale to be admitted for registration,
there is a need for it to be re-entered now that the titles have been reconstituted upon payment of new
entry fees," and by-passed the second query as having been rendered moot and academic by the answer
to the first. 6

Unwilling to accept that result, the DBP appealed the resolution to the Court of Appeals (then the
Intermediate Appellate Court) 7 which, after reviewing the record, certified the appeal to this Court as
involving a question purely of law.8

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The appealed resolution appears to be based upon a reading of the cited Section 56 of PD No. 1529, and
particularly of the provision therein referring to the Register's act of making a primary entry as " ... a
preliminary process in registration ...," as depriving of any effect a primary entry without a corresponding
annotation thereof on the certificate of title to which the instrument subject of said entry refers.

That view fails to find support from a consideration of entire context of said Section 56 which in another
part also provides that the instrument subject of a primary entry "... shall be regarded as registered from
the time so noted ...," and, at the very least, gives such entry from the moment of its making the effect of
putting the whole world on notice of the existence the instrument on entered. Such effect (of registration)
clearly attaches to the mere making of the entry without regard to the subsequent step of annotating a
memorandum of the instrument subject of the entry on the certificate of title to which it refers. Indeed, said
Section, in also providing that the annotation, "... when made ... shall bear the same date ..." as the entry,
may be said to contemplate unspecified intervals of time occurring between the making of a primary entry
and that of the corresponding annotation on the certificate of title without robbing the entry of the effect of
being equivalent to registration. Neither, therefore, is the implication in the appealed resolution that
annotation must annotation entry immediately or in short order justified by the language of Section 56.

Furthermore, it is amply clear that the four-year hiatus between primary entry and proposed annotation in
this case has not been of DBP's making. Though it was under no necessity to present the owner's
duplicates of the certificates of title affected for purposes of primary entry, since the transaction sought to
be recorded was an involuntary transaction, 9 and the record is silent as to whether it presented them or
not, there is nonetheless every probability that it did so. It was the mortgagee of the lands covered by
those titles and it is usual in mortgage transactions that the owner's duplicates of the encumbered titles
are yielded into the custody of the mortgage until the mortgage is discharged. Moreover, the certificates
of title were reconstituted from the owner's duplicates, 10 and again it is to be presumed that said
duplicates were presented by DBP, the petitioner in the reconstitution proceedings.

It is, furthermore, admitted that the requisite registration fees were fully paid and that the certificate of sale
was registrable on its face. 11 DBP, therefore, complied with all that was required of it for purposes of both
primary entry and annotation of the certificate of sale. It cannot be blamed that annotation could not be
made contemporaneously with the entry because the originals of the subject certificates of title were
missing and could not be found, since it had nothing to do with their safekeeping. If anyone was
responsible for failure of annotation, it was the Register of Deeds who was chargeable with the keeping
and custody of those documents.

It does not, therefore, make sense to require DBP to repeat the process of primary entry, paying anew the
entry fees as the appealed resolution disposes, in order to procure annotation which through no fault on
its part, had to be deferred until the originals of the certificates of title were found or reconstituted. That it
is hardly just or equitable to do so also seems to have occurred to the Solicitor General, who dilutes his
argument in support of the appealed resolution with the suggestion that "... the making of a new entry ...
would be the more orderly procedure," and that DBP should not be made to pay filing fees anew.12

Jurisprudence on the subject, while it has not been entirely consistent, is not wanting. In Government vs.
Aballe, 13this Court ruled that " ... (a)lthough a notice of attachment has not been noted on the certificate
of title, its notation in the book of entry of the register of deeds produces all the effects which the law
gives to its registration or inscription." Seemingly, that ruling was abandoned in the wartime case of Basa
vs. De la Rama, 14 where it was held that the entry of an instrument in the primary entry book produces no
legal effect unless a memorandum thereof is noted on the certificate of title. Villasor vs.

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Camon, 15 however, clarified that Aballe was never really abandoned or reversed insofar as it applied to
involuntary transactions. Said the Court in that case, which involved a voluntary transactions a deed of
assignment of rights in a parcel of land and its improvements:

The appellant cannot invoke in support of her contention, the ruling laid down in the case
of Government of the Philippine Islands vs. Aballe, 60 Phil., 986, which was followed in
Director of Lands vs. Abad, 61 Phil. 479, to the effect that an attachment entered upon
the entry book is duly registered although the duplicate certificate is not presented at the
time of registration to the register of deeds. Appellant cannot invoked said ruling, not
because it has been abandoned by the Supreme Court during the Japanese occupation
in the case of Bass VS. De la Rama, et al., ... in which it was said that "we are
constrained to abandon the ruling in said two cases,"- it was not abandoned for the
decision was concurred by only two justices or less than a majority, and said statement
was not necessary or an obiter dictum and against the law, as correctly stated by the two
associate justices who dissented and only concurred in the result, but because said
ruling, subsisting and in force, does not support appellant's contention, for it is only
applicable to registration of involuntary instruments, such as attachment, or other
liens and adverse claims of any description. This ruling is correct or in conformity with the
provisions of section 72 of Act No. 496, which do not require the production by the
registrant of the duplicate certificate of the land to be affected, ... (emphasis supplied)

The decision in Villasor also quoted with approval the following excerpt from an earlier case, Philippine
National Bank vs. Fernandez. 16

Coming now to the second ground on which the appellant bases his claims, we find that
when Simona Fausa executed the document, Exhibit 3, on October 17, 1928, conveying
her interest in the land to the appellant, her interest therein had already been attached by
the provincial sheriff and also by him at public auction to the Philippine National Bank,
and the certificate of sale filed in the office of the register of deeds in accordance with the
law (sections 429 and 450 of the Code of Civil Procedure). It was not necessary for the
sheriff to present the owner's duplicate of the certificate of title when he filed notice of
attachment with the register of deeds, nor was it necessary for the Philippine National
Bank to present the owner's duplicate when the bank filed its certificate of sale for
registration (sections 71 and 72 of Act No. 496).

Later cases appear to have applied the Aballe ruling that entry in the day book, even without the
corresponding annotation on the certificate of title, is equivalent to, or produces the effect of, registration
to voluntary transactions, provided the requisite fees are paid and the owner's duplicates of the
certificates of title affected are presented. Thus, in Levin vs. Bass, et al., 17 it was held:

... Under the Torrens system the act of registration is the operative act to convey and
affect the land. Do the entry in the day book of a deed of sale which was presented and
filed together with owner's duplicate certificate of title which the office of the Registrar of
Deeds and full payment of registration fees constitute a complete act of registration which
operates to convey and affect the land? In voluntary registration, such as a sale,
mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and
presented or if no payment of registration fees be made within 15 days, entry in the day
book of the deed of sale does not operate to convey and affect the land sold. In

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involuntary registration, such as an attachment, levy upon execution, lis pendens and the
like entry thereof in the day book is a sufficient notice to all persons of such adverse
claim. ... The pronouncement of the court below is to the effect that an innocent
purchaser for value has no right to the property because he is not a holder of a certificate
of title to such property acquired by him for value and in good faith. It amounts to holding
that for failure of the Registrar of Deeds to comply and perform his duty, an innocent
purchaser for value loses that character-he is not an "innocent holder for value of a
certificate of title." ... Neither violence to, nor stretching of the meaning of, the law would
be done, if we should hold that an innocent purchaser for value of registered land
becomes the registered owner and in contemplation of law the holder of a certificate
thereof the moment he presents the owner's duplicate certificate of title to the property
sold and pays the full amount of registration fees, because what remains to be done lies
not within his power to perform. The Registrar of Deeds is in duty bound to perform it. We
believe that is a reasonable and practical interpretation of the law under considerations-a
construction which would lead to no inconsistency and injustice. (emphasis supplied)

A similar ruling was made in Potenciano vs. Dineros, et al., 18 concerning land a deed of sale of which
was entered in the day book upon payment of the corresponding fees and presentation of the owner's
duplicate of the covering certificate of title, on November 4, 1944. However, due to the confusion arising
from the bombing of Manila (this having happened during the final months of the Japanese Occupation),
the papers presented by the registrant were either lost or destroyed, no certificate of title was issued to
him and as far as the records of the Register of Deeds showed, the property remained in the name of the
vendor. Another party later sued the vendor, obtained judgment against him and purchased the property
on execution sale. In affirming judgment annulling the execution sale in an action brought by the original
purchaser, this Court held:

The judgment creditor contends that entry of the deed in the day book is not sufficient
registration. Both upon law and authority this contention must be rejected. Section 56 of
the Land Registration Act says that deeds relating to registered land shall, upon payment
of the filing fees, be entered in the entry book also called day book in the same section
with notation of the year, month, day, hour, and minute of their reception and that
"they shall be regarded as registered from the moment so noted." And applying this
provision in the cases of Levin vs. Bass, etc., G.R. Nos. L-4340 to 4346, decided on May
28, 1952, this Court held that "an innocent purchaser for value of registered land
becomes the registered owner and in contemplation of law the holder of a certificate
thereof the moment he presents and files a duly notarized and lawful deed of sale and
the same is entered on the day book and at the same time he surrenders or presents the
owner's duplicate certificate of title to the property sold and pays the full amount of
registration fees, because what remains to be done lies not within his power to perform."

Current doctrine thus seems to be that entry alone produces the effect of registration, whether the
transaction entered is a voluntary or an involuntary one, so long as the registrant has complied with all
that is required of him for purposes of entry and annotation, and nothing more remains to be done but a
duty incumbent solely on the register of deeds.

Therefore, without necessarily holding that annotation of a primary entry on the original of the certificate
of title may be deferred indefinitely without prejudice to the legal effect of said entry, the Court rules that in
the particular situation here obtaining, annotation of the disputed entry on the reconstituted originals of

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the certificates of title to which it refers is entirely proper and justified. To hold said entry "ineffective," as
does the appealed resolution, amounts to declaring that it did not, and does not, protect the registrant
(DBP) from claims arising, or transactions made, thereafter which are adverse to or in derogation of the
rights created or conveyed by the transaction thus entered. That, surely, is a result that is neither just nor
can, by any reasonable interpretation of Section 56 of PD 1529, be asserted as warranted by its terms.

The qualms implicit in the query of the respondent (and present appellee) register of deeds about making
annotation of an entry effected before he assumed that office are more imagined than real. He would only
be making a memorandum of an instrument and of its entry based on or reciting details which are already
of indubitable record and, pursuant to the express command of the law, giving said memorandum the
same date as the entry. No part of that function is exclusive to the incumbent of the office at the time
entry was made or is forbidden to any of his successors.

WHEREFORE, the appealed resolution of the Acting Commissioner of Land Registration is SET ASIDE.
The respondent-appellee Register of Deeds of Nueva Ecija, or his successor, is ordered to annotate on
the originals of the reconstituted Transfer Certificates of Title Nos. NT-149033 and NT-149034 of his
Registry a memorandum of the certificate of sale in favor of appellant Development Bank of the
Philippines as entered under Entry No. 8191 dated June 13, 1980 of the Primary Entry (Day) Book of said
Registry. No pronouncement as to costs.

SO ORDERED.

National Housing Authority v. Augusto Basa, G.R. No. 149121, April 20, 2010

DECISION

LEONARDO-DE CASTRO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the
Amended Decision[1] of the Court of Appeals dated November 27, 2000and its Resolution dated July 19,
2001 denying the motion for reconsideration of the National Housing Authority (NHA).

On April 19, 1983, spouses Augusto and Luz Basa loaned from NHA the amount of P556,827.10 secured
by a real estate mortgage over their properties covered by Transfer Certificates of Title (TCTs) Nos.
287008 and 285413, located at No. 30 San Antonio St., San Francisco del Monte, Quezon
City.[2] Spouses Basa did not pay the loan despite repeated demands. To collect its credit, the NHA,
on August 9, 1990, filed a verified petition for extrajudicial foreclosure of mortgage before the Sheriffs
Office in Quezon City, pursuant to Act No. 3135, as amended.[3]

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After notice and publication, the properties were sold at public auction where NHA emerged as the
highest bidder.[4] On April 16, 1991, the sheriffs certificate of sale was registered and annotated only on
the owners duplicate copies of the titles in the hands of the respondents, since the titles in the custody of
the Register of Deeds were among those burned down when a fire gutted the City Hall of Quezon
City on June 11, 1988.[5]

On April 16, 1992, the redemption period expired,[6] without respondents having redeemed the
properties. Shortly thereafter, on April 24, 1992, NHA executed an Affidavit of Consolidation of
Ownership[7] over the foreclosed properties, and the same was inscribed by the Register of Deeds on the
certificates of title in the hand of NHA under Entry No. 6572/T-287008-PR-29207.[8]

On June 18, 1992, NHA filed a petition for the issuance of a Writ of Possession. The said petition was
granted by the Regional Trial Court (RTC) in an Order[9] dated August 4, 1992.

A Writ of Possession[10] was issued on March 9, 1993 by the RTC, ordering spouses Augusto and Luz
Basa to vacate the subject lots. The writ, however, remained unserved.This compelled NHA to move for
the issuance of an alias writ of possession on April 28, 1993.

Before the RTC could resolve the motion for the issuance of an alias writ of possession, respondents
spouses Basa and Eduardo Basa, on June 2, 1993, filed a Motion for Leave to Intervene and Petition in
Intervention (with Prayer for Temporary Restraining Order and/or Writ of Preliminary
Injunction).[11] Respondents anchored said petition for intervention on Section 8 [12] of Act No. 3135, as
amended, which gives the debtor/mortgagor the remedy to petition that the sale be set aside and the writ
of possession be cancelled. In the said petition for intervention, respondents averred that the extrajudicial
foreclosure of the subject properties was a nullity since notices were not posted and published, written
notices of foreclosure were not given to them, and notices of sale were not tendered to the occupants of
the sold properties, thereby denying them the opportunity to ventilate their rights. [13] Respondents likewise
insisted that even assuming arguendo that the foreclosure sale were valid, they were still entitled to
redeem the same since the one-year redemption period from the registration of the sheriffs certificate of
foreclosure sale had not yet prescribed.[14] Citing Bernardez v. Reyes[15] and Bass v. De la
Rama,[16] respondents theorized that the instrument is deemed registered only upon actual inscription on
the certificate of title in the custody of the civil registrar. [17]Since the sheriffs certificate was only inscribed
on the owners duplicate certificate of title, and not on the certificate of title in the possession of the
Register of Deeds, then there was no effective registration and the one-year redemption period had not
even begun to run. Thus, respondents asked the RTC, among others, to declare the foreclosure sale null
and void, to allow the respondents to redeem the mortgaged properties in the amount of P21,160.00, and
to cancel the Writ of Possession dated March 9, 1993.

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NHA opposed respondents petition for intervention. [18] It countered that the extrajudicial foreclosure sale
was conducted validly and made in accordance with Act No. 3135 as evidenced by the publication of the
Notice of Sheriffs Sale in the Manila Times in its issues dated July 14, 21 and 28, 1990. [19] NHA also said
that respondents had been furnished with a copy of the Notice of Sheriffs Sale as shown at the bottom
portion of said notice.[20] NHA maintained that respondents right of redemption had long expired on April
15, 1992 since the certificate of sale was inscribed on their TCT Nos. 285413 and 287008 a year earlier,
or on April 16, 1991. It pointed out that the RTC, via its Order dated August 4, 1992, had already ruled
that respondents right of redemption was already gone without them exercising said right. Since said
order had already attained finality, the ruling therein could no longer be disturbed.

On January 2, 1995, the RTC issued the first assailed Order [21] with the following directives: 1) granting
the issuance of the alias writ of possession which allowed NHA to take possession of the subject
properties; 2) admitting the Petition in Intervention and treating the same as the petition to set aside sale
mentioned in [Sec. 8] of Act No. 3155; and 3) granting the issuance of a Writ of Preliminary Injunction in
favor of respondents that ordered NHA to refrain from selling or disposing of the contested
properties. The pertinent portion of the order reads:

After examining the record and following precedents x x x this Court hereby orders:

1. The issuance of an alias writ of possession;

2. Admission of the Petition in Intervention, treating the same as the petition to

set aside sale, etc., mentioned in [Sec. 8] of Act No. 3155;

3. The issuance of a writ of preliminary injunction, after a BOND in the amount

of P20,000.00 had been duly filed by intervenors, ordering movant National Housing
Authority, its agents and/or any other person acting under its command, to desist and
refrain from selling or in any manner from disposing of the subject properties covered by
TCT Nos. 287008 and 285413 and located at No. 30, San Antonio Street, San Francisco
del Monte, Quezon City, pending the termination of this proceeding and/or unless a
contrary order is issued by this Court;

4. Setting the hearing of the petition in intervention (to set aside) on March 17,
1995, at 8:30 a.m.[22]

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NHA filed a motion for reconsideration[23] assailing the RTCs Order insofar as it admitted respondents
motion for intervention and issued a writ of preliminary injunction. NHA argued that respondents should
have assailed the foreclosure sale during the hearing in the petition for the issuance of a Writ of
Possession, and not during the hearing in the petition for the issuance of an alias writ of possession since
the petition referred to in Section 8 of Act No. 3135 pertains to the original petition for the issuance of the
Writ of Possession and not the Motion for the Issuance of an Alias Writ of Possession. NHA stressed that
another reason why the petition for intervention should be denied was the finality of the Order
dated August 4, 1992 declaring respondents right of redemption barred by prescription. Lastly, NHA
asserted that the writ of possession was issued as a matter of course upon filing of the proper motion and
thereby, the court was bereft of discretion.

In the second assailed Order[24] dated September 4, 1995, the RTC denied NHAs motion for
reconsideration reasoning that the admission of the intervention was sanctioned by Section 8 of Act No.
3135. As to the grant of preliminary injunction, the RTC made the justification that if the NHA was not
restrained, the judgment which may be favorable to respondents would be ineffectual. The order partly
provides:

The motion is without merit. The admission of the intervention is sanctioned by Sec. 8 of
Act No. 3135. And, because, otherwise or if no preliminary injunction is issued, the
movant NHA may, before final judgment, do or continue the doing of the act with the
intervenor asks the court to restrain, and thus make ineffectual the final judgment
rendered afterwards which may grant the relief sought by the intervenor.

ACCORDINGLY, the motion for reconsideration is DENIED. [25]

Undaunted, NHA filed on November 24, 1995, a special civil action for certiorari and prohibition before the
Court of Appeals.

The Court of Appeals rendered a Decision[26] dated February 24, 2000, in favor of the NHA. It declared
null and void the assailed orders of the RTC dated January 2, 1995 and September 4, 1995, to the extent
that the said orders admitted the petition in intervention and granted the issuance of the preliminary
injunction; but it upheld the grant of the alias writ of possession, thus:

WHEREFORE, the petition is GRANTED, and the assailed order of January 2,

1995 is declared NULL AND VOID except for the portion directing the issuance of an
alias writ of possession. Likewise declared NULL AND VOID is the second assailed order
of September 4, 1995 denying the petitioners motion for reconsideration. Let an alias writ
of possession be issued and executed/implemented by the public respondent without
further delay.[27]

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The Court of Appeals defended its affirmation of the RTCs grant of the alias writ of possession in NHAs
favor by saying that it was a necessary consequence after the earlier writ was left unserved to the party. It
further explained that NHA was entitled to the writ of possession as a matter of course after the lapse of
the redemption period.

As to the RTCs admission of respondents petition for intervention, the appellate court opined that it was
improperly and erroneously made. The Court of Appeals believed that the only recourse available to a
mortgagor, in this case the respondents, in a foreclosure sale is to question the validity of the sale
through a petition to set aside the sale and to cancel the writ of possession, a summary procedure
provided for under Section 112 of the Land Registration Act. It also observed that the grant of the
preliminary injunction by the RTC was uncalled for as it would effectively defeat the right of NHA to
possession, the latter having been entitled by virtue of the grant of the alias writ of possession.

Respondents filed a motion for reconsideration.[28] They alleged that since they raised the issue that their
right of redemption had not prescribed, said fact should have changed the whole scenario such that the
issuance of a writ of possession ceased to be summary in nature and was no longer
ministerial. Respondents then concluded that their right to redeem the properties against NHAs right to
the writ of possession must be threshed out in a hearing of the case on its merits.

With regard to the RTC Order dated August 4, 1992 granting the writ of possession which, according to
the NHA, became final and executory, respondents argued that said order did not constitute res
judicata so as to bar the filing of the petition for intervention since the said order was not a judgment on
the merits that could attain finality.

Also, respondents would like the Court of Appeals to treat the petition for intervention not only as an
opposition to the issuance of the alias writ of possession, but also as a proper remedy under Section 8 of
Act No. 3135, as amended, in view of the various issues raised.

On November 27, 2000, the Court of Appeals, in its Amended Decision, reconsidered its earlier stance. It
declared that the period of redemption had not expired as the certificate of sale had not been registered
or annotated in the original copies of the titles supposedly kept with the Register of Deeds since said titles
were earlier razed by fire. Taking its cue from Bass v. De la Rama where the Court purportedly made a
ruling that entry of a document, such as sale of real property, in the entry book is insufficient to treat such
document as registered, unless the same had been annotated on the certificate of title; the Court of
Appeals went on to say that the entry of the certificate of sale in the owners duplicate of the titles could
not have been sufficient to register the same since anyone who would wish to check with the Register of
Deeds would not see any annotation. Thus, entry made on the owners duplicate of the titles cannot be
considered notice that would bind the whole world. Having been deprived of their right of redemption, the

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Court of Appeals deemed it proper to allow respondents to intervene. The dispositive part of the amended
decision decrees:

WHEREFORE, the motion for reconsideration is GRANTED. Our decision

dated February 24, 2000, is RECONSIDERED and SET ASIDE and the
petition DISMISSED.[29]

Unfazed, NHA filed a motion for reconsideration, which the Court of Appeals denied in its July 19,
2001 Resolution, to wit:

ACCORDINGLY, the Motion for Reconsideration dated February 24, 2000 is DENIED for
lack of merit.[30]

Hence, the instant petition.

In its memorandum, NHA tendered the following issues:

1. WHETHER OR NOT THE ANNOTATION OF THE SHERIFFS CERTIFICATE

OF SALE IN THE PRIMARY ENTRY BOOK OF THE REGISTER OF DEEDS
AND ON THE OWNERS DUPLICATE TITLE IS SUFFICIENT COMPLIANCE
WITH THE REQUIREMENT OF LAW ON REGISTRATION.

2. WHETHER OR NOT THE CASE OF BASS VS. DE LA RAMA HAS BEEN

SUPERSEDED.[31]

Respondents, on the other hand, offered the following as issues:

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WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

THE LOWER COURT DID NOT ACT WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ADMITTING THE RESPONDENTS
INTERVENTION AND GRANTING THE EQUITABLE WRIT OF INJUNCTION THEREBY
DISMISSING THE PETITION FOR CERTIORARI AND PROHIBITION.

II

WHETHER OR NOT THE INSTANT PETITION COMPLIES WITH THE

REQUIREMENTS OF RULE 45 OF THE RULES OF COURT.[32]

On the procedural aspect, respondents question NHAs alleged failure to include in its petition copies of
material portions of the record such as pleadings filed in the RTC and the Court of Appeals as required
under Section 4, Rule 45 of the Rules of Court. Respondents also pointed out the purported defective
verification of NHA in view of the fact that it merely stated that the one verifying had read the allegations
of the petition and that the same were true and correct to the best of his knowledge. According to
respondents, such declarations were not in accordance with the rules which require that a verified
pleading must state that the affiant had read the pleading and that the allegations therein were true and
correct based on his personal knowledge and not only to the best of his knowledge.

As to the merits, NHA stresses that the annotation and entry in the owners duplicate certificate of
titles of the sheriffs certificate of sale are sufficient compliance with the requirement of law on
registration. To support this, NHA refers to Land Registration Administration Circular No. 3
dated December 6, 1988, entitled Entry and Provisional Registration of Instruments Pending
Reconstitution of Title which allegedly authorized all Registers of Deeds to accept for entry and
provisional registration instruments affecting lost or destroyed certificates of title pending reconstitution of
the original. The legality and validity of the disputed registration on its duplicate copies of the sheriffs
certificate of sale, NHA insists, are backed by this Courts ruling in Development Bank of the Philippines v.
Acting Register of Deeds of Nueva Ecija,[33] where purportedly, this Court made a favorable interpretation
of Section 56 of Presidential Decree No. 1529. NHA says that the inscription of the sheriffs certificate of
sale only to the owners duplicate copies, but not to those in the custody of the register of deeds is justified
as the latter were burned down. Thus, it could not be blamed for the non-registration of the sale in the
original copies.

NHA faults the Court of Appeals reliance on Bass v. De la Rama since the ruling therein stating that entry
and annotation of a sale instrument on the owners duplicate copy only as insufficient registration, was
already abandoned in Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,
where it was allegedly ruled that the primary entry alone of the transaction produces the effect of
registration so long as the registrant has complied with all that is required of him for purposes of entry and
annotation.

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In contrast, respondents submit that annotation of the sheriffs certificate of sale on the owners copy is
inadequate to propel the running of the redemption period. They firmly believe that for the sale instrument
to be considered as registered, the inscription must be made on the reconstituted titles.

Respondents disagree with NHAs opinion that Bass v. De la Rama was superceded by Development
Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija. They are of the persuasion that the
ruling in DBP pertains exclusively to the unique factual milieu and the issues attendant therein, but not to
the instant case where Bass purportedly applies. Respondents also assail NHAs citation of Sta. Ignacia
Rural Bank, Inc. v. Court of Appeals.[34] According to them, said case finds no application to the instant
controversy because the issue involved in the former was whether the redemption period should be
reckoned from the date of the auction sale or the registration of the certificate of sale, which ostensibly is
not the bone of contention in this case.

Ascribing NHAs inaction to have the burned titles reconstituted, respondents assert that such neglect
should not be used as a justification for the non-inscription in the original titles of the certificate of
sale. Additionally, respondents insist that the question of whether the redemption period should be
reckoned from the inscription on the owners duplicate copies is a factual and legal issue that is
appropriately adjudicated in a hearing on the merits of their petition in intervention, and not in the instant
special civil action for certiorari and prohibition which is limited in scope, namely, whether the RTC
committed grave abuse of discretion amounting to lack of jurisdiction in admitting their petition in
intervention.

Respondents reiterate that the issuance of the writ of possession prayed for by NHA before the RTC is no
longer ministerial since it raised the issue of whether their period of redemption has already expired. They
cite Barican v. Intermediate Appellate Court[35] as the authority to this argument.

We dwell first with the procedural issues before the main controversy. Respondents contend that the
instant petition is dismissible on the ground that NHA failed to attach pleadings filed in the RTC and the
Court of Appeals as required under Section 4, Rule 45 of the Rules of Court which partly provides:

SEC. 4. Contents of petition. The petition shall be filed in eighteen (18) copies,
with the original copy intended for the court being indicated as such by the petitioner, and
shall x x x (d) be accompanied by a clearly legible duplicate original, or a certified true
copy of the judgment or final order or resolution certified by the clerk of court of the
court a quo and the requisite number of plain copies thereof, and such material portions
of the record as would support the petition; x x x.

In its petition, NHA attached the February 24, 2000 Decision, the November 27, 2000 Amended
Decision, and the July 19, 2001 Resolution all of the Court of Appeals; copies of the transfer certificates
of title of the disputed properties; and the June 13, 1994 Order of the Quezon City RTC ordering the

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reconstitution of the said titles. This Court finds that NHA substantially complied with the requirements
under Section 4 of Rule 45. The same conclusion was arrived at by this Court in Development Bank of
the Philippines v. Family Foods Manufacturing Co., Ltd.[36] when it was faced with the same procedural
objection, thus:

As held by this Court in Air Philippines Corporation v. Zamora:

[E]ven if a document is relevant and pertinent to the petition, it

need not be appended if it is shown that the contents thereof can also
[be] found in another document already attached to the petition. Thus, if
the material allegations in a position paper are summarized in a
questioned judgment, it will suffice that only a certified true copy of the
judgment is attached.

Third, a petition lacking an essential pleading or part of the case

record may still be given due course or reinstated (if earlier dismissed)
upon showing that petitioner later submitted the documents required, or
that it will serve the higher interest of justice that the case be decided on
the merits.

Nevertheless, even if the pleadings and other supporting documents were not
attached to the petition, the dismissal is unwarranted because the CA records containing
the promissory notes and the real estate and chattel mortgages were elevated to this
Court. Without a doubt, we have sufficient basis to actually and completely dispose of the
case.

We must stress that cases should be determined on the merits, after all parties
have been given full opportunity to ventilate their causes and defenses, rather than on
technicalities or procedural imperfections. In that way, the ends of justice would be
served better. Rules of procedure are mere tools designed to expedite the decision or
resolution of cases and other matters pending in court. A strict and rigid application of
rules, resulting in technicalities that tend to frustrate rather than promote substantial
justice, must be avoided. In fact, Section 6 of Rule 1 states that the Rules shall be
liberally construed in order to promote their objective of ensuring the just, speedy and
inexpensive disposition of every action and proceeding.

Contrary to respondents assertion, NHAs verification conforms to the rule. Section 4, Rule 7 of the Rules
of Court states:

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SEC. 4. Verification. Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on authentic
records.

A pleading required to be verified which contains a verification based on information and

belief, or upon knowledge, information and belief, or lacks a proper verification, shall be
treated as an unsigned pleading.

The reason for requiring verification in the petition is to secure an assurance that the allegations
of a pleading are true and correct; are not speculative or merely imagined; and have been made in good
faith.[37] To achieve this purpose, the verification of a pleading is made through an affidavit or sworn
statement confirming that the affiant has read the pleading whose allegations are true and correct of the
affiant's personal knowledge or based on authentic records.[38]

The General Manager of NHA verified the petition as follows:

3. I have read the allegations contained therein and that the same are true and
correct to the best of my own personal knowledge.[39]

A reading of the above verification reveals nothing objectionable about it. The affiant confirmed that he
had read the allegations in the petition which were true and correct based on his personal
knowledge. The addition of the words to the best before the phrase of my personal knowledge did not
violate the requirement under Section 4 of Rule 7, it being sufficient that the affiant declared that the
allegations in the petition are true and correct based on his personal knowledge.

Now, as to the merits of the case. The main issue before us is whether the annotation of the
sheriffs certificate of sale on the owners duplicate certificate of titles is sufficient registration considering
that the inscription on the original certificates could not be made as the same got burned.

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Jurisprudence is replete with analogous cases. Of foremost importance is Development Bank of the
Philippines v. Acting Register of Deeds of Nueva Ecija[40] where the Court listed cases where the
transaction or instrument was annotated not on the original certificate but somewhere else. In that case,
DBP, following the extrajudicial foreclosure sale where it emerged as the highest bidder, registered with
the Register of Deeds the sheriffs certificate of sale in its favor. After it had paid the required fees, said
transaction was entered in the primary entry book. However, the annotation of the said transaction to the
originals of the certificates of title could not be done because the same titles were missing from the files of
the Registry. This prompted DBP to commence reconstitution proceedings of the lost titles. Four years
had passed before the missing certificates of title were reconstituted. When DBP sought the inscription of
the four-year old sale transaction on the reconstituted titles, the Acting Register of Deeds, being in doubt
of the proper action to take, referred the matter to the Commissioner of the Land Registration Authority
by consulta, the latter resolved against the annotation of the sale transaction and opined that said entry
was ineffective due to the impossibility of accomplishing registration at the time the document was
entered because of the non-availability of the certificate (sic) of title involved.[41] In other words, annotation
on the primary book was deemed insufficient registration. The Court disagreed with this
posture. Considering that DBP had paid all the fees and complied with all the requirements for purposes
of both primary entry and annotation of the certificate of sale, the Court declared that mere entry in the
primary book was considered sufficient registration since [DBP] cannot be blamed that annotation could
not be made contemporaneously with the entry because the originals of the subject certificates of title
were missing and could not be found, since it had nothing to do with their safekeeping. If anyone was
responsible for failure of annotation, it was the Register of Deeds who was chargeable with the keeping
and custody of those documents.[42] To buttress its conclusion, the Court reviewed the relevant
jurisprudence starting from 1934.The Court noted that before the Second World War, particularly
in Government of the Philippine Islands v. Aballe,[43] the prevailing doctrine was an inscription in the book
of entry even without the notation on the certificate of title was considered as satisfactory and produced
all the effects which the law gave to its registration. During the war, however, the Court observed that
there was apparent departure from said ruling since in Bass v. De la Rama, the holding was that entry of
an instrument in the primary entry book does not confer any legal effect without a memorandum thereof
inscribed on the certificate of title.[44] DBP noted that Bass v. De la Rama, however, survived only for a
little while since later cases appear to have applied the Aballe ruling that entry in the day book, even
without the corresponding annotation on the certificate of title, is equivalent to, or produces the effect of,
registration to voluntary transactions, provided the requisite fees are paid and the owners duplicates of
the certificates of title affected are presented.[45]

These later cases are Levin v. Bass[46] and Potenciano v. Dineros,[47] both of which involve the issue of
whether entry in the day book of a deed of sale, payment of the fees, and presentation of the owners
duplicate certificate of title constitute a complete act of registration. [48]

Simply, respondents resort to Bass v. De la Rama is futile as the same was abandoned by the later
cases, i.e., Bass, Potenciano and DBP.

In the recent case of Autocorp Group v. Court of Appeals,[49] the respondent was awarded the foreclosed
parcels of land. A sheriffs certificate of sale was thereafter issued in its favor. Thereafter, petitioners in
that case filed a complaint before the RTC with a prayer for the issuance of an ex parte TRO aimed at
preventing the Register of Deeds from registering the said certificate of sale in the name of the
respondent and from taking possession of the subject properties. [50] Before the RTC could issue a TRO,

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respondent presented the sheriffs certificate of sale to the Register of Deeds who entered the same
certificate in the primary book, even if the registration fee was paid only the following day.Four days after,
the RTC issued a TRO directing the Register of Deeds to refrain from registering the said sheriffs
certificate of sale. A preliminary injunction was thereafter issued as the TRO was about to expire. The
preliminary injunction was questioned by therein respondent. One of the main issues raised there was
whether the entry of the certificate of sale in the primary book was equivalent to registration such that the
TRO and the preliminary injunction issues would not lie anymore as the act sought to be restrained had
become an accomplished act. The Court held that the TRO and the preliminary injunction had already
become moot and academic by the earlier entry of the certificate of sale in the primary entry book which
was tantamount to registration, thus:

In fine, petitioners prayer for the issuance of a writ of injunction, to prevent the
register of deeds from registering the subject certificate of sale, had been rendered moot
and academic by the valid entry of the instrument in the primary entry book. Such
entry is equivalent to registration. Injunction would not lie anymore, as the act sought
to be enjoined had already become a fait accompli or an accomplished act.[51]

Indeed, the prevailing rule is that there is effective registration once the registrant has fulfilled all that is
needed of him for purposes of entry and annotation, so that what is left to be accomplished lies solely on
the register of deeds. The Court thus once held:

Current doctrine thus seems to be that entry alone produces the effect of registration,
whether the transaction entered is a voluntary or an involuntary one, so long as the
registrant has complied with all that is required of him for purposes of entry and
annotation, and nothing more remains to be done but a duty incumbent solely on the
register of deeds.[52]

In the case under consideration, NHA presented the sheriffs certificate of sale to the Register of Deeds
and the same was entered as Entry No. 2873 and said entry was further annotated in the owners transfer
certificate of title.[53] A year later and after the mortgagors did not redeem the said properties, respondents
filed with the Register of Deeds an Affidavit of Consolidation of Ownership [54]after which the same
instrument was presumably entered into in the day book as the same was annotated in the owners
duplicate copy.[55] Just like in DBP, Levin, Potenciano and Autocorp, NHA followed the procedure in order
to have its sheriffs certificate of sale annotated in the transfer certificates of title. There would be,
therefore, no reason not to apply the ruling in said cases to this one. It was not NHAs fault that the
certificate of sale was not annotated on the transfer certificates of title which were supposed to be in the
custody of the Registrar, since the same were burned. Neither could NHA be blamed for the fact that
there were no reconstituted titles available during the time of inscription as it had taken the necessary

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steps in having the same reconstituted as early as July 15, 1988.[56] NHA did everything within its power
to assert its right.

While it may be true that, in DBP, the Court ruled that in the particular situation here obtaining, annotation
of the disputed entry on the reconstituted originals of the certificates of title to which it refers is entirely
proper and justified, this does not mean, as respondents insist, that the ruling therein applies exclusively
to the factual milieu and the issue obtaining in said case, and not to similar cases. There is nothing in the
subject declaration that categorically states its pro hac vice character. For in truth, what the said
statement really conveys is that the current doctrine that entry in the primary book produces the effect of
registration can be applied in the situation obtaining in that case since the registrant therein complied with
all that was required of it, hence, it was fairly reasonable that its acts be given the effect of registration,
just as the Court did in the past cases. In fact the Court there continued with this pronouncement:

To hold said entry ineffective, as does the appealed resolution, amounts to

declaring that it did not, and does not, protect the registrant (DBP) from claims arising, or
transactions made, thereafter which are adverse to or in derogation of the rights created
or conveyed by the transaction thus entered. That, surely, is a result that is neither just
nor can, by any reasonable interpretation of Section 56 of Presidential Decree No. 1529
be asserted as warranted by its terms.[57]

What is more, in Autocorp Group v. Court of Appeals,[58] the pertinent DBP ruling was applied, thereby
demonstrating that the said ruling in DBP may be applied to other cases with similar factual and legal
issues, viz:

Petitioners contend that the aforecited case of DBP is not apropos to the case at bar.
Allegedly, in DBP, the bank not only paid the registration fees but also presented the
owners duplicate certificate of title. We find no merit in petitioners posture x x x.

xxxx

Like in DBP v. Acting Register of Deeds of Nueva Ecija, the instrument involved in the
case at bar, is a sheriffs certificate of sale, We hold now, as we held therein, that the
registrant is under no necessity to present the owners duplicates of the certificates of title
affected, for purposes of primary entry, as the transaction sought to be recorded is an
involuntary transaction.

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xxxx

x x x Such entry is equivalent to registration. Injunction would not lie anymore, as

the act sought to be enjoined had already become a fait accompli or an accomplished
act.[59]

Moreover, respondents stand on the non-applicability of the DBP case to other cases, absent any
statement thereof to such effect, contravenes the principle of stare decisis which urges that courts are to
apply principles declared in prior decisions that are substantially similar to a pending case. [60]

Since entry of the certificate of sale was validly registered, the redemption period accruing to respondents
commenced therefrom, since the one-year period of redemption is reckoned from the date of registration
of the certificate of sale.[61] It must be noted that on April 16, 1991, the sheriffs certificate of sale was
registered and annotated only on the owners duplicate copies of the titles and on April 16, 1992, the
redemption period expired, without respondents having redeemed the properties. In fact, on April 24,
1992, NHA executed an Affidavit of Consolidation of Ownership. Clearly, respondents have lost their
opportunity to redeem the properties in question.

As regards respondents allegation on the defect in the publication and notice requirements of the
extrajudicial foreclosure sale, the same is unavailing. The rule is that it is the mortgagor who alleges
absence of a requisite who has the burden of establishing such fact.[62] This is so because foreclosure
proceedings have in their favor the presumption of regularity and the burden of evidence to rebut the
same is on the party who questions it.[63] Here, except for their bare allegations, respondents failed to
present any evidence to support them. In addition, NHA stated in its Comment to Motion for Leave of
Court to Intervene that it had complied with the publication of the Notice of Sheriffs Sale in the Manila
Times in the latters issues dated July 14, 21 and 28, 1990. [64] It also claimed that an Affidavit of
Publication of said newspaper was attached as Annex B in the said comment. [65] NHA also said that
respondents had been furnished with a copy of the Notice of Sheriffs Sale as shown at the bottom portion
of said notice.[66] From all these, it would tend to show that respondents aspersion of non-compliance with
the requirements of foreclosure sale is a futile attempt to salvage its statutory right to redeem their
foreclosed properties, which right had long been lost by inaction.

Considering that the foreclosure sale and its subsequent registration with the Register of Deeds were
done validly, there is no reason for the non-issuance of the writ of possession. A writ of possession is an
order directing the sheriff to place a person in possession of a real or personal property, such as when a
property is extrajudicially foreclosed.[67] Section 7 of Act No. 3135 provides for the rule in the issuance of
the writ of possession involving extrajudicial foreclosure sales of real estate mortgage, to wit:

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Sec. 7. In any sale made under the provisions of this Act, the purchaser may
petition the [Regional Trial Court] of the province or place where the property or any
part thereof is situated, to give him possession thereof during the redemption period,
furnishing bond in an amount equivalent to the use of the property for a period of twelve
months, to indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and filed in the form of an ex parte motion in the
registration or cadastral proceedings if the property is registered, or in special
proceedings in the case of property registered under the Mortgage Law or under
section one hundred and ninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of
deeds in accordance with any existing law, and in each case the clerk of the court shall,
upon the filing of such petition, collect the fees specified in paragraph eleven of section
one hundred and fourteen of Act Numbered Four Hundred and ninety-six, as amended
by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon
approval of the bond, order that a writ of possession issue, addressed to the sheriff of
the province in which the property is situated, who shall execute said order
immediately.

This provision of law authorizes the purchaser in a foreclosure sale to apply for a writ of
possession during the redemption period by filing an ex parte motion under oath for that purpose in the
corresponding registration or cadastral proceeding in the case of property with Torrens title.[68] Upon the
filing of such motion and the approval of the corresponding bond, the law also in express terms directs
the court to issue the order for a writ of possession.[69]

The time-honored precept is that after the consolidation of titles in the buyers name, for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right. [70]Its issuance to a purchaser in
an extrajudicial foreclosure is merely a ministerial function. [71] The writ of possession issues as a matter of
course upon the filing of the proper motion and the approval of the corresponding bond. The judge issuing
the writ following these express provisions of law neither exercises his official discretion nor
judgment.[72] As such, the court granting the writ cannot be charged with having acted without jurisdiction
or with grave abuse of discretion.[73] To accentuate the writs ministerial character, the Court disallowed
injunction to prohibit its issuance despite a pending action for annulment of mortgage or the foreclosure
itself.[74]

Believing that the instant case does not come within the penumbra of the foregoing rule, respondents
resort to the ruling in Barican v. Intermediate Appellate Court.[75]Unfortunately for them, the instant case
does not even come close to the cited case. There, the Court deemed it inequitable to issue a writ of
possession in favor of the purchaser in the auction sale considering that the property involved was
already in the possession of a third person by virtue of a deed of sale with assumption of mortgage even
before the purchaser could register the sheriffs certificate of sale. Also, the auction buyer therein

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unreasonably deferred to exercise its right to acquire possession over the property. These circumstances
are not present in the instant case.

Moreover, in Fernandez v. Espinoza,[76] the Court refused to apply the ruling in Barican v.
Intermediate Appellate Court[77] and Cometa v. Intermediate Appellate Court,[78] two cases which are
exemptions to the stated rule, reasoning that:

In Cometa, which actually involved execution of judgment for the prevailing party in a
damages suit, the subject properties were sold at the public auction at an unusually lower
price, while in Barican, the mortgagee bank took five years from the time of foreclosure
before filing the petition for the issuance of writ of possession. We have considered these
equitable and peculiar circumstances in Cometa and Barican to justify the relaxation of
the otherwise absolute rule. None of these exceptional circumstances, however, attended
herein so as to place the instant case in the same stature as that of Cometa and Barican.
Instead, the ruling in Vaca v. Court of Appeals is on all fours with the present petition.
In Vaca, there is no dispute that the property was not redeemed within one year from the
registration of the extrajudicial foreclosure sale; thus, the mortgagee bank acquired an
absolute right, as purchaser, to the issuance of the writ of possession. Similarly, UOB, as
the purchaser at the auction sale in the instant case, is entitled as a matter of right, to the
issuance of the writ of possession.

Just as in Fernandez, this Court does not see any compelling reason to veer away from the
established rule.

In fine, this Court finds that the Court of Appeals committed reversible error in ruling that the
annotation of NHAs sheriffs certificate of sale on the duplicate certificates of title was not effective
registration and in holding that respondents redemption period had not expired.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Amended
Decision of the Court of Appeals dated November 27, 2000 is SET ASIDE.

SO ORDERED.

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Durawood v. Candice Bona, G.R. No. 179884, January 25, 2012

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals in CA-
G.R. SP No. 94479 dated April 18, 2007 and its Resolution[2] dated September 18, 2007.

On June 3, 2004, petitioner Durawood Construction and Lumber Supply, Inc. (Durawood) filed an
action for sum of money plus damages with a prayer for the issuance of a writ of preliminary attachment
against LBB Construction and Development Corporation (LBB Construction) and its president Leticia
Barber (Barber) before the Regional Trial Court (RTC) of Antipolo. In said suit, which was docketed as
Civil Case No. 04-7240, Durawood prayed for the sum of P665,385.50 as payment for construction
materials delivered to LBB Construction.

On June 14, 2004, the RTC issued an Order granting Durawoods prayer for the issuance of a writ
of attachment. On June 16, 2004, the corresponding writ was issued.

On June 17, 2004, Sheriff Rolando C. Leyva (Sheriff Leyva) levied on a 344-square meter parcel
of land in Richdale Subdivision, Antipolo City covered by Transfer Certificate of Title (TCT) No. R-17571 in
the name of LBB Construction. A Notice of Levy on Attachment was annotated in TCT No. R-17571s
Memorandum of Encumbrances on the same day, June 17, 2004.

On July 13, 2004, respondent Candice S. Bona (Candice) filed a Motion seeking leave to
intervene in Civil Case No. 04-7240. Attached to said Motion was Candices Answer in Intervention, her
Third Party Claim addressed to Sheriff Leyva, and a copy of TCT No. R-17571. Candice claimed therein
that she is a co-owner of the property covered by TCT No. R-17571. She alleged that LBB Construction
had sold the property to her and her siblings, Michael Angelo S. Bona, Diane Sheila S. Bona, Glenda May
S. Bona and Johann Louie Sebastian S. Bona, through a Deed of Absolute Sale dated June 2,
2004. Candice asserted that the sale is the subject of Entry No. 30549 dated June 16, 2004 in the books
of the Registry of Deeds of Antipolo City, while the levy on attachment is only Entry No.
30590 dated June 17, 2004. What was attached to the Motion was a copy of TCT No. R-17571, and not a
title in Candice and her co-owners names.

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On August 11, 2004, the RTC issued an Order granting Candices Motion to Intervene.

LBB Construction and Barber filed their Answer in Civil Case No. 04-7240, but failed to attend the
scheduled hearings, including the pre-trial. Consequently, Durawood was allowed to present its
evidence ex parte.

On July 21, 2005, the RTC rendered its Decision[3] in Civil Case No. 04-7240 in favor of
Durawood. The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing consideration, judgment is rendered in

favor of the plaintiff and against the defendants, viz:

1. Ordering the defendants to pay plaintiff the sum of Six Hundred Sixty[-]Five
Thousand Three Hundred Eighty[-]Five Pesos and Fifty Centavos
(P665,385.50) plus two percent (2%) interest per month from May 11, 2004
up to the present;

2. Ordering the defendants to pay plaintiff twenty-five percent (25%) of the

amount due to the plaintiff by way of attorneys fees; and

3. To pay the costs of suit.[4]

The Decision became final and executory. On September 12, 2005, Durawood filed a Motion for
the Issuance of a Writ of Execution. On November 15, 2005, the RTC issued a Writ of Execution. It was
when this Writ was about to be enforced that Durawood discovered the cancellation of TCT No. R-17571
and the issuance of TCT No. R-22522 in the name of Candice and her siblings.

It would appear from the records that on June 16, 2004, the supposed Register of Deeds of
Antipolo City, Atty. Randy A. Rutaquio (Atty. Rutaquio), cancelled TCT No. R-17571 and issued TCT No.
R-22522 in the name of Candice and her co-owners. The parties, however, do not dispute that said
cancellation of the old TCT and issuance of the new one was antedated, since Atty. Rutaquio was still the
Register of Deeds of Malabon on said date.[5] According to a certification of the Land Registration

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Authority,[6] it was a certain Atty. Edgar D. Santos (Atty. Santos) who was the Acting Register of Deeds of
Antipolo City on June 16, 2004.

Durawood filed a Motion to Reinstate Notice of Levy on Attachment in TCT No. R-22522 and Cite
Atty. Randy A. Rutaquio for Contempt[7] on the following grounds:

5. The cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522
was made by Atty. Randy A. Rutaquio who, on June 2004, was not the Register of Deeds
of Antipolo City. As evidence of such fact, plaintiff corporation was issued a certification
by LRA Human Resource Management Officer IV Loreto I. Orense that Atty. Edgar D.
Santos was the Acting Register of Deeds of Antipolo City from June 1-30, 2004.

6. While the Deed of Sale annotated in TCT No. R-17571 appears to have been
made on June 16, 2004, the fact of its inscription was made after that of the levy on
attachment as it obviously appears below and next to it.

7. The records of this case reveal that in the Third Party Claim filed by Candice
Bona sometime in July 2004, there was never any mention of any recording about a
Deed of Absolute Sale in the Memorandum of Encumbrances in TCT No. R-17571. It is
difficult to comprehend that Atty. Hernando U. Salvador, Bonas lawyer, would miss
mentioning that a Deed of Absolute Sale was inscribed ahead of the notice of levy on
attachment if ever such sale was made on June 16, 2004.

8. Thus, under the circumstances, plaintiff corporation cannot help speculate that
[the] Deed of Sale between LBB Construction and the Bonas was made to appear to
have been recorded a day before the attachment.

9. While the Notice of Levy on Attachment was inscribed in TCT No. R-17571
ahead and before of the Deed of Sale between LBB Construction Co., Inc. and the
Bonas, the said notice was not carried over in TCT No. R-22522 despite the fact that
there was no order coming from this Honorable Court dissolving the Writ of Preliminary
Attachment dated June 16, 2004.

10. Randy Rutaquios unauthorized acts of cancelling TCT No. R-17571 and
issuing TCT No. R-22522 without inscribing the Notice of Levy on Attachment despite the
absence of a court order dissolving the writ of Preliminary Attachment constitute improper
conduct tending to directly or indirectly to impede, obstruct or degrade the administration
of justice.[8]

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Atty. Rutaquio filed a Manifestation alleging that the sale was entered in the Primary Entry Book
prior to the Levy on Attachment. The two transactions were assigned to different examiners and it just so
happened that the examiner to whom the levy on attachment was assigned was able to inscribe the
memorandum ahead of the sale, although the inscription of the sale was entered ahead of the levy. The
levy on attachment was not inscribed on TCT No. R-22522 because allegedly the sale should have priority
and preference. The cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522 was already
completed when he took over the position of Atty. Santos as Acting Register of Deeds and was therefore
already clothed with the authority to issue and sign TCT No. R-22522.

Atty. Rutaquio also submitted a letter dated June 25, 2004 from Atty. Santos to Land Registration
Authority (LRA) Administrator Benedicto B. Ulep (Administrator Ulep) consulting the latter as regards the
registration of the Deed of Absolute Sale and the Notice of Levy on Attachment.[9] In said letter received
by the LRA on July 1, 2004, Atty. Santos stated that he had not acted on the Deed of Absolute Sale since
the required registration fees were not paid therefor.[10] Administrator Ulep was able to reply to said letter
on October 6, 2004, when Atty. Rutaquio was already the Acting Register of Deeds. Administrator Ulep
stated that since the Deed of Sale was considered registered on June 16, 2004, the same shall take
precedence over the Notice of Levy on Attachment registered on June 17, 2004.[11]

Acting on the Motion to Reinstate Notice of Levy on Attachment in TCT No. R-22522 and Cite
Atty. Randy A. Rutaquio for Contempt, the RTC issued an Order [12] dated March 2, 2006, ruling in favor of
Durawood. The RTC gave great weight to the certification by LRA Human Resource Management Officer
IV Loreto I. Orense that Atty. Santos was the Acting Register of Deeds from June 1-30, 2004, and held
that this proves the fact that Atty. Santos was the only person authorized to sign and approve all the
transactions with the Registry of Deeds of Antipolo City at the time. Moreover, according to the RTC, the
alienation of LBB Construction in favor of the Bonas without leaving sufficient property to pay its obligation
is considered by law in fraud of creditor under Articles 1381[13] and 1387[14] of the Civil Code.

The RTC did not rule on Durawoods prayer to cite Atty. Rutaquio for contempt. The dispositive
portion of the March 2, 2006 Order reads:

WHEREFORE, premises considered, the instant motion to reinstate notice of

levy on attachment in TCT No. R-22522 now in the name of the intervenors is hereby
GRANTED its non-inscription therein having been made without order of this Court.

The Register of Deeds of Antipolo City is directed to reinstate the notice of levy
on attachment in TCT No. R-22522 in the names of intervenors immediately upon receipt
of this Order.[15]

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Candice filed a Motion for Reconsideration of the above Order. In the meantime, on March 13,
2006, Sheriff Leyva issued a Notice of Sheriffs Sale setting the sale of the property covered by TCT No.
R-22522 at public auction on April 11, 2006 at 10:00 a.m., pursuant to the November 15, 2005 Writ of
Execution. Candice filed an Urgent Ex-Parte Motion to Order the Branch Sheriff to Desist from the Sale of
Intervenors Property for Being Premature, which was granted by the RTC in an Order dated March 29,
2006.

On March 8, 2006, the new Acting Register of Deeds Jose S. Loriega, Jr. complied with the March
6, 2006 Order of the RTC by reinstating in TCT No. R-22522 the Notice of Levy on Attachment in favor of
Durawood.

On April 7, 2006, the RTC issued an Order denying Candices Motion for Reconsideration. In said
Order, the RTC highlighted its observation that in TCT No. R-17571, the inscription of the levy on
attachment by Atty. Santos dated June 17, 2004 was in page A (the dorsal portion) of the title, while the
supposedly earlier inscription of the Deed of Sale by Atty. Rutaquio dated June 16, 2004 was found in
page B (a separate page) of the title. The RTC found this fact, as well as the above-mentioned
certification that Atty. Santos was the Acting Register of Deeds of Antipolo City from June 1 to 30, 2004,
sufficient proof of the irregularity of the June 16, 2004 inscription of the Deed of Sale.

On April 11, 2006, Sheriff Leyva sold the subject property at public auction for P1,259,727.90 with
Durawood being the lone bidder, and issued the corresponding Certificate of Sale. The sale was inscribed
in TCT No. R-22522 on the same date.[16]

Candice filed with the Court of Appeals a Petition for Certiorari and Prohibition assailing the March
2, 2006 and April 7, 2006 Orders of the RTC.

On April 18, 2007, the Court of Appeals rendered the assailed Decision in favor of
Candice. According to the Court of Appeals, the sequence of presentation of the entries in the TCT cannot
control the determination of the rights of the claimants over a disputed property. It is the registration in the
Primary Entry Book (also referred to in other cases as the day book) that establishes the order of
reception of instruments affecting registered land. As explained by Atty. Rutaquio, the entry in the day
book is only the preliminary step in the registration. The inscription of the levy on attachment on TCT No.
R-17571 (which was made before the inscription of the Deed of Sale on said title) retroacts to the date of
entry in the Primary Entry Book, which is June 17, 2004. However, the inscription of the Deed of Sale on
TCT No. R-17571, although made after the inscription of the levy on attachment, retroacts to the earlier
date of entry in the Primary Entry Book, which is June 16, 2004.

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As regards the issuance by Atty. Rutaquio of TCT No. R-22522 on June 16, 2004 despite the fact
that he was not yet the Register of Deeds of Antipolo City at that time, the Court of Appeals held that there
was substantial compliance with the National Land Titles and Deeds Registration Administration
(NALTDRA; now the Land Registration Authority [LRA]) Circular No. 94 on Certificates of title and
documents left unsigned by former Register of Deeds, which provides:

It has been brought to the attention of this Registration that, in some Registries,
there are certificates of title with the full transcriptions and inscriptions, including the
volume and page numbers, the title number, the date and the name of the former
Register of Deeds, already typewritten thereon but which, for some reasons, cannot
anymore be signed by the former official. In such cases and to resolve this problem, the
present Register of Deeds may, without changing or altering the transcriptions and
inscriptions, affix his signature below the name of the former Register of Deeds but
placing the actual date and time of signing enclosed in parenthesis below his
signature.[17]

The Court of Appeals accepted Atty. Rutaquios manifestation that he signed TCT No. R-22522
subsequent to June 16, 2004, on a date when he was already the Acting Register of Deeds of Antipolo
City. Since the entry in the Primary Entry Book was made at the time of the incumbency of Atty. Santos,
the name of the latter still appears on the document. According to the Court of Appeals, Candice cannot
be made to suffer for the failure of Atty. Rutaquio to affix the date when he signed the
document. Furthermore, a certificate of title, once registered, cannot be impugned, altered, changed,
modified, enlarged or diminished except in a direct proceeding permitted by law. Finally, an action for
rescission of contracts entered into in fraud of creditors cannot be instituted except when the party
suffering damage has no other legal means to obtain reparation for the same.[18]

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the assailed Orders of public respondent

judge ordering the reinstatement of the subject notice of levy on attachment in TCT No.
R-22522 are hereby ANNULLED and SET ASIDE. As a result thereof, the public auction
sale carried out pursuant to said levy is also declared null and void.[19]

Durawood filed a Motion for Reconsideration, but the same was denied by the Court of Appeals in
its Resolution dated September 18, 2007.

Durawood filed the instant Petition for Review, with the following Assignment of Errors:

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I.

THE COURT OF APPEALS IGNORED THE FACT THAT NON-PAYMENT OF THE

REQUIRED REGISTRATION FEES BY CANDICE S. BONA AND HER SIBLINGS DID
NOT COMPLETE THE REGISTRATION OF THE DEED OF ABSOLUTE SALE ON
JUNE 16, 2004.

II.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT DISREGARDED THE FACT

THAT NALTDRA CIRCULAR NO. 94 WAS NOT COMPLIED WITH BY ATTY. RANDY
RUTAQUIO.

III.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO CONSIDER THAT

THE ENTRIES IN TCT NO. R-17571 (THE PREDECESSOR OF TCT NO. R-22522) ARE
EVIDENCES OF THE FACTS STATED THEREIN.

IV.

THE COURT OF APPEALS OVERLOOKED THE FACT THAT THE REAL PROPERTY
COVERED BY TCT NO. R-17571 AND SUBSEQUENTLY BY TCT NO. R-22522 HAS
ALREADY BEEN ATTACHED BUT WAS UNILATERALLY RELEASED FROM THE
COURTS JURISDICTION BY A USURPER.[20]

All these allegations are specific matters to be resolved by this Court in determining the overriding
issue of the case at bar: whether the Court of Appeals correctly granted Candices Petition
for Certiorari and Prohibition on its finding that the RTC committed grave abuse of discretion in issuing its
March 2, 2006 and April 7, 2006 Orders. In other words, the main issue to be determined by this Court
is whether or not there was grave abuse of discretion in the RTCs order to reinstate the notice of levy on
attachment in TCT No. R-22522. Grave abuse of discretion signifies such capricious and whimsical
exercise of judgment that is equivalent to lack of jurisdiction. The abuse of discretion must be grave as

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where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility,
and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of law. [21]

The Court of Appeals, in considering the date of entry in the day book of the Registry of Deeds as
controlling over the presentation of the entries in TCT No. R-17571, relied on Section 56 of Presidential
Decree No. 1529 which provides that:

SEC. 56. Primary Entry Book; fees; certified copies. Each Register of Deeds
shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in
the order of their reception, all instruments including copies of writs and processes filed
with him relating to registered land. He shall, as a preliminary process in registration, note
in such book the date, hour and minute of reception of all instruments, in the order in
which they were received. They shall be regarded as registered from the time so
noted, and the memorandum of each instrument, when made on the certificate of
title to which it refers, shall bear the same date: Provided, that the national
government as well as the provincial and city governments shall be exempt from the
payment of such fees in advance in order to be entitled to entry and registration.
(Emphasis supplied.)

The consequence of the highlighted portion of the above section is two-fold: (1) in determining the
date in which an instrument is considered registered, the reckoning point is the time of the reception of
such instrument as noted in the Primary Entry Book; and (2) when the memorandum of the instrument is
later made on the certificate of title to which it refers, such memorandum shall bear the same date as that
of the reception of the instrument as noted in the Primary Entry Book. Pursuant to the second
consequence stated above, the Court of Appeals held that Atty. Rutaquio correctly placed the date of
entry in the Primary Entry Book as the date of the memorandum of the registration of the deed of sale in
TCT No. R-17571.

As regards the first consequence, this Court has applied the same in several cases. Thus, in the
old cases of Levin v. Bass,[22] Potenciano v. Dineros,[23] and Development Bank of the Philippines v.
Acting Register of Deeds of Nueva Ecija,[24] as well as in the fairly recent cases of Autocorp Group v.
Court of Appeals,[25] Armed Forces and Police Mutual Benefit Association, Inc. v.
Santiago,[26] and National Housing Authority v. Basa, Jr.,[27] we upheld the entry of instruments in the
Primary Entry Book to be equivalent to registration despite even the failure to annotate said instruments in
the corresponding certificates of title.

Based on this alone, it appears that the RTC was in error when it considered the registration of
the Absolute Deed of Sale on June 16, 2004 inferior to the registration of the Notice of Levy on

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Attachment on June 17, 2004 on the ground that the Attachment was annotated on TCT No. R-17571
earlier than the Deed of Sale. As discussed in the above-mentioned cases, the annotation in the certificate
of title is not determinative of the effectivity of the registration of the subject instrument.

However, a close reading of the above-mentioned cases reveals that for the entry of instruments
in the Primary Entry Book to be equivalent to registration, certain requirements have to be met. Thus, we
held in Levin that:

Do the entry in the day book of a deed of sale which was presented and filed together
with the owner's duplicate certificate of title with the office of the Registrar of Deeds and
full payment of registration fees constitute a complete act of registration which operates
to convey and affect the land? In voluntary registration, such as a sale, mortgage, lease
and the like, if the owner's duplicate certificate be not surrendered and presented or if no
payment of registration fees be made within 15 days, entry in the day book of the
deed of sale does not operate to convey and affect the land sold. x x x.[28]

Levin, which was decided in 1952, applied Section 56 of the Land Registration Act [29] which
provides:

Sec. 56. Each register of deeds shall keep an entry book in which, upon payment
of the filing fee, he shall enter in the order of their reception all deeds and other voluntary
instruments, and all copies of writs or other process filed with him relating to registered
land. He shall note in such book the year, month, day, hour, and minute of reception of all
instruments in the order in which they were received. They shall be regarded as
registered from the time so noted, and the memorandum of each instrument when made
on the certificate of title to which it refers shall bear the same date; Provided, however,
That no registration, annotation, or memorandum on a certificate of title shall be
made unless the fees prescribed therefor by this Act are paid within fifteen days'
time after the date of the registration of the deed, instrument, order or document in
the entry book or day book, and in case said fee is not paid within the time above
mentioned, such entry shall be null and void: Provided further, That the Insular
Government and the provincial and municipal governments need not pay such fees in
advance in order to be entitled to entry or registration. (Emphasis supplied.)

This provision is the precursor of the aforequoted Section 56 of Presidential Decree No. 1529,
which seems to have dispensed with the provision nullifying the registration if the required fees are not
paid:

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SEC. 56. Primary Entry Book; fees; certified copies. Each Register of Deeds
shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in
the order of their reception, all instruments including copies of writs and processes filed
with him relating to registered land. He shall, as a preliminary process in registration, note
in such book the date, hour and minute of reception of all instruments, in the order in
which they were received. They shall be regarded as registered from the time so noted,
and the memorandum of each instrument, when made on the certificate of title to which it
refers, shall bear the same date: Provided, that the national government as well as the
provincial and city governments shall be exempt from the payment of such fees in
advance in order to be entitled to entry and registration.

In Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,[30] this Court
applied the provisions of Presidential Decree No. 1529 and modified the doctrine as follows:

Current doctrine thus seems to be that entry alone produces the effect of
registration, whether the transaction entered is a voluntary or an involuntary one, so long
as the registrant has complied with all that is required of him for purposes of entry
and annotation, and nothing more remains to be done but a duty incumbent solely
on the register of deeds.[31]

This pronouncement, which was reiterated in National Housing Authority v. Basa, Jr.,[32] shows
that for the entry to be considered to have the effect of registration, there is still a need to comply with all
that is required for entry and registration, including the payment of the prescribed fees. Thus, in Autocorp
Group v. Court of Appeals,[33] this Court compared the date when the required fees were paid with the
therein assailed writ of preliminary injunction:

Petitioners contend that payment of the entry fee is a condition sine qua
non before any valid entry can be made in the primary entry book. Allegedly, the Court of
Appeals resorted to judicial legislation when it held that the subsequent payment of the
entry fee was curative and a substantial compliance with the law. Petitioners claim that
the ruling in DBP vs. Acting Register of Deeds of Nueva Ecija does not apply to this
case. As there was no valid registration, petitioners conclude that the order of the trial
court issuing a writ of preliminary injunction was proper, considering the irregularities
present in the conduct of the extrajudicial foreclosure x x x.

We find the petition bereft of merit.

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First. The objection as to the payment of the requisite fees is unavailing. There is
no question that the fees were paid, albeit belatedly. Respondent bank presented the
certificate of sale to the Office of the Register of Deeds of Cebu City for registration
on January 21, 1999 at 4:30 p.m. As the cashier had already left, the Office could not
receive the payment for entry and registration fees, but still, the certificate of sale was
entered in the primary entry book. The following day, respondent bank paid the requisite
entry and registration fees. Given the peculiar facts of the case, we agree with the Court
of Appeals that the payment of respondent bank must be deemed to be substantial
compliance with the law; and, the entry of the instrument the day before, should not be
invalidated. In any case, even if we consider the entry to have been made on January
22, the important fact is that the entry in the primary entry book was done prior to the
issuance of the writ of injunction [on February 15, 1999; TRO issued on January 25,
1999] by the trial court.[34] (Emphases supplied.)

Records in the case at bar reveal that as of June 25, 2004, the date of the letter of Atty. Santos
seeking the opinion of the LRA as regards the registration of the Deed of Sale and the Notice of Levy on
Attachment, the required registration fees for the Deed of Sale has not yet been paid:

25 June 2004

[received by the LRA: July 01, 2004]

HON. BENEDICTO B. ULEP

Administrator

This Authority

Sir:

This has reference to the TCT No. R-17571/T-87 registered under the name of
LBB Construction and Development Corporation relative to the Deed of Absolute Sale
with Entry No. 30549, which was sought to be registered on 16 June 2004 at 11:20 a.m.
(a photocopy of which is hereto attached as Annex A).

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However, on 17 June 2004 at 11:45 a.m. a Notice of Levy on Attachment (a

photocopy of which is hereto attached as Annex B) with Entry No. 30590 was filed and
annotated against TCT No. R-17571/T-87.

In view of the foregoing, we are now in a quandary as to what proper steps

should be taken. It should be noted further that the required registration fees of the
abovementioned sale was not paid the reason for which the same was not
immediately acted upon by the undersigned.[35]

Since there was still no compliance of all that is required x x x for purposes of entry and
annotation[36] of the Deed of Sale as of June 25, 2004, we are constrained to rule that the registration of
the Notice of Levy on Attachment on June 17, 2004 should take precedence over the former. Considering
that the Notice of Levy on Attachment was deemed registered earlier than the Deed of Sale, the TCT
issued pursuant to the latter should contain the annotation of the Attachment.

In view of the foregoing, we find that the RTC was, in fact, acting properly when it ordered the
reinstatement of the Notice of Levy on Attachment in TCT No. R-22522.Since the RTC cannot be
considered as to have acted in grave abuse of its discretion in issuing such Order, the Petition
for Certiorari assailing the same should have been dismissed.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is

hereby GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 94479 dated April 18, 2007
and its Resolution dated September 18, 2007 are REVERSED and SET ASIDE.

SO ORDERED.

b. Double Sales
Rodriguez v. Sioson, G.R. No. 199180, July 27, 2016
DECISION
REYES, J.:
review1
Before the Court is a petition for under Rule 45 of the Rules of Court assailing the
Decision2dated May 26, 2011 and Resolution3 dated October 21, 2011 of the Court of
Appeals (CA) in CA-G.R. CV No. 94867, which nullified the Joint Decision4 dated August 13,
2009 of the Regional Trial Court (RTC) of Bataan, Branch 3.
The Facts

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This petition is the aftermath of a series of sales transactions entered into by Neri delos
Reyes (Neri) over a portion of a property formerly identified as Lot 398, with an area of
22,398 square meters, covered by Transfer Certificate of Title (TCT) No. T-86275 and
registered in the name of "Neri delos Reyes, married to Violeta Lacuata."5chanrobleslaw

Sometime in 1997, the Municipality of Orani, Bataan (Municipality) purchased from Neri an
area of about 1.7 hectare of Lot 398, to be used for the extension of the Municipality's public
market. Among other things, it was agreed that upon full payment of the purchase price, Neri
will surrender the mother title to the Municipality for subdivision of the property on the
condition that Neri will equitably share in the expense thereof.6chanrobleslaw

Lot 398 was subsequently subdivided into 5 lots: Lot 398-A, Lot 398-B, Lot 398-C, Lot 398-D,
and Lot 398-E. Lots 398-C and 398-D pertain to the portions that were sold to the
Municipality, while Lot 398-E is a road lot. Consequently, only Lots 398-A and 398-B were left
as the remaining portions over which Neri retained absolute title. TCT Nos. T-209894 and T-
209895 were then respectively issued over Lots 398-A and 398-B and were both registered in
the name of "Neri delos Reyes, married to Violeta Lacuata." The owner's duplicate copies of
TCT Nos. T-209894 and T-209895, however, were retained by the Municipality pending
Neri's payment of his share in the expenses incurred for the subdivision of Lot 398. These
were placed under the custody of the Municipal Treasurer, where they continue to
remain.7chanrobleslaw

Neri, however, alleged that then Municipal Mayor Mario Zuiga suggested that he sell Lot
398-A to his aunt, petitioner Thelma Rodriguez (Thelma). The Municipality would then
expropriate the same from Thelma. Neri agreed to the suggestion.8chanrobleslaw

After agreeing to the amount of P1,243,000.00 as the selling price, Thelma, on March 20,
1997, issued a check for said amount payable to Neri. When it fell due, no sufficient funds
were available to cover the check. Consequently, it was agreed that Thelma would pay the
purchase price in installments from March 20, 1997 to September 4, 1997. Thelma, however,
was only able to pay P442,293.50.9chanrobleslaw

On November 12, 2001, Thelma caused the annotation of an adverse claim on TCT No. T-
209894.10 At about the same time, Thelma saw an announcement that a new Orani Common
Terminal would be built on Lot 398-A. As she has not yet entered into any agreement
regarding the utilization of said lot, Thelma filed a Complaint for Injunction docketed as Civil
Case No. 7394 against then incumbent mayor Efren Pascual, Jr. (Mayor Pascual), and the
Municipality under claim of ownership. To support her claim, Thelma incorporated in her
complaint a copy of an undated and unnotarized deed of absolute sale allegedly executed
by Neri in her favor.11chanrobleslaw

In their joint verified answer, Mayor Pascual and the Municipality acknowledged that Thelma
became the owner of Lot 398-A by way of purchase from Neri.12chanrobleslaw

In 2002, Neri executed an affidavit claiming that the owner's copies of TCT No. T-209894
(covering Lot 398-A) and TCT No. T-209895 (covering Lot 398-B) were lost, which was
annotated on the original copy of TCT No. T-209894 on May 8, 2002.13 Two days after, or on
May 10, 2002, Neri caused the cancellation of Thelma's adverse claim. 14 Neri also caused

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the reconstitution of new owner's copies of TCT Nos. T-209894 and T-209895.15 Thereafter,
new copies of TCT Nos. T-209894 and T-209895 were issued, and Neri then sold Lot 398-A
to Spouses Jaime and Armi Sioson, Spouses Joan and Joseph Camacho, and Agnes
Samonte (respondents) - in a deed of sale dated November 27, 2002. A special power of
attorney was executed by Violeta delos Reyes (Violeta) in favor of Neri for the purpose.
Consequently, TCT No. T-209894 was cancelled, and TCT No. T-226775 was thus issued in
the respondents' names.16chanrobleslaw

Upon the issuance of TCT No. T-226775, the respondents declared Lot 398-A for tax
purposes and paid them accordingly. They sought to take actual possession thereof by filling
it; however, after they filled said lot with about 40 truckloads of soil/fillings, Thelma sent two
armed blue guards who entered the premises and set up a tent therein. The respondents
brought the matter to the attention of barangay authorities who referred them to the municipal
mayor. As the municipal mayor did not take any action, the respondents filed a forcible entry
case against Thelma before the Municipal Circuit Trial Court of Orani-Samal, Bataan,
docketed as Civil Case No. 843. The said ejectment case is still pending. 17chanrobleslaw

After Thelma learned of the second sale of Lot 398-A, she filed against the respondents a
complaint for the Declaration of Nullity of the Second Sale and TCT No. T-226775 on
February 11, 2003, docketed as Civil Case No. 7664. In support of her claim, Thelma once
again presented a deed of absolute sale executed by Neri in her favor. This time, the deed of
sale she presented was duly signed by her and Neri, witnessed, notarized and dated
April 10, 1997.18chanrobleslaw

The respondents countered that they are innocent purchasers for value having bought Lot
398-A at the time when Thelma's adverse claim was already cancelled. While they admit
Thelma's possession of the subject property, they, however, qualify that possession is being
contested in a separate action for forcible entry. 19chanrobleslaw

The respondents also filed a verified answer-in-intervention in Civil Case No. 7394 (injunction
case) contending that they are the present registered owners of Lot 398-A, and as such,
Thelma is not entitled to any relief.20chanrobleslaw
Ruling of the RTC

The RTC jointly heard Civil Case No. 7394 and Civil Case No. 7664 and after trial, rendered
judgment in favor of Thelma. The dispositive portion of the Joint Decision21 dated August 13,
2009 reads:ChanRoblesVirtualawlibrary
WHEREFORE, judgment is hereby rendered declaring that:ChanRoblesVirtualawlibrary
1) [Thelma] is entitled to the relief of permanent injunction prayed for in Civil Case No. 7394
against the respondents. Insofar as defendants [Mayor Pascual] and the [Municipality] are
concerned, not only did they acknowledge expressly the ownership of [Thelma] of Lot 398-A,
they have disowned the commission of any act in derogation of [Thelma's] right of ownership
of the lot and did not contest anymore the action of [Thelma] in said case;

2) Insofar as Civil Case No. 7664 is concerned, the second deed of sale entered into by [Neri]
with the [respondents] is hereby declared null and void, and [TCT] No. T-226775 of the
Registry of Deeds of Bataan which was issued by defendant Register of Deeds pursuant to
said second deed of sale is likewise declared null and void, and accordingly, the Register of
Deeds for the Province of Bataan is ordered to cancel said certificate of title and to reinstate

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[TCT] No. T-209894 in the name of [Neri], married to [Violeta];

3) The new owner's copy of [TCT] No. T-209894 is hereby declared null and void as the
original owner's copy is not lost but actually exists and is presently in the custody of the
Municipal Treasurer of Orani, Bataan. In consequence, defendant Register of Deeds of
Bataan is directed to cancel said new owner's copy of [TCT] No. T-209894;
and cralawlawlibrary

4) [The respondents] are hereby ordered to jointly and severally pay to [Thelma] attorney's
fees in the amount of Twenty[-]Five Thousand Pesos (P25,000.00).
All counterclaims of [the respondents] are denied for lack of basis in fact and in law.

No pronouncement as to costs.

SO ORDERED.22chanroblesvirtuallawlibrary
The RTC concluded that by Neri's admission that he sold the subject lot to Thelma for a
consideration of P1,243,000.00, and his acknowledgement receipt of P442,293.50 as partial
payment from the latter, the transaction between Thelma and Neri should be regarded as an
executed contract of sale. Hence, Lot 398-A was subjected to a double sale when Neri sold
the same property to the respondents.23 The RTC further ruled that the contract of sale
between Neri and the respondents is null and void because it was transacted and executed
at the time when Neri was no longer the owner of Lot 398-A. It was legally inexistent for lack
of object certain. Thereupon, the fact that the respondents were able to register their
acquisition first is of no moment. Registration does not legitimize a void contract and thus,
TCT No. T-226775 should be cancelled.24chanrobleslaw

The respondents moved for reconsideration but it was denied by the RTC per
Order25cralawred dated January 13, 2010. Hence, they elevated their case to the CA.
Ruling of the CA

On May 26, 2011, the CA promulgated the assailed Decision,26 with the following dispositive
portion:ChanRoblesVirtualawlibrary
WHEREFORE, the instant Appeal is GRANTED. The Joint Decision dated August 13, 2009
and the Order dated January 13, 2010 of the [RTC] of Bataan are hereby
declared NULLand VOID insofar as it (1) granted permanent injunction in favor of [Thelma] in
Civil Case No. 7394 against [the respondents];T2) declared null and void the deed of sale
between [Neri] and [the respondents] in Civil Case No. 7664; (3) declared null and void the
[TCT] No. T-226775; (4) ordered the cancellation of [TCT] No. T-226775 and reinstatement of
[TCT] No. T-209894 in the name of [Neri], married to [Violeta]; and (5) ordered the payment
of attorney's fees.

Consequently, the following are hereby declared VALID: (1) the Deed of Sale between
[Neri] and [the respondents]; and (2) the [TCT] No. T-226775 in the names of [the
respondents].

This Decision is without prejudice to any right which [Thelma] may have against [Neri] for the
refund of the amount of Four Hundred Forty-Two Thousand Two Hundred Ninety-Three
and 50/100 Pesos (P442,293.50).

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The Complaints in Civil Cases Nos. 7394 and 7664 are hereby DISMISSED.

SO ORDERED.27 (Emphasis in the original)

Contrary to the findings of the RTC, the CA found that the contract between Neri and
Thelma was a mere contract to sell and not a contract of sale; hence, there was no double
sale of Lot 93 8-A. According to the CA, the question of whether or not the respondents are
buyers in good faith is unavailing since the concept of a "buyer in good faith" finds relevance
only in cases of double sale. The CA further stated that even if it is assumed that the contract
between Neri and Thelma was an absolute contract of sale, the same is nonetheless void for
lack of consent of Neri's wife, Violeta, insofar as the object of the transaction is a conjugal
property.

Thelma moved for reconsideration of the CA decision, which was denied for lack of merit in
Resolution28dated October 21, 2011.

Hence this petition.

Thelma argues that there was double sale and the CA erred in reversing the RTC decision:
(1) by interpreting the sale between Thelma and Neri as a mere contract to sell; (2) by
declaring the deed of sale in favor of Thelma as null and void due to lack of Violeta's consent
or conformity; and (3) by declaring the respondents as buyers in good faith despite prior
registration of Thelma's notice of adverse claim in TCT No. T-209894, and her actual
possession of the subject property. 29chanrobleslaw
Ruling of the Court

The resolution of this case basically rests on the determination of whether the transaction
between Neri and Thelma is a contract of sale or a contract to sell. The rule on double sale,
as provided in Article 1544 of the Civil Code,30 does not apply to a case where there was a
sale to one party of the land itself while the other contract was a mere promise to sell the land
or at most an actual assignment of the right to repurchase the same land.31chanrobleslaw

Both the RTC and the CA concur in the finding that Neri agreed to sell Lot 398-A to Thelma
for an agreed price of P1,243,000.00. The RTC, however, concluded that by Neri's admission
that he sold the subject lot to Thelma for a consideration of P1,243,000.00, and that he
acknowledged receipt of P442,293.50 as partial payment from the latter, the transaction
between Thelma and Neri should be regarded as an executed contract of sale, and not a
merely executory one. The RTC likewise took into consideration Thelma's alleged possession
of the property and Neri's failure to rescind the contract as indicative of the nature of their
agreement as one of sale.32chanrobleslaw

On the other hand, the CA ruled that "the contract between Thelma and Neri was a mere
contract to sell, the transfer of ownership over Lot 398-A being conditioned on Thelma's full
payment of the purchase price."33 As regards the existence of the two contracts of sale, the
CA concluded that Thelma admitted on trial that the first deed of sale was only meant to be
an acknowledgment receipt for the down payment she made on the subject lot, and the
second deed of sale was allegedly executed after Thelma pays in full the purchase price of
the lot.

A review of this case shows that the CA ruled in accord with existing jurisprudence.

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"The real character of the contract is not the title given, but the intention of the parties." 34 In
this case, there exist two deeds of absolute sale. Though identically worded, the first contract
was undated, not notarized, signed only by Neri, and was presented in Civil Case No. 7394
for Injunction,35 while the second deed was dated April 10, 1997, notarized on September 5,
1997, signed by both Neri and Thelma, and was presented in Civil Case No. 7664 for
Declaration of Nullity of Deed of Sale and Title.36chanrobleslaw

In determining the nature of the agreement between Thelma and Neri, the CA took note of
these two documents, and, coupled with Thelma's own admissions, correctly found that it was
a mere contract to sell. According to the CA:ChanRoblesVirtualawlibrary
During trial, Thelma explained the apparent disparity between the two (2) "deeds of absolute
sale" by testifying that the undated and unnotarized deed of sale served only as a "receipt"
which was signed by Neri when the latter received the downpayment for the lot. The dated
and notarized deed of sale, on the other hand, was signed by both Thelma and Neri upon
Thelma's alleged full payment of the purchase price:

chanRoblesvirtualLawlibraryx x x x

Second, the execution of the "deed of absolute sale" dated August 10, 1997 and the transfer
and delivery of the title to Thelma's name covering Lot No. 398-A were conditioned upon full
payment of the purchase price.

Thelma testified that the "deed of absolute sale" dated August 10, 1997 and which was
attached to Thelma's complaint in Civil Case No. 7664 was signed by her, Neri and their
witnesses only upon full payment of the purchase price. Thelma further testified that she and
Neri agreed to place the amount of the purchase price on the deed of absolute sale only at
the time when Thelma had fully paid the same: x x x37 (Italics ours and emphasis deleted)
Despite the denomination of their agreement as one of sale, the circumstances tend to show
that Neri agreed to sell the subject property to Thelma on the condition that title and
ownership would pass or be transferred upon the full payment of the purchase price. This is
the very nature of a contract to sell, which is a "bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the property despite delivery thereof to the
prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, i.e., the full payment of the purchase price."38 As
stated by the Court, the agreement to execute a deed of sale upon full payment of the
purchase price "shows that the vendors reserved title to the subject property until full
payment of the purchase price."39chanrobleslaw

It was likewise established that Thelma was not able to pay the full purchase price, and that
she was only able to pay P442,293.50 of the agreed selling price of P1,243,000.00. The
RTC, in fact, made the following findings: (1) the consideration for Lot 398-A was
P1,243,000.00; (2) Thelma issued a check on March 20, 1997 for said amount, payable to
Neri; (3) the agreement was that the check would only be held by Neri for safekeeping as it
was yet unsure if there was ample funds to cover the check; (4) the check was not covered
by sufficient funds when presented for payment, so Thelma subsequently paid Neri in
installments starting from March 20, 1997 to September 4, 1997; and (5) Neri acknowledged
receipt from Thelma the total amount of P442,293.50.40chanrobleslaw

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To bolster her claim, Thelma insists that she now holds title over the subject property after
Neri allegedly delivered the subject lot to her right after the execution of the sale.41 There is,
however, nothing on record to support this claim aside from her bare assertions. There was
no testimony or any proof on her part showing when and how she took possession of the
property. At best, what is extant from the records is that Thelma paid taxes on the property
for the years 2000 and 2001, which was three years after the alleged sale. "But tax
declarations, by themselves, are not conclusive evidence of ownership of real
property."42 Aside from this, the tax receipts showed that the property was still declared in the
name of Neri.43chanrobleslaw

Moreover, the alleged delivery of the property, even if true, is irrelevant considering that in a
contract to sell, ownership is retained by the registered owner in spite of the partial payment
of the purchase price and delivery of possession of the property. Thus, in Roque v.
Aguado,44 the Court ruled that since the petitioners have not paid the final installment of the
purchase price, the condition which would have triggered the parties' obligation to enter into
and thereby perfect a contract of sale cannot be deemed to have been fulfilled; consequently,
they "cannot validly claim ownership over the subject portion even if they had made an
initial payment and even took possession of the same."45chanrobleslaw

Accordingly, the CA did not commit any reversible error in concluding that "the contract
between Thelma and Neri was a mere contract to sell, the transfer of ownership over Lot 398-
A being conditioned on Thelma's full payment of the purchase price. Having failed to pay the
purchase price in full, Thelma cannot claim ownership over Lot 398-A and Neri is not legally
proscribed from alienating the same lot to other buyers."46chanrobleslaw

Finally, while the CA correctly ruled that the agreement was a contract to sell, the Court,
however, does not share its position that the subject property is a conjugal property, and as
such, the absence of Violeta's consent should be held as among the factors which could have
adversely affected the validity of the purported contract of sale between Neri and Thelma.
This is due to the following reasons: first, the subject property, Lot 398-A, is registered in the
name of "Neri delos Reyes, married to Violeta Lacuata," and so was its mother lot, Lot 398.
In Metropolitan Bank and Trust Company v. Tan,47 it was held that such form of registration is
determinative of the property's nature as paraphemal. That the only import of the title is that
Neri is the owner of the subject property, it being registered in his name alone, and that he is
married to Violeta; and second, the record is bereft of proof that said property was acquired
during Neri and Violeta's marriage - such that, the presumption under Article 116 of the
Family Code that properties acquired during the marriage are presumed to be conjugal
cannot apply.

WHEREFORE, the petition is DENIED for lack of merit. Accordingly, the Decision dated May
26, 2011 and Resolution dated October 21, 2011 of the Court of Appeals in CA-G.R. CV No.
94867 are AFFIRMED.

SO ORDERED.

Melencio v. CA, G.R. No. 148846, September 25, 2007

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DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure
seeking the reversal of the Court of Appeals (CA) Decision[2] dated March 30, 2001 and praying that the
Decision[3] of the Regional Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld.

The Facts

The subject property is a 30,351 square meter parcel of land (subject property) particularly denominated
as Lot No. 3368, located at Suba-basbas, Marigondon, Lapu-Lapu City, Cebu, and part of a total area of
30,777 square meters covered by Transfer Certificate of Title (TCT) No. 20626 [4] (entire property) in the
name of the late petitioner Go Kim Chuan (Go Kim Chuan).[5]

The entire property was originally owned by Esteban Bonghanoy[6] who had only one child, Juana
Bonghanoy-Amodia,[7] mother of the late Leoncia Amodia and petitioners Cecilia Amodia Vda. de
Melencion, Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia[8] (the Amodias). The entire property
was brought under the operation of the Torrens System. [9] However, the title thereto was lost during the
Second World War.

On July 10, 1964, the Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale[10] whereby they extra-judicially settled the estate of Esteban Bonghanoy and conveyed the
subject property to respondent Aznar Brothers Realty Company (AZNAR) for a consideration
of P10,200.00. On August 10, 1964, the said Extra-Judicial Partition of Real Estate with Deed of Absolute
Sale was registered under Act 3344[11] as there was no title on file at the Register of Deeds of Lapu-Lapu

City (Register of Deeds). Thereafter, AZNAR made some improvements and constructed a beach house
thereon.

On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia
and Eutiquio Amodia[12] (petitioners Amodias) executed a Deed of Extra-Judicial Settlement with Absolute
Sale,[13] conveying the subject property in favor of Go Kim Chuan for and in consideration of P70,000.00.
The lost title covering the subject property was reconstituted pursuant to Republic Act (RA) No. 26.[14] A
reconstituted title particularly designated as Original Certificate of Title (OCT) No. RO-2899 was issued in
the name of Esteban Bonghanoy[15] and, subsequently, a derivative title (TCT No. 20626) was issued in
the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and
dominion over the subject property in an adverse and continuous manner and in the concept of an owner.

On February 14, 1990, AZNAR wrote a letter[16] to petitioners Amodias asking the latter to withdraw
and/or nullify the sale entered into between them and Go Kim Chuan. On the same date, a Notice of
Adverse Claim[17] was annotated by AZNAR on TCT No. 20626. Because petitioners did not heed
AZNAR's demand, on April 25, 1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan

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for Annulment of Sale and Cancellation of TCT No. 20626[18] alleging that the sale to Go Kim Chuan was
an invalid second sale of the subject property which had earlier been sold to it. Petitioners Amodias
denied that they executed the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor
of AZNAR, claiming that their purported signatures thereon were forged.[19] Trial on the merits ensued.

The RTC's Decision

On February 18, 1993, the RTC dismissed AZNAR's complaint and declared Go Kim Chuan as the real
owner of the subject property. The RTC ratiocinated that the signatures of the Amodias in the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by
the document examiner of the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said
deed did not convey anything in favor of AZNAR. Moreover, the subject property had been brought under
the Land Registration Act; hence, all transactions involving the same should have complied with the said
law. Finally, the RTC held that AZNAR failed to show that Go Kim Chuan acquired the subject property in
bad faith.

Aggrieved, AZNAR appealed the RTC Decision to the CA.[20]

The CA's Decision

On March 30, 2001, the CA rendered a Decision holding that the Extra-Judicial Partition of Real Estate
with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the
Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to
Article 1544 of the New Civil Code, the former deed should be given preference over the latter; that
AZNAR's adverse claim was annotated earlier than the execution of the Deed of Extra-Judicial Settlement
with Absolute Sale in favor of Go Kim Chuan; hence, the latter should have respected said adverse claim
and should have made inquiries as to possible defects that may exist in the title over the subject property;
and that in the absence of a final determination by a court of proper jurisdiction
on the alleged forged signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale, the finding of the document examiner was insufficient for the RTC to rule in favor of the
petitioners.

The CA disposed of the case in this wise:

WHEREFORE, premises considered, the assailed decision dated February 18,
1993 of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-
L is hereby REVERSED and SET ASIDE and a new one is hereby entered as follows:

(1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the

real owner of the land in question;

(2) Declaring both the Deed of Extra-judicial Settlement with Absolute

Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia
Amodia, Veneranda A. Ibag and Eustaquio Amodia in favor of Go
Kim Chuan and the Transfer Certificate of Title No. 20626 in the
name of Go Kim Chuan as NULL AND VOID;

(3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-

appellant the possession of the land in question and to execute a

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registrable deed of conveyance of the subject property to the said

plaintiff-appellant.

No costs.

SO ORDERED.[21]

Petitioners filed a Motion for Reconsideration[22] which the CA denied in its Resolution[23] dated June 5,
2001.

Hence, this Petition based on the following grounds:

Lot 3368 was already a registered land under Act 496, thus, the registration by
respondent of the Deed of Sale in 1964 under Act 3344 produces no legal effect
whatsoever;

II

Even assuming arguendo that the lot in question was duly registered under Act 3344 as
an unregistered land, it is without prejudice to better rights and the provision of Article
1544 of the New Civil Code would be inapplicable;

III

The Honorable Court of Appeals erred in holding that an adverse claim was already
existing at the time the subject land was sold to petitioner Go Kim Chuan; on the
contrary, the latter had purchased the said land in good faith and for value, without
notice of any fact that would reasonably impel a closer inquiry as to the possibility of a
defect in the vendor's title; and

IV

The Court of Appeals has misapplied the case of Heirs of Severa Gregorio v. CA, 300
SCRA 565, cited in support of its ruling that the court a quo committed error in
appreciating the testimony of an expert witness as to the forgery of the first Deed of
Sale.[24]

In its Comment[25] dated September 18, 2001, AZNAR argued, among others, that the Petition is
dismissible because the Verification and Certification of Non-forum Shopping were not signed by all the
petitioners, invoking this Court's Decision in the case of Loquias v. Office of the Ombudsman,[26] and that
the same were signed only by one April Socorro Go, daughter of the late Go Kim Chuan, who did not
even appear to be authorized to file the instant case in behalf of the other petitioners.

In their Reply[27] dated October 22, 2001, petitioners contended that April Socorro Go is one of the
legitimate children and an heir of the late Go Kim Chuan and, as such, she has personal knowledge of

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the truth of the facts alleged in the Petition. Petitioners submitted that they substantially complied with the
Rules of Court by attaching the required Verification and Certification of Non-Forum Shopping and since
the same are required simply to facilitate and promote the orderly administration of justice, compliance
therewith should not be imposed with absolute literalness.

On December 19, 2001, petitioners, through counsel, filed a Motion [28] for Leave to Admit Amended
Petition[29] for Review on Certiorari (Amended Petition). Petitioners manifested that they were seeking to
correct a defect in the designation of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella
S. Go, Sonia Beth Go-Reynes, Daryl Go, and April Socorro Go be impleaded as petitioners instead of the
earlier designated petitioners, Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia,
Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners admitted that he inadvertently included the
petitioners Amodias in the initial Petition for Review on Certiorari(Original Petition), as they were parties
before the RTC and CA. The counsel also manifested that he was only representing the Heirs of Go Kim
Chuan in this case. Lastly, he claimed that other than the substitution of the original petitioners, both the
Original Petition and Amended Petition uniformly raised the same issues and should be given due course
in the greater interest of justice and that the instant Motion was not interposed for delay.

Per directive of the Court,[30] AZNAR filed its Comment[31] on the said motion wherein AZNAR manifested
that it had no serious objection to the admission of the Amended Petition if the same was intended merely
to implead the Heirs of Go Kim Chuan as petitioners. However, AZNAR interposed strong opposition to
the Amended Petition's admission since the names of the petitioners Amodias were deleted without their
written consent.

In their Reply,[32] the Heirs of Go Kim Chuan, through counsel, claimed that petitioners Amodias were
excluded from the Amended Petition because they can no longer be located despite diligent efforts
exerted by counsel. The counsel claims that after the rendition of the assailed CA Decision, he sent
several letters to petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left with
no choice, filed the instant case before this Court on their own.

The Court issued a Resolution[33] dated September 16, 2002 giving due course to the Petition and
requiring the parties to submit their respective Memoranda.

In their Memorandum,[34] petitioners Heirs of Go Kim Chuan reiterate the same issues raised in the
Original Petition and the Amended Petition. They argue that Act 3344 only refers to transactions affecting
lands or interests therein not previously registered under the Spanish Mortgage Law or under the Torrens
system; that if AZNAR could not have registered the sale in 1964 under Act 496 because the title over the
subject property was lost, AZNAR should have availed itself of the remedy of reconstitution; that
registration under Act 3344 is without legal effect and could not operate as constructive notice to
petitioners and third persons, hence, may not be used as basis for the application of Art. 1544 of the New
Civil Code; that the Notice of Adverse Claim of AZNAR was annotated on TCT No. 20626 only on
February 14, 1990 after the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor
of Go Kim Chuan on February 18, 1989, hence, the CA erred when it held that Go Kim Chuan was not a
buyer in good faith for supposedly having knowledge of such adverse claim; and that the doctrine laid
down in Heirs of Severa Gregorio v. CA[35] is inapplicable since it referred to a case wherein the original
copy of the document under review was not produced in evidence while in the instant case, the original
copy of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in
favor of AZNAR was presented before the trial court judge.

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On the other hand, in its Memorandum,[36] AZNAR maintains that the Original Petition is dismissible
because the Verification and Certification of Non-Forum Shopping thereof were not signed by all the
petitioners. AZNAR further claims that the Amended Petition was filed in order to cure a fatal defect which
should not be countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer in bad
faith as he had prior constructive notice that the subject property was sold to AZNAR because the sale
was registered with the Register of Deeds under Act 3344; that the 1964 sale was registered under Act
3344 because the subject property was not actually covered by a Torrens title at the time; that there was
no other mode of registration except under Act 3344; that Go Kim Chuan had to wait for the reconstitution
of the lost title, hence, it could not be said that he examined any certificate of title and could feign
ignorance of the sale in favor of AZNAR; that the second sale did not transfer the subject property to Go
Kim Chuan since it was no longer within the vendors' power to convey; that with respect to the issue of
forgery, the finding of the document examiner is not conclusive; and that such issue was belied by
petitioner Veneranda Amodia herself when she declared that the negotiated sale in 1964 between
AZNAR and the Amodias was not consummated because the latter did not receive the full consideration
for the subject property.
Before resolving the main issues raised, the Court shall first deal with an apparent procedural lapse in this
case.

Counsel for petitioners filed a Motion for Leave to Admit Amended Petition for Review on Certiorari in
order to implead the Heirs of the late Go Kim Chuan as the new petitioners and to delete the names of
petitioners Amodias because they could no longer be located. Said petitioners sought the relaxation of
the rules so that in the interest of justice, the case can be decided on the merits. AZNAR opposes the
Amended Petition because it was allegedly filed to cure a fatal defect in the original petition non-
compliance with the rules on Verification and Certification of Non-Forum Shopping.

In this regard, the case of Iglesia ni Cristo v. Ponferrada[37] is instructive, viz.:

The purpose of verification is simply to secure an assurance that the allegations of the
petition (or complaint) have been made in good faith; or are true and correct, not merely
speculative. This requirement is simply a condition affecting the form of pleadings, and
noncompliance therewith does not necessarily render it fatally defective. Indeed,
verification is only a formal, not a jurisdictional requirement.

The issue in the present case is not the lack of verification but the sufficiency of one
executed by only one of plaintiffs. This Court held in Ateneo de Naga University v.
Manalo, that the verification requirement is deemed substantially complied with when,
as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and
belief to swear to the truth of the allegations in the petition (complaint), signed the
verification attached to it. Such verification is deemed sufficient assurance that the
matters alleged in the petition have been made in good faith or are true and correct, not
merely speculative.

The same liberality should likewise be applied to the certification against forum
shopping. The general rule is that the certification must be signed by all plaintiffs in a
case and the signature of only one of them is insufficient. However, the Court has also
stressed in a number of cases that the rules on forum shopping were designed to
promote and facilitate the orderly administration of justice and thus should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate

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objective. The rule of substantial compliance may be availed of with respect to the
contents of the certification. This is because the requirement
of strict compliance with the provisions merely underscores its mandatory
nature in that the certification cannot be altogether dispensed with or its requirements
completely disregarded.

Thus, we held in Iglesia ni Cristo that the commonality of interest is material and crucial to relaxation of
the Rules.

In the case at bench, the petitioners in the Amended Petition are Heirs of the late Go Kim Chuan. They
represent their predecessor-in-interest in whose favor a title was issued covering the subject property and
said title is sought to be canceled by AZNAR. Clearly, there is presence of the commonality of interest
referred to in Iglesia ni Cristo. Under the circumstances, the rules may be reasonably and liberally
construed to avoid a patent denial of substantial justice, because it cannot be denied that the ends of
justice are better served when cases are determined on the merits after all parties are given full
opportunity to ventilate their causes and defenses rather than on technicality or some procedural
imperfections.[38]

The Issues

We now proceed to the merits of the case. From the issues raised, there are ultimately two questions that
require resolution:

First, did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in ruling that the RTC committed
an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition
of Real Estate with Deed of Absolute Sale?

Second, who between Go Kim Chuan and AZNAR has the better right over the subject property?

We resolve the first question in the negative.

Forgery cannot be presumed. It must be proved by clear, positive and convincing evidence and the
burden of proof rests on the party alleging forgery. Handwriting experts are usually helpful in the
examination of forged documents because of the technical procedure involved in analyzing them. But
1resort to these experts is not mandatory or indispensable. A finding of forgery does not depend entirely
on the testimonies of handwriting experts, because the judge must conduct an independent
examination of the questioned signature in order to arrive at a reasonable conclusion as to its
authenticity.[39]

The RTC's finding with respect to the issue of forgery reads:

After a thorough study of the pleadings and evidence of the parties, the court finds that
preponderance of evidence heavily tilts in favor of the defendants. The document relied
upon by the plaintiff in its claim of ownership over the land in question, the extrajudicial
partition and sale, has been found by the document examiner of the PC Crime Laboratory
to be a forgery. Being a forgery, said document conveyed nothing in favor of the plaintiff.
Hence, plaintiff's claim of ownership over the same has no more leg to stand on. x x x [40]

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While it is true that the original document was produced before the RTC, the finding of forgery relies
wholly on the testimony of the document examiner. It falls short of the required independent examination
to be conducted by the trial court judge. Other than the statement of the document examiner, the RTC
decision contains no other basis to support its conclusion
of the existence of forgery. Accordingly, the CA was correct in rejecting the RTCs finding and in applying
the doctrine laid down in the case of Heirs of Severa Gregorio v. CA.

However, we resolve the second question in favor of Go Kim Chuan.

Without doubt, we have here a case of double sale of registered land. Apropos is Article 1544 of the New
Civil Code which provides:

ART. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession thereof
in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

We have already ruled that the registration contemplated in this provision refers to registration under the
Torrens System, which considers the act of registration as the operative act [41] that gives validity to the
transfer or creates a lien upon the land.[42] This rule precisely applies to cases involving conflicting rights
over registered property and those of innocent transferees who relied on the clean title of the
properties.[43] Thus, we held that registration must be done in the proper registry in order to bind the
same.[44]

In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens
System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR
knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor
under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded
by such a lame excuse.

Act 3344 provides for the system of recording of transactions or claims over unregistered real
estate[45] without prejudice to a third party with a better right.[46] But if the land is registered under the Land
Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the
Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the
term is used under Art. 1544 of the New Civil Code.[47]

In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of
AZNAR was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not
registered.[48] Rather, it was the sale in favor of Go Kim Chuan which was registered under Act No. 496.

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AZNAR insists that since there was no Torrens title on file in 1964, insofar as the vendors, AZNAR, and
the Register of Deeds are concerned, the subject property was unregistered at the time. The contention is
untenable. The fact that the certificate of title over the registered land is lost does not convert it into
unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the
particular property described therein.[49] This Court agrees with the petitioners that AZNAR should have
availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registration under
Act 3344. We note that in Aznar Brothers Realty Company v. Aying,[50] AZNAR, beset with the similar
problem of a lost certificate of title over a registered land, sought the reconstitution thereof. It is
unfortunate that, in the instant case, despite the sale of the subject property way back in 1964 and the
existence of the remedy of reconstitution at that time, AZNAR opted to register the same under the
improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did
not bother to have the lost title reconstituted or even have the subject property declared under its name
for taxation purposes. Vigilantibus, non dormientibus, jura subveniunt. Laws must come to the assistance
of the vigilant, not of the sleepy.[51]

Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496 while AZNAR did
not, we still cannot make an outright award of the subject property to the petitioners solely on that
basis. For the law is clear: mere registration of title is not enough. Good faith must accompany the
registration.

Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no
knowledge of the previous alienation of the property by the vendor to another. Notably, what is important
for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the
second sale in good faith, meaning, he does so without knowledge of any defect in the title over the
property sold. [52]

To fully resolve the second question, therefore, it is imperative that we determine whether Go Kim Chuan
was a registrant in good faith.

The CA found that AZNAR registered its Notice of Adverse Claim ahead of the Deed of Extra-Judicial
Settlement with Absolute Sale in favor of Go Kim Chuan. Because of this, the CA declared that Go Kim
Chuan was not a buyer in good faith, because he should have respected such adverse claim or, at least,
inquired into the validity thereof.

We do not agree.

While factual issues are not within the province of this Court, as it is not a trier of facts and is not required
to examine the oral and documentary evidence de novo, this Court has the authority to review and, in
proper cases, reverse the factual findings of lower courts in the following instances: (a) when the findings
of fact of the trial court are in conflict with those of the appellate court; (b) when the judgment of the
appellate court is based on a misapprehension of facts; and, (c) when the appellate court manifestly
overlooked certain relevant facts which, if properly considered, would justify a different conclusion.[53]
The instant case falls squarely within the foregoing exceptions.

Concededly, inscription of an adverse claim serves as a warning to third parties dealing with a piece of
real property that someone claims an interest therein or that there is a right superior to that of the titled
owner.[54] However, as pointed out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim
was annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of title was

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reconstituted and after the issuance of said TCT in the name of Go Kim Chuan on December 1, 1989. It
is, therefore, absurd to say that Go Kim Chuan should be bound by
an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled
by a claim which he did not have any knowledge of.

Citing Santiago v. Court of Appeals,[55] AZNAR contends that even if the adverse claim was annotated on
TCT No. 20626 only on February 4, 1990, the prior registration of the sale in its favor under Act 3344
served as constructive notice to Go Kim Chuan and thus negates the latter's claim of good faith, since the
Court held in that case, Registration, however, by the first buyer under Act 3344 can have the effect of
constructive notice to the second buyer that can defeat his right as such buyer in good faith.

AZNAR's reliance on Santiago is misplaced. In Santiago, the first buyers registered the sale under the
Torrens System, as can be inferred from the issuance of the TCT in their names. There was no
registration under Act 3344. Conversely, in the instant case, AZNAR registered the sale in its favor under
Act 3344 despite its full knowledge that the subject property is under the operation of the Torrens System.
To repeat, there can be no constructive notice to the second buyer through registration under Act 3344 if
the property is registered under the Torrens system.[56]

Moreover, before buying the subject property, Go Kim Chuan made verifications with the Office of the City
Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the premises of the subject
property and found that nobody interposed any adverse claim against the Amodias. After he decided to
buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial
Settlement with Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost
certificate of title and caused the issuance of the assailed TCT in his name. [57] Given these antecedents,
good faith on the part of Go Kim Chuan cannot be doubted.

We also note that AZNAR's complaint for cancellation of title contains no allegation that the
(second) purchaser was aware of defects in his title. In the absence of such an allegation and proof of
bad faith, it would be grossly inappropriate for this Court to render judgment against the purchaser who
had already acquired title not only because of lack of evidence, but also because of the indefeasibility and
conclusiveness of such title.[58]

Finally, it is worth stressing that the Torrens system was adopted in this country because it was believed
to be the most effective measure to guarantee the integrity of land titles and to insure their indefeasibility
once the claim of ownership is established and recognized. If a person purchases a piece of land on the
assurance that the seller's title thereto is valid, he should not run the risk of losing his acquisition. If this
were permitted, public confidence in the system would be eroded and land transactions would have to be
attended by complicated and not necessarily conclusive investigations and proof of ownership.[59]

WHEREFORE, the instant petition for review is GRANTED. The Decision of the Court of Appeals in CA-
G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Lapu-
Lapu City, Branch 27, in Civil Case No. 2254-L, is REINSTATED. No costs.

SO ORDERED.

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Antonio v. Santos, G.R. No. 149238, 538 SCRA 1, November 22, 2007

RESOLUTION

QUISUMBING, J.:
This is an appeal from the Decision[1] dated July 31, 2001 of the Court of Appeals in CA-G.R. CV
No. 58246, affirming, with modification, the Decision[2] dated October 7, 1997 of Branch 72, Regional Trial
Court (RTC) in Antipolo, Rizal in Civil Case No. 1261-A. The RTC had dismissed the complaint for
Reconveyance, Annulment of Title and Damages filed by petitioner Sixto Antonio against respondents.

The antecedent facts, culled from the records, are as follows:

On September 19, 1988, petitioner Sixto Antonio filed before Branch 72, RTC, Antipolo, Rizal, a
complaint for Reconveyance, Annulment of Title and Damages against respondents spouses Sofronio
and Aurora Santos, Luis and Angelina Liberato, and Mario and Victoria Cruz. The complaint was
docketed as Civil Case No. 1261-A.

In his complaint,[3] Antonio alleged that he is the absolute owner of a 13,159-square meter parcel of
land denominated as Lot No. 11703, CAD 688-D, Cainta-Taytay Cadastre, situated in Barangay San Juan,
Cainta, Rizal. He averred that, as evidenced by certificates of payment of realty taxes for the years 1918
and 1919, the property was previously owned by his father and that in 1984, he filed before Branch 71,
RTC, Antipolo, Rizal, an application for the registration of two parcels of land, one of which was Lot No.
11703, CAD 688-D, situated in Barangay San Juan, Cainta, Rizal. His application was docketed as Land
Registration Case No. 142-A (LRC No. 142-A).

Although the RTC, Branch 71, declared him the true and absolute owner in fee simple of the two
parcels of land he applied for, it set aside its decision with respect to Lot No. 11703, CAD 688-D in an
Order dated August 21, 1986, to avoid duplication of issuance of titles.

Antonio said that after investigation, he discovered that Lot No. 11703, CAD 688-D was already
titled in the name of respondents. He then filed the complaint for Reconveyance, Annulment of Title and
Damages against respondents, averring that respondents committed fraud in their application for titling
because they made it appear in their application for registration that the subject property was located in
Pinagbuhatan, Pasig, Rizal, when in fact, the property is located in Barangay San Juan, Cainta, Rizal. He
added, respondents also made it appear in their application for registration that the subject property is
bound on the North East by the Pasig River when in fact it is bound on the North East by
the Tapayan River. Furthermore, the Pasig River does not traverse any portion of the jurisdiction of
Cainta, Rizal. He argued that Original Certificate of Title No. 108 (OCT No. 108) in respondents names,
insofar as it included Lot No. 11703, CAD 688-D, is, therefore, null and void because it was obtained
through fraudulent misrepresentations and machinations.

In their Answer[4] dated July 26, 1989, respondents averred that OCT No. 108 was duly issued to
them by the Register of Deeds for Metro Manila, District II, on May 20, 1977. They alleged that prior to the
issuance of OCT No. 108, they, as registered owners, had always been in peaceful possession of the
property and at no time had Antonio possessed the property, nor did he ever make any claim against the
said property.

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The RTC of Antipolo, Rizal, Branch 72, in a Decision dated October 7, 1997 dismissed the
complaint and ordered Antonio to pay respondents moral damages and attorneys fees. The dispositive
portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING
the instant complaint, and orders plaintiff as follows:

1. To pay defendants Sofronio Santos, Aurora Santos, Sps. Luis Liberato and
Angelina Santos, the amount of P100,000.00 each, by way of moral damages;

2. To pay defendants the amount of P60,000.00, by way of attorneys fees, and

costs of suit.

SO ORDERED.[5]

The Court of Appeals in a Decision dated July 31, 2001 affirmed with modification the
abovementioned decision by deleting the award of moral damages and attorneys fees. The dispositive
portion of the decision of the Court of Appeals states:
WHEREFORE, with modification deleting [or] setting aside the award for moral
damages and attorneys fees, the decision appealed from is AFFIRMED with costs
against the plaintiff-appellant.

SO ORDERED.[6]

Hence, the instant petition, raising the following issues:

I.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING
THAT THE DECISION IN LAND REGISTRATION CASE NO. 142-A, LRC RECORD NO.
58707, REGIONAL TRIAL COURT OF ANTIPOLO CITY, BRANCH 71, IS SUFFICIENT
BASIS OF PETITIONERS CLAIM OF RIGHT OF OWNERSHIP OVER THE PROPERTY
SUBJECT OF ACTION FOR RECONVEYANCE.

II.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN TREATING

PETITIONERS ACTION FOR RECONVEYANCE AS ONE FOR TITLING OF A PARCEL
OF LAND.

III.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT

RESPONDENTS HAVE FRAUDULENTLY REGISTERED AND TITLED SUBJECT
PROPERTY IN THEIR NAMES.

IV.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT

RESPONDENTS MOTHER ACQUIRED SUBJECT PROPERTY FROM HER FATHER,

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GAVINO SANTOS, WHICH THE LATTER ALLEGEDLY PURCHASED FROM

LADISLAO RIVERA.

V.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE

DECISION OF THE COURT A QUO DISMISSING PETITIONERS ACTION FOR
RECONVEYANCE.[7]

Simply put, the issues raised are: (1) Did the Court of Appeals err in not holding that the decision
in LRC No. 142-A was sufficient basis of petitioners claim of ownership over the subject property? (2) Did
the Court of Appeals and RTC erroneously treat petitioners action for reconveyance as one for titling of a
parcel of land? (3) Did respondents fraudulently title the subject property in their names? (4) Did the Court
of Appeals err in finding that respondents mother acquired the subject property from her father, Gavino
Santos, who purchased it from Ladislao Rivera? and (5) Did the Court of Appeals err in affirming the
decision of the RTC dismissing petitioners action for reconveyance?

Petitioner argues that the Court of Appeals erred in not holding that the decision in LRC No. 142-
A is sufficient basis for his claim of ownership over the property; in treating his action for reconveyance as
one for titling; in not holding that respondents had fraudulently registered the property in their names; and
in holding that respondents mother had acquired the subject property from her father, Gavino Santos,
who allegedly bought the property from Ladislao Rivera.

Respondents, on the other hand, in their Comments,[8] contend that they have proved they have a
better title to the property. They argue that petitioners attempt to register Lot No. 11703, CAD 688-D in his
name is tainted with fraud, and that petitioner had failed to adduce any evidence of fraud on their part. They
assert that their documentary and testimonial evidence which were unrebutted by petitioner show original
ownership of the land by Ladislao Rivera from whom their grandfather bought the property.

After serious consideration, we find that petitioners arguments lack merit.

On the first issue, petitioner argues that in LRC No. 142-A, the RTC of Antipolo, Branch 71,
rendered a Decision on January 7, 1986 adjudicating ownership of two lots, including Lot No. 11703, CAD
688-D, in his favor. He adds that on February 19, 1986, after said decision has become final and executory,
the said RTC issued a certification for issuance of decree, directing the Land Registration Commission to
issue the corresponding decree of registration. Hence, he argues, his right of ownership over the land has
already been fully established, but no certificate of title was issued to him only because the property was
already registered in the name of respondents.

But we agree with respondents that petitioner cannot rely on the decision in LRC No. 142-A. As
pointed out by the Court of Appeals, even if a title had been issued to petitioner based on said decision, his
title would be of a later date than the title of respondents, hence inefficacious and ineffective. This Court has
ruled that, when two certificates of title are issued to different persons covering the same land in whole or in
part, the earlier in date must prevail; and in case of successive registrations where more than one certificate
is issued over the same land, the person holding a prior certificate is entitled to the land as against a person
who relies on a subsequent certificate.[9]

On the second issue, petitioner contends that it is very apparent the RTC and Court of Appeals
had the notion that his case a quo was not an action for reconveyance, but rather an application for

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registration of land where the applicant and oppositor had to prove their respective registrable titles. This,
he adds, could be gleaned from the RTCs findings that the claim of plaintiff on the basis of said
documents cannot prevail over the adverse, public, open, peaceful and continuous possession by the
defendants over the subject property, and that it was indubitably shown that the defendants have
occupied said property since time immemorial while plaintiff has never at anytime taken possession of
said property.

We find petitioners contentions unconvincing. For an action for reconveyance based on fraud to
prosper, this Court has held that the party seeking reconveyance must prove by clear and convincing
evidence his title to the property and the fact of fraud.[10] The RTC, in making the abovementioned findings,
was not treating petitioners action for reconveyance as one for titling of property. But it was weighing
whether petitioner has, by clear and convincing evidence, proven his title to the property. Moreover, the
RTC, in its decision, discussed the merits of petitioners ground for his action for reconveyance, i.e. whether
or not respondents committed fraud in titling the subject property in their names. The RTC held that as
shown by public records in the custody of the RTC, Pasig City and the Land Registration Authority,
petitioners claim that the property was fraudulently titled in the names of respondents is baseless. Thus,
petitioners contention that the RTC and the Court of Appeals treated his action for reconveyance as one for
titling of property lacks any persuasive basis.

On the third and fourth issues, we find them to be factual issues, hence beyond our jurisdiction to
resolve. In a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, this Courts power of
review is limited to questions of law only.[11]

Note, however, should be taken of the established doctrine that an action for reconveyance
resulting from fraud prescribes four years from the discovery of the fraud. Such discovery is deemed to
have taken place upon the issuance of the certificate of title over the property. Registration of real
property is considered a constructive notice to all persons, thus, the four-year period shall be counted
therefrom.[12] It appears that OCT No. 108 was issued to respondents by the Register of Deeds for Metro
Manila on May 20, 1977. From the time of registration of the land in the name of respondents on May 20,
1977 to the filing of the complaint on September 19, 1988, more than four years had already
elapsed. Hence, it cannot be denied that petitioners action had already prescribed.

Based on the foregoing considerations, we find that the Court of Appeals did not err in affirming
the decision of the RTC dismissing petitioners action for reconveyance.

Finally, concerning the deletion of moral damages and attorneys fees, we agree with the ruling of
the Court of Appeals that here an award of moral damages is not warranted since the record is bereft of
any proof that Antonio acted maliciously or in bad faith in filing the action. [13] Neither should attorneys fees
be awarded. The accepted rule is that the reason for the award of attorneys fees must be stated in the
text of the trial courts decision; otherwise, if it is stated only in the dispositive portion of the decision, the
same must be disallowed.[14] In this case, we find that the trial courts decision failed to show the reason
for the award of attorneys fees, hence it was properly deleted by the appellate court.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated July 31,
2001 of the Court of Appeals in CA-G.R. CV No. 58246 is AFFIRMED.No pronouncement as to costs.

SO ORDERED.

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c. Buyer in Good Faith

LBP v. Poblete, G.R. No. 196577, February 25, 2013

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 196577 February 25, 2013

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
BARBARA SAMPAGA POBLETE, Respondent.

DECISION

CARPIO, J.:

The Case

This Petition for Review on Certiorari1 seeks to reverse the Court of Appeals'
Decision2 dated 28 September 20 I 0 and its Resolution3 dated 19 April 2011 in C A-G.R. CV No. 91666.
The Court of Appeals (C A) affirmed in toto the Decision4 of the Regional Trial Court (RTC) of San Jose,
Occidental Mindoro, Branch 46, in Civil Case No. R-1331.

The Facts

The facts, as culled from the records, are as follows:

Petitioner Land Bank of the Philippines (Land Bank) is a banking institution organized and existing under
Philippine laws. Respondent Barbara Sampaga Poblete (Poblete) is the registered owner of a parcel of
land, known as Lot No. 29, with an area of 455 square meters, located in Buenavista, Sablayan,
Occidental Mindoro, under Original Certificate of Title (OCT) No. P-12026. In October 1997, Poblete
obtained a 300,000.00 loan from Kabalikat ng Pamayanan ng Nagnanais Tumulong at Yumaman Multi-
Purpose Cooperative (Kapantay). Poblete mortgaged Lot No. 29 to Kapantay to guarantee payment of
the loan. Kapantay, in turn, used OCT No. P-12026 as collateral under its Loan Account No. 97-CC-013
with Land Bank-Sablayan Branch.

In November 1998, Poblete decided to sell Lot No. 29 to pay her loan. She instructed her son-in-law
Domingo Balen (Balen) to look for a buyer. Balen referred Angelito Joseph Maniego (Maniego) to
Poblete. According to Poblete, Maniego agreed to buy Lot No. 29 for 900,000.00, but Maniego
suggested that a deed of absolute sale for 300,000.00 be executed instead to reduce the taxes. Thus,
Poblete executed the Deed of Absolute Sale dated 9 November 1998 (Deed dated 9 November 1998)
with 300,000.00 as consideration.5 In the Deed dated 9 November 1998, Poblete described herself as a
"widow." Poblete, then, asked Balen to deliver the Deed dated 9 November 1998 to Maniego and to

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receive the payment in her behalf. Balen testified that he delivered the Deed dated 9 November 1998 to
Maniego. However, Balen stated that he did not receive from Maniego the agreed purchase price.
Maniego told Balen that he would pay the amount upon his return from the United States. In an Affidavit
dated 19 November 1998, Poblete stated that she agreed to have the payment deposited in her Land
Bank Savings Account.6

Based on a Certification issued by Land Bank-Sablayan Branch Department Manager Marcelino Pulayan
on 20 August 1999,7 Maniego paid Kapantays Loan Account No. 97-CC-013 for 448,202.08. On 8 June
2000, Maniego applied for a loan of 1,000,000.00 with Land Bank, using OCT No. P 12026 as collateral.
Land Bank alleged that as a condition for the approval of the loan, the title of the collateral should first be
transferred to Maniego.

On 14 August 2000, pursuant to a Deed of Absolute Sale dated 11 August 2000 (Deed dated 11 August
2000),8 the Register of Deeds of Occidental Mindoro issued Transfer Certificate of Title (TCT) No. T-
20151 in Maniegos name. On 15 August 2000, Maniego and Land Bank executed a Credit Line
Agreement and a Real Estate Mortgage over TCT No. T- 20151. On the same day, Land Bank released
the 1,000,000.00 loan proceeds to Maniego. Subsequently, Maniego failed to pay the loan with Land
Bank. On 4 November 2002, Land Bank filed an Application for Extra-judicial Foreclosure of Real Estate
Mortgage stating that Maniegos total indebtedness amounted to 1,154,388.88.

On 2 December 2002, Poblete filed a Complaint for Nullification of the Deed dated 11 August 2000 and
TCT No. T-20151, Reconveyance of Title and Damages with Prayer for Temporary Restraining Order
and/or Issuance of Writ of Preliminary Injunction. Named defendants were Maniego, Land Bank, the
Register of Deeds of Occidental Mindoro and Elsa Z. Aguirre in her capacity as Acting Clerk of Court of
RTC San Jose, Occidental Mindoro. In her Complaint, Poblete alleged that despite her demands on
Maniego, she did not receive the consideration of 900,000.00 for Lot No. 29. She claimed that without
her knowledge, Maniego used the Deed dated 9 November 1998 to acquire OCT No. P-12026 from
Kapantay. Upon her verification with the Register of Deeds, the Deed dated 11 August 2000 was used to
obtain TCT No. T-20151. Poblete claimed that the Deed dated 11 August 2000 bearing her and her
deceased husbands, Primo Poblete, supposed signatures was a forgery as their signatures were forged.
As proof of the forgery, Poblete presented the Death Certificate dated 27 April 1996 of her husband and
Report No. 294-502 of the Technical Services Department of the National Bureau of Investigation
showing that the signatures in the Deed dated 11 August 2000 were forgeries. Accordingly, Poblete also
filed a case for estafa through falsification of public document against Maniego and sought injunction of
the impending foreclosure proceeding.

On 7 January 2003, Land Bank filed its Answer with Compulsory Counterclaim and Cross-claim. Land
Bank claimed that it is a mortgagee in good faith and it observed due diligence prior to approving the loan
by verifying Maniegos title with the Office of the Register of Deeds. Land Bank likewise interposed a
cross-claim against Maniego for the payment of the loan, with interest, penalties and other charges.
Maniego, on the other hand, separately filed his Answer. Maniego denied the allegations of Poblete and
claimed that it was Poblete who forged the Deed dated 11 August 2000. He also alleged that he paid the
consideration of the sale to Poblete and even her loans from Kapantay and Land Bank.

The Ruling of the Regional Trial Court

On 28 December 2007, the RTC of San Jose, Occidental Mindoro, Branch 46, rendered a Decision in
favor of Poblete, the dispositive portion of which reads:

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WHEREFORE, by preponderance of evidence, judgment is hereby rendered in favor of the plaintiff and
against the defendants, as follows:

1. Declaring the Deed of Sale dated August 11, 2000 over O.C.T. No. P-12026, as null and void;

2. Declaring Transfer of Certificate of Title No. T-20151 as null and void, it having been issued on
the basis of a spurious and forged document;

3. The preliminary [i]njunction issued directing the defendants to refrain from proceedings [sic]
with the auction sale of the plaintiffs properties, dated February 10, 2002, is hereby made
permanent;

4. Ordering defendant Angelito Joseph Maniego to return to the plaintiff O.C.T. No. P-12026; and

5. Ordering defendant Angelito Joseph Maniego to pay plaintiff the amount of 50,000.00, as and
for reasonable attorneys fees.

Judgment is furthermore rendered on the cross-claim of defendant Land Bank of the Philippines against
defendant Angelito Joseph Maniego, as follows:

A. Ordering defendant Angelito Joseph Maniego to pay his co-defendant [L]and Bank of the
Philippines his loan with a principal of 1,000,000.00, plus interests, penalties and other charges
thereon; and

B. Ordering defendant Angelito Joseph Maniego to pay the costs of this suit.

SO ORDERED.9

The RTC ruled that the sale between Poblete and Maniego was a nullity. The RTC found that the agreed
consideration was 900,000.00 and Maniego failed to pay the consideration. Furthermore, the signatures
of Poblete and her deceased husband were proven to be forgeries. The RTC also ruled that Land Bank
was not a mortgagee in good faith because it failed to exercise the diligence required of banking
institutions. The RTC explained that had Land Bank exercised due diligence, it would have known before
approving the loan that the sale between Poblete and Maniego had not been consummated.
Nevertheless, the RTC granted Land Banks cross-claim against Maniego.

In an Order dated 17 March 2008, the RTC denied the Motion for Reconsideration filed by Land Bank for
want of merit. Thereafter, Land Bank and Maniego separately challenged the RTCs Decision before the
CA.

The Ruling of the Court of Appeals

On 28 September 2010, the CA promulgated its Decision affirming in toto the Decision of the RTC.10 Both
Land Bank and Maniego filed their Motions for Reconsideration but the CA denied both motions on 19
April 2011.11

In a Resolution dated 13 July 2011,12 the Second Division of this Court denied the Petition for Review on
Certiorari filed by Maniego. This Resolution became final and executory on 19 January 2012.

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On the other hand, Land Bank filed this petition.

The Issues

Land Bank seeks a reversal and raises the following issues for resolution:

1. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) ERRED IN

UPHOLDING THE FINDING OF THE TRIAL COURT DECLARING TCT NO. T-20151 AS NULL
AND VOID. THE COURT OF APPEALS MISCONSTRUED AND MISAPPRECIATED THE
EVIDENCE AND THE LAW IN NOT FINDING TCT NO. T-20151 REGISTERED IN THE NAME
OF ANGELITO JOSEPH MANIEGO AS VALID.

2. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) MISCONSTRUED

THE EVIDENCE AND THE LAW IN NOT FINDING LAND BANK A MORTGAGEE IN GOOD
FAITH.

3. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) MISCONSTRUED

THE EVIDENCE AND THE LAW IN NOT FINDING THE RESPONDENT AND ANGELITO
JOSEPH MANIEGO AS IN PARI DELICTO.

4. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION) ERRED IN NOT

APPLYING THE PRINCIPLE OF ESTOPPEL OR LACHES ON RESPONDENT IN THAT THE
PROXIMATE CAUSE OF HER LOSS WAS HER NEGLIGENCE TO SAFEGUARD HER RIGHTS
OVER THE SUBJECT PROPERTY, THEREBY ENABLING ANGELITO JOSEPH MANIEGO TO
MORTGAGE THE SAME WITH LAND BANK.13

The Ruling of the Court

We do not find merit in the petition.

A petition for review under Rule 45 of the Rules of Court specifically provides that only questions of law
may be raised, subject to exceptional circumstances14 which are not present in this case. Hence, factual
findings of the trial court, especially if affirmed by the CA, are binding on us.15 In this case, both the RTC
and the CA found that the signatures of Poblete and her deceased husband in the Deed dated 11 August
2000 were forged by Maniego. In addition, the evidence is preponderant that Maniego did not pay the
consideration for the sale. Since the issue on the genuineness of the Deed dated 11 August 2000 is
essentially a question of fact, we are not dutybound to analyze and weigh the evidence again.16

It is a well-entrenched rule, as aptly applied by the CA, that a forged or fraudulent deed is a nullity and
conveys no title.17 Moreover, where the deed of sale states that the purchase price has been paid but in
fact has never been paid, the deed of sale is void ab initio for lack of consideration.18 Since the Deed
dated 11 August 2000 is void, the corresponding TCT No. T-20151 issued pursuant to the same deed is
likewise void. In Yu Bun Guan v. Ong,19 the Court ruled that there was no legal basis for the issuance of
the certificate of title and the CA correctly cancelled the same when the deed of absolute sale was
completely simulated, void and without effect. In Erea v. Querrer-Kauffman,20 the Court held that when
the instrument presented for registration is forged, even if accompanied by the owners duplicate
certificate of title, the registered owner does not thereby lose his title, and neither does the mortgagee

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acquire any right or title to the property. In such a case, the mortgagee under the forged instrument is not
a mortgagee protected by law.21

The issue on the nullity of Maniegos title had already been foreclosed when this Court denied Maniegos
petition for review in the Resolution dated 13 July 2011, which became final and executory on 19 January
2012.22 It is settled that a decision that has acquired finality becomes immutable and unalterable and may
no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions
of fact or law and whether it will be made by the court that rendered it or by the highest court of the
land.23 This is without prejudice, however, to the right of Maniego to recover from Poblete what he paid to
Kapantay for the account of Poblete, otherwise there will be unjust enrichment by Poblete.

Since TCT No. T-20151 has been declared void by final judgment, the Real Estate Mortgage constituted
over it is also void. In a real estate mortgage contract, it is essential that the mortgagor be the absolute
owner of the property to be mortgaged; otherwise, the mortgage is void. 24

Land Bank insists that it is a mortgagee in good faith since it verified Maniegos title, did a credit
investigation, and inspected Lot No. 29. The issue of being a mortgagee in good faith is a factual matter,
which cannot be raised in this petition.25 However, to settle the issue, we carefully examined the records
to determine whether or not Land Bank is a mortgagee in good faith.1wphi1

There is indeed a situation where, despite the fact that the mortgagor is not the owner of the mortgaged
property, his title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are
given effect by reason of public policy.26 This is the doctrine of "the mortgagee in good faith" based on the
rule that buyers or mortgagees dealing with property covered by a Torrens Certificate of Title are not
required to go beyond what appears on the face of the title.27 However, it has been consistently held that
this rule does not apply to banks, which are required to observe a higher standard of diligence. 28 A bank
whose business is impressed with public interest is expected to exercise more care and prudence in its
dealings than a private individual, even in cases involving registered lands. 29 A bank cannot assume that,
simply because the title offered as security is on its face free of any encumbrances or lien, it is relieved of
the responsibility of taking further steps to verify the title and inspect the properties to be mortgaged. 30

Applying the same principles, we do not find Land Bank to be a mortgagee in good faith.

Good faith, or the lack of it, is a question of intention.31 In ascertaining intention, courts are necessarily
controlled by the evidence as to the conduct and outward acts by which alone the inward motive may,
with safety, be determined.32

Based on the evidence, Land Bank processed Maniegos loan application upon his presentation of OCT
No. P-12026, which was still under the name of Poblete. Land Bank even ignored the fact that Kapantay
previously used Pobletes title as collateral in its loan account with Land Bank. 33 In Bank of Commerce v.
San Pablo, Jr.,34 we held that when "the person applying for the loan is other than the registered owner of
the real property being mortgaged, [such fact] should have already raised a red flag and which should
have induced the Bank x x x to make inquiries into and confirm x x x [the] authority to mortgage x x x. A
person who deliberately ignores a significant fact that could create suspicion in an otherwise reasonable
person is not an innocent purchaser for value."

The records do not even show that Land Bank investigated and inspected the property to ascertain its
actual occupants. Land Bank merely mentioned that it inspected Lot No. 29 to appraise the value of the

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property. We take judicial notice of the standard practice of banks, before approving a loan, to send
representatives to the premises of the land offered as collateral to investigate its real
owners.35 In Prudential Bank v. Kim Hyeun Soon,36 the Court held that the bank failed to exercise due
diligence although its representative conducted an ocular inspection, because the representative
concentrated only on the appraisal of the property and failed to inquire as to who were the then occupants
of the property.

Land Bank claims that it conditioned the approval of the loan upon the transfer of title to Maniego, but
admits processing the loan based on Maniegos assurances that title would soon be his. 37 Thus, only one
day after Maniego obtained TCT No. T-20151 under his name, Land Bank and Maniego executed a
Credit Line Agreement and a Real Estate Mortgage. Because of Land Banks haste in granting the loan, it
appears that Maniegos loan was already completely processed while the collateral was still in the name
of Poblete. This is also supported by the testimony of Land Bank Customer Assistant Andresito Osano. 38

Where the mortgagee acted with haste in granting the mortgage loan and did not ascertain the ownership
of the land being mortgaged, as well as the authority of the supposed agent executing the mortgage, it
cannot be considered an innocent mortgagee.39

Since Land Bank is not a mortgagee in good faith, it is not entitled to protection. The injunction against
the foreclosure proceeding in the present case should be made permanent. Since Lot No. 29 has not
been transferred to a third person who is an innocent purchaser for value, ownership of the lot remains
with Poblete. This is without prejudice to the right of either party to proceed against Maniego.

On the allegation that Poblete is in pari delicto with Maniego, we find the principle inapplicable. The pari
delicto rule provides that "when two parties are equally at fault, the law leaves them as they are and
denies recovery by either one of them."40 We adopt the factual finding of the RTC and the CA that only
Maniego is at fault.

Finally, on the issues of estoppel and laches, such were not raised before the trial court.1wphi1 I fence,
we cannot rule upon the same. It is settled that an issue which was neither alleged in the complaint nor
raised during the trial cannot be raised for the tirst time on appeal, as such a recourse would be offensive
to the basic rules of t}1ir play, justice and due process, since the opposing party would be deprived of the
opp01iunity to introduce evidence rebutting such new issue.41

WHEREFORE, we DENY the petition. We AFFIRM the 28 September 2010 Decision and the 19 April
2011 Resolution of the Court of Appeals in CA-Ci.R. CV No. 91666. The injunction against the foreclosure
proceeding, issued by the Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, is made
permanent. Costs against Land Bank.

SO ORDERED.

Legarda v. CA, et. al., G.R. No. 94457, October 16, 1997

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EN BANC

[G.R. No. 94457. October 16, 1997]

VICTORIA LEGARDA, petitioner, vs. THE HONORABLE COURT OF APPEALS, NEW CATHAY
HOUSE, INC., THE HONORABLE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
94, respondents.

RESOLUTION

ROMERO, J.:

For our resolution is the motion for reconsideration of the March 18, 1991, decision of the Courts's
First Division, filed by private respondents New Cathay House, Inc. (Cathay). A brief narration of facts is
in order.

The parties hereto entered into a lease agreement over a certain Quezon City property owned by
petitioner Victoria Legarda. For some reason or another, she refused to sign the contract although
respondent lessee, Cathay, made a deposit and a down payment of rentals, prompting the latter to file
before the Regional Trial Court of Quezon City, Branch 94 a complaint[1] against the former for specific
performance with preliminary injunction and damages. The court a quo issued the injunction. In the
meantime, Legardas counsel, noted lawyer Dean Antonio Coronel, requested a 10-day extension of time
to file an answer which the court granted. Atty. Coronel, however, failed to file an answer within the
extended period. His client was eventually declared in default, Cathay was allowed to present
evidence ex-parte, and on March 25, 1985, a judgment by default was reached by the trial court ordering
Legarda to execute the lease contract in favor of, and to pay damages to, Cathay.

On April 9, 1985, a copy of said decision was served on Atty. Coronel but he took no action until the
judgment became final and executory. A month later, the trial court issued a writ of execution and a public
auction was held where Cathays manager, Roberto V. Cabrera, Jr., as highest bidder, was awarded the
property for P376,500.00 in satisfaction of the judgment debt.Consequently, a Certificate of Sale was
issued by the sheriff on June 27, 1985. Upon failure of Legarda to redeem her property within the one-
year redemption period, a Final Deed of Sale was issued by the sheriff on July 8, 1986, which was
registered by Cabrera with the Register of Deeds three days later. Hence, Legardas Transfer Certificate
of Title (TCT) No. 270814 was cancelled with the issuance of TCT No. 350892 in the name of Cabrera.

Despite the lapse of over a year since the judgment by default became final and executory, Atty.
Coronel made no move on behalf of his client. He did not even inform her of all these
developments. When Legarda did learn of the adverse decision, she nevertheless did not lose faith in her
counsel[2] and prevailed upon him to seek appropriate relief. Thus, on October 23, 1986, he filed a petition
for annulment of judgment with prayer for the issuance of a writ of preliminary mandatory injunction
before the Court of Appeals.[3]

On November 29, 1989, the appellate court rendered a decision affirming the March 25, 1985,
decision of the trial court, dismissing the petition for annulment of judgment, and holding Legarda bound
by the negligence of her counsel. It considered her allegation of fraud by Cathay to be improbable, and
added that there was pure and simple negligence on the part of petitioners counsel who failed to file an

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answer and, later, a petition for relief from judgment by default. Upon notice of the Court of Appeals
decision, Atty. Coronel again neglected to protect his clients interest by failing to file a motion for
reconsideration or to appeal therefrom until said decision became final on December 21, 1989.

Sometime in March 1990, Legarda learned of the adverse decision of the Court of Appeals dated
November 29, 1989, not from Atty. Coronel but from his secretary. She then hired a new counsel for the
purpose of elevating her case to this Court. The new lawyer filed a petition for certiorari praying for the
annulment of the decision of the trial and appellate courts and of the sheriffs sale, alleging, among other
things, that Legarda lost in the courts below because her previous lawyer was grossly negligent and
inefficient, whose omissions cannot possibly bind her because this amounted to a violation of her right to
due process of law. She, therefore, asked Cathay (not Cabrera) to reconvey the subject property to her.

On March 18, 1991, a decision[4] was rendered in this case by Mr. Justice Gancayco, ruling, inter
alia, as follows: (a) granting the petition; (b) nullifying the trial courts decision dated March 25, 1985, the
Court of Appeals decision dated November 29, 1989, the Sheriffs Certificate of Sale dated June 27, 1985,
of the property in question, and the subsequent final deed of sale covering the same property; and
(c) ordering Cathay to reconvey said property to Legarda, and the Register of Deeds to cancel the
registration of said property in the name of Cathay (not Cabrera) and to issue a new one in Legardas
name.

The Court then declared that Atty. Coronel committed, not just ordinary or simple negligence, but
reckless, inexcusable and gross negligence, which deprived his client of her property without due process
of law. His acts, or the lack of it, should not be allowed to bind Legarda who has been consigned to
penury because her lawyer appeared to have abandoned her case not once but repeatedly. Thus, the
Court ruled against tolerating such unjust enrichment of Cathay at Legardas expense, and noted that
counsels lack of devotion to duty is so gross and palpable that this Court must come to the aid of his
distraught client.

Aggrieved by this development, Cathay filed the instant motion for reconsideration, alleging, inter
alia, that reconveyance is not possible because the subject property had already been sold by its owner,
Cabrera, even prior to the promulgation of said decision.

By virtue of the Gancayco decision, Cathay was duty bound to return the subject property to
Legarda. The impossibility of this directive is immediately apparent, for two reasons: First, Cathay neither
possessed nor owned the property so it is in no position to reconvey the same; second, even if it did,
ownership over the property had already been validly transferred to innocent third parties at the time of
promulgation of said judgment.

There is no question that the highest bidder at the public auction was Cathays manager. It has not
been shown nor even alleged, however, that Roberto Cabrera had all the time been acting for or in behalf
of Cathay. For all intents and purposes, Cabrera was simply a vendee whose payment effectively
extinguished Legardas liability to Cathay as the judgment creditor.No proof was ever presented which
would reveal that the sale occurred only on paper, with Cabrera acting as a mere conduit for
Cathay. What is clear from the records is that the auction sale was conducted regularly, that a certificate
of sale and, subsequently, a final deed of sale were issued to Cabrera which allowed him to consolidate
his ownership over the subject property, register it and obtain a title in his own name, and sell it to Nancy
Saw, an innocent purchaser for value, at a premium price. Nothing on record would demonstrate that
Cathay was the beneficiary of the sale between Cabrera and Saw. Cabrera himself maintained that he
was acting in his private (as distinct from his corporate) capacity[5] when he participated in the bidding.

Since the decision of the Court of Appeals gained finality on December 21, 1989, the subject
property has been sold and ownership thereof transferred no less than three times, viz.: (a) from Cabrera

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to Nancy Saw on March 21, 1990, four months after the decision of the Court of Appeals became final
and executory and one year before the promulgation of the March 18, 1991, decision under
reconsideration; (b) from Nancy Saw to Lily Tanlo Sy Chua on August 7, 1990, more than one year before
the Court issued a temporary restraining order in connection with this case; and (c) from the spouses
Victor and Lily Sy Chua to Janet Chong Luminlun on April 3, 1992. With these transfers, Cabreras TCT
No. 350892 gave way to Saws TCT No. 31672, then to Chuas TCT No. 31673, and finally to Luminluns
TCT No. 99143, all issued by the Register of Deeds of Quezon City on April 3, 1990, August 8, 1990, and
November 24, 1993, respectively.

We do not have to belabor the fact that all the successors-in-interest of Cabrera to the subject lot
were transferees for value and in good faith, having relied as they did on the clean titles of their
predecessors. The successive owners were each armed with their own indefeasible titles which
automatically brought them under the aegis of the Torrens System. As the Court declared in Sandoval v.
Court of Appeals,[6] (i)t is settled doctrine that one who deals with property registered under the Torrens
system need not go beyond the same, but only has to rely on the title. He is charged with notice only of
such burdens and claims as are annotated on the title.[7] In the case at bar, it is not disputed that no
notice of lis pendens was ever annotated on any of the titles of the subsequent owners. And even if there
were such a notice, it would not have created a lien over the property because the main office of a lien is
to warn prospective buyers that the property they intend to purchase is the subject of a pending
litigation. Therefore, since the property is already in the hands of Luminlun, an innocent purchaser for
value, it can no longer be returned to its original owner by Cabrera, much less by Cathay itself.

Another point to consider, though not raised as an issue in this case, is the fact that Cabrera was
impleaded as a party-respondent only on August 12, 1991, after the promulgation of the Gancayco
decision.[8] The dispositive portion itself ordered Cathay, instead of Cabrera to reconvey the property to
Legarda. Cabrera was never a party to this case, either as plaintiff-appellee below or as respondent in the
present action. Neither did he ever act as Cathays representative. As we held in the recent case of
National Power Corporation v. NLRC, et al.,[9](j)urisdiction over a party is acquired by his voluntary
appearance or submission to the court or by the coercive process issued by the court to him, generally by
service of summons.[10] In other words, until Cabrera was impleaded as party respondent and ordered to
file a comment in the August 12, 1991, resolution, the Court never obtained jurisdiction over him, and to
command his principal to reconvey a piece of property which used to be HIS would not only be
inappropriate but would also constitute a real deprivation of ones property without due process of law.

Assuming arguendo that reconveyance is possible, that Cathay and Cabrera are one and the same
and that Cabreras payment redounded to the benefit of his principal, reconveyance, under the facts and
evidence obtaining in this case, would still not address the issues raised herein

The application of the sale price to Legardas judgment debt constituted a payment which
extinguished her liability to Cathay as the party in whose favor the obligation to pay damages was
established.[11] It was a payment in the sense that Cathay had to resort to a court-supervised auction sale
in order to execute the judgment.[12] With the fulfillment of the judgment debtors obligation, nothing else
was required to be done.

Under the Gancayco ruling, the order of reconveyance was premised on the alleged gross
negligence of Legardas counsel which should not be allowed to bind her as she was deprived of her
property without due process of law.

It is, however, basic that as long as a party was given the opportunity to defend her interests in due
course, she cannot be said to have been denied due process of law, for this opportunity to be heard is the
very essence of due process. The chronology of events shows that the case took its regular course in the

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trial and appellate courts but Legardas counsel failed to act as any ordinary counsel should have acted,
his negligence every step of the way amounting to abandonment, in the words of the Gancayco
decision. Yet, it cannot be denied that the proceedings which led to the filing of this case were not
attended by any irregularity. The judgment by default was valid, so was the ensuing sale at public
auction. If Cabrera was adjudged highest bidder in said auction sale, it was not through any machination
on his part. All of his actuations that led to the final registration of the title in his name were aboveboard,
untainted by any irregularity.

The fact that Cabrera is an officer of Cathay does not make him a purchaser in bad faith. His act in
representing the company was never questioned nor disputed by Legarda. And while it is true that he won
in the bidding, it is likewise true that said bidding was conducted by the book. There is no call to be
alarmed that an official of the company emerges as the winning bidder since in some cases, the judgment
creditor himself personally participates in the bidding.

There is no gainsaying that Legarda is the judgment debtor here. Her property was sold at public
auction to satisfy the judgment debt. She cannot claim that she was illegally deprived of her property
because such deprivation was done in accordance with the rules on execution of judgments. Whether the
money used to pay for said property came from the judgment creditor or its representative is not
relevant. What is important is that it was purchased for value. Cabrera parted with real money at the
auction. In his Sheriffs Certificate of Sale dated June 27, 1985, [13] Deputy Sheriff Angelito R. Mendoza
certified, inter alia, that the highest bidder paid to the Deputy Sheriff the said amount of P376,500.00, the
sale price of the levied property. If this does not constitute payment, what then is it? Had there been no
real purchase and payment below, the subject property would never have been awarded to Cabrera and
registered in his name, and the judgment debt would never have been satisfied. Thus, to require either
Cathay or Cabrera to reconvey the property would be an unlawful intrusion into the lawful exercise of his
proprietary rights over the land in question, an act which would constitute an actual denial of property
without due process of law.

It may be true that the subject lot could have fetched a higher price during the public auction, as
Legarda claims, but the fail to betray any hint of a bid higher than Cabreras which was bypassed in his
favor. Certainly, he could not help it if his bid of only P376,500.00 was the highest. Moreover, in spite of
this allegedly low selling price, Legarda still failed to redeem her property within the one-year redemption
period. She could not feign ignorance of said sale on account of her counsels failure to so inform her,
because such auction sales comply with requirements of notice and publication under the Rules of
Court. In the absence of any clear and convincing proof that such requirements were not followed, the
presumption of regularity stands. Legarda also claims that she was in the United States during the
redemption period, but she admits that she left the Philippines only on July 13, 1985, or sixteen days after
the auction sale of June 27, 1985. Finally, she admits that her mother Ligaya represented her during her
absence.[14] In short, she was not totally in the dark as to the fate of her property and she could have
exercised her right of redemption if she chose to, but she did not.

Neither Cathay nor Cabrera should be made to suffer for the gross negligence of Legardas
counsel. If she may be said to be innocent because she was ignorant of the acts of negligence of her
counsel, with more reason are respondents truly innocent. As between two parties who may lose due to
the negligence or incompetence of the counsel of one, the party who was responsible for making it
happen should suffer the consequences. This reflects the basic common law maxim, so succinctly stated
by Justice J.B.L. Reyes, that . . . (B)etween two innocent parties, the one who made it possible for the
wrong to be done should be the one to bear the resulting loss.[15] In this case, it was not respondents,
Legarda, who misjudged and hired the services of the lawyer who practically abandoned her case and
who continued to retain him even after his proven apathy and negligence.

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The Gancayco decision makes much of the fact that Legarda is now consigned to penury and,
therefore, this Court must come to the aid of the distraught client. It must be remembered that this Court
renders decisions, not on the basis of emotions but on its sound judgment, applying the relevant,
appropriate law. Much as it may pity Legarda, or any losing litigant for that matter, it cannot play the role
of a knight in shining armor coming to the aid of someone, who through her weakness, ignorance or
misjudgment may have been bested in a legal joust which complied with all the rules of legal
proceedings.

In Vales v. Villa,[16] this Court warned against the danger of jumping to the aid of a litigant who
commits serious error of judgment resulting in his own loss:

x x x Courts operate not because one person has been defeated or overcome by another, but because he
has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them - indeed, all they have in the world; but not for that alone
can the law intervene and restore. There must be, in addition, a violation of law, the commission of what
the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and
remedy it."

Respondents should not be penalized for Legardas mistake. If the subject property was at all sold, it
was only after the decisions of the trial and appellate courts had gained finality.These twin judgments,
which were nullified by the Gancayco decision, should be respected and allowed to stand by this Court for
having become final and executory.

A judgment may be broadly defined as the decision or sentence of the law given by a court or other
tribunal as the result of proceedings instituted therein. [17] It is a judicial act which settles the issues, fixes
the rights and liabilities of the parties, and determines the proceeding, and it is regarded as the sentence
of the law pronounced by the court on the action or question before it.[18]

In the case at bar, the trial courts judgment was based on Cathays evidence after Legarda was
declared in default. Damages were duly awarded to Cathay, not whimsically, but upon proof of its
entitlement thereto. The issue of whether the plaintiff (Cathay) deserved to recover damages because of
the defendants (Legardas) refusal to honor their lease agreement was resolved. Consequently, the right
of Cathay to be vindicated for such breach and the liability incurred by Legarda in the process were
determined.

This judgment became final when she failed to avail of remedies available to her, such as filing a
motion for reconsideration or appealing the case. At the time, the issues raised in the complaint had
already been determined and disposed of by the trial court. [19] This is the stage of finality which judgments
must at one point or another reach. In our jurisdiction, a judgment becomes ipso facto final when no
appeal is perfected or the reglementary period to appeal therefrom expires. The necessity of giving finality
to judgments that are not void is self-evident.The interests of society impose it. The opposite view might
make litigations more unendurable than the wrongs (they are) intended to redress. It would create doubt,
real or imaginary, and controversy would constantly arise as to what the judgment or order was. Public
policy and sound practice demand that, at the risk of occasional errors, judgments of courts should
become final at some definite date fixed by law. The very object for which courts were instituted was to
put an end to controversies.[20] When judgments of lower courts gain finality, they, too, become inviolable,
impervious to modification. They may, then, no longer be reviewed, or in any way modified directly or
indirectly, by a higher court, not even by the Supreme Court. [21] In other words, once a judgment becomes
final, the only errors that may be corrected are those which are clerical.[22]

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From the foregoing precedents, it is readily apparent that the real issue that must be resolved in this
motion for reconsideration is the alleged illegality of the final judgments of the trial and appellate courts.

Void judgments may be classified into two groups: those rendered by a court without jurisdiction to
do so and those obtained by fraud or collusion.[23] This case must be tested in light of the guidelines
governing the latter class of judgments. In this regard, an action to annul a judgment on the ground of
fraud will not lie unless the fraud is extrinsic or collateral and facts upon which it is based (have) not been
controverted or resolved in the case where (the) judgment was rendered. [24] Where is the fraud in the
case at bar? Was Legarda unlawfully barred from the proceedings below? Did her counsel sell her out to
the opponent?

It must be noted that, aside from the fact that no extrinsic fraud attended the trial and resolution of
this case, the jurisdiction of the court a quo over the parties and the subject matter was never raised as
an issue by Legarda. Such being the case, the decision of the trial court cannot be nullified. Errors of
judgment, if any, can only be reviewed on appeal, failing which the decision becomes final and executory,
valid and binding upon the parties in the case and their successors in interest. [25]

At this juncture, it must be pointed out that while Legarda went to the Court of Appeals claiming
precisely that the trial courts decision was fraudulently obtained, she grounded her petition before the
Supreme Court upon her estranged counsels negligence. This could only imply that at the time she filed
her petition for annulment of judgment, she entertained no notion that Atty. Coronel was being remiss in
his duties. It was only after the appellate courts decision had become final and executory, a writ of
execution issued, the property auctioned off then sold to an innocent purchasers for value, that she began
to protest the alleged negligence of her attorney. In most cases, this would have been dismissed outright
for being dilatory and appearing as an act of desperation on the part of a vanquished litigant. The
Gancayco ruling, unfortunately, ruled otherwise.

Fortunately, we now have an opportunity to rectify a grave error of the past.

WHEREFORE, the Motion for Reconsideration of respondent New Cathay House, Inc. is hereby
GRANTED. Consequently, the decision dated March 18, 1991, of the Courts First Division is VACATED
and SET ASIDE. A new judgment is hereby entered DISMISSING the instant petition for review and
AFFIRMING the November 29, 1989, decision of the Court of Appeals in CA-G.R. No. SP-10487. Costs
against petitioner Victoria Legarda.

SO ORDERED.

Gabutan v. Nacalaban, G.R. No. 185857-58, June 29, 2016

DECISION

JARDELEZA, J.:

Before us are consolidated petitions questioning the Court of Appeals' (CA) Decision1 dated December
11, 2008 and Resolution2 dated August 17, 2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No.
53598-MlN.3 In G.R. Nos. 185857-58, the heirs of Trifonia D. Gabutan and Tirso Dalondonan, Buna D.

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Actub, Felisia Trocio and Crisanta D. Ubaub (Gabutan, et al.) filed a partial appeal by way of a petition for
review on certiorari, 4 seeking to reverse the portion of the CA Decision declaring Cagayan Capital
College (the College) as a buyer in good faith. The other petition, G .R. Nos. 194 314-] 5, is one
for certiorari5filed by Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao as heirs of Baldomera
D. Vda. De Nacalaban (Nacalaban, et al.). It seeks to annul the CA Decision and Resolution which
sustained the action for reconveyance filed by Gabutan, et al.

The Antecedents

On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an 800-square meter parcel of prime
land (property) in Poblacion, Cagayan de Oro City from Petra, F ortunata, Francisco and Dolores, all
surnamed Daamo.6Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-2259 7 covering the
property was issued in the name of Godofredo. He thereafter built a house on it. 8

Godofredo died on January 7, 1974.9 He was survived by his wife, Baldomera, and their children, Dante,
Helen, and Susan. On March 19, 1979, Baldomera issued a Certification 10 in favor of her mother,
Melecia. It provided, in effect, that Baldomera was allowing her mother to build and occupy a house on
the portion of the property. 11 Accordingly, the house was declared for taxation purposes. The tax
declaration 12 presented in evidence showed that Melecia owned the building on the land owned by
Godofredo. 13

Baldomera died on September 11, 1994. 14 On July 3, 1996, her children executed an Extrajudicial
Settlement of Estate of Deceased Person with Sale15 (Extrajudicial Settlement with Sale) where they
adjudicated unto themselves the property and sold it to the College. On August 22, 1996, TCT No. T-
2259 was cancelled and TCT No. T-111846 16 covering the property was issued in the name of the
College. 17

Melecia died on April 20, 199718 and was survived by her children, Trifonia, Buna, Felisia, Crisanta, and
Tirso.

In a letter 19 dated May 5, 1997, the College demanded Trifonia D. Gabutan, Mary Jane Gilig, Allan
Ubaub, and Evelyn Dailo, the heirs of Melecia who were occupying the house on the property, to vacate
the premises. 20

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real Property, Declaration of
Nullity of Contracts, Partition and Damages with Writ of Preliminary Attachment and Injunction21 against
Nacalaban, et al. and the College. They alleged that: (1) Melecia bought the property using her own
money but Godofredo had the Deed of Absolute Sale executed in his name instead of his mother-in-
law;22 (2) Godofredo and Baldomera were only trustees of the property in favor of the real owner and
beneficiary, Melecia;23 (3) they only knew about the Extrajudicial Settlement with Sale upon verification
with the Registry of Deeds;24 and (4) the College was a buyer in bad faith, being aware they were co-
owners of the property. 25

In its Answer with Affirmative Defenses,26 the College claimed that it is a buyer in good faith and for value,
having "made exhaustive investigations and verifications from all reliable sources" that Melecia and her
heirs were staying in the property by mere tolerance. 27 It alleged that: (l) in the tax declaration28 of the
residential house, Melecia admitted that the lot owner is Godofredo; 29 (2) the occupancy permit of Melecia
was issued only after Godofredo issued a certification30 to the effect that Melecia was allowed to occupy a

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portion of the property;31 and (3) the Extrajudicial Settlement with Sale was published in three consecutive
issues of Mindanao Post, a newspaper of general circulation.32

In their Answer with Counterclaim, 33 Nacalaban, et al. denied the allegations of Gabutan, et al. They
claimed to have acquired the property by intestate succession from their parents, who in their lifetime,
exercised unequivocal and absolute ownership over the property. 34 Nacalaban, et al. also set up the
defenses of laches and prescription, and asserted that the action for reconveyance was improper
because the property had already been sold to an innocent purchaser for value.35

On September 10, 1997, the College filed a separate Complaint for Unlawful Detainer and
Damages36 with the Municipal Trial Court in Cities (MTCC) against Trifonia, Mary Jane, Allan, Evelyn and
Nicolas Dailo (Heirs of Melecia). In their Answer with Affirmative and/or Negative Defenses with
Compulsory Counterclaim, 37 the Heirs of Melecia claimed that they own and possess the property in co-
ownership with Nacalaban, et al. and Gabutan, et al. because it was purchased by Melecia, their common
predecessor. 38 They also claimed that the house in which they reside was constructed at her
expense.39 The College had prior knowledge of this co-ownership, and hence, was a purchaser in bad
faith. 40 The Heirs of Melecia also raised the defense of forum-shopping in view of the pendency of the
action for reconveyance. 41 They then concluded that in view of the issues and the value of the property,
as well, the MTCC had no jurisdiction over the case.42

The MTCC found it had jurisdiction to hear the case and ruled in favor of the College:43

WHEREFORE, JUDGMENT is hereby rendered ordering each of the defendants to:

a.) Immediately vacate the property of the plaintiff;

b.) Pay the plaintiff the monthly use compensation for the continued use of the property at the rate of
P500.00 per month from MAY 5, 1997 until the property is actually vacated;

c.) Pay the plaintiff Attorney's fees amounting to P5,000.00 per defendant;

d.) Pay for litigation expenses at the rate of P1,000.00 per defendant.

SO ORDERED.44

On appeal, the Regional Trial Court (RTC) affirmed the MTCC's Decision46 in all respects, except that the
Heirs of Melecia were given 30 days from notice to vacate the property. 47 They filed a motion for
reconsideration, but it was denied.49 Thus, the Heirs of Melecia filed a petition for review50 before the CA,
docketed as CA-G.R. SP No. 53598.51

Meanwhile, in the reconveyance case, the RTC rendered a Decision52 in favor of Gabutan, et al. The RTC
found the testimonies of their witnesses credible, in that the money of Melecia was used in buying the
property but the name of Godofredo was used when the title was obtained because Godofredo lived in
Cagayan de Oro City while Melecia lived in Bornay, Gitagum, Misamis Oriental. 53 Thus, the RTC held that
a trust was established by operation of law pursuant to Article 1448 of the Civil Code. 54 The dispositive
portion of the RTC's Decision reads:

WHEREFORE, judgment is hereby rendered, and this Court hereby:

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1. Declares that the Spouses Godofredo and Baldomera Nacalaban held the land covered by Transfer
Certificate of Title No. T-2259 issued in the name of Godofredo Nacalaban married to Baldomera
Dalondonan issued on January 13, 1959 in trust for Melecia V da. de Dalondonan with the Spouses as
the trustees and Melecia V da. de Dalondonan as the cestui que trust;

2. Declares that upon the death of Melecia V da. de Dalondonan on August 20, 1997, the ownership and
beneficial interest of the foregoing Land passed to the plaintiffs and individual defendants by operation of
law as legal heirs of Melecia V da. de Dalondonan;

3. Nullifies the Extrajudicial Settlement of Estate of Deceased Person with Sale executed by the individual
defendants on July 30, 1996 and known as Doc. No. 326; Page No. 67; Book No. XX; Series of 1996 in
the Notarial Register of Notary Public Victoriano M. Jacot with respect to the Extrajudicial settlement by
the individual defendants of the land referred to above;

4. Declares that defendant Cagayan Capitol College was a buyer in good faith and for value of the land
referred to above, and, accordingly, declares that said defendant now owns the land;

5. Orders defendant Cagayan Capitol College to inform this Court in writing within thirty (30) days from
receipt of this decision the amount of the purchase price of the land referred to above bought by it from
the individual defendants the amount of which should approximate the prevailing market value of the land
at the time of the purchase;

6. Orders the individual defendants namely, Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao,
jointly and severally, to deliver and turn over to the plaintiffs, within thirty (30) days from receipt of this
decision, plaintiffs' shares of the proceeds of the sale of the land referred to above the amount of which is
equivalent to five-sixth (5/6) of said proceeds with the remaining one-sixth (1/6) to be retained by the
individual defendants as their share by virtue of their being the legal heirs of Baldomera D. Nacalaban;

SO ORDERED.55

Both parties filed separate appeals from this Decision before the CA. 57 In a Resolution58 dated October 7,
2004, the CA consolidated both appeals.

The CA rendered its Decision59 on December 11, 2008 dismissing the consolidated appeals and
affirming in toto the RTC Decisions in the unlawful detainer case and the action for reconveyance. The
CA held that: (1) the defense of co-ownership based on an implied trust by a defendant in an unlawful
detainer case shall not divest the MTCC of jurisdiction over the case;60 (2) the dead man's statute does
not apply because Gabutan, et al.'s counsel did not interpose any objection when the testimony of
Crisanta Ubaub was offered and Gabutan, et al.'s counsel even examined her;61 (3) Nacalaban, et
al.'s claim that Gabutan, et al.'s witnesses are not competent to testify on matters which took place before
the death of Godofredo and Melecia is without merit because Gabutan, et al. have not specified these
witnesses and such hearsay evidence alluded to;62 (4) the parole evidence rule does not apply because
Melecia and Nacalaban, et al. were not parties to the Deed of Conditional Sale;63 (5) the action for
reconveyance has not yet prescribed because Gabutan, et al. are in possession of the property;64 and (6)
the College is a buyer in good faith. 65

Nacalaban, et al. filed their motion for reconsideration of the CA Decision, but it was denied in a
Resolution 66 dated August 1 7, 2010. Hence, they filed the present petition for certiorari67under Rule 65,

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where they allege that: (1) the action for reconveyance already expired; 68 (2) for an action for
reconveyance to prosper, the property should not have passed into the hands of another who bought the
property in good faith and for value;69 and (3) the title of Godofredo under TCT No. T-2259 which was
issued on January 13, 1959 could not be attacked collaterally.70

On the other hand, Gabutan, et al. filed the present petition for review on certiorari71under Rule 45,
seeking a partial appeal of the CA Decision. In their petition, Gabutan, et al. allege that the College is not
a buyer in good faith because it did not buy the property from the registered owner. 72 Since Godofredo
was the registered owner of the property and not Nacalaban, et al., the College should have exercised a
higher degree of prudence in establishing their capacity to sell it. 73 Further, despite knowing that other
persons possessed the property, the College did not inquire with Gabutan, et al. the nature of their stay
on the property.74 Under Section 1, paragraph 2, Rule 7 4 of the Rules of Court, the publication of the
Extrajudicial Settlement with Sale was also without prejudice to claims of other persons who had no
notice or participation thereof. 75 Finally, Gabutan, et al. argue that they cannot be ejected from the
property because there is no evidence to show that their stay was by mere tolerance, and that Melecia
was a builder in good faith. 76

Considering that the petitions assail the same CA Decision and involve the same parties, we issued a
Resolution77dated December 13, 2010 consolidating them.

The Issues

The issues for resolution are:

1. Whether the petition for certiorari of Nacalaban, et al. shall prosper;

2. Whether the action for reconveyance was proper; and

3. Whether the College is a buyer in good faith.

Our Ruling

I. The petition for certiorari of

Nacalaban, et al. is a wrong
remedy

Pursuant to Section 1, Rule 45 of the Rules of Court,78 the proper remedy to obtain a reversal of judgment
on the merits, final order or resolution is an appeal. The Resolution dated August 17, 2010 of the CA,
which affirmed its Decision dated December 11, 2008, was a final resolution that disposed of the appeal
by Nacalaban, et al. and left nothing more to be done by the CA in respect to the said case. Thus,
Nacalaban, et al. should have filed an appeal in the form of a petition for review on certiorari and not a
petition for certiorari under Rule 65, which is a special civil action.

Rule 65 is a limited form of review and is a remedy of last recourse. This extraordinary action lies only
where there is no appeal nor plain, speedy and adequate remedy in the ordinary course of
law. 79 In Malayang Manggagawa ng Stayfast Phils., Inc. v. National Labor Relations Comission, 80 we
held that appeal would still be the proper remedy from a judgment on the merits, final order or resolution
even if the error ascribed to the court rendering the judgment is its lack of jurisdiction over the subject

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matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of
law set out in the decision, order or resolution. The existence and availability of the right of appeal
prohibits the resort to certiorari because one of the requirements for the latter remedy is that there should
be no appeal. 81 We have always declared that a petition for certiorari is not a substitute for an appeal
where the latter remedy is available but was lost through fault or negligence. 82

Here, Nacalaban, et al. received the assailed Resolution dated August 17, 2010 on September 7,
2010.83 Under the Rules of Court, they had 15 days or until September 22, 2010 to file an appeal before
us. Nacalaban, et al. allowed this period to lapse without doing so and, instead, filed a petition
for certiorari on November 5, 2010. 84 Being the wrong remedy, the petition of Nacalaban, et al. is,
therefore, dismissible. Although there are exceptions85 to this general rule, none applies in this case.

In spite of the consolidation we have ordered, we cannot treat the petition of Nacalaban, et al. as one
under Rule 45. We have the discretion to treat a Rule 65 petition for certiorari as a Rule 45 petition for
review on certiorari if (1) the petition is filed within the reglementary period for filing a petition for review;
(2) when errors of judgment are averred; and (3) when there is sufficient reason to justify the relaxation of
the rules. 86 The first and third requisites are absent in this case. To reiterate, the petition was filed
beyond the 15-day reglementary period of filing a petition for review on certiorari. As will be discussed, we
also find no compelling reason to relax the rules.

II. The action for reconveyance filed by Gabutan, et al. is proper

a. An implied resulting trust was created

between Melecia and Godofredo

We stress at the outset that the question of existence of an implied trust is factual, hence, ordinarily
outside the purview of Rule 45. 87 The resolution of factual issues is the function of the lower courts
whose findings, when aptly supported by evidence, bind us. This is especially true when the CA affirms
the lower court's findings, as in this case. While we, under established exceptional circumstances, had
deviated from this rule, we do not find this case to be under any of the exceptions. 88 Even if we were to
disregard these established doctrinal rules, we would still affirm the assailed CA rulings.

Article 1448 of the Civil Code provides in part that there is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. The trust
created here, which is also referred to as a purchase money resulting trust, 89 occurs when there is (l) an
actual payment of money, property or services, or an equivalent, constituting valuable consideration; (2)
and such consideration must be furnished by the alleged beneficiary of a resulting trust.90 These two
elements are present here.

Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia, established that Melecia's
money was used in buying the property, but its title was placed in Godofredo's name. She purchased the
property because Felisia wanted to build a pharmacy on it.91 On one occasion in Melecia' s house, and
when the entire family was present, Melecia gave Godofredo the money to purchase the
property.92 Melecia entrusted the money to Godofredo because he was in Cagayan de Oro, and per
Melecia' s instruction, the deed of sale covering the property was placed in his name. 93 It was allegedly
her practice to buy properties and place them in her children's name, but it was understood that she and
her children co-own the properties. 94

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Melecia built a residential building on the property, where her daughter Crisanta and some of her
grandchildren resided. 95 Godofredo also thereafter built a house on the property. Twice, he also
mortgaged the property to secure loans. Melecia allowed him to do so because she trusted him. 96 After
Godofredo' s death, and when Baldomera fell ill, there were family discussions to transfer the title in
Melecia's name so Melecia's children can divide it together with the rest of Melecia's properties. The
plans, however, always fell through.97

Both the RTC and CA found credence on these pieces of testimonial evidence that an implied resulting
trust exists. Reliance on these testimonies will not violate the parol evidence rule, as Nacalaban, et
al. once raised. In Tong v. Go Tiat Kun,98we ruled that since an implied trust is neither dependent upon an
express agreement nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the
admission of parol evidence to prove their existence. What is crucial is the intention to create a
trust.99 We cautioned, however, that the parol evidence that is required to establish the existence of an
implied trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or indefinite
declarations. 100 The testimonies of Felisia, Crisanta, and Trifonia satisfy these requirements. They are
consistent and agree in all material points in reference to the circumstances behind the arrangement
between Melecia and Godofredo. We agree with the RTC when it said that this arrangement among
family members is not unusual, especially in the 1950s. 101

Nacalaban, et al., on the other hand, denied the arrangement between Melecia and Godofredo, and
maintained that it was really the latter who purchased the property from its original owners, as evidenced
by their possession of the Deed of Conditional Sale and the title being in Godofredo's name. 102 It is
telling, however, that Nacalaban, et al. failed to provide the details of the sale, specifically with regard to
how Godofredo could have been able to afford the purchase price himself, which would have directly
refuted the allegation that Melecia's money was used in the purchase. As the RTC aptly observed, if
Godofredo really bought the property with his own money, it was surprising that Baldomera did not
transfer the title of the property to her name when Godofredo died in 1974. Baldomera did not do so until
her death in 1994 despite being pressed by her siblings to partition the property. The RTC correctly
deduced that this only meant that Baldomera acknowledged that the property belongs to Melecia. 103

Having established the creation of an implied resulting trust, the action for reconveyance filed by
Gabutan, et al., the heirs of Melecia in whose benefit the trust was created, is proper. An action for
reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was
wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or
reconvey the land to him. 104 It will not amount to a collateral attack on the title, contrary to the allegation
of Nacalaban, et al. 105We explained in Hortizuela v. Tagufa: 106

x x x As a matter of fact, an action for reconveyance is a recognized remedy, an action in

personam, available to a person whose property has been wrongfully registered under the Torrens
system in another's name. In an action for reconveyance, the decree is not sought to be set aside. It does
not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks
to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always
available as long as the property has not passed to an innocent third person for value.

There is no quibble that a certificate of title, like in the case at bench, can only be questioned through a
direct proceeding. The MCTC and the CA, however, failed to take into account that in a complaint for
reconveyance, the decree of registration is respected as incontrovertible and is not being questioned.
What is being sought is the transfer of the property wrongfully or erroneously registered in another's name

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to its rightful owner or to the one with a better right. If the registration of the land is fraudulent, the person
in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an
action for reconveyance of the property. 107

The fact that the property was already titled in Godofredo's name, and later transferred to the College, is
not a hindrance to an action for reconveyance based on an implied trust. The title did not operate to vest
ownership upon the property in favor of the College. As held in Naval v. 108

x x x Registration of a piece of land under the Torrens System does not create or vest title, because it is
not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over
the particular property described therein. It cannot be used to protect a usurper from the true owner; nor
can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the
expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the
real property may be co-owned with persons not named in the certificate, or that it may be held in trust for
another.109

Moreover, the body of the Complaint filed by Gabutan, et al. shows that it is not only for the reconveyance
of the property but also for the annulment of TCT No. T-111846 issued in the name of the
College. 110 Gabutan, et al. questioned the validity of the sale to the College and claimed co-ownership
over the property. Thus, we can rule on the validity of TCT No. T-111846 since the Complaint is a direct
attack on the title of the College.

b. The action for reconveyance is

imprescriptible because the
plaintiffs are in possession of
the property

An action for reconveyance based on an implied or a constructive trust prescribes 10 years from the
alleged fraudulent registration or date of issuance of the certificate of title over the property. However, an
action for reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the
person enforcing the trust is in possession of the property. In effect, the action for reconveyance is an
action to quiet the property title, which does not prescribe. 111 The reason is that the one who is in actual
possession of the land claiming to be its owner may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right. His undisturbed possession gives him a continuing
right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one who is in possession. 112

The fact of actual possession of Gabutan, et al. of the property, during the lifetime of Melecia and even
after her death, is an undisputed and established fact. The College has even filed an ejectment case
against the Heirs of Melecia for this reason. 113 Thus, their complaint for reconveyance is imprescriptible.
It follows, with more reason, that Gabutan, et al. cannot be held guilty of !aches as the said doctrine,
which is one in equity, cannot be set up to resist the enforcement of an imprescriptible legal right. 114

III. The property shall be

reconveyed to the estate of
Melecia

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a. The Extrajudicial Settlement with Sale

executed between Nacalaban, et al.
and the College is void

Having established the creation of an implied resulting trust between Melecia and Godofredo, the law
thereby creates the obligation of the trustee to reconvey the property and its title in favor of the true
owner. 115 The true owner, Melecia, died in 1997 and was succeeded by her children and grandchildren.
The property, therefore, must be reconveyed to her estate.

The execution of the Extrajudicial Settlement with Sale between Godofredo's heirs and the College will
not defeat the legal obligation to reconvey the property because at the time of its execution in 1996,
Melecia was still alive. Hence, Nacalaban, et al. did not have the right or authority to sell the
property. Nemo dat quad non habet. One can sell only what one owns or is authorized to sell, and the
buyer can acquire no more right than what the seller can transfer legally. 116 Nacalaban, et al. cannot find
refuge in their argument that the property was registered in their father's name and that after his death,
his rights passed to them as his legal heirs. To repeat, title to property does not vest ownership but is a
mere proof that such property has been registered. 117

b. The College is a buyer in bad

faith

Despite the finding that the property was owned by Melecia and upon her death, by her heirs, the lower
courts still sustained the ownership of the College of the property on the ground that it is an innocent
purchaser for value. 118The lower courts' findings are grounded on the following: (i) Gabutan, et al.'s claim
was never annotated on Godofredo's title; (ii) the Extrajudicial Settlement with Sale was duly published
and the College was able to effect the transfer of the title in its name; (iii) Baldomera issued a certification
in favor of Melecia allowing her to occupy a portion of the lot; and (iv) the tax declaration showed that
Melecia owned only the building on the land owned by Godofredo. 119

The RTC reiterated the rule that the buyer of a land registered under the Torrens System may rely upon
the face of the certificate of title and does not have to look beyond it. 120 The CA, on the other hand, held
that when taken together, these facts would reasonably constitute enough reason for the College or any
buyer to conclude that the property is free from any adverse claim, thereby making any further
investigation unnecessary. Absent any showing that the College knew of the actual arrangement between
Godofredo and Melecia, it must be deemed a buyer in good faith. 121

Gabutan, et al. alleged that the lower courts erred in ruling that the College is a buyer in good faith,
raising the following: (1) Nacalaban, et al. are not the registered owners of the property; Godofredo is the
registered owner who died on January 7, 1974; 122 (2) not being the registered owners, the College, as
buyer, is expected to examine not only the certificate of title but all factual circumstances necessary for
him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the
property; 123 and (3) the College knew that other persons possessed the property so it should have first
established the capacity of the Nacalaban children to sell the property. 124

Whether one is a buyer in good faith and whether due diligence and prudence were exercised are
questions of fact. 125 As we have already mentioned, only questions of law may be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court. We see an exception, however, to this general
rule relative to the finding that the College is a buyer in good faith. We hold that the RTC's finding that the

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College is a buyer in good faith, which finding was upheld by the CA, was based on an obvious
misapprehension of facts and was clearly not supported by law and jurisprudence.

In Bautista v. Silva,126 we reiterated the requisites for one to be considered a purchaser in good faith:

A buyer for value in good faith is one who buys property of another, without notice that some other person
has a right to, or interest in, such property and pays full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other persons in the property. He buys
the property with the well-founded belief that the person from whom he receives the thing had title to the
property and capacity to convey it.

To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the
title to the property. He need not prove that he made further inquiry for he is not obliged to explore
beyond the four comers of the title. Such degree of proof of good faith, however, is sufficient only
when the following conditions concur: first, the seller is the registered owner of the
land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was
not aware of any claim or interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title to the property.

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the
latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller's title and capacity to transfer any interest in the
property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied
on the face of the title; he must now also show that he exercised reasonable precaution by inquiring
beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad
faith. 127(Emphasis supplied.)

Thus, the College, which has the burden to prove the status of being a purchaser in good faith, is required
to prove the concurrence of the above conditions. This onus probandi cannot be discharged by mere
invocation of the legal presumption of good faith. 128 We find that the College failed to discharge this
burden.

Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al. are not the registered owners of the
property, but Godofredo. In Bautista v. 129 Court of Appeals, we held:

However, it is important to note that petitioners did not buy the land from the registered owner, Dionisio
Santiago. They bought it from his heirs, Maria dela Cruz and Jose Santiago.

Where a purchaser buys from one who is not the registered owner himself: the law requires a higher
degree of prudence even if the land object of the transaction is registered. One who buys from one who is
not the registered owner is expected to examine not only the certificate of title but all factual
circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his
capacity to transfer the land. 130

Secondly, the College was aware that aside from Nacalaban, et al., the Heirs of Melecia, were also in
possession of the property. The College cited the tax declaration which bore an annotation that Melecia
owned a residential building and Godofredo owned the lot. 131 Also, apart from filing an ejectment case

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against the Heirs of Melecia, the College retained part of the purchase price for the demolition of
Melecia's building as well. 132

In Occea v. Esponilla, 133 we held that petitioner-spouses were not purchasers in good faith when they
merely relied on the representation of the seller regarding the nature of possession of the occupants of
the land:

In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and
registration of the land. x x x At the trial, Tomas Occea admitted that he found houses built on the land
during its ocular inspection prior to his purchase. He relied on the representation of vendor Arnold
that these houses were owned by squatters and that he was merely tolerating their presence on
the land. Tomas should have verified from the occupants of the land the nature and authority of
their possession instead of merely relying on the representation of the vendor that they were
squatters, having seen for himself that the land was occupied by persons other than the vendor
who was not in possession of the land at that time. x x x 134 (Emphasis supplied.)

Although the College in its Answer alleged that it made an exhaustive investigation and verification from
all reliable sources and found that the possession of Melecia and her heirs was merely tolerated, 135 it
failed to specify who or what these sources were. There is no evidence that the College did inquire from
Melecia or her heirs themselves, who were occupying the property, the nature and authority of their
possession. It is not far-fetched to conclude, therefore, that the College merely relied on the
representations of the sellers and the documents they presented. In this regard, the College is not a
buyer in good faith.

The "honesty of intention" which constitutes good faith implies a freedom from knowledge of
circumstances which ought to put a person on inquiry. 136 If the land purchased is in the possession
of a person other than the vendor, the purchaser must be wary and must investigate the rights of the
actual possessor. 137 Without such inquiry, the purchaser cannot be said to be in good faith and cannot
have any right over the property. 138

We are aware that in the ejectment case, the MTCC and RTC ruled in favor of the College.1wphi1 We
emphasize, though, that the ruling on the College's better right of possession was without prejudice to the
eventual outcome of the reconveyance case where the issue of ownership was fully threshed out. We
have held that the sole issue for resolution in an unlawful detainer case is physical or material possession
of the property involved, independent of any claim of ownership by any of the parties. When the
defendant, however, raises the defense of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only
to determine the issue of possession. 139 Thus, the ruling on the ejectment case is not conclusive as to
the issue of ownership. 140

WHEREFORE, in view of the foregoing, the petition for certiorari in G.R. Nos. 194314-14 is DENIED and
the petition for review on certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the Court of
Appeals dated December 11, 2008 and its Resolution dated August 17, 2010 are AFFIRMED with the
following MODIFICATIONS:

1. Cagayan Capitol College is hereby declared a buyer in bad faith, who has no right to
possession and ownership of the property;

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2. Nacalaban, et al. are ordered to return the purchase price paid on the property to the College,
plus interest at the rate of six percent (6%) per annum computed from July 23, 1997 141 until the
date of finality of this judgment. The total amount shall thereafter earn interest at the rate of six
percent (6%) per annum from the finality of judgment until its satisfaction; 142 and

3. The Register of Deeds is ordered to cancel TCT No. T-111846 in the name of the College.

4. The property should be reconveyed to the Estate of the late Melecia Dalondonan with the
institution of the proper proceedings for its partition and titling.

SO ORDERED.

Cusi v. Domingo, G.R. No. 195825, February 27, 2013

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 195825 February 27, 2013

SPOUSES ALFONSO AND MARIA ANGELES CUSI, Petitioners,

vs.
LILIA V. DOMINGO, Respondent.

x-----------------------x

G.R. No. 195871

RAMONA LIZA L. DE VERA, Petitioner,

vs
LILIA V. DOMINGO AND SPOUSES RADELIA AND ALFRED SY, Respondents.

DECISION

BERSAMIN, J.:

Under the Torrens system of land registration, the registered owner of realty cannot be deprived of her
property through fraud, unless a transferee acquires the property as an innocent purchaser for value. A
transferee who acquires the property covered by a reissued owner's copy of the certificate of title without
taking the ordinary precautions of honest persons in doing business and examining the records of the
proper Registry of Deeds, or who fails to pay the full market value of the property is not considered an
innocent purchaser for value.

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Under review in these consolidated appeals is the Decision promulgated on July 16, 2010, 1 whereby the
Court of Appeals (CA) in CA-G.R. CV No. 90452 affirmed the revised decision rendered on March 1,
2007 by the Regional Trial Court in Quezon City (RTC) against the petitioners and their seller. 2

Antecedents

The property in dispute was a vacant unfenced lot situated in White Plains, Quezon City and covered by
Transfer Certificate of Title (TCT) No. N-165606 issued in the name of respondent Lilia V. Domingo by the
Registry of Deeds of Quezon City. It had an area of 658 square meters. 3 In July 1999, Domingo learned
that construction activities were being undertaken on her property without her consent. She soon
unearthed the series of anomalous transactions affecting her property.

On July 18, 1997, one Radelia Sy (Sy),4 representing herself as the owner of the property, petitioned the
RTC for the issuance of a new owners copy of Domingos TCT No. N-165606, appending to her petition
a deed of absolute sale dated July 14, 1997 purportedly executed in her favor by Domingo; 5 and an
affidavit of loss dated July 17, 1997,6 whereby she claimed that her bag containing the owners copy of
TCT No. N-165606 had been snatched from her on July 13, 1997 while she was at the SM City in North
EDSA, Quezon City. The RTC granted Sys petition on August 26, 1997.7 The Registry of Deeds of
Quezon City then issued a new owners duplicate copy of TCT No. N-165606, which was later cancelled
by virtue of the deed of absolute sale dated July 14, 1997, and in its stead the Registry of Deeds of
Quezon City issued TCT No. 186142 in Sys name.8

Sy subsequently subdivided the property into two, and sold each half by way of contract to sell to
Spouses Edgardo and Ramona Liza De Vera and to Spouses Alfonso and Maria Angeles Cusi. The
existence of the individual contracts to sell was annotated on the dorsal portion of Sys TCT No. 186142
as Entry No. PE-8907/N-186142,9stating that the consideration of the sale was 1,000,000.00 for each
set of buyers, or for a total of 2,000,000.00 for the entire property that had an actual worth of not less
than 14,000,000.00. TCT No. 186142 in the name of Sy was then cancelled by virtue of the deeds of
sale executed between Sy and Spouses De Vera, and between Sy and Spouses Cusi, to whom were
respectively issued TCT No. 18956810 and TCT No. 189569.11 All the while, the transactions between Sy
and the De Veras, and between Sy and the Cusis were unknown to Domingo, whose TCT No. N-165606
remained in her undisturbed possession.12

It turned out that the construction activities taking place on the property that Domingo learned about were
upon the initiative of the De Veras in the exercise of their dominical and possessory rights.

Domingo commenced this action against Sy and her spouse, the De Veras and the Cusis in the RTC, the
complaint being docketed as Civil Case No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses
Radelia and Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo M. and
Ramona Liza L. De Vera, BPI Family Savings Bank and The Register of Deeds of Quezon City, seeking
the annulment or cancellation of titles, injunction and damages. Domingo applied for the issuance of a
writ of preliminary prohibitory and mandatory injunction, and a temporary restraining order (TRO). 13 The
RTC granted Domingos application for the TRO enjoining the defendants from proceeding with the
construction activities on the property. The RTC later granted her application for the writ of preliminary
injunction.

Ruling of the RTC

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On September 30, 2003, the RTC rendered a decision,14 disposing:

WHEREFORE, in view of all the foregoing judgment is hereby rendered:

(a) declaring the sale between Lilia V. Domingo and Radella Sy void and of (sic) effect;

(b) declaring the Sps. Edgardo and Ramona Liza De Vera and Sps. Alfonso and Maria Angeles
Cusi to be purchasers in good faith and for value;

(c) lifting the writ of preliminary injunction;

(d) finding defendant Radella Sy liable to the plaintiff Lilia Domingo liable (sic) for damages, as
follows:

1. Fourteen Million Pesos (14,000,000.00) representing the value of the property

covered by TCT No. 165606 plus legal rate of interest until fully paid;

2. One Million Pesos (1,000,000.00) representing moral damages;

3. Five Hundred Thousand Pesos (500,000.00) representing exemplary damages;

4. Five Hundred Thousand Pesos (500,000.00) representing attorneys fees;

5. Two Hundred Thousand Pesos (200,000.00) representing litigation expenses; and

6. Costs of Suit.

IT IS SO ORDERED.

Acting on the motions for reconsideration separately filed by Sy and Domingo, 15 the RTC reconsidered
and set aside its September 30, 2003 decision, and allowed the presentation of rebuttal and sur-rebuttal
evidence.

On March 1, 2007, the RTC rendered a new decision, 16 ruling:

WHEREFORE, in view of the foregoing, Judgment is hereby rendered:

(a) Declaring the sale between Lilia Domingo and Radelia Sy void and of no effect;

(b) Declaring the Sps. Edgardo and Ramona Liza De Vera and Sps. Alfonso and Maria Angeles
Cusi not purchasers in good faith and for value;

(c) TCT Nos. 189568 and 189569 are hereby cancelled and declared Null and Void Ab Initio;

(d) Directing the Register of Deeds of Quezon City to annotate this Order on TCT No. 189568
and 189569;

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(e) TCT No. 165606 in the name of Lilia Domingo is hereby revalidated; and,

(f) Finding defendant Radelia Sy liable to the plaintiff Lilia V. Domingo liable (sic) for damages, as
follows:

1. One Million Pesos (1,000,000.00) representing moral damages;

2. Five Hundred Thousand Pesos (500,000.00) representing exemplary damages;

3. Five Hundred Thousand Pesos (500,000.00) representing attorneys fees;

4. Two Hundred Thousand Pesos (200,000.00) representing litigation expenses; and,

5. Costs of suit.

This Decision is without prejudice to whatever civil action for recovery and damages, the defendants Sps.
De Vera and Sps. Cusi may have against defendant Spouses Radelia and Alfred Sy.

SO ORDERED.

Ruling of the CA

On appeal, the assignment of errors each set of appellants made was as follows:

Spouses Cusi

a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FINDING THAT DEFENDANTS

SPOUSES ALFONSO AND MARIA ANGELES CUSI ARE NOT PURCHASERS IN GOOD FAITH
AND FOR VALUE.

b) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FAILING TO RESOLVE THE ISSUE
OF WHETHER OR NOT CODEFENDANTS SPOUSES RADELIA SY AND ALFRED SY ARE
LIABLE FOR SPOUSES CUSIS CROSS-CLAIM.

c) THE REGIONAL TRIAL COURT ERRED IN FAILING TO AWARD DAMAGES AND

ATTORNEYS FEES TO DEFENDANTS SPOUSES CUSI.17

Spouses Sy

a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT THE SALE BETWEEN LILIA
DOMINGO AND RADELIA SY VOID AND OF NO EFFECT AND WAS PROCURRED (sic)
THROUGH FRAUDULENT MEANS.

b) THAT THE HONORABLE COURT ERRED IN AWARDING ACTUAL MORAL DAMAGES,

EXEMPLARY DAMAGES AND ATTORNEYS FEES AND LITIGATION EXPENSES THE SAME
BEING NULL AND VOID FOR BEING CONTRARY TO LAW.

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c) THAT THE SAID DECISION IS CONTRARY TO LAW AND JURISPRUDENCE AND IS NOT
SUPPORTED BY EVIDENCE, AS THE SAME CONTAIN SERIOUS REVERSIBLE ERRORS
WHEN THE COURT A QUO DECLARED THAT TCT NOS. 189568 AND 189569 CANCELLED
AND DECLARED NULL AND VOID AB INITIO.

d) THE INSTANT ASSAILED DECISION OF THE HONORABLE COURT HAVE (sic) DEPRIVED
DEFENDANT[S] SPOUSES SY OF THEIR BASIC CONSTITUTIONAL RIGHT TO DUE
PROCESS OF LAW.18

Spouses De Vera

a) THE LOWER COURT ERRED IN HOLDING THAT THE DE VERA SPOUSES ARE NOT
PURCHASERS IN GOOD FAITH AND NOT ENTITLED TO THE POSSESSION OF THE
PROPERTY COVERED BY TCT NO. N-189568.

b) THE LOWER COURT ALSO ERRED IN NOT AWARDING DEFENDANT-APPELLANT DE

VERA HER COUNTERCLAIMS AGAINST PLAINTIFF-APPELLEE.19

As stated, the CA promulgated its decision on July 16, 2010, affirming the RTC with modification of the
damages to be paid by the Sys to Domingo, viz:

WHEREFORE, premises considered, the instant appeal is denied. Accordingly, the Decision dated
March 1, 2007 of the Regional Trial Court is hereby AFFIRMED with the modification on the award of
damages to be paid by defendants-appellants Spouses Radelia and Alfred Sy in favor of the plaintiff-
appellee Lilia V. Domingo, to wit;

1. 500,000.00 by way of moral damages;

2. 200,000.00 by way of exemplary damages;

3. 100,000.00 as attorneys fees and litigation expenses.

SO ORDERED.20

The CA held that the sale of the property from Domingo to Sy was null and void and conveyed no title to
the latter for being effected by forging the signature of Domingo; that Sy thereby acquired no right in the
property that she could convey to the Cusis and De Veras as her buyers; that although acknowledging
that a purchaser could rely on what appeared on the face of the certificate of title, the Cusis and De Veras
did not have the status of purchasers in good faith and for value by reason of their being aware of Sys
TCT No. 186142 being a reconstituted owners copy, thereby requiring them to conduct an inquiry or
investigation into the status of the title of Sy in the property, and not simply rely on the face of Sys TCT
No. 186142; and that the Cusis and De Veras were also aware of other facts that should further put them
on guard, particularly the several nearly simultaneous transactions respecting the property, and the
undervaluation of the purchase price from 7,000,000.00/half to only 1,000,000.00/half to enable Sy to
pay a lesser capital gains tax.

The CA later on denied the motions for reconsideration.21

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Issues

Hence, this appeal via petitions for review on certiorari by the Cusis (G.R. No. 195825) and Ramona Liza
L. De Vera22 (G.R. No. 195871).

In G.R. No. 195825, the Cusis submit the following issues:23

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT

TRANSFER CERTIFICATE OF TITLE NO. 186142 REGISTERED IN THE NAME OF RADELIA
SY IS A RECONSTITUTED TITLE.

II

WHETHER OR NOT THE PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE.

III

GRANTING, WITHOUT ADMITTING, THAT THE DECISION OF THE HONORABLE COURT OF

APPEALS IS CORRECT WITH RESPECT TO THE SECOND ISSUE, WHETHER OR NOT
PETITIONERS ARE ENTITLED TO REIMBURSEMENT OF ALL THE PAYMENTS MADE BY
PETITIONERS TO THEIR CODEFENDANTS SPOUSES ALFRED AND RADELIA SY IN
ADDITION TO DAMAGES AND ATTORNEYS FEES.

In G.R. No. 195871, De Vera asserts that the primordial issue is whether or not she was an innocent
purchaser for value and in good faith.

Ruling of the Court

The petitions for review are bereft of merit.

Firstly, now beyond dispute is the nullity of the transfer of Domingos property to Sy because both lower
courts united in so finding. The unanimity in findings of both the RTC and the CA on this all-important
aspect of the case is now conclusive on the Court in view of their consistency thereon as well as by
reason of such findings being fully supported by preponderant evidence. We consider to be significant
that the Sys no longer came to the Court for further review, thereby rendering the judgment of the CA on
the issue of nullity final and immutable as to them.

Secondly, the Cusis and De Vera commonly contend that the CA gravely erred in not considering them to
be purchasers in good faith and for value. They argue that Sys TCT No. 186142 was free of any liens or
encumbrances that could have excited their suspicion; and that they nonetheless even went beyond the
task of examining the face of Sys TCT No. 186142, recounting every single detail of their quest to
ascertain the validity of Sys title, but did not find anything by which to doubt her title.

The Court concurs with the finding by the CA that the Cusis and De Vera were not purchasers for value
and in good faith. The records simply do not support their common contention in that respect.

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Under the Torrens system of land registration,24 the State is required to maintain a register of
landholdings that guarantees indefeasible title to those included in the register. The system has been
instituted to combat the problems of uncertainty, complexity and cost associated with old title systems
that depended upon proof of an unbroken chain of title back to a good root of title. The State issues an
official certificate of title to attest to the fact that the person named is the owner of the property described
therein, subject to such liens and encumbrances as thereon noted or what the law warrants or reserves.25

One of the guiding tenets underlying the Torrens system is the curtain principle, in that one does not need
to go behind the certificate of title because it contains all the information about the title of its holder. This
principle dispenses with the need of proving ownership by long complicated documents kept by the
registered owner, which may be necessary under a private conveyancing system, and assures that all the
necessary information regarding ownership is on the certificate of title. Consequently, the avowed
objective of the Torrens system is to obviate possible conflicts of title by giving the public the right to rely
upon the face of the Torrens certificate and, as a rule, to dispense with the necessity of inquiring further;
on the part of the registered owner, the system gives him complete peace of mind that he would be
secured in his ownership as long as he has not voluntarily disposed of any right over the covered land. 26

The Philippines adopted the Torrens system through Act No. 496,27 also known as the Land Registration
Act, which was approved on November 6, 1902 and took effect on February 1, 1903. In this jurisdiction,
therefore, "a person dealing in registered land has the right to rely on the Torrens certificate of title and to
dispense with the need of inquiring further, except when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry". 28

To obtain a grasp of whether a person has actual knowledge of facts and circumstances that would impel
a reasonably cautious man to make such inquiry, an internal matter, necessitates an analysis of evidence
of a persons conduct.29 That renders the determination of intent as a factual issue,30 something that the
Court does not normally involve itself in because of its not being a trier of facts. Indeed, as a rule, the
review function of the Court is limited to a review of the law involved.

But the Court now delves into the facts relating to the issue of innocence of the petitioners in their
purchase of the property, considering that the RTC, through its original decision, at first regarded them to
have been innocent purchasers who were not aware of any flaw or defect in Sys title based on the fact
that the property had been unfenced and vacant. The RTC also regarded the petitioners making of
reasonable verifications as their exercise of the due diligence required of an ordinary buyer.31 The RTC
later completely turned around through another decision, however, and it was such decision that the CA
affirmed subject to the modifications of the damages granted to Domingo.

There is no question that the petitioners exerted some effort as buyers to determine whether the property
did rightfully belong to Sy. For one, they did not find any encumbrance, like a notice of lis pendens, being
annotated on the TCT of Sy. Nonetheless, their observance of a certain degree of diligence within the
context of the principles underlying the Torrens system

was not their only barometer under the law and jurisprudence by which to gauge the validity of their
acquisition of title. As the purchasers of the property, they also came under the clear obligation to
purchase the property not only in good faith but also for value.

Therein lay the problem. The petitioners were shown to have been deficient in their vigilance as buyers of
the property. It was not enough for them to show that the property was unfenced and vacant; otherwise, it

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would be too easy for any registered owner to lose her property, including its possession, through illegal
occupation. Nor was it safe for them to simply rely on the face of Sys TCT No. 186142 in view of the fact
that they were aware that her TCT was derived from a duplicate owners copy reissued by virtue of the
loss of the original duplicate owners copy. That circumstance should have already alerted them to the
need to inquire beyond the face of Sys TCT No. 186142. There were other circumstances, like the almost
simultaneous transactions affecting the property within a short span of time, as well as the gross
undervaluation of the property in the deeds of sale, ostensibly at the behest of Sy to minimize her
liabilities for the capital gains tax, that also excited suspicion, and required them to be extra-cautious in
dealing with Sy on the property.

To the Court, the CAs treatment of Sys TCT No. 186142 as similar to a reconstituted copy of a Torrens
certificate of title was not unwarranted. In doing so, the CA cited the ruling in Barstowe Philippines
Corporation v. Republic,32where the Court, quoting from precedents, opined that "the nature of a
reconstituted Transfer Certificate of Title of registered land is similar to that of a second Owners
Duplicate Transfer Certificate of Title," in that "both are issued, after the proper proceedings, on the
representation of the registered owner that the original of the said TCT or the original of the Owners
Duplicate TCT, respectively, was lost and could not be located or found despite diligent efforts exerted for
that purpose;"33 and that both were "subsequent copies of the originals thereof," a fact that a "cursory
examination of these subsequent copies would show" and "put on notice of such fact [anyone dealing with
such copies who is] thus warned to be extracareful."34

Verily, the Court has treated a reissued duplicate owners copy of a TCT as merely a reconstituted
certificate of title. In Garcia v. Court of Appeals,35 a case with striking similarities to this one, an impostor
succeeded in tricking a court of law into granting his petition for the issuance of a duplicate owners copy
of the supposedly lost TCT. The impostor then had the TCT cancelled by presenting a purported deed of
sale between him and the registered owners, both of whom had already been dead for some time, and
another TCT was then issued in the impostors own name. This issuance in the impostors own name was
followed by the issuance of yet another TCT in favor of a third party, supposedly the buyer of the
impostor. In turn, the impostors transferee (already the registered owner in his own name) mortgaged the
property to Spouses Miguel and Adela Lazaro, who then caused the annotation of the mortgage on the
TCT. All the while, the original duplicate owners copy of the TCT remained in the hands of an heir of the
deceased registered owners with his co-heirs knowledge and consent.

The inevitable litigation ensued, and ultimately ended up with the Court.1wphi1 The Lazaros, as the
mortgagees, claimed good faith, and urged the Court to find in their favor. But the Court rebuffed their
urging, holding instead that they did not deal on the property in good faith because: (a) "the title of the
property mortgaged to the Lazaros was a second owners duplicate TCT, which is, in effect a
reconstituted title. This circumstance should have alerted them to make the necessary investigation, but
they did not;" and (b) their argument, that "because the TCT of the property on which their mortgage lien
was annotated did not contain the annotation: "Reconstituted title," the treatment of the reissued duplicate
owners copy of the TCT as akin to a reconstituted title did not apply, had no merit considering that: "The
nature of a reconstituted Transfer Certificate of Title of registered land is similar to that of a second
Owner's Duplicate Transfer Certificate of Title. Both are issued, after the proper proceedings, on the
representation of the registered owner that the original of the said TCT or the original of the Owner's
Duplicate TCT, respectively, was lost and could not be located or found despite diligent efforts exerted for
that purpose. Both, therefore, are subsequent copies of the originals thereof. A cursory examination of
these subsequent copies would show that they are not the originals. Anyone dealing with such copies are

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put on notice of such fact and thus warned to be extra-careful. This warning the mortgagees Lazaros did
not heed, or they just ignored it."36

The fraud committed in Garcia paralleled the fraud committed here.1wphi1 The registered owner of the
property was Domingo, who remained in the custody of her TCT all along; the impostor was Sy, who
succeeded in obtaining a duplicate owners copy; and the Cusis and the De Veras were similarly situated
as the Spouses Lazaro, the mortgagees in Garcia. The Cusis and the De Veras did not investigate
beyond the face of Sys TCT No. 186142, despite the certificate derived from the reissued duplicate
owners copy being akin to a reconstituted TCT. Thereby, they denied themselves the innocence and
good faith they supposedly clothed themselves with when they dealt with Sy on the property.

The records also show that the forged deed of sale from Domingo to Sy appeared to be executed on July
14, 1997; that the affidavit of loss by which Sy would later on support her petition for the issuance of the
duplicate owners copy of Domingos TCT No. 165606 was executed on July 17, 1997, the very same day
in which Sy registered the affidavit of loss in the Registry of Deeds of Quezon City; that Sy filed the
petition for the issuance of the duplicate owners copy of Domingos TCT No. 165606; that the RTC
granted her petition on August 26, 1997; and that on October 31, 1997, a real estate mortgage was
executed in favor of one Emma Turingan, with the mortgage being annotated on TCT No. 165606 on
November 10, 1997.

Being the buyers of the registered realty, the Cusis and the De Veras were aware of the aforementioned
several almost simultaneous transactions affecting the property. Their awareness, if it was not actual, was
at least presumed, and ought to have put them on their guard, for, as the CA pointed out, the RTC
observed that "[t]hese almost simultaneous transactions, particularly the date of the alleged loss of the
TCT No. 165606 and the purported Deed of Sale, suffice[d] to arouse suspicion on [the part of] any
person dealing with the subject property."37 Simple prudence would then have impelled them as honest
persons to make deeper inquiries to clear the suspiciousness haunting Sys title. But they still went on
with their respective purchase of the property without making the deeper inquiries. In that regard, they
were not acting in good faith.

Another circumstance indicating that the Cusis and the De Veras were not innocent purchasers for value
was the gross undervaluation of the property in the deeds of sale at the measly price of 1,000,000.00 for
each half when the true market value was then in the aggregate of at least 14,000,000.00 for the entire
property. Even if the undervaluation was to accommodate the request of Sy to enable her to minimize her
liabilities for the capital gains tax, their acquiescence to the fraud perpetrated against the Government, no
less, still rendered them as parties to the wrongdoing. They were not any less guilty at all. In the ultimate
analysis, their supposed passivity respecting the arrangement to perpetrate the fraud was not even
plausible, because they knew as the buyers that they were not personally liable for the capital gains taxes
and thus had nothing to gain by their acquiescence. There was simply no acceptable reason for them to
have acquiesced to the fraud, or for them not to have rightfully insisted on the declaration of the full value
of the realty in their deeds of sale. By letting their respective deeds of sale reflect the grossly inadequate
price, they should suffer the consequences, including the inference of their bad faith in transacting the
sales in their favor.

De Vera particularly insists that she and her late husband did not have any hand in the undervaluation;
and that Sy, having prepared the deed of sale, should alone be held responsible for the undervaluation
that had inured only to her benefit as the seller. However, such insistence was rendered of no
consequence herein by the fact that neither she nor her late husband had seen fit to rectify the

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undervaluation. It is notable that the De Veras were contracting parties who appeared to have transacted
with full freedom from undue influence from Sy or anyone else.

Although the petitioners argue that the actual consideration of the sale was nearly 7,000,000.00 for each
half of the property, the Court rejects their argument as devoid of factual basis, for they did not adduce
evidence of the actual payment of that amount to Sy. Accordingly, the recitals of the deeds of sale were
controlling on the consideration of the sales.

Good faith is the honest intention to abstain from taking unconscientious advantage of another. It means
the "freedom from knowledge and circumstances which ought to put a person on inquiry." 38

Given this notion of good faith, therefore, a purchaser in good faith is one who buys the property of
another without notice that some other person has a right to, or interest in, such property and pays full
and fair price for the same.38As an examination of the records shows, the petitioners were not innocent
purchasers in good faith and for value. Their failure to investigate Sy's title despite the nearly
simultaneous transactions on the property that ought to have put them on inquiry manifested their
awareness of the flaw in Sy's title. That they did not also appear to have paid the full price for their share
of the property evinced their not having paid true value.39

Resultantly, the Court affirms the lower courts, and restores to Domingo her rights of dominion over the
propetiy.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated on July 16, 201 0;
and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.

Saberon v. Ventanilla, G.R. No. 192669, April 21, 2014

Republic of the Philippines

SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 192669 April 21, 2014

RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON, Petitioners,

vs.
OSCAR VENTANILLA, JR., and CARMEN GLORIA D. VENTANILLA, Respondents.

RESOLUTION

MENDOZA, J.:

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For resolution of the Court is a motion for reconsideration of the Court's January 19, 2011
Resolution1 which denied the petition of Raul F. Saberon, Jr., Joan F. Saberon and Jacqueline F.
Saberon (Saberons). In effect, it affirmed the March 12, 2010 Decision2 and the June 18, 2010
Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 85520, holding that the June 21, 2005
Decision of the Regional Trial Court, Branch 80, Quezon City (RTC) in Civil Case No. 96-26486, was
correct in, among others, ordering the cancellation of Transfer Certificate of Title (TCT) Nos. 55396 and
55397 in the name of the Saberons and Samuel Marquez (Marquez).

This case is an offshoot of two (2) cases involving the same property, docketed as G.R. No. 82978 and
G.R. No. 107282, which had been decided by the Court with finality on November 22, 1990 and March
16, 1994, respectively.

Antecedent Facts

In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the petitioner, being the owner of several
parcels of land situated in Quezon City, constituting the subdivision known as Capitol Homes Subdivision
Nos. I and II. On July 25, 1972, MRCI entered into a contract with A.U. Valencia & Co. Inc. (AUVC)
entitled "Confirmation of Land Development and Sales Contract," whereby for a consideration, including
sales commission and management fee, the latter was to develop the aforesaid subdivision with authority
to manage the sales thereof; execute contracts to sell to lot buyers; and issue official receipts. At that
time, the president of AUVC, was Artemio U. Valencia (Valencia).

On March 3, 1970, MRCI and AUVC executed two (2) contracts to sell covering Lots 1 and 2 of Block 17,
in favor of Oscar C. Ventanilla, Jr. and Carmen Gloria D. Ventanilla (Ventanillas), for the combined
contract price of 66,571.00 payable monthly for ten (10) years. The Ventanillas paid the down payment
as stipulated in the two (2) contracts.

On March 13, 1970, Valencia, holding out himself as president of MRCI, and without the knowledge of the
Ventanillas, resold the same property to Carlos Crisostomo (Crisostomo), without any consideration.
Valencia transmitted the fictitious contract with Crisostomo to MRCI while he kept the contracts to sell
with the Ventanillas in his private office files. All the amounts paid by the latter were deposited in
Valencias bank account and remitted to MRCI as payments of Crisostomo. The Ventanillas continued to
pay the monthly installment.

Thereafter, MRCI terminated its business relationship with AUVC on account of irregularities discovered
in its collection and remittances. Consequently, Valencia was removed as president by the Board of
Directors of MRCI. He then stopped transmitting the Ventanillas monthly installments which at that time,
already amounted to 17,925.40 for Lot 1 and 18,141.95 for Lot 2 (appearing in MRCIs records as
credited under the name of Crisostomo).

On June 8, 1973, AUVC sued MRCI to impugn the abrogation of their agency agreement before the Court
of First Instance, Branch 19, Manila (CFI Manila), which eventually ordered all lot buyers to deposit their
monthly amortizations with the court. On July 17, 1973, AUVC informed the Ventanillas that it was still
authorized by the trial court to collect the monthly amortizations and requested them to continue remitting
their payment, with the assurance that said payments would be deposited later in court.

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For AUVCs failure to forward its collections to the trial court as ordered, MRCI caused the publication of a
notice cancelling the contracts to sell of some lot buyers including those of Crisostomo in whose name
the payments of the Ventanillas had been credited.

It was not until March 1978 when the Ventanillas discovered Valencias deception. Believing that they had
already remitted the total amount of 73,122.35 for the two lots, the Ventanillas offered to pay the
balance to MRCI. To their shock, their names as lot buyers did not appear in MRCIs records. Instead,
MRCI showed them a copy of the contract to sell signed by Valencia, in favor of Crisostomo. MRCI
refused the Ventanillas offer to pay for the remainder of the contract price.

Aggrieved, the Ventanillas commenced an action for specific performance, annulment of deeds and
damages against MRCI, AUVC, and Crisostomo with the Court of First Instance, Branch 17-B, Quezon
City (CFI Quezon City) docketed as Civil Case No. 26411, where Crisostomo was declared in default for
his failure to file an answer.

On November 17, 1980, the CFI Quezon City rendered a decision declaring the contracts to sell in favor
of the Ventanillas as valid and subsisting, and annulling the contract to sell in favor of Crisostomo. It
ordered the MRCI to execute an absolute deed of sale in favor of the Ventanillas, free from all liens and
encumbrances. Damages and attorney's fees in the total amount of 210,000.00 were also awarded to
the Ventanillas for which the MRCI, AUVC, and Crisostomo were held solidarily liable. The CFI Quezon
City ruled further that if for any reason the transfer of the lots could not be effected, MRCI, AUVC and
Crisostomo would be solidarily liable to the Ventanillas for the reimbursement of the sum of 73,122.35,
representing the amount they paid for the two (2) lots, and the legal interest thereon from March 1970,
plus the decreed damages and attorney's fees. Valencia was also held liable to MRCI for moral and
exemplary damages and attorney's fees.

On separate appeals filed by AUVC and MRCI, the CA sustained the CFI Quezon Citys decision in toto.

The 1990 Case

MRCI then filed before this Court a petition for certiorari docketed as G.R. No. 82978, to review the
decision of the CA upholding the solidary liability of MRCI, AUVC and Crisostomo for the payment of
moral and exemplary damages and attorney's fees to the Ventanillas.

On November 22, 1990, this Court affirmed the decision of the CA and declared the judgment of the CFI
Quezon City immediately executory.

Encouraged by the seeming triumph of their cause, the Ventanillas moved for the issuance of a writ of
execution in Civil Case No. 26411. The writ was issued on May 3, 1991, and served upon MRCI on May
9, 1991. A notice of levy was annotated in the titles of MRCI on May 31, 1991.

In a manifestation and motion, however, MRCI alleged that the subject properties could not longer be
delivered to the Ventanillas because they had already been sold to Samuel Marquez (Marquez) on
February 7, 1990, while its petition was pending before this Court. Nevertheless, MRCI offered to
reimburse the amount paid by the Ventanillas, including legal interest plus damages. MRCI also prayed
that its tender of payment be accepted and that all garnishments on their accounts lifted.

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The Ventanillas accepted the amount of 210,000.00 as damages and attorneys fees but rejected the
reimbursement offered by MRCI in lieu of the execution of the absolute deed of sale. They contended that
the alleged sale to Marquez was void, fraudulent, and in contempt of court and that no claim of ownership
over the properties in question had ever been made by Marquez.

On July 19, 1991, the CFI Quezon City ordered that the garnishment made by the Sheriff upon the bank
account of MRCI could be lifted only upon the deposit to the Court of the amount of 500,000.00 in cash.

MRCI then moved for reconsideration praying that it be ordered to reimburse the Ventanillas in the
amount of 263,074.10 and that the garnishment of its bank deposit be lifted. This plea was denied twice
by the trial court prompting MRCI to file another petition for certiorari with the CA, which ruled that the
contract to sell in favor of Marquez did not constitute a legal impediment to the immediate execution of
the judgment. Furthermore, it held that the cash bond fixed by the trial court for the lifting of the
garnishment was fair and reasonable because the value of the lot in question had considerably increased.

The 1994 Case

From the CA, the case was elevated to this Court as G.R. No. 107282 where MRCI argued that the sale
of the properties to Marquez was valid because at the time of the sale, the issue of the validity of the sale
to the Ventanillas had not yet been resolved. Further, there was no specific injunction against it re-selling
the property. As a buyer in good faith, Marquez had a right to rely on the recitals in the certificate of title.
The subject matter of the controversy having been passed to an innocent purchaser for value, the
execution of the absolute deed of sale in favor of the Ventanillas could not be ordered by the trial court.

The Ventanillas countered that the validity of the sale to them had already been established even while
the previous petition was still awaiting resolution. The petition only questioned the solidary liability of
MRCI to the Ventanillas. Hence, the portion of the decision ordering MRCI to execute an absolute deed of
sale in their favor had already become final and executory when MRCI failed to appeal it to the Court.
Thus, an order enjoining MRCI from reselling the property in litigation was unnecessary. Besides, the
unusual lack of interest, on the part of Marquez, to protect and assert his right over the disputed property
was, to the Ventanillas, a clear indication that the alleged sale to him was merely a ploy of MRCI to evade
the execution of the absolute deed of sale in their favor.

On March 16, 1994, the Court settled the controversy in this wise:

The validity of the contract to sell in favor of the Ventanilla spouses is not disputed by the parties. Even in
the previous petition, the recognition of that contract was not assigned as error of either the trial court or
appellate court. The fact that the MRCI did not question the legality of the award for damages to the
Ventanillas also shows that it even then already acknowledged the validity of the contract to sell in favor
of the private respondents.

On top of all this, there are other circumstances that cast suspicion on the validity, not to say the very
existence, of the contract with Marquez.

First, the contract to sell in favor of Marquez was entered into after the lapse of almost ten years from the
rendition of the judgment of the trial court upholding the sale to the Ventanillas.

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Second, the petitioner did not invoke the contract with Marquez during the hearing on the motion for the
issuance of the writ of execution filed by the private respondents. It disclosed the contract only after the
writ of execution had been served upon it.

Third, in its manifestation and motion dated December 21, 1990, the petitioner said it was ready to deliver
the titles to the Ventanillas provided that their counterclaims against private respondents were paid or
offset first. There was no mention of the contract to sell with Marquez on February 7, 1990.

Fourth, Marquez has not intervened in any of these proceedings to assert and protect his rights to the
subject property as an alleged purchaser in good faith.

At any rate, even if it be assumed that the contract to sell in favor of Marquez is valid, it cannot prevail
over the final and executory judgment ordering MRCI to execute an absolute deed of sale in favor of the
Ventanillas. No less importantly, the records do not show that Marquez has already paid the supposed
balance amounting to 616,000.00 of the original price of over 800,000.00. (Emphasis supplied)

As it turned out, the execution of the judgment in favor of the Ventanillas was yet far from fruition. Samuel
Cleofe, Register of Deeds for Quezon City (ROD Cleofe) revealed to them, that on March 11, 1992, MRCI
registered a deed of absolute sale to Marquez who eventually sold the same property to the Saberons,
which conveyance was registered in July 1992. ROD Cleofe opined that a judicial order for the
cancellation of the titles in the name of the Saberons was essential before he complied with the writ of
execution in Civil Case No. 26411. Apparently, the notice of levy, through inadvertence, was not carried
over to the title issued to Marquez, the same being a junior encumbrance which was entered after the
contract to sell to Marquez had already been annotated.

Civil Case No. Q-96-26486

Once again, the Ventanillas were constrained to go to court to seek the annulment of the deed of sale
executed between MRCI and Marquez as well as the deed of sale between Marquez and the Saberons,
as the fruits of void conveyances. The case was docketed as Civil Case No. Q-96-26486 with the
Regional Trial Court, Branch 80, Quezon City (RTC).

During the trial, all the defendants, including Edgar Krohn Jr. (Krohn) as President of MRCI, and Bede
Tabalingcos (Tabalingcos) as its legal counsel, filed their respective answers, except Marquez who was
declared in default.

On June 21, 2005, the RTC rendered its decision, the dispositive portion of which reads:

Wherefore, premises considered, judgment is hereby rendered in favour of plaintiffs, the spouses Oscar
and Carmen Ventanilla, and against defendants MRCI, Krohn, Tabalingcos, Marquez and Saberon, as
follows:

(1) Declaring the Transfer Certificated of Title Nos. 55396 and 55397 in the name of Samuel
Marquez, and Transfer Certificates of Title Nos. 63140 and 63141 in the names of Raul, Jr., Joan
and Jacqueline Saberon as null and void;

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(2) Ordering defendant MRCI to receive payment of the balance of the purchase price to be paid
by the plaintiffs and to execute a Deed of Absolute Sale in favour of the plaintiffs, and in case of
failure thereof, ordering plaintiffs to consign the amount with this Court;

(3) Ordering the Register of Deeds to cancel the titles in the name of Marquez and the Saberons,
and to issue new certificates of title in the name of the spouses Ventanillas upon registration of
the Deed of Absolute Sale in favour of the plaintiffs or proof of their consignment;

(4) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay plaintiffs, jointly and
severally, the sums of:

a. 100,000.00, as moral damages; and

b. 50,000.00, as attorneys fees.

(5) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay defendants Saberon,
jointly and severally, the sum of 7,118,155.88 representing the value of the properties in dispute
and the value of the improvements introduced by defendants Saberon; and

(6) Ordering the defendants to pay the costs of the suit.

Defendants counterclaims are hereby dismissed for lack of merit.

Separate appeals were instituted by MRCI and Tabalingcos, on one hand, and the Saberons, on the
other. The former contended that no fraudulent act could be attributed to them for the sale of the property
to the title of Marquez, considering that ROD Cleofe was the one who inadvertently omitted the carrying
over of the notice of levy to Marquez who consequently secured a clean title to the lot. MRCI Tabalingcos
further claimed that the sale to Marquez was effected while the previous case was still pending, at a time
when they had every liberty to believe in the legality of their position.

Meanwhile, the Saberons relied on one central argumentthat they were purchasers in good faith,
having relied on the correctness of the certificates of title covering the lots in question; and therefore,
holders of a valid and indefeasible title.

In the assailed decision, the CA made its conclusion hinged on the following findings:

When MRCI executed a Contract to Sell in favor of Marquez in February 1990, it was in the throes of an
appeal from the Decision in Civil Case No. 26411 where its very first Contracts to Sell to the Ventanillas
were upheld over those of Crisostomo. The Marquez Contract to Sell was in fact the third in a row, and
registered a year later, on May 21, 1991, appears as the first recorded entry in MRCIs titles. The notice
of levy in Civil Case No. 26411 came ten days later, on May 31, 1991. Then, in February 1992, MRCI
executed a deed of absolute sale to Marquez and when the new titles were issued in Marquez name, the
notice of levy was not carried over. A few months later, these titles were cancelled by virtue of a deed of
sale to the Saberons and, on the same day, TCT 63140 and 63141 were issued clean to them.

According to the CA, the arguments espoused by MRCI and Tabalingcos were untenable. The said
parties were found guilty of bad faith for selling the lots to Marquez at a time when litigation as to the
validity of the first sale to the Ventanillas was still pending. In other words, MRCI was sufficiently aware of

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the Court decision confirming its failure to supervise and control the affairs of its authorized agent, AUVC,
which led to the explicit pronouncement that the first sale to the Ventanillas was valid. This should have
served as a warning to MRCI that it could no longer deal with the property in deference to the Courts
ruling and affirmation of the trial courts order to execute the deed of sale in favor of the Ventanillas.
Obviously, MRCI took no heed of this caveat. The titles had been transferred yet again to the Saberons,
who claimed to be purchasers in good faith. Unfortunately, there was an exception to the general rule.
The CA cited AFP Mutual Benefit Association Inc. v. Santiago,4 where the Court ruled that with respect to
involuntary liens, an entry of a notice of levy and attachment in the primary entry or day book of the
Registry of Deeds was considered as sufficient notice to all persons that the land was already subject to
attachment. Resultantly, attachment was duly perfected and bound the land.

The Present Petition

Aggrieved by this CA ruling, the Saberons filed the present petition. They claimed that in 1992, a certain
Tiks Bautista offered the lots to Raul Saberon, who, after being given photocopies of the titles to the land,
inquired with the Registry of Deeds for Quezon City (ROD-QC) to verify the authenticity of the same. He
found no encumbrances or annotations on the said titles, other than restrictions for construction and
negotiation. As agreed upon, he paid Marquez the amount of Two Million One Hundred Thousand Pesos
(2,100,000.00) as purchase price for the lots. Upon payment of the real property taxes, a certification
was issued by the Office of the City Treasurer for the purpose of transferring the title over the property.

Thereafter, Marquez executed the Deed of Absolute Sale in favor of the Saberons. The ROD-QC then
issued TCT Nos. 63140 and 63141 in their names.

Unknown to the Saberons, the former owner of the properties had entered into contracts to sell with the
Ventanillas, way back in 1970. It was only upon receipt of the summons in the case filed by the
Ventanillas with the RTC that they learned of the present controversy.

With the RTC and the CA rulings against their title over the properties, the Saberons now come to the
Court with their vehement insistence that they were purchasers in good faith and for value. Before
purchasing the lots, they exercised due diligence and found no encumbrance or annotations on the titles.
At the same time, the Ventanillas also failed to rebut the presumption of their good faith as there was no
showing that they confederated with MRCI and its officers to deprive the Ventanillas of their right over the
subject properties.

According to the Saberons, the CA likewise erred in ruling that there was no constructive notice of the
levy made upon the subject lands. They claimed that the appellate court could not solely rely on AFP
Mutual Benefit Association Inc. v. Santiago.5 Instead, they urged the Court to interpret

Sections 52 and 42 of Presidential Decree (P.D.) No. 1529 which cover the effects of registration and the
manner thereof; and to examine Section 54 which shows that, in addition to the filing of the instrument
creating, transferring or claiming interest in registered land less than ownership, a brief memorandum of
such shall be made by the Register of Deeds on the certificate of title and signed by him. Hence, the
ruling in AFP, that an entry of a notice of levy and attachment in the primary entry or day book of the
Registry of Deeds was sufficient notice to all persons that the land was already subject to such
attachment, would be rendered as a superfluity in light of the mandatory character of the said provision.

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The Saberons further pointed that the claim of the Ventanillas over the subject properties never ripened
into ownership as they failed to consign the balance on the purchase price stipulated on the contracts to
sell, thus preventing the obligatory force of the contract from taking effect.

On October 4, 2010, the Court required the Ventanillas to file their comment to the petition. 6 On January
19, 2011, the Court resolved to deny the Saberons petition for failure to sufficiently show any reversible
error in the assailed judgment by the CA.7 In its June 15, 2011 Resolution,8 the Court required the
Ventanillas to comment on the motion for reconsideration filed by the Saberons.

Resolution of the Court

At first glance, it would seem that the case involves convoluted issues brought about by the number of
times the Ventanillas were impelled by circumstances to seek judicial action. Nonetheless, the
antecedents would readily reveal that the essential facts are not disputed: 1) that the subject properties
have indeed been the objects of various transfers effected by MRCI leading to the current controversy
between the Saberons and the Ventanillas; and 2) that prior to the sale to the Saberons, a notice of levy
as an encumbrance was already in existence.

Sections 51 and 52 of P.D. No. 1529 explain the purpose and effects of registering both voluntary and
involuntary instruments, to wit:

Section 51. Conveyance and other dealings by registered owner. An owner of registered land may
convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law.
But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect
registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the office of the Register
of Deeds for the province or city where the land lies.

Section 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the
office of the Register of Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing or entering.

These provisions encapsulate the rule that documents, like the certificates of title do not effect a
conveyance of or encumbrances on a parcel of land. Registration is the operative act that conveys
ownership or affects the land insofar as third persons are concerned. By virtue of registration, a
constructive notice to the whole world of such voluntary or involuntary instrument or court writ or
processes, is thereby created.

The question of utmost relevance to this case, then, is this: whether or not the registration of the notice of
levy had produced constructive notice that would bind third persons despite the failure of the ROD-QC to
annotate the same in the certificates of title?

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In answering these questions, the Court is beckoned to rule on two conflicting rights over the subject
properties: the right of the Ventanillas to acquire the title to the registered land from the moment of
inscription of the notice of levy on the day book (or entry book), on one hand; and the right of the
Saberons to rely on what appears on the certificate of title for purposes of voluntary dealings with the
same parcel of land, on the other.

The Saberons maintain that they had no notice of any defect, irregularity or encumbrance in the titles of
the property they purchased. In its decision, however, the RTC pointed out that their suspicion should
have been aroused by the circumstance that Marquez, who was not engaged in the buy-and-sell
business and had the property for only a few months, would offer the same for sale. Although the RTC
found that the Saberons may not be considered as innocent purchasers for value because of this
circumstance, it, nonetheless, ruled that they, who might well be unwilling victims of the fraudulent
scheme employed by MRCI and Marquez, were entitled to actual and compensatory damages.

To this latter finding, the Court agrees. The Saberons could not be said to have authored the
entanglement they found themselves in. No fault can be attributed to them for relying on the face of the
title presented by Marquez. This is bolstered by the fact that the RTC decision shows no categorical
finding that the Saberons purchase of the lots from Marquez was tainted with bad faith. That the
Saberons should have harbored doubts against Marquez is too high a standard to impose on a buyer of
titled land. This is in consonance to the rule that the one who deals with property registered under the
Torrens system is charged with notice only of such burdens and claims as are annotated on the title. 9 "All
persons dealing with property covered by Torrens certificate of title are not required to explore further
than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may
subsequently defeat his right thereto."10 These rules remain as essential features of the Torrens system.
The present case does not entail a modification or overturning of these principles.

Be that as it may, no fault can likewise be imputed to the Ventanillas.

In ultimately ruling for the Ventanillas, the courts a quo focused on the superiority of their notice of levy
and the constructive notice against the whole world which it had produced and which effectively bound
third persons including the Saberons.

It has already been established in the two previous cases decided by the Court that the contracts to sell
executed in favor of the Ventanillas are valid and subsisting. Clearly, it has been acknowledged, even by
MRCI, as can be seen in the latters own choice to only question their solidary liability in the 1990 case
and its failure to assign the same as an error in the 1994 case. In the same vein, the issue on Marquezs
title had already been passed upon and settled in the 1994 case. That he purchased the lots prior to the
annotation of the notice of levy in MRCIs title was of no moment. In fact, the Court explicitly declared that
MRCIs transaction with Marquez "cannot prevail over the final and executory judgment ordering MRCI to
execute an absolute deed of sale in favor of the Ventanillas."

These favorable findings prompted the Ventanillas to register the notice of levy on the properties. The
records show that on the strength of a final and executory decision by the Court, they successfully
obtained a writ of execution from the RTC and a notice of levy was then entered, albeit on the primary
entry book only. The contract to sell to Marquez was registered on May 21, 1991, while the notice of levy
was issued ten (10) days later, or on May 31, 1991. In February 1992, MRCI executed the Deed of Sale
with Marquez, under whose name the clean titles, sans the notice of levy, were issued. A year later, or on

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March 11, 1992, MRCI registered the deed of sale to Marquez who later sold the same property to the
Saberons.

This complex situation could have been avoided if it were not for the failure of ROD Cleofe to carry over
the notice of levy to Marquezs title, serving as a senior encumbrance that might have dissuaded the
Saberons from purchasing the properties.

The Court agrees with the position of the RTC in rejecting ROD Cleofes theory.

Distinctions between a contract to sell and a contract of sale are well-established in

urisprudence.1wphi1 In a contract of sale, the title to the property passes to the vendee upon the
delivery of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the vendor and is
not to pass to the vendee until full payment of the purchase price. Otherwise stated, in a contract of sale,
the vendor loses ownership over the property and cannot recover it until and unless the contract is
resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the
price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not
a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. 11

It is undeniable, therefore, that no title was transferred to Marquez upon the annotation of the contract to
sell on MRCIs title. As correctly found by the trial court, the contract to sell cannot be substituted by the
Deed of Absolute Sale as a "mere conclusion" of the previous contract since the owners of the properties
under the two instruments are different.12

Considering that the deed of sale in favor of Marquez was of later registration, the notice of levy should
have been carried over to the title as a senior encumbrance.

Corollary to this is the rule that a levy of a judgment debtor creates a lien, which nothing can
subsequently destroy except the very dissolution of the attachment of the levy itself. 13 Prior registration of
the lien creates a preference, since the act of registration is the operative act to convey and affect the
land.14 Jurisprudence dictates that the said lien continues until the debt is paid, or the sale is had under
an execution issued on the judgment or until the judgment is satisfied, or the attachment is discharged or
vacated in the same manner provided by law. Under no law, not even P.D. No. 1529, is it stated that an
attachment shall be discharged upon sale of the property other than under execution.15

Additionally, Section 59 of P.D. No. 1529 provides that, "[i]f, at the time of the transfer, subsisting
encumbrances or annotations appear in the registration book, they shall be carried over and stated in the
new certificate or certificates, except so far as they may be simultaneously released or discharged." This
provision undoubtedly speaks of the ministerial duty on the part of the Register of Deeds to carry over
existing encumbrances to the certificates of title.

From the foregoing, ROD Cleofes theory that a deed of sale, as a mere conclusion of a contract to sell,
turns into a senior encumbrance which may surpass a notice of levy, has no leg to stand on. It was, in
fact, properly rejected by the courts a quo. Verily, the controversy at hand arose not from the Ventanillas
fault, but from ROD Cleofes misplaced understanding of his duty under the law.

Surely, the Ventanillas had every right to presume that the Register of Deeds would carry over the notice
of levy to subsequent titles covering the subject properties. The notice was registered precisely to bind
the properties and to serve as caution to third persons who might potentially deal with the property under

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the custody of the law. In DBP v. Acting Register of Deeds of Nueva Ecija, 16 the Court ruled that entry
alone produced the effect of registration, whether the transaction entered was a voluntary or involuntary
one, so long as the registrant had complied with all that was required of him for purposes of entry and
annotation, and nothing more remained to be done but a duty incumbent solely on the Register of Deeds.

While the Court is not unmindful that a buyer is charged with notice only of such burdens and claims as
are annotated on the title, the RTC and the CA are both correct in applying the rule as to the effects of
involuntary registration. In cases of voluntary registration of documents, an innocent purchaser for value
of registered land becomes the registered owner, and, in contemplation of law the holder of a certificate of
title, the moment he presents and files a duly notarized and valid deed of sale and the same is entered in
the day book and at the same time he surrenders or presents the owner's duplicate certificate of title
covering the land sold and pays the registration fees, because what remains to be done lies not within his
power to perform. The Register of Deeds is duty bound to perform it.17 In cases of involuntary registration,
an entry thereof in the day book is a sufficient notice to all persons even if the owner's duplicate certificate
of title is not presented to the register of deeds. Therefore, in the registration of an attachment, levy upon
execution, notice of lis pendens, and the like, the entry thereof in the day book is a sufficient notice to all
persons of such adverse claim.18

This rule was reiterated in the more recent case of Armed Forces and Police Mutual Benefit Association,
Inc., v. Santiago,19 as relied upon by the CA. In AFP, the Notice of Levy was presented for registration in
the Registry of Deeds of Pasig City. The Notice was entered in the Primary Entry Book, but was not
annotated on the TCT because the original copy of the said title on file in the Registry of Deeds was not
available at that time. Six (6) days after the presentation of the Notice of Levy, the Deed of Absolute Sale
involving the same parcel of land was presented for registration and likewise entered. The deed of sale
was examined by the same employee who examined the notice of levy, but she failed to notice that the
title subject of the sale was the same title which was the subject of the notice of levy earlier presented.
Unaware of the previous presentation of the notice of levy, the Register of Deeds issued a certificate of
title in the name of the vendee on the basis of the deed of sale. The Register of Deeds in AFP
immediately requested the vendee to surrender the documents in light of the mistake discovered so that
he could take appropriate rectification or correction. Settling the issue on whether the notice of levy could
be annotated in the certificate of title, the Court ruled in the affirmative on the ground that the preference
created by the levy on attachment was not diminished by the subsequent registration of the prior sale.
Superiority and preference in rights were given to the registration of the levy on attachment; although the
notice of attachment had not been noted on the certificate of title, its notation in the book of entry of the
Register of Deeds produced all the effects which the law gave to its registration or inscription, to wit:

Under the rule of notice, it is presumed that the purchaser has examined every instrument of record
affecting the title. Such presumption is irrebuttable. He is charged with notice of every fact shown by the
record and is presumed to know every fact shown by the record and 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. For these
reasons, a declaration from the court that respondent was in bad faith is not necessary in order that the
notice of levy on attachment may be annotated on TCT No. PT-94912.

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The fact that the notice of levy on attachment was not annotated on the original title on file in the Registry
of Deeds, which resulted in its non-annotation on the title TCT No. PT-94912, should not prejudice
petitioner. As long as the requisites required by law in order to effect attachment are complied with and
the appropriate fees duly paid, attachment is duly perfected. The attachment already binds the land. This
is because what remains to be done lies not within the petitioners power to perform but is a duty
incumbent solely on the Register of Deeds. (Emphasis supplied)

In the case at bench, the notice of levy covering the subject property was annotated in the entry book of
the ROD QC prior to the issuance of a TCT in the name of the Saberons. Clearly, the Ventanillas levy
was placed on record prior to the sale. This shows the superiority and preference in rights of the
Ventanillas over the property as against the Saberons. In AFP, the Court upheld the registration of the
levy on attachment in the primary entry book as a senior encumbrance despite the mistake of the ROD,
the Court must, a fortiori, sustain the notice of levy registered by the Ventanillas notwithstanding the
nonfeasance of ROD Cleofe. Again, the prevailing rule is that there is effective registration once the
registrant has fulfilled all that is needed of him for purposes of entry and annotation, so that what is left to
be accomplished lies solely on the Register of Deeds.20

Suffice it to say, no bad faith can be ascribed to the parties alike. Nevertheless, the equal footing of the
parties necessarily tilts in favor of the superiority of the Ventanillas notice of levy, as discussed.

The Court also sees no reason to dwell in the contention that the rights or interests of the Ventanillas in
the subject properties never ripened into ownership. It bears stressing that the previous decisions
discussed herein already sealed the validity of the contract to sell issued to the Ventanillas decades ago.
As found by the RTC, it was MRCIs obstinate refusal to accept their tender of payment, not to mention
the devious transfer of the property, which caused the decade-long delay of the execution of the deed of
sale in their favor. This is a finding that the Court, which is not a trier of facts, will have to respect.

In the same vein, the attribution of laches against the Ventanillas is flawed. Their failure to learn about the
structures being built on the subject lands and the payment of real property taxes by the Saberons is not
sufficient justification to withhold the declaration of their ownership over it. Against a different factual
milieu, laches may be said to have set it but not so in this case. While the Ventanillas may have been
unaware that improvements were being erected over the lots, this obliviousness can, by no means, be
treated as a lack of vigilance on their part. It bears stressing that the Ventanillas are now of advanced age
and retired as university professors. Considering the length of litigation which they had to endure in order
to assert their right over the property which they have painstakingly paid for decades ago, to hold now
that they have been remiss in the protection of their rights would be the height of impropriety, if not
injustice. To exact from them an obligation to visit the land in litigation every so often, lest they be held to
have slept on their rights, is iniquitous and unreasonable. All told, the Ventanillas remain as innocent
victims of deception.

The Court deems it significant to note that the amount of 7,118,115.88 awarded to the Saberons by the
RTC is to be satisfied by MRCI, Krohn, Tabalingcos, and Marquez, who have not been impleaded as
parties to the present petition, thus, rendering the said award final and executory. The said amount,
however, is separate and distinct from those provided under Article 448 21 in relation to Article 54622 of the
Civil Code. In the petition, the Saberons invoked the said provisions, claiming that they are entitled to
reimbursement of all the expenses incurred in the introduction of improvements on the subject lands
amounting to 23,058,822.79.

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The Court finds the Saberons to be builders in good faith.

No less than the court a quo observed that "no actual evidence that the Saberons connived with the
MRCI and Marquez to have the titles registered in their names to the prejudice of the (Ventanillas)" and
that what was obvious was that "the Saberons dealt with clean certificates of titles." Also quite telling on
this point is the finding that MRCI, Krohn, Tabalingcos, and Marquez are liable to the Saberons. The RTC
reasoned out in the following wise:

This Court is not convinced, however that defendants Saberon took part in the fraudulent scheme
employed by the other defendants against the plaintiffs. Although they may not be considered as innocent
purchasers for value shown in the discussion above, this Court is not ready to conclude that the Saberons
joined the other defendants in their efforts to frustrate plaintiffs rights over the disputed properties. On the
contrary, they may be considered victims of the same fraudulent employed by defendants MRCI and
Marquez, and thus can rightfully claim damages from the same.23

Consequently, Article 448 in relation to Article 546 of the Civil Code will apply.1wphi1 The provisions
respectively read:

Article 448. The owner of the land on which anything has been built, sow or planted in good faith, shall
have the right to appropriate, as his own the works, sowing, or planting, after payment of the indemnity
provided for in Article 546 and 548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land and if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case disagreement, the court shall
fix the terms thereof.

Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefore.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have acquired by reason thereof.

Thus, the two options available to the Ventanillas: 1) they may exercise the right to appropriate after
payment of indemnity representing the value of the improvements introduced and the necessary and
useful expenses defrayed on the subject lots; or 2) they may forego payment of the said indemnity and
instead, oblige the Saberons to pay the price of the land.

Should the Ventanillas elect to appropriate the improvements, the trial court is ordered to determine the
value of the improvements and the necessary and useful expenses after hearing and reception of
evidence. Should the Ventanillas, however, pursue the option to oblige the Saberons to pay the "price of
the land," the trial court is ordered to determine said price to be paid to the V entanillas.

WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The appealed March 12, 2010
Decision and the June 18, 2010 Resolution of the Court of Appeals in CA-G.R. CV No. 85520 are
AFFIRMED with modification in that the Ventanillas are given a period of sixty ( 60) days from finality of
this Resolution to decide whether to pay the Saberons the value of the improvements and the necessary

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and useful expenses defrayed on the 2 lots or to oblige the Saberons to pay them the "price" of said lots.
Depending on the option exercised by the Ventanillas, the case is hereby remanded to the court of origin
for further proceedings as to the determination of reimbursement due to the petitioners or of the "price" of
the subject lots due to the Ventanillas.

SO ORDERED.

d. Real Estate Mortgage (Sec. 60)

Home Bankers Savings v. CA, et. al., G.R. No. 128354, April 26, 2005

SECOND DIVISION

[G.R. No. 128354. April 26, 2005]

HOME BANKERS SAVINGS & TRUST CO., petitioner, vs. THE HONORABLE COURT OF APPEALS,
PABLO N. AREVALO, FRANCISCO A. UY, SPOUSES LEANDRO A. SORIANO, JR. and
LILIAN SORIANO, ALFREDO LIM and FELISA CHI LIM/ALFREDO LIM, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul
the Decision[1] of the Court of Appeals (CA) dated November 28, 1996 in CA-G.R. SP No. 40892 and its
Resolution dated February 19, 1997 denying petitioners motion for reconsideration.

Each of private respondents entered into separate contracts to sell with TransAmerican Sales and
Exposition (TransAmerican) through the latters Owner/General Manager, Engr. Jesus Garcia, involving
certain portions of land covered by Transfer Certificate of Title (TCT) No. 19155, located at No. 45 Gen.
Lim Street, Heroes Hill, Quezon City, together with one unit three-storey townhouse to be built on each
portion, as follows:

Respondent Pablo N. Arevalo purchased the portion of land denominated as Unit No. 5 [2] for the amount
of P750,000.00 on August 21, 1988 and had already fully paid the purchase price on September 3, 1988;

Respondent Alfredo Lim purchased the portion of land denominated as Unit No. 1 [3] for the amount
of P800,000.00 on December 22, 1988 and fully paid the same upon execution of the agreement on the
same day;

Respondent Francisco A. Uy purchased the portion of land denominated as Unit No. 6[4] on October 29,
1988 in the amount of P800,000.00 payable in installments and had allegedly made a total payment
of P581,507.41. He ordered to stop the payment of all [postdated] checks from September 1990 to

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November 1995 on the ground of non-completion of his unit and had later learned of the foreclosure of
the property;

Respondent spouses Leandro A. Soriano, Jr. and Lilian Soriano purchased the portion of land
denominated as Unit No. 3[5] on February 15, 1990 in the amount of P1,600,000.00 and had allegedly
made a payment of P669,960.00. They had stopped paying because of non-completion of the project and
had later learned of the foreclosure of the property;

Respondents Alfredo Lim and Santos Lim purchased the portion of land denominated as Unit No.
7[6] for P700,000.00 on October 1988 and had been fully paid as of March 18, 1989; Santos Lim
subsequently sold and assigned his share of the property to private respondent Felisa Chi Lim on May
12, 1989.

It is stipulated in their respective contracts that their individual townhouses will be fully completed and
constructed as per plans and specifications and the respective titles thereto shall be delivered and
transferred to private respondents free from all liens and encumbrances upon their full payment of the
purchase price. However, despite repeated demands, Garcia/TransAmerican failed to comply with their
undertakings.

On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers
Savings and Trust Company (formerly Home Savings Bank and Trust Company) a loan in the amount
of P4,000,000.00 and without the prior approval of the Housing and Land Use Regulatory Board
(HLURB), the spouses mortgaged[7] eight lots covered by TCT Nos. 3349 to 3356 as collateral. Petitioner
registered its mortgage on these titles without any other encumbrance or lien annotated therein. The
proceeds of the loan were intended for the development of the lots into an eight-unit townhouse project.
However, five out of these eight titles turned out to be private respondents townhouses subject of the
contracts to sell with Garcia/TransAmerican.

When the loan became due, Garcia failed to pay his obligation to petitioner. Consequently, petitioner
instituted an extrajudicial foreclosure[8] on the subject lots and being the highest bidder in the public
auction, a certificate of sale[9] in its favor was issued by the sheriff on February 26, 1990. Subsequently,
the sheriffs certificate of sale was registered and annotated on the titles of the subject lots in the Register
of Deeds of Quezon City.

On November 8, 1990, private respondents filed a complaint with the Office of Appeals, Adjudication
and Legal Affairs (OAALA), HLURB, against Garcia/TransAmerican as seller/developer of the property
and petitioner, as indispensable party, for non-delivery of titles and non-completion of the subdivision
project.[10] They prayed for the completion of the units, annulment of the mortgage in favor of petitioner,
release of the mortgage on the lots with fully paid owners and delivery of their titles, and for petitioner to
compute individual loan values of amortizing respondents and to accept payments from them and
damages.

Petitioner filed its Answer contending that private respondents have no cause of action against it;
that at the time of the loan application and execution of the promissory note and real estate mortgage by
Garcia, there were no known individual buyers of the subject land nor annotation of any contracts, liens or
encumbrances of third persons on the titles of the subject lots; that the loan was granted and released
without notifying HLURB as it was not necessary.

Private respondents filed their Reply and a motion for the judgment on the pleadings. Petitioner did
not file a rejoinder. Private respondents filed a manifestation reiterating for a judgment on their pleadings
and asked that the reliefs prayed for be rendered as far as petitioner was concerned. Upon motion of

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private respondents, the case against Garcia/TransAmerican was archived for failure to serve summons
on him/it despite efforts to locate his whereabouts or its office. The case was then considered submitted
for decision.

On August 16, 1991, OAALA rendered its Decision,[11] the dispositive portion of which reads:

WHEREFORE, Judgment is hereby rendered as follows:

1. Declaring the mortgage executed by and between respondents Engr. Jesus Garcia/TransAmerican
Sales and Exposition and Home Bankers Savings and Trust Company (formerly Home Savings Bank and
Trust Company) to be unenforceable as against all the complainants;

2. Ordering the Register of Deeds of Quezon City to cancel the annotations of the mortgage indebtedness
between respondents Engr. Jesus Garcia and Home Bankers Savings and Trust Company (formerly
Home Savings Bank and Trust Company);

3. Ordering, likewise the Register of Deeds of Quezon City to cancel the annotation of the Certificate of
Sale in favor of the respondent Home Bankers Savings and Trust Company on the following Transfer
Certificates of Title to wit:

1) TCT No. 3350

2) TCT No. 3351
3) TCT No. 3352
4) TCT No. 3354
5) TCT No. 3356

4. Ordering respondent Home Bankers Savings and Trust Company (formerly Home Savings Bank and
Trust Company) to:

4.1. AS TO THE FIRST CAUSE OF ACTION

Deliver to Complainant Pablo N. Arevalo TCT No. 3352 free from all liens
and encumbrances.

4.2. AS TO THE SECOND CAUSE OF ACTION

Deliver to Complainant Alfredo Lim TCT No. 3356 free from all liens and
encumbrances.

4.3. AS TO THE THIRD CAUSE OF ACTION

To compute and/or determine the loan value of complainant Francisco A. Uy

who was not able to complete or make full payment and to accept payment
and/or receive amortization from said complainant Francisco A. Uy and
upon full payment to deliver TCT No. 3351 free from all liens and
encumbrances.

4.4. AS TO THE FOURTH CAUSE OF ACTION

To compute and/or determine the loan value of Complainant Spouses

Leandro A. Soriano, Jr. and Lilian Soriano who were not able to complete or
make full payment and to accept and/or receive amortization from said

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Complainants Soriano and upon full payment to deliver TCT No. 3354 free
from all liens and encumbrances.

4.5. AS TO THE FIFTH CAUSE OF ACTION

Deliver to complainant Alfredo Lim and Felisa Chi Lim TCT No. 3350 free
from all liens and encumbrances.

without prejudice to its right to require respondent Engr. Jesus Garcia/TransAmerican to constitute new
collaterals in lieu of the said titles sufficient in value to cover the mortgage obligation. [12]

Petitioner filed an appeal with the Board of Commissioners of the HLURB which dismissed the same
in a decision dated June 15, 1992.[13] Petitioner then elevated the case to the Office of the President
which rendered a decision dated June 30, 1995[14] dismissing the appeal and affirming the June 15, 1992
decision of the HLURB. Petitioners motion for reconsideration was also denied in a Resolution dated May
7, 1996.[15]

Petitioner filed a petition for review with the CA which, in the herein assailed decision dated
November 28, 1996, denied the petition and affirmed the decision of the Office of the President. The CA
applied the case of Union Bank of the Philippines vs. HLURB, et al.,[16] where it was held that the act of a
subdivision developer of mortgaging the subdivision without the knowledge and consent of a unit buyer
and without the approval of the National Housing Authority (NHA, now HLURB) is violative of Section 18
of P.D. No. 957 thus, falling under the exclusive jurisdiction of HLURB.

The CA upheld the findings of the OAALA, HLURB that private respondents had already entered into
separate contracts to sell with TransAmerican as early as 1988 while it was only in 1989 that spouses
Garcia applied for a loan with petitioner and executed a mortgage contract over the subject lots; that the
proceeds of the loan were purposely intended for the development of a property which was the same
property subject of the contracts to sell; that despite the contracts to sell, Garcia/TransAmerican did not
apprise petitioner of the existence of these contracts nor did petitioner exhaust any effort to inquire into
their existence since petitioner merely relied on the purported clean reconstituted titles in the name of
Garcia; that the mortgage of the subject lots without the consent of the buyers and the authorization of the
HLURB is a clear violation of P.D. No. 957; that the mortgage contract is void and unenforceable against
private respondents.

Petitioners motion for reconsideration was denied by the CA in its Resolution dated February 19,
1997.[17]

Petitioner is now before us raising the following grounds in support of its petition:

A. THE OFFICE OF THE PRESIDENT ERRED IN RULING THAT THE HLURB HAS
JURISDICTION TO NULLIFY OR DECLARE UNENFORCEABLE THE REAL ESTATE
MORTGAGE VALIDLY CONSTITUTED BY THE OWNER.

B. ASSUMING ARGUENDO THAT THE HLURB HAS JURISDICTION, RESPONDENT COURT

MANIFESTLY ERRED IN FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF
HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS.

C. IN THE EVENT THAT THE DECISION OF THE RESPONDENT COURT FINDING THE
REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE
AGAINST RESPONDENTS IS UPHELD, THE UNREGISTERED CONTRACTS TO SELL IN
FAVOR OF RESPONDENTS SHOULD ALSO BE HELD VALID ONLY AS TO THE
PARTIES THERETO BUT UNENFORCEABLE AGAINST PETITIONER.

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Private respondents filed their Comment and petitioner filed its Reply thereto.

In a Resolution dated February 23, 2004, we gave due course to the petition and required the parties
to submit their respective memoranda which they complied with.

The petition is devoid of merit.

Notably, the issues raised are mere rehash of the issues already passed upon by the HLURB, the
Office of the President and the CA which we uphold as we find no reversible errors committed.

Petitioner claims that HLURB has no power to declare the mortgage contract over real property
executed between a real estate developer and petitioner, a banking institution, void or unenforceable, as
it is properly within the jurisdiction of the Regional Trial Court. Petitioner asserts that being a mortgagee
of the subject lots and a purchaser in good faith, it is not a project owner, developer, or dealer
contemplated under P.D. No. 1344, the law which expanded the jurisdiction of the NHA; and that since
there is no seller-buyer relationship existing between it and private respondents, HLURB has no
jurisdiction to rule on the validity of the mortgage and to annul foreclosure proceedings.

The argument is untenable.

The CA did not err in affirming the decision of the Office of the President that HLURB has jurisdiction
to declare invalid the mortgage contract executed between Garcia/TransAmerican and petitioner over the
subject lots insofar as private respondents are concerned. It correctly relied on Union Bank of the
Philippines vs. HLURB, et al.[18] where we squarely ruled on the question of HLURBs jurisdiction to hear
and decide a condominium buyers complaint for: (a) annulment of a real estate mortgage constituted by
the project owner without the consent of the buyer and without the prior written approval of the NHA; (b)
annulment of the foreclosure sale; and (c) annulment of the condominium certificate of title that was
issued to the highest bidder at the foreclosure sale, thus:

. . . The issue in HLURB Case No. REM-062689-4077 is the validity of the real estate mortgage of Davids
condominium unit that FRDC executed in favor of the Union Bank and Far East Bank without prior
approval of the National Housing Authority and the legality of the title which the mortgage banks acquired
as highest bidder therefore in the extrajudicial foreclosure sale. The applicable provisions of P.D. No. 957,
otherwise known as The Subdivision and Condominium Buyers Protective Decree are quoted hereunder
as follows:

Sec. 3. NATIONAL HOUSING AUTHORITY. The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the provisions of this
Decree.

Section 18. Mortgages No mortgage on any unit or lot shall be made by the owner or developer without
prior written approval of the authority. Such approval shall not be granted unless it is shown that the
proceeds of the mortgage loan shall be used for the development of the condominium or subdivision
project and effective measures have been provided to ensure such utilization. The loan value of each lot
or unit covered by the mortgage shall be determined and the buyer thereof if any shall be notified before
the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the
mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the
particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit
promptly after full payment thereof.

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P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the National Housing Authority to include the
following:

Sec. 1. In the exercise of its function to regulate the real estate trade and business and in addition to its
powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed

by buyers of subdivision lot or condominium unit against the owner,
developer, broker or salesman.

On February 7, 1981, Executive Order No. 648 transferred the regulatory and quasi-judicial functions of
the NHA to the Human Settlements Regulatory Commission.

Sec. 8. TRANSFER OF FUNCTIONS. The regulatory functions of the National Housing Authority
pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to
the Commission, together with such applicable personnel, appropriation, records, equipment and property
necessary for the enforcement and implementation of such functions. Among these regulatory functions
are:

1. Regulation of the real estate trade and business:

...

7. Approval of mortgage on any subdivision lot or condominium unit made by the

owner or developer;

...

11. Hear and decide cases on unsound real estate business practices; claims
involving refund filed against project owners, developers, dealers, brokers,
or salesmen; and cases of specific performance.

Executive Order No. 90 dated December 17, 1986 changed the name of the Human Settlements
Regulatory Commission to Housing and Land Use Regulatory Board (HLURB).

Clearly, FRDCs act of mortgaging the condominium project to Bancom and FEBTC, without the
knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now
HLURB) as required by P.D. No. 957, was not only an unsound real estate business practice but also
highly prejudicial to the buyer. David, who has a cause of action for annulment of the mortgage, the
mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP and
FEBTC as the highest bidders at the sale. The case falls within the exclusive jurisdiction of the NHA (now
HLURB) as provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978.

...

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We hold that the jurisdiction of the HLURB to regulate the real estate trade is broad enough to include
jurisdiction over complaints for specific performance of the sale, or annulment of the mortgage, of a
condominium unit, with damages.[19]

Petitioner avers that the Union Bank ruling is not applicable in its case, since it had no knowledge of
any buyer of the subject lots at the time the mortgage was constituted; that there was no construction in
the subject lots at the time petitioner accepted the same as collateral; that the title to the subject property
was still in the process of being reconstituted and the loan was in fact meant for the development of the
subject lots into an eight-unit townhouse project.

We are not persuaded.

Contrary to petitioners claim that there were no buyers of the subject lots at the time of the
constitution of the mortgage, records show that private respondents Arevalo, Uy, Alfredo Lim and Santos
Lim had entered into contracts to sell with Garcia/TransAmerican as early as 1988 for their respective
lots. In fact, they, except for Uy, had already fully paid their townhouse units in 1988 without the
certificates of title being delivered to them. Garcia mortgaged the subject lots without their knowledge and
consent.

While private respondents spouses Soriano bought the subject lots after the constitution of the
mortgage in favor of petitioner, the subject lots are, as early as 1988, subdivision lots which as defined
under Section 2(e) of P.D. No. 957 to mean any of the lots, whether residential, commercial, industrial, or
recreational in a subdivision project[20] are entitled to the protection of P.D. No. 957.

Under Section 18 of P.D. No. 957, it is provided that no mortgage on any unit or lot shall be made by
the owner or developer without prior written approval of the authority. Such approval shall not be granted
unless it is shown that the proceeds of the mortgage loan shall be used for the development of the
condominium or subdivision project and effective measures have been provided to ensure such
utilization. As in the Union Bank, the mortgage was constituted on the subject lots in favor of petitioner
without the prior written approval from the HLURB, thus HLURB has jurisdiction to rule on the validity of
the mortgage.

Notwithstanding that petitioner became the owner of the subject lots by being the highest bidder in
the extrajudicial foreclosure sale, it must be remembered that it was first a mortgagee of the same. Since
the lot was mortgaged in violation of Section 18 of P.D. No. 957, HLURB has jurisdiction to declare the
mortgage void insofar as private respondents are concerned and to annul the foreclosure sale. In Far
East Bank and Trust Co. vs. Marquez,[21] we held that Section 18 of P.D. No. 957 is a prohibitory law, and
acts committed contrary to it are void. We said:

In determining whether a law is mandatory, it is necessary to ascertain the legislative intent, as stated by
Sen. Arturo M. Tolentino, an authority on civil law:

There is no well-defined rule by which a mandatory or prohibitory law may, in all circumstances, be
distinguished from one which is directory, suppletory, or permissive. In the determination of this question,
the prime object is to ascertain the legislative intention. Generally speaking, those provisions which are
mere matter of form, or which are not material, do not affect any substantial right, and do not relate to the
essence of the thing to be done, so that compliance is a matter of convenience rather than substance, are
considered to be directory. On the other hand, statutory provisions which relate to matters of substance,
affect substantial rights and are the very essence of the thing required to be done, are regarded as
mandatory.

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In Philippine National Bank vs. Office of the President, we had occasion to mull over the intent of P.D. No.
957 thus:

. . . [T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming subdivision
developers. As between these small lot buyers and the gigantic financial institutions which the developers
deal with, it is obvious that the law as an instrument of social justice must favor the weak. Indeed, the
petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities,
and therefore is presumed to have conducted the usual due diligence checking and ascertaining (whether
thru ocular inspection or other modes of investigation) the actual status, condition, utilization and
occupancy of the property offered as collateral, . . . On the other hand, private respondents obviously
were powerless to discover attempt of the land developer to hypothecate the property being sold to them.
It was precisely in order to deal with this kind of situation that P.D. No. 957 was enacted, its very essence
and intendment being to provide a protective mantle over helpless citizens who may fall prey to the
razzmatazz of what P.D. No. 957 termed unscrupulous subdivision and condominium sellers.

Concededly, P.D. No. 957 aims to protect innocent lot buyers. Section 18 of the decree directly
addresses the problem of fraud committed against buyers when the lot they have contracted to purchase,
and which they have religiously paid for, is mortgaged without their knowledge. The avowed purpose of
P.D. No. 957 compels the reading of Section 18 as prohibitory acts committed contrary to it are void.
Such construal ensures the attainment of the purpose of the law: to protect lot buyers, so that they do not
end up still homeless despite having fully paid for their home lots with their hard-earned cash.[22]

Since the mortgage is void, HLURBs orders of the cancellation of the sheriffs certificate of sale, release of
the mortgaged lots and delivery of the corresponding titles to respondents who had fully paid the
purchase price of the units are but the necessary consequences of the invalidity of the mortgage for the
protection of private respondents.

Anent the second issue, petitioner contends that since the titles on their face were free from any
claims, liens and encumbrances at the time of the mortgage, it is not obliged under the law to go beyond
the certificates of title registered under the Torrens system and had every reason to rely on the
correctness and validity of those titles.

We are not convinced.

While the cases[23] cited by petitioner held that the mortgagee is not under obligation to look beyond
the certificate of title when on its face, it was free from lien or encumbrances, the mortgagees therein
were considered in good faith as they were totally innocent and free from negligence or wrongdoing in the
transaction. In this case, petitioner knew that the loan it was extending to Garcia/TransAmerican was for
the purpose of the development of the eight-unit townhouses. Petitioners insistence that prior to the
approval of the loan, it undertook a thorough check on the property and found the titles free from liens
and encumbrances would not suffice. It was incumbent upon petitioner to inquire into the status of the lots
which includes verification on whether Garcia had secured the authority from the HLURB to mortgage the
subject lots. Petitioner failed to do so. We likewise find petitioner negligent in failing to even ascertain
from Garcia if there are buyers of the lots who turned out to be private respondents. Petitioners want of
knowledge due to its negligence takes the place of registration, thus it is presumed to know the rights of
respondents over the lot. The conversion of the status of petitioner from mortgagee to buyer-owner will
not lessen the importance of such knowledge.[24]Neither will the conversion set aside the consequence of
its negligence as a mortgagee.[25]

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Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the
real estate offered as security for the application of a loan. We cannot overemphasize the fact that the
Bank cannot barefacedly argue that simply because the title or titles offered as security were clean of any
encumbrances or lien, that it was thereby relieved of taking any other step to verify the over-reaching
implications should the subdivision be auctioned on foreclosure. [26] We find apropos to cite our ruling
in Far East Bank and Trust Co. vs. Marquez, thus:[27]

Petitioner argues that it is an innocent mortgagee whose lien must be respected and protected, since the
title offered as security was clean of any encumbrances or lien. We do not agree.

. . . As a general rule, where there is nothing on the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further
than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that
may subsequently defeat his right thereto. This rule, however, admits of an exception as where the
purchaser or mortgagee has knowledge of a defect or lack of title in the vendor, or that he was aware of
sufficient facts to induce a reasonably prudent man to inquire into the status of the property in litigation.

Petitioner bank should have considered that it was dealing with a [townhouse] project that was already in
progress. A reasonable person should have been aware that, to finance the project, sources of funds
could have been used other than the loan, which was intended to serve the purpose only partially. Hence,
there was need to verify whether any part of the property was already the subject of any other contract
involving buyers or potential buyers. In granting the loan, petitioner bank should not have been content
merely with a clean title, considering the presence of circumstances indicating the need for a thorough
investigation of the existence of buyers like respondent. Having been wanting in care and prudence, the
latter cannot be deemed to be an innocent mortgagee.

Petitioner cannot claim to be a mortgagee in good faith. Indeed it was negligent, as found by the Office of
the President and by the CA. Petitioner should not have relied only on the representation of the
mortgagor that the latter had secured all requisite permits and licenses from the government agencies
concerned. The former should have required the submission of certified true copies of those documents
and verified their authenticity through its own independent effort.

Having been negligent in finding out what respondents rights were over the lot, petitioner must be
deemed to possess constructive knowledge of those rights.

As to the third issue, petitioner contends that private respondents were negligent in failing to register
their contracts to sell in accordance with Section 17 of P.D. No. 957; that private respondents
unregistered contracts to sell are binding only on them and Garcia/TransAmerican but not on petitioner
which had no actual or constructive notice of the sale at the time the mortgage was constituted.

We disagree.

Section 17 of P.D. No. 957[28] provides that the seller shall register the contracts to sell with the
Register of Deeds of Quezon City. Thus, it is Garcias responsibility as seller to register the contracts and
petitioner should not blame private respondents for not doing so. As we have said earlier, considering
petitioners negligence in ascertaining the existence or absence of authority from HLURB for
Garcia/TransAmerican to mortgage the subject lots, petitioner cannot claim to be an innocent purchaser
for value and in good faith. Petitioner is bound by private respondents contracts to sell executed with
Garcia/TransAmerican.

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The last paragraph of Section 18 of P.D. No. 957 provides that respondents who have not yet paid in
full have the option to pay their installment for the lot directly to the mortgagee (petitioner) who is required
to apply such payments to the corresponding mortgage indebtedness secured by the particular lot or unit
being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full
payment thereof. Thus, petitioner is obliged to accept the payment of remaining unpaid amortizations,
without prejudice to petitioner banks seeking relief against the subdivision developer.[29]

Notably, although no issue was taken on the fact that the case against Garcia/TransAmerican, the
developer/seller and mortgagor of the subject lots, was archived for failure to serve summons on him/it as
his whereabouts or the office could not be located, it must be stated that Garcia/TransAmerican is not an
indispensable party since a final determination on the validity of the mortgage over the subject lots can be
rendered against petitioner. Thus, the absence of Garcia/TransAmerican did not hamper the OAALA from
resolving the dispute between private respondents and petitioner.

In China Bank vs. Oliver,[30] we held that the mortgagor, who allegedly misrepresented herself to be
Mercedes M. Oliver, the registered owner of TCT No. S-50195, is not an indispensable party in a case
filed by a person claiming to be the true registered owner, for annulment of mortgage and cancellation of
title against the mortgagee, China Bank. We found therein that even without the mortgagor, the true
Mercedes Oliver can prove in her complaint that she is the real person referred in the title and she is not
the same person using the name who entered into a deed of mortgage with the mortgagee, China Bank.

In the present case, private respondents, in their complaint, alleged that the mortgage was
constituted without the prior written approval of the HLURB which is in violation of Section 18 of P.D. No.
957. Petitioners admission that it granted and released the loan without notifying the HLURB because of
its belief that it was not necessary to do so, is fatal to petitioners defense. As a consequence thereof, the
mortgage constituted in favor of petitioner can be declared invalid as against private respondents even
without the presence of Garcia/TransAmerican. It is worthy to mention that the assailed decision was
rendered merely against petitioner and had not made any pronouncement as to Garcia/TransAmericans
liability to private respondents for the non-completion of the projects; or to herein petitioner, as
mortgagee.

The present case merely involves the liability of petitioner bank to private respondents as buyers of
the lots and townhouse units.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

De La Merced v. GSIS, et. al., G.R. No. 167140, November 23, 2011

DECISION

DEL CASTILLO, J.:

A transferee pendente lite of registered land, whose title bears a notice of a pending litigation involving his
transferors title to the said land, is bound by the outcome of the litigation, whether it be for or against his

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transferor. Given this principle, the modification of the final decision against the transferor in order to include the
transferee pendente lite does not violate the doctrine of immutability of final judgments. His inclusion does not add to
or change the judgment; it is only a legal consequence of the established doctrine that a final judgment binds the
privy of a litigating party.

Before the Court is a Petition for Review[1] assailing the validity of the February 9, 2005 Order[2] of Branch 160 of the
Regional Trial Court (RTC) of Pasig City. The said Order denied petitioners motion for supplemental writ of
execution:[3]

Conformably with Section 8, Rule 39, 1997 Rules of Civil Procedure, execution in this case can
only be implemented as far as what has been decreed in the decision dated September 11, 2001,
qualified by the Order of this Court dated January 20, 2003 with respect [to] the payment of
attorneys fees.

In view thereof, plaintiffs motion for supplemental writ of execution is DENIED.

SO ORDERED.[4]

The September 11, 2001 Decision referred to in the assailed Order was rendered by this Court in G.R. No. 140398,
entitled Col. Francisco Dela Merced, substituted by his heirs, namely, BLANQUITA E. DELA MERCED, LUIS
CESAR DELA MERCED, BLANQUITA E. DELA MERCED (nee MACATANGAY), and MARIA OLIVIA M.
PAREDES, v. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and SPOUSES VICTOR and
MILAGROS MANLONGAT.[5] The fallo of the said Decision reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court of Pasig City,
Branch 160, in Civil Case Nos. 51410 and 51470, is REINSTATED. The foreclosure sale of Lot
Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT
26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in
the name of Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of
Pasig City is ordered to CANCELall present certificates of title in the name of GSIS and Elizabeth
Manlongat covering the above-mentioned properties, and to ISSUE new certificates of title over
the same in the name of petitioners as co-owners thereof. Respondents GSIS and spouses Victor
and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys fees in the
increased amount of P50,000.00, and to pay the costs.

SO ORDERED.[6]

G.R. No. 140398 has long attained finality[7] but could not be executed because of the objections raised by the
Register of Deeds (RD) and respondent Government Service Insurance System (GSIS). These objections, which
the trial court found insurmountable in its assailed February 9, 2005 Order, are now presented to us for resolution.

Factual antecedents

This case involves five registered parcels of land located within the Antonio Subdivision, Pasig City Lots 6, 7, 8, and
10 of Block 2 and Lot 8 of Block 8 (subject properties). These lots were originally owned by, and titled in the name

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of, Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of Title (TCT) No. 26105.[8] TCT No. 26105
contains several lots, other than the subject properties, within the Antonio Subdivision.

Later, the Zulueta spouses mortgaged[9] several lots contained in TCT No. 26105 to the GSIS, which eventually
foreclosed on the mortgaged properties, including the subject properties. Upon consolidation of GSISs ownership,
TCT No. 26105 in Zuluetas name was cancelled, and TCT No. 23554[10] was issued in GSISs name.[11]

Upon learning of the foreclosure, petitioners predecessor, Francisco Dela Merced (Dela Merced) filed a
complaint[12] praying for the nullity of the GSIS foreclosure on the subject properties (Lots 6, 7, 8, and 10 of Block 2
and Lot 8 of Block 8) on the ground that he, not the Zuluetas, was the owner of these lots at the time of the
foreclosure. Dela Merced also impleaded Victor and Milagros Manlongat,[13] who were claiming Lot 6, Block 2 by
virtue of a sale executed by the GSIS in their daughters (Elizabeth Manlongat) favor.[14] Dela Merced argued that,
due to the nullity of GSISs foreclosure over the subject properties, it had no ownership right that could be transferred
to Elizabeth Manlongat.

Dela Merced caused the annotation of lis pendens[15] on GSISs TCT No. 23554 on September 21, 1984 in order to
protect his interests in the subject properties. Dela Merced died in 1988 and was substituted by his heirs, the
petitioners in the instant case.

After a protracted litigation, the case reached this Court as G.R. No. 140398. On September 11, 2001, a
Decision[16] was rendered in petitioners favor. The Court nullified GSISs foreclosure of the subject properties
because these lots were never part of its mortgage agreement with the Zulueta spouses. The dispositive portion of
said Decision reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court of Pasig City,
Branch 160, in Civil Case Nos. 51410 and 51470, is REINSTATED. The foreclosure sale of Lot
Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT
26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in
the name of Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of
Pasig City is ordered to CANCELall present certificates of title in the name of GSIS and Elizabeth
Manlongat covering the above-mentioned properties, and to ISSUE new certificates of tile over the
same in the name of petitioners as co-owners thereof. Respondents GSIS and spouses Victor
and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys fees in the
increased amount of P50,000.00, and to pay the costs.[17]

Judgment was entered on April 23, 2002.[18]

Pursuant to the finality of the above Decision, petitioners filed a Motion for Execution[19] with Branch 160 of the RTC
of Pasig City.

First obstacle:
GSISs alleged exemption from execution

GSIS opposed the motion for execution, citing as basis Section 39 of Republic Act No. 8291 (RA 8291), also known
as the GSIS Act of 1997. The said provision allegedly exempts GSIS funds and properties from attachment,
garnishment, execution, levy and other court processes.[20]

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On January 20, 2003, the trial court granted petitioners motion for execution; but held in abeyance the execution of
the award of attorneys fees, pending clarification before the higher courts of the issue of GSISs exemption under
Section 39 of RA 8291. The said Order is reproduced below:

Acting on the Motion for Execution filed by the plaintiff herein together with the opposition of
defendant GSIS, and considering that the judgment has already become final and executory, the
same is hereby Granted.

As prayed for, let a writ of execution issue to enforce the judgment of this court.

However, with respect to the payment of attorneys fees in the increased amount of P50,000.00
which has to be paid jointly and severally by the GSIS and Sps. Manlongat, the same is held in
abeyance as far as GSIS is concerned pending clarification by the GSIS before the Supreme
Court on the issue of whether its funds and assets are exempt from execution pursuant to Section
39, R.A. 8291, otherwise known as the GSIS Act of 1997.

SO ORDERED.[21]

A writ of execution was issued on July 24, 2003.[22]

Eventually, GSIS filed with the Court of Appeals (CA) a petition for certiorari and prohibition against the trial courts
implementation of the writ of execution against it.[23] The petition, docketed as CA-G.R. SP No. 87821, presented the
issue whether the trial judge gravely abused her discretion in ordering execution against GSIS funds and properties
despite their alleged express and absolute exemption from execution, garnishment, and other court processes
under Section 39 of RA 8291.[24]

In its October 28, 2005 Decision, the CA dismissed GSISs petition and held that execution may be enforced against
it.[25] The ratio of the appellate court is reproduced in part:

Public respondent court presided by Hon. Amelia A. Fabros did not commit grave abuse of
discretion when it issued the Writ of Execution dated 24 July 2003. It must be considered that the
properties which (Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 of Antonio Subdivision) were
the subject of the writ of execution in the instant case are not the properties of petitioner GSIS. In
the court a quos Decision dated October 23, 1987 and reiterated in the Honorable Supreme
Courts Decision dated September 11, 2001, it declared inter alia that the certificates of title issued
to petitioner GSIS pertaining to Lot Nos. 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 are null and
void and further directed inter alia the Register of Deeds of Pasig City to cancel all the present
certificates of title in the name of petitioner GSIS. x x x[26]

xxxx

[P]etitioner GSIS has no interest over the subject properties and x x x had never validly acquired
ownership thereof. x x x[27] Therefore, any and all [rights] that petitioner GSIS may have on the
subject properties were non-existent from the very beginning. Verily, the court a quo was right then
in issuing the writ of execution dated 24 July 2003 and that petitioner GSIS claim that it should be
exempted from execution has no basis in fact and in law.[28]

xxxx

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We lay stress that the pronouncement made in the abovementioned SC circular and in the case of
Commissioner of Public Highways vs. San Diego, cited in the Armovit case find no application in
the case at bar. It must be noted that the properties referred to therein are those owned by
government which could not be seized under writ of execution to satisfy such judgment because
to do so, there is a necessity for the corresponding appropriation of public funds by Congress
before the same could be disbursed. In this instant case, it has already been settled that the herein
properties involved are not owned by petitioner GSIS; hence, there is no prohibition that the same
could be executed and that there is no public funds involved which require the corresponding
appropriation thereof. x x x[29]

xxxx

In fine, the execution of the subject properties is proper for to assert otherwise, would be depriving
private respondents dela Merced and Paredes of their properties without due process of law as it
had been clearly established on record that they really owned the subject properties. To sustain
petitioner GSIS view that it should be exempt from execution would be putting the subject
properties beyond the reach of the rightful owners thereof x x x. Likewise, to uphold petitioner
GSIS theory would inevitably lead to a disastrous consequence and lend imprimatur to deprivation
of property without due process of law.Additionally, to grant petitioner GSIS prayer that the subject
properties be exempt from execution without any factual and legal basis thereof would resultantly
remain the same in the custody or control of petitioner GSIS which unjustly enriches itself at the
expense of private respondents dela Merced and Paredes and who the latter could be deprived of
the beneficial use/ownership thereof when in the very first place they were able to establish the
ownership thereof. Every person who through an act or performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.[30]

xxxx

WHEREFORE, premises considered, the instant PETITION FOR CERTIORARI and

PROHIBITION is hereby DISMISSED. Accordingly, the Writ of Execution dated 24 July 2003 and
the Order dated 16 September 2004 both rendered by the Regional Trial Court of Pasig City,
Branch 160 stand.

SO ORDERED. [31]

GSISs motion for reconsideration of the above Decision was denied in the June 30, 2006 Resolution of the
appellate court.[32] GSIS appealed the CA Decision to this Court[33] but the petition was denied in a Resolution dated
February 12, 2007,[34] which denial was entered in the Book of Judgments on October 2, 2007.[35]
Second obstacle:
Alleged inadequacy of the fallo

After the resolution of the issue of GSISs exemption, petitioners encountered more problems with the execution of
the September 11, 2001 Decision in G.R. No. 140398. According to the RD of Pasig City, Policarpio Espenesin, he
could not enforce the Decision in G.R. No. 140398 as worded.
The order to cancel the titles of GSIS over Lots 7 and 8 of Block 2 allegedly could not be enforced because GSIS no
longer had title over these two lots. GSIS had already conveyed these lots in 1985 and 1988 to Diogenes Bartolome

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(Lot 8) and Antonio Dimaguila [Dimaguila] (Lot 7), respectively. At present, Lot 7 of Block 2 is titled in Dimaguilas
name (TCT No. PT-67466)[36]while Lot 8 of Block 2 is titled in the name of Bartolomes assignee, Zenaida Victorino
[Victorino] (TCT No. 53031).[37] While both titles contain notices of lis pendens carried over from GSISs title,[38] the
RD claimed that the writ of execution must first be modified to include the cancellation of derivative titles of the GSIS
title.

The RD also found difficulty in implementing the order to cancel GSISs titles over Lot 10 of Block 2 and Lot 8 of
Block 8 and to issue new ones in petitioners name because no such individual titles exist in his records. The RD
posited that these two lots must still be included in GSISs mother title, TCT No. 23554. The RD opined that he
cannot cancel GSISs mother title, even if it contains Lot 10 of Block 2 and Lot 8 of Block 8 because it would affect
other lots that might still be included therein.

The RD further lamented that assuming he could cancel GSISs mother title with respect to Lot 10 of Block 2 and Lot
8 of Block 8, there is still no way that he could issue new titles over these lots in petitioners name. This is because
his office has no information regarding the technical descriptions for these two lots. The RD thus suggested that the
parties provide him with these relevant information before he can proceed.

In order to address these difficulties, petitioners filed before the trial court a Motion for Supplemental Writ of
Execution.[39] They prayed for a supplemental writ ordering the RD to cancel the titles over Lots 7 and 8 of Block 2 in
GSISs name or in the name of other subsequent transferees; and directing the GSIS and the Bureau of Lands to
supply the RD with the technical descriptions of Lot 10, Block 2, and Lot 8, Block 8.[40]

GSIS opposed the issuance of a supplemental writ of execution.[41]

On February 9, 2005, Judge Amelia A. Fabros issued the assailed order denying petitioners motion for
supplemental writ of execution.

Respondents arguments

The Manlongats could not be served with copies of the Courts resolutions; hence the Court dispensed with their
comment.[42]

GSIS argues that petitioners motion was properly denied because it seeks
to modify a final and executory Decision. The September 11, 2001 Decision in G.R. No. 140398 only ordered the
cancellation of GSISs titles over the subject properties. It did not order the cancellation of all derivative titles of GSISs
transferees; nor did it order the GSIS to perform acts such as providing the RD with the technical descriptions for Lot
10, Block 2 and Lot 8, Block 8. GSIS maintains that a supplemental writ that includes such additional orders is null
and void for non-conformity with the judgment.

Further, GSIS argues that the inclusion of derivative titles in the September 11, 2001 Decision in G.R. No. 140398
would deprive the holders of these derivative titles their day in court. GSIS opines that the holders of the derivative
titles are not bound by the judgment against GSIS because these holders are strangers to the action between GSIS
and petitioners.

Lastly, GSIS again raises its earlier argument that the September 11, 2001 Decision in G.R. No. 140398 cannot be
enforced because of GSISs exemption from court processes under RA 8291.

Petitioners arguments

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Petitioners counter that the September 11, 2001 Decision in G.R. No. 140398 can be enforced against GSISs
transferees pendente lite because these transferees were given notice of the pendency of the case by virtue of the
notice of lis pendens that had been inscribed on GSISs TCT No. 23554 as early as September 21, 1984. In fact,
when TCT No. 23554 was cancelled with respect to Lots 7 and 8 of Block 2 in order to issue new titles in Dimaguilas
and Victorinos names, this notice was carried over to their respective titles. Moreover, the conveyance of these lots
to Victorino and Dimaguila transpired in 1985 and 1988, respectively; clearly during the pendency of the case and
with notice of the questions surrounding GSISs ownership over these properties.

As transferees pendente lite, Dimaguilas and Victorinos titles are proper subjects of writs of execution even if they
were not actual parties to the case. Petitioners cite Voluntad v. Spouses Dizon[43] as their authority.[44]

With regard to the issuance of new titles for Lot 10, Block 2 and Lot 8, Block 8, petitioners argue that GSIS can be
compelled to provide the RD with their respective technical descriptions.This power is granted to the courts under
Section 10, Rule 39 of the Rules of Court.[45]

Petitioners maintain that execution of the Decision in G.R. No. 140398 should not be confined to the literal terms
contained only in the fallo or the dispositive portion.[46]

As regards GSISs alleged exemption, petitioners posit that the GSIS can no longer raise the issue of exemption
from execution given that the CA had already rendered its Decision on that question in CA-G.R. SP No. 87821. The
said Decision was affirmed by this Court in G.R. No. 173391 through our February 12, 2007 Resolution[47] and entry
of judgment in that case was made on October 2, 2007.[48]

Issues

Can GSIS still raise the issue of exemption?

Whether a final and executory judgment against GSIS and Manlongat can be enforced against their successors-in-
interest or holders of derivative titles

Whether an order to cancel title to a particular property includes an order to provide technical descriptions and
segregate it from its mother title

Our Ruling

On the issue of GSISs exemption

The issue of GSISs alleged exemption under RA 8291 had been finally decided against GSIS in G.R. No. 173391,
when this Court denied GSISs petition for review. The denial rendered the CA Decision in CA-G.R. SP No. 87821
final and executory. GSISs attempt to resurrect the same issue by interjecting the same in this proceeding is barred
by the principle of law of the case, which states that determinations of questions of law will generally be held to
govern a case throughout all its subsequent stages where such determination has already been made on a prior
appeal to a court of last resort.[49] The Decision in G.R. No. 173391 allowing the execution of the judgment against
GSIS is the law of the case and controls the proceedings below which are already in the execution stage.

Enforcement of judgment against transferees pendente

lite

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A notice of lis pendens is an announcement 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 the said property.[50] The effect of the annotation of lis pendens on future transactions over
the subject property is discussed by an authority on land titles and registration:

Once a notice of lis pendens has been duly registered, any cancellation or issuance of the title of
the land involved as well as any subsequent transaction affecting the same, would have to be
subject to the outcome of the litigation. In other words, upon the termination of the litigation there
can be no risk of losing the property or any part thereof as a result of any conveyance of the land
or any encumbrance that may be made thereon posterior to the filing of the notice of lis
pendens.[51]
It is not disputed that petitioners caused the annotation of lis pendens on TCT No. 23554, which covers Lots 7 and 8
of Block 2, as early as September 21, 1984.[52] On July 29, 1985 and August 24, 1998, TCT No. 23554 was
cancelled with respect to Lots 7 and 8 of Block 2 and new individual titles were issued to Victorino and Dimaguila.
Both titles had the notice of lis pendens which was carried over from TCT No. 23554. Ineluctably, both Victorino and
Dimaguila had notice of the litigation involving GSISs ownership over the subject properties, and were bound by the
outcome of the litigation. When a transferee pendente lite takes property with notice of lis pendens, such transferee
undertakes to respect the outcome of the litigation. As held in Selph v. Vda. de Aguilar,[53] an order to cancel the
transferors title may be enforced against his transferee, whose title is expressly subject to the outcome of the
litigation by the fact of the annotation of lis pendens.

The existence of these entries on Dimaguilas and Victorinos titles bars any defense of good faith[54] against
petitioners and effectively makes Dimaguila and Victorino mere privies of GSIS and subject to whatever rights GSIS
might have in the subject properties, which (as it turns out) is none at all. What Dimaguila and Victorino possess are
derivative titles of the GSISs title over Lots 7 and 8 of Block 2, which this Court has finally adjudicated to be null and
void. Given the legal maxim that a spring cannot rise higher than its source, it follows that Dimaguilas and Victorinos
titles, or any other title over the subject properties that are derived from TCT No. 23554 of the GSIS, are likewise null
and void. As explained by this Court in another case, the title obtained by the transferee pendente lite affords him no
special protection; he cannot invoke the rights of a purchaser in good faith and cannot acquire better rights than
those of his predecessor-in-interest.[55]
In Voluntad v. Spouses Dizon,[56] the Court allowed the issuance of an alias
writ of execution against the transferees pendente lite, who had knowledge of the pending litigation on the basis of
the annotation of the notice of lis pendens on their titles. The Court clarified therein that there was no need for the
victorious [parties] to file a separate action to enforce their right to recover the property as against the new registered
owners.[57]
In Associated Bank v. Pronstroller,[58] the Court affirmed the judgments of the trial and appellate courts cancelling the
titles of the spouses Vaca, who were transferees pendente lite of Associated Bank, despite the fact that the spouses
Vaca were not parties to the case between Associated Bank and the Pronstrollers. The Court explained therein:

Admittedly, during the pendency of the case, respondents timely registered a notice of lis pendens
to warn the whole world that the property was the subject of a pending litigation.

Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a
court acquires over property involved in a suit, pending the continuance of the action, and until
final judgment. Founded upon public policy and necessity, lis pendens is intended to keep the
properties in litigation within the power of the court until the litigation is terminated, and to prevent
the defeat of the judgment or decree by subsequent alienation. x x x

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The filing of a notice of lis pendens has a twofold effect: (1) to keep the subject matter of the
litigation within the power of the court until the entry of the final judgment to prevent the defeat of
the final judgment by successive alienations; and (2) to bind a purchaser, bona fide or not, of the
land subject of the litigation to the judgment or decree that the court will promulgate subsequently.

This registration, therefore, gives the court clear authority to cancel the title of the spouses Vaca,
since the sale of the subject property was made after the notice of lis pendens. x x x[59]

Upon Associated Banks MR, the spouses Vaca filed a motion to intervene arguing that they had a real interest in
assailing the July 14, 2008 Decision, which ordered the cancellation of their title. The Court denied the intervention. It
was held that the interests of the spouses Vaca in the subject property were properly represented in the action by
their transferor/vendor Associated Bank, which was already a party thereto. As transferees pendente lite, the
spouses Vaca stand exactly in the shoes of their predecessor-in-interest, Associated Bank.[60]
The Court cannot accept GSISs theory that the dispositive portion of the Decision in G.R. No. 140398 is enforceable
only against GSISs title because it does not contain the phrase and all its derivative titles. GSISs narrow
interpretation would render nugatory the principle that a final judgment against a party is binding on his privies and
successors-in-interest. We cannot sustain this interpretation. In Cabresos v. Judge Tiro,[61] the Court upheld the
respondent judges issuance of an alias writ of execution against the successors-in-interest of the losing litigant
despite the fact that these successors-in-interest were not mentioned in the judgment and were never parties to the
case. The Court explained that an action is binding on the privies of the litigants even if such privies are not literally
parties to the action. Their inclusion in the writ of execution does not vary or exceed the terms of the judgment. In the
same way, the inclusion of the derivative titles in the writ of execution will not alter the Decision in G.R. No. 140398
ordering the cancellation of GSISs title.

Cancellation of title

The RD claimed that it cannot execute the order to cancel the GSISs titles over Lot 10, Block 2 and Lot 8, Block 8
because it has no record of GSISs title over these two lots. The RD theorized that these lots are included in a
mother title in GSISs possession and would still have to be segregated therefrom. To effectuate such segregation,
the RD needed the technical descriptions of the two lots and the mother title. Thus, petitioners ask that the GSIS be
compelled to surrender its title over, as well as the technical descriptions of, Lot 10, Block 2 and Lot 8, Block 8.
GSIS refused to turn over the needed documents and information, claiming that these acts go beyond what were
ordered in the Decision in G.R. No. 140398. GSISs protestations ring hollow.

The order contained in the Decision in G.R. No. 140398 is for the RD to cancel GSISs titles over Lot 10, Block 2
and Lot 8, Block 8, inter alia. Whether these titles are individual or contained in a mother title is of no
consequence. The RD has to cause their cancellation. If the cancellation can only be carried out by requiring GSIS
or the Bureau of Lands to provide the necessary information, then they can be compelled to do so. Otherwise, the
Courts decision would be rendered inefficacious, and GSIS would retain ostensible ownership over the lots by the
simple expedience that they are included in a mother title, instead of individual titles. That result is manifestly
contrary to the Courts ruling and would subvert the very purpose of bringing this case for a complete resolution.
A similar predicament was ruled upon by the Court in Republic Surety and Insurance Co., Inc. v. Intermediate
Appellate Court.[62] In that case, the Court declared that Republic Mines had no right to the property involved but
during the execution, the RD refused to cancel the TCT in Republic Mines name on the ground that the dispositive
portion of the trial courts Decision did not order the RD to cancel the title and to revive the old title in favor of the
victorious party. The Court held that the missing order to cancel and revive should be deemed implied in the trial
courts decision. Speaking through Justice Feliciano, the Court explained thus:

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What is involved here is not what is ordinarily regarded as a clerical error in the dispositive part of
the decision of the Court of First Instance, which type of error is perhaps best typified by an error in
arithmetical computation. At the same time, what is involved here is not a correction of an
erroneous judgment or dispositive portion of a judgment. What we believe is involved here is in the
nature of an inadvertent omission on the part of the Court of First Instance x x x, of what might be
described as a logical follow-through of something set forth both in the body of the decision and in
the dispositive portion thereof: the inevitable follow-through, or translation into, operational or
behavioral terms, of the annulment of the Deed of Sale with Assumption of Mortgage, from which
petitioners' title or claim of title embodied in TCT 133153 flows. The dispositive portion of the
decision itself declares the nullity ab initio of the simulated Deed of Sale with Assumption of
Mortgage and instructed the petitioners and all persons claiming under them to vacate the subject
premises and to turn over possession thereof to the respondent-spouses. Paragraph B of the
same dispositive portion, confirming the real estate mortgage executed by the respondent-
spouses also necessarily assumes that Title No. 133153 in the name of petitioner Republic Mines
is null and void and therefore to be cancelled, since it is indispensable that the mortgagors have
title to the real property given under mortgage to the creditor (Article 2085 [2], Civil Code).[63]

xxxx

There are powerful considerations of an equitable nature which impel us to the conclusions we
reach here. Substantial justice cannot be served if the petitioner Republic Mines, having absolutely
no right, legal or equitable, to the property involved, its claim thereto being based upon a
transaction which was not only simulated but also immoral and unconscionable, should be
allowed to retain the Transfer Certificate of Title in its name. The petitioner would thereby be in a
position to inflict infinite mischief upon the respondent-spouses whom they deprived for 15 years
of the possession of the property of which they were and are lawful owners, and whom they
compelled to litigate for 15 years to recover their own property. The judicial process as we know it
and as administered by this Court cannot permit such a situation to subsist. It cannot be an
adequate remedy for the respondent-spouses to have to start once more in the Court of First
Instance, to ask that court to clarify its own judgment, a process which could be prolonged by the
filing of petitions for review in the Court of Appeals and eventually in this Court once more. Public
policy of the most fundamental and insistent kind requires that litigation must at last come to an
end if it is not to become more pernicious and unbearable than the very injustice or wrong sought
to be corrected thereby. That public policy demands that we cut this knot here and now.[64]

When a judgment calls for the issuance of a new title in favor of the winning party (as in the instant case), it logically
follows that the judgment also requires the losing party to surrender its title for cancellation. It is the only sensible
way by which the decision may be enforced. To this end, petitioners can obtain a court order requiring the registered
owner to surrender the same and directing the entry of a new certificate of title in petitioners favor.[65] The trial court
should have granted petitioners motion for supplemental writ of execution as it had authority to issue the necessary
orders to aid the execution of the final judgment.[66]
GSISs objection that these orders cannot be enforced because they do not literally appear in the Decision in G.R.
No. 140398 is unreasonable. GSIS would have the Court spell out the wheres, whys, and hows of the
execution. GSIS wants a dispositive portion that is a step-by-step detailed description of what needs to be done for
purposes of execution. This expectation is unreasonable and absurd.

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WHEREFORE, the petition is GRANTED. The February 9, 2005 Order of Branch 160 of
the Regional Trial Court of Pasig City is REVERSED and SET ASIDE. The September 11, 2001 Decision in G.R.
No. 140398 is clarified to read as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals is REVERSED AND SET ASIDE.
The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and
51470, is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of
Block 8 of the property originally covered by TCT No. 26105, and the subsequent certificates of
titles issued to GSIS as well as TCT No. PT-94007 in the name of Elizabeth Manlongat, and their
respective derivative titles are declared NULL AND VOID.

The Register of Deeds of Pasig City is ordered to CANCEL all present certificates of title covering
the above-mentioned properties, whether contained in individual titles or in a mother title, in
the name of GSIS and Elizabeth Manlongat, or in the name of their privies, successors-in-
interest or transferees pendente lite, and to ISSUE new certificates of title over the same in the
name of petitioners as co-owners thereof.

GSIS and the Bureau of Lands are ordered to supply the necessary documents and
information for the proper enforcement of the above orders.

Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay, jointly
and severally, attorneys fees in the increased amount of P50,000.00, and to pay the costs.
SO ORDERED.

The trial court is ordered to ISSUE the writ of execution in accordance with the above clarified dispositive portion.

GSIS is seriously warned not to further delay the execution of this case.

SO ORDERED.

Ruiz v. Dimailig, G.R. No. 204280, November 9, 2016

SECOND DIVISION

November 9, 2016

G.R. No. 204280

EVELYN V. RUIZ, Petitioner

vs.
BERNARDO F. DIMAILIG, Respondent

DECISION

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DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the October 22, 2012 Decision1 of the Court of Appeals (CA)
in CA-GR. CV No. 95046 which reversed and set aside the November 26, 2009 Decision 2 and the March
19, 2010 Order3of the Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573. The
CA declared void the Real Estate Mortgage (REM) constituted on the property covered by Transfer
Certificate of Tit1e (TCT) No. T-361747.

Factual Antecedents

Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a parcel ofland covered by TCT
No. T-361747 located inAlapan, Imus, Cavite.4 In October 1997, he entrusted the owners copy of the said
TCT to his brother, Jovannie,5 who in turn gave the title to Editha Sanggalang (Editha), a broker, for its
intended sale. However, in January 1998, the property was mortgaged to Evelyn V. Ruiz (Evelyn) as
evidenced by a Deed of REM6 without Bernardos knowledge and consent. Hence, Bernardo instituted
this suit for annulment of the Deed of REM.7

In her Answer,8 Evelyn contended that she met Jovannie when she inspected the subject property and
assured her that Bernardo owned the property and his title thereto was genuine. She further claimed that
Jovannie mortgaged the property to her. She also insisted that as a mortgagee in good faith and for
value, the REM cannot be annulled and that she had the right to keep the owner's copy of TCT No. T-
3617 4 7 until the loan was fully paid to her.

During pre-trial, the parties arrived at the following stipulations:9

1. That x x x it was not [Bernardo] who signed as mortgagor in the subject Deed of Real Estate Mortgage.

2. That there was a demand letter sent to [Evelyn] x x x to cause a release of mortgage on the subject
property.

3. The x x x controversy [was referred] to the Barangay for conciliation and mediation.

[4.] That Jovannie x x x is the brother of [Bernardo].

Thereafter, trial on the merits ensued.

Bernardo testified that when he went abroad on October 19, 1997, he left the owner's copy of the TCT of
the subject property to Jovannie as they intended to sell the subject property. 10 However, on January 26,
1998, a REM was executed on the subject property. Bernardo argued that his alleged signature
appearing therein was merely forged11as he was still abroad at that time. When he learned in September
or November 1998 that Editha mortgaged the subject property, be personally told Evelyn that the REM
was fake and demanded the return of his title. Not heeding his request, he filed a complaint for estafa
through falsification of public document against Editha and Evelyn, The criminal case against Evelyn was
dismissed12 while Editha was found guilty as charged. 13

Jovannie also took the witness stand. He testified that sometime in December 1997, Editha convinced
him to surrender the owner's copy of TCT No. T-361747 which she would show her
buyer.14 Subsequently, however, Editha informed him that she misplaced the title. Hence, he executed in

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August 199815 an affidavit of loss and registered it with the Register of Deeds (RD). 16 In September 1998,
Editha finally admitted that the title was not lost but was in Evelyn's possession because of the
REM.17 Upon learning this, Jovannie inquired from Evelyn if Editha mortgaged Bernardo's property to her.
Purportedly, Evelyn confirmed said mortgage and told him that she would not return the owner's copy of
TCT No. T-361747 unless Editha pay the loan,18 Jovannie also alleged that he told Evelyn that Bernardo's
alleged signature in the REM was not genuine since he was abroad at the time of its execution. 19

On the other hand, Evelyn maintained that she was a mortgagee in good faith. She testified that sales
agents - Editha, Corazon Encarnacion, and a certain Parani, - and a person introducing himself as
"Bernardo" mortgaged the subject property to her for 300,000.00 payable within a period of three
months.20 She asserted that even after the expiration of said period, "Bernardo" failed to pay the loan. 21

Evelyn narrated that before accepting the mortgage of the subject property, she, the sales agents, her
aunt, and "Bernardo," visited the property. She pointed out that her companions inspected it while she
stayed in the vehicle as she was still recuperating from an operation. 22 She admitted that she neither
verified from the neighborhood the owner of the property nor approached the occupant thereof. 23

Moreover, Evelyn asserted that when the Deed of REM was executed, the person who introduced himself
as Bernardo presented a community tax certificate and his picture as proof of identity. 24 She admitted that
she did not ask for any identification card from "Bernardo."25

Contrary to the allegation in her Answer that Jovannie mortgaged the property, Evelyn clarified that she
met Jovannie for the first time when he went to her house and told her that Bernardo could not have
mortgaged the property to her as he was abroad.26

Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to corroborate her testimony.
Corazon averred that in January 1998, she accompanied Evelyn and several others in inspecting the
subject property.27 The day after the inspection, Evelyn and '"Bernardo'' executed the Deed of REM in the
office of a certain Atty. Ignacio; Evelyn handed 300,000.00 to Editha, not to "Bernardo;" 28 in turn, Editha
handed to Evelyn the owner's copy of TCT No. T-361747.29

Ruling of the Regional Trial Court

On November 26, 2009, the RTC dismissed the Complaint. It held that while Bernardo was the registered
owner of the subject property, Evelyn was a mortgagee in good faith because she was unaware that the
person who represented himself as Bernardo was an impostor. It noted that Evelyn caused the
verification of the title of the property with the RD and found the same to be free from any lien or
encumbrance. Evelyn also inspected the property and met Jovannie during such inspection. Finally, the
RTC declared that there was no showing of any circumstance that would cause Evelyn to doubt the
validity of the title or the property covered by it. In fine, Evelyn did all that was necessary before parting
with her money and entering into the REM.

On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration. Thus, he appealed to the
CA.

Ruling of the Court of Appeals

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On October 22, 2012, the CA rendered the assailed Decision reversing and setting aside the RTC
Decision. The decretal portion of the CA Decision reads:

WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC are REVERSED and SET
ASIDE. The complaint of Bernardo F. Dimailig is GRANTED. The Deed of Real Estate Mortgage
constituted on the real property covered by TCT No. T-361747 of the Registry of Deeds for the Province
of Cavite, registered in his name, is DECLARED null and void. Evelyn V. Ruiz is ORDERED to reconvey
or return to him the owner's duplicate copy of the said title. His claims for the payment of attorney's fees
and costs of suits are DENIED. Costs against Evelyn V. Ruiz.

SO ORDERED.30

The CA held that the "innocent purchaser (mortgagor in this case) for value protected by law is one who
purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged
deed."31 Since the Deed of REM was forged, and the title to the subject property is still in the name of the
rightful owner, and the mortgagor is a different person who only pretended to be the owner, then Evelyn
cannot seek protection from the cloak of the principle of mortgagee in good faith. The CA held that in this
case, "the registered owner will not personally lose his title."32

The CA further decreed that Evelyn's claim of good faith cannot stand as she failed to verify the real
identity of the person introduced by Editha as Bernardo. It noted that the impostor did not even exhibit
any identification card to prove his identity; and, by Evelyn's admission, she merely relied on the
representation of Editha relative to the identity of "Bernardo." It also held that Evelyn transacted only with
Editha despite the fact that the purported owner was present during the inspection of the property, and
during the execution of the REM.

In sum, the CA ruled that for being a forged instrument, the Deed of REM was a nullity, and the owner's
copy of TCT No. T-361747 must be returned to its rightful owner, Bernardo.

Issue

Hence, Evelyn filed this Petition raising the sole assignment of error as follows:

[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in good faith despite the
presence of substantial evidence to support such conclusion of fact. 33

Petitioners Arguments

Petitioner insists that she is a mortgagee in good faith. She claims that she was totally unaware of the
fraudulent acts employed by Editha, Jovannie, and the impostor to obtain a loan from her. She stresses
that a person dealing with a property covered by a certificate of title is not required to look beyond what
appears on the face of the title.

Respondents Arguments

Bernardo, on his end, contends that since the person who mortgaged the property was a mere impostor,
then Evelyn cannot claim that she was a mortgagee in good faith. This is because a mortgage is void
where the mortgagor has no title at all to the property subject of such mortgage.

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Bernardo asserts that there were circumstances that should have aroused suspicion on the part of Evelyn
relative to the mortgagor's title over the property. He specifies that throughout the negotiation of the
mortgage, Evelyn transacted only with Editha, not with "Bernardo," despite the fact that Editha and the
other real estate agents who assisted Evelyn in the mortgage transaction were not armed with a power of
attorney.

Bernardo likewise stresses that although Evelyn caused the inspection of the subject property, she
herself admitted that she did not alight from the vehicle during the inspection, and she failed to verify the
actual occupant of the property.

Our Ruling

The Petition is without merit.

As a Rule, the issue of whether a person is a mortgagee in good faith is not within the ambit of a Rule 45
Petition.1wphi1 The determination of presence or absence of good faith, and of negligence are factual
matters, which are outside the scope of a petition for review on certiorari.34 Nevertheless, this rule allows
certain exceptions including cases where the RTC and the CA arrived at different or conflicting factual
findings,35 as in the case at bench. As such, the Court deems it necessary to re-examine and re-evaluate
the factual findings of the CA as they differ with those of the RTC.

No valid mortgage will arise unless the mortgagor has a valid title or ownership over the mortgaged
property. By way of exception, a mortgagee can invoke that he or she derived title even if the mortgagor's
title on the property is defective, if he or she acted in. good faith. In such instance, the mortgagee must
prove that no circumstance that should have aroused her suspicion on the veracity of the mortgagor's title
on the property was disregarded.36

Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who is not the rightful owner
of the property, has already succeeded in obtaining a Torrens title over the property in his name and that,
after obtaining the said title, he succeeds in mortgaging the property to another who relies on what
appears on the said title."37 In short, the doctrine of mortgagee in good faith assumes that the title to the
subject property had already been transferred or registered in the name of the impostor who thereafter
transacts with a mortgagee who acted in good faith. In the case at bench, it must be emphasized that the
title remained to be registered in the name of Bernardo, the rightful and real owner, and not in the name
of the impostor.

The burden of proof that one is a mortgagee in good faith and for value lies with the person who claims
such status. A mortgagee cannot simply ignore facts that should have put a reasonable person on guard,
and thereafter claim that he or she acted in good faith under the belief that the mortgagor's title is not
defective.38 And, such good faith entails an honest intention to refrain from taking unconscientious
advantage of another.39

In other words, in order for a mortgagee to invoke the doctrine of mortgagee in good faith, the impostor
must have succeeded in obtaining a Torrens title in his name and thereafter in mortgaging the property.
Where the mortgagor is an impostor who only pretended to be the registered owner, and acting on such
pretense, mortgaged the property to another, the mortgagor evidently did not succeed in having the
property titled in his or her name, and the mortgagee cannot rely on such pretense as what appears on
the title is not the impostor's name but that of the registered owner.40

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In this case, Evelyn insists that she is a mortgagee in good faith and for value. Thus, she has the burden
to prove such claim and must provide necessary evidence to support the same. Unfortunately, Evelyn
failed to discharge her burden.

First, the Deed of REM was established to be a forged instrument. As aptly discussed by the CA,
Bernardo did not and could not have executed it as he was abroad at the time of its execution, to wit:

Verily, Bernardo could not have affixed his signature on the said deed on January 26, 1998 for he left the
Philippines on March 21, 1998. Not only that, his signature on his Seafarers Identification and Record
Book is remarkably different from the signature on the assailed mortgage contract. The variance is
obvious even to the untrained eye. This is further bolstered by Evelyns admission that Bernardo was not
the one who represented himself as the registered owner of the subject property and was not the one
who signed the questioned contract. Thus, there can be no denying the fact that the signature on the
Deed of Real Estate Mortgage was not affixed or signed by the same person.41

In fact, during pre-trial, both parties agreed that it was not Bernardo who signed as the mortgagor in the
Deed of REM. It was only an impostor - representing himself as Bernardo - who mortgaged the property.
This impostor is not only without rightful ownership on the mortgaged property, he also has no Torrens
title in his own name involving said property.

Simply put, for being a forged instrument, the Deed of REM is a nullity and conveys no title. 42

Second, Evelyn cannot invoke the protection given to a mortgagee in good faith. As discussed, the title to
the subject property remained registered in the name of Bernardo. It was not transferred to the impostor's
name when Evelyn transacted with the latter. Hence, the principle of mortgagee in good faith finds no
application; correspondingly, Evelyn cannot not seek refuge therefrom.

Third, even assuming that the impostor has caused the property to be titled in his name as if he had
rightful ownership thereof, Evelyn would still not be deemed a mortgagee in good faith. This is because
Evelyn did not take the necessary steps to dete1mine any defect in the title of the alleged owner of the
mortgaged property. She deliberately ignored pertinent facts that should have aroused suspicion on the
veracity of the title of the mortgagor "Bernardo."43

One, while '"Bernardo" introduced himself to Evelyn as the owner of the property, he did not present any
proof of identification. To recall, he only exhibited his co1rununity tax certificate and a picture when he
introduced himself to Evelyn. ''Bernardo's" failure to sufficiently establish his identity should have aroused
suspicion on the part of Evelyn whether the person she was transacting with is the real Bernardo or a
mere impostor. She should have investigated further and verified the identity of ''Bernardo" but she failed
to do so. She even admitted that she did not at all ask for any identification card from "'Bernardo."

Two, Evelyn also ignored the fact that "Bernardo'' did not participate in the negotiations/transactions
leading to the execution of the Deed of REM. Notably, no power of attorney was given to Editha who
supposedly transacted in behalf of Bernardo. Despite "Bernardo's" presence during the ocular inspection
of the property and execution of the mortgage contract, it was Editha who transacted with Evelyn. As
gathered from the testimony of Corazon, after the execution of the deed, Evelyn handed the loan amount
of 300,000.00 to Editha, not to "Bernardo," and it was Editha who handed to Evelyn the owner's copy of
TCT No. T-361747.

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Three, Evelyn likewise failed to ascertain the supposed title of "Bernardo" over the property, Evelyn
admitted that during the ocular inspection, she remained in the vehicle. She did not inquire from the
subject property's occupant or from the occupants of the surrounding properties if they knew "Bernardo"
and whether or not he owned the subject property.

Notably, the RTC misapprehended certain facts when it held that Evelyn inspected the property and met
Jovannie during the inspection. By her own account, Evelyn clarified that she met Jovannie for the first
time only when the latter visited her house to inform her that an impostor mortgaged Bernardo's property
to her.

Four, the Court observes that Evelyn hastily granted the loan and entered into the mortgage contract. As
also testified by Corazon, a day after the supposed ocular inspection on the property, Evelyn and
"Bernardo" executed the Deed of REM even without Evelyn verifying the identity of the property's
occupant as well as the right of the mortgagor, if any, over the same. Indeed, where the mortgagee acted
with haste in granting the loan, without first determining the ownership of the property being mortgaged,
the mortgagee cannot be considered as an innocent mortgagee in good faith.44

Thus, considering that the mortgage contract was forged as it was entered into by Evelyn with an
impostor, the registered owner of the property, Bernardo, correspondingly did not lose his title thereon,
and Evelyn did not acquire any right or title on the property and cannot invoke that she is a mortgagee in
good faith and for value.45

WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012 Decision of the Court of
Appeals in CAG.R. CV No. 95046 is AFFIRMED.

SO ORDERED.

e. Sale Involving Real Estate

Esguerra v. Trinidad, G.R. No. 169890, March 12, 2007

DECISION

CARPIO MORALES, J.:

Involved in the present controversy are two parcels of land located in Camalig, Meycauayan,
Bulacan.

Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the owners of several parcels of
land in Camalig, Meycauayan, Bulacan among them a 35,284-square meter parcel of land covered by
Tax Declaration No. 10374, half of which (17,642 square meters) they sold to their grandchildren, herein
petitioners Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a
23,989-square meter

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parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to
petitioners, and the remaining 500 square meters they sold to their other grandchildren, the brothers
Eulalio and Julian Trinidad (Trinidad brothers).

Also sold to the Trinidad brothers were a 7,048-square meter parcel of land covered by Tax
Declaration No. 9059, a 4,618-square meter parcel of land covered by Tax Declaration No. 12081, and a
768-square meter parcel of land covered by Tax Declaration No. 13989.

The Esguerra spouses executed the necessary Deed of Sale in favor of petitioners on August 11,
1937,[1]and that in favor of the Trinidad brothers on August 17, 1937.[2]Both documents were executed
before notary public Maximo Abao.

Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a
notarized Kasulatan ng Bilihang Tuluyan ng Lupa[3] dated October 13, 1965. A portion of the land
consisting of 1,693 square meters was later assigned Lot No. 3593 during a cadastral survey conducted
in the late 1960s.

On respondents application for registration of title, the then Court of First Instance (CFI) of
Bulacan, by Decision[4] of February 20, 1967, awarded Lot No. 3593 in their favor in Land Registration
Case No. N-323-V. Pursuant to the Decision, the Land Registration Commission (LRC, now the Land
Registration Authority [LRA]) issued Decree No. N-114039 by virtue of which the Register of Deeds of
Bulacan issued OCT No. 0-3631[5] in the name of respondents.
Meanwhile, under a notarized Bilihan ng Lupa[6] dated November 10, 1958, petitioners sold to
respondents parents Eulalio Trinidad and Damiana Rodeadilla (Trinidadspouses) a portion of about 5,000
square meters of the 23,489-square meter of land which they previously acquired from
the Esguerra spouses.[7]

During the same cadastral survey conducted in the late 1960s, it was discovered that the about
5,000-square meter portion of petitioners parcel of land sold to the Trinidad spouses which was
assigned Lot No. 3591 actually measured 6,268 square meters.
In a subsequent application for registration of title over Lot No. 3591, docketed as Land
Registration Case No. N-335-V, the CFI, by Decision[8] of August 21, 1972, awarded Lot No. 3591 in favor
of Eulalio Trinidad. Pursuant to the Decision, the LRC issued Decree No. N-149491 by virtue of which the
Register of Deeds of Bulacan issued OCT No. 0-6498[9] in the name of Trinidad.

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was
transmitted to respondents by succession.

Petitioners, alleging that upon verification with the LRA they discovered the issuance of the
above-stated two OCTs, filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos,
Bulacan two separate complaints for their nullification on the ground that they were procured through
fraud or misrepresentation.

In the first complaint, docketed as Civil Case No. 737-M-94, petitioners sought the cancellation of
OCT No. 0-3631.
In the other complaint, docketed as Civil Case No. 738-M-94, petitioners sought the cancellation
of OCT No. 0-6498.

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 Page 217 of 540

Both cases were consolidated and tried before Branch 79 of the RTC which, after trial, dismissed
the cases by Joint Decision[10] of May 15, 1997.

Their appeal with the Court of Appeals having been dismissed by Decision of February 28, 2005,
a reconsideration of which was, by Resolution of October 3, 2005,[11]denied, petitioners filed the instant
petition.

Petitioners fault the appellate court

1. . . . in misappreciating the fact that the act of the respondent Eulalio Trinidad in
acquiring the property from Felipe Esguerra constituted fraud.

2. . . . in the [i]nterpretation and application of the provisions of Article 1542 of the

New Civil Code.

3. . . . in ruling that there is prescription, res judicata, and violation of the non-
[forum] shopping.[12]

In their Comment, respondents assailed the petition as lacking verification and certification
against forum shopping and failing to attach to it an affidavit of service and material portions of the record
in support thereof. Petitioners counter that the procedural deficiencies have been mooted by the filing of a
Compliance.

A check of the rollo shows that attached to the petition are an Affidavit of Service dated
November 21, 2005 and the appellate courts Decision of February 28, 2005 and Resolution of October 3,
2005; and that on January 16, 2006 or almost three months following the last day to file the petition,
petitioners submitted, not at their own instance,[13]a Verification and Sworn Certification on Non-Forum
Shopping signed by petitioner Pedro Esguerra who cited honest and excusable mistake behind the
omission to submit the same.

This Court has strictly enforced the requirement of verification and certification, obedience to
which and to other procedural rules is needed if fair results are to be expected therefrom.[14] While
exceptional cases have been considered to correct patent injustice concomitant to a liberal application of
the rules of procedure, there should be an effort on the part of the party invoking liberality to advance a
reasonable or meritorious explanation for his failure to comply with the rules. [15] In petitioners case, no
such explanation has been advanced.

With regard to petitioners failure to attach material portions of the record in support of the petition, this
requirement is not a mere technicality but an essential requisite for the determination of prima facie basis
for giving due course to the petition.[16] As a rule, a petition which lacks copies of essential pleadings and
portions of the case record may be dismissed. Much discretion is left to the reviewing court, however, to
determine the necessity for such copies as the exact nature of the pleadings and portions of the case
record which must accompany a petition is not specified.[17]

At all events, technicality aside, the petition must be denied.

It is settled that fraud is a question of fact and the circumstances constituting the same must be
alleged and proved in the court below.[18]

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 Page 218 of 540

In the present cases, as did the trial court, the appellate court found no fraud in respondents
acquisition and registration of the land, viz:

. . . Appellant Pedro Esguerra even testified that he does not know how appellees were
able to secure a title over the lot in question and that they never sold Lot No. 3593 to
Virginia Trinidad since it is part of the whole lot of 23,489 square meters. The said
testimony is a mere conclusion on the part of appellants. On the other hand, the evidence
shows that appellees acquired title over the subject property by virtue of a deed of sale
executed by their father Eulalio Trinidad in their favor.

xxxx

[T]hey failed to establish that appellees acquisition of the certificate of title is

fraudulent. In fact, in their two complaints, appellants acknowledged that appellees
observed and took the initial procedural steps in the registration of the land, thus ruling
out fraud in the acquisition of the certificate of title. . . .[19]

Factual findings of the trial court, when affirmed by the Court of Appeals, are final, conclusive and
binding on this Court,[20] which is not a trier of facts,[21] hence, bereft of function under Rule 45 to examine
and weigh the probative value of the evidence presented,[22] its jurisdiction being limited only to the review
and revision of errors of law.[23] Albeit there are exceptions[24] to this rule, the cases at bar do not fall
thereunder, there being no showing that the trial and appellate courts overlooked matters which, if
considered, would alter their outcome.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a
strong presumption that the provisions of the law governing the registration of land which led to its
issuance have been duly followed.[25] Fraud being a serious charge, it must be supported by clear and
convincing proof.[26] Petitioners failed to discharge the burden of proof, however.

On the questioned interpretation and application by the appellate court of Article 1542 of the Civil
Code reading:

In the sale of real estate, made for a lump sum and not at the rate of a certain
sum for a unit of measure or number, there shall be no increase or decrease of the price,
although there be a greater or less areas or number than that stated in the contract.

The same rule shall be applied when two or more immovables are sold for a
single price; but if, besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the contract, the
vendor shall be bound to deliver all that is included within said boundaries, even when it
exceeds the area or number specified in the contract; and, should he not be able to do
so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or
number, unless the contract is rescinded because the vendee does not accede to the
failure to deliver what has been stipulated. (Emphasis and underscoring supplied),

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while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that what they sold
were only 5,000 square meters and not 6,268 square meters, and thus claim the excess of 1,268 square
meters.

In sales involving real estate, the parties may choose between two types of pricing agreement:
a unit price contract wherein the purchase price is determined by way of reference to a stated rate per
unit area (e.g., P1,000 per square meter), or a lump sum contract which states a full purchase price for
an immovable the area of which may be declared based on an estimate or where both the area and
boundaries are stated (e.g., P1 million for 1,000 square meters, etc.). In Rudolf Lietz, Inc. v. Court of
Appeals,[27] the Court discussed the distinction:

. . . In a unit price contract, the statement of area of immovable is not conclusive and the
price may be reduced or increased depending on the area actually delivered. If the
vendor delivers less than the area agreed upon, the vendee may oblige the vendor to
deliver all that may be stated in the contract or demand for the proportionate reduction of
the purchase price if delivery is not possible. If the vendor delivers more than the area
stated in the contract, the vendee has the option to accept only the amount agreed upon
or to accept the whole area, provided he pays for the additional area at the contract rate.

xxxx

In the case where the area of the immovable is stated in the contract based on
an estimate, the actual area delivered may not measure up exactly with the area stated in
the contract.According to Article 1542 of the Civil Code, in the sale of real estate, made
for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or
number than that stated in the contract. . . .

xxxx

Where both the area and the boundaries of the immovable are declared, the
area covered within the boundaries of the immovable prevails over the stated
area. In cases of conflict between areas and boundaries, it is the latter which should
prevail. What really defines a piece of ground is not the area, calculated with more or
less certainty, mentioned in its description, but the boundaries therein laid down, as
enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well
established that the specific boundaries stated in the contract must control over any
statement with respect to the area contained within its boundaries. It is not of vital
consequence that a deed or contract of sale of land should disclose the area with
mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate
object.[28] (Emphasis and underscoring supplied)

The courts below correctly characterized the sale of Lot No. 3591 as one involving a lump sum
contract. The Bilihan ng Lupa shows that the parties agreed on the purchase price of P1,000.00 on a

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predetermined, albeit unsurveyed, area of 5,000 square meters and not on a particular rate per unit
area. As noted by the Court of Appeals, the identity of the realty was sufficiently described as riceland:

It is clear from the afore-quoted Bilihan ng Lupa that what appellants sold to Eulalio was
the bahaging palayan. Though measured as 5,000 square meters, more or less, such
measurement is only an approximation, and not an exact measurement. Moreover, we
take note of the fact that the said deed of sale mentioned the boundaries covering the
whole area of 33,489 square meters, including the bahaging palayan. Had appellants
intended to sell only a portion of the bahaging palayan, they could have stated the
specific area in the deed of sale and not the entire bahaging palayan . . . .[29]

In fine, under Article 1542, what is controlling is the entire land included within the boundaries,
regardless of whether the real area should be greater or smaller than that recited in the deed. This is
particularly true since the area of the land in OCT No. 0-6498 was described in the deed as humigit
kumulang, that is, more or less.[30]

A caveat is in order, however. The use of more or less or similar words in designating quantity
covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description
more or less with reference to its area does not thereby ipso facto take all risk of quantity in the land.[31]

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency
in area. Courts must consider a host of other factors. In one case,[32] the Court found substantial
discrepancy in area due to contemporaneous circumstances. Citing change in the physical nature of the
property, it was therein established that the excess area at the southern portion was a product of
reclamation, which explained why the lands technical description in the deed of sale indicated the
seashore as its southern boundary, hence, the inclusion of the reclaimed area was declared
unreasonable.

In OCT No. 0-6498, the increase by a fourth of a fraction of the area indicated in the deed of sale
cannot be considered as an unreasonable excess. Most importantly, the circumstances attendant to the
inclusion of the excess area bare nothing atypical or significant to hint at unreasonableness. It must be
noted that the land was not yet technically surveyed at the time of the sale. As vendors who themselves
executed the Bilihan ng Lupa, petitioners may rightly be presumed to have acquired a good estimate of
the value and area of the bahaging palayan.

As for the last assigned error, the appellate court, in finding that the complaints were time-barred,
noted that when the complaints were filed in 1994, more than 27 years had elapsed from the issuance of
OCT No. 0-3631 and more than 20 years from the issuance of OCT No. 0-6498. The prescriptive period
of one (1) year had thus set in.

Petitioners reliance on Agne v. Director of Lands[33] is misplaced since the cancellation of title
was predicated not on the ground of fraud but on want of jurisdiction. Even assuming that petitioners
actions are in the nature of a suit for quieting of title, which is imprescriptible, the actions still necessarily
fail since petitioners failed to establish the existence of fraud.

A word on Republic Act No. 7160[34] which was raised by petitioners in their petition. It expressly
requires the parties to undergo a conciliation process under the Katarungang Pambarangay, as a
precondition to filing a complaint in court,[35] non-compliance with this condition precedent does not
prevent a court of competent jurisdiction from exercising its power of adjudication over a case unless the

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defendants object thereto. The objection should be seasonably made before the court first taking
cognizance of the complaint, and must be raised in the Answer or in such other pleading allowed under
the Rules of Court.[36]

While petitioners admittedly failed to comply with the requirement of barangay conciliation, they
assert that respondents waived such objection when they failed to raise it in their Answer. Contrary to
petitioners claim, however, the records reveal that respondents raised their objection in their Amended
Answers[37] filed in both cases.

IN FINE, it is a fundamental principle in land registration that a certificate of title serves as

evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name
appears therein. Such indefeasibility commences after the lapse or expiration of one year from the date of
entry of the decree of registration when all persons are considered to have a constructive notice of the
title to the property. After the lapse of one year, therefore, title to the property can no longer be contested.
This system was so effected in order to quiet title to land.[38]

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals are AFFIRMED.

Costs against petitioners.

SO ORDERED.

Del Prado v. Caballero, G.R. No. 148225, March 3, 2010

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the decision[1] of the Court of Appeals (CA) dated September
26, 2000 and its resolution denying the motion for reconsideration thereof.

The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge
Juan Y. Reyes of the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor
of Spouses Antonio L. Caballero and Leonarda B. Caballero several parcels of land situated in Guba,
Cebu City, one of which was Cadastral Lot No. 11909, the subject of this controversy. [2] On May 21, 1987,
Antonio Caballero moved for the issuance of the final decree of registration for their lots. [3] Consequently,
on May 25, 1987, the same court, through then Presiding Judge Renato C. Dacudao, ordered the
National Land Titles and Deeds Registration Administration to issue the decree of registration and the
corresponding titles of the lots in favor of the Caballeros.[4]

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 Page 222 of 540

On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the
tax declaration covering the property. The pertinent portion of the deed of sale reads as follows:

That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO,

Filipinos, both of legal age and residents of Talamban, Cebu City, Philippines, for
and in consideration of the sum of FORTY THOUSAND PESOS (P40,000.00),
Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single
and a resident of Sikatuna St., Cebu City, Philippines, the receipt of which is full
is hereby acknowledged, do by these presents SELL, CEDE, TRANSFER,
ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs, assigns
and/or successors-in-interest, one (1) unregistered parcel of land, situated at
Guba, Cebu City, Philippines, and more particularly described and bounded, as
follows:

A parcel of land known as Cad. Lot No. 11909,

bounded as follows:

North : Lot 11903

East : Lot 11908
West : Lot 11910
South : Lot 11858 & 11912

containing an area of 4,000 square meters,

more or less, covered by Tax Dec. No. 00787 of the
Cebu City Assessors Office, Cebu City.

of which parcel of land we are the absolute and lawful owners.

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on
November 15, 1990, and entered in the Registration Book of the City of Cebu on December 19,
1990.[5] Therein, the technical description of Lot No. 11909 states that said lot measures about 14,457
square meters, more or less.[6]

On March 20, 1991, petitioner filed in the same cadastral proceedings a Petition for Registration
of Document Under Presidential Decree (P.D.) 1529[7] in order that a certificate of title be issued in her
name, covering the whole Lot No. 11909. In the petition, petitioner alleged that the tenor of the instrument
of sale indicated that the sale was for a lump sum or cuerpo cierto, in which case, the vendor was bound
to deliver all that was included within said boundaries even when it exceeded the area specified in the
contract. Respondents opposed, on the main ground that only 4,000 sq m of Lot No. 11909 was sold to
petitioner. They claimed that the sale was not for a cuerpo cierto. They moved for the outright dismissal of
the petition on grounds of prescription and lack of jurisdiction.

After trial on the merits, the court found that petitioner had established a clear and positive right to
Lot No. 11909. The intended sale between the parties was for a lump sum, since there was no evidence
presented that the property was sold for a price per unit. It was apparent that the subject matter of the
sale was the parcel of land, known as Cadastral Lot No. 11909, and not only a portion thereof. [8]

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Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive
portion:

WHEREFORE, premises considered, the petition is hereby granted and

judgment is hereby rendered in favor of herein petitioner. The Register of Deeds
of the City of Cebu is hereby ordered and directed to effect the registration in his
office of the Deed of Absolute Sale between Spouses Antonio Caballero and
Leonarda Caballero and Petitioner, Carmen del Prado dated June 11, 1990
covering Lot No. 11909 after payment of all fees prescribed by law. Additionally,
the Register of Deeds of the City of Cebu is hereby ordered to cancel Original
Certificate No. 1305 in the name of Antonio Caballero and Leonarda Caballero
and the Transfer Certificate of Title be issued in the name of Petitioner Carmen
del Prado covering the entire parcel of land known as Cadastral Lot No. 11909. [9]

An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision,
reversing and setting aside the decision of the RTC.

The CA no longer touched on the character of the sale, because it found that petitioner availed
herself of an improper remedy. The petition for registration of document is not one of the remedies
provided under P.D. No. 1529, after the original registration has been effected. Thus, the CA ruled that
the lower court committed an error when it assumed jurisdiction over the petition, which prayed for a
remedy not sanctioned under the Property Registration Decree. Accordingly, the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision

is REVERSED and SET ASIDE and a new one entered dismissing the petition
for lack of jurisdiction. No pronouncement as to costs.[10]

Aggrieved, petitioner filed the instant petition, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS

COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT
CONTRARY TO THAT OF THE TRIAL COURT[;]
II. WHETHER OR NOT THE COURT OF APPEALS
COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE
SALE OF THE LOT IS FOR A LUMP SUM OR CUERPO
CIERTO[;]
III. WHETHER OR NOT THE COURT A QUO HAS
JURISDICTION OVER THE PETITION FOR REGISTRATION OF
THE DEED OF ABSOLUTE SALE DATED 11 JUNE 1990
EXECUTED BETWEEN HEREIN PETITIONER AND
RESPONDENTS[.] [11]

The core issue in this case is whether or not the sale of the land was for a lump sum or not.

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Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real
estate for a lump sum, governed under Article 1542 of the Civil Code.[12] In the contract, it was stated that
the land contains an area of 4,000 sq m more or less, bounded on the North by Lot No. 11903, on the
East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910.
When the OCT was issued, the area of Lot No. 11909 was declared to be 14,475 sq m, with an excess of
10,475 sq m. In accordance with Article 1542, respondents are, therefore, duty-bound to deliver the whole
area within the boundaries stated, without any corresponding increase in the price.Thus, petitioner
concludes that she is entitled to have the certificate of title, covering the whole Lot No. 11909, which was
originally issued in the names of respondents, transferred to her name.

We do not agree.

In Esguerra v. Trinidad,[13] the Court had occasion to discuss the matter of sales involving real
estates. The Courts pronouncement is quite instructive:

In sales involving real estate, the parties may choose between two types of
pricing agreement: a unit price contract wherein the purchase price is determined by
way of reference to a stated rate per unit area (e.g., P1,000 per square meter), or a lump
sum contract which states a full purchase price for an immovable the area of which may
be declared based on the estimate or where both the area and boundaries are stated
(e.g., P1 million for 1,000 square meters, etc.). In Rudolf Lietz, Inc. v. Court of
Appeals (478 SCRA 451), the Court discussed the distinction:

In a unit price contract, the statement of area of immovable is not

conclusive and the price may be reduced or increased depending on the
area actually delivered. If the vendor delivers less than the area agreed
upon, the vendee may oblige the vendor to deliver all that may be stated
in the contract or demand for the proportionate reduction of the purchase
price if delivery is not possible. If the vendor delivers more than the area
stated in the contract, the vendee has the option to accept only the
amount agreed upon or to accept the whole area, provided he pays for
the additional area at the contract rate.

xxxx

In the case where the area of an immovable is stated in the contract

based on an estimate, the actual area delivered may not measure up
exactly with the area stated in the contract. According to Article 1542 of
the Civil Code, in the sale of real estate, made for a lump sum and not at
the rate of a certain sum for a unit of measure or number, there shall be
no increase or decrease of the price, although there be a greater or less
areas or number than that stated in the contract. . . .
xxxx
Where both the area and the boundaries of the immovable are
declared, the area covered within the boundaries of the immovable
prevails over the stated area. In cases of conflict between areas and
boundaries, it is the latter which should prevail. What really defines a
piece of ground is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein laid down, as

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 Page 225 of 540

enclosing the land and indicating its limits. In a contract of sale of land in
a mass, it is well established that the specific boundaries stated in the
contract must control over any statement with respect to the area
contained within its boundaries. It is not of vital consequence that a deed
or contract of sale of land should disclose the area with mathematical
accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything
within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object.[14]

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and
admits of an exception. It held:

A caveat is in order, however. The use of more or less or similar words in

designating quantity covers only a reasonable excess or deficiency. A vendee
of land sold in gross or with the description more or less with reference to its area
does not thereby ipso facto take all risk of quantity in the land..

Numerical data are not of course the sole gauge of unreasonableness of

the excess or deficiency in area. Courts must consider a host of other factors. In
one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial
discrepancy in area due to contemporaneous circumstances. Citing change in
the physical nature of the property, it was therein established that the excess
area at the southern portion was a product of reclamation, which explained why
the lands technical description in the deed of sale indicated the seashore as its
southern boundary, hence, the inclusion of the reclaimed area was declared
unreasonable.[15]

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the
purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the
North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on
the West by Lot No. 11910. In a contract of sale of land in a mass, the specific boundaries stated in the
contract must control over any other statement, with respect to the area contained within its
boundaries.[16]

Blacks Law Dictionary[17] defines the phrase more or less to mean:

About; substantially; or approximately; implying that both parties assume

the risk of any ordinary discrepancy. The words are intended to cover slight or
unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d
408; and are ordinarily to be interpreted as taking care of unsubstantial
differences or differences of small importance compared to the whole number of
items transferred.

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Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The
difference in the area is obviously sizeable and too substantial to be overlooked. It is not a reasonable
excess or deficiency that should be deemed included in the deed of sale.

We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous
scrutiny of the records, we lend credence to respondents claim that they intended to sell only 4,000 sq m
of the whole Lot No. 11909, contrary to the findings of the lower court. The records reveal that when the
parties made an ocular inspection, petitioner specifically pointed to that portion of the lot, which she
preferred to purchase, since there were mango trees planted and a deep well thereon. After the sale,
respondents delivered and segregated the area of 4,000 sq m in favor of petitioner by fencing off the area
of 10,475 sq m belonging to them.[18]

Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual
contract, because it is perfected by mere consent. The essential elements of a contract of sale are the
following: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the
price; (b) determinate subject matter; and (c) price certain in money or its equivalent. All these elements
are present in the instant case.[19]

More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by
filing the petition for registration in the same cadastral case, was improper. It is a fundamental principle in
land registration that a certificate of title serves as evidence of an indefeasible and incontrovertible title to
the property in favor of the person whose name appears therein. Such indefeasibility commences after
one year from the date of entry of the decree of registration. [20] Inasmuch as the petition for registration of
document did not interrupt the running of the period to file the appropriate petition for review and
considering that the prescribed one-year period had long since expired, the decree of registration, as well
as the certificate of title issued in favor of respondents, had become incontrovertible. [21]

WHEREFORE, the petition is DENIED.

SO ORDERED.

Agatep v. Rodriguez, G.R. No. 170540, October 28, 2009

DECISION

PERALTA, J.

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision[1] of the Court of Appeals (CA) dated September 9, 2005 in CA-
G.R. CV No. 83163 which affirmed the May 12, 2004 Decision of the Regional Trial Court (RTC) of Aparri,

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Cagayan, Branch 8, in Civil Case No. 08-298. Petitioner also assails the CA
Resolution[2] dated November 16, 2005 denying her motion for reconsideration.

The factual and procedural antecedents of the case are as follows:

The present case arose from a dispute involving a parcel of land located at Zinundungan, Lasam,
Cagayan with an area of 1,377 square meters and covered by Transfer Certificate of Title (TCT) No. T-
10759 of the Register of Deeds of the Province of Cagayan.[3]

The subject property was previously owned by herein respondent Natalia Aguinaldo Vda. de Lim. On July
18, 1975, Lim mortgaged the lot to the Philippine National Bank (PNB), Tuguegarao Branch, to secure a
loan of P30,000.00 which she obtained from the said bank. The mortgage contract was duly annotated on
TCT No. T-10759. Lim was not able to pay her loan prompting PNB to foreclose the property. On April 13,
1983, the subject parcel of land was sold at public auction to PNB as the highest bidder.[4] Lim failed to
redeem the property. After the expiration of the one-year redemption period allowed by law, PNB
consolidated its ownership over the disputed land.[5] As a consequence, TCT No. T-10759 in the name of
Lim was canceled and a new certificate of title (TCT No. T-65894) was issued in the name of PNB
on November 8, 1985.[6]

Meanwhile, on August 18, 1976, while the mortgage was still in effect, Lim sold the subject property to
herein petitioner's husband, Isaac Agatep (Agatep), for a sum of P18,000.00.[7] However, the sale was not
registered. Neither did Lim deliver the title to petitioner or her husband. Nonetheless, Agatep took
possession of the same, fenced it with barbed wire and introduced improvements thereon. Subsequently,
Agatep died in 1978. Despite his death, his heirs, including herein petitioner, continued to possess the
property.

In July 1992, the subject lot was included among PNB's acquired assets for sale. Later on, an invitation to
bid was duly published. On April 20, 1993, the disputed parcel of land was sold to herein respondent
Roberta L. Rodriguez (Rodriguez), who is the daughter of respondent Lim.[8] Subsequently, TCT No. T-
65894, in the name of PNB, was canceled and a new title (TCT No. T-89400) was issued in the name of
Rodriguez.[9]

On January 27, 1995, herein petitioner filed a Complaint[10] for reconveyance and/or damages with the
RTC of Aparri, Cagayan against herein respondents.

Later, the complaint was amended to implead PNB as a party-defendant.[11]

On January 20, 2000, the RTC dismissed the amended complaint for failure of herein petitioner (then
plaintiff) to file her Pre-Trial Brief.[12] Petitioner filed a motion for reconsideration but the RTC denied it.
Thereafter, trial ensued.

On May 12, 2004, the RTC rendered judgment in favor of herein respondents. [13] The dispositive portion
of the Decision reads as follows:

WHEREFORE, the Court hereby renders judgment to wit:

1. Dismiss the instant complaint for reconveyance for lack of merit;

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2. Sustain the legality of TCT No. 10559[14] in the name of defendant Roberta
Rodriguez; and

3. Award actual damages in favor of plaintiff Eufemia Balatico Vda. de Agatep against
defendant Natalia Aguinaldo Vda. de Lim in the amount of Php18,000.00 with legal
interest to be computed from the filing of the instant case up to the full completion of its
payment.

SO DECIDED.[15]
In awarding damages in favor of herein petitioner, the RTC ruled that Lim enriched herself at the expense
of petitioner and her husband by benefiting from the proceeds of the sale but failing to deliver the object of
such sale. Hence, on grounds of justice and equity, petitioner should be awarded an adequate
compensation for the value of the loss suffered.

Herein petitioner filed an appeal with the CA contending that the RTC erred in not considering the merit of
the evidence and arguments proven and submitted by petitioner on the issues defined and agreed upon
by the parties. Petitioner also averred that the RTC erred in deciding the case on issues different from
those defined and agreed upon by the parties during the pre-trial conference and that the trial court further
erred in dismissing the amended complaint.

On September 9, 2005, the CA rendered its Decision dismissing herein petitioner's appeal for lack of
merit and affirming the assailed Decision of the RTC.

Petitioner filed a motion for reconsideration, but the CA denied it in its Resolution dated November 16,
2005.

Hence, the present petition with the following assignment of errors:

IV.1. IN AFFIRMING THE DECISION OF THE TRIAL COURT IN DISMISSING THE

AMENDED COMPLAINT AGAINST THE PNB, THE APPELLATE COURT COMMITTED
A REVERSIBLE ERROR;

IV.2. IN HOLDING THAT NOTWITHSTANDING THE DISMISSAL OF THE AMENDED

COMPLAINT AS AGAINST PNB, THE TRIAL COURT IN ITS DECISION
NONETHELESS FULLY PASSED UPON THE MERITS OF APPELLANT'S CAUSE OF
ACTION AGAINST THE SAID MORTGAGEE BANK, THE APPELLATE COURT
COMMITTED A REVERSIBLE ERROR;

IV.3. AS A NECESSARY CONSEQUENCE OF THE ERROR IV.2, THE RULING OF

THE APPELLATE COURT THAT PNB IS A MORTGAGEE, BUYER AND LATER
SELLER IN GOOD FAITH, IS A REVERSIBLE ERROR;

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IV.4. THE DECISION, ANNEX A, ERRED IN REJECTING PETITIONER'S ARGUMENTS

THAT PNB DID NOT ACQUIRE OWNERSHIP OVER THE PROPERTY IN QUESTION;

IV.5. THE DECISION, ANNEX A, ERRED IN RULING THAT PETITIONER'S

CONTENTION THAT THE TRIAL COURT DECIDED THE CASE UPON SUCH ISSUES
DIFFERENT FROM THOSE AGREED UPON DURING THE PRE-TRIAL CONFERENCE
DESERVES SCANT CONSIDERATION; AND

IV.6. THE DECISION, ANNEX A, ERRED IN RULING THAT PETITIONER IS NOT

ENTITLED TO HER CAUSE OF ACTION OF RECONVEYANCE.[16]
In her first assigned error, petitioner contends that Section 6, Rule 18 of the Rules of Court does not
require another pre-trial, as well as the filing of another pre-trial brief, when the complaint is amended to
implead another defendant.

The Court does not agree.

In Tiu v. Middleton,[17] the Court, giving emphasis on the importance of a pre-trial, held that:

Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it
was discretionary under the 1940 Rules of Court, it was made mandatory under the 1964
Rules and the subsequent amendments in 1997. Hailed as the most important procedural
innovation in Anglo-Saxon justice in the nineteenth century, pre-trial seeks to achieve the
following:

(a) The possibility of an amicable settlement or of a submission to

alternative modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;
(d) The possibility of obtaining stipulations or admissions of facts and of
documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a
commissioner;
(g) The propriety of rendering judgment on the pleadings, or summary
judgment, or of dismissing the action should a valid ground therefor be
found to exist;
(h) The advisability or necessity of suspending the proceedings; and
(i) Such other matters as may aid in the prompt disposition of the
action.[18]

In consonance with these objectives, Section 6, Rule 18 of the Rules of Court, as amended, provides:

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SEC. 6. Pre-trial brief. The parties shall file with the court and serve on the adverse party,
in such manner as shall ensure their receipt thereof at least three (3) days before the
date of the pre-trial, their respective pre-trial briefs which shall contain, among others:

(a) A statement of their willingness to enter into amicable settlement or

alternative modes of dispute resolution, indicating the desired
terms thereof;

(b) A summary of admitted facts and proposed stipulation of facts;

(c) The issues to be tried or resolved;

(d) The documents or exhibits to be presented, stating the purpose

thereof;

(e) A manifestation of their having availed, or their intention to avail,

themselves of discovery procedures or referral to commissioners;
and

(f) The number and names of the witnesses, and the substance of their
respective testimonies.

Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-
trial.

The pre-trial brief serves as a guide during the pre-trial conference so as to simplify, abbreviate and
expedite the trial if not to dispense with it. It is a devise essential to the speedy disposition of disputes,
and parties cannot brush it aside as a mere technicality. [19] In addition, pre-trial rules are not to be belittled
or dismissed, because their non-observance may result in prejudice to a partys substantive rights. Like all
rules, they should be followed except only for the most persuasive of reasons when they may be relaxed
to relieve a litigant of an injustice not commensurate with the degree of his thought[less]ness in not
complying with the procedure.[20]

Petitioner posits that even if an amended complaint is filed for the purpose of impleading another party as
defendant, where no additional cause of action was alleged and the amount of prayer for damages in the
original complaint was the same, another pre-trial is not required and a second pre-trial brief need not be
filed.

It must be pointed out, however, that in the cases[21] cited by petitioner to support her argument, the Court
found no need for a second pre-trial precisely because there are no additional causes of action alleged
and the impleaded defendants merely adopted and repleaded all the pleadings of the original defendants.
Petitioner's reliance on the above-cited cases is misplaced because, in the present case, the RTC
correctly found that petitioner had a separate cause of action against PNB. A separate cause of action
necessarily means additional cause of action. Moreover, the defenses adopted by PNB are completely
different from the defenses of Lim and Rodriguez, necessitating a separate determination of the matters
enumerated under Section 6, Rule 18 of the Rules of Court insofar as PNB and petitioner are concerned.
On these bases, we find no error in the ruling of the CA which sustained the trial court's dismissal of the
amended complaint against PNB for failure of petitioner to file her pre-trial brief.

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Corollarily, Sections 4 and 5 of the same Rule state:

Sec. 4. Appearance of parties. It shall be the duty of the parties and their counsel to
appear at the pre-trial. The non-appearance of a party may be excused only if a valid
cause is shown therefor or if a representative shall appear in his behalf fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and of documents.

Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required
pursuant to the next preceding section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by the court. x x x

In the present case, the Court observes that in the Order of the RTC dated June 6, 2000,[22] the trial court
noted the absence of both the petitioner and her counsel during the scheduled pre-trial conference with
respect to the amended complaint impleading PNB. Under the above-quoted Rules, such absence is an
additional ground to dismiss the action against PNB.

Whether an order of dismissal should be maintained under the circumstances of a particular case or
whether it should be set aside depends on the sound discretion of the trial court.[23] Considering the
circumstances established on record in the instant case, the Court finds no cogent reason to set aside the
order of the RTC dismissing the complaint of petitioner against PNB.

With respect to the second and third assignment of errors, petitioner argues that the CA erred in
sustaining the RTC when it passed upon the merits of petitioner's cause of action against PNB
notwithstanding the fact that the complaint against the latter was already dismissed. Petitioner contends
that a person who was not impleaded in a case could not be bound by the decision rendered therein.
Petitioner then proceeds to conclude that the CA erred in sustaining the trial court's finding that PNB was
a mortgagee, buyer and seller in good faith.

The Court is not persuaded.

It is true that the judgment of the trial and appellate courts in the present case could not bind the PNB for
the latter is not a party to the case. However, this does not mean that the trial and appellate courts are
precluded from making findings which are necessary for a just, complete and proper resolution of the
issues raised in the present case. The Court finds no error in the determination by the trial and appellate
courts of the question of whether or not PNB was a mortgagee, buyer and, later on, seller in good faith as
this would bear upon the ultimate issue of whether petitioner is entitled to reconveyance.

Petitioner insists that PNB is not a mortgagee in good faith asserting that, if it only exercised due
diligence, it would have found out that petitioner and her husband were already in adverse possession of
the subject property as early as two years before the same was sold to them. This claim, however, is
contradicted by no less than petitioner's averments in her Brief filed with the CA wherein she stated that
[i]mmediately after the sale, the land was delivered to Isaac Agatep x x x Since that time up to the
present, Isaac Agatep and after his death, the Appellant have been in continuous, uninterrupted, adverse
and public possession of the said parcel of land.[24] The foregoing assertion only shows that petitioner's
husband took possession of the subject lot only after the same was sold to him.

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In any case, the Court finds no error in the findings of both the RTC and the CA that PNB is indeed an
innocent mortgagee for value. When the lots were mortgaged to PNB by Lim, the titles thereto were in the
latter's name, and they showed neither vice nor infirmity. In accepting the mortgage, PNB was not
required to make any further investigation of the titles to the properties being given as security, and could
rely entirely on what was stated in the aforesaid title. The public interest in upholding the indefeasibility of
a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance thereon,
protects a buyer or mortgagee who, in good faith, relies upon what appears on the face of the certificate
of title.[25]

In her fourth assigned error, petitioner contends that PNB did not acquire ownership over the disputed lot
because the said property was not delivered to it. Petitioner asserts that the execution of a public
document does not constitute sufficient delivery to PNB, considering that the subject property is in the
adverse possession, under claim of ownership, of petitioner and her predecessor-in-interest. Petitioner
further assails the ruling of the CA that PNB, who was the buyer in the foreclosure sale, became the
absolute owner of the property purchased when it consolidated its ownership thereof for failure of the
mortgagor Lim to redeem the subject property during the period of one year after the registration of the
sale.

The Court finds petitioner's arguments untenable.

The Court's ruling in Manuel R. Dulay Enterprises, Inc. v. Court of Appeals [26] is instructive, to wit:

Petitioner's contention that private respondent Torres never acquired ownership over the
subject property since the latter was never in actual possession of the subject property
nor was the property delivered to him is also without merit.

Paragraph 1, Article 1498 of the New Civil Code provides:

When the sale is made through a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly
be inferred.

Under the aforementioned article, the mere execution of the deed of sale in a public
document is equivalent to the delivery of the property. Likewise, this Court had held that:

It is settled that the buyer in a foreclosure sale becomes the

absolute owner of the property purchased if it is not redeemed during the
period of one year after the registration of the sale. As such, he is
entitled to the possession of the said property and can demand it at any
time following the consolidation of ownership in his name and the
issuance to him of a new transfer certificate of title. The buyer can, in
fact, demand possession of the land even during the redemption period
except that he has to post a bond in accordance with Section 7 of Act
No. 3133, as amended. No such bond is required after the redemption
period if the property is not redeemed. Possession of the land then
becomes an absolute right of the purchaser as confirmed owner.

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Therefore, prior physical delivery or possession is not legally required since the execution
of the Deed of Sale is deemed equivalent to delivery.[27]

This ruling was reiterated in Spouses Sabio v. The International Corporate Bank, Inc.[28] wherein it was
held that:

Notwithstanding the presence of illegal occupants on the subject property, transfer of

ownership by symbolic delivery under Article 1498 can still be effected through the
execution of the deed of conveyance. As we held in Power Commercial and Industrial
Corp. v. Court of Appeals [274 SCRA 597, 610], the key word is control, not possession,
of the subject property. Considering that the deed of conveyance proposed by
respondents did not stipulate or infer that petitioners could not exercise control over said
property, delivery can be effected through the mere execution of said deed.
x x x It is sufficient that there are no legal impediments to prevent petitioners from gaining
physical possession of the subject property. As stated above, prior physical delivery or
possession is not legally required and the execution of the deed of sale or conveyance is
deemed equivalent to delivery. This deed operates as a formal or symbolic delivery of the
property sold and authorizes the buyer or transferee to use the document as proof of
ownership. Nothing more is required.[29]

Thus, the execution of the Deed of Sale in favor of PNB, after the expiration of the redemption period, is
deemed equivalent to delivery.

As to petitioner's contention that the execution of a public document in favor of PNB did not constitute
sufficient delivery to it because the property involved is in the actual and adverse possession of petitioner
and her husband, it must be noted that petitioner and her husband's possession of the disputed lot is
derived from their right as buyers of the subject parcel of land. As buyers or transferees, petitioner and
her husband simply stepped into the shoes of Lim, who, prior to selling the subject property to them,
mortgaged the same to PNB. As Lim's successors-in-interest, their possession could not be said to be
adverse to that of Lim. Thus, they are also bound to recognize and respect the mortgage entered into by
the latter. Their possession of the disputed lot could not, therefore, be considered as a legal impediment
which could prevent PNB from acquiring ownership and possession thereof.

It bears to reiterate the undisputed fact, in the instant case, that Lim mortgaged the subject property to
PNB prior to selling the same to petitioner's husband. Settled is the rule that a mortgage is an accessory
contract intended to secure the performance of the principal obligation. One of its characteristics is that it
is inseparable from the property. It adheres to the property regardless of who its owner may subsequently
be.[30]

This is true even in the case of a real estate mortgage because, pursuant to Article 2126 of the Civil
Code, the mortgage directly and immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it was constituted. It is
inseparable from the property mortgaged as it is a right in rem - a lien on the property whoever its owner
may be. It subsists notwithstanding a change in ownership; in short, the personality of the owner is
disregarded. Thus, all subsequent purchasers must respect the mortgage whether the transfer to them be
with or without the consent of the mortgagee, for such mortgage until discharged follows the property. [31]

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Petitioner avers that she and her husband were not aware of the mortgage contract which was executed
between PNB and Lim prior to the sale of the subject property by the latter to her husband. The fact
remains, however, that the mortgage was registered and annotated on the certificate of title covering the
subject property.

It is settled that registration in the public registry is notice to the whole world.[32] Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if
registered, filed or entered in the Office of the Register of Deeds of the province or city where the land to
which it relates lies, be constructive notice to all persons from the time of such registering, filing or
entering.[33] Under the rule of notice, it is presumed that the purchaser has examined every instrument of
record affecting the title. Such presumption may not be rebutted. He is charged with notice of every fact
shown by the record and is presumed to know every fact shown by the record and to know every fact
which an examination of the record would have disclosed. This presumption cannot be overcome by any
claim 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. [34] In
the present case, since the mortgage contract was registered, petitioner may not claim lack of knowledge
thereof as a valid defense. The subsequent sale of the property to petitioner's husband cannot defeat the
rights of PNB as the mortgagee and, subsequently, the purchaser at the auction sale whose rights were
derived from a prior mortgage validly registered.

In her fifth assignment of error, petitioner contends that the trial court deviated from the issues identified
in the Pre-Trial Order and that the case was decided on issues different from those agreed upon during
the pre-trial. Settled is the rule that a pre-trial order is not meant to be a detailed catalogue of each and
every issue that is to be or may be taken up during the trial. Issues that are impliedly included therein or
may be inferable therefrom by necessary implication are as much integral parts of the pre-trial order as
those that are expressly stipulated.[35] In the case before us, a cursory reading of the issues enumerated
in the Pre-Trial Order of the RTC would readily show that the complete and proper resolution of these
issues would necessarily include all other matters pertinent to determining whether herein petitioner is the
lawful owner of the subject property and is, therefore, entitled to reconveyance. It would be illogical not to
touch on the question of whether the mortgage contract between Lim and PNB is binding on petitioner
and her husband or whether PNB lawfully foreclosed and acquired ownership of the subject property
because a resolution of these issues is determinative of whether there are no impediments in petitioner
and her husband's acquisition of ownership of the disputed lot.

Coming to the last assigned error, the Court agrees with the disquisition of the CA that an action for
reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and
legal owner.[36] From the foregoing discussions, the Court finds no sufficient reason to depart from the
findings of the RTC and the CA that, based on the evidence on record, there was no wrongful registration
of the property, first in the name of PNB as the purchaser when the property was auctioned and,
subsequently, in the name of respondent Rodriguez who bought the subject property when the same was
offered for sale by PNB. Hence, the CA did not commit error in affirming the RTC's dismissal of herein
petitioner's complaint for reconveyance.

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WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals,
dated September 9, 2005 and November 16, 2005, respectively, in CA-G.R. CV No. 83163
are AFFIRMED.

SO ORDERED.

f. Caveat Emptor Principle

Sy v. Capistrano Jr., G.R. No. 154450, July 28, 2008

RESOLUTION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision of the Court
of Appeals (CA) dated July 23, 2002 in CA-G.R. CV No. 53314.

The case originated from an action for reconveyance of a large tract of land in Caloocan City before the
Regional Trial Court (RTC), Branch 129, Caloocan City, entitled Nicolas Capistrano, Jr. v. Nenita F. Scott,
Spouses Juanito and Josefina Jamilar, Joseph L. Sy, Nelson Golpeo and John Tan, and the Register of
Deeds, Caloocan City. Said case was docketed as Civil Case No. C-15791.

The antecedents are as follows:

Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano, Jr. (Capistrano) and
offered her services to help him sell his 13,785 square meters of land covered by Transfer Certificate of
Title (TCT) No. 76496 of the Register of Deeds of Caloocan City. Capistrano gave her a temporary
authority to sell which expired without any sale transaction being made. To his shock, he discovered later
that TCT No. 76496, which was in his name, had already been cancelled on June 24, 1992 and a new
one, TCT No. 249959, issued over the same property on the same date to Josefina A. Jamilar. TCT No.
249959 likewise had already been cancelled and replaced by three (3) TCTs (Nos. 251524, 251525, and
251526), all in the names of the Jamilar spouses. TCT Nos. 251524 and 251526 had also been cancelled
and replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan, respectively.

Upon further inquiries, Capistrano also discovered the following:

1. The cancellation of his TCT No. 76496 and the issuance of TCT No. 249959
to Jamilar were based upon two (2) deeds of sale, i.e., a Deed of Absolute Sale
purportedly executed by him in favor of Scott on March 9, 1980 and a Deed of
Absolute Sale allegedly executed by Scott in favor of Jamilar on May 17, 1990.
2. The supposed 1980 sale from him to Scott was for P150,000.00; but despite
the lapse of more than 10 years thereafter, the alleged 1990 sale from Scott to
Jamilar was also for P150,000.00.

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3. Both deeds were presented for registration simultaneously on June 24,

1992.

4. Although the deed in favor of Scott states that it was executed on March 9,
1980, the annotation thereof at the back of TCT No. 76496 states that the date of
the instrument is March 9, 1990.

5. Even if there was no direct sale from Capistrano to Jamilar, the transfer of
title was made directly to the latter. No TCT was issued in favor of Scott.

6. The issuance of TCT No. 249959 in favor of Jamilar was with the help of
Joseph Sy, who provided for (sic) money for the payment of the capital gains tax,
documentary stamps, transfer fees and other expenses of registration of the
deeds of sale.

7. On July 8, 1992, an Affidavit of Adverse Claim was annotated at the back of

Jamilars TCT No. 249959 at the instance of Sy, Golpeo, and Tan under a
Contract to Sell in their favor by the Jamilar spouses. Said contract was executed
sometime in May, 1992 when the title to the property was still in the name of
Capistrano.

8. Around July 28, 1992, upon request of the Jamilar spouses, TCT No.
249959 was cancelled and three (3) new certificates of title (TCT Nos. 251524,
251525, and 251526) all in the name of Jamilar on the basis of an alleged
subdivision plan (No. Psd-13-011917) without Capistranos knowledge and
consent as registered owner. The notice of adverse claim of Sy, Golpeo, and Tan
was carried over to the three new titles.

9. Around August 18, 1992, Sy, Golpeo, and Tan filed Civil Case No. C-15551
against the Jamilars and another couple, the Giltura spouses, for alleged
violations of the Contract to Sell.They caused a notice of lis pendens to be
annotated on the three (3) TCTs in Jamilars name. Said civil case, however, was
not prosecuted.

10. On January 26, 1993, a Deed of Absolute Sale was executed by the Jamilars
and the Gilturas, in favor of Golpeo and Tan. Thus, TCT Nos. 251524 and
251526 were cancelled and TCT Nos. 262286 and 262287 were issued to
Golpeo and Tan, respectively. TCT No. 251525 remained in the name of
Jamilar.[1]

Thus, the action for reconveyance filed by Capistrano, alleging that his and his wifes signatures
on the purported deed of absolute sale in favor of Scott were forgeries; that the owners duplicate copy of
TCT No. 76496 in his name had always been in his possession; and that Scott, the Jamilar spouses,
Golpeo, and Tan were not innocent purchasers for value because they all participated in defrauding him
of his property. Capistrano claimed P1,000,000.00 from all defendants as moral damages, P100,000.00
as exemplary damages; and P100,000.00 as attorneys fees.

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In their Answer with Counterclaim, the Jamilar spouses denied the allegations in the complaint
and claimed that Capistrano had no cause of action against them, as there was no privity of transaction
between them; the issuance of TCT No. 249959 in their names was proper, valid, and legal; and that
Capistrano was in estoppel. By way of counterclaim, they sought P50,000.00 as actual
damages, P50,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00 as
attorneys fees.

In their Answer, Sy, Golpeo, and Tan denied the allegations in the complaint and alleged that
Capistrano had no cause of action against them; that at the time they bought the property from the
Jamilars and the Gilturas as unregistered owners, there was nothing in the certificates of title that would
indicate any vice in its ownership; that a buyer in good faith of a registered realty need not look beyond
the Torrens title to search for any defect; and that they were innocent purchasers of the land for value. As
counterclaim, they sought P500,000.00 as moral damages and P50,000.00 as attorneys fees.

In her Answer with Cross-claim, Scott denied the allegations in the complaint and alleged that she
had no knowledge or any actual participation in the execution of the deeds of sale in her favor and the
Jamilars; that she only knew of the purported conveyances when she received a copy of the complaint;
that her signatures appearing in both deeds of sale were forgeries; that when her authority to sell the land
expired, she had no other dealings with it; that she never received any amount of money as alleged
consideration for the property; and that, even if she were the owner, she would never have sold it at so
low a price.

By way of Cross-claim against Sy, Golpeo, Tan, and the Jamilars, Scott alleged that when she
was looking for a buyer of the property, the Jamilars helped her locate the property, and they became
conversant with the details of the ownership and other particulars thereof; that only the other defendants
were responsible for the seeming criminal conspiracy in defrauding Capistrano; that in the event she
would be held liable to him, her other co-defendants should be ordered to reimburse her of whatever
amount she may be made to pay Capistrano; that she was entitled to P50,000.00 as moral damages
and P50,000.00 as attorneys fees from her co-defendants due to their fraudulent conduct.

Later, Sy, Golpeo, and Tan filed a third-party complaint against the Giltura spouses who were the
Jamilars alleged co-vendors of the subject property.

Thereafter, trial on the merits ensued.

Subsequently, the trial court decided in favor of Capistrano. In its Decision dated May 7, 1996,
adopting the theory of Capistrano as presented in his memorandum, the trial court rendered judgment as
follows:

1. Declaring plaintiff herein as the absolute owner of the parcel of land located
at the Tala Estate, Bagumbong, Caloocan City and covered by TCT No. 76496;
2. Ordering defendant Register of Deeds to cause the cancellation of TCT No.
251525 registered in the name of defendant Josefina Jamilar;

3. Ordering defendant Register of Deeds to cause the cancellation of TCT

Nos. 262286 and 262287 registered in the names of defendants Nelson Golpeo
and John B. Tan;

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4. Ordering defendant Register of Deeds to cause the issuance to plaintiff of

three (3) new TCTs, in replacement of the aforesaid TCTs Nos. 251525, 262286
and 262287;

5. Ordering all the private defendants in the above-captioned case to pay

plaintiff, jointly and severally, the reduced amount of P400,000.00 as moral
damages;

6. Ordering all the private defendants in the above-captioned case to pay to

plaintiff, jointly and severally, the reduced sum of P50,000.00 as exemplary
damages;

7. Ordering all the private defendants in the above-captioned case to pay

plaintiffs counsel, jointly and severally, the reduced amount of P70,000.00 as
attorneys fees, plus costs of suit;

8. Ordering the dismissal of defendants Sy, Golpeo and Tans Cross-Claim

against defendant spouses Jamilar;

9. Ordering the dismissal of defendants Sy, Golpeo and Tans Third-Party

Complaint against defendant spouses Giltura; and

10. Ordering the dismissal of the Counterclaims against plaintiff.

SO ORDERED.[2]

On appeal, the CA, in its Decision dated July 23, 2002, affirmed the Decision of the trial court with the
modification that the Jamilar spouses were ordered to return to Sy, Golpeo, and Tan the amount
of P1,679,260.00 representing their full payment for the property, with legal interest thereon from the date
of the filing of the complaint until full payment.

Hence, this petition, with petitioners insisting that they were innocent purchasers for value of the parcels
of land covered by TCT Nos. 262286 and 262287. They claim that when they negotiated with the Jamilars
for the purchase of the property, although the title thereto was still in the name of Capistrano, the
documents shown to them the court order directing the issuance of a new owners duplicate copy of TCT
No. 76496, the new owners duplicate copy thereof, the tax declaration, the deed of absolute sale between
Capistrano and Scott, the deed of absolute sale between Scott and Jamilar, and the real estate tax
receipts there was nothing that aroused their suspicion so as to compel them to look beyond the Torrens
title. They asseverated that there was nothing wrong in financing the cancellation of Capistranos title and
the issuance of titles to the Jamilars because the money they spent therefor was considered part of the
purchase price they paid for their property.

In their Comment, the heirs of Capistrano, who were substituted after the latters death, reiterated
the factual circumstances which should have alerted the petitioners to conduct further investigation, thus

(a) Why the Deed of Absolute Sale supposedly executed by Capistrano had
remained unregistered for so long, i.e., from March 9, 1980 up to June 1992,

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when they were negotiating with the Jamilars and the Gilturas for their purchase
of the subject property;
(b) Whether or not the owners copy of Capistranos certificate of title had really
been lost;

(c) Whether Capistrano really sold his property to Scott and whether Scott
actually sold it to the Jamilars, which matters were easily ascertainable as both
Capistrano and Scott were still alive and their names appear on so many
documents;

(d) Why the consideration for both the March 9, 1980 sale and the May 17,
1990 sale was the same (P150,000.00), despite the lapse of more than 10 years;

(e) Why the price was so low (P10.88 per square meter, both in 1980 and in
1990) when the petitioners were willing to pay and actually paid P150.00 per
square meter in May 1992; and

(f) Whether or not both deeds of sale were authentic.[3]

In addition, the heirs of Capistrano pointed out that petitioners entered into negotiations over the
property, not with the registered owner thereof, but only with those claiming ownership thereof based on
questionable deeds of sale.

The petition should be denied. The arguments proffered by petitioners all pertain to factual issues
which have already been passed upon by both the trial court and the CA.

Findings of facts of the CA are final and conclusive and cannot be reviewed on appeal, as long as they
are based on substantial evidence. While, admittedly, there are exceptions to this rule such as: (a) when
the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the
inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion;
(d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are
conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same were
contrary to the admissions of both the appellant and appellee.[4] Not one of these exceptional
circumstances is present in this case.

First. The CA was correct in upholding the finding of the trial court that the purported sale of the property
from Capistrano to Scott was a forgery, and resort to a handwriting expert was not even necessary as the
specimen signature submitted by Capistrano during trial showed marked variance from that found in the
deed of absolute sale. The technical procedure utilized by handwriting experts, while usually helpful in the
examination of forged documents, is not mandatory or indispensable to the examination or comparison of
handwritings.[5]

By the same token, we agree with the CA when it held that the deed of sale between Scott and the
Jamilars was also forged, as it noted the stark differences between the signatures of Scott in the deed of
sale and those in her handwritten letters to Capistrano.

Second. In finding that the Jamilar spouses were not innocent purchasers for value of the subject
property, the CA properly held that they should have known that the signatures of Scott and Capistrano

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were forgeries due to the patent variance of the signatures in the two deeds of sale shown to them by
Scott, when Scott presented to them the deeds of sale, one allegedly executed by Capistrano in her favor
covering his property; and the other allegedly executed by Scott in favor of Capistrano over her property,
the P40,000.00 consideration for which ostensibly constituted her initial and partial payment for the sale
of Capistranos property to her.

The CA also correctly found the Gilturas not innocent purchasers for value, because they failed to check
the veracity of the allegation of Jamilar that he acquired the property from Capistrano.

In ruling that Sy was not an innocent purchaser for value, we share the observation of the appellate court
that Sy knew that the title to the property was still in the name of Capistrano, but failed to verify the claim
of the Jamilar spouses regarding the transfer of ownership of the property by asking for the copies of the
deeds of absolute sale between Capistrano and Scott, and between Scott and Jamilar. Sy should have
likewise inquired why the Gilturas had to affix their conformity to the contract to sell by asking for a copy
of the deed of sale between the Jamilars and the Gilturas. Had Sy done so, he would have learned that
the Jamilars claimed that they purchased the property from Capistrano and not from Scott.

We also note, as found by both the trial court and the CA, Tans testimony that he, Golpeo and Sy are
brothers, he and Golpeo having been adopted by Sys father. Tan also testified that he and Golpeo were
privy to the transaction between Sy and the Jamilars and the Gilturas, as shown by their collective act of
filing a complaint for specific performance to enforce the contract to sell.

Also noteworthy and something that would have ordinarily aroused suspicion is the fact that even before
the supposed execution of the deed of sale by Scott in favor of the Jamilars, the latter had already caused
the subdivision of the property into nine (9) lots, with the title to the property still in the name of
Capistrano.

Notable likewise is that the owners duplicate copy of TCT No. 76496 in the name of Capistrano had
always been in his possession since he gave Scott only a photocopy thereof pursuant to the latters
authority to look for a buyer of the property. On the other hand, the Jamilars were able to acquire a new
owners duplicate copy thereof by filing an affidavit of loss and a petition for the issuance of another
owners duplicate copy of TCT No. 76496. The minimum requirement of a good faith buyer is that the
vendee of the real property should at least see the owners duplicate copy of the title. [6] A person who
deals with registered land through someone who is not the registered owner is expected to look beyond
the certificate of title and examine all the factual circumstances thereof in order to determine if the vendor
has the capacity to transfer any interest in the land. He has the duty to ascertain the identity of the person
with whom he is dealing and the latters legal authority to convey.[7]

Finally, there is the questionable cancellation of the certificate of title of Capistrano which resulted in the
immediate issuance of a certificate of title in favor of the Jamilar spouses despite the claim that
Capistrano sold his property to Scott and it was Scott who sold the same to the Jamilars.

In light of the foregoing disquisitions, based on the evidence on record, we find no error in the
findings of the CA as to warrant a discretionary judicial review by this Court.

WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible error on the part
of the Court of Appeals. Costs against petitioners.

SO ORDERED.

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Domingo Realty v. CA, G.R. No. 126236, January 26, 2007

DECISION
VELASCO, JR., J.:

Good judgment comes from experience, and often experience comes from bad judgment.
Rita Mae Brown

The Case

This Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, seeks the
reversal of the October 31, 1995 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 33407,
entitled Antonio M. Acero v. Hon. Sofronio G. Sayo, et al., which annulled the December 7, 1987 Decision
based on a Compromise Agreement among petitioner Domingo Realty, Inc. (Domingo Realty),
respondent Antonio M. Acero, and defendant Luis Recato Dy in Civil Case No. 9581-P before the Pasay
City Regional Trial Court (RTC), Branch CXI; and the August 28, 1996 Resolution [2] of the CA which
denied petitioners Motion for Reconsideration of its October 31, 1995 Decision.

The Facts

On November 19, 1981, petitioner Domingo Realty filed its November 15, 1981 Complaint [3] with
the Pasay City RTC against Antonio M. Acero, who conducted business under the firm name A.M. Acero
Trading,[4] David Victorio, John Doe, and Peter Doe, for recovery of possession of three (3) parcels of
land located in Cupang, Muntinlupa, Metro Manila, covered by (1) Transfer Certificate of Title (TCT) No.
(75600) S-107639-Land Records of Rizal; (2) TCT No. (67006) S-107640-Land Records of Rizal; and (3)
TCT No. (67007) S-107643-Land Records of Rizal (the subject properties). The said lots have an
aggregate area of 26,705 square meters, more or less, on a portion of which Acero had constructed a
factory building for the manufacture of hollow blocks, as alleged by Domingo Realty.

On January 4, 1982, defendants Acero and Victorio filed their December 21, 1981 Answer [5] to
the Complaint in Civil Case No. 9581-P. Acero alleged that he merely leased the land from his co-
defendant David Victorio, who, in turn, claimed to own the property on which the hollow blocks factory of
Acero stood. In the Answer, Victorio assailed the validity of the TCTs of Domingo Realty, alleging that the
said TCTs emanated from spurious deeds of sale, and claimed that he and his predecessors-in-interest
had been in possession of the property for more than 70 years.

On December 3, 1987, Mariano Yu representing Domingo Realty, Luis Recato Dy[6], and Antonio
M. Acero, all assisted by counsels, executed a Compromise Agreement, which contained the following
stipulations, to wit:

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1. That defendants admit and recognize the ownership of the plaintiff over the
property subject of this case, covered by TCT No. S-107639 (75600), S-107643
(67007), and S-107640 (67006) with a total area of 26,705 square meters;

2. That defendant Luis Recato Dy admits and recognizes that his title covered by
TCT No. 108027 has been proven not to be genuine and that the area indicated
therein is inside the property of the plaintiff;

3. That defendant Acero admits that the property he is presently occupying by way
of lease is encroaching on a portion of the property of the plaintiff and assume[s]
and undertakes to vacate, remove and clear any and all structures erected inside
the property of the plaintiff by himself and other third parties, duly authorized
and/or who have an existing agreement with defendant Acero, and shall deliver
said portion of the property of the plaintiff free and clear of any unauthorized
structures, shanties, occupants, squatters or lessees within a period of sixty (60)
days from date of signing of this compromise agreement. Should defendant Acero
fail in his obligation to vacate, remove and clear the structures erected inside the
property of the plaintiff within the period of 60 days afore-mentioned, plaintiff shall
be entitled to a writ of execution for the immediate demolition or removal of said
structure to fully implement this agreement; and ejectment of all squatters and
occupants and lessees, including the dependents to fully implement this
agreement;

4. That plaintiff admits and recognizes that defendant Luis Recato Dy bought and
occupied the property in good faith and for value whereas defendant Acero leased
the portion of said property likewise in good faith and for value hereby waives
absolutely and unconditionally all claims including attorneys fees against both
defendants in all cases pending in any court whether by virtue of any judgment or
under the present complaint and undertake to withdraw and/or move to dismiss the
same under the spirit of this agreement;

5. That defendants likewise waive all claims for damages including attorneys fees
against the plaintiff;

6. That plaintiff acknowledges the benefit done by defendant Luis Recato Dy on

the property by incurring expenses in protecting and preserving the property by
way of construction of perimeter fence and maintaining a caretaker therein and
plaintiff has agreed to pay Luis Recato Dy the amount of P100,000.00 upon
approval of this agreement by this Honorable Court.[7]

Acting on the Compromise Agreement, the Pasay City RTC rendered the December 7,
1987 Decision which adopted the aforequoted six (6) stipulations and approved the Compromise
Agreement.

To implement the said Decision, Domingo Realty filed its January 21, 1988 Motion[8] asking the
trial court for permission to conduct a re-survey of the subject properties, which was granted in
the January 22, 1988 Order.[9]

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On February 2, 1988, respondent Acero filed his January 29, 1988 Motion to Nullify the Compromise
Agreement,[10] claiming that the January 22, 1988 Order authorizing the survey plan of petitioner Domingo
Realty as the basis of a resurvey would violate the Compromise Agreement since the whole area he
occupied would be adjudged as owned by the realty firm.

On March 18, 1988, Acero filed a Motion to Resurvey,[11] whereby it was alleged that the parties agreed to
have the disputed lots re-surveyed by the Bureau of Lands. Thus, the trial court issued the March 21,
1988 Order[12] directing the Director of Lands to conduct a re-survey of the subject properties.

In his June 9, 1989 Report, Elpidio T. De Lara, Chief of the Technical Services Division of the Lands
Management Section of the National Capital Region - Department of Environment and Natural
Resources, submitted to the trial court Verification Survey Plan No. Vs-13-000135. In the said Verification
Survey Plan, petitioners TCTs covered the entire land occupied by the respondents hollow block
factory.[13]

On April 10, 1990, petitioner Ayala Steel Manufacturing Co., Inc. (Ayala Steel) filed its March 30, 1990
Motion for Substitution alleging that it had purchased the subject lots, attaching to the motion TCT Nos.
152528, 152529, and 152530 all in its name, as proof of purchase.[14]

The said motion was opposed by Acero claiming that this case has already been terminated in
accordance with the compromise agreement of the parties, hence, substitution will no longer be
necessary and justified under the circumstances.[15] The motion was not resolved which explains why
both transferor Domingo Realty and transferee Ayala Steel are co-petitioners in the instant petition.

In its December 28, 1990 Order,[16] the trial court directed Acero to conduct his own re-survey of the lots
based on the technical description appearing in the TCTs of Domingo Realty and to have the re-survey
plans approved by the Bureau of Lands. The Order resulted from Aceros contention that he occupied only
2,000 square meters of petitioners property.

Acero employed the services of Engr. Eligio L. Cruz who came up with Verification Survey Plan No. Vs-
13-000185. However, when the said Verification Survey Plan was presented to the Bureau of Lands for
approval, it was rejected because Engr. Cruz failed to comply with the requirements of the Bureau. [17]
On April 8, 1991, petitioners filed a Manifestation with Motion praying for the denial of respondents Motion
to Nullify the Compromise Agreement and for the approval of Verification Survey Plan No. Vs-13-000135
prepared by Engr. Lara of the Bureau of Lands. The Pasay City RTC issued the December 6,
1991 Order[18] denying respondent Aceros Motion to Nullify the Compromise Agreement. As a
consequence, petitioners filed a Motion for Execution on December 10, 1991.[19]

On January 6, 1992, respondent filed an undated Manifestation [20] claiming, among others, that it was on
record that the Compromise Agreement was only as to a portion of the land being occupied by
respondent, which is about 2,000 square meters, more or less. He reiterated the same contentions in
his December 21, 1991 Manifestation.[21]

On January 13, 1992, respondent filed a Motion to Modify Order Dated 6 December 91,[22] claiming that
the said Order modified the Compromise Agreement considering that it allegedly involved only 1,357
square meters and not the entire lot;[23] and if not amended, the Order would deviate from the principle
that no man shall enrich himself at the expense of the other.

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In its January 15, 1992 Order,[24] the trial court approved the issuance of a Writ of Execution to enforce
the December 7, 1987 Decision. On February 3, 1992, respondent Acero subsequently filed a Motion for
Reconsideration[25] of the January 15, 1992 Order arguing that the Order was premature and that
Verification Survey Plan No. Vs-13-000135 violated the Compromise Agreement.
On January 18, 1992, the Pasay City Hall was gutted by fire, destroying the records of the lower court,
including those of this case. Thus, after reconstituting the records, the trial court issued the October 6,
1992 Order,[26] reiterating its January 15, 1992 Order and ordering the issuance of a Writ of Execution.

On October 23, 1992, respondent filed a Manifestation and Compliance,[27] alleging that Verification
Survey Plan No. Vs-13-000185 had been approved by the Regional Director of the DENR; thus, he
moved for the annulment of the October 6, 1992 Order granting the Writ of Execution in favor of
petitioners.

Given the conflicting Verification Survey Plans of the parties, the trial court issued the October 11,
1993 Order[28] requiring the Bureau of Lands Director to determine which of the two survey plans was
correct.

Subsequently, Regional Technical Director Eriberto V. Almazan of the Land Registration Authority issued
the November 24, 1993 Order[29] cancelling Verification Survey Plan No. Vs-13-000185, submitted by
Engineer Eligio Cruz, who was hired by respondent Acero, and declared Verification Survey Plan No. Vs-
13-000135, submitted by Engineer Lara of the Bureau of Lands, as the correct Plan.

Thereafter, petitioners filed their January 12, 1994 Ex-parte Manifestation with Motion,[30] praying for the
implementation of the Writ of Execution against the disputed lands, which was granted in the January 12,
1994 Order.[31]

Respondents Motion for Reconsideration[32] of the January 12, 1994 Order was denied in the February 1,
1994 Order[33] of the Pasay City RTC.

Aggrieved, respondent Acero filed before the CA his February 23, 1994 Petition for Certiorari and
Mandamus with Urgent Prayer for Issuance of a Temporary Restraining Order, [34] under Rule 65 of the
Rules of Court, against petitioners and Judge Sofronio G. Sayo as presiding judge of the lower court. In
the petition, respondent sought to nullify and set aside the RTC Orders dated December 6, 1991, January
15, 1992, October 6, 1992, January 12, 1994, and February 1, 1994, all of which pertain to the execution
of the December 7, 1987 Decision on the Compromise Agreement. Significantly, respondent did not seek
the annulment of said judgment but merely reiterated the issue that under the Compromise Agreement,
he would only be vacating a portion of the property he was occupying.

The Ruling of the Court of Appeals

On October 31, 1995, the CA promulgated the assailed Decision, the fallo of which reads:

IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED and the
Orders of respondent court dated December 6, 1991, January 15, 1992, October
6, 1992, and January 12, 1994, and February 1, 1994 are SET ASIDE. In the
interest of justice, and consistent with the views expressed by this Court, the
Compromise Judgment dated December 7, 1987 of respondent court is
likewise SET ASIDE. Respondent Court is likewise directed to proceed with the

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hearing of Civil Case No. 9581-P on the merits and determine, once and for all, the
respective proprietary rights of the litigants thereto.

SO ORDERED.[35]

In discarding the December 7, 1987 Decision based on the Compromise Agreement, the appellate court
ratiocinated that David Victorio, the alleged lessor of Acero, was not a party to the Compromise
Agreement; thus, there would always remain the probability that he might eventually resurface and assail
the Compromise Agreement, giving rise to another suit. Moreover, the CA found the Compromise
Agreement vague, not having stipulated a mutually agreed upon surveyor, who would survey the
properties using as a basis, survey plans acceptable to both, and to thereafter submit a report to the
court.[36]

Likewise, the CA sustained Aceros belief that he would only have to vacate a portion of the property he
was presently occupying, which was tantamount to a mistake that served as basis for the nullification of
the Compromise Agreement entered into.

On January 17, 1996, petitioners filed a Motion for Reconsideration [37] of the adverse Decision, which was
consequently rejected in the CAs August 28, 1996 Resolution.
Thus, the instant petition is in our hands.

The Issues

The issues as stated in the petition are as follows:

1. THE RESPONDENT COURT OF APPEALS ERRED IN NULLIFYING AND

SETTING ASIDE JUDGMENT ON COMPROMISE AGREEMENT AND THE
COMPROMISE AGREEMENT ITSELF AS WELL AS THE SUBSEQUENT
ORDERS OF THE COURT A QUO THOUGH THERE IS NO MOTION TO SET
ASIDE THE JUDGMENT ON THE COMPROMISE AGREEMENT BEFORE THE
COURT A QUO ON THE GROUND OF FRAUD, MISTAKE OR DURESS;
2. THE RESPONDENT COURT OF APPEALS ERRED IN NULLIFYING AND
SETTING ASIDE THE JUDGMENT ON COMPROMISE AGREEMENT AND THE
COMPROMISE AGREEMENT ITSELF AS WELL AS THE SUBSEQUENT
ORDERS OF THE COURT OF QUO [SIC] THOUGH IN THE PETITION FOR
CERTIORARI AND MANDAMUS BEFORE RESPONDENT COURT OF
APPEALS, PRIVATE RESPONDENT ARGUED THAT JUDGMENT ON
COMPROMISE AGREEMENT IS FINAL, EXECUTORY, IMMUTABLE AND
UNALTERABLE;

3. THE RESPONDENT COURT OF APPEALS ERRED IN NULLIFYING AND

SETTING ASIDE JUDGMENT ON COMPROMISE AGREEMENT AND THE
COMPROMISE AGREEMENT ITSELF AS WELL AS THE SUBSEQUENT
ORDERS OF THE COURT A QUO BASED ON FRAUD OR MISTAKE THOUGH
SAID ISSUES WERE NOT RAISED BEFORE THE COURT A QUO, AND NO
EVIDENCE WAS INTRODUCED TO SUBSTANTIATE FRAUD OR MISTAKE
BEFORE THE COURT A QUO;

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4. THE RESPONDENT COURT OF APPEALS ERRED WHEN IT RULED THAT

THE NON-INCLUSION OF ONE OF THE PARTIES IN THIS CASE, AND THE
VAGUENESS OF THE COMPROMISE AGREEMENT ARE GROUNDS TO
NULLIFY AND SET ASIDE THE COMPROMISE AGREEMENT; AND

5. THE RESPONDENT COURT OF APPEALS ERRED WHEN IT ENTERTAINED

THE PETITION FOR CERTIORARI AND MANDAMUS THOUGH IT WAS FILED
BEYOND REASONABLE TIME IF NOT BARRED BY LACHES.[38]

Restated, the issues are:

I.

WHETHER THE PETITION BEFORE THE COURT OF APPEALS WAS FILED

OUT OF TIME OR BARRED BY LACHES;

II.

WHETHER THE NON-INCLUSION OF DAVID VICTORIO WOULD NULLIFY THE

COMPROMISE AGREEMENT;

III.

WHETHER THE JUDGMENT ON COMPROMISE AGREEMENT SHOULD BE

SET ASIDE ON THE GROUND OF VAGUENESS; AND

IV.

WHETHER THE JUDGMENT ON COMPROMISE AGREEMENT SHOULD BE

SET ASIDE ON THE GROUND OF MISTAKE.

The Courts Ruling

The petition is meritorious.

The preliminary issue involves the query of what proper remedy is available to a party who believes that
his consent in a compromise agreement was vitiated by mistake upon which a judgment was rendered by
a court of law.
There is no question that a contract where the consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable under Article 1330 of the Civil Code. If the contract
assumes the form of a Compromise Agreement between the parties in a civil case, then a judgment
rendered on the basis of such covenant is final, unappealable, and immediately executory. If one of the
parties claims that his consent was obtained through fraud, mistake, or duress, he must file a motion with

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the trial court that approved the compromise agreement to reconsider the judgment and nullify or set
aside said contract on any of the said grounds for annulment of contract within 15 days from notice of
judgment. Under Rule 37, said party can either file a motion for new trial or reconsideration. A party can
file a motion for new trial based on fraud, accident or mistake, excusable negligence, or newly discovered
evidence.

On the other hand, a party may decide to seek the recall or modification of the judgment by means of a
motion for reconsideration on the ground that the decision or final order is contrary to law if the consent
was procured through fraud, mistake, or duress. Thus, the motion for a new trial or motion for
reconsideration is the readily available remedy for a party to challenge a judgment if the 15-day period
from receipt of judgment for taking an appeal has not yet expired. This motion is the most plain, speedy,
and adequate remedy in law to assail a judgment based on a compromise agreement which, even if it is
immediately executory, can still be annulled for vices of consent or forgery. [39]

Prior to the effectivity of the 1997 Rules of Civil Procedure on July 1, 1997, an order denying a motion for
new trial or reconsideration was not appealable since the judgment in the case is not yet final. The
remedy is to appeal from the challenged decision and the denial of the motion for reconsideration or new
trial is assigned as an error in the appeal.[40] Under the present [1997] Rules of Civil Procedure, the same
rule was maintained that the order denying said motion is still unappealable and the rule is still to appeal
from the judgment and not from the order rejecting the motion for reconsideration/new trial.

If the 15-day period for taking an appeal has lapsed, then the aggrieved party can avail of Rule 38 by
filing a petition for relief from judgment which should be done within 60 days after the petitioner learns of
the judgment, but not more than six (6) months after such judgment or final order was entered. Prior to
the effectivity of the 1997 Rules of Civil Procedure in 1997, if the court denies the petition under Rule 38,
the remedy is to appeal from the order of denial and not from the judgment since said decision has
already become final and already unappealable.[41] However, in the appeal from said order, the appellant
may likewise assail the judgment. Under the 1997 Rules of Civil Procedure, the aggrieved party can no
longer appeal from the order denying the petition since this is proscribed under Section 1 of Rule 41. The
remedy of the party is to file a special civil action for certiorari under Rule 65 from the order rejecting the
petition for relief from judgment.

The records of the case reveal the following:

1. December 3, 1987 the parties signed the Compromise Agreement;

2. December 7, 1987 a decision/judgment was rendered based on the December 3, 1987 Compromise
Agreement;

3. February 2, 1988 Acero filed a Motion to Nullify the Compromise Agreement;

4. December 6, 1991 the trial court denied Aceros Motion to Nullify the Compromise Agreement;

5. December 11, 1991 defendant Acero received the December 6, 1991 Order which denied said
motion;[42]

6. December 26, 1991 the 15-day period to appeal to the CA expired by the failure of defendant Acero to
file an appeal with said appellate court;

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7. January 15, 1992 the trial court issued the Order which granted petitioners motion for the issuance of a
Writ of Execution;
8. October 6, 1992 the trial court reiterated its January 15, 1992 Order directing the issuance of a Writ of
Execution after the records of the case were lost in a fire that gutted the Pasay City Hall;

9. January 12, 1994 the trial court issued the Order which directed the implementation of the Writ of
Execution prayed for by petitioners;

10. February 1, 1994 the trial court issued the Order which denied respondents Motion for
Reconsideration of its January 12, 1994 Order; and

11. April 4, 1994 Acero filed with the CA a petition for certiorari in CA-G.R. SP No. 33407 entitled Antonio
M. Acero v. Domingo Realty, Inc., et al.

In his undated Manifestation, respondent Acero admitted having received a copy of the December 7,
1987 Decision on December 11, 1987. However, it was only on February 2, 1988 when he filed a Motion
to Nullify the Compromise Agreement which was discarded for lack of merit by the trial court
on December 6, 1991. If the Motion to Nullify the Compromise Agreement is treated as a motion for
reconsideration and/or for new trial, then Acero should have filed an appeal from the December 7, 1987
Decision and assigned as error the December 6, 1991 Order denying said motion pursuant to the rules
existing prior to the 1997 Rules of Civil Procedure. He failed to file such appeal but instead filed a petition
for certiorari under Rule 65 with the CA on April 4, 1994. This is prejudicial to respondent Acero as the
special civil action of certiorari is not the proper remedy. If the aggrieved party does not interpose a timely
appeal from the adverse decision, a special civil action for certiorari is not available as a substitute for a
lost appeal.[43]

What respondent Acero should have done was to file a petition for relief from judgment when he became
aware that he lost his right of appeal on December 26, 1991. Even with this approach, defendant Acero
was also remiss.

In sum, the petition for certiorari instituted by respondent Acero with the CA is a wrong remedy; a simple
appeal to the CA would have sufficed. Since the certiorari action is an improper legal action, the petition
should have been rejected outright by the CA.

Assuming arguendo that a petition for certiorari with the CA is the appropriate remedy, still, said petition
was filed out of time.

The petition before the CA was filed prior to the effectivity of the 1997 Rules of Court when there was still
no prescribed period within which to file said petition, unlike in the present Section 4 of Rule 65 wherein a
Petition for Certiorari and Mandamus must be filed within 60 days from notice of the judgment, final order,
or resolution appealed from, or of the denial of the petitioners motion for new trial or reconsideration after
notice of judgment.

Section 4, Rule 65 previously read:

Section 4. Where petition filed.The petition may be filed in the Supreme Court, or,
if it relates to the acts or omissions of an inferior court, or of a corporation, board or
officer or person, in a Court of First Instance having jurisdiction thereof. It may also
be filed in the Court of Appeals if it is in aid of its appellate jurisdiction.

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Petitions for certiorari under Rules 43, 44 and 45 shall be filed with the Supreme
Court.

Before the 1997 Rules of Civil Procedure became effective on July 1, 1997, the yardstick to determine the
timeliness of a petition for certiorari under Rule 65 was the reasonableness of the time that had elapsed
from receipt of notice of the assailed order/s of the trial court up to the filing of the appeal with the
CA.[44] In a number of cases, the Court ruled that reasonable time can be pegged at three (3) months. [45]

In the present case, the Order denying the Motion to Nullify the Compromise Agreement was issued
on December 6, 1991. The petition for certiorari was filed on April 4, 1994.The period of two (2) years and
four (4) months cannot be considered fair and reasonable. With respect to the January 15, 1992 Order
granting the writ of execution and the October 6, 1992 Order directing the issuance of the writ, it is
evident that the petition before the CA was filed more than three (3) months after the receipt by
respondent Acero of said orders and the filing of the petition is likewise unreasonably delayed.

On the second issue, petitioners assail the ruling of the appellate court that David Victorio who is claimed
to be the lessor of Acero, and who is impleaded as a defendant in Civil Case No. 9581-P, was not made a
party to the Compromise Agreement and hence, he may later assail the compromise agreement as not
binding upon him, thereby giving rise to another suit.[46]

We find merit in petitioners position.

The CA was unable to cite a law or jurisprudence that supports the annulment of a compromise
agreement if one of the parties in a case is not included in the settlement. The only legal effect of the non-
inclusion of a party in a compromise agreement is that said party cannot be bound by the terms of the
agreement. The Compromise Agreement shall however be valid and binding as to the parties who signed
thereto.[47]

The issue of ownership between petitioners and David Victorio can be threshed out by the trial court in
Civil Case No. 9581-P. The proper thing to do is to remand the case for continuation of the proceedings
between petitioners and defendant David Victorio but not to annul the partial judgment between
petitioners and respondent Acero which has been pending execution for 20 years.

With regard to the third issue, petitioners assail the ruling of the CA that the Compromise Agreement is
vague as there is still a need to determine the exact metes and bounds of the encroachment on the
petitioners lot.

The object of a contract, in order to be considered as certain, need not specify such object with
absolute certainty. It is enough that the object is determinable in order for it to be considered as
certain. Article 1349 of the Civil Code provides:
Article 1349. The object of every contract must be determinate as to its kind. The
fact that the quantity is not determinate shall not be an obstacle to the existence of
the contract, provided it is possible to determine the same, without the need of a
new contract between the parties.

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In the instant case, the title over the subject property contains a technical description that provides the
metes and bounds of the property of petitioners. Such technical description is the final determinant of the
extent of the property of petitioners. Thus, the area of petitioners property is determinable based on the
technical descriptions contained in the TCTs.

Notably, the determination made by the Bureau of Landsthat Verification Survey Plan No. Vs-13-
000135 is the correct Planis controlling and shall prevail over Verification Survey Plan No. Vs-13-000185
submitted by Acero. Findings of fact by administrative agencies, having acquired expertise in their field of
specialization, must be given great weight by this Court. [48] Even if the exact area of encroachment is not
specified in the agreement, it can still be determined from the technical description of the title of plaintiff
which defendant Acero admitted to be correct. Thus, the object of the Compromise Agreement is
considered determinate and specific.

Moreover, vagueness is defined in Blacks Law Dictionary as: indefinite, uncertain; not susceptible of
being understood.

A perusal of the entire Compromise Agreement will negate any contention that there is vagueness in its
provisions. It must be remembered that in the interpretation of contracts, an instrument must be construed
so as to give effect to all the provisions of these contracts. [49] Thus, the Compromise Agreement must be
considered as a whole.

The alleged vagueness revolves around the term portion in paragraph three (3) of the Compromise
Agreement,[50] taken together with paragraph one (1) which we quote:

1. That defendants admit and recognize the ownership of the plaintiff over
the property subject of this case, covered by TCT No. S-107639 (75600), S-
107643 (67007), and S-107640 (67006) with a total area of 26,705 square
meters;

xxxx
3. That defendant Acero admits that the property he is presently occupying
by way of lease is encroaching on a portion of the property of the plaintiff
and assume and undertakes to vacate, remove and clear any and all
structures erected inside the property of the plaintiff by himself and other third
parties, duly authorized and/or who have an existing agreement with defendant
Acero, and shall deliver said portion of the property of the plaintiff free and clear of
any unauthorized structures, shanties, occupants, squatters or lessees within a
period of sixty (60) days from date of signing of this compromise
agreement. Should defendant Acero fail in his obligation to vacate, remove and
clear the structures erected inside the property of the plaintiff within the period of
60 days afore-mentioned, plaintiff shall be entitled to a writ of execution for the
immediate demolition or removal of said structure to fully implement this
agreement; and ejectment of all squatters and occupants and lessees, including
the dependents to fully implement this agreement. (Emphasis supplied.)

Respondent harps on their contention that the term portion in paragraph 3 of the Compromise Agreement
refers to the property which they are occupying. Respondents interpretation of paragraph 3 of the

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Compromise Agreement is mistaken as it is anchored on his belief that the encroachment on the property
of petitioners is only a portion and not the entire lot he is occupying. This is apparent from his Supplement
to his Petition for Certiorari and Mandamus where he explained:

Petitioner [Acero] entered into this agreement because of his well-founded

belief and conviction that a portion of the property he is occupying encroaches
only a portion of the property of private respondent. In fine, only a portion of the
property petitioner is occupying (not all of it) encroaches on a portion of the property
of private respondent.[51]

This contention is incorrect. The agreement is clear that respondent Acero admitted that the
property he is presently occupying by way of lease is encroaching on a portionof the property of the
plaintiff. Thus, whether it is only a portion or the entire lot Acero is leasing that will be affected by the
agreement is of no importance. What controls is the encroachment on the lot of petitioner Domingo Realty
regardless of whether the entire lot or only a portion occupied by Acero will be covered by the
encroachment.

While it may be the honest belief of respondent Acero that only a portion of the lot he is occupying
encroaches on the 26,705-square meter lot of petitioner Domingo Realty and later, Ayala Steel, the Court
finds that the true and real agreement between the parties is that any encroachment by respondent Acero
on the lot of petitioners will be surrendered to the latter. This is apparent from the undertaking in
paragraph 3 that defendant Acero undertakes to vacate, remove and clear any and all structures erected
inside the property of the plaintiff. This prestation results from the admission against the interest of
respondent Acero that he admits and recognizes the ownership of the plaintiff (Domingo Realty) over the
subject lot. The controlling word therefore is encroachmentwhether it involves a portion of or the entire
lot claimed by defendant David Victorio. To reiterate, the word portion refers to petitioners lot and not that
of Aceros. Contrary to the disposition of the CA, we rule that the terms of the Compromise Agreement are
clear and leave no doubt upon the intent of the parties that respondent Acero will vacate, remove, and
clear any and all structures erected inside petitioners property, the ownership of which is not denied by
him. The literal meaning of the stipulations in the Compromise Agreement will control under Article 1370
of the Civil Code. Thus, the alleged vagueness in the object of the agreement cannot be made an excuse
for its nullification.

Finally, with regard to the fourth issue, petitioners question the finding of the CA that the compromise
judgment can be set aside on the ground of mistake under Article 2038 of the Civil Code, because
respondent Acero gave his consent to the Compromise Agreement in good faith that he would only
vacate a portion of his lot in favor of petitioner Domingo Realty.

We rule otherwise.

Articles 2038 and 1330 of the Civil Code allow a party to a contract, on the ground of mistake, to nullify a
compromise agreement, viz:

Article 2038. A compromise in which there is mistake, fraud, violence, intimidation,

undue influence, or falsity of documents, is subject to the provisions of Article 1330
of this Code.

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Article 1330. A contract where the consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable (emphasis supplied).

Mistake has been defined as a misunderstanding of the meaning or implication of something or a wrong
action or statement proceeding from a faulty judgment x x x. [52]

Article 1333 of the Civil Code of the Philippines however states that there is no mistake if the party
alleging it knew the doubt, contingency or risk affecting the object of the contract.

Under this provision of law, it is presumed that the parties to a contract know and understand the import
of their agreement. Thus, civil law expert Arturo M. Tolentino opined that:

To invalidate consent, the error must be excusable. It must be real error, and not
one that could have been avoided by the party alleging it. The error must arise
from facts unknown to him. He cannot allege an error which refers to a fact known
to him, or which he should have known by ordinary diligent examination of the
facts. An error so patent and obvious that nobody could have made it, or one
which could have been avoided by ordinary prudence, cannot be invoked by
the one who made it in order to annul his contract. A mistake that is caused by
manifest negligence cannot invalidate a juridical act.[53] (Emphasis supplied.)

Prior to the execution of the Compromise Agreement, respondent Acero was already aware of the
technical description of the titled lots of petitioner Domingo Realty and more so, of the boundaries and
area of the lot he leased from David Victorio. Before consenting to the agreement, he could have simply
hired a geodetic engineer to conduct a verification survey and determine the actual encroachment of the
area he was leasing on the titled lot of petitioner Domingo Realty. Had he undertaken such a
precautionary measure, he would have known that the entire area he was occupying intruded into the
titled lot of petitioners and possibly, he would not have signed the agreement.

In this factual milieu, respondent Acero could have easily averted the alleged mistake in the contract; but
through palpable neglect, he failed to undertake the measures expected of a person of ordinary
prudence. Without doubt, this kind of mistake cannot be resorted to by respondent Acero as a ground to
nullify an otherwise clear, legal, and valid agreement, even though the document may become adverse
and even ruinous to his business.

Moreover, respondent failed to state in the Compromise Agreement that he intended to vacate only a
portion of the property he was leasing. Such provision being beneficial to respondent, he, in the exercise
of the proper diligence required, should have made sure that such matter was specified in the
Compromise Agreement. Respondent Aceros failure to have the said stipulation incorporated in the
Compromise Agreement is negligence on his part and insufficient to abrogate said agreement.

In Torres v. Court of Appeals,[54] which was also cited in LL and Company Development and Agro-
Industrial Corporation v. Huang Chao Chun,[55] it was held that:

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Under Article 1315 of the Civil Code, contracts bind the parties not only to what
has been expressly stipulated, but also to all necessary consequences thereof, as
follows:

ART. 1315. Contracts are perfected by mere consent, and from

that moment the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping
with good faith, usage and law.

It is undisputed that petitioners are educated and are thus presumed to have
understood the terms of the contract they voluntarily signed. If it was not in
consonance with their expectations, they should have objected to it and insisted on
the provisions they wanted.

Courts are not authorized to extricate parties from the necessary consequences of
their acts, and the fact that the contractual stipulations may turn out to be
financially disadvantageous will not relieve parties thereto of their obligations. They
cannot now disavow the relationship formed from such agreement due to their
supposed misunderstanding of its terms.

The mere fact that the Compromise Agreement favors one party does not render it invalid. We ruled
in Amarante v. Court of Appeals that:
Compromises are generally to be favored and cannot be set aside if the parties
acted in good faith and made reciprocal concessions to each other in order to
terminate a case. This holds true even if all the gains appear to be on one side
and all the sacrifices on the other (emphasis supplied).[56]

One final note. While the Court can commiserate with respondent Acero in his sad plight, nonetheless we
have no power to make or alter contracts in order to save him from the adverse stipulations in the
Compromise Agreement. Hopefully this case will serve as a precaution to prospective parties to a
contract involving titled lands for them to exercise the diligence of a reasonably prudent person by
undertaking measures to ensure the legality of the title and the accurate metes and bounds of the lot
embraced in the title. It is advisable that such parties (1) verify the origin, history, authenticity, and validity
of the title with the Office of the Register of Deeds and the Land Registration Authority; (2) engage the
services of a competent and reliable geodetic engineer to verify the boundary, metes, and bounds of the
lot subject of said title based on the technical description in the said title and the approved survey plan in
the Land Management Bureau; (3) conduct an actual ocular inspection of the lot; (4) inquire from the
owners and possessors of adjoining lots with respect to the true and legal ownership of the lot in
question; (5) put up signs that said lot is being purchased, leased, or encumbered; and (6) undertake
such other measures to make the general public aware that said lot will be subject to alienation, lease, or
encumbrance by the parties. Respondent Acero, for all his woes, may have a legal recourse against
lessor David Victorio who inveigled him to lease the lot which turned out to be owned by another.

WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution of the
CA are REVERSED. The questioned Orders of the Pasay City RTC dated December 6, 1991, January

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15, 1992, October 6, 1992, January 12, 1994, and February 1, 1994, including the Decision dated
December 7, 1987, are AFFIRMED. The case is remanded to the Pasay RTC, Branch III for further
proceedings with respect to petitioner Domingo Realtys November 15, 1981 Complaint [57] against one of
the defendants, David Victorio. No costs.

SO ORDERED.

Locsin v. Hizon, G.R. No. 204369, September 17, 2014

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 204369 September 17, 2014

ENRIQUETA M. LOCSIN, Petitioner,

vs.
BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA, Respondents.

DECISION

VELASCO, JR., J.:

Nature of the Case

Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution of
the Court of Appeals (CA), dated June 6, 2012 and October 30, 2012, respectively, in CA-G.R. CV No.
96659 entitled Enriqueta M Locsin v. Marylou Bolos, et al. In reversing the ruling of the trial court, the CA
held that respondents are innocent purchasers in good faith and for value of the subject property.

The Facts

Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m. lot covered by Transfer
Certificate of Title (TCT) No. 235094, located at 49 Don Vicente St., Don Antonio Heights Subdivision,
Brgy. Holy Spirit, Capitol, Quezon City. In 1992, she filed an ejectment case, Civil Case No. 38-
6633,2 against one Billy Aceron (Aceron) before the Metropolitan Trial Court, Branch 3 8 in Quezon City
(MTC) to recover possession over the land in issue. Eventually, the two entered into a compromise
agreement, which the MTC approved on August 6, 1993.3

Locsin later went to the United States without knowing whether Aceron has complied with his part of the
bargain under the compromise agreement. In spite of her absence, however, she continued to pay the
real property taxes on the subject lot.

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In 1994, after discovering thather copy of TCT No. 235094 was missing, Locsin filed a petition for
administrative reconstruction in order to secure a new one, TCT No. RT-97467. Sometime in early 2002,
she then requested her counsel to check the status of the subject lot. It was then that they discovered the
following:

1. One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February 11, 1999, and then
secured a new one, TCT No. N-200074, in her favor by registering a Deed of Absolute Sale dated
November 3, 1979 allegedly executed by Locsin with the Registry of Deeds;

2. Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP 1.5 million, but it was
titled under Carlos Hizons (Carlos) name on August 12, 1999. Carlos is Bernardos son;

3. On October 1, 1999, Bernardo, claiming to be the owner of the property, filed a Motion for
Issuance of Writ of Execution for the enforcement of the court-approved compromise agreement
in Civil Case No. 38-6633;

4. The property was already occupied and was, in fact, up for sale.

On May 9, 2002, Locsin, through counsel, sent Carlos a letter requesting the return of the property since
her signature in the purported deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20,
2002, Carlos denied Locsins request, claiming that he was unaware of any defect or flaw in Bolos title
and he is, thus, an innocent purchaser for value and good faith. On June 13, 2002, 4 Bernardo met with
Locsins counsel and discussed the possibility of a compromise. He ended the meeting with a promise to
come up with a win-win situation for his son and Locsin, a promise which turned out to be deceitful, for,
on July 15, 2002, Locsin learned that Carlos had already sold the property for PhP 1.5 million to his sister
and her husband, herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara),
respectively, who, as early as May 24, 2002, had a new certificate of title, TCT No. N-237083, issued in
their names. The spouses Guevara then immediately mortgaged the said property to secure a PhP 2.5
million loan/credit facility with Damar Credit Corporation (DCC).

It was against the foregoing backdrop of events that Locsin filed an action for reconveyance, annulment
ofTCT No. N-237083, the cancellation of the mortgage lien annotated thereon, and damages, against
Bolos, Bernardo, Carlos, the Sps. Guevara, DCC, and the Register of Deeds, Quezon City, docketed as
Civil Case No. Q-02-47925, which was tried by the Regional Trial Court, Branch 77 in Quezon City (RTC).
The charges against DCC, however, weredropped on joint motion ofthe parties. This is in view of the
cancellation of the mortgage for failure of the spouses Guevara to avail of the loan/credit facility DCC
extended in their favor.5

Ruling of the Trial Court

On November 19, 2010, the RTC rendered a Decision 6 dismissing the complaint and finding for
respondents,as defendants thereat, holding that: (a) there is insufficient evidence to showthat Locsins
signature in the Deed of Absolute Sale between her and Bolos is a forgery; (b) the questioned deed is a
public document, having been notarized; thus, it has, in its favor, the presumption of regularity; (c) Locsin
cannot simply rely on the apparent difference of the signatures in the deed and in the documents
presented by her to prove her allegation of forgery; (d) the transfers of title from Bolos to Carlos and from
Carlos to the spouses Guevara are valid and regular; (e) Bernardo, Carlos, and the spouses Guevara are
all buyers in good faith. Aggrieved, petitioner appealed the case to the CA.

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Ruling of the Court of Appeals

The CA, in its assailed Decision, ruled that it was erroneous for the RTC to hold that Locsin failed to
prove that her signature was forged. In its appreciation of the evidence, the CA found that, indeed,
Locsins signature in the Deed of Absolute Sale in favor of Bolos differs from her signatures in the other
documents offered as evidence.

The CA, however, affirmed the RTCs finding that herein respondents are innocent purchasers for value.
Citing Casimiro Development Corp. v. Renato L. Mateo,7 the appellate court held that respondents,
having dealt with property registered under the Torrens System, need not go beyond the certificate of
title, but only has to rely on the said certificate. Moreover, as the CA added, any notice of defect or flaw in
the title of the vendor should encompass facts and circumstances that would impel a reasonably prudent
man to inquire into the status of the title of the property in order to amount to bad faith.

Accordingly, the CA ruled that Locsin can no longer recover the subject lot. 8 Hence, the insant petition.

Arguments

Petitioner Locsin insists that Bernardo was well aware, at the time he purchased the subject property, of a
possible defect in Bolos title since he knew that another person, Aceron, was then occupying the lot in
issue.9 As a matter of fact, Bernardo even moved for the execution of the compromise agreement
between Locsin and Aceron inCivil Case No. 38-6633 in order to enforce to oust Aceron of his possession
over the property.10

Thus, petitioner maintains that Bernardo, knowing as he did the incidents involving the subject
property,should have acted as a reasonably diligent buyer in verifying the authenticity of Bolostitle
instead of closing his eyes to the possibility of a defecttherein. Essentially, petitioner argues that
Bernardos stubborn refusal to make an inquiry beyond the face of Bolos title is indicative of his lack of
prudence in protecting himself from possible defects or flaws therein, and consequently bars him from
interposing the protection accorded toan innocent purchaser for value.

As regards Carlos and the Sps. Guevaras admissions and testimonies, petitioner points out that when
these are placed side-by-side with the concurrent circumstances in the case, it is readily revealed that the
transfer from the former to the latter was only simulated and intended to keep the property out of
petitioners reach.

For their part, respondents maintain that they had the right to rely solely upon the face of Bolos clean
title, considering that it was free from any lien or encumbrance. They are not even required, so they claim,
to check on the validity of the sale from which they derived their title.11 Too, respondents claim that their
knowledge of Acerons possession cannot be the basis for an allegation of bad faith, for the property was
purchased on an "asis where-is" basis. The Issue

Considering that the finding of the CAthat Locsins signature in the Deed of Absolute Sale in favor of
Bolos was indeed bogus commands itself for concurrence, the resolution of the present petition lies on
this singular issuewhether or not respondents are innocent purchasers for value.12

The Courts Ruling

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The petition is meritorious.

Procedural issue

As a general rule, only questions of law may be raised in a petition for review on certiorari. 13 This Court is
not a trier offacts; and in the exercise of the power of review, we do not normally undertake the re-
examination of the evidence presented by the contending parties during the trial of the case. 14 This rule,
however, admits of exceptions.For one, the findings of fact of the CA will not bind the parties in cases
where the inference made on the evidence is mistaken, as here.15

That being said, we now proceed to the core of the controversy.

Precautionary measures for buyers of real property

An innocent purchaser for value is one who buys the property of another without notice that some other
person has a right to or interest in it, and who pays a full and fair price atthe time of the purchase or
before receiving any notice of another persons claim.16 As such, a defective title or one the
procurement of which is tainted with fraud and misrepresentationmay be the source of a completely
legal and valid title, provided that the buyer is an innocent third person who, in good faith, relied on the
correctness of the certificate of title, or an innocent purchaser for value.17

Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with
registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way
obliged to go beyond the certificate to determine the condition of the property. 18 The recognized
exceptions to this rule are stated as follows:

[A] person dealing with registeredland has a right to rely on the Torrens certificate of title and to dispense
with the need of inquiring further except when the party has actual knowledge of facts and circumstances
that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge
of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. The presence of anything which excites or
arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of
the vendor appearing on the face of said certificate. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith and, hence, does not merit
the protection of the law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we emphasized the need for prospective parties to a contract
involving titled lands to exercise the diligence of a reasonably prudent person in ensuring the legality of
the title, and the accuracy of the metes and bounds of the lot embraced therein, by undertaking
precautionary measures, such as:

1. Verifying the origin, history, authenticity, and validity of the title with the Office of the Register of
Deeds and the Land Registration Authority;

2. Engaging the services of a competent and reliable geodetic engineer to verify the
boundary,metes, and bounds of the lot subject of said title based on the technical description in
the said title and the approved survey plan in the Land Management Bureau;

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3. Conducting an actual ocular inspection of the lot;

4. Inquiring from the owners and possessors of adjoining lots with respect to the true and legal
ownership of the lot in question;

5. Putting up of signs that said lot is being purchased, leased, or encumbered; and

6. Undertaking such other measures to make the general public aware that said lot will be subject
to alienation, lease, or encumbrance by the parties.

In the case at bar, Bolos certificate of title was concededly free from liens and encumbrances on its face.
However, the failure of Carlos and the spouses Guevara to exercise the necessary level ofcaution in light
of the factual milieu surrounding the sequence of transfers from Bolos to respondents bars the application
of the mirror doctrine and inspires the Courts concurrence withpetitioners proposition.

Carlos is not an innocent purchaser for value

Foremost, the Court is of the view that Bernardo negotiated with Bolos for the property as Carlos agent.
This is bolstered by the fact that he was the one who arranged for the saleand eventual registration of the
property in Carlos favor. Carlos testified during the May 27, 2009 hearing:21

Q: Are you privy with the negotiations between your father, Mr. Bernardo Hizon, and your co-defendant,
Marylou Bolos, the alleged seller?

A: No, Maam.

Q: Do you remember having signed a Deed of Absolute Sale, dated August 12, 1999?

A: Yes, Maam.

Q: And, at that time that you have signed the Deed, was Marylou Bolos present?

A: No, Maam.

Q: Who negotiated and arranged for the sale of the property between Marylou Bolos and you? A: It was
my father. (emphasis ours)

Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his
agent received in that capacity,22 any information available and known to Bernardo is deemed similarly
available and known to Carlos, including the following:

1. Bernardo knew that Bolos, from whom he purchased the subject property, never acquired
possession over the lot. As a matter of fact, in his March 11, 2009 direct testimony, 23 Bernardo
admitted having knowledge of Acerons lot possession as well as the compromise agreement
between petitioner and Aceron.

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2. Bolos purported Deed of Sale was executed on November 3, 1979 but the ejectment case
commenced by Locsin against Aceron was in 1992, or thirteen (13)years after the property was
supposedly transferred to Bolos.

3. The August 6, 1993 Judgment,24 issued by the MTC on the compromise agreement between
Locsin and Aceron, clearly stated therein that "[o]n August 2, 1993,the parties [Aceron and
Locsin] submitted to [the MTC] for approval a Compromise Agreement dated July 28, 1993." It
further indicated that "[Aceron] acknowledges [Locsins] right of possessionto [the subject
property], being the registered owner thereof."

Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled to
investigate the reason behind the arrangement. They should have been pressed to inquire into the status
of the title of the property in litigation in order to protect Carlos interest. It should have struck them as odd
that it was Locsin, not Bolos, who sought the recovery of possession by commencing an ejectment case
against Aceron, and even entered into a compromiseagreement with the latter years afterthe purported
sale in Bolos favor. Instead, Bernardo and Carlos took inconsistent positions when they argued for the
validity of the transfer of the property in favor of Bolos, but in the same breath prayed for the enforcement
of the compromise agreement entered into by Locsin.

At this point it is well to emphasize that entering into a compromise agreement is an act of strict
dominion.25 If Bolos already acquired ownership of the property as early as 1979, it should have been her
who entered into a compromise agreement with Aceron in 1993, not her predecessor-in-interest, Locsin,
who, theoretically, had already divested herself of ownership thereof.

The spouses Guevara are not innocent purchasers for value

As regards the transfer of the property from Carlos to the spouses Guevara, We find the existence of the
sale highly suspicious. For one, there is a dearth of evidence to support the respondent spouses position
that the sale was a bona fide transaction. Evenif we repeatedly sift through the evidence on record, still
we cannot findany document, contract, or deed evidencing the sale in favor of the spouses Guevara. The
same goes for the purported payment of the purchase price of the property in the amount of PhP 1.5
million in favor of Carlos. As a matter of fact, the only documentary evidence that they presented were as
follows:

1. Deed of Sale between Locsin and Bolos;

2. TCT No. 200074 issued in Bolos name;

3. TCT No. N-205332 in Carlos name;

4. TCT No. N-237083 in the nameof the Sps. Guevara.

To bridge the gap in their documentary evidence, respondents proffer their own testimonies explaining
the circumstances surrounding the alleged sale.26 However, basic is the rule that bare and self-serving
allegations, unsubstantiated by evidence, are not equivalent to proof under the Rules.27 As such, we
cannot give credence to their representations that the sale between them actually transpired.

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Furthermore, and noticeably enough,the transfer from Carlos to the spouses Guevara was effected only
fifteen(15) days after Locsin demanded the surrender of the property fromCarlos. Reviewing the timeline:

May 9, 2002: Locsins counsel sent a letter to Carlos, requesting that he return the property to Locsin
since the latters signature in the purported deed of sale between her and Bolos was a forgery.

May 20, 2002:Carlos counsel replied to Locsins May 9, 2002 letter, claiming that Carlos was unaware of
any defect or flaw in Bolos title, making him an innocent purchaserof the subject property.

May 24, 2002: The Sps. Guevara allegedly purchased the property from Carlos.

When Bernardo met with Locsinscounsel on June 13, 2002, and personally made a commitment to
comeup with a win-win situation for his son and Locsin, he knew fully well, too,that the property had
already been purportedly transferred to his daughter and son-in-law, the spouses Guevara, for he, no
less, facilitated the same. This, to us, isglaring evidence of bad faith and an apparent intention to mislead
Locsin into believing that she could no longer recover the subject property.

Also, the fact that Lourdes Guevara and Carlos are siblings, and that Carlos agent in his dealings
concerning the property is his own father, renders incredible the argument thatLourdes had no knowledge
whatsoever of Locsins claim of ownership atthe time of the purported sale.

Indeed, the fact that the spouses Guevara never intended to be the owner in good faith and for value of
the lot is further made manifest by their lack of interest in protecting themselvesin the case. It does not
even appear in their testimonies that they, at the very least, intended to vigilantly protect their claim over
the property and prevent Locsin take it away from them. What they did was to simply appoint Bernardo as
their attorney-in-fact to handle the situation and never bothered acquainting themselves with the
developments in the case.28 To be sure, respondent Jose Manuel Guevara was not even presented asa
witness in the case.

There is also strong reason to believethat even the mortgage in favor of DCC was a mere ploy tomake it
appear that the Sps. Guevara exercised acts of dominion over the subject property. This is so considering
the proximity between the propertys registration in their names and its being subjected to the mortgage.
Most telling is that the credit line secured by the mortgage was never used by the spouses, resulting in
the mortgages cancellation and the exclusion of DCC as a party in Civil Case No. Q-02-47925.1wphi1

These circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to
exercise the necessary level of caution expected of a bona fide buyer and even performed acts that are
highly suspect. Consequently, this Court could not give respondents the protection accorded to innocent
purchasers in good faith and for value.

Locsin is entitled to nominal damages

We now delve into petitioners prayer for exemplary damages, attorneys fees, and costs of suit. Here, the
Court notes that petitioner failed to specifically pray that moral damages be awarded. Additionally, she
never invoked any of the grounds that would have warranted the award of moral damages. As can be
gleaned from the records, lacking from her testimony is any claim that she suffered any form of physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,

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social humiliation, or any other similar circumstance.29 Thus, we are constrained to refrain from awarding
moral damages in favor of petitioner.

In the same vein, exemplary damages cannot be awarded in favor of petitioner. Well-settled that this
species of damages is allowed only in addition to moral damages such that no exemplary damages can
be awarded unless the claimant first establishes his clear right to moral damages. 30 Consequently,
despite our finding that respondents acted in a fraudulent manner, petitioners claim for exemplary
damages is unavailing at this point.

Nevertheless, we find an award for nominal damages to be in order. Under prevailing jurisprudence,
nominal damages are "recoverable where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of any kind or where there has been a
breach of contract and no substantial injury or actual damages whatsoever have been or can be
shown."31 As expounded in Almeda v. Cario,32 a violation of the plaintiffs right, even if only technical, is
sufficient to support an award of nominal damages. So long as there is a showing of a violation of the
right of the plaintiff, as herein petitioner, an award of nominal damages is proper. 33

In the case at bar, this Court recognizes that petitioner was unduly deprived of her ownership rights
overthe property, and was compelled to litigate for its recovery, for almost ten (10) years. Clearly, this
could have entitled her to actual or compensatory damages had she quantified and proved, during trial,
the amounts which could have accrued in her favor, including commercial fruits such as reasonable rent
covering the pendency of the case. Nonetheless, petitioners failure to prove actual or compensatory
damages does not erase the fact that her property rights were unlawfully invaded by respondents,
entitling her to nominal damages.

As to the amount to be awarded, it bears stressing that the same is addressed to the sound discretion
ofthe court, taking into account the relevant circumstances.34 Considering the length of time petitioner
was deprived of her property and the bad faith attending respondents actuations in the extant case, we
find the amount of seventy-five thousand pesos (PhP 75,000) as sufficient nominal damages. Moreover,
respondents should be held jointly and severally liable for the said amount, attorneys fees in the amount
of an additional seventy-fivethousand pesos (PhP 75,000), and the costs of the suit.

WHEREFORE, in light of the foregoing, the Petition is hereby GRANTED. The assailed Decision of the
Court of Appeals dated June 6, 2012 in CA-G.R. CV No. 96659 affirming the Decision of the Regional
Trial Court, Branch 77, Quezon City, in Civil Case No. Q-02-47925; as well as its Resolution dated
October 30, 2012, denying reconsideration thereof, are hereby REVERSED and SET ASIDE. TCT No. N-
200074 in the name of Marylou Bolos, and the titles descending therefrom, namely, TCT Nos. N-205332
and N-237083 in the name of Carlos Hizon, and the Spouses Jose Manuel & Lourdes Guevara,
respectively, are hereby declared NULL and VOID. Respondents and all other persons acting under their
authority are hereby DIRECTED to surrender possession of the subject property in favor of petitioner.
Respondents Bernardo Hizon, Carlos Hizon, and the spouses Jose Manuel and Lourdes Guevara shall
jointly and severally pay petitioner PhP 75,000 as nominal damages, PhP 75,000 as attorney's fees, and
costs of suit.

The Register of Deeds of Quezon City is hereby ORDERED to (1) cancel TCT No. N-237083; (2)
reinstate TCT No. RT-97467; and (3) reissue TCT No. RT-97467 in favor of petitioner, without requiring
from petitioner payment for any and all expenses in performing the three acts.

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SO ORDERED.

2. Involuntary Dealings
a. Attachments (Sec. 69)
b. Adverse Claims (Sec. 70)
Sajonas v. CA, G.R. No. 102377, July 5, 1996

SECOND DIVISION

[G. R. No. 102377. July 5, 1996]

ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners, vs. THE COURT OF APPEALS,
DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON CITY and REGISTER OF
DEEDS OF MARIKINA, respondents.

DECISION

TORRES, JR., J.:

A word or group of words conveys intentions. When used truncatedly, its meaning disappears and
breeds conflict. Thus, it is written - By thy words shalt thou be justified, and by thy words shalt thou be
condemned. (Matthew, 12:37)

Construing the new words of a statute separately is the raison detre of this appeal.

Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execution
from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the
private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina,
issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to
and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of
the spouses Alfredo Sajonas and Conchita R. Sajonas, who purchased the parcel of land from the
Uychocdes, and are now the petitioners in this case.

The facts are not disputed, and are hereby reproduced as follows:

On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of
residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas on
installment basis as evidenced by a Contract to Sell dated September 22, 1983. The property was
registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of
Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the annotation of an adverse claim
based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No.
116017. Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale involving the

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property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute sale was
registered almost a year after, or on August 28, 1985.

Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for
collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was
entered into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary
obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in two years from June
25, 1980. When Uychocde failed to comply with his undertaking in the compromise agreement,
defendant-appellant Pilares moved for the issuance of a writ of execution to enforce the decision based
on the compromise agreement, which the court granted in its order dated August 3, 1982. Accordingly, a
writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was
pending. Pursuant to the order of execution dated August 3, 1982, a notice of levy on execution was
issued on February 12, 1985. On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City
presented said notice of levy on execution before the Register of Deeds of Marikina and the same was
annotated at the back of TCT No. 79073 as Entry No. 123283.

When the deed of absolute sale dated September 4 1984 was registered on August 28, 1985, TCT No. N-
79073 was cancelled and in lieu thereof, TCT No. N-109417 was ssued in the name of the Sajonas
couple. The notice of levy on execution annotated by defendant sheriff was carried over to the new
title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon City,
hence the auction sale of the subject property did not push through as scheduled.

On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution
upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said
demand, defendant-appellant Pilares refused to cause the cancellation of said annotation. In view thereof,
plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986. [1]

The Sajonases filed their complaint[2] in the Regional Trial Court of Rizal, Branch 71, against
Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges:

7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of
the defendant, have already transferred, conveyed and assigned all their title, rights and interests to the
plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon;

8. That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal
and invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by
the plaintiffs on the corresponding title of the Uychocde spouses;

9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause the
cancellation of the said notice of levy but the latter, without justifiable reason and with the sole purpose of
harassing and embarrassing the plaintiffs ignored and refused plaintiffs demand;

10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of the notice
of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned
counsel, to protect their rights and interests, for which they agreed to pay attorneys fees in the amount of
P10,000 and appearance fees of P500 per day in court.[3]

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Pilares filed his answer with compulsory counterclaim[4] on March 8, 1986, raising special and
affirmative defenses, the relevant portions of which are as follows:

10. Plaintiff has no cause of action against herein defendants;

11. Assuming, without however admitting that they filed an adverse claim against the property covered by
TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same
ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529;

12. The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of
Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon City proceeding from a
decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto Uychocde, is
undoubtedly proper and appropriate because the property is registered in the name of the judgment
debtor and is not among those exempted from execution;

13. Assuming without admitting that the property subject matter of this case was in fact sold by the
registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and without any legal
force and effect because it was done in fraud of a judgment creditor, the defendant Pilares.[5]

Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas
spouses. The parties appeared at pre-trial proceedings on January 21, 1987,[6] after which, trial on the
merits ensued.

The trial court rendered its decision on February 15, 1989.[7] It found in favor of the Sajonas couple,
and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-109417.

The court a quo stated, thus:

After going over the evidence presented by the parties, the court finds that although the title of the subject
matter of the Notice of Levy on Execution was still in the name of the Spouses Uychocde when the same
was annotated on the said title, an earlier Affidavit of Adverse Claim was annotated on the same title by
the plaintiffs who earlier bought said property from the Uychocdes.

It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual notice of an
adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not
have any legal effect in any respect on account of prior inscription of the adverse claim annotated on the
title of the Uychocdes.

xxx xxx xxx

On the issue of whether or not plaintiffs are buyers in good faith of the property of the spouses Uychocde
even notwithstanding the claim of the defendant that said sale executed by the spouses was made in
fraud of creditors, the Court finds that the evidence in this instance is bare of any indication that said
plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the
same is involved in a litigation between said spouses and the defendant. Good faith is the opposite of
fraud and bad faith, and the existence of any bad faith must be established by competent proof. [8] (Cai vs.
Henson, 51 Phil 606)

xxx xxx xxx

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In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant
Pilares, as follows:

1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certificate of Title
No. N-109417.

2. Ordering said defendant to pay the amount of P5,000 as attorneys fees.

3. Dismissing the Counterclaim interposed by said defendant.

Said defendant is likewise ordered to pay the costs.

Dissatisfied, Pilares appealed to the Court of Appeals [9], assigning errors on the part of the lower
court. The appellate court reversed the lower courts decision, and upheld the annotation of the levy on
execution on the certificate of title, thus:

WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this
complaint is dismissed.

Costs against the plaintiffs-appellees."[10]

The Sajonas couple are now before us, on a Petition for Review on Certiorari[11], praying inter alia to
set aside the Court of Appeals decision, and to reinstate that of the Regional Trial Court.

Private respondent filed his Comment[12] on March 5, 1992, after which, the parties were ordered to
file their respective Memoranda. Private respondent complied thereto on April 27, 1994[13], while
petitioners were able to submit their Memorandum on September 29, 1992.[14]

Petitioner assigns the following as errors of the appellate court, to wit:

THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR
ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED
TO READ OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT
INCONSISTENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.

II

THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON
THE GROUND THAT IT VIOLATES PETITIONERS SUBSTANTIAL RIGHT TO DUE PROCESS.

Primarily, we are being asked to ascertain who among the parties in suit has a better right over the
property in question. The petitioners derive their claim from the right of ownership arising from a perfected
contract of absolute sale between them and the registered owners of the property, such right being
attested to by the notice of adverse claim [15] annotated on TCT No. N-79073 as early as August 27,
1984. Private respondent on the other hand, claims the right to levy on the property, and have it sold on
execution to satisfy his judgment credit, arising from Civil Case No. Q-28850[16] against the Uychocdes,
from whose title, petitioners derived their own.

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Concededly, annotation of an adverse claim is a measure designed to protect the interest of a

person over a piece of real property where the registration of such interest or right is not otherwise
provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree),
and serves a warning to third parties dealing with said property that someone is claiming an interest on
the same or a better right than that of the registered owner thereof. Such notice is registered by filing a
sworn statement with the Register of Deeds of the province where the property is located, setting forth the
basis of the claimed right together with other dates pertinent thereto. [17]

The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. *

Noting the changes made in the terminology of the provisions of the law, private respondent
interpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from
its annotation, and does not automatically lose its force afterwards. Private respondent further maintains
that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to
September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70
of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to
defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the
payment of their obligation based on a compromise agreement.[18]

The respondent appellate court upheld private respondents theory when it ruled:

The above stated conclusion of the lower court is based on the premise that the adverse claim filed by
plaintiffs-appellees is still effective despite the lapse of 30 days from the date of registration. However,
under the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective only for a period of 30
days from the date of its registration. The provision of this Decree is clear and specific.

xxx xxx xxx

It should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496)
does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however,
now specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain
effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529
stating the period of effectivity would not have been inserted in the law.

Since the adverse claim was annotated On August 27, 1984, it was effective only until September 26,
1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985,
said adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the
existence of the adverse claim on the Uychocdes title is equivalent to registration inasmuch as the
adverse claim was already ineffective when the notice of levy on execution was annotated. Thus, the act
of defendant sheriff in annotating the notice of levy on execution was proper and justified.

The appellate court relied on the rule of statutory construction that Section 70 is specific and
unambiguous and hence, needs no interpretation nor construction. [19] Perforce, the appellate court stated,
the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to
give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days
from the date of its registration, after which it shall be without force and effect. Continuing, the court
further stated;

. . . clearly, the issue now has been reduced to one of preference- which should be preferred between the
notice of levy on execution and the deed of absolute sale.The Deed of Absolute Sale was executed on

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September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution
was annotated six (6) months prior to the registration of the sale on February 12, 1985.

In the case of Landig vs. U.S. Commercial Co., 89 Phil 638 it was held that where a sale is recorded later
than an attachment, although the former is of an earlier date, the sale must give way to the attachment on
the ground that the act of registration is the operative act to affect the land. A similar ruling was restated
in Campillo vs. Court of Appeals (129 SCRA 513).

xxx xxx xxx

The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property
Registration Decree, which provides as follows:

Section 51. Conveyance and other dealings by the registered owner.- An owner of registered land may
convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in
law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or
affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land in so far as third persons are
concerned, and in all cases under the Decree, the registration shall be made in the office of the Register
of Deeds for the province or city where the land lies. (Italics supplied by the lower court.)

Under the Torrens system, registration is the operative act which gives validity to the transfer or
creates a lien upon the land. 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 certificate of title.[20]

Although we have relied on the foregoing rule, in many cases coming before us, the same, however,
does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or
affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of
property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and
annotated on the certificate of title previous to the sale. [21] While it is true that under the provisions of the
Property Registration Decree, deeds of conveyance of property registered under the system, or any
interest therein only take effect as a conveyance to bind the land upon its registration, and that a
purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for
any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule
is not absolute. Thus, one who buys from the registered owner need not have to look behind the
certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon.One who
buys without checking the vendors title takes all the risks and losses consequent to such failure.[22]

In PNB vs. Court of Appeals, we held that the subsequent sale of the property to the De Castro
spouses cannot prevail over the adverse claim of Perez, which was inscribed on the banks certificate of
title on October 6, 1958. That should have put said spouses on notice, and they can claim no better legal
right over and above that of Perez. The TCT issued in the spouses names on July, 1959 also carried the
said annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid
for the property.[23]

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Then again, in Gardner vs. Court of Appeals, we said that the statement of respondent court in its
resolution of reversal that until the validity of an adverse claim is determined judicially, it cannot be
considered a flaw in the vendors title contradicts the very object of adverse claims. As stated earlier, the
annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of
real property, and serves as a notice and warning to third parties dealing with said property that someone
is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent
sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over
the property.[24]

The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No.
N-109417 still in force when private respondent caused the notice of levy on execution to be registered
and annotated in the said title, considering that more than thirty days had already lapsed since it was
annotated? This is a decisive factor in the resolution of this instant case.

If the adverse claim was still in effect, then respondents are charged with knowledge of pre-existing
interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy
attached to the certificate of title.

For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land
Registration Act reads:

Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising
subsequent to the date of the original registration, may, if no other provision is made in this Act for
registering the same, make a statement in writing setting forth fully his alleged right or interest, and how
or under whom acquired, and a reference to the volume and page of the certificate of title of the
registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and
designate a place at which all notices may be served upon him.The statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of such adverse claim and shall enter such decree
therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be
cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was
frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion.

The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the
changes introduced by P.D. 1529, which provides:

Sec. 70 Adverse Claim- Whoever claims any part or interest in registered land adverse to the registered
owner, arising subsequent to the date of the original registration, may, if no other provision is made in this
decree for registering the same, make a statement in writing setting forth fully his alleged right or interest,
and how or under whom acquired, a reference to the number of certificate of title of the registered owner,
the name of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place
at which all notices may be served upon him. This statement shall be entitled to registration as an
adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from
the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled
upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation,
no second adverse claim based on the same ground shall be registered by the same claimant.

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Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First
Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a
speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may
be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be
ordered cancelled. If, in any case, the court, after notice and hearing shall find that the adverse claim thus
registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor
more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may
withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Italics ours)

In construing the law aforesaid, care should be taken that every part thereof be given effect and a
construction that could render a provision inoperative should be avoided, and inconsistent provisions
should be reconciled whenever possible as parts of a harmonious whole. [25] For taken in solitude, a word
or phrase might easily convey a meaning quite different from the one actually intended and evident when
a word or phrase is considered with those with which it is associated. [26] In ascertaining the period of
effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three,
paragraph two of Section 70 of P.D. 1529 provides:

The adverse claim shall be effective for a period of thirty days from the date of registration.

At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to
thirty days. But the above provision cannot and should not be treated separately, but should be read in
relation to the sentence following, which reads:

After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified
petition therefor by the party in interest.

If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse
of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and
complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated
by mere lapse of time, the law would not have required the party in interest to do a useless act.

A statutes clauses and phrases must not be taken separately, but in its relation to the statutes
totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of
laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the
published Act, its history, origin, and its purposes may be examined by the courts in their
construction.[27] An eminent authority on the subject matter states the rule candidly:

A statute is passed as a whole and not in parts or sections, and is animated by one general purpose and
intent. Consequently, each part or section should be construed in connection with every other part or
section so as to produce a harmonious whole. It is not proper to confine its intention to the one section
construed. It is always an unsafe way of construing a statute or contract to divide it by a process of
etymological dissection, into separate words, and then apply to each, thus separated from the context,
some particular meaning to be attached to any word or phrase usually to be ascertained from the
context.[28]

Construing the provision as a whole would reconcile the apparent inconsistency between the
portions of the law such that the provision on cancellation of adverse claim by verified petition would
serve to qualify the provision on the effectivity period. The law, taken together, simply means that the
cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will

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remain annotated and shall continue as a lien upon the property. For if the adverse claim has already
ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the
process of cancellation would be a useless ceremony. [29]

It should be noted that the law employs the phrase may be cancelled, which obviously indicates, as
inherent in its decision making power, that the court may or may not order the cancellation of an adverse
claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the
date of registration. The court cannot be bound by such period as it would be inconsistent with the very
authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the
validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It
will therefore depend upon the evidence at a proper hearing for the court to determine whether it will
order the cancellation of the adverse claim or not.[30]

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to
thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of
adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a
person over a piece of real property where the registration of such interest or right is not otherwise
provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree),
and serves as a warning to third parties dealing with said property that someone is claiming an interest or
the same or a better right than the registered owner thereof.[31]

The reason why the law provides for a hearing where the validity of the adverse claim is to be
threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the
propriety of his claimed interest can be established or revoked, all for the purpose of determining at last
the existence of any encumbrance on the title arising from such adverse claim. This is in line with the
provision immediately following:

Provided, however, that after cancellation, no second adverse claim shall be registered by the same
claimant.

Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be
precluded from registering a second adverse claim based on the same ground.

It was held that validity or efficaciousness of the claim may only be determined by the Court upon
petition by an interested party, in which event, the Court shall order the immediate hearing thereof and
make the proper adjudication as justice and equity may warrant. And it is only when such claim is found
unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest
of the adverse claimant and giving notice and warning to third parties.[32]

In sum, the disputed inscription of adverse claim on the Transfer Certificate of Title No. N-79073 was
still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy
on execution thereto. Consequently, he is charged with knowledge that the property sought to be levied
upon on execution was encumbered by an interest the same as or better than that of the registered owner
thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of
title in favor of the petitioners.This can be deduced from the pertinent provision of the Rules of Court, to
wit:

Section 16. Effect of levy on execution as to third persons- The levy on execution shall create a lien in
favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at
the time of the levy, subject to liens or encumbrances then existing. (Italics supplied)

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To hold otherwise would be to deprive petitioners of their property, who waited a long time to
complete payments on their property, convinced that their interest was amply protected by the inscribed
adverse claim.

As lucidly observed by the trial court in the challenged decision:

True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days
from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the
property in question? Stated in another, did the lapse of the thirty day period automatically nullify the
contract to sell between the plaintiffs and the Uychocdes thereby depriving the former of their vested right
over the property?

It is respectfully submitted that it did not.[33]

As to whether or not the petitioners are buyers in good faith of the subject property, the same should
be made to rest on the findings of the trial court. As pointedly observed by the appellate court, there is no
question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at
the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony
of Conchita Sajonas, wife of plaintiff, during cross-examination on April 21, 1988.[34]

ATTY. REYES

Q - Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the
property subject matter of this case, they showed you the owners transfer certificate, is it
not?

A - Yes, sir.

Q - That was shown to you the very first time that this lot was offered to you for sale?

A - Yes.

Q - After you were shown a copy of the title and after you were informed that they are desirous
in selling the same, did you and your husband decide to buy the same?

A - No, we did not decide right after seeing the title. Of course, we visited...

Q - No, you just answer my question. You did not immediately decide?

A - Yes.

Q - When did you finally decide to buy the same?

A - After seeing the site and after verifying from the Register of Deeds in Marikina that it is free
from encumbrances, that was the time we decided.

Q - How soon after you were offered this lot did you verify the exact location and the
genuineness of the title, as soon after this was offered to you?

A - I think its one week after they were offered.[35]

A purchaser in good faith and for value is one who buys property of another without notice that some
other person has a right to or interest in such property and pays a full and fair price for the same, at the
time of such purchase, or before he has notice of the claims or interest of some other person in the
property.[36] Good faith consists in an honest intention to abstain from taking any unconscientious

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advantage of another.[37] Thus, the claim of the private respondent that the sale executed by the spouses
was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any
knowledge or notice of the debt of the Uychocdes in favor of the private respondents, nor of any claim by
the latter over the Uychocdes properties or that the same was involved in any litigation between said
spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad
faith must be established by competent proof by the party alleging the same. Sans such proof, the
petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not
be disturbed.

At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser
of registered land in good faith that they can take and hold the same free from any and all prior claims,
liens and encumbrances except those set forth on the Certificate of Title and those expressly mentioned
in the ACT as having been preserved against it. Otherwise, the efficacy of the conclusiveness of the
Certificate of Title which the Torrens system seeks to insure would be futile and nugatory. [38]

ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991
is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989
finding for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-
109417 is hereby REINSTATED.

The inscription of the notice of levy on execution on TCT No. N-109417 is hereby CANCELLED.

Costs against private respondent.

SO ORDERED.

Rodriguez v. CA, G.R. No. 142687, July 20, 2006

DECISION

PUNO, J.:

This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in CA-G.R.
CV No. 48772 and its resolution dated March 31, 2000. The Court of Appeals reversed the decision of the
Regional Trial Court of Makati in Civil Case No. 92-3524.

The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents Calingo) were
the registered owners of a house and lot located at No. 7903 Redwood Street, Marcelo Green Village,
Paraaque, Metro Manila. The property was mortgaged to the Development Bank of the Philippines, which
mortgage was later absorbed by the Home Mutual Development Fund (HMDF) or Pag-ibig.
On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica
Barrameda (respondents Barrameda) entered into a contract of sale with assumption of mortgage where
the former sold to the latter the property in question and the latter assumed to pay the outstanding loan
balance to the Development Bank of the Philippines.[1] Respondents Barrameda issued two checks in the
amounts of P150,000.00 and P528,539.76, for which respondents Calingo issued a receipt dated April
24, 1992.[2]

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In a letter dated April 23, 1992, respondent Antonio S. Calingo informed HMDF/Pag-ibig about
the sale of the property with assumption of mortgage. Said letter, however, together with an affidavit by
respondents Calingo, was served upon HMDF/Pag-ibig on October 2, 1992.[3]

On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Paraaque an
affidavit of adverse claim on the property. The adverse claim was inscribed at the back of the certificate of
title as Entry No. 3439.[4]

On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF, Mortgage and Loans
Division informing the office that they have purchased the subject property from the Calingo spouses and
that they filed a notice of adverse claim with the Register of Deeds of Paraaque. They also sought
assistance from said office as regards the procedure for the full settlement of the loan arrearages and the
transfer of the property in their names.[5]

Respondents Barrameda moved into the property on June 2, 1992.

On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution
was annotated at the back of the certificate of title of the property in question. The writ of execution was
issued by Judge Salvador Abad Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil
Case No. 88-2159 involving a claim by herein petitioners, Spouses Francisco and Bernardina Rodriguez,
against respondents Calingo. Judge Abad Santos issued the writ in favor of petitioners Rodriguez. [6]

On July 21, 1992, petitioners counsel, Atty. Nelson A. Loyola, sent a letter to respondents
Barrameda inquiring about the basis of their occupation of the property in question.
On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount
of P364,992.07 to complete the payment of the agreed purchase price.Respondents Calingo
acknowledged receipt of said amount and waived all their rights to the property in favor of the Barrameda
spouses. They also guaranteed that the property was clear and free from any liens and encumbrances,
except the real estate mortgage assumed by respondents Barrameda.[7]

On October 7, 1992, respondents Barrameda executed a joint affidavit stating that they are the
owners of the property in question by virtue of a deed of sale with assumption of mortgage; that they
registered an affidavit of adverse claim with the Register of Deeds of Paraaque; that the Sheriff of the
Regional Trial Court, Branch 65, Makati, Sheriff Manuel C. Dolor, levied said property despite their
adverse claim; and that they have acquired the property long before the levy was made, and therefore,
said levy was illegal. They served a copy of the affidavit on petitioners counsel, Atty. Loyola, who made a
reply thereto on October 15, 1992.

In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola pointed out that the
alleged deed of sale with assumption of mortgage was not registered with the Register of Deeds and that
the records of the HMDF show that the property is owned by the Calingo spouses. He urged the
Barrameda spouses to confer with the petitioners to amicably settle the controversy. [8]

On November 9, 1992, respondents Barrameda found a Notice of Sheriffs Sale posted on their
front gate, announcing the auction sale of their house and lot on December 3, 1992 at 10:00 in the
morning.[9]

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On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of Court,
respondents Barrameda served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor, accompanied
by their affidavit of title.

On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a
petition for quieting of title with prayer for preliminary injunction. The petition prayed, among others, that
the execution sale of the property be enjoined, the notice of levy and attachment
inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared the lawful
and sole owners of the property in question.[10]

The trial court ruled in favor of herein petitioners and dismissed respondents Barramedas petition
for quieting of title. It ruled that the annotation of respondents Barramedas adverse claim at the back of
the certificate of title was insufficient to establish their claim over the property. It said that respondents
Barrameda, as buyers of the property, should have registered the title in their names. Furthermore,
respondents Barramedas adverse claim had lost its efficacy after the lapse of thirty days in accordance
with the provisions of the Land Registration Act. The trial court also found that there was collusion
between respondents Barrameda and respondents Calingo to transfer the property to defraud third
parties who may have a claim against the Calingos.[11]

The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling
in Sajonas v. Court of Appeals,[12] the appellate court held that respondents Barramedas adverse claim
inscribed on the certificate of title was still effective at the time the property was levied on execution. It
said:

Therefore, the disputed inscription of adverse claim on TCT No. 83612/57286

was still in effect on July 13, 1992 when the Rodriguezes caused the annotation of the
notice of levy on execution thereto. Consequently, they are charged with knowledge that
the property sought to be levied upon on execution was encumbered by an interest the
same as or better than that of the registered owner thereof. Such notice of levy cannot
prevail over the existing adverse claim inscribed on the certificate of title in favor of the
Barramedas. xxx

The court held, therefore, that the notice of levy could not prevail over respondents Barramedas
adverse claim.

Petitioners moved for a reconsideration of the appellate courts ruling, but the motion was denied.

Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of title
was not available to respondents Barrameda as they did not have a valid title to the property in
question; that the affidavit of adverse claim inscribed by respondents Barrameda at the back of the
certificate of title was not sufficient to establish their claim to the property; and there was collusion
between respondents Barrameda and respondents Calingo.

The principal issue that needs to be resolved in this case is whether respondents Barramedas
adverse claim on the property should prevail over the levy on execution issued by another court in
satisfaction of a judgment against respondents Calingo.

We hold that it cannot.

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Respondents Barrameda anchor their claim on the property on the deed of sale with assumption
of mortgage executed by them and respondents Calingo on April 27, 1992.The Property Registration
Decree[13] requires that such document be registered with the Register of Deeds in order to be binding on
third persons. The law provides:

Sec. 51. Conveyance and other dealings by registered owner. An owner of

registered land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds
to make registration.

The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of Deeds for the province or city
where the land lies. (emphasis supplied)

It is admitted in this case that the deed of sale with assumption of mortgage was not registered,
but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. The
question now is whether the adverse claim is sufficient to bind third parties such as herein petitioners.

In L.P. Leviste and Company, Inc. v. Noblejas,[14] we explained when an inscription of an

adverse claim is sufficient to affect third parties, thus:

The basis of respondent Villanuevas adverse claim was an agreement to sell

executed in her favor by Garcia Realty. An agreement to sell is a voluntary instrument as
it is a wilful act of the registered owner. As such voluntary instrument, Section 50 of Act
No. 496 [now Presidential Decree No. 1529] expressly provides that the act of
registration shall be the operative act to convey and affect the land. And Section 55 of the
same Act requires the presentation of the owners duplicate certificate of title for the
registration of any deed or voluntary instrument. As the agreement to sell involves an
interest less than an estate in fee simple, the same should have been registered by filing
it with the Register of Deeds who, in turn, makes a brief memorandum thereof upon the
original and owners duplicate certificate of title. The reason for requiring the production of
the owners duplicate certificate in the registration of a voluntary instrument is that, being
a wilful act of the registered owner, it is to be presumed that he is interested in registering
the instrument and would willingly surrender, present or produce his duplicate certificate
of title to the Register of Deeds in order to accomplish such registration. However, where
the owner refuses to surrender the duplicate certificate for the annotation of the
voluntary instrument, the grantee may file with the Register of Deeds a statement
setting forth his adverse claim, as provided for in Section 110 of Act No. 496. In
such a case, the annotation of the instrument upon the entry book is sufficient to affect
the real estate to which it relates, although Section 72 of Act No. 496 imposes upon the
Register of Deeds the duty to require the production by the [r]egistered owner of his
duplicate certificate for the inscription of the adverse claim. The annotation of an
adverse claim is a measure designed to protect the interest of a person over a
piece of real property where the registration of such interest or right is not

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otherwise provided for by the Land Registration Act, and serves as a notice and
warning to third parties dealing with said property that someone is claiming an
interest on the same or a better right than the registered owner thereof. (emphases
supplied)

In the case at bar, the reason given for the non-registration of the deed of sale with assumption of
mortgage was that the owners duplicate copy of the certificate of title was in the possession of HMDF. It
was not shown, however, that either respondents Barrameda or respondents Calingo exerted any effort to
retrieve the owners duplicate copy from the HMDF for the purpose of registering the deed of sale with
assumption of mortgage. In fact, the parties did not even seek to obtain the consent of, much less inform,
the HMDF of the sale of the property. This, despite the provision in the contract of mortgage prohibiting
the mortgagor (respondents Calingo) from selling or disposing the property without the written
consent of the mortgagee.[15] Respondents Calingo, as party to the contract of mortgage, are charged
with the knowledge of such provision and are bound to comply therewith. Apparently, there was haste in
disposing the property that respondents Calingo informed HMDF of the sale only on October 2,
1992 when they served a copy of their letter to said office regarding the transfer of the property to
respondents Barrameda. There was no reason for the parties failure to seek the approval of the HMDF to
the sale as it appears from the letter of respondent Angelica Paez-Barrameda to HMDF that they were
ready to pay in full the balance of the loan plus interest. What is more suspect is that the judgment
against respondents Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was rendered
on January 28, 1992, before the sale of the property on April 27, 1992. We also find it unsettling that
respondents Barrameda, without any reservation or inquiry, readily remitted to respondents Calingo the
full payment for the property on August 21, 1992 despite knowledge of the levy on execution over the
property in July of the same year. Any prudent buyer of real property, before parting with his money, is
expected to first ensure that the title to the property he is about to purchase is clear and free from any
liabilities and that the sellers have the proper authority to deal on the property.

Again, we stress that the annotation of an adverse claim is a measure designed to protect the
interest of a person over a piece of property where the registration of such interest or right is not
otherwise provided for by the law on registration of real property. Section 70 of Presidential Decree
No. 1529 is clear:

Sec. 70. Adverse claim. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in this Decree for registering the
same, make a statement in writing setting forth his alleged right or interest, and how or
under whom acquired, a reference to the number of the certificate of title of the registered
owner, the name of the registered owner, and a description of the land in which the right
or interest is claimed. xxx

The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda
is a registrable instrument. In order to bind third parties, it must be registered with the Office of the
Register of Deeds. It was not shown in this case that there was justifiable reason why the deed could not
be registered. Hence, the remedy of adverse claim cannot substitute for registration.

IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court
of Appeals are SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No. 92-3524
is REINSTATED. No cost.

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SO ORDERED.

Golden Haven Memorial Park v. Filinvest, G.R. No. 187824, November 17, 2010

DECISION

ABAD, J.:

These cases are about which of two real estate developers, both buyers of the same lands, acted in good
faith and has a better title to the same.

The Facts and the Case

Petronila Yap (Yap), Victoriano and Policarpio Vivar (the Vivars), Benjamin Cruz (Cruz), Juan Aquino
(Aquino), Gideon Corpuz (Corpuz), and Francisco Sobremesana (Sobremesana), and some other
relatives inherited a parcel of land in Las Pias City covered by Transfer Certificate of Title (TCT) 67462
RT-1. Subsequently, the heirs had the land divided into 13 lots and, in a judicial partition, the court
distributed four of the lots as follows: a) Lots 1 and 12 to Aquino; b) Lot 2 to Corpuz and Sobremesana;
and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots were distributed to the other heirs.

On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot
6 in favor of Golden Haven Memorial Park, Inc. (GHM), payable in three installments. On July 31, 1989
another heir, Aquino, acting for himself and for Corpuz and Sobremesana, also executed an agreement to
sell Lots 1, 2, and 12 in favor of GHM, payable in the same manner. In both instances, GHM paid the first
installment upon execution of the contract.

On August 4, 1989 GHM caused to be annotated a Notice of Adverse Claim on TCT 67462 RT-1. On
September 20, 1989 the sellers of the four lots wrote GHM that they were still working on the titling of the
lots in their names and wanted to know if GHM was still interested in proceeding with their
agreements. GHM replied in the affirmative on September 21, 1989 and said that it was just waiting for
the sellers titles so it can pay the second installments.

Sometime in August of 1989, Filinvest Development Corporation (Filinvest) applied for the transfer in its
name of the titles over Lots 2, 4, and 5 but the Las Pias Register of Deeds declined its application. Upon
inquiry, Filinvest learned that Lot 8, a lot belonging to some other heir or heirs and covered by the same
mother title, had been sold to Household Development Corporation (HDC), a sister company of GHM,
and HDC held the owners duplicate copy of that title. Filinvest immediately filed against HDC a petition for
the surrender and cancellation of the co-owners duplicate copy of TCT 67462 RT-1. Filinvest alleged that
it bought Lots 1, 2, 6, and 12 of the property from their respective owners as evidenced by three deeds of
absolute sale in its favor dated September 10, November 18, and December 29, 1989 and that Filinvest
was entitled to the registrations of such sales.
On January 14, 1991 GHM filed against the sellers and Filinvest a complaint for the annulment of the
deeds of sale issued in the latters favor before the Regional Trial Court (RTC) of Las Pias City in Civil

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Case 91-098. On March 16, 2006 the RTC rendered a decision after trial, declaring the contracts to sell
executed by some of the heirs in GHMs favor valid and enforceable and the sale in favor of Filinvest null
and void. Only Filinvest appealed among the defendants.

On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of
the contract to sell Lot 6 in GHMs favor. But the CA declared the contracts to sell Lots 1, 2, and 12 in
GHMs favor void and the sale of the same lots in favor of Filinvest valid.

Both parties filed their petitions for review before this Court, Filinvest in G.R. 187824, and GHM in G.R.
188265.

The Issue Presented

The issue presented in these cases is whether or not the contracts to sell that the sellers
executed in GHMs favor covering the same lots sold to Filinvest are valid and enforceable.

The Courts Ruling

To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title
that covers the property. But this is true only when, at the time of the sale, the buyer was unaware of any
adverse claim to the property.[1] Otherwise, the law requires the buyer to exercise a higher degree of
diligence before proceeding with his purchase. He must examine not only the certificate of title, but also
the sellers right and capacity to transfer any interest in the property.[2] In such a situation, the buyer must
show that he exercised reasonable precaution by inquiring beyond the four corners of the title. [3] Failing in
these, he may be deemed a buyer in bad faith.[4]

Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462 RT-1, the mother title,
as early as August 4, 1989 a notice of adverse claim covering Lot 6.This notwithstanding, Filinvest still
proceeded to buy Lots 1, 2, 6, and 12 on September 10, November 18, and December 29, 1989.

Filinvest of course contends that, although the title carried a notice of adverse claim, that notice
was only with respect to seller Yaps interest in Lot 6 and it did not affect Lots 1, 2, 12, and the remaining
interests in Lot 6. The Court disagrees.
The annotation of an adverse claim is intended to protect the claimants interest in the property. The
notice is a warning to third parties dealing with the property that someone claims an interest in it or
asserts a better right than the registered owner.[5] Such notice constitutes, by operation of law, notice to
the whole world.[6] Here, although the notice of adverse claim pertained to only one lot and Filinvest
wanted to acquire interest in some other lots under the same title, the notice served as warning to it that
one of the owners was engaged in double selling.

What is more, upon inquiry with the Register of Deeds of Las Pias, Filinvest also learned that the
heirs of Andres Aldana sold Lot 8 to HDC and turned over the co-owners duplicate copy of TCT 67462
RT-1 to that company which had since then kept the title. Filinvest (referred to below as FDC) admits this
fact in its petition,[7] thus:

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Sometime in August 1989, FDC applied with the Register of Deeds of Las
Pias for the transfer and registration of Lots 2, 4, and 5 in its name and
surrendered the co-owners duplicate copy of TCT No. (67462) RT-1 given to it by
the Vivar family, but the Register of Deeds of Las Pias City refused to do the
transfer of title in the name of FDC and instead demanded from FDC to surrender
as well the other co-owner's duplicate copy of TCT No. (67462) RT-1 which was
issued to the heirs of Andres Aldana. Upon further inquiry, FDC came to know that
the heirs of Andres Aldana sold Lot 8 and delivered their co-owner's duplicate
copy of TCT No. (67462) RT-1 to Household Development Corporation, a sister
company of respondent GHMPI. FDC made representations to Household
Development Corporation for the surrender of said co-owner's duplicate copy of
TCT No. (67462) RT-1 to the Register of Deeds of Las Pias City, but Household
Development Corporation refused to do so.

Filinvests knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest was interested,
that GHM had annotated an adverse claim to that Lot 6, and that GHM had physical possession of the
title, should have put Filinvest on its toes regarding the prospects it faced if it bought the other lots
covered by the title in question. Filinvest should have investigated the true status of Lots 1, 2, 6, and 12
by asking GHM the size and shape of its interest in the lands covered by the same title, especially since
both companies were engaged in the business of developing lands. One who has knowledge of facts
which should have put him upon such inquiry and investigation cannot claim that he has acquired title to
the property in good faith as against the true owner of the land or of an interest in it.[8]

The Court upholds the validity of the contracts between GHM and its sellers. As the trial court aptly
observed, GHM entered into valid contracts with its sellers but the latter simply and knowingly refused
without just cause to honor their obligations. The sellers apparently had a sudden change of heart when
they found out that Filinvest was willing to pay more.

As to the award of exemplary damages, the Court sustains the CA ruling. This species of damages is
allowed only in addition to moral damages such that exemplary damages cannot be awarded unless the
claimant first establishes a clear right to moral damages. [9] Here, since GHM failed to prove that it is
entitled to moral damages, the RTCs award of exemplary damages had no basis. But the grant of
attorneys fees is proper. As the RTC noted, this case has been pending since 1991, or for 19 years
now. GHM was forced to litigate and incur expenses in order to protect its rights and interests.

WHEREFORE, the Court GRANTS the petition in G.R. 188265 and DISMISSES the petition in G.R.
187824. The Court likewise REVERSES and SETS ASIDE the decision of the Court of Appeals dated
November 25, 2008 in CA-G.R. CV 89448, and REINSTATES the decision of the Regional Trial Court in
Civil Case 91-098 dated March 16, 2006 with the MODIFICATION that the award of exemplary damages
is DELETED.
SO ORDERED.

Martinez v. Garcia, G.R. No. 166356, February 4, 2010

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DECISION

PERALTA, J.:

Before us is a special civil action for certiorari under Rule 65 of the Rules of Court to annul and set aside
the Decision[1] dated August 12, 2004 and the Resolution[2] dated November 18, 2004 of the Court of
Appeals (CA) in CA-G.R. CV No. 61591, which reversed and set aside the Decision[3] dated April 15,
1998 and Order[4] dated August 11, 1998 of the Regional Trial Court (RTC) of Pasig, Branch 267, in
Special Civil Action No. 574.

The factual antecedents are as follows:

Respondent Edilberto Brua was the registered owner of a parcel of land located in Mandaluyong, Rizal,
covered by Transfer Certificate of Title (TCT) No. 346026 of the Registry of Deeds of Rizal, which is the
subject matter of this case. The property was first mortgaged to the Government Service Insurance
System (GSIS), and such mortgage was annotated at the back of TCT No. 346026 as Entry No. 91370,
inscribed on June 5, 1974.[5] On February 5, 1980, respondent Brua obtained a loan from his brother-in-
law, respondent Ernesto Garcia, in the amount of One Hundred Fifty Thousand Pesos (P150,000.00)
and, to secure the payment of said loan, respondent Brua mortgaged the subjectproperty to respondent
Garcia, as evidenced by a Deed of Real Estate Mortgage[6] executed in respondent Garcia's favor. Since
the title to the subject property was in the possession of the GSIS and respondent Garcia could not
register the Deed of Real Estate Mortgage, he then executed an Affidavit of Adverse Claim[7] and
registered it with the Registry of Deeds of Rizal on June 23, 1980 as Entry No. 49853/T-346026,[8] which
remained uncanceled up to this time.

Sometime in October 1991, respondent Brua requested respondent Garcia to pay the former's loan with
the GSIS, so that the title to the subject property would be released to the latter. Respondent Garcia then
paid GSIS the amount of P400,000.00 and, thus, the title to the subject property was released to him.

On October 22, 1991, a Deed of Absolute Sale[9] was executed between respondents Garcia and Brua
over the subject property, where respondent Brua sold the property in the amount of P705,000.00. In the
same deed, it was stated that the subject property was only a partial payment of respondent
Brua's mortgage indebtedness to respondent Garcia, which he could no longer redeem from the latter.
Respondent Garcia then registered the Deed of Sale with the Registry of Deeds of Rizal on October 24
1991, and a new TCT No. 5204[10] was issued in the names of respondent Garcia and his wife. However,
the annotations at the back of the previous title were carried over to the new title, to wit: Entry No. 56837,
a Notice of Levy on Attachment and/or Levy inscribed on January 8, 1981; [11] Entry No. 2881 showing a
Notice of Levy on Execution in favor of petitioner Flor Martinez, which was inscribed on July 11,
1988;[12] Entry No. 3706, which was a Certificate of Sale in favor of petitioner inscribed on September 2,
1988;[13] Entry No. 72854,which was a Notice of Levy on Execution in favor of Pilipinas Bank inscribed on
December 8, 1981;[14] and Entry No. 16611 inscribed on October 24, 1991, which was the cancellation
of respondent Brua's mortgage with GSIS.[15]

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It appeared that the annotations found at the back of the title of the subject property in favor of
petitioner, i.e., Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution, and Certificate of
Sale, were all made in connection with petitioner's action for Collection of Sum of Money, which she filed
against respondent Brua at the RTC of Makati City, Branch 60, docketed as Civil Case No. 39633. In that
case, a decision was rendered in favor of petitioner, where the RTC ordered respondent Brua to pay the
former the amount of P244,594.10, representing the value of the dishonored checks plus 12% interest per
annum as damages and the premium paid by petitioner for the attachment bond. The decision became
final and executory as respondent Brua failed to appeal the same, and a notice of levy on execution was
issued. A public auction was subsequently conducted, where the subject property was awarded to
petitioner as the sole bidder in the amount of P10,000.00, and a Certificate of Sale was issued in her
favor.

The annotation of Pilipinas Bank's Notice of Levy on Execution annotated as Entry No. 72854 on the title
of the subject property was by virtue of a civil case filed by Filipinas Manufacturers Bank, now known as
Pilipinas Bank, against respondent Brua.

On February 9, 1994, respondents Garcia and Brua filed with the RTC of Pasig, Branch 267, an Action to
Quiet Title, initially against petitioner due to the encumbrances/liens annotated on respondent Garcia's
new title. They contended that these encumbrances/liens were registered subsequent to the annotation of
respondent Garcia's adverse claim made in 1980, and prayed that these be canceled. Subsequently, the
complaint was amended to include Pilipinas Bank as an additional defendant. Petitioner and Pilipinas
Bank filed their respective Answers thereto.

Trial thereafter ensued.

On April 15, 1998, the RTC rendered its decision dismissing respondent Garcia's action for quieting of
title, the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby

dismissed for lack of merit and judgment is hereby rendered in favor of defendants Flor
Martinez and Pilipinas Bank as against plaintiffs Ernesto Garcia and Edilberto Brua who
are further directed to pay both defendants attorney's fees in the amount of P50,000.00
each.

Accordingly, the judicial inscriptions particularly, Entry No. 3706/T-

346026, annotation of certificate of sale and Entry No. 72854/T-346026 are held to be

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valid, subsisting liens which do not constitute a cloud on Transfer Certificate of Title No.
5204.[16]

In so ruling, the RTC found that the adverse claim which respondent Garcia caused to be annotated on
the previous title of the subject property, i.e, TCT No. 346026, on June 23, 1980 was predicated on his
interest as a mortgagee of a loan of P150,000.00, which he extended to respondent Brua; that
respondent Garcia's adverse interest was merely that of a second mortgagee, as he was not yet the
purchaser of the subject property as of said date; that when the judicial liens, i.e., Notice of Levy on
Attachment and/or Levy and Notice of Levy on Execution, were caused to be registered by petitioner on
respondent Brua's title on January 8, 1981 and July 8, 1998, respectively, by virtue of petitioner being
adjudged judgment creditor by Branch 60 of RTC Makati, respondent Garcia's claim became inferior to
that of petitioner. The RTC said that respondent Garcia's inaction to preserve his adverse claim as a
second mortgagee, which was inscribed on June 23, 1980, and his sudden decision to redeem and
purchase the subject property from the GSIS in October 1991 -- when petitioner's Notice of Levy on
Attachment and/or Levy, Notice of Levy on Execution and Certificate of Sale were already inscribed at the
back of respondent Brua's title -- showed bad faith on the part of respondent Garcia; that respondent Brua
did not even testify or participate in the case, except when he was impleaded as a plaintiff in the case.
The RTC did not give credit to respondent Garcia's claim that he and respondent Brua had no prior
knowledge of the occurrence of a public auction and the consequent annotation of the certificate of sale,
and found respondent Garcia to be a buyer in bad faith of the subject property.

The RTC also ruled that the Notice of Levy on Execution, which was annotated on December 8, 1981 as
Entry No. 72854 on respondent Brua's title arising from Civil Case No. 7262 entitled Pilipinas Bank v.
Edilberto Brua, was a valid levy on the subject property in favor of Pilipinas Bank. The levy could not be
canceled, as this would impair the interest of the bank which had been decided upon by a co-equal court.
The RTC found that the sale between respondents appeared to be tainted with bad faith, which
constrained petitioner and Pilipinas Bank from engaging the services of lawyers; thus, the award of
attorney's fees in the latter's favor.

Respondents' motion for reconsideration was denied by the RTC on August 11, 1998.

Respondents filed their appeal with the CA. However, respondent Brua failed to file his appellant's
brief; thus, his appeal was considered abandoned and dismissed. Petitioner and Pilipinas Bank filed their
respective appellees' briefs.

On August 12, 2004, the CA reversed and set aside the RTC decision, the dispositive portion of which
reads:

WHEREFORE, the appealed Decision dated April 15, 1998 is REVERSED and SET
ASIDE. Granting the instant appeal, Entry No. 72854 (Notice of Levy on Execution in
favor of Pilipinas Bank), Entry No. 2881 (Notice of Levy on Execution in favor of Flor
Martinez) and Entry No. 3706 (Certificate of Sale in favor of Flor Martinez) inscribed in
TCT No. 346026 and carried over to TCT No. 5204, are hereby CANCELLED.[17]

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The CA said that a subsequent sale of property covered by a certificate of title cannot prevail over an
adverse claim, duly sworn to and annotated on the certificate of title previous to the sale; that while one
who buys a property from the registered owner need not have to look behind the title, he is nevertheless
bound by the liens and encumbrances annotated thereon; and, thus, one who buys without checking the
vendor's title takes all the risks and losses consequent to such failure. The CA found that in order to
protect his interest, respondent Garcia executed an Affidavit of Adverse Claim on June 23, 1980,
annotated it on the title of the subject property under Entry No. 49853 and it has remained uncanceled up
to this time; that such adverse claim was registered prior to the inscription of the Certificate of Sale in
favor of petitioner under Entry No. 3706 and Pilipinas Bank's Notice of Levy on Execution under Entry No.
72854; that the prior registration of respondent Garcia's adverse claim effectively gave petitioner and
Pilipinas Bank notice of the former's right to the subject property and, thus, petitioner was deemed to
have knowledge of respondent Garcia's claim and could not be considered as a buyer in good faith at the
time she purchased the subject property in the public auction; that petitioner could not claim that she was
a purchaser in good faith, since respondent Garcia's adverse claim was entered on June 23, 1980, eight
years ahead of petitioner's Certificate of Sale on September 2, 1988; that when the Notice of Levy on
Execution in favor of Pilipinas Bank was annotated on respondent Brua's title, the sheriff who caused the
annotation was charged with knowledge that the property sought to be levied upon on execution was
encumbered by an interest, which was the same if not better than that of the registered owner thereof;
and that such notice of levy could not prevail over the existing adverse claim of respondent Garcia
inscribed on the title as can be deduced from Section 12, Rule 39 of the Rules of Court.

The CA found that the RTC erred in concluding that respondent Garcia was a purchaser in bad faith,
since his adverse claim was entered in respondent Brua's title in 1980, and respondent Garcia could not
have foretold at the time he caused such annotation of adverse claim that petitioner would purchase the
same property eight years thereafter; and that while good faith is presumed, bad faith must be
established by competent proof by the party alleging the same; and, thus, in the absence of respondent
Garcia's bad faith, he is deemed to be a purchaser in good faith, and his interest in the property must not
be disturbed.

The CA also found that a Notice of Adverse Claim remains valid even after the lapse of 30 days, as
provided for in Sec. 70 of Presidential Decree No. (PD) 1529 pursuant to our ruling in Sajonas v. CA; that
since no petition was filed by petitioner for the cancellation of respondent Garcia's Notice of Adverse
Claim, the adverse claim subsisted and his rights over the subject property must consequently be upheld.

Petitioners motion for reconsideration was denied by the CA in a Resolution dated November 18, 2004.

Petitioner is now before us via a petition for certiorari under Rule 65, alleging grave abuse of discretion
amounting to lack or excess of jurisdiction committed by the CA in issuing its assailed decision and
resolution.

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Petitioner contends that respondent Garcia's adverse claim is nothing but a notice that he has an interest
adverse to that of respondent Brua to the extent of P150,000.00, which was the amount of the loan
secured by a Deed of Real Estate Mortgage executed by respondent Brua in favor of respondent Garcia;
that the adverse claim cannot be said to be superior to a final sale conducted by the sheriff by authority of
the court pursuant to a judgment that has attained finality; that Sajonas v. CA, on which the CA anchored
its decision, differs from this case, since the adverse claim made in the title by therein petitioner Sajonas
was by virtue of a contract to sell; that unlike in this case, respondent Garcia caused the annotation of his
adverse claim as a mortgagee of respondent Brua in the amount of P150,000.00 in 1980; and respondent
Garcia's payment of the GSIS loan in 1991, upon the request of respondent Brua, was presumably for the
reason that respondent Brua could no longer discharge the GSIS obligation; and to avoid the foreclosure
of the property by the GSIS, respondent Brua asked Garcia to redeem it; that respondent Garcia's
adverse claim in 1980 was not as a vendee of the property like in Sajonas, but merely as a mortgagee.

Petitioner admits that respondent Garcia, as a mortgagee on the basis of which an adverse claim was
inscribed on the title of the subject property, is protected by Sec. 12, Rule 39 of the Rules of Court; and,
thus, petitioner knows that she is obliged as a vendee in the public sale to pay liens and encumbrances
then existing at the time of the sale on September 2, 1988, which necessarily included the adverse claim
of respondent Garcia in the amount of P150,000.00.

In his Comment, respondent Garcia claims that the petition faces outright dismissal, since the appropriate
remedy of the petitioner should have been a petition for review under Rule 45 which had already lapsed;
that when the CA reversed the RTC decision, such action did not constitute grave abuse of discretion
since it had legal basis; that any lien or adverse claim earlier inscribed prevails over those liens or
adverse claims inscribed subsequent thereto.

Respondent Brua did not file his comment. Thus, we dispensed with the filing of the same in a Resolution
dated June 19, 2006.

Petitioner filed her Reply, arguing that a petition for certiorari may be availed of where appeal is
inadequate and ineffectual.

The parties submitted their respective memoranda as required in Our Resolution dated August 30, 2006.

We dismiss the petition.

Petitioner should have filed a petition for review under Rule 45 of the Rules of Court instead of a petition
for certiorari under Rule 65, since she is assailing the CA decision and resolution which are final
judgments. Rule 45 clearly provides that decisions, final orders or resolutions of the CA in any case, i.e.,
regardless of the nature of the action or proceedings involved, may be appealed to us by filing a petition
for review, which is just a continuation of the appellate process over the original case.[18] And the petition
for review must be filed within fifteen (15) days from notice of the judgment or final order or resolution

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appealed from, or of the denial of petitioner's motion for a new trial or reconsideration filed in due time
after notice of the judgment.[19]

In this case, petitioner received a copy of the CA Resolution denying her motion for reconsideration on
November 24, 2004; and, thus, under Rule 45, she has 15 days from receipt of such resolution, or until
December 9, 2004, to file a petition for review. However, petitioner did not file a petition for review;
instead, she filed a petition for certiorariunder Rule 65 on January 24, 2005.[20] Hence, the CA decision
and resolution have already attained finality, and petitioner has lost her right to appeal.

A petition for certiorari under Rule 65 is proper if a tribunal, a board or an officer exercising judicial or
quasi-judicial functions has acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy and adequate
remedy in the ordinary course of law.[21] In this case, petitioner had the remedy of appeal, and it was the
speedy and adequate remedy in the ordinary course of law. Thus, a special civil action
for certiorari cannot be used as a substitute for an appeal that the petitioner has already
lost. Certiorari cannot be allowed when a party to a case fails to appeal a judgment to the proper forum
despite the availability of that remedy, certiorari not being a substitute for a lost appeal.[22] Certiorari will
not be a cure for failure to timely file a petition for review on certiorari underRule 45.[23]
While there are instances where the extraordinary remedy of certiorari may be resorted to despite the
availability of an appeal, the long line of decisions denying the special civil action for certiorari, either
before appeal was availed of or in instances where the appeal period had lapsed, far outnumber the
instances where certiorari was given due course.[24] The few significant exceptions are: (1) when public
welfare and the advancement of public policy dictate; (2) when the broader interests of justice so require;
(3) when the writs issued are null; (4) when the questioned order amounts to an oppressive exercise of
judicial authority,[25] which we find to be not present in this case. Notably, petitioner did not even fail to
advance an explanation why appeal was not availed of, nor was there any showing that the issue raised
in the petition for certiorari could not be raised on appeal. Concomitant to a liberal application of the rules
of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure
to abide by the rules.[26]

In fact, the argument raised by petitioner, i.e., that the Court of Appeals had no legal authority to vary the
findings of the trial court and substitute its own conclusion, which were patently contrary to the trial
court's findings, and conclusion, relates to the wisdom and soundness of the assailed CA decision and
resolution. Where the issue or question involved affects the wisdom or legal soundness of the decision
not the jurisdiction of the court to render said decision the same is beyond the province of a special civil
action for certiorari.[27] Erroneous findings and conclusions do not render the appellate court vulnerable to
the corrective writ of certiorari, for where the court has jurisdiction over the case, even if its findings are
not correct, these would, at the most, constitute errors of law and not abuse of discretion correctible
by certiorari.[28] For if every error committed by the trial court or quasi-judicial agency were to be the
proper subject of review by certiorari, then trial would never end, and the dockets of appellate courts
would be clogged beyond measure.[29]

Even if we consider this petition for certiorari under Rule 65, it must be shown that the CA committed
grave abuse of discretion equivalent to lack or excess of jurisdiction, and not mere errors of judgment, for
the petition to be granted.[30] As we said, certiorari is not a remedy for errors of judgment, which are
correctible by appeal. By grave abuse of discretion is meant such capricious and whimsical exercise of

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judgment as is equivalent to lack of jurisdiction, and mere abuse of discretion is not enough -- it must be
grave.[31]

Petitioner contends that the adverse claim of respondent Garcia inscribed on the title of the subject
property is but a notice that the latter has an interest adverse to respondent Brua's title, to the extent
of P150,000.00 secured by a real estate mortgage, and such adverse claim cannot be considered
superior to that of a final sale conducted by the sheriff by virtue of a court judgment that has attained
finality.

Sec. 12, Rule 39 of the Rules of Court provides:

SEC. 12. Effect of levy on execution as to third persons. The levy on execution shall
create a lien in favor of the judgment obligee over the right, title and interest of the
judgment obligor in such property at the time of the levy, subject to liens and
encumbrances then existing.

Clearly, the levy does not make the judgment creditor the owner of the property levied upon. He merely
obtains a lien.[32] Such levy on execution is subject and subordinate to all valid claims and liens existing
against the property at the time the execution lien attached, such as real estate mortgages. [33]
Respondent Garcia's adverse claim, which refers to the deed of mortgage executed by respondent Brua
in his favor, was annotated on respondent Brua's title registered with the Registry of Deeds of Rizal on
June 23, 1980 as Entry No. 49853. The adverse claim was already existing when the Notice of Levy on
Execution, as well as the Certificate of Sale in favor of petitioner, was inscribed on July 11, 1988 and
September 2, 1988, respectively; and, hence, the adverse claim is sufficient to constitute constructive
notice to petitioner regarding the subject property. When petitioner registered her Notice of Levy on
Execution on the title of the subject property, she was charged with the knowledge that the subject
property sought to be levied upon on execution was encumbered by an interest the same as or better
than that of the registered owner thereof.[34] Thus, no grave abuse of discretion was committed by the CA
when it held that the notice of levy and subsequent sale of the subject property could not prevail over
respondent Garcia's existing adverse claim inscribed on respondent Brua's certificate of title.

The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece
of real property, where the registration of such interest or right is not otherwise provided for by the Land
Registration Act or Act No. 496 (now P.D. No.1529 or the Property Registration Decree), and serves a
warning to third parties dealing with said property that someone is claiming an interest on the same or a
better right than that of the registered owner thereof.[35]

Petitioner cannot be considered as a buyer in good faith. A purchaser in good faith and for value is one
who buys the property of another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase, or before he has notice
of the claims or interest of some other person in the property. [36] Here, petitioner admitted on cross-
examination that when she registered her notice of attachment in 1981 and the levy on execution on July
11, 1988, she already saw respondent Garcia's adverse claim inscribed on respondent Brua's title on
June 23, 1980.[37]

Petitioner claims that Sajonas v. CA[38] is not applicable, since the adverse claim registered on the title of
the subject property made by the Sajonases in 1984 was by virtue of a contract to sell, so that when the
full purchase price was eventually paid on September 4, 1984, a deed of sale of the property was
subsequently executed and registered in the Registry of Deeds of Marikina on August 28, 1985; that

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when the respondent therein registered his notice levy on execution on February 12, 1985, such notice of
levy could not have precedence over the adverse claim, because there was no more property to levy
upon. In this case, however, respondent Garcia caused the annotation of his adverse claim only as a
mortgagee of respondent Brua in the amount of P150,000.00 in 1980. The subsequent deed of sale was
executed in 1991 between respondents Garcia and Brua after the former paid the latter's loan from with
the GSIS. When a new title was issued in respondent Garcia's name, the notice of levy on execution and
the certificate of sale were already annotated on the title of the subject property; and, thus, the sale in
favor of respondent Garcia could not prevail over the previous auction sale in petitioner's favor.

We are not impressed.

The issue posed in Sajonas was whether the adverse claim inscribed on TCT No. N-190417 was still in
force when private respondent therein caused the annotation of the notice of levy on execution on the
title; if the adverse claim was still in effect, then respondent therein was charged with the knowledge of
pre-existing interest over the subject property and, thus, the Sajonases were entitled to the cancellation of
the notice of levy inscribed on the title.

We ruled in Sajonas that the inscription of the adverse claim on the title of the subject property was still in
effect on February 12, 1985, when the sheriff annotated the notice of levy on execution in favor of
respondent therein; that respondent therein was charged with knowledge that the subject property sought
to be levied upon on execution was encumbered by an interest the same as or better than that of the
registered owner thereof. We then said that such notice of levy could not prevail over the existing adverse
claim inscribed on the certificate of title in favor of the Sajonases.

As in that case, the adverse claim of respondent Garcia based on the Deed of Mortgage executed by
respondent Brua over the subject land in the formers favor was existing when the Notice of Levy on
Execution was inscribed in favor of petitioner. Although the deed of sale between respondents Brua and
Garcia was done after the notice of levy on execution and certificate of sale were inscribed on the title, it
was clearly stated in the deed that the subject property was only a partial payment for respondent Brua's
mortgage indebtedness to respondent Garcia, which the former could no longer redeem from the latter.
Thus, the sale of the subject property by respondent Brua to respondent Garcia was by reason of
respondent Brua's prior loan from respondent Garcia, which was secured by a mortgage on the subject
property; and this mortgage was registered and already existing on the title of the subject property when
the Notice of Levy on Execution and Certificate of Sale in favor of petitioner were inscribed thereon. Thus,
petitioner's claim over the subject property must yield to the earlier encumbrance registered by
respondent Garcia.

WHEREFORE, the petition is DISMISSED. The Decision dated August 12, 2004 and Resolution dated
November 18, 2004 of the Court of Appeals in CA-G.R. CV No. 61591 are AFFIRMED.

SO ORDERED.

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c. Enforcement of Liens on Registered Land and Application of New Certificate Upon

Expiration of Redemption Period (Sec. 74-75)
Padilla Jr. v. Phil. Producers Cooperative, G.R. No. 141256, July 15, 2005

DECISION

CORONA, J.:

In implementing the involuntary transfer of title of real property levied and sold on execution, is it
enough for the executing party to file a motion with the court which rendered judgment, or does he need
to file a separate action with the Regional Trial Court?
This is a petition for review on certiorari[1] from a decision
of the Court of Appeals in CA-G.R. CV No. 53085,[2] and its resolution denying reconsideration,[3] both of
which affirmed the orders of the Regional Trial Court of Bacolod City, Branch 51. [4]

The undisputed facts of the case follow.[5]

Petitioner and his wife are the registered owners of the following real properties: Lot Nos. 2904-A
(covered by TCT No. T-36090), 2312-C-5 (covered by TCT No. T-3849), and 2654 (covered by TCT No.
T-8053), all situated in Bago City.

Respondent is a marketing cooperative which had a money claim against petitioner.

On April 24, 1987, respondent filed a civil case against petitioner for collection of a sum of money
in the Regional Trial Court of Bacolod City.[6] Despite receipt of summons on May 18, 1987, petitioner
(then defendant) opted not to file an answer.[7] On March 3, 1988, respondent (then plaintiff) moved to
have petitioner-defendant declared in default, which the trial court granted on April 15,
1988.[8] Respondent presented its evidence on October 9, 1989.[9] On November 28, 1989, the trial court
rendered a decision in respondents favor.[10] Petitioner was furnished a copy of this decision by mail on
November 29, 1989 but, because of his failure to claim it, the copy was returned. [11]

On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots (Lot 2904-
A, Lot 2312-C-5 and Lot 2654), all of the Bago Cadastre and registered in petitioners name, were levied
by virtue of that writ. On July 4, 1990, sheriff Renato T. Arimas auctioned off the lots to satisfy the
judgment, with respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and clerk of
court Antonio Arbis executed a certificate of sale in favor of respondent. On August 13, 1990, the
certificate of sale was recorded in the Register of Deeds.[12]

When petitioner failed to exercise his right of redemption within the 12-month period allowed by
law, the court, on motion of respondent, ordered on February 5, 1992 the issuance of a writ of possession
for the sheriff to cause the delivery of the physical possession of the properties in favor of respondent. [13]

On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue new titles
over the properties in its name, alleging that the Register of Deeds (RD) of Bago City would not issue new
titles (in respondents name) unless the owners copies were first surrendered to him. Respondent
countered that such surrender was impossible because this was an involuntary sale and the owners
copies were with petitioner.[14]

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On July 3, 1995, the trial court issued an order granting the motion. In a subsequent order dated
August 8, 1995, it denied petitioners motion for reconsideration. Petitioner appealed. Four years later, the
Court of Appeals rendered the assailed decision affirming the order of the trial court.
Petitioner contends that respondents motion for the RD to cancel the existing certificates of title
and issue new ones in its name was in fact a real action and that the motion was procedurally infirm
because respondent did not furnish him a copy.[15] He also claims that under Section 6 of Rule 39 of the
1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the
motion was filed more than 5 years after the writ of execution was issued on March 23, 1990. [16] He also
argues that respondent failed to follow the correct procedure for the cancellation of a certificate of title and
the issuance of a new one, which is contained in Section 107 of PD 1529.[17]

In its comment,[18] respondent claims that the motion dated May 15, 1995 to direct the RD to issue
new certificates of title was but a continuation of the series of events that began with the decision in its
favor on November 28, 1989, and from there, the auction of the properties and the issuance of a
certificate of sale in 1990.

The two principal issues for consideration are:

(1) whether or not respondents right to have new titles issued in its name is now barred by
prescription and
(2) whether or not the motion in question is the proper remedy for cancelling petitioners
certificates of title and new ones issued in its name.

On the first issue, we rule that the respondents right to petition the court for the issuance of new
certificates of title has not yet prescribed.

In Heirs of Blancaflor vs. Court of Appeals,[19] Sarmiento Trading Corporation, predecessor-in-

interest of the private respondent Greater Manila Equipment Marketing Corporation, secured a writ of
execution in 1968 by virtue of which it levied real property belonging to petitioners predecessor-in-
interest, Blancaflor. When the property was auctioned, Sarmiento Trading bid successfully and, in 1970,
after the lapse of the one-year redemption period, consolidated its ownership over the lot.

Sarmiento Trading then filed a petition with the Court of First Instance to order the cancellation of
Blancaflors title and the issuance of a new one in its name. In 1972, Sarmiento Trading sold the lot to
private respondent which, at the time, went by the name Sarmiento Distributors Corporation.

In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to surrender his
owners duplicate copy of the TCT. Blancaflor did not comply and the RD refused to issue a new title. On
May 25, 1989, private respondent filed a petition in the Regional Trial Court praying that the petitioners be
ordered to surrender the owners duplicate copy of the title. The petitioners refused, claiming that
respondents cause of action had already prescribed. Ruling otherwise, we stated:
It is settled that execution is enforced by the fact of levy and sale. The
result of such execution salewith Sarmiento Trading Corporation as the highest
bidderwas that title to Lot No. 22 of TCT No. 14749 vested immediately in the purchaser
subject only to the judgment debtors right to repurchase. Therefore, upon Sarmiento
Trading Corporations purchase of Lot No. 22 covered by TCT No. 14749 at the
auction sale, private respondents successor-in-interest had acquired a right over
said title.

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The right acquired by the purchaser at an execution sale is inchoate and does
not become absolute until after the expiration of the redemption period without the right
of redemption having been exercised. But inchoate though it be, it is like any other right,
entitled to protection and must be respected until extinguished by
redemption. Gaudencio Blancaflor was not able to redeem his property after the
expiration of the redemption period, which was 12 months after the entry or
annotation of the certificate of sale made on the back of TCT No. 14749.
Consequently, he had been divested of all his rights to the property. (underscoring
ours)
In this case, the rule being invoked by petitioner[20] states:

SEC. 6. Execution by motion or by independent action.A final and executory

judgment or order may be executed on motion within five (5) years from the date of its
entry. After the lapse of such time, and before it is barred by the statute of limitations, a
judgment may be enforced by action. The revived judgment may also be enforced by
motion within five (5) years from the date of its entry and thereafter by action before it is
barred by the statute of limitations.

As should be evident from Blancaflor, petitioner Padillas reliance on Section 6 of Rule 39 of the
1997 Revised Rules of Civil Procedure is misplaced. The fact of levy and sale constitutes execution, and
not the action for the issuance of a new title. Here, because the levy and sale of the properties took place
in June and July of 1990, respectively, or less than a year after the decision became final and executory,
the respondent clearly exercised its rights in timely fashion.

In addition, petitioner himself admits his failure to redeem the properties within the one-year
period by adopting the facts stated in the Court of Appeals decision. [21] There is thus no doubt he had
been divested of his ownership of the contested lots.

Respondents position hinges on petitioners failure to redeem the properties 12 months after the
certificate of sale was recorded in the Register of Deeds on August 13, 1990. There is no uncertainty
about respondents having become the new lawful owner of the lots in question by virtue of the levy and
the execution sale.

On the other hand, the issue of whether to acquire new titles by mere motion or through a
separate petition is an entirely different matter.

Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the
old TCTs and the issuance of new ones as a result of petitioners refusal to surrender his owners duplicate
TCTs.

Indeed, this called for a separate cadastral action initiated via petition.
Section 107 of PD 1529,[22] formerly Section 111 of Act 496,[23] provides:
Sec. 107. Surrender of withheld duplicate certificates.Where it is necessary to issue a
new certificate of title pursuant to any involuntary instrument which divests the title of the
registered owner against his consent or where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to surrender the owners
duplicate certificate of title, the party in interest may file a petition in court to compel the
surrender of the same to the Register of Deeds. The court, after hearing, may order the

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registered owner or any person withholding the duplicate certificate to surrender the
same, and direct the entry of a new certificate or memorandum upon such surrender. If
the person withholding the duplicate certificate is not amenable to the process of the
court, or if for any reason the outstanding owners duplicate certificate cannot be
delivered, the court may order the annulment of the same as well as the issuance of a
new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall
contain a memorandum of the annulment of the outstanding duplicate.

Respondent alleges that it resorted to filing the contested motion because it could not obtain new
certificates of title, considering that petitioner refused to surrender his owners duplicate TCTs. This
contention is incorrect. The proper course of action was to file a petition in court, rather than merely
move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading
which was in more or less the same situation as the respondent in this case: [24]

Petitioners reliance on prescription and laches is unavailing in this instance. It

was proper for Sarmiento Trading Corporation to file a petition with the Court of
First Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No.
14749 in the name of Gaudencio Blancaflor and the issuance of another in its name.
This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD
No. 1529

Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after
registered land has been sold on any execution, or taken or sold for the enforcement of
any lien of any description, the person claiming under the execution or under any deed
or other instrument made in the course of the proceedings to levy such execution or
enforce any lien, may petition the court for the entry of a new certificate to him, and the
application may be granted: Provided, however, That every new certificate entered under
this section shall contain a memorandum of the nature of the proceeding on which it is
based: Provided, further, That at any time prior to the entry of a new certificate the
registered owner may pursue all his lawful remedies to impeach or annul proceedings
under execution or to enforce liens of any description.

Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption
period.Upon the expiration of the time, if any, allowed by law for redemption after the
registered land has been sold on execution, or taken or sold for the enforcement of a lien
of any description, except a mortgage lien, the purchaser at such sale or anyone
claiming under him may petition the court for the entry of a new certificate to him.

Before the entry of a new certificate of title, the registered owner may pursue all
legal and equitable remedies to impeach or annul such proceedings.

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It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the
law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner)
and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed the
judgment obligation. Petitioner contends that only his interest in the subject lots, and not that of his wife
who was not a party to the suit, should have been subjected to execution, and he should have had the
opportunity to prove as much.

While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the
only way to describe his refusal to surrender his owners duplicates of the certificates of title despite the
final and executory judgment against him respondent, on the other hand, cannot simply disregard
proper procedure for the issuance to it of new certificates of title. There was a law on the matter and
respondent should have followed it.

In any event, respondent can still file the proper petition with the cadastral court for the issuance
of new titles in its name.

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in
CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional Trial Court of Bacolod City
ordering the Register of Deeds of Bago City to issue new certificates of title in favor of respondent
is ANULLED.

SO ORDERED.

Reyes v. Tang Soat Ing, G.R. No. 185620, December 14, 2011

DECISION

PEREZ, J.:

Challenged in this petition for review on certiorari under Rule 45 of the Rules of Court is the Decision[1] of
the Court of Appeals in CA-G.R. SP No. 96913 annulling and setting aside the Orders [2] of the Regional
Trial Court (RTC), Branch 7, Malolos, Bulacan which denied respondents Tang Soat Ings (Joanna Tangs)
and Ando Sys Opposition (To MFR Farm, Inc.s Motion dated 25 April 2006) and Motion (To declare void
the sale of the property covered by TCT No. 198753) dated May 23, 2006.

The controversy arose from a complaint for Enforcement of Easement and Damages with Prayer for
Preliminary Injunction and Restraining Order filed by MFR Farms, Inc. (MFR) against respondents
docketed as Civil Case No. 1245-M. MFR complained of respondents commercial and industrial use of
their property covered by Transfer Certificate of Title (TCT) No. T-198753, and sought the enforcement of
the encumbrance contained in their title. MFR likewise asked for the payment of damages suffered by its
pig farm resulting from respondents illegal use of their property.

After trial, the RTC granted MFRs complaint and specifically held that:

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x x x [Respondents] have defied the clear undertaking stated in the title to the subject
property to limit the use thereof to purposes not commercial or industrial in character. x x
x [U]sing the land as a chemical processing site and as a storage facility for chemicals is
devoting it to industrial purposes, which is not allowed under the subsisting encumbrance
on the property.

x x x [R]elief is owing to [MFR], but the grant thereof is rendered all the more imperative
in light of the manifestly injurious effects which the business of [respondents] is causing
to the neighboring estate, if not to the entire locality. x x x By more than mere
preponderance of evidence has it been established that the gaseous by-products of the
chemical manufacturing process are outright pollutants which cause direct and manifest
harm to humans and animals alike, not to mention other living things.

xxxx

WHEREFORE, judgment is hereby rendered: (a) ordering [respondents] to desist from

the further conduct of industrial or commercial activities on the parcel of land covered by
TCT No. T-198753 of the Registry of Deeds of Bulacan, particularly the manufacture and
storage of chemicals thereat, including the construction of buildings intended for
purposes prohibited by the title to the property; (b) making permanent the injunctions
issued by this Courts orders of May 3, 1982 and December 7, 1983; (c) ordering
[respondents] to pay [MFR] actual damages in the amount of Six hundred Thirty-Nine
Thousand Six hundred Fifty (P639,650.00) Pesos, with legal rate of Twelve (12%)
percent interest from the filing of the complaint on January 15, 1982, until the same is
fully paid; (d) ordering [respondents] to pay [MFR] exemplary damages in the amount
One Hundred Thousand (P100,000.00) Pesos by way of example of correction for the
public good; (e) ordering [respondents] to pay MFR attorneys fees in the amount of One
Hundred Thousand (P100,000.00) Pesos and to pay the costs of suit.[3]

On appeal by respondents docketed as CA G.R. CV No. 37808, the Court of Appeals affirmed
with modification the ruling of the RTC: the Court of Appeals reduced the rate of interest to six percent
(6%) and deleted the award of exemplary damages and attorneys fees.[4]

MFR and respondents filed separate appeals by certiorari[5] to this Court questioning the
appellate courts ruling. Unfortunately for the parties, we dismissed both appeals for late payment of legal
fees and late filing of the petition.[6] By December 1, 1997, the decision of the Court of Appeals in CA G.R.
CV No. 37808 became final and executory, and was recorded in the Book of Entries of Judgment. [7]

On September 28, 1998, upon motion of MFR, the RTC issued a Writ of Execution. [8] Pursuant thereto,
the Branch Clerk of Court commanded the Sheriff of RTC, Branch 7, Malolos, Bulacan, Mr. Leovino
Legaspi (Sheriff Legaspi), to execute the Decision dated September 12, 1991 as modified by the Court of
Appeals.[9] Sheriff Legaspi was likewise ordered to accomplish a return of the proceedings taken thereon
in accordance with Section 14, Rule 39 of the Rules of Court.

On January 4, 1999, Sheriff Legaspi submitted a Sheriffs Report manifesting:

That on October 2, 1998[,] the undersigned was in receipt of the Writ of Execution issued
by Hon. Danilo A. Manalastas for service thereof;

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That on October 9, 1998[,] the undersigned served copy of the Writ of Execution and
copy of the Notice dated October 9, 1998 to [respondent] Tang Soat Ing giving him five
(5) days to comply [with] his obligations under the Writ of Execution, thru Rodolfo
Mendez, caretaker of the [respondents], at Tungkong Mangga, San Jose del Monte,
Bulacan. The undersigned inquired from the said caretaker about the personal properties
of Tang Soat Ing but he was told that Tang Soat Ing has no more properties and the
factory located in the compound is being leased to other people;

That on December 10, 1998[,] the undersigned went back to Tang Soat Ing at Tungkong
Mangga, Sa Jose del Monte, Bulacan but said person was not there and also Rodolfo
Mendez was not around because he was in Manila;

That on December 28, 1998[,] the undersigned went back to Tungkong Mangga, San
Jose del Monte, Bulacan and talked to the caretaker[,] Rodolfo Mendez[,] and asked him
what happened to the papers he gave to [respondent] Tang Soat Ing. The caretaker said
that [respondent Tang Soat Ing] called his lawyer and informed [the latter] about the
papers he received. The caretaker also told the undersigned that he [did] not know what
the lawyer said.[10]
A few days thereafter, on January 7, 1999, Sheriff Legaspi presented the Writ of Execution and
the Notice of Levy on Execution of Real Property[11] covering TCT No. T-198753 to the Register of Deeds
of Bulacan Province.

On February 4, 1999, the Notice of Levy was inscribed on TCT No. T-198753.[12]

On May 7, 1999, Sheriff Legaspi issued a Notice of Sale on Execution of Real Property[13] which he
likewise posted on the following places:

(a) The Bulletin Board of Municipal Hall of San Jose del Monte, Bulacan;
(b) The Bulletin Board of the Church of San Jose del Monte, Bulacan;
(c) The Bulletin Board of the Chapel of Gaya-gaya, San Jose del Monte, Bulacan;
(d) The Bulletin Board of the main entrance of the Provincial Capitol Building of Malolos,
Bulacan; and
(e) The Posting Board of the Office of the Ex-Officio Sheriff located at the back of the
Bulwagan ng Katarungan Building, Malolos, Bulacan.[14]
On June 12, 19 & 26, 1999, the Notice of Sale on Execution of Real Property was published in
The Times Newsweekly.[15]

On July 19, 1999, at the public auction of the subject property covered by TCT No. T-198753, MFR was
declared as the highest bidder. On even date, Sheriff Legaspi issued a Certificate of Sale [16] which was
registered with the Register of Deeds of Bulacan Province.

After more than five (5) years, on September 17, 2004, with respondents failing to exercise their right of
redemption, MFR filed a Motion[17] asking the RTC to issue an order directing the Register of Deeds of
Bulacan Province to cancel TCT No. T-198753 in the name of respondents, and issue a new certificate of
title in the name of MFR.

On September 28, 2004, the RTC denied the Motion holding that a mere motion is not sufficient for the
cancellation of a certificate of title. The RTC ruled that under Section 107 [18] of Presidential Decree No.

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1529, the Property Registration Decree, a petition and a hearing are required for the issuance of a new
certificate of title.

On December 1, 2004, MFR filed a Petition[19] in the same case, under the same docket number, Civil
Case No. 1245-M, before the same execution court. In this new petition, MFR impleaded the Register of
Deeds as additional defendant and prayed for the same reliefs as those prayed for in their previous
motion with an additional prayer for the issuance of an order directing respondents to immediately
surrender the Owners Duplicate Copy of TCT No. T-198753.

On three separate occasions, December 9, 2004 and February 8 and 17, 2005, respondents, through
their counsel of record, Atty. T. J. Sumawang (Atty. Sumawang), received a copy of the Petition. [20]

Respondents failed to file an Answer or any responsive pleading to MFRs Petition. Consequently, MFR
moved to declare respondents in default. The Motion to Declare Respondents in Default was served on
Atty. Sumawang on June 11, 2005.

The RTC granted MFRs Motion to Declare Respondents in Default: thereafter, MFR presented
evidence ex-parte.

During presentation of evidence ex-parte, MFR filed a Motion for Substitution of Party Petitioner attaching
thereto a Deed of Transfer of Interest declaring petitioner Ruben C. Reyes (Reyes) acquisition of MFRs
rights over the subject property. On January 2, 2006, the RTC issued an Order granting this latest motion:
MFR was substituted by Reyes as party-petitioner.

In an Order dated January 10, 2006, the RTC granted the Petition, thus:

WHEREFORE, finding merit in the instant petition, the same is hereby granted.
Accordingly, defendant/private respondent Tang Soat Ing (Joanna Tang) is hereby
directed to surrender to the Court her duplicate owners copy of TCT No. T-198753 within
thirty (30) days from receipt of this Order. In [the event said] defendant/private
respondent fails to surrender such owners duplicate copy as directed hereinabove, the
Register of Deeds of Bulacan is hereby directed to cancel TCT No. T-198753 and issue
in lieu thereof a new owners duplicate certificate of title in the name of Ruben C. Reyes,
who has substituted [MFR] by virtue of a Deed of Transfer of Interest and pursuant to the
order of this court dated January 02, 2006.[21]
Copies of the Order were separately served on Atty. Sumawang, Atty. Anacleto Diaz (Reyes counsel) and
the Register of Deeds of Bulacan Province on January 20 and February 2, 2006,
respectively.[22] However, service thereof to respondents counsel was returned and rendered
impossible. Apparently, Atty. Sumawang had already died in December 2005.[23]

On April 27, 2006, Reyes filed another Motion praying that the Register of Deeds of Bulacan Province be
directed to cancel TCT No. T-198753 in the name of respondents and to issue a new one in his (Reyes)
name.

On May 19, 2006, new counsel for respondents entered its appearance. Forthwith, on May 23, 2006,
respondents, through their new counsel, filed the previously adverted to Opposition and
Motion,[24] opposing Reyes April 27, 2006 Motion and moving to declare void the sale of the subject
property.

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After an exchange of pleadings from the parties, the RTC issued the Order denying respondents
Opposition and Motion for lack of merit. The RTC ruled that, Section 107 of PD 1529 does not
categorically state that the petition x x x should be in the form of a separate, distinct and original action to
be filed in another court, as otherwise it will create a situation in which the final judgment of a court, and
its enforcement, may be subject to a review of, or even reversal by another court of co-equal
jurisdiction.[25] As regards the motion to declare void the execution sale of the subject property covered by
TCT No. T-198753, the RTC noted that there was substantial compliance with the requirements of
[Section 15, Rule 39 of the Rules of Court evidenced] in the Sheriffs Report dated January 4, 1999, as
well as the publication and posting requirements, extant in the records of this case. [26] In conclusion, the
RTC ruled that respondents are estopped from questioning the proceedings, after keeping silent thereon
for a long time, despite notice thereof.

Respondents filed a Motion for Reconsideration which the RTC denied in its Order dated October 20,
2006.

Gaining no reprieve from the RTC, respondents filed a petition for certiorari before the Court of Appeals
seeking to: (1) nullify the trial courts twin Orders dated July 17, 2006 and October 20, 2006, respectively;
and (2) declare void the execution proceedings relating to the sale of the subject property and the
cancellation of TCT No. T-198753.

In yet another turn of events, the appellate court annulled and set aside the July 17, 2006 and October
20, 2006 Orders of the RTC:

WHEREFORE, the Petition is GRANTED and the Orders issued on July 17 and October
20, 2006 are ANNULLED and SET ASIDE. The public auction sale of the property held
on July 19, 1999 is declared invald and the Certificate of Sale issued by Sheriff Leovino
G. Legaspi on July 19, 1999 in favor of [petitioner Reyes, substituting MFR] covering the
parcel of land embraced in Transfer Certificate of Title No. T-198753 is likewise declared
null and void.[27]

Aggrieved, Reyes filed a Motion for Reconsideration which resulted in another exchange of pleadings
between the parties. On December 9, 2008, the Court of Appeals denied the motion.

Hence, this impasse with the following issues for our resolution:
1. Whether the execution sale of the subject property covered by TCT No. T-198753 is void;

2. Proceeding from the validity of the execution sale and the consolidation of Reyes ownership over the
subject property, whether Section 107 of Presidential Decree No. 1529 contemplates the filing of a
separate cadastral case before the RTC acting as a land registration court.

The petition is partially impressed with merit.

In declaring void the execution sale, the appellate court noted that petitioner did not strictly comply with
the requirements of Section 15, Rule 39 of the Rules of Court. The Court of Appeals relied on our holding
in Villaceran v. Beltejar,[28] an administrative case finding therein respondent Sheriff guilty of simple
neglect of duty for failure to strictly comply with the rules on execution sale. The Court of Appeals ruled
that the deficiencies in the notice of execution sale were substantial and of such nature as to prevent the
court from applying the presumption of regularity in the performance of official functions by Sheriff
Legaspi at the time of the execution sale. On this score, the Court of Appeals pointed out that it was

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incumbent upon Reyes part to prove that the requirements of the law on execution sale have been fully
complied with.

We disagree.

Contrary to the Court of Appeals holding, the burden of evidence to prove lack of compliance with Section
15, Rule 39 of the Rules of Court rests on the party claiming lack thereof i.e., respondents.

In Venzon v. Spouses Juan,[29] we declared that the judgment debtor, as herein respondents,
alleging lack of compliance with the posting and publication requirements of the auction sale in
accordance with the rules, is behooved to prove such allegation. We held, thus:

x x x. Whoever asserts a right dependent for its existence upon a negative, must
establish the truth of the negative by a preponderance of the evidence. This must
be the rule, or it must follow that rights, of which a negative forms an essential
element, may be enforced without proof. Thus, whenever the [partys] right
depends upon the truth of a negative, upon him is cast the onus probandi, except
in cases where the matter is peculiarly within the knowledge of the adverse party.

It was error, therefore, for the trial court to hold that:

Defendants did not present evidence to rebut the no notice allegation of the
plaintiff. Although in the defendant spouses pre-trial brief, there is that general
allegation that the auction sale was made in accordance with law, however, there
is no showing in the record that the requirements with respect to
publication/posting of notices were complied with by the defendants.

Deliberating on the absence of notice, the fact that the plaintiff did not come to
know that Lot 12 was being subjected to an auction sale proves two things: one,
that no notice was posted in the place where the property is located [and, two,
that] there was no auction sale that took place on March 30, 1992. . . .

Further, the defendants, particularly defendant sheriff, who is the most competent
person to testify that a written notice of sale was made and posted in accordance
with law, was not presented to the witness stand. Neither was a document
presented like Sheriffs Certificate of Posting to attest to the fact that a written
notice of sale was posted before the property was allegedly sold at public
auction. In fact, the record is silent as (to) where the auction sale was conducted.

By ruling in the foregoing manner, the trial court incorrectly shifted the
plaintiffs burden of proof to the defendants. It is true that the fact of posting
and publication of the notices is a matter peculiarly within the knowledge of the
Deputy Sheriff. However, the trial court did not acquire jurisdiction over him, as he
was not served with summons. At the time of the filing of the complaint, he was no
longer connected with the Caloocan RTC, Branch 126, which issued the writ of
execution. Hence, he could not testify in his own behalf.

x x x [T]he duty imposed by Section [18] (c) is reposed upon the sheriff, who is
charged with the enforcement of the writ. Respondent spouses had a right to

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presume that he had regularly performed his duty. It was not incumbent upon them
to present him as a witness for, in the absence of the sheriff, the burden to prove
lack of posting and publication remained with petitioner.[30] (Emphasis supplied)
Respondents made no attempt to meet this burden of evidence, simply maintaining lack of notice
of the entire proceedings (execution and issuance of a new title over the subject property) before the trial
court.

We cannot subscribe to respondents belated posturing. The disputable presumption that official
duty has been regularly performed was not overcome by respondents. [31]The documents on record lead
us to the inevitable conclusion that respondents had constructive, if not actual, notice of the execution
proceedings from the issuance of the Writ of Execution, the levy on the subject property, [32] its subjection
to execution sale, up to and until the proceedings in the RTC relating to the issuance of a new certificate
of title over the subject property. Certainly, respondents are precluded from feigning ignorance of MFR
(substituted by Reyes) staking a claim thereon.

There was substantial compliance with Section 15, Rule 39 of the Rules of Court: the documents
in support thereof, i.e., the Certificate of Posting issued by Sheriff Legaspi and the Affidavit of Publication
executed by the publisher of The Times Newsweekly, appear to be in order.[33] In this case, the purpose
of giving notice through posting and publication under Section 15(c) of the same ruleto let the public know
of the sale to the end that the best price or a better bid may be made possible to minimize prejudice to the
judgment debtorwas realized.

Another thing militates against respondents claim of lack of knowledge of the encumbrance on
their propertythe separate registrations of: (1) the Notice of Levy on TCT No. T-198753; (2) the Certificate
of Sale.

In this jurisdiction, we adhere to the doctrine that registration in a public registry works as
constructive notice to the whole world.[34] Section 51 of Act No. 496, as amended by Section 52 of
Presidential Decree No. 1529, provides:

SECTION 52. Constructive notice upon registration.Every conveyance,

mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land shall, if registered, filed or entered in the Office of the Register of
Deeds for the province or city where the land to which it relates lies,
be constructive notice to all persons from the time of such registering, filing, or
entering.

And, quite undeniably, respondents had constructive notice that their property is subject of execution
proceedings arising from their judgment debt and in danger of forfeiture to their judgment creditor.

Respondents consistently flouted the judgment in Civil Case No. 1245-M, as amended by the
Decision of the Court of Appeals in CA G.R. CV No. 37808, which became final and executory on
December 1, 1997, by their utter failure to respond to the processes of the RTC in the execution
proceedings despite their receipt of notice at each stage thereof. At the very least, respondents attack on
the validity of the execution proceedings, culminating in the execution sale of the subject property, is
barred by laches.

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Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.[35]Laches thus operates as a bar in equity.[36]

We hearken to the time-honored rule anchored on public policy:

[R]elief will be denied to a litigant whose claim or demand has become "stale," or who
has acquiesced for an unreasonable length of time, or who has not been vigilant or who
has slept on his rights either by negligence, folly or inattention. In other words, public
policy requires, for peace of society, the discouragement of claims grown stale for
non-assertion; thus laches is an impediment to the assertion or enforcement of a right
which has become, under the circumstances, inequitable or unfair to
permit.[37] (Emphasis supplied)

The records bear out that as of October 9, 1998, and on two occasions thereafter, December 10
& 28, 1998, Sheriff Legaspi served a copy of the Writ of Execution on respondents, and followed up
thereon. With no action forthcoming from respondents, who are ostensibly evading payment of their
judgment debt, the Sheriff correctly levied on the subject property. For more than five (5) years from the
execution sale thereof, with respondents not exercising their right of redemption, up to the filing of a
Motion, and subsequently, a Petition for the issuance of a new certificate of title over the property in
Reyes name, respondents made no effort to settle their judgment debt, much less, to ascertain the status
of the execution proceedings against them and the levy on, and consequent sale of, their property. Truly
significant is the fact that eight (8) years had lapsed, from the time respondents received a copy of the
Writ of Execution in October 1998 until they, through their new counsel, filed the Opposition and Motion in
May 2006, before respondents were prodded into action.

We find obvious respondents brazen ploy to forestall and thwart the execution of a final and
executory judgment against them. The death of their counsel, Atty. Sumawang, and their engagement of
a new one, does not minimize the hard fact that respondents had notice of, not only the execution
proceedings, but also, the proceedings on the issuance of a new title over the subject property. Yet,
respondents did not act on any of these notices which were duly received by Atty.
Sumawang. Respondents Motion to nullify the execution proceedings, from the levy on the subject
property and sale thereof, is an afterthought, a last-ditch effort to evade payment of their judgment
debt. Their claim of ignorance of the execution proceedings flies in the face of the documents on
record. This bare-faced claim cannot trump the disputable presumption that a person takes ordinary care
of his concerns.[38] Consequently, respondents are estopped and barred from assailing the execution
proceedings before the RTC.

Time and again, we have held that once a judgment becomes final and executory, the prevailing
party should not be denied the fruits of his victory by some subterfuge devised by the losing party. [39] We
completely agree with the RTCs disquisition, thus:

Finally, after [MFR] had filed the petition in question pursuant to and in compliance with
the order of this court dated September 28, 2004, to which no answer or any responsive
pleading was filed by respondents or thru their lawyer, as the latter was certainly notified
of the proceedings in said petition, respondents cannot now assail said proceedings after

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keeping silent thereon for a long time, and if indeed there was neglect on the part of their
lawyer in informing them of or in taking part in said proceedings, such negligence of their
counsel binds them as client. There is likewise an evident lack of prudence and due
diligence on the part of the respondents by their failure to inform this court of the
withdrawal of their former counsel for a long period of time, and they cannot now, by
feigning ignorance of the proceedings had in the petition in question, assail the same thru
a new counsel. In other words, respondents cannot be allowed to keep silent on or refuse
to participate in proceedings that they know were taking place in connection with a final
judgment rendered against them and then suddenly, after said proceedings were long
terminated, come to court to question the same through a new counsel. The respondents
are clearly in estoppel. Also, the court finds no practical purpose and benefit in sustaining
the theory posited by respondents which, aside from the reasons advanced earlier, will
have no other effect than to further unduly delay the execution of a judgment that had
long acquired finality.[40]

xxxx

Respondents are clearly estopped from assailing the proceedings in question by their
failure or refusal to participate therein despite their or their counsels knowledge thereof,
and it would be unjust for the plaintiff to allow respondents to put in issue the validity of
said proceedings at this late stage, thru another counsel, as they are bound by the action
or inaction of their former counsel.[41]

The Court of Appeals reliance on Villaceran v. Beltejar[42] is misplaced. Villaceran is an

administrative case finding the Sheriff guilty of simple neglect of duty for failure to strictly comply with the
rules on execution sale. We held therein that there was no substantial compliance by the Sheriff with
Section 15(c), Rule 39 of the Rules of Court. Our declaration that [n]o reason exists not to apply the
principle in the extrajudicial foreclosure sales of real property (statutory requirements of posting and
publication must be strictly complied with since non-compliance could constitute a jurisdictional defect
that would invalidate the sale) to execution sales of real property under Rule 39 of the Rules of Court [43] is
an obiter which should not be definitive of the facts obtaining herein.

The facts of this case demonstrate respondents stubborn refusal to comply with the judgment
against them by claiming lack of notice of the execution proceedings. We reiterate that this claim is belied
by the evidence on record and cannot invalidate the enforcement and execution of a final and executory
judgment of this Court. On the whole, respondents silence and inaction for eight (8) years from the time
the subject property was validly levied upon by the RTC, bars them from claiming invalidity of the
execution proceedings.

Notwithstanding the validity of the execution sale and Reyes consolidation of ownership over the
subject property upon the lapse of the redemption period, we hold that Section 107 of Presidential Decree
No. 1529 contemplates the filing of a separate and original action before the RTC, acting as a land
registration court.

Reyes argues that to require him to file his petition in another court would unduly divest the RTC
of its jurisdiction to enforce its final and executory decision. Reyes invokes our ruling in Natalia Realty,
Inc. v. Court of Appeals[44] where we declared that jurisdiction of the court to execute its judgment
continues even after the judgment has become final for the purpose of enforcement of judgment. [45]

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Reyes reasoning is off tangent. Natalia is inapplicable because the execution proceedings in this
case have been completed and was terminated upon the execution sale of the subject property. Reyes
already consolidated ownership over the subject property; as owner, he has a right to have the same
registered in his name. This transfer of title to the subject property in Reyes name is no longer part of the
execution proceedings: the fact of levy and sale constitutes execution, not so is the action for the
issuance of a new title.[46]

Indeed, the subsequent filing of a separate and original action for the titling of the subject property
in Reyes name, no longer involves the execution of the judgment in Civil Case No. 1245-M.

Section 107 of the Property Registration Decree falls under PETITIONS AND ACTIONS AFTER
ORIGINAL REGISTRATION, Chapter X thereof. The provision reads:

SECTION 107. Surrender of withhold duplicate certificates. Where it is necessary to

issue a new certificate of title pursuant to any involuntary instrument which divests the
title of the registered owner against his consent or where a voluntary instrument cannot
be registered by reason of the refusal or failure of the holder to surrender the owner's
duplicate certificate of title, the party in interest may file a petition in court to compel
surrender of the same to the Register of Deeds. The court, after hearing, may order the
registered owner or any person withholding the duplicate certificate to surrender the
same, and direct the entry of a new certificate or memorandum upon such surrender. If
the person withholding the duplicate certificate is not amenable to the process of the
court, or if not any reason the outstanding owner's duplicate certificate cannot be
delivered, the court may order the annulment of the same as well as the issuance of a
new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall
contain a memorandum of the annulment of the outstanding duplicate.

That a succeeding registration of property in anothers name, after its original registration,
contemplates a separate original action is reinforced by our ruling in Padilla v. Philippine Producers
Cooperative Marketing Association, Inc.[47] Answering the question: In implementing the involuntary
transfer of title of real property levied and sold on execution, is it enough for the executing party to file a
motion with the court which rendered judgment, or does he need to file a separate action with the
Regional Trial Court, we unequivocally declared, thus:

Petitioner is correct in assailing as improper respondents filing of a mere motion

for the cancellation of the old TCTs and the issuance of new ones as a result of
petitioners refusal to surrender his owners duplicate TCTs.

Indeed, this called for a separate cadastral action initiated via petition.

Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

xxxx

Respondent alleges that it resorted to filing the contested motion because it

could not obtain new certificates of title, considering that petitioner refused to surrender
his owners duplicate TCTs. This contention is incorrect. The proper course of action was

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to file a petition in court, rather than merely move, for the issuance of new titles. This
was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less
the same situation as the respondent in this case:

Petitioners reliance on prescription and laches is unavailing in this

instance. It was proper for Sarmiento Trading Corporation to file a petition
with the Court of First Instance of Iloilo, acting as a cadastral court, for the
cancellation of TCT No. 14749 in the name of Gaudencio Blancaflor and the
issuance of another in its name. This is a procedure provided for under Section
78 of Act No. 496 and Section 75 of PD No. 1529. . . .

Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for
redemption after registered land has been sold on any execution, or taken or sold
for the enforcement of any lien of any description, the person claiming under the
execution or under any deed or other instrument made in the course of the
proceedings to levy such execution or enforce any lien, may petition the court for
the entry of a new certificate to him, and the application may be
granted: Provided, however, That every new certificate entered under this section
shall contain a memorandum of the nature of the proceeding on which it is
based: Provided, further, That at any time prior to the entry of a new certificate
the registered owner may pursue all his lawful remedies to impeach or annul
proceedings under execution or to enforce liens of any description.

Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption

period. Upon the expiration of the time, if any, allowed by law for redemption
after the registered land has been sold on execution, or taken or sold for the
enforcement of a lien of any description, except a mortgage lien, the purchaser at
such sale or anyone claiming under him may petition the court for the entry of a
new certificate to him.

Before the entry of a new certificate of title, the registered owner may
pursue all legal and equitable remedies to impeach or annul such proceedings.

It is clear that PD 1529 provides the solution to respondents quandary. The

reasons behind the law make a lot of sense; it provides due process to a registered
landowner (in this case the petitioner) and prevents the fraudulent or mistaken
conveyance of land, the value of which may exceed the judgment obligation. x x x.

While we certainly will not condone any attempt by petitioner to frustrate the ends
of justice the only way to describe his refusal to surrender his owners duplicates of the
certificates of title despite the final and executory judgment against him respondent,
on the other hand, cannot simply disregard proper procedure for the issuance to it
of new certificates of title. There was a law on the matter and respondent should
have followed it.

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In any event, respondent can still file the proper petition with the cadastral
court for the issuance of new titles in its name.[48] (Emphasis supplied).

Plainly, Reyes must institute a separate cadastral action initiated via petition.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals in CA G.R. SP
No. 96913 annulling and setting aside the Orders dated July 17, 2006 and October 20, 2006 issued by
the Regional Trial Court, Branch 7, Malolos, Bulacan in Civil Case No. 1245-M is MODIFIED:

1. The public auction sale of the subject property covered by TCT No. T-198753 on July 19, 1999 is
declared VALID;

2. The Certificate of Sale issued by Sheriff Leovino Legaspi on July 19, 1999 in favor of MFR
Farms, Inc. (substituted by petitioner Ruben C. Reyes) covering the parcel of land embraced in Transfer
Certificate of Title No. T-198753 is likewise declared VALID; and

3. The Petition[49] dated October 29, 2004 filed by MFR Farms, Inc. (substituted by Ruben C.
Reyes) is DISMISSED without prejudice to re-filing as a separate original action pursuant to Section 107
of Presidential Decree No. 1529.

SO ORDERED.

d. Lis Pendens (Sec. 76)

Viewmaster Construction v. Maulit, et. al., G.R. No. 136283, February 29, 2000

THIRD DIVISION

[G.R. No. 136283. February 29, 2000]

VIEWMASTER CONSTRUCTION CORPORATION, petitioner, vs. HON. REYNALDO Y. MAULIT in his

official capacity as administrator of the Land Registration Authority; and EDGARDO CASTRO,
acting register of deeds of Las Pias, Metro Manila; respondents.

DECISION

PANGANIBAN, J.:

A notice of lis pendens may be registered when an action or a proceeding directly affects the title to the
land or the buildings thereon; or the possession, the use or the occupation thereof. Hence, the
registration of such notice should be allowed if the litigation involves the enforcement of an agreement for
the co-development of a parcel of land. h Y

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Statement of the Case

Before us is a Petition for Review on Certiorari[1] assailing the February 27, 1998 Decision[2] of the Court
of Appeals (CA)[3] in CA- GR SP No. 39649 and its November 12, 1998 Resolution[4] denying
reconsideration. The assailed Decision affirmed the Resolution [5] of the Land Registration Authority (LRA)
in Consulta No. 2381, which ruled as follows:

"PREMISES CONSIDERED, this Authority is of the considered view and so holds that the
Notice of Lis Pendens subject of this consulta is not registrable."[6]

The Facts

The undisputed facts were summarized by the Court of Appeals as follows:

"The subject property is known as the Las Pias property registered in the name of Peltan
Development Inc. (now State Properties Corporation) covered by Transfer Certificate of
Title No. (S-17992) 12473-A situated in Barrio Tindig na Manga, Las Pias, Rizal.

"The Chiong/Roxas family collectively owns and controls State Investment Trust, Inc.
(formerly State Investment House, Inc.) and is the major shareholder of the following
corporations, namely: State Land Investment Corporation, Philippine Development and
Industrial Corporation and Stronghold Realty Development.

"Sometime in 1995, the said family decided to give control and ownership over the said
corporations to only one member of the family, through the process of bidding among the
family members/stockholders of the said companies. It was agreed that the bidder who
acquires 51% or more of the said companies shall be deemed the winner.

"Defendant Allen Roxas, one of the stockholders of State Investment Trust, Inc. applied
for a loan with First Metro Investment, Inc. (First Metro for brevity) in the amount
of P36,500,000.00 in order to participate in the bidding. Es msc

"First Metro granted Allen Roxas' loan application without collateral provided, however,
that he procure a guarantor/surety/solidary co-debtor to secure the payment of the said
loan.

"Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in

consideration for its participation in a Joint Venture Project to co-develop the real estate
assets of State Investment Trust, Inc.

"After a series of negotiations, petitioner Viewmaster and defendant Allen Roxas agreed
that should the latter prevail and win in the bidding, he shall sell to petitioner fifty percent
(50%) of the total eventual acquisitions of shares of stock in the State Investment Trust,
Inc., at a purchase price equivalent to the successful bid price per share plus an
additiona1 ten percent (10%) per share.

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"As a result of the loans granted by First Metro in consideration of and upon the guaranty
of petitioner Viewmaster, defendant Allen Roxas, eventually gained control and
ownership of State Investment Trust, Inc.

"However, notwithstanding the lapse of two (2) years since defendant Allen Roxas
became the controlling stockholder of State Investment Trust, Inc., he failed to take the
necessary action to implement the Joint Venture Project with petitioner Viewmaster to co-
develop the subject properties.

"Thus, petitioner's counsel wrote defendant Allen Roxas, reiterating petitioner's demand
to comply with the agreement to co-develop the Las Pias Property and to set in operation
all the necessary steps towards the realization of the said project.

"On September 8, 1995, petitioner Viewmaster filed a Complaint for Specific

Performance, Enforcement of Implied Trust and Damages against State Investment
Trust, Inc. Northeast Land Development, Inc., State Properties Corporation (formerly
Peltan Development, Inc.) and defendant Allen Roxas, in his capacity as Vice-Chairman
of State Investment Trust, Inc., and Chairman of Northeast Land Development, Inc.,
State Properties Corporation, which was docketed as Civil Case No.65277. Esmm is

"On September 11,1995, petitioner Viewmaster filed a Notice of Lis Pendens with the
Register of Deeds of Quezon City and Las Pias for the annotation of a Notice of Lis
Pendens on Transfer Certificate of Title No. (S-17992) 12473- A, registered in the name
of Peltan Development, Inc. (now State Properties Corporation).

"In a letter dated September 15, 1995, the respondent Register of Deeds of Las Pias
denied the request for annotation of the Notice of Lis Pendens on the following grounds:

1. the request for annotation and the complaint [do] not contain an adequate description
of the subject property;

2. petitioner's action only has an incidental effect on the property in question. Esmso

"On September 20, 1995, petitioner filed an appeal to the respondent Land Registration
Authority, which was docketed as Consulta No. 2381.

"On December 14, 1995, the Respondent Land Registration Authority issued the assailed
Resolution holding that petitioner's 'Notice of Lis Pendens' was not registrable."[7]

Ruling of the Court of Appeals

In affirming the ruling of the LRA, the Court of Appeals held that petitioner failed to adequately describe
the subject property in the Complaint and in the application for the registration of a notice of lis
pendens. The CA noted that while Transfer Certificate of Title No. (S-17992) 12473-A indicated six
parcels of land, petitioner's application mentioned only one parcel.

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Moreover, the CA also ruled that a notice of lis pendens may be registered only when an action directly
affects the title to or possession of the real property. In the present case, the proceedings instituted by
petitioner affected the title or possession incidentally only, not directly.

Hence, this Petition.[8]

Issues

Petitioner submits for the consideration of the Court the following issues:

"I

Whether or not the petitioner failed to adequately describe the subject property in its
complaint and in the notice of lis pendens Mse sm

II

Whether or not the Las Pias property is directly involved in Civil Case No. 65277." [9]

The Court's Ruling

The Petition is meritorious.

First Issue: Description of Property

Petitioner contends that the absence of the property's technical description in either the notice of lis
pendens or the Complaint is not a sufficient ground for rejecting its application, because a copy of TCT
No. (S-17992) 12473-A specifically describing the property was attached to and made an integral part of
both documents.

On the other hand, respondents argue that petitioner failed to provide an accurate description of the Las
Pias property, which was merely referred to as a "parcel of land."

The notice of lis pendens described the property as follows:

"A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias,
Province of Rizal x x x containing an area of Seven Hundred Eighty Six Thousand One
Hundred Sixty Seven (786,167) square meters, more or less."

By itself, the above does not adequately describe the subject property, pursuant to Section 14 of Rule 13
of the Rules of Court and Section 76 of Presidential Decree (PD) No.1529. It does not distinguish the said
property from other properties similarly located in the Barrio of Tindig na Manga, Municipality of Las Pias,
Province of Rizal. Indeed, by the above description alone, it would be impossible to identify the property.

In the paragraph directly preceding the description quoted above, however, petitioner specifically stated
that the property referred to in the notice of lis pendens was the same parcel of land covered by TCT No.
(S-17992) 12473-A:

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"Please be notified that on 08 September 1995, the [p]laintiff in the above-entitled case
filed an action against the above-named [d]efendants for specific performance,
enforcement of an implied trust and damages, now pending in the Regional Trial Court of
Pasig, Branch 166, which action involves a parcel of land covered by Transfer Certificate
Title (TCT) No. (S-17992) 12473-A, registered in the name of Peltan Development
Incorporated which changed its corporate name to State Properties Corporation, one of
the [d]efendants in the aforesaid case. The said parcel of land is more particu1arly
described as follows: Ex sm

'A parcel of land situated in the Barrio of Tindig na Manga, Municipality of

Las Pias, Province of Rizal x x x containing an area of Seven Hundred
Eighty Six Thousand One Hundred Sixty Seven (786,167) square
meters, more or less.'

"Request is therefore made [for] your good office to record this notice of pendency of the
aforementioned action in TCT No. (S-17992) 12473-A for all legal purposes."[10]

As earlier noted, a copy of the TCT was attached to and made an integral part of both documents.
Consequently, the notice of lis pendens submitted for registration, taken as a whole, leaves no doubt as
to the identity of the property, the technical description of which appears on the attached TCT. We stress
that the main purpose of the requirement that the notice should contain a technical description of the
property is to ensure that the same can be distinguished and readily identified. In this case, we agree with
petitioner that there was substantial compliance with this requirement.

Second Issue: Property Directly Involved

In upholding the LRA, the Court of Appeals held that "the doctrine of lis pendens has no application to a
proceeding in which the only object sought is the recovery of [a] money judgment, though the title [to] or
right or possession [of] a property may be incidentally affected. It is thus essential that the property be
directly affected where the relief sought in the action or suit includes the recovery of possession, or the
enforcement [thereof], or an adjudication between the conflicting claims of title, possession or right of
possession to specific property, or requiring its transfer or sale."[11]

On the other hand, petitioner contends that the civil case subject of the notice of lis pendens directly
involved the land in question, because it prayed for the enforcement of a prior agreement between herein
petitioner and Defendant Allen Roxas to co-develop the latter's property.

We agree with the petitioner. A notice of lis pendens, which literally means "pending suit," may involve
actions that deal not only with the title or possession of a property, but even with the use or occupation
thereof. Thus, Section 76 of PD 1529 reads: Jjjuris

"Sec. 76. Notice of lis pendens. -- No action to recover possession of real estate, or to
quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other
proceedings of any kind in court directly affecting the title to land or the use or occupation
thereof or the buildings thereon, and no judgment, and no proceeding to vacate or
reverse any judgment, shall have any effect upon registered land as against persons
other than the parties thereto, unless a memorandum or notice stating the institution of
such action or proceeding and the court wherein the same is pending, as well as the date

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of the institution thereof, together with a reference to the number of the certificate of title,
and an adequate description of the land affected and the registered owner thereof, shall
have been filed and registered."

In Magdalena Homeowners Association, Inc. v. Court of Appeals,[12] the Court did not confine the
availability of lis pendens to cases involving the title to or possession of real property. Thus, it held:

"According to Section 24, Rule 14[13] of the Rules of Court and Section 76 of Presidential
Decree No.1529, a notice of lis pendens is proper in the following cases, viz.:

a).......An action to recover possession of real estate;

b).......An action to quiet title thereto;

c).......An action to remove clouds thereon;

d).......An action for partition; and

e).......Any other proceedings of any kind in Court directly affecting the title to the land
or the use or occupation hereof or the buildings thereon."

In Villanueva v. Court of Appeals,[14] this Court further declared that the rule of lis pendens applied to suits
brought "to establish an equitable estate, interest, or right in specific real property or to enforce any lien,
charge, or encumbrance against it x x x." Thus, this Court observed that the said notice pertained to the
following: Sjcj

"x x x all suits or actions which directly affect real property and not only those which
involve the question of title, but also those which are brought to establish an equitable
estate, interest, or right, in specific real property or to enforce any lien, charge, or
encumbrance against it, there being in some cases a lis pendens, although at the
commencement of the suit there is no present vested interest, claim, or lien in or on the
property which it seeks to charge. It has also been held to apply in the case of a
proceeding to declare an absolute deed of mortgage, or to redeem from a foreclosure
sale, or to establish a trust, or to suits for the settlement and adjustment of partnership
interests."

In the present case, petitioner's Complaint docketed as Civil Case No. 65277 clearly warrants the
registration of a notice of lis pendens. The Complaint prayed for the following reliefs: Scjj

"1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of his
shareholdings in Defendant State Investment to Plaintiff at the price equivalent to the
successful bid price per share plus an additional ten percent (10%) per share
and directing Defendants to co-develop with the Plaintiff the subject real properties;

2. Render judgment ordering the Defendant Allen Roxas to:

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a. Pay the Plaintiff the amount of at least Twenty Million Pesos (P20,000,000.00) and/or
such other amounts as may be proven during the course of the trial, by way of actual
damages;

b. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of
moral damages;

c. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of
exemplary damages;

d. Pay the Plaintiff the amount of Two Hundred Fifty Thousand Pesos (P250,000.00) by
way of attorney's fees; and

e. Pay expenses of litigation and costs of suit."[15]

Undeniably, the prayer that Defendant Allen Roxas be ordered to sell 50 percent of his shareholdings in
State Investment does not directly involve title to the property and is therefore not a proper subject of a
notice of lis pendens. Neither do the various amounts of damages prayed for justify such annotation.

We disagree, however, with the Court of Appeals and the respondents that the prayer for the co-
development of the land was merely incidental to the sale of shares of defendant company.Jjsc

The Complaint shows that the loan obtained by Allen Roxas (one of the defendants in the civil case) from
First Metro was guaranteed by petitioner for two distinct considerations: (a) to enable it to purchase 50
percent of the stocks that the said defendant may acquire in State Investment and (b) to co-develop with
the defendants the Quezon City and the Las Pias properties of the corporation. In other words, the co-
development of the said properties is a separate undertaking that did not arise from petitioner's
acquisition of the defendant's shares in the corporation. To repeat, the co-development is not merely
auxiliary or incidental to the purchase of the shares; it is a distinct consideration for Viewmaster's
guaranty.[16]

Hence, by virtue of the alleged agreement with Allen Roxas, petitioner has a direct -- not
merely incidental -- interest in the Las Pias property. Contrary to respondents' contention, [17] the action
involves not only the collection of a money judgment, but also the enforcement of petitioner's right to co-
develop and use the property.

The Court must stress that the purpose of lis pendens is (1) to protect the rights of the party causing the
registration thereof[18] and (2) to advise third persons who purchase or contract on the subject property
that they do so at their peril and subject to the result of the pending litigation. [19] One who deals with
property subject of a notice of lis pendens cannot acquire better rights than those of his predecessors-in-
interest.[20] In Tanchoco v. Aquino,[21] the Court held:

"x x x. _ The doctrine of lis pendens is founded upon reason of public policy and
necessity, the purpose of which is to keep the subject matter of the litigation within the
power of the court until the judgment or decree shall have been entered; otherwise, by
successive alienations pending the litigation, its judgment or decree shall be rendered
abortive and impossible of execution. Purchasers pendente lite of the property subject of

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the litigation after the notice of lis pendens is inscribed in the Office of the Register of
Deeds are bound by the judgment against their predecessors. x x x."

Without a notice of lis pendens, a third party who acquires the property after relying only on the Certificate
of Title would be deemed a purchaser in good faith. Against such third party, the supposed rights of
petitioner cannot be enforced, because the former is not bound by the property owner's undertakings not
annotated in the TCT.[22] Kyle

Likewise, there exists the possibility that the res of the civil case would leave the control of the court and
render ineffectual a judgment therein. Indeed, according to petitioner, it was not even informed when
Allen Roxas exchanged the Quezon City property for shares of stock in Northeast Land Development,
Inc.[23] Hence, it maintains that there is a clear risk that the same thing would be done with the Las Pias
property.

In this light, the CA ruling left unprotected petitioner's claim of co-development over the Las Pias property.
Hence, until the conflicting rights and interests are threshed out in the civil case pending before the RTC,
it will be in the best interest of the parties and the public at large that a notice of the suit be given to the
whole world.

The Court is not here saying that petitioner is entitled to the reliefs prayed for in its Complaint pending in
the RTC. Verily, there is no requirement that the right to or the interest in the property subject of a lis
pendens be proven by the applicant. The Rule merely requires that an affirmative relief be claimed. [24] A
notation of lis pendens neither affects the merits of a case nor creates a right or a lien. [25] It merely
protects the applicant's rights, which will be determined during the trial.

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court of
Appeals REVERSED and SET ASIDE. The Las Pias Register of Deeds is directed to cause the
annotation of lis pendens in TCT No. (S-17992) 12473-A. No costs.

SO ORDERED.

Atlantic Erectors, Inc. v. Herbal Cove Realty, G.R. No. 148568, March 20, 2003

THIRD DIVISION

[G.R. No. 148568. March 20, 2003]

ATLANTIC ERECTORS, INC., petitioner, vs. HERBAL COVE REALTY CORPORATION, respondent.

DECISION

PANGANIBAN, J.:

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The pendency of a simple collection suit arising from the alleged nonpayment of construction
services, materials, unrealized income and damages does not justify the annotation of a notice of lis
pendens on the title to a property where construction has been done.

Statement of the Case

Before the Court is a Petition for Review on Certiorari [1] under Rule 45 of the Rules of Court,
challenging the May 30, 2000 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 56432. The
dispositive portion of the Decision is reproduced as follows:

WHEREFORE, the petition is granted and the assailed November 4, 1998 and October 22, 1999 orders
annulled and set aside. The July 30, 1998 order of respondent judge is reinstated granting the
cancellation of the notices of lis pendens subject of this petition.[3]

In its July 21, 2001 Resolution,[4] the CA denied petitioners Motion for Reconsideration.

The Facts

The factual antecedents of the case are summarized by the CA in this wise:

On June 20, 1996, [respondent] and [petitioner] entered into a Construction Contract whereby the former
agreed to construct four (4) units of [townhouses] designated as 16-A, 16-B, 17-A and 17-B and one (1)
single detached unit for an original contract price of P15,726,745.19 which was late[r] adjusted
to P16,726,745.19 as a result of additional works. The contract period is 180 days commencing [on] July
7, 1996 and to terminate on January 7, 1997.[Petitioner] claimed that the said period was not followed
due to reasons attributable to [respondent], namely: suspension orders, additional works, force majeure,
and unjustifiable acts of omission or delay on the part of said [respondent]. [Respondent], however,
denied such claim and instead pointed to [petitioner] as having exceeded the 180 day contract period
aggravated by defective workmanship and utilization of materials which are not in compliance with
specifications.

xxxxxxxxx

On November 21, 1997, [petitioner] filed a complaint for sum of money with damages (Civil Case No. 97-
2707) with the Regional Trial Court of Makati entitled Atlantic Erectors, Incorporated vs. Herbal Cove
Realty Corp. and Ernest C. Escal[e]r. This case was raffled to Branch 137, x x x Judge Santiago J.
Ranada presiding. In said initiatory pleading, [petitioner] AEI asked for the following reliefs:

AFTER DUE NOTICE AND HEARING, to order x x x defendant to:

1. Pay plaintiff the sum of P4,854,229.94 for the unpaid construction services already rendered;

2. To x x x pay plaintiff the sum of P1,595,551.00 for the construction materials, equipment and tools of
plaintiff held by defendant;

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 Page 312 of 540

3. To x x x pay plaintiff the sum of P2,250,000.00 for the [loss] x x x of expected income from the
construction project;

4. [T]o x x x pay plaintiff the sum of P800,000.00 for the cost of income by way of rental from the
equipment of plaintiff held by defendants;

5. To x x x pay plaintiff the sum of P5,000,000.00 for moral damages;

6. To x x x pay plaintiff the sum of P5,000,000.00 for exemplary damages;

7. To x x x pay plaintiff the sum equivalent of 25% of the total money claim plus P200,000.00 acceptance
fee and P2,500.00 per court appearance;

8. To x x x pay the cost of suit.

On the same day of November 21, 1997, [petitioner] filed a notice of lis pendens for annotation of the
pendency of Civil Case No. 97-707 on titles TCTs nos. T-30228, 30229, 30230, 30231 and 30232. When
the lots covered by said titles were subsequently subdivided into 50 lots, the notices of lis pendens were
carried over to the titles of the subdivided lots, i.e., Transfer Certificate of Title Nos. T-36179 to T-36226
and T-36245 to T-36246 of the Register of Deeds of Tagaytay City.

On January 30, 1998, [respondent] and x x x Ernest L. Escaler, filed a Motion to Dismiss [petitioners]
Complaint for lack of jurisdiction and for failure to state a cause of action. They claimed [that] the Makati
RTC has no jurisdiction over the subject matter of the case because the parties Construction Contract
contained a clause requiring them to submit their dispute to arbitration.

xxxxxxxxx

On March 17, 1998, [RTC Judge Ranada] dismissed the Complaint as against [respondent] for
[petitioners] failure to comply with a condition precedent to the filing of a court action which is the prior
resort to arbitration and as against x x x Escaler for failure of the Complaint to state a cause of action x x x.

[Petitioner] filed a Motion for Reconsideration of the March 17, 1998 dismissal order. [Respondent] filed
its Opposition thereto.

On April 24, 1998, [respondent] filed a Motion to Cancel Notice of Lis Pendens. It argued that the notices
of lis pendens are without basis because [petitioners] action is a purely personal action to collect a sum of
money and recover damages and x x x does not directly affect title to, use or possession of real property.

In his July 30, 1998 Order, [Judge Ranada] granted [respondents] Motion to Cancel Notice of Lis
Pendens x x x:

[Petitioner] filed a Motion for Reconsideration of the aforesaid July 30, 1998 Order to which [respondent]
filed an Opposition.

In a November 4, 1998 Order, [Judge Ranada,] while finding no merit in the grounds raised by [petitioner]
in its Motion for Reconsideration, reversed his July 30, 1998 Order and reinstated the notices of lis
pendens, as follows:

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 Page 313 of 540

1. The Court finds no merit in plaintiffs contention that in dismissing the above-entitled case for lack of
jurisdiction, and at the same time granting defendant Herbal Coves motion to cancel notice of lis
pendens, the Court [took] an inconsistent posture. The Rules provide that prior to the transmittal of the
original record on appeal, the court may issue orders for the protection and preservation of the rights of
the parties which do not involve any matter litigated by the appeal (3rdpar., Sec. 10, Rule 41). Even as it
declared itself without jurisdiction, this Court still has power to act on incidents in this case, such as acting
on motions for reconsideration, for correction, for lifting of lis pendens, or approving appeals, etc.

As correctly argued by defendant Herbal Cove, a notice of lis pendens serves only as a precautionary
measure or warning to prospective buyers of a property that there is a pending litigation involving the
same.

The Court notes that when it issued the Order of 30 July 1998 lifting the notice of lis pendens, there was
as yet no appeal filed by plaintiff. Subsequently, on 10 September 1998, after a notice of appeal was filed
by plaintiff on 4 September 1998, the Branch Clerk of Court was ordered by the Court to elevate the
entire records of the above-entitled case to the Court of Appeals. It therefore results that the above-
entitled case is still pending. After a careful consideration of all matters relevant to the lis pendens, the
Court believes that justice will be better served by setting aside the Order of 30 July 1998.

On November 27, 1998, [respondent] filed a Motion for Reconsideration of the November 4, 1998 Order
arguing that allowing the notice of lis pendens to remain annotated on the titles would defeat, not serve,
the ends of justice and that equitable considerations cannot be resorted to when there is an applicable
provision of law.

xxxxxxxxx

On October 22, 1999, [Judge Ranada] issued an order denying [respondents] Motion for Reconsideration
of the November 4, 1998 Order for lack of sufficient merit.[5]

Thereafter, Respondent Herbal Cove filed with the CA a Petition for Certiorari.

Ruling of the Court of Appeals

Setting aside the Orders of the RTC dated November 4, 1998 and October 22, 1999, the CA
reinstated the formers July 30, 1998 Order[6] granting Herbal Coves Motion to Cancel the Notice of Lis
Pendens. According to the appellate court, the re-annotation of those notices was improper for want of
any legal basis. It specifically cited Section 76 of Presidential Decree No. 1529 (the Property Registration
Decree). The decree provides that the registration of such notices is allowed only when court proceedings
directly affect the title to, or the use or the occupation of, the land or any building thereon.

The CA opined that the Complaint filed by petitioner in Civil Case No. 97-2707 was intended purely
to collect a sum of money and to recover damages. The appellate court ruled that the Complaint did not
aver any ownership claim to the subject land or any right of possession over the buildings constructed
thereon. It further declared that absent any claim on the title to the buildings or on the possession thereof,
the notices of lis pendens had no leg to stand on.

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 Page 314 of 540

Likewise, the CA held that Judge Ranada should have maintained the notice cancellations, which he
had directed in his July 30, 1998 Order. Those notices were no longer necessary to protect the rights of
petitioner, inasmuch as it could have procured protective relief from the Construction Industry Arbitral
Commission (CIAC), where provisional remedies were available.The CA also mentioned petitioners
admission that there was already a pending case before the CIAC, which in fact rendered a decision on
March 11, 1999.

The appellate court further explained that the re-annotation of the Notice of Lis Pendens was no
longer warranted after the court a quo had ruled that the latter had no jurisdiction over the case. The
former held that the rationale behind the principle of lis pendens -- to keep the subject matter of the
litigation within the power of the court until the entry of final judgment -- was no longer applicable. The
reason for such inapplicability was that the Makati RTC already declared that it had no jurisdiction or
power over the subject matter of the case.

Finally, the CA opined that petitioners Complaint had not alleged or claimed, as basis for the
continued annotation of the Notice of Lis Pendens, the lien of contractors and laborers under Article 2242
of the New Civil Code. Moreover, petitioner had not even referred to any lien of whatever nature. Verily,
the CA ruled that the failure to allege and claim the contractors lien did not warrant the continued
annotation on the property titles of Respondent Herbal Cove.

Hence, this Petition.[7]

The Issues

Petitioner raises the following issues for our consideration:

I. Whether or not money claims representing cost of materials [for] and labor [on] the houses
constructed on a property [are] a proper lien for annotation of lis pendens on the property
title[.]

II. Whether or not the trial court[,] after having declared itself without jurisdiction to try the case[,]
may still decide on [the] substantial issue of the case.[8]

This Courts Ruling

The Petition has no merit.

First Issue:
Proper Basis for a
Notice of Lis Pendens

Petitioner avers that its money claim on the cost of labor and materials for the townhouses it
constructed on the respondents land is a proper lien that justifies the annotation of a notice of lis
pendens on the land titles. According to petitioner, the money claim constitutes a lien that can be

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 Page 315 of 540

enforced to secure payment for the said obligations. It argues that, to preserve the alleged improvement it
had made on the subject land, such annotation on the property titles of respondent is necessary.

On the other hand, Respondent Herbal Cove argues that the annotation is bereft of any factual or legal
basis, because petitioners Complaint[9] does not directly affect the title to the property, or the use or the
possession thereof. It also claims that petitioners Complaint did not assert ownership of the property or any
right to possess it. Moreover, respondent attacks as baseless the annotation of the Notice of Lis
Pendens through the enforcement of a contractors lien under Article 2242 of the Civil Code. It points out
that the said provision applies only to cases in which there are several creditors carrying on a legal action
against an insolvent debtor.

As a general rule, the only instances in which a notice of lis pendens may be availed of are as
follows: (a) an action to recover possession of real estate; (b) an action for partition; and (c) any other
court proceedings that directly affect the title to the land or the building thereon or the use or the
occupation thereof.[10] Additionally, this Court has held that resorting to lis pendens is not necessarily
confined to cases that involve title to or possession of real property. This annotation also applies to suits
seeking to establish a right to, or an equitable estate or interest in, a specific real property; or to enforce a
lien, a charge or an encumbrance against it.[11]

Apparently, petitioner proceeds on the premise that its money claim involves the enforcement of a
lien. Since the money claim is for the nonpayment of materials and labor used in the construction of
townhouses, the lien referred to would have to be that provided under Article 2242 of the Civil Code. This
provision describes a contractors lien over an immovable property as follows:

Art. 2242. With reference to specific immovable property and real rights of the debtor, the following
claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or
real right:

xxxxxxxxx

(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and
contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works,
upon said buildings, canals or other works;

(4) Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals
or other works, upon said buildings, canals or other works[.] (Emphasis supplied)

However, a careful examination of petitioners Complaint, as well as the reliefs it seeks, reveals that
no such lien or interest over the property was ever alleged. The Complaint merely asked for the payment
of construction services and materials plus damages, without mentioning -- much less asserting -- a lien
or an encumbrance over the property. Verily, it was a purely personal action and a simple collection
case. It did not contain any material averment of any enforceable right, interest or lien in connection with
the subject property.

As it is, petitioners money claim cannot be characterized as an action that involves the enforcement
of a lien or an encumbrance, one that would thus warrant the annotation of the Notice of Lis
Pendens. Indeed, the nature of an action is determined by the allegations of the complaint.[12]

Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Complaint, the
annotation of the Notice of Lis Pendens would still be unjustified, because a complaint for collection and
damages is not the proper mode for the enforcement of a contractors lien.

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In J.L. Bernardo Construction v. Court of Appeals,[13] the Court explained the concept of a
contractors lien under Article 2242 of the Civil Code and the proper mode for its enforcement as follows:

Articles 2241 and 2242 of the Civil Code enumerates certain credits which enjoy preference with respect
to specific personal or real property of the debtor.Specifically, the contractors lien claimed by the
petitioners is granted under the third paragraph of Article 2242 which provides that the claims of
contractors engaged in the construction, reconstruction or repair of buildings or other works shall
be preferred with respect to the specific building or other immovable property constructed.

However, Article 2242 finds application when there is a concurrence of credits, i.e., when the same
specific property of the debtor is subjected to the claims of several creditors and the value of
such property of the debtor is insufficient to pay in full all the creditors. In such a situation, the
question of preference will arise, that is, there will be a need to determine which of the creditors will be
paid ahead of the others. Fundamental tenets of due process will dictate that this statutory lien
should then only be enforced in the context of some kind of a proceeding where the claims of all
the preferred creditors may be bindingly adjudicated, such as insolvency
proceedings.[14] (Emphasis supplied)

Clearly then, neither Article 2242 of the Civil Code nor the enforcement of the lien thereunder is
applicable here, because petitioners Complaint failed to satisfy the foregoing requirements. Nowhere
does it show that respondents property was subject to the claims of other creditors or was insufficient to
pay for all concurring debts. Moreover, the Complaint did not pertain to insolvency proceedings or to any
other action in which the adjudication of claims of preferred creditors could be ascertained.

Another factor negates the argument of petitioner that its money claim involves the enforcement of a
lien or the assertion of title to or possession of the subject property: the fact that it filed its action with the
RTC of Makati, which is undisputedly bereft of any jurisdiction over respondents property in Tagaytay
City. Certainly, actions affecting title to or possession of real property or the assertion of any interest
therein should be commenced and tried in the proper court that has jurisdiction over the area, where the
real property involved or a portion thereof is situated. [15] If petitioner really intended to assert its claim or
enforce its supposed lien, interest or right over respondents subject properties, it would have instituted
the proper proceedings or filed a real action with the RTC of Tagaytay City, which clearly had jurisdiction
over those properties.[16]

Narciso Pea, a leading authority on the subject of land titles and registration, gives an explicit
exposition on the inapplicability of the doctrine of lis pendens to certain actions and proceedings that
specifically include money claims. He explains in this wise:

By express provision of law, the doctrine of lis pendens does not apply to attachments, levies of
execution, or to proceedings for the probate of wills, or for administration of the estate of deceased
persons in the Court of First Instance. Also, it is held generally that the doctrine of lis pendens has no
application to a proceeding in which the only object sought is the recovery of a money judgment,
though the title or right of possession to property be incidentally affected. It is essential that the
property be directly affected, as where the relief sought in the action or suit includes the recovery of
possession, or the enforcement of a lien, or an adjudication between conflicting claims of title,
possession, or the right of possession to specific property, or requiring its transfer or sale [17] (Emphasis
supplied)

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Pea adds that even if a party initially avails itself of a notice of lis pendens upon the filing of a case in
court, such notice is rendered nugatory if the case turns out to be a purely personal action. We quote him
as follows:

It may be possible also that the case when commenced may justify a resort to lis pendens, but during the
progress thereof, it develops to be purely a personal action for damages or otherwise. In such event, the
notice of lis pendens has become functus officio.[18] (Emphasis supplied)

Thus, when a complaint or an action is determined by the courts to be in personam, the rationale for
or purpose of the notice of lis pendens ceases to exist. To be sure, this Court has expressly and
categorically declared that the annotation of a notice of lis pendens on titles to properties is not proper in
cases wherein the proceedings instituted are actions in personam.[19]

Second Issue:
Jurisdiction of the Trial Court

Petitioner argues that the RTC had no jurisdiction to issue the Order canceling the Notice of Lis
Pendens as well as the Order reinstating it. Supposedly, since both Orders were issued by the trial court
without jurisdiction, the annotation made by the Register of Deeds of Tagaytay City must remain in force.

Petitioner avers that the trial court finally declared that the latter had no jurisdiction over the case
on July 27, 1998, in an Order denying the formers Motion for Reconsideration of the March 17, 1998
Order dismissing the Complaint. Petitioner insists that the subsequent July 30, 1998 Order cancelling the
subject Notice of Lis Pendens is void, because it was issued by a court that had no more jurisdiction over
the case.

Rule 41 of the 1997 Rules on Civil Procedure, which governs appeals from regional trial courts,
expressly provides that RTCs lose jurisdiction over a case when an appeal is filed. The rule reads thus:

SEC. 9. Perfection of appeal; effect thereof. -- A partys appeal by notice of appeal is deemed perfected
as to him upon the filing of the notice of appeal in due time.

xxxxxxxxx

In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the
appeals filed in due time and the expiration of the time to appeal of the other parties. (Emphasis
supplied)

On the basis of the foregoing rule, the trial court lost jurisdiction over the case only on August 31,
1998, when petitioner filed its Notice of Appeal.[20] Thus, any order issued by the RTC prior to that date
should be considered valid, because the court still had jurisdiction over the case. Accordingly, it still had
the authority or jurisdiction to issue the July 30, 1998 Order canceling the Notice of Lis Pendens. On the
other hand, the November 4, 1998 Order that set aside the July 30, 1998 Order and reinstated that
Notice should be considered without force and effect, because it was issued by the trial court after it had
already lost jurisdiction.

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In any case, even if we were to adopt petitioners theory that both the July 30, 1998 and the
November 4, 1998 Orders were void for having been issued without jurisdiction, the annotation is still
improper for lack of factual and legal bases.

As discussed previously, erroneously misplaced is the reliance of petitioner on the premise that its
money claim is an action for the enforcement of a contractors lien. Verily, the annotation of the Notice
of Lis Pendens on the subject property titles should not have been made in the first place. The Complaint
filed before the Makati RTC -- for the collection of a sum of money and for damages -- did not provide
sufficient legal basis for such annotation.

Finally, petitioner vehemently insists that the trial court had no jurisdiction to cancel the Notice. Yet,
the former filed before the CA an appeal, docketed as CA-GR CV No. 65647,[21]questioning the RTCs
dismissal of the Complaint for lack of jurisdiction. Moreover, it must be remembered that it was petitioner
which had initially invoked the jurisdiction of the trial court when the former sought a judgment for the
recovery of money and damages against respondent. Yet again, it was also petitioner which assailed that
same jurisdiction for issuing an order unfavorable to the formers cause. Indeed, parties cannot invoke the
jurisdiction of a court to secure affirmative relief, then repudiate or question that same jurisdiction after
obtaining or failing to obtain such relief.[22]

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioner.

SO ORDERED.

Homeowners Savings v. Delgado, G.R. No. 189477, February 26, 2014

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 189477 February 26, 2014

HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant,

vs.
ASUNCION P. FELONIA and LYDIA C. DE GUZMAN, represented by MARIBEL FRIAS, Respondents-
Appellees.
MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF LAS PINAS CITY and RHANDOLFO B.
AMANSEC, in his capacity as Clerk of Court Ex-Officio Sheriff, Office of the Clerk of Court, Las
Pias City,Respondents-Defendants.

DECISION

PEREZ, J.:

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 Page 319 of 540

Assailed in this Petition for Review on Certiorari is the Decision1 and Resolution2 of the Court of Appeals
(CA), in CA-G.R. CV No. 87540, which affirmed with modifications, the Decision3 of the Regional Trial
Court (RTC), reinstating the title of respondents Asuncion Felonia (Felonia) and Lydia de Guzman (De
Guzman) and cancelling the title of Marie Michelle Delgado (Delgado).

The facts as culled from the records are as follows:

Felonia and De Guzman were the registered owners of a parcel of land consisting of 532 square meters
with a five-bedroom house, covered by Transfer of Certificate of Title (TCT) No. T-402 issued by the
register of deeds of Las Pias City.

Sometime in June 1990, Felonia and De Guzman mortgaged the property to Delgado to secure the loan
in the amount of 1,655,000.00. However, instead of a real estate mortgage, the parties executed a Deed
of Absolute Sale with an Option to Repurchase.4

On 20 December 1991, Felonia and De Guzman filed an action for Reformation of Contract (Reformation
case), docketed as Civil Case No. 91-59654, before the RTC of Manila. On the findings that it is "very
apparent that the transaction had between the parties is one of a mortgage and not a deed of sale with
right to repurchase,"5 the RTC, on 21 March 1995 rendered a judgment favorable to Felonia and De
Guzman. Thus:

WHEREFORE, judgment is hereby rendered directing the [Felonia and De Guzman] and the [Delgado] to
execute a deed of mortgage over the property in question taking into account the payments made and the
imposition of the legal interests on the principal loan.

On the other hand, the counterclaim is hereby dismissed for lack of merit.

No pronouncements as to attorneys fees and damages in both instances as the parties must bear their
respective expenses incident to this suit.6

Aggrieved, Delgado elevated the case to the CA where it was docketed as CA-G.R. CV No. 49317. The
CA affirmed the trial court decision. On 16 October 2000, the CA decision became final and executory.7

Inspite of the pendency of the Reformation case in which she was the defendant, Delgado filed a "Petition
for Consolidation of Ownership of Property Sold with an Option to Repurchase and Issuance of a New
Certificate of Title" (Consolidation case) in the RTC of Las Pias, on 20 June 1994. 8 After an ex-parte
hearing, the RTC ordered the issuance of a new title under Delgados name, thus:

WHEREFORE, judgment is rendered-

1. Declaring [DELGADO] as absolute owner of the subject parcel of land covered by Transfer
Certificate of Title No. T-402 of the Register of Deeds of Las Pias, Metro Manila;

2. Ordering the Register of Deeds of Las Pias, Metro Manila to cancel Transfer Certificate of
Title No. T-402 and issue in lieu thereof a new certificate of title and owners duplicate copy
thereof in the name of [DELGADO].9

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By virtue of the RTC decision, Delgado transferred the title to her name. Hence, TCT No. T-402,
registered in the names of Felonia and De Guzman, was canceled and TCT No. 44848 in the name of
Delgado, was issued.

Aggrieved, Felonia and De Guzman elevated the case to the CA through a Petition for Annulment of
Judgment.10

Meanwhile, on 2 June 1995, Delgado mortgaged the subject property to Homeowners Savings and Loan
Bank (HSLB) using her newly registered title. Three (3) days later, or on 5 June 1995, HSLB caused the
annotation of the mortgage.

On 14 September 1995, Felonia and De Guzman caused the annotation of a Notice of Lis Pendens on
Delgados title, TCT No. 44848. The Notice states:

Entry No. 8219/T-44848 NOTICE OF LIS PENDENS filed by Atty. Humberto A. Jambora, Counsel for
the Plaintiff, that a case been commenced in the RTC, Branch 38, Manila, entitled ASUNCION P.
FELONIA and LYDIA DE GUZMAN thru VERONICA P. BELMONTE, as Atty-in-fact (Plaintiffs) v.s.
MARIE MICHELLE DELGADO defendant in Civil Case No. 91-59654 for Reformation of Instrument.

Copy on file in this Registry.

Date of Instrument Sept. 11, 1995

Date of Inscription Sept. 14, 1995 at 9:55 a.m.11

On 20 November1997, HSLB foreclosed the subject property and later consolidated ownership in its
favor, causing the issuance of a new title in its name, TCT No. 64668.

On 27 October 2000, the CA annulled and set aside the decision of the RTC, Las Pias City in the
Consolidation case. The decision of the CA, declaring Felonia and De Guzman as the absolute owners of
the subject property and ordering the cancellation of Delgados title, became final and executory on 1
December 2000.12 Thus:

WHEREFORE, the petition is GRANTED and the subject judgment of the court a quo is ANNULLED and
SET ASIDE.13

On 29 April 2003, Felonia and De Guzman, represented by Maribel Frias (Frias), claiming to be the
absolute owners of the subject property, instituted the instant complaint against Delgado, HSLB, Register
of Deeds of Las Pias City and Rhandolfo B. Amansec before the RTC of Las Pias City for Nullity of
Mortgage and Foreclosure Sale, Annulment of Titles of Delgado and HSLB, and finally, Reconveyance of
Possession and Ownership of the subject property in their favor.

As defendant, HSLB asserted that Felonia and De Guzman are barred from laches as they had slept on
their rights to timely annotate, by way of Notice of Lis Pendens, the pendency of the Reformation case.
HSLB also claimed that it should not be bound by the decisions of the CA in the Reformation and
Consolidation cases because it was not a party therein.

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Finally, HSLB asserted that it was a mortgagee in good faith because the mortgage between Delgado
and HSLB was annotated on the title on 5 June 1995, whereas the Notice of Lis Pendens was annotated
only on 14 September 1995.

After trial, the RTC ruled in favor of Felonia and De Guzman as the absolute owners of the subject
property. The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the Court hereby finds for the [Felonia and De Guzman] with
references to the decision of the Court of Appeals in CA-G.R. CV No. 49317 and CA-G.R. SP No. 43711
as THESE TWO DECISIONS CANNOT BE IGNORED and against [Delgado] and [HSLB], Register of
Deeds of Las Pias City ordering the (sic) as follows:

1. The Register of Deeds of Las Pias City to cancel Transfer Certificate of Title Nos. 44848 and
T-64668 as null and void and reinstating Transfer Certificate of Title No. T-402 which shall
contain a memorandum of the fact and shall in all respect be entitled to like faith and credit as the
original certificate of title and shall, thereafter be regarded as such for all intents and purposes
under the law;

2. Declaring the Mortgage Sheriffs Sale and the Certificate of Sale issued in favor of HSLB null
and void, without prejudice to whatever rights the said Bank may have against [Delgado];

3. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for
compensatory damages;

4. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for
exemplary damages;

5. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for moral
damages;

6. Ordering [Delgado] to pay 20% of the total obligations as and by way of attorneys fees;

7. Ordering [Delgado] to pay cost of suit.14

On appeal, the CA affirmed with modifications the trial court decision. The dispositive portion of the
appealed Decision reads:

WHEREFORE, in the light of the foregoing, the decision appealed from is AFFIRMED with the
MODIFICATIONS that the awards of actual damages and attorneys fees are DELETED, moral and
exemplary damages are REDUCED to 50,000.00 each, and Delgado is ordered to pay the appellees
25,000.00 as nominal damages.15

Hence, this petition.

Notably, HSLB does not question the affirmance by the CA of the trial courts ruling that TCT No. 44848,
the certificate of title of its mortgagor-vendor, and TCT No. 64668, the certificate of title that was secured
by virtue of the Sheriffs sale in its favor, should be cancelled "as null and void" and that TCT No. T-402 in
the name of Felonia and De Guzman should be reinstated.

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Recognizing the validity of TCT No. T-402 restored in the name of Felonia and De Guzman, petitioners
pray that the decision of the CA be modified "to the effect that the mortgage lien in favor of petitioner
HSLB annotated as entry No. 4708-12 on TCT No. 44848 be [ordered] carried over on TCT No. T-402
after it is reinstated in the name of [Felonia and De Guzman]."16

Proceeding from the ruling of the CA that it is a mortgagee in good faith, HSLB argues that a denial of its
prayer would run counter to jurisprudence giving protection to a mortgagee in good faith by reason of
public policy.

We cannot grant the prayer of petitioner. The priorly registered mortgage lien of HSLB is now worthless.

Arguably, HSLB was initially a mortgagee in good faith. In Bank of Commerce v. San Pablo, Jr., 17 the
doctrine of mortgagee in good faith was explained:

There is, however, a situation where, despite the fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising
there from are given effect by reason of public policy. This is the doctrine of "the mortgagee in good faith"
based on the rule that all persons dealing with property covered by the Torrens Certificates of Title, as
buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public
interest in upholding indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of
any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears
on the face of the certificate of title.

When the property was mortgaged to HSLB, the registered owner of the subject property was Delgado
who had in her name TCT No. 44848. Thus, HSLB cannot be faulted in relying on the face of Delgados
title. The records indicate that Delgado was at the time of the mortgage in possession of the subject
property and Delgados title did not contain any annotation that would arouse HSLBs suspicion. HSLB,
as a mortgagee, had a right to rely in good faith on Delgados title, and in the absence of any sign that
might arouse suspicion, HSLB had no obligation to undertake further investigation. As held by this Court
in Cebu International Finance Corp. v.

CA:18

The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of
the mortgagor of the property given as security and in the absence of any sign that might arouse
suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the
rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee or transferee in
good faith is nonetheless entitled to protection.

However, the rights of the parties to the present case are defined not by the determination of whether or
not HSLB is a mortgagee in good faith, but of whether or not HSLB is a purchaser in good faith. And,
HSLB is not such a purchaser.

A purchaser in good faith is defined as one who buys a property without notice that some other person
has a right to, or interest in, the property and pays full and fair price at the time of purchase or before he
has notice of the claim or interest of other persons in the property.19

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When a prospective buyer is faced with facts and circumstances as to arouse his suspicion, he must take
precautionary steps to qualify as a purchaser in good faith. In Spouses Mathay v. CA,20 we determined
the duty of a prospective buyer:

Although it is a recognized principle that a person dealing on a registered land need not go beyond its
certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party
on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of
occupants/tenants thereon, it is of course, expected from the purchaser of a valued piece of land to
inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants
possess the land en concepto de dueo, in the concept of the owner. As is the common practice in the
real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent
purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else
other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the
purchaser to verify the extent of the occupants possessory rights. The failure of a prospective buyer to
take such precautionary steps would mean negligence on his part and would thereby preclude him from
claiming or invoking the rights of a purchaser in good faith.

In the case at bar, HSLB utterly failed to take the necessary precautions.1wphi1 At the time the subject
property was mortgaged, there was yet no annotated Notice of Lis Pendens. However, at the time HSLB
purchased the subject property, the Notice of Lis Pendens was already annotated on the title. 21

Lis pendens is a Latin term which literally means, "a pending suit or a pending litigation" while a notice of
lis pendens is an announcement to the whole world that a real property is in litigation, serving as a
warning that anyone who acquires an interest over the property does so at his/her own risk, or that he/she
gambles on the result of the litigation over the property. 22 It is a warning to prospective buyers to take
precautions and investigate the pending litigation.

The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending
resolution or decision. With the notice of lis pendens duly recorded and remaining uncancelled, the
registrant could rest secure that he/she will not lose the property or any part thereof during litigation.

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is
to keep the subject matter of the litigation within the Courts jurisdiction until the judgment or the decree
have been entered; otherwise, by successive alienations pending the litigation, its judgment or decree
shall be rendered abortive and impossible of execution.23

Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge of the annotated
Notice of Lis Pendens. Instead of heeding the same, HSLB continued with the purchase knowing the
legal repercussions a notice of lis pendens entails. HSLB took upon itself the risk that the Notice of Lis
Pendens leads to.1wphi1 As correctly found by the CA, "the notice of lis pendens was annotated on 14
September 1995, whereas the foreclosure sale, where the appellant was declared as the highest bidder,
took place sometime in 1997. There is no doubt that at the time appellant purchased the subject property,
it was aware of the pending litigation concerning the same property and thus, the title issued in its favor
was subject to the outcome of said litigation."24

This ruling is in accord with Rehabilitation Finance Corp. v. Morales,25 which underscored the significance
of a lis pendens, then defined in Sec. 24, Rule 7 now Sec. 14 of Rule 13 in relation to a mortgage priorly
annotated on the title covering the property. Thus:

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The notice of lis pendens in question was annotated on the back of the certificate of title as a necessary
incident of the civil action to recover the ownership of the property affected by it. The mortgage executed
in favor of petitioner corporation was annotated on the same title prior to the annotation of the notice of lis
pendens; but when petitioner bought the property as the highest bidder at the auction sale made as an
aftermath of the foreclosure of the mortgage, the title already bore the notice of lis pendens. Held: While
the notice of lis pendens cannot affect petitioners right as mortgagee, because the same was annotated
subsequent to the mortgage, yet the said notice affects its right as purchaser because notice of lis
pendens simply means that a certain property is involved in a litigation and serves as a notice to the
whole world that one who buys the same does so at his own risk. 26

The subject of the lis pendens on the title of HSLBs vendor, Delgado, is the "Reformation case" filed
against Delgado by the herein respondents. The case was decided with finality by the CA in favor of
herein respondents. The contract of sale in favor of Delgado was ordered reformed into a contract of
mortgage. By final decision of the CA, HSLBs vendor, Delgado, is not the property owner but only a
mortgagee. As it turned out, Delgado could not have constituted a valid mortgage on the property. That
the mortgagor be the absolute owner of the thing mortgaged is an essential requisite of a contract of
mortgage. Article 2085 (2) of the Civil Code specifically says so:

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:

xxxx

(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or mortgaged.

Succinctly, for a valid mortgage to exist, ownership of the property is an essential requisite. 27

Reyes v. De Leon28 cited the case of Philippine National Bank v. Rocha29 where it was pronounced that
"a mortgage of real property executed by one who is not an owner thereof at the time of the execution of
the mortgage is without legal existence." Such that, according to DBP v. Prudential Bank,30 there being no
valid mortgage, there could also be no valid foreclosure or valid auction sale.

We go back to Bank of Commerce v. San Pablo, Jr.31 where the doctrine of mortgagee in good faith, upon
which petitioner relies, was clarified as "based on the rule that all persons dealing with property covered
by the Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. In turn, the rule is based on "x x x public interest in upholding the indefeasibility of
a certificate of title, as evidence of lawful ownership of the land or of any encumbrance thereon." 32

Insofar as the HSLB is concerned, there is no longer any public interest in upholding the indefeasibility of
the certificate of title of its mortgagor, Delgado. Such title has been nullified in a decision that had become
final and executory. Its own title, derived from the foreclosure of Delgado's mortgage in its favor, has
likewise been nullified in the very same decision that restored the certificate of title in respondents' name.
There is absolutely no reason that can support the prayer of HSLB to have its mortgage lien carried over
and into the restored certificate of title of respondents.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 87540 is
AFFIRMED.

SO ORDERED.

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Casim v. RD of Las Pias, G.R. No. 168655, July 2, 2010

DECISION

PERALTA, J.:

This is a petition for review under Rule 45 of the Rules of Court, taken directly on a pure question
of law from the April 14, 2005 Resolution[1] and June 24, 2005 Order[2]issued by the Regional Trial Court
(RTC) of Las Pias City, Branch 253 in Civil Case No. LP-04-0071[3] one for cancellation of notice of lis
pendens. The assailed Resolution dismissed for lack of jurisdiction the petition filed by J. Casim
Construction Supplies Inc. for cancellation of notice of lis pendens annotated on its certificate of title,
whereas the assailed Order denied reconsideration.

The facts follow.

Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation [4] in whose
name Transfer Certificate of Title (TCT) No. 49936,[5] covering a 10,715-square meter land was
registered. Sometime in 1982, petitioner acquired the covered property by virtue of a Deed of Absolute
Sale[6] and as a result the mother title, TCT No. 30459 was cancelled and TCT No. 49936 was issued in
its stead.[7]

On March 22, 2004, petitioner filed with the RTC of Las Pias City, Branch 253 an original petition for the
cancellation of the notice of lis pendens, as well as of all the other entries of involuntary encumbrances
annotated on the original copy of TCT No. 49936. Invoking the inherent power of the trial court to grant
relief according to the petition, petitioner prayed that the notice of lis pendens as well as all the other
annotations on the said title be cancelled. Petitioner claimed that its owners duplicate copy of the TCT
was clean at the time of its delivery and that it was surprised to learn later on that the original copy of its
TCT, on file with the Register of Deeds, contained several entries which all signified that the covered
property had been subjected to various claims. The subject notice of lis pendens is one of such
entries.[8] The notations appearing on the titles memorandum of encumbrances are as follows:

Entry No. 81-8334/T-30459 ADVERSE CLAIM In an affidavit duly subscribed and sworn
to, BRUNO F. CASIM claims, among other things, that he has the right and interest over
the property described herein in accordance with Doc. No. 336; Page No. 69; Book No. 1;
s. of 1981 of Not. Pub. of Makati, M.M., Romarie G. Villonco, dated August 4, 1981.
Date of inscription Aug. 5, 1981 2:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds

Entry No. 82-4676/T-49936 CANCELLATION OF ADVERSE CLAIM inscribed hereon

under Entry No. 81-8334/T-30459 in accordance with Doc. No. 247; Page 50; Book No.
CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.
Date of inscription April 21, 1982 8:40 a.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds

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Entry No. 82-4678/T-49936 AFFIDAVIT In accordance with the affidavit duly executed by
the herein registered owners, this title is hereby cancelled and in lieu thereof TCT No.
49936/T-228 has been issued in accordance with Doc. No. 249; Page No. 80; Book No.
CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.
Date of inscription April 21, 1982 8:44 a.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds

Entry No. 81-12423/T-30459 NOTICE OF LIS PENDENS: By virtue of the notice of Lis
Pendens presented and filed by CESAR P. MANALAYSAY, counsel for the plaintiff,
notice is hereby given that a petition for review has been commenced and now pending
in the Court of First Instance of Rizal, Branch XXIX, Pasay, M.M, in Civil Case No. LP-
9438-P, BRUNEO F. CASIM, Plaintiff, vs. SPS. JESUS A. CASIM & MARGARITA
CHAVEZ and Sps. Urbano Nobleza and Cristita J. Nobleza, and Filomena C. Antonio,
Defendants, involving the property described herein.
Date of the instrument - Sept. 17, 1981
Date of the inscription - Sept. 18, 1981 - 3:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds[9]

To justify the cancellation, petitioner alleged that the notice of lis pendens, in particular, was a forgery
judging from the inconsistencies in the inscribers signature as well as from the fact that the notice was
entered non-chronologically, that is, the date thereof is much earlier than that of the preceding entry. In
this regard, it noted the lack of any transaction record on file with the Register of Deeds that would
support the notice of lis pendens annotation.[10]

Petitioner also stated that while Section 59 of Presidential Decree (P.D.) No. 1529 requires the carry-over
of subsisting encumbrances in the new issuances of TCTs, petitioners duplicate copy of the title did not
contain any such carry-over, which means that it was an innocent purchaser for value, especially since it
was never a party to the civil case referred to in the notice of lis pendens. Lastly, it alludes to the
indefeasibility of its title despite the fact that the mother title, TCT No. 30459, might have suffered from
certain defects and constraints.[11]

The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant case
and filed a Comment/Opposition[12] in which it maintained that the RTC of Las Pias did not have
jurisdiction over the present action, because the matter of canceling a notice of lis pendens lies within the
jurisdiction of the court before which the main action referred to in the notice is pending. In this regard, it
emphasized that the case referred to in the said notice had already attained finality as the Supreme Court
had issued an entry of judgment therein and that the RTC of Makati City had ordered execution in that
case.[13] It cited the lack of legal basis for the petition in that nothing in the allegations hints at any of the
legal grounds for the cancellation of notice of lis pendens.[14] And, as opposed to petitioners claim that
there was no carry-over of encumbrances made in TCT No. 49936 from the mother title TCT No. 30459,
the latter would show that it also had the same inscriptions as those found in TCT No. 49936 only that
they were entered in the original copy on file with the Register of Deeds. Also, as per
Certification[15] issued by the Register of Deeds, petitioners claim of lack of transaction record could not
stand, because the said certification stated merely that the corresponding transaction record could no
longer be retrieved and might, therefore, be considered as either lost or destroyed.

On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to
dismiss the petition and declared that the action must have been filed before the same court and in the

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same action in relation to which the annotation of the notice of lis pendens had been sought. Anent the
allegation that the entries in the TCT were forged, the trial court pointed out that not only did petitioner
resort to the wrong forum to determine the existence of forgery, but also that forgery could not be
presumed merely from the alleged non-chronological entries in the TCT but instead must be positively
proved. In this connection, the trial court noted petitioners failure to name exactly who had committed the
forgery, as well as the lack of evidence on which the allegation could be based. [16] The petition was
disposed of as follows:

IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED.

SO ORDERED.[17]

Petitioner moved for reconsideration,[18] but it was denied in the trial courts June 24, 2005 Order.[19]

Now, raising the purely legal question of whether the RTC of Las Pias City, Branch 253 has jurisdiction in
an original action to cancel the notice of lis pendens annotated on the subject title as an incident in a
previous case, petitioner, in this present petition, ascribes error to the trial court in dismissing its petition
for cancellation. An action for cancellation of notice of lis pendens, petitioner believes, is not always
ancillary to an existing main action because a trial court has the inherent power to cause such
cancellation, especially in this case that petitioner was never a party to the litigation to which the notice
of lis pendens relates.[20] Petitioner further posits that the trial court has committed an error in declining to
rule on the allegation of forgery, especially since there is no transaction record on file with the Register of
Deeds relative to said entries. It likewise points out that granting the notice of lis pendens has been
properly annotated on the title, the fact that its owners duplicate title is clean suggests that it was never a
party to the civil case referred to in the notice.[21] Finally, petitioner posits that TCT No. 49936 is
indefeasible and holds it free from any liens and encumbrances which its mother title, TCT No. 30459,
might have suffered.[22]

The Intestate Estate of Bruneo F. Casim (intervenor), in its Comment on the present petition, reiterates
that the court a quo does not have jurisdiction to order the cancellation of the subject notice of lis
pendens because it is only the court exercising jurisdiction over the property which may order the same
that is, the court having jurisdiction over the main action in relation to which the registration of the notice
has been sought. Also, it notes that even on the assumption that the trial court had such jurisdiction, the
petition for cancellation still has no legal basis as petitioner failed to establish the grounds therefor. Also,
the subject notice of lis pendens was validly carried over to TCT No. 49936 from the mother title, TCT No.
30459.

In its Reply,[23] petitioner, in a semantic slur, dealt primarily with the supposed inconsistencies in
intervenors arguments. Yet the core of its contention is that the non-chronological annotation of the notice
stands to be the best evidence of forgery. From this, it advances the notion that forgery of the notice of lis
pendens suffices as a ground for the cancellation thereof which may be availed of in an independent
action by the aggrieved party.

The petition is utterly unmeritorious.

Lis pendens which literally means pending suit refers to the jurisdiction, power or control
which a court acquires over the property involved in a suit, pending the continuance of the action, and
until final judgment.[24] Founded upon public policy and necessity, lis pendens is intended to keep the

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properties in litigation within the power of the court until the litigation is terminated, and to prevent the
defeat of the judgment or decree by subsequent alienation. [25] Its notice is an announcement to the whole
world that a particular property is in litigation and serves 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.[26]

A notice of lis pendens, once duly registered, may be cancelled by the trial court before which the
action involving the property is pending. This power is said to be inherent in the trial court and is
exercised only under express provisions of law.[27] Accordingly, Section 14, Rule 13 of the 1997 Rules of
Civil Procedure authorizes the trial court to cancel a notice of lis pendens where it is properly shown that
the purpose of its annotation is for molesting the adverse party, or that it is not necessary to protect the
rights of the party who caused it to be annotated. Be that as it may, the power to cancel a notice of lis
pendens is exercised only under exceptional circumstances, such as: where such circumstances are
imputable to the party who caused the annotation; where the litigation was unduly prolonged to the
prejudice of the other party because of several continuances procured by petitioner; where the case
which is the basis for the lis pendens notation was dismissed for non prosequitur on the part of the
plaintiff; or where judgment was rendered against the party who caused such a notation. In such
instances, said notice is deemed ipso facto cancelled.[28]

In theorizing that the RTC of Las Pias City, Branch 253 has the inherent power to cancel the
notice of lis pendens that was incidentally registered in relation to Civil Case No. 2137, a case which had
been decided by the RTC of Makati City, Branch 62 and affirmed by the Supreme Court on appeal,
petitioner advocates that the cancellation of such a notice is not always ancillary to a main action.

The argument fails.

From the available records, it appears that the subject notice of lis pendens had been recorded at
the instance of Bruneo F. Casim (Bruneo) in relation to Civil Case No. 2137 [29] one for annulment of
sale and recovery of real property which he filed before the RTC of Makati City, Branch 62 against the
spouses Jesus and Margarita Casim, predecessors-in-interest and stockholders of petitioner
corporation. That case involved the property subject of the present case, then covered by TCT No.
30459. At the close of the trial on the merits therein, the RTC of Makati rendered a decision adverse to
Bruneo and dismissed the complaint for lack of merit.[30] Aggrieved, Bruneo lodged an appeal with the
Court of Appeals, docketed as CA-G.R. CV No. 54204, which reversed and set aside the trial courts
decision.[31] Expectedly, the spouses Jesus and Margarita Casim elevated the case to the Supreme
Court, docketed as G.R. No. 151957, but their appeal was dismissed for being filed out of time. [32]

A necessary incident of registering a notice of lis pendens is that the property covered thereby is
effectively placed, until the litigation attains finality, under the power and control of the court having
jurisdiction over the case to which the notice relates. [33] In this sense, parties dealing with the given
property are charged with the knowledge of the existence of the action and are deemed to take the
property subject to the outcome of the litigation.[34] It is also in this sense that the power possessed by a
trial court to cancel the notice of lis pendens is said to be inherent as the same is merely ancillary to the
main action.[35]

Thus, in Vda. de Kilayko v. Judge Tengco,[36] Heirs of Maria Marasigan v. Intermediate Appellate
Court[37]
and Tanchoco v. Aquino,[38] it was held that the precautionary notice of lis pendens may be
ordered cancelled at any time by the court having jurisdiction over the main action inasmuch as the same

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is merely an incident to the said action. The pronouncement in Heirs of Eugenio Lopez, Sr. v.
Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of Appeals,[39] is equally instructive

The notice of lis pendens x x x is ordinarily recorded without the intervention of

the court where the action is pending. The notice is but an incident in an action, an
extrajudicial one, to be sure. It does not affect the merits thereof. It is intended merely to
constructively advise, or warn, all people who deal with the property that they so deal with
it at their own risk, and whatever rights they may acquire in the property in any voluntary
transaction are subject to the results of the action, and may well be inferior and
subordinate to those which may be finally determined and laid down therein. The
cancellation of such a precautionary notice is therefore also a mere incident in the
action, and may be ordered by the Court having jurisdiction of it at any given time.
x x x[40]

Clearly, the action for cancellation of the notice of lis pendens in this case must have been filed
not before the court a quo via an original action but rather, before the RTC of Makati City, Branch 62 as
an incident of the annulment case in relation to which its registration was sought. Thus, it is the latter
court that has jurisdiction over the main case referred to in the notice and it is that same court which
exercises power and control over the real property subject of the notice.

But even so, the petition could no longer be expected to pursue before the proper forum
inasmuch as the decision rendered in the annulment case has already attained finality before both the
Court of Appeals and the Supreme Court on the appellate level, unless of course there exists substantial
and genuine claims against the parties relative to the main case subject of the notice of lis
pendens.[41] There is none in this case. It is thus well to note that the precautionary notice that has been
registered relative to the annulment case then pending before the RTC of Makati City, Branch 62 has
served its purpose. With the finality of the decision therein on appeal, the notice has already been
rendered functus officio. The rights of the parties, as well as of their successors-in-interest, petitioner
included, in relation to the subject property, are hence to be decided according the said final decision.

To be sure, petitioner is not altogether precluded from pursuing a specific remedy, only that the
suitable course of action legally available is not judicial but rather administrative. Section 77 of P.D. No.
1529 provides the appropriate measure to have a notice of lis pendens cancelled out from the title, that is
by presenting to the Register of Deeds, after finality of the judgment rendered in the main action, a
certificate executed by the clerk of court before which the main action was pending to the effect that the
case has already been finally decided by the court, stating the manner of the disposal thereof. Section 77
materially states:

SEC. 77. Cancellation of lis pendens. Before final judgment, a notice of lis
pendens may be cancelled upon order of the court, after proper showing that the notice is
for the purpose of molesting the adverse party, or that it is not necessary to protect the
rights of the party who caused it to be registered. It may also be cancelled by the
Register of Deeds upon verified petition of the party who caused the registration thereof.

At any time after final judgment in favor of the defendant, or other disposition
of the action such as to terminate finally all rights of the plaintiff in and to the land
and/or buildings involved, in any case in which a memorandum or notice of lis
pendens has been registered as provided in the preceding section, the notice of lis

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pendens shall be deemed cancelled upon the registration of a certificate of the

clerk of court in which the action or proceeding was pending stating the manner of
disposal thereof. [42]

Lastly, petitioner tends to make an issue out of the fact that while the original TCT on file with the
Register of Deeds does contain the annotations and notice referred to in this petition, its owners duplicate
copy of the title nevertheless does not reflect the same non-chronological inscriptions. From this,
petitioner submits its puerile argument that the said annotations appearing on the original copy of the TCT
are all a forgery, and goes on to assert the indefeasibility of its Torrens title as well as its supposed status
as an innocent purchaser for value in good faith. Yet we decline to rule on these assumptions principally
because they raise matters that call for factual determination which certainly are beyond the competence
of the Court to dispose of in this petition.

All told, we find that the RTC of Las Pias City, Branch 253 has committed no reversible error in
issuing the assailed Resolution and Order dismissing for lack of jurisdiction the petition for cancellation of
notice of lis pendens filed by petitioner, and in denying reconsideration.

WHEREFORE, the petition is DENIED. The April 14, 2005 Resolution and the June 24, 2005
Order issued by the Regional Trial Court of Las Pias City, Branch 253, in Civil Case No. LP-04-0071, are
hereby AFFIRMED.

SO ORDERED.

e. Levies on Execution
Pineda v. Arcalas, G.R. No. 170172, November 23, 2007

DECISION

CHICO-NAZARIO, J.:

This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, assailing the
Resolution[1] dated 25 January 2005, rendered by the Court of Appeals in C.A. G.R. CV No. 82872,
dismissing the appeal filed by petitioner Arlyn Pineda (Pineda) for failure to file her appellants brief. Under
the assailed Resolution, the Order[2]promulgated by Branch 27 of the Regional Trial Court of Santa Cruz,
Laguna (Laguna RTC), on 2 February 2004, granting the petition of respondent Julie Arcalas (Arcalas) for
the cancellation of the Affidavit of Adverse Claim annotated at the back of Transfer Certificate of Title
(TCT) No. T-52319 under Entry No. 324094, became final.

The subject property consists of three parcels of land, which are described as Lot No. 3762-D
with an area of 42,958 square meters, Lot No. 3762-E with an area of 4,436 square meters, and Lot No.
3762-F with an area of 2,606 square meters, the total area of which consists of 50,000 square
meters. These three lots are portions of Lot No. 3762, registered in the name of Spouses

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Mauro Lateo and Encarnacion Evangelista (spouses Lateo) under TCT No. T-52319, with a total area of
74,708 square meters, located at Barrios Duhat and Labuin, Santa Cruz, Laguna. A certain
Victoria Tolentino bought the said property from the Spouses Lateo. Sometime later, Civil Case No. Q-96-
27884, for Sum of Money, was instituted by Arcalas against Victoria Tolentino. This case stemmed from
an indebtedness evidenced by a promissory note and four post-dated checks later dishonored, which
Victoria Tolentino owed Arcalas.[3]
On 9 September 1997, Branch 93 of the Quezon City RTC, rendered judgment in favor
of Arcalas and against Victoria Tolentino.[4]

On 15 December 1997, Pineda bought the subject property from Victoria L. Tolentino.[5] Pineda
alleged that upon payment of the purchase price, she took possession of the subject property by allowing
a tenant, Rodrigo Bautista to cultivate the same. However, Pineda failed to register the subject property
under her name.[6]

To execute the judgment, the Quezon City RTC levied upon the subject property and the Notice
of Levy on Alias Writ of Execution dated 12 January 1999 was annotated as Entry No. 315074, in relation
to Entry No. 319362, at the back of TCT No. T-52319.[7]

Asserting ownership of the subject property, Pineda filed with the Deputy Sheriff of the Quezon City RTC
an Affidavit of Title and Third Party Claim. Arcalas filed a motion to set aside Pinedas Affidavit of Title and
Third Party Claim, which on 3 November 1999, the Quezon City RTC granted, to wit:

[Arcalas] showed that her levies on the properties were duly registered while the
alleged Deed of Absolute Sale between the defendant Victoria
L. Tolentino and Analyn G. Pineda was not. The levies being superior to the sale claimed
by Ms. Pineda, the court rules to quash and set aside her Affidavit of Title and Third Party
Claim.

ACCORDINGLY, the motion is granted. The Affidavit of Title and Third-Party Claim is set
aside to allow completion of execution proceedings.[8]

On 2 February 2000, after the finality[9] of the Order of the Quezon City RTC quashing Pinedas
third-party claim, Pineda filed with the Office of the Register of Deeds of Laguna another Affidavit of Third
Party Claim and caused the inscription of a notice of adverse claim at the back of TCT No. T-52319 under
Entry No. 324094. [10]

On 3 February 2000, Arcalas and Leonardo Byron P. Perez, Jr. purchased Lot No. 3762 at an
auction sale conducted by the Deputy Sheriff of Quezon City. The sale was evidenced by a Sheriffs
Certificate of Sale issued on the same day and registered as Entry No. 324225 at the back of TCT No. T-
52319.[11]

Arcalas then filed an action for the cancellation of the entry of Pinedas adverse claim before the
Laguna RTC. The Laguna RTC ordered the cancellation of the Notice of Adverse Claim annotated as
Entry No. 324094 at the back of TCT No. 52319 on the ground of res judicata:

The court order emanating from Branch 91 of the Regional Trial Court of Quezon City
having become final and executory and no relief therefrom having been filed by [Pineda],
the said order granting the [Arcalass] Motion to Set Aside Affidavit of Title and 3 rd Party

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Claim should be given due course and the corresponding annotation at the back of TCT
No. T-52319 as Entry No. 324094 dated February 2, 2000 should be expunged
accordingly.[12]
Pineda appealed the Order of the Laguna RTC before the Court of Appeals under Rule 44 of the
Rules of Court. In a Resolution dated 25 January 2005,[13] the appellate court dismissed the appeal and
considered it abandoned when Pineda failed to file her appellants brief.

Pineda filed a Motion for Reconsideration, wherein it was plainly stated that Pinedas counsel overlooked
the period within which he should file the appellants brief. [14] The said motion was denied in a Resolution
dated 26 May 2005. Pineda filed a Second Motion for Reconsideration, which was denied on 7 October
2005.[15] No appellants brief was attached to either motion for reconsideration.

Hence, the present Petition raising the following issues:[16]

I.

WHETHER THE LEVY ON ALIAS WRIT OF EXECUTION ISSUED BY THE REGIONAL

TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-96-27884 MAY EXEMPT THE
PORTION BOUGHT BY [PINEDA] FROM VICTORIA TOLENTINO; [and]

II.

WHETHER THE POSSESSION OF [PINEDA] OF THE 5 HECTARES PORTION

OF LOT 3762 IS ALREADY EQUIVALENT TO A TITLE DESPITE THE ABSENCE OF
REGISTRATION.

This petition must be dismissed.

The Court of Appeals properly dismissed the case for Pinedas failure to file an appellants brief. This is in
accordance with Section 7 of Rule 44 of the Rules of Court, which imposes upon the appellant the duty to
file an appellants brief in ordinary appealed cases before the Court of Appeals, thus:

Section 7. Appellants brief.It shall be the duty of the appellant to file with the court, within
forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and
documentary, are attached to the record, seven (7) copies of his legibly typewritten,
mimeographed or printed brief, with proof of service of two (2) copies thereof upon
the appellee.

In special cases appealed to the Court of Appeals, such as certiorari,

prohibition, mandamus, quo warranto and habeas corpus cases, a memorandum of appeal must be
filed in place of an appellants brief as provided in Section 10 of Rule 44 of the Rules of Court

Section 10. Time of filing memoranda in special cases.In certiorari, prohibition,

mandamus, quo warranto and habeas corpus cases, the parties shall file, in lieu of briefs,
their respective memoranda within a non-extendible period of thirty (30) days from receipt
of the notice issued by the clerk that all the evidence, oral and documentary, is already
attached to the record.

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The failure of the appellant to file his memorandum within the period therefor may be a
ground for dismissal of the appeal.

Non-filing of an appellants brief or a memorandum of appeal is one of the explicitly recognized grounds of
dismissal of the appeal in Section 1 of Rule 50 of the Rules of Court:

Section 1. Grounds for dismissal of appeal. - An appeal may be dismissed by the Court of
Appeals, on its own motion or on that of the appellee, on the following grounds:

xxxx

(e) Failure of the appellant to serve and file the required number of copies of his brief or
memorandum within the time provided by these Rules;

This Court provided the rationale for requiring an appellants brief in Enriquez v. Court of Appeals[17]:

[T]he appellants brief is mandatory for the assignment of errors is vital to the decision of
the appeal on the merits. This is because on appeal only errors specifically assigned and
properly argued in the brief or memorandum will be considered, except those affecting
jurisdiction over the subject matter as well as plain and clerical errors. Otherwise stated,
an appellate court has no power to resolve an unassigned error, which does not affect
the courts jurisdiction over the subject matter, save for a plain or clerical error.

Thus, in Casim v. Flordeliza,[18] this Court affirmed the dismissal of an appeal, even when the filing of an
appellants brief was merely attended by delay and fell short of some of the requirements of the Rules of
Court. The Court, in Gonzales v. Gonzales,[19] reiterated that it is obligatory on the part of the appellant to
submit or file a memorandum of appeal, and that failing such duty, the Rules of Court unmistakably
command the dismissal of the appeal.

In this case, Pineda did not even provide a proper justification for her failure to file her appellants
brief. It was merely alleged in her Motion for Reconsideration that her counsel overlooked the period
within which to file the appellants brief. Although Pineda filed no less than two motions for
reconsideration, Pineda had not, at any time, made any attempt to file her appellants brief. Nor did she
supply any convincing argument to establish her right to the subject property for which she seeks
vindication.

Thus, this Court cannot reverse or fault the appellate court for duly acting in faithful compliance
with the rules of procedure and established jurisprudence that it has been mandated to observe, nor turn
a blind eye and tolerate the transgressions of these rules and doctrines. [20] An appealing party must
strictly comply with the requisites laid down in the Rules of Court since the right to appeal is a purely
statutory right.[21]

Even when this Court recognized the importance of deciding cases on the merits to better serve
the ends of justice, it has stressed that the liberality in the application of rules of procedure may not be
invoked if it will result in the wanton disregard of the rules or cause needless delay in the administration of
justice.[22] The Court eyes with disfavor the unjustified delay in the termination of cases; once a judgment

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has become final, the winning party must not be deprived of the fruits of the verdict, through a mere
subterfuge. The time spent by the judiciary, more so of this Court, in taking cognizance and resolving
cases is not limitless and cannot be wasted on cases devoid of any right calling for vindication and
are merely reprehensible efforts to evade the operation of a decision that is final and executory.[23]

In the present case, there is a clear intent on the part of Pineda to delay the termination of the
case, thereby depriving Arcalas of the fruits of a just verdict. The Quezon City RTC already quashed
Pinedas third party claim over the subject property, yet she filed another adverse claim before the Office
of the Register of Deeds of Laguna based on the same allegations and arguments previously settled by
the Quezon City RTC. Arcalas, thus, had to file another case to cause the cancellation of Pinedas notice
of adverse claim on TCT No. T-52319 before the Laguna RTC. After the Laguna RTC gave due course
to Arcalass petition, Pineda filed a dilatory appeal before the Court of Appeals, where she merely let the
period for the filing of the appellants brief lapse without exerting any effort to file one. The two motions for
reconsideration and even the petition before this Court fail to present new issues. They raised the very
same issues which had been consistently resolved by both the Quezon City RTC and the Laguna RTC in
favor of Arcalas, upholding the superiority of her lien over that of Pinedas unregistered sale. Considering
all these circumstances, there is no basis for the lenient application of procedural rules in this case;
otherwise, it would result in a manifest injustice and the abuse of court processes.

As a rule, the negligence or mistake of counsel binds the client. [24] The only exception to this rule
is when the counsels negligence is so gross that a party is deprived of due process and, thus, loses life,
honor or property on mere technicalities.[25] The exception cannot apply to the present case, where
Pineda is merely repeating arguments that were already heard and decided upon by courts of proper
jurisdiction, and the absolute lack of merit of the petition is at once obvious.

Pineda avers that she is not a party to Civil Case No. Q-96-27884, heard before the Quezon City
RTC, and that the levy on the alias writ of execution issued in Civil Case No. Q-96-27884 cannot affect
her purchase of subject property. Such position runs contrary to law and jurisprudence.

Sections 51 and 52 of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree, provide that:

Section 51. Conveyance and other dealings by registered owner.An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds
to make registration.

The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of Deeds for the province or the
city where the land lies. (Emphasis provided.)

Section 52. Constructive notice upon registration.Every conveyance, mortgage, lease,

lien, attachment, order, judgment, instrument or entry affecting registered land shall, if
registered, filed or entered in the office of the Register of Deeds for the province or city

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where the land to which it relates lies, be constructive notice to all persons from the
time of such registering, filing or entering. (Emphasis provided.)

It is clear from these provisions that before a purchaser of land causes the registration of the
transfer of the subject property in her favor, third persons, such as Arcalas, cannot be bound thereby.
Insofar as third persons are concerned, what validly transfers or conveys a persons interest in real
property is the registration of the deed. As the deed of sale was unrecorded, it operates merely as a
contract between the parties, namely Victoria Tolentino as seller and Pineda as buyer, which may be
enforceable against Victoria Tolentino through a separate and independent action. On the other
hand, Arcalass lien was registered and annotated at the back of the title of the subject property and
accordingly amounted to a constructive notice thereof to all persons, whether or not party to the original
case filed before the Quezon City RTC.

The doctrine is well settled that a levy on execution duly registered takes preference over a prior
unregistered sale.[26] A registered lien is entitled to preferential
consideration.[27] In Valdevieso v. Damalerio,[28] the Court held that a registered writ of attachment was a
superior lien over that on an unregistered deed of sale and explained the reason therefor:

This is so because an attachment is a proceeding in rem. It is against the particular

property, enforceable against the whole world. The attaching creditor acquires a specific
lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the
property attached is an indebted thing and a virtual condemnation of it to pay the owners
debt. The lien continues until the debt is paid, or sale is had under execution issued on
the judgment, or until the judgment is satisfied, or the attachment discharged or vacated
in some manner provided by law.

Thus, in the registry, the attachment in favor of respondent appeared in the

nature of a real lien when petitioner had his purchase recorded. The effect of the notation
of said lien was to subject and subordinate the right of petitioner, as purchaser, to the
lien. Petitioner acquired ownership of the land only from the date of the recording of his
title in the register, and the right of ownership which he inscribed was not absolute but a
limited right, subject to a prior registered lien of respondent, a right which is preferred and
superior to that of petitioner.

Pineda also contends that her possession of the subject property cures the defect caused by her
failure to register the subject property in her name. This contention is inaccurate as well as inapplicable.

True, that notwithstanding the preference given to a registered lien, this Court has made an
exception in a case where a party has actual knowledge of the claimants actual, open, and notorious
possession of the disputed property at the time the levy or attachment was registered. In such situations,
the actual notice and knowledge of a prior unregistered interest, not the mere possession of the disputed
property, was held to be equivalent to registration.[29]

Lamentably, in this case, Pineda did not even allege, much less prove, that Arcalas had actual
knowledge of her claim of ownership and possession of the property at the time the levy was
registered. The records fail to show that Arcalas knew of Pinedas claim of ownership and possession
prior to Pinedas filing of her third party claim before the Quezon City RTC. Hence, the mere possession of

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the subject property by Pineda, absent any proof that Arcalas had knowledge of her possession and
adverse claim of ownership of the subject property, cannot be considered as equivalent to registration.

IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED and the assailed Decision of
the Court of Appeals in C.A. G.R. CV No. 82872, promulgated on 25 January 2005, is AFFIRMED. The
Order of Branch 27 of the Regional Trial Court of Sta. Cruz, Laguna, directing the Register of Deeds of
Laguna to cancel the Notice of Adverse Claim inscribed at the back of TCT No. T-52319 as Entry No.
324094 is SUSTAINED. No costs.

SO ORDERED.

Valdevieso v. Damalerio, G.R. No. 133303, February 17, 2005

SECOND DIVISION

[G.R. No. 133303. February 17, 2005]

BERNARDO VALDEVIESO, petitioner, vs. CANDELARIO DAMALERIO AND AUREA C.

DAMALERIO, respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside
the 25 September 1997 Decision and the 10 February 1998 Resolution of the Court of Appeals in CA-
G.R. SP No. 43082 entitled, Candelario Damalerio and Aurea Damalerio v. Honorable Antonio S. Alano,
et al.[1]

There is no dispute as to the following facts:

On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and Elenita
Uy a parcel of land consisting of 10,000 square meters, more or less, located at Bo. Tambler, General
Santos City, and covered by Transfer Certificate of Title (TCT) No. T-30586.[2]

The deed of sale was not registered, nor was the title of the land transferred to petitioner.[3]

On 07 December 1995, the said property was immediately declared by petitioner for taxation
purposes as Tax Declaration No. l6205 with the City Assessors Office.[4]

It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio (respondents) filed
with the Regional Trial Court (RTC) of General Santos City, a complaint for a sum of money against
spouses Lorenzo and Elenita Uy docketed as Civil Case No. 5748 with application for the issuance of a
Writ of Preliminary Attachment.[5]

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On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by virtue of which the
property, then still in the name of Lorenzo Uy but which had already been sold to petitioner, was levied.
The levy was duly recorded in the Register of Deeds of General Santos City and annotated upon TCT No.
T-30586.[6]

On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu thereof,
TCT No. T-74439 was issued in the name of petitioner.[7] This new TCT carried with it the attachment in
favor of respondents.

On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to discharge or annul
the attachment levied on the property covered by TCT No. T-74439 on the ground that the said property
belongs to him and no longer to Lorenzo and Elenita Uy. [8]

In a resolution dated 21 October 1996, the trial court ruled for the petitioner. [9] Citing Manliguez v.
Court of Appeals[10] and Santos v. Bayhon,[11] it held that the levy of the property by virtue of attachment is
lawful only when the levied property indubitably belongs to the defendant. Applying the rulings in the cited
cases, it opined that although defendant Lorenzo Uy remained the registered owner of the property
attached, yet the fact was that he was no longer the owner thereof as it was already sold earlier to
petitioner, hence, the writ of attachment was unlawful.

Respondents sought reconsideration thereof which was denied by the trial court in a resolution dated
03 January 1997.[12]

From the unfavorable resolution of the trial court in the third-party claim, respondents appealed to the
Court of Appeals. The appellate court reversed the resolution and by judgment promulgated on 25
September 1997, it declared that an attachment or levy of execution, though posterior to the sale, but if
registered before the sale is registered, takes precedence over the sale. [13] The writ of attachment in favor
of the respondents, being recorded ahead of the sale to petitioner, will therefore take precedence.

Petitioner moved for reconsideration but this was denied by the Court of Appeals in its Resolution of
10 February 1998.[14]

Hence, this Petition for Review on Certiorari.

The sole issue in this case is whether or not a registered writ of attachment on the land is a superior
lien over that of an earlier unregistered deed of sale.

Petitioner maintains that he has a superior right over the questioned property because when the
same was attached on 23 April 1996, this property was no longer owned by spouses Uy against whom
attachment was issued as it was already sold to petitioner on 05 December 1995. The ownership thereof
was already transferred to petitioner pursuant to Article 1477 [15] in relation to Article 1498[16] of the Civil
Code.

Dismissing the allegation that he slept on his rights by not immediately registering at least an
adverse claim based on his deed of sale, petitioner avers that he promptly worked out for the transfer of
registration in his name. The slight delay in the registration, he claims was not due to his fault but
attributable to the process involved in the registration of property such as the issuance of the Department
of Agrarian Reform clearance which was effected only after compliance with several requirements.

Considering the peculiar facts and circumstances obtaining in this case, petitioner submits it would
be in accord with justice and equity to declare him as having a superior right to the disputed property than
the respondents.

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Respondents maintain the contrary view. They aver that registration of a deed of sale is the
operative act which binds the land and creates a lien thereon. Before the registration of the deed, the
property is not bound insofar as third persons are concerned. Since the writ of attachment in favor of
respondents was registered earlier than the deed of sale to petitioner, respondents were of the belief that
their registered writ of attachment on the subject property enjoys preference and priority over petitioners
earlier unregistered deed of sale over the same property. They also contend that Articles 1477 and 1498
of the Civil Code as cited by petitioner are not applicable to the case because said provisions apply only
as between the parties to the deed of sale. These provisions do not apply to, nor bind, third parties, like
respondents, because what affects or binds third parties is the registration of the instrument in the
Register of Deeds. Furthermore, respondents argue that petitioner cannot invoke equity in his favor
unless the following conditions are met: (a) the absence of specific provision of a law on the matter; and
(b) if the person who invokes it is not guilty of delay. Both conditions have not been met, however, since
there is a law on the subject matter, i.e., Section 51 of Presidential Decree No. 1529, and that petitioner
allegedly slept on his rights by not immediately registering an adverse claim based on his deed of sale.

We agree with the respondents.

The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said Section provides:

Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey,
mortgage, lease, charge, or otherwise deal with the same in accordance with existing laws. He may use
such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect
registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the office of the Register
of Deeds for the province or city where the land lies.

It is to be noted that though the subject land was deeded to petitioner as early as 05 December
1995, it was not until 06 June 1996 that the conveyance was registered, and, during that interregnum, the
land was subjected to a levy on attachment. It should also be observed that, at the time of the attachment
of the property on 23 April 1996, the spouses Uy were still the registered owners of said property. Under
the cited law, the execution of the deed of sale in favor of petitioner was not enough as a succeeding step
had to be taken, which was the registration of the sale from the spouses Uy to him. Insofar as third
persons are concerned, what validly transfers or conveys a persons interest in real property is the
registration of the deed. Thus, when petitioner bought the property on 05 December 1995, it was, at that
point, no more than a private transaction between him and the spouses Uy. It needed to be registered
before it could bind third parties, including respondents. When the registration finally took place on 06
June 1996, it was already too late because, by then, the levy in favor of respondents, pursuant to the
preliminary attachment ordered by the General Santos City RTC, had already been annotated on the title.

The settled rule is that levy on attachment, duly registered, takes preference over a prior
unregistered sale.[17] This result is a necessary consequence of the fact that the property involved was
duly covered by the Torrens system which works under the fundamental principle that registration is the
operative act which gives validity to the transfer or creates a lien upon the land. [18]

The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale. This is so because an attachment is a proceeding in rem.[19] It is against the

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particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on
the attached property which nothing can subsequently destroy except the very dissolution of the
attachment or levy itself.[20] Such a proceeding, in effect, means that the property attached is an indebted
thing and a virtual condemnation of it to pay the owners debt. [21] The lien continues until the debt is paid,
or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien
when petitioner had his purchase recorded. The effect of the notation of said lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of the land only
from the date of the recording of his title in the register, and the right of ownership which he inscribed was
not absolute but a limited right, subject to a prior registered lien of respondents, a right which is preferred
and superior to that of petitioner.[22]

Anent petitioners reliance on the rulings laid down in Manliguez v. Court of Appeals and Santos v.
Bayhon, we find the same to be misplaced. These cases did not deal at all with the dilemma at hand, i.e.
the question of whether or not a registered writ of attachment on land is superior to that of an earlier
unregistered deed of sale. In Santos, what was involved were machinery and pieces of equipment which
were executed upon pursuant to the favorable ruling of the National Labor Relations Commission. A third
party claimed that the machinery were already sold to her, but it does not appear in the facts of the case if
such sale was ever registered. Manliguez is similar to Santos, except that the former involved buildings
and improvements on a piece of land. To stress, in both cited cases, the registration of the sale, if any, of
the subject properties was never in issue.

As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in the
presence of a law clearly applicable to the case. We reiterate that this Court, while aware of its equity
jurisdiction, is first and foremost, a court of law.[23] While equity might tilt on the side of one party, the
same cannot be enforced so as to overrule positive provisions of law in favor of the other.[24] Equity
cannot supplant or contravene the law.[25] The rule must stand no matter how harsh it may seem. Dura lex
sed lex.

WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No. 43082 dated 25
September 1997, and its Resolution dated 10 February 1998, are hereby AFFIRMED. No costs.

SO ORDERED.

VIII. Registration of Judgments, Orders, and Partitions (Sections 78 92)

1. Surrender of Owners Duplicate (Sec. 107, P.D. 1529)

Toledo Banaga v. CA, et. al., G.R. No. 127941, January 28, 1999

FIRST DIVISION

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[G.R. No. 127941. January 28, 1999]

BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners, vs. COURT OF APPEALS and
CANDELARIO DAMALERIO respondents.

DECISION

MARTINEZ, J.:

The Court of Appeals (CA), in a decision penned by then Justice Ricardo J.

Francisco,[1] categorically declared private respondent as the absolute owner of the land subject of this
case. That decision was affirmed by this Court, became final and executory and was remanded to the
lower court for execution. But the Register of Deeds frustrated private respondents judicially determined
right as it refused to issue Certificates of Title in his name on the ground that the matter should be
referred en consulta to the Register of Deeds before petitioners title can be cancelled and a new one
issued in the name of the winning party herein private respondent. So, for the third time, this simple
redemption case which commenced in the 1980s is again before this Court.

Here is a summary of the facts, over which there is no dispute:

In an action for redemption filed by petitioner Banaga, the trial court declared that she had lost her
right to redeem her property earlier foreclosed and which was subsequently sold at public auction to
private respondent.[2] Certificates of Title covering the said property were issued to private respondent
over which petitioner Banaga annotated on March 3, 1983 a notice of lis pendens.[3] On appeal by
petitioner Banaga, the CA reversed the decision of the trial court and allowed the former to redeem the
property within a certain period.[4] Private respondents petition to this Court was dismissed [5] and the
decision became final.

On June 11, 1992, petitioner Banaga tried to redeem the property by depositing with the trial court
the amount of redemption which was financed by her co-petitioner Tan. Private respondent opposed the
redemption arguing that it was made beyond the time given to her by the court in the earlier
case. However, the lower court issued an order on August 7, 1992 upholding the redemption and ordered
the Register of Deeds to cancel private respondents Certificates of Title and issue new titles in the name
of petitioner Banaga.[6] When his motion for reconsideration was denied by the trial court in an order
dated January 4, 1993, private respondent filed a petition for certiorari with the CA which was docketed
as CA-G.R. No. 29869. On January 11, 1993, private respondent caused the annotation of said petition
as another notice of lis pendens on the Certificates of Title. Three days later, the CA issued a temporary
restraining order to enjoin the execution of the August 7, 1992 and January 4, 1993 orders.

Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to petitioner Tan with
the deed of absolute sale mentioning private respondents certificate of title which was not yet
cancelled.Notwithstanding the notice of lis pendens, petitioner Tan subdivided the property in question
under a subdivision plan, which she made not in her name but in the name of private respondent. There
being no preliminary injunction issued and with the expiration of the TRO, petitioner Tan asked the
Register of Deeds to issue new titles in her name. On March 24, 1993, such titles were issued in
petitioner Tans name but it still carried the annotations of the two notices of lis pendens. Upon learning of
the new title of petitioner Tan, private respondent impleaded the former in his petition in CA-G.R. No.
29869.

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On October 28, 1993, the CA set aside the August 7, 1992 and January 4, 1993 orders of the trial
court and declared private respondent absolute owner of the subject property. The CA disposed of the
petition as follows:

WHERFORE, in view of the foregoing considerations, the instant petition is hereby GRANTED. The
orders issued by public respondent judge dated August 7, 1992 and January 4, 1993 are hereby ordered
SET ASIDE and a new one is hereby entered declaring petitioner as the absolute owner of the parcels of
land subject of redemption for failure of private respondent to exercise the right of redemption within the
thirty (30) day period previously granted her by this court. [7]

That decision became final and executory after petitioner Banagas petition for review was dismissed
by this Court for lack of merit.[8] Upon motion of private respondent, the trial court issued a writ of
execution on December 27, 1994 ordering the Register of Deeds to reinstate the Certificates of Title in
the name of the movant herein private respondent. In its order which petitioners did not contest, the
court a quo said that:

Although there is no specific pronouncement in the decision of the Court of Appeals that reverts the titles
to the land subjects of redemption to the defendant, the fact that it declared the petitioner (Damalerio) as
the absolute owner of the lands entitles him to writ of execution issuing from this court directing the
Register of Deeds to reinstate his titles to his name. As it is implied from the decision declaring him the
absolute owner of the lands that the titles to the land be reverted to him (See Uy v. Capulong, 221 SCRA
87).

Let therefore a writ of execution issue in this case to enforce the decision of the Court of Appeals. In this
connection, the Register of Deeds of the Registry of Deeds for General Santos City is hereby ordered to
reinstate the titles of Candelario B. Damalerio - Transfer Certificates of Title No. T- 19570 and T-19571,
both of the Registry of Deeds from General Santos City. [9]

But the Register of Deeds refused to comply with the writ of execution alleging that the Certificates of
Title issued to petitioner Tan must first be surrendered. Accordingly, private respondent moved to cite the
Register of Deeds in contempt of court which was denied, as the trial court ruled on January 11, 1995 that
the formers remedy is by consulta to the Commissioner of Land Registration.[10] In another order (dated
March 29, 1996), the trial court likewise denied private respondents motion for the issuance of a writ of
possession ruling that the latters remedy is a separate action to declare petitioner Tans Certificates of
Title void. Aggrieved, private respondent again elevated the case to the CA via a petition
for certiorari and mandamus[11] assailing the above-mentioned two orders of the court a quo naming as
respondents the trial court judge, the Register of Deeds and the petitioners. On November 7, 1996, the
CA rendered a decision granting the petition and, among others, set aside the assailed orders of the trial
court. The dispositive portion of the CA decision reads:

WHEREFORE, in view of all the foregoing considerations, the petition is GRANTED. Judgment is hereby
rendered:

1) setting aside the orders of the respondent judge dated January11, 1995 and March 29, 1996;

2) declaring the title issued to Biblia Toledo-Banaga, Jovita Tan and to those other subsequent
transferee or transferees, if any, as null and void;

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3) ordering the Register of Deeds of General Santos City to issue new certificates of title to
Candelario Damalerio over the parcels of land in question;

4) ordering the respondent court to issue writ of execution for the enforcement of this decision
and of the decision in CA-G.R. SP No. 29868 (sic), as well as a writ of possession for the
delivery to petitioner Damalerio of the Physical possession of the parcels of land subject
matter of this case.

SO ORDERED.[12]

Upon denial by the CA of their motion for reconsideration, petitioners filed the instant petition
for certiorari and mandamus. The Court, however, is puzzled why petitioners, in their petition, would seek
to set aside the two orders (January 4, 1995 and March 29, 1996) of respondent judge who was not
named in their petition.[13] Assuming this to be a mere lapsus since they also confusingly refer to Banaga
and Tan as private respondent and to Damalerio as petitioner, [14] the petition is still utterly without merit. It
is petitioners stand (1) that petitioner Tan is a buyer in god faith and (2) that the remedy of private
respondent to secure the titles in his name is by consulta to the Land Registration Commissioner and not
through contempt.

The Court is not convinced of the arguments proffered by petitioners.

By arguing that petitioner Tan was a buyer in good faith, petitioners in effect raise once more the
issue of ownership of the subject property. But such issue had already been clearly and categorically
ruled upon by the CA and affirmed by this Court, wherein private respondent was adjudged the rightful
and absolute owner thereof. The decision in that case bars a further repeated consideration of the very
same issue that has already been settled with finality. To once again re-open that issue through a
different avenue would defeat the existence of our courts as final arbiters of legal controversies. Having
attained finality, the decision is beyond review or modification even by this Court. [15]

Under the principle of res judicata, the Court and the parties, are bound by such final decision,
otherwise, there will be no end to litigation. It is to the interest of the public that there should be an end to
litigation by the parties over a subject fully and fairly adjudicated, and an individual should not be vexed
twice for the same cause.[16] All the elements of res judicata are present in this case, which are:

(a) the former judgment must be final;

(b) the court which rendered judgment had jurisdiction over the parties and the subject matter;

(c) it must be a judgment on the merits;

(d) and there must be between the first and second actions identity of parties, subject matter,
and cause of action.[17]

The judgment in the redemption suit had long become final and executory; there is no question that
the court had jurisdiction over the parties and the subject matter; it involves an adjudication on the merits
of the case as the court discussed and passed upon petitioner Banagas right of redemption which she did
not timely exercise and as a consequence, lost her claim of ownership of the lot. Both petitioners and
private respondent are parties to the earlier cases, disputing the same parcel of land with both opposing
parties claiming ownership thereof. Certainly, res judicata had set in. Besides, once a judgment had
become final and executory, it can no longer be disturbed no matter how erroneous it may be. In any
case, no such error was attributed to in this case.

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Contrary to petitioners argument, private respondents remedy is not a direct or independent civil
action for cancellation of petitioner Tans titles. The facts, circumstances, evidence and arguments
invoked in this derailed final and executory decision are the very same matters that will be established
assuming such independent suit is legally warranted. It does not matter whether the former case was a
redemption suit and the new one will be for cancellation of title because the test of identity of causes of
action is not in its form but whether the same evidence would support and establish the former and
present causes of action.[18]

Petitioners other contention that the execution of the final and executory decision - which is to issue
titles in the name of private respondent - cannot be compelled by mandamus because of the formality that
the registered owner first surrenders her duplicate Certificates of Title for cancellation per Section 80 of
Presidential Decree 1529[19] cited by the Register of Deeds,[20] bears no merit. In effect, they argue that
the winning party must wait execution until the losing party has complied with the formality of surrender of
the duplicate title. Such preposterous contention borders on the absurd and has no place in our legal
system. Precisely, the Supreme Court had already affirmed the CAs judgment that Certificates of Title be
issued in private respondents name. To file another action just to compel the registered owner, herein
petitioner Tan, to surrender her titles constitute violation of, if not disrespect to, the orders of the highest
tribunal. Otherwise, if execution cannot be had just because the losing party will not surrender her titles,
the entire proceeding in the courts, not to say the efforts, expenses and time of the parties, would be
rendered nugatory. It is revolting to conscience to allow petitioners to further avert the satisfaction of their
obligation because of sheer literal adherence to technicality, [21] or formality of surrender of the duplicate
titles. The surrender of the duplicate is implied from the executory decision since petitioners themselves
were parties thereto. Besides, as part of the execution process, it is a ministerial function of the Register
of Deeds to comply with the decision of the court to issue a title and register a property in the name of a
certain person, especially when the decision had attained finality, as in this case.

In addition, the enforcement of a final and executory judgment is likewise a ministerial function of the
courts[22] and does not call for the exercise of discretion. Being a ministerial duty, a writ of mandamus lies
to compel its performance.[23] Moreover, it is axiomatic that where a decision on the merits is rendered
and the same has become final and executory, as in this case, the action on procedural matters or issues
becomes moot and academic.[24] Thus, the so-called consulta to the Commissioner of Land Registration,
which is not applicable herein, was only a naive and belated effort resorted to by petitioners in order to
delay execution. If petitioners desire to stop the enforcement of a final and executory decision, they
should have secured the issuance of a writ of preliminary injunction,[25] but which they did not avail
knowing that there exists no legal or even equitable justifications to support it.

At any rate, at the time petitioner Banaga sold the property to petitioner Tan, the latter was well
aware of the interest of private respondent over the lot. Petitioner Tan furnished the amount used by
petitioner Banaga for the attempted redemption. One who redeems in vain a property of another acquires
notice that there could be a controversy. It is for the same reason that petitioner Tan was included as
party to the case filed in court. Worse, at the time of the sale, petitioner Tan was buying a property not
registered in the sellers name. This clear from the deed of absolute sale which even mentioned that the
Certificates of Title is still in the name of private respondent. It is settled that a party dealing with a
registered land need not go beyond the Certificate of Title to determine the true owner thereof so as to
guard or protect her interest. She has only to look and rely on the entries in the Certificate of Title. By
looking at the title, however, petitioner Tan cannot feigned ignorance that the property is registered in
private respondents name and not in the name of the person selling to her. Such fact alone should have
at least prompted, if not impelled her to investigate deeper into the title of her seller - petitioner Banaga,
more so when such effort would not have entailed additional hardship, and would have been quite easy,
as the titles still carried the two notices of lis pendens.

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By virtue of such notices, petitioner Tan is bound by the outcome of the litigation subject of the lis
pendens. As a transferee pendente lite, she stands exactly in the shoes of the transferor and must
respect any judgment or decree which may be rendered for or against the transferor. Her interest is
subject to the incidents or results of the pending suit, and her Certificates of Title will, in that respect,
afford her no special protection.[26]

To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither
the registered owner nor was the former authorized by the latter to sell the same. She knew she was not
dealing with the registered owner or a representative of the latter. One who buys property with full
knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith[27] and cannot
claim that he acquired title in good faith as against the owner or of an interest therein. [28] When she
nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation. [29] She is bound
by the outcome of her indifference with no one to blame except herself if she looses her claim as against
one who has a superior right or interest over the property. These are the undeniable and uncontroverted
facts found by the CA, which petitioners even quote and cite in their petition. As aptly concluded by the
CA that petitioner Tan is indeed a buyer in bad faith on which the Court agrees:

Notwithstanding her constructive and actual knowledge that Damalerio was claiming the land, that the
land was in his name, and it was involved in pending litigation, Jovita Tan bought it from Banaga on
January 7, 1993. The deed of sale recites that the parcels of land sold were covered by Transfer
Certificates of Title No. __ (formerly [T-12488] T-530) and TCT No. __ (formerly [T-12488] T-530) (sic)
and TCT No. __ (formerly P-1294). (Annex F, Petition). Apart from the fact that Banaga was without any
TCT, as above stated, TCT No. T-12488 was petitioners title (Annex C, Petition). Herein private
respondent Tan was buying a land not registered in her sellers (Banagas) name, but in that of petitioner
Damalerio who had been claiming it as his own. She admitted this fact when she had the land subdivided
on February 2, 1993 not in her name but in the name of Candelario Damalerio (Annex Q,
Reply). Evidently, she was a purchaser in bad faith because she had full knowledge of the flaws and
defects of title of her seller, Banaga. X x x.

The notice of lis pendens registered on March 3, 1993 involving the land in question and private
respondent Tans actual knowledge of the then pending Civil Case No. 2556, where the question as to
whether the redemption of the land which she financed was raised, rendered her a purchaser in bad faith
and made the decision therein binding upon her.[30]

Being a buyer in bad faith, petitioner Tan cannot acquire a better rights than her predecessor in
interest,[31] for she merely stepped into the shoes of the latter. Such finding of bad faith is final and may
not be re-opened for the law cannot allow the parties to trifle with the courts.[32]

With respect to the issue of possession, such right is a necessary incident of ownership. [33] The
adjudication of ownership to private respondent includes the delivery of possession since the defeated
parties in this case has not shown by what right to retain possession of the land independently of their
claim of ownership which was rejected.[34] Otherwise, it would be unjust if petitioners who has no valid
right over the property will retain the same.[35] Thus, the CA correctly disagreed with the trial courts order
denying private respondents motion for writ of possession for the following reasons cited in its decision:

1. The order violates the doctrine laid down in Javier vs. Court of Appeals, 224 SCRA 704,
which ruled that the issuance of title in favor of a purchaser in bad faith does not exempt the
latter from complying with the decision adverse to his predecessor in interest, nor preclude him
from being reached by writ of execution;

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2. Private respondent Tan was a party respondent in CA-G.R. SP No. 29869, she having been
impleaded in a supplemental petition, which this Court gave due course and required the
respondents to file their answer.The fact that she did not file any pleading, nor intervene therein
did not excuse her from being bound by the decision, otherwise all that a party respondent was
to fold his arm to prevent him from being bound by a decision in a case. Her securing titles over
the land during the pendency of said case did not protect her from the effects of said
decision. The validity of tile of a purchaser of registered land depends on whether he had
knowledge, actual or constructive, of defects in the title of his vendor. If he has such knowledge,
he is a purchaser in bad faith and acquires the land subject to such defects (X x x indicates that
citations of authorities omitted) The title secured by a purchaser in bad faith is a nullity and gave
the latter no right whatsoever, as against the owner (x x x).

3. Private respondent Tans titles and those of her predecessor, Banaga, arose from the void
orders of August 7, 1992 and January 4, 1993. Since a void order could not give rise to valid
rights, said titles were also necessarily null and void (x x x).

4. Private respondents and respondent Judge executed the questioned orders of August 7,
1993 and January 4, 1993, pending review of said orders in CA-G.R. SP No. 29869. The
nullification of said orders by this out imposed upon the private respondents the obligation to
return the property to Damalerio and upon respondent Judge, upon motion for execution, to
order the cancellation of private respondents titles and the issuance of new titles to him.

5. This Court in its decision in CA-G.R. SP No. 29869 declared petitioner Damalerio absolute
owner of the property in question. Private respondents were parties litigants in said case, who
did not claim possession of the land separately from their claim of ownership thereof. Such
being the case, the delivery of possession is considered included in this Courts decision
declaring Damalerio absolute owner of the property (x x x), which can be enforced by writ of
possession (x x x). In denying petitioners motion for writ of possession, the trial court violated
said doctrines, and

6. Lastly, the effect of respondent Judges order of March 29, 1996 is to re-open the decision in
CA-G.R. SP No. 29689 for re-litigation and alteration in a separate action. For while this Court
already declared that Banagas redemption of the land financed by private respondent Tan was
invalid, and as a consequence declared Damalerio absolute owner of the property, which was
binding against private respondent Tan, as she was a respondent therein and a
purchaser pendente lite and in bad faith, the order of the respondent Court holding that another
civil action be filed to annul private respondent Tans titles would be to re-litigate such issues
and modify or alter this Courts final decision.

The respondent Court has no authority to do so.[36]

WHEREFORE, premises considered, the petition is hereby DENIED and the assailed decision of the
Court of Appeals is AFFIRMED in toto with costs against petitioners. No further proceeding will be
entertained in this case.

SO ORDERED.

Abad, et. al., v. Filhomes Realty, G.R. No. 189239, November 24, 2010

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DECISION

CARPIO MORALES, J.:

Fil-Homes Realty and Development Corporation and Magdiwang Realty Corporation (respondents), co-
owners of two lots situated in Sucat, Paraaque City and covered by Transfer Certificates of Title Nos.
21712 and 21713, filed a complaint for unlawful detainer on May 7, 2003 against above-named
petitioners before the Paraaque Metropolitan Trial Court (MeTC).

Respondents alleged that petitioners, through tolerance, had occupied the subject lots since 1980 but
ignored their repeated demands to vacate them.

Petitioners countered that there is no possession by tolerance for they have been in adverse, continuous
and uninterrupted possession of the lots for more than 30 years; and that respondents predecessor-in-
interest, Pilipinas Development Corporation, had no title to the lots. In any event, they contend that the
question of ownership must first be settled before the issue of possession may be resolved.

During the pendency of the case or on June 30, 2004, the City of Paraaque filed expropriation
proceedings covering the lots before the Regional Trial Court of Paraaque with the intention of
establishing a socialized housing project therein for distribution to the occupants including petitioners. A
writ of possession was consequently issued and a Certificate of Turn-over given to the City.

Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the unlawful
detainer case against petitioners, disposing as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants Leticia and Ervin Abad et. als. ordering the latter and all persons claiming
rights under them to VACATE and SURRENDER possession of the premises (Lots
covered by TCT NOS. (71065) 21712 and (71066) 21713 otherwise known as Purok I
Silverio Compound, Barangay San Isidro, Paraaque City to plaintiff and to PAY the said
plaintiff as follows:

1. The reasonable compensation in the amount of P20,000.00 a month

commencing November 20, 2002 and every month thereafter until the
defendants shall have finally vacated the premises and surrender peaceful
possession thereof to the plaintiff;
2. P20,000.00 as and for attorneys fees, and finally
3. Costs of suit.

SO ORDERED.[1] (emphasis in the original)

The MeTC held that as no payment had been made to respondents for the lots, they still maintain
ownership thereon. It added that petitioners cannot claim a better right by virtue of the issuance of a Writ
of Possession for the project beneficiaries have yet to be named.

On appeal, the Regional Trial Court (RTC), by Decision of September 4, 2008, [2] reversed the MeTC
decision and dismissed respondents complaint in this wise:

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x x x The court a quo ruled that the case filed by plaintiffs (respondents herein) is
unlawful detainer as shown by the allegations of the Complaint. The ruling of the court a
quo is not accurate. It is not the allegations of the Complaint that finally determine
whether a case is unlawful detainer, rather it is the evidence in the case.

Unlawful detainer requires the significant element of tolerance. Tolerance of the

occupation of the property must be present right from the start of the defendants
possession. The phrase from the start of defendants possession is significant. When
there is no tolerance right from the start of the possession sought to be recovered,
the case of unlawful detainer will not prosper.[3] (emphasis in the original;
underscoring supplied)

The RTC went on to rule that the issuance of a writ of possession in favor of the City bars the
continuation of the unlawful detainer proceedings, and since the judgment had already been rendered in
the expropriation proceedings which effectively turned over the lots to the City, the MeTC has no
jurisdiction to disregard the . . . final judgment and writ of possession due to non-payment of just
compensation:

The Writ of Possession shows that possession over the properties subject of this
case had already been given to the City of Paraaque since January 19, 2006 after they
were expropriated. It is serious error for the court a quo to rule in the unlawful
detainer case that Magdiwang Realty Corporation and Fil-Homes Realty and
Development Corporation could still be given possession of the properties which
were already expropriated in favor of the City of Paraaque.

There is also another serious lapse in the ruling of the court a quo that the case
for expropriation in the Regional Trial Court would not bar, suspend or abate the
ejectment proceedings. The court a quo had failed to consider the fact that the case for
expropriation was already decided by the Regional Trial Court, Branch 196 way back in
the year 2006 or 2 years before the court a quo rendered its judgment in the unlawful
detainer case in the year 2008. In fact, there was already a Writ of Possession way back
in the year 1996 (sic) issued in the expropriation case by the Regional Trial Court, Branch
196. The court a quo has no valid reason to disregard the said final judgment and
the writ of possession already issued by the Regional Trial Court in favor of the
City of Paraaque and against Magdiwang Realty Corporation and Fil-Homes Realty
Development Corporation and make another judgment concerning possession of
the subject properties contrary to the final judgment of the Regional Trial Court,
Branch 196.[4] (emphasis in the original)

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Before the Court of Appeals where respondents filed a petition for review, they maintained that
respondents act of allowing several years to pass without requiring [them] to vacate nor filing an
ejectment case against them amounts to acquiescence or tolerance of their possession. [5]

By Decision of May 27, 2009,[6] the appellate court, noting that petitioners did not present evidence to
rebut respondents allegation of possession by tolerance, and considering petitioners admission that they
commenced occupation of the property without the permission of the previous owner Pilipinas
Development Corporation as indicium of tolerance by respondents predecessor-in-interest, ruled in
favor of respondents. Held the appellate court:
Where the defendants entry upon the land was with plaintiffs tolerance from the
date and fact of entry, unlawful detainer proceedings may be instituted within one year
from the demand on him to vacate upon demand. The status of such defendant is
analogous to that of a tenant or lessee, the term of whose lease, has expired but whose
occupancy is continued by the tolerance of the lessor. The same rule applies where the
defendant purchased the house of the former lessee, who was already in arrears in the
payment of rentals, and thereafter occupied the premises without a new lease contract
with the landowner.[7]

Respecting the issuance of a writ of possession in the expropriation proceedings, the appellate court,
citing Republic v. Gingoyon,[8] held the same does not signify the completion of the expropriation
proceedings. Thus it disposed:

WHEREFORE, premises considered, the instant Petition is GRANTED. The

assailed Decision of the Court a quo is REVOKED and SET ASIDE. The Decision of the
Metropolitan Trial Court dated March 3, 2008 is hereby REINSTATED with
MODIFICATION [by] deleting the award for attorneys fees.

SO ORDERED. (underscoring supplied)

Petitioners motion for reconsideration was denied by Resolution dated August 26, 2009, hence, the filing
of the present petition for review.
The petition fails.

In the exercise of the power of eminent domain, the State expropriates private property for public
use upon payment of just compensation. A socialized housing project falls within the ambit of public use
as it is in furtherance of the constitutional provisions on social justice. [9]

As a general rule, ejectment proceedings, due to its summary nature, are not suspended or their
resolution held in abeyance despite the pendency of a civil action regarding ownership.

Section 1 of Commonwealth Act No. 538[10] enlightens, however:

Section 1. When the Government seeks to acquire, through purchase or

expropriation proceedings, lands belonging to any estate or chaplaincy (cappellania), any
action for ejectment against the tenants occupying said lands shall be automatically
suspended, for such time as may be required by the expropriation proceedings or the
necessary negotiations for the purchase of the lands, in which latter case, the period of
suspension shall not exceed one year.

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To avail himself of the benefits of the suspension, the tenants shall pay to the
landowner the current rents as they become due or deposit the same with the
court where the action for ejectment has been instituted. (emphasis and underscoring
supplied)

Petitioners did not comply with any of the acts mentioned in the law to avail of the benefits of the
suspension. They nevertheless posit that since the lots are the subject of expropriation proceedings,
respondents can no longer assert a better right of possession; and that the City Ordinance authorizing the
initiation of expropriation proceedings designated them as beneficiaries of the lots, hence, they are
entitled to continue staying there.

Petitioners position does not lie.

The exercise of expropriation by a local government unit is covered by Section 19 of the Local
Government Code (LGC):

SEC. 19. Eminent Domain. A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent domain for
public use, or purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner, and
such offer was not accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen percent
(15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That the amount to be paid for the
expropriated property shall be determined by the proper court, based on the fair market
value of the property.
Lintag v. National Power Corporation[11] clearly outlines the stages of expropriation, viz:

Expropriation of lands consists of two stages:

The first is concerned with the determination of the authority of the plaintiff to exercise
the power of eminent domain and the propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a lawful right to take the property sought to
be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the
complaint x x x.

The second phase of the eminent domain action is concerned with the determination by
the court of "the just compensation for the property sought to be taken." This is done by
the court with the assistance of not more than three (3) commissioners x x x .
It is only upon the completion of these two stages that expropriation is said to have been
completed. The process is not complete until payment of just compensation. Accordingly,
the issuance of the writ of possession in this case does not write finis to the expropriation
proceedings. To effectuate the transfer of ownership, it is necessary for the NPC to pay

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the property owners the final just compensation.[12] (emphasis and underscoring
supplied)

In the present case, the mere issuance of a writ of possession in the expropriation proceedings did not
transfer ownership of the lots in favor of the City. Such issuance was only the first stage in
expropriation. There is even no evidence that judicial deposit had been made in favor of respondents
prior to the Citys possession of the lots, contrary to Section 19 of the LGC.

Respecting petitioners claim that they have been named beneficiaries of the lots, the city
ordinance authorizing the initiation of expropriation proceedings does not state so. [13] Petitioners cannot
thus claim any right over the lots on the basis of the ordinance.

Even if the lots are eventually transferred to the City, it is non sequitur for petitioners to claim that
they are automatically entitled to be beneficiaries thereof. For certain requirements must be met and
complied with before they can be considered to be beneficiaries.

In another vein, petitioners posit that respondents failed to prove that their possession is by mere
tolerance. This too fails. Apropos is the ruling in Calubayan v. Pascual:[14]

In allowing several years to pass without requiring the occupant to vacate the
premises nor filing an action to eject him, plaintiffs have acquiesced to
defendants possession and use of the premises. It has been held that a
person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily bound by an
implied promise that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against them. The status of the
defendant is analogous to that of a lessee or tenant whose term of lease has
expired but whose occupancy continued by tolerance of the owner. In such a case,
the unlawful deprivation or withholding of possession is to be counted from the
date of the demand to vacate. (emphasis and underscoring supplied)

Respondents bought the lots from Pilipinas Development Corporation in 1983. They stepped into the
shoes of the seller with respect to its relationship with petitioners. Even if early on respondents made no
demand or filed no action against petitioners to eject them from the lots, they thereby merely maintained
the status quo allowed petitioners possession by tolerance.

WHEREFORE, the petition for review is DENIED.

IX. Assurance Fund

CHAPTER VII SECTIONS 93 102

1. Claims against the Assurance Fund (Sec. 95)

Development Bank of the Philippines v. Bautista, G.R. No. 21362, November 29, 1968

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DECISION

FERNANDO, J.:

The question this appeal from a judgment of a lower court presents is one that possesses both novelty
and significance. It is this: What is the right, if any, of a creditor which previously satisfied its claim by
foreclosing extrajudicially on a mortgage executed by the debtor, whose title was thereafter nullified in a
judicial proceeding where she was not brought in as a party?

As creditor, the Development Bank of the Philippines now appellant, filed a complaint against one of its
debtors, Lourdes Gaspar Bautista, now appellee, for the recovery of a sum of money representing the
unpaid mortgage indebtedness, which previously had been wiped out with the creditor bank acquiring the
title of the mortgaged property in an extrajudicial sale. Thereafter, the title was nullified in a judicial
proceeding, the land in question being adjudged as belonging to another claimant, without, however, such
debtor, as above noted, having been cited to appear in such court action.

The Development Bank was unsuccessful, the lower court being of the view that with the due process
requirement thus flagrantly disregarded, since she was not a party in such action where her title was set
aside, such a judgment could in no wise be binding on her and be the source of a claim by the appellant
bank. The complaint was thus dismissed by the lower court, then presided by Judge, now Justice, Magno
Gatmaitan of the Court of Appeals. Hence, this appeal by appellant bank.

Such dismissal is in accordance with law. There is no occasion for us to repudiate the lower court.

From the very statement of facts in the brief for appellant bank, the following appears: "On or before May
31, 1949, the defendant- appellee, Lourdes Gaspar Bautista, who shall hereafter be referred to as
Bautista, applied to the Government for the sale in her favor of a parcel of land with an area of 12 has., 44
ares, and 22 centares, located at Bo. Sta. Barbara, San Jose, Nueva Ecija. After proper investigation,
Sales Patent No. V-132 covering said property was issued in her favor on June l, 1949 (Exh. A-I) by the
Director of Lands. Sales Patent No. V-l32 was registered in the office of the Register of Deeds of Nueva
Ecija pursuant to Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of which Original Certificate
of Title No. P-389 was issued in her favor." 1

How the loan was contracted by now appellee Bautista was therein set forth. Thus: "On July 16, 1949,
Bautista applied for a loan with the Rehabilitation Finance Corporation (RFC), predecessor in interest of
the plaintiff-appellee Development Bank of the Philippines (DBP), offering as security the parcel of land
covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista also submitted to the RFC other
documents to show her ownership and possession of the land in question, namely, Tax Declaration No.
5153 (Exh. A-4) in her name and the blueprint plan of the land. On the basis of the documents mentioned
and the appraisal of the property by its appraiser, the RFC approved a loan of P4,000.00 in favor of
Bautista. On July 16, 1949, Bautista executed the mortgage contract over the property covered by O.C.T.
No. P-389 and the promissory note for P4,000.00 in favor of the RFC (Exhs. C and C-1), after which the
proceeds of the loan were released." 2

The satisfaction of the mortgage debt with the acquisition of the title to such property by appellant Bank,

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by virtue of an extrajudicial foreclosure sale, and such title losing its validity in view of a court proceeding,
where however, appellee Bautista, was not made a party, was next taken up in the brief of plaintiff-
appellant. Thus: "Bautista failed to pay the amortization on the loan so that the RFC took steps to
foreclose the mortgage extrajudicially under Act 3135, as amended. In the ensuing auction sale
conducted by the sheriff of Nueva Ecija on June 27, 1951, the RFC acquired the mortgaged property as
the highest bidder (Exh. D). On the date of the sale, the total obligation of Bautista with the RFC was
P4,858.84 (Exh. I). On July 21, 1952, upon failure of Bautista to redeem the property within the one (1)
year period as provided by law, plaintiff-appellant RFC consolidated its ownership thereon (Exhs. E and
E-1). On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and replaced it
with T.C.T. No. NT-12108 in the name of the RFC (Exhs. F and F-1). On or about this time, however, an
action (Civil Case No. 870) was filed by Rufino Ramos and Juan Ramos in the Court of First Instance of
Nueva Ecija against the Government of the Republic of the Philippines and the RFC (as successor in
interest of Bautista) claiming ownership of the land in question and seeking the annulment of T.C.T. No.
2336 in the name of the Government, O.C.T. No. P-389 in the name of Bautista and T.C.T. No. NT-12108
in the name of the RFC. A decision thereon was rendered on June 27, 1955 (Exhs. G, G-1, and G-3)
whereby the aforementioned certificates of title were declared null and void." 3

Why the complaint had to be dismissed was explained thus in the decision now on appeal: "The Court
after examining the proofs, is constrained to sustain her on that; it will really appear that she had never
been placed within the jurisdiction of the Nueva Ecija Court; as the action there was one to annul the title,
it was an action strictly in personam, if that was the case as it was, the judgment there could not in any
way bind Lourdes who had not acquiesced in said decision in any way for what only happened is that as
to the mortgage, the Bank foreclosed, and then sold unto Conrada and when the title had been annulled,
the Bank reimbursed Conrada; stated otherwise, the annullment of Lourdes title was a proceeding ex-
parte as far as she was concerned and could not bind her at all; and her mortgage was foreclosed and
the Bank realized on it, when the Bank afterwards acquiesced in the annulment of the title and took it
upon itself to reimburse Conrada, the Bank was acting on its own peril because it could not have by that,
bound Lourdes at all." 4

As stated at the outset, the decision must be affirmed. The fundamental due process requirement having
been disregarded, appellee Bautista could not in any wise be made to suffer, whether directly or
indirectly, from the effects of such decision. After appellant bank had acquired her title by such
extrajudicial foreclosure sale and thus, through its own act, seen to it that her obligation had been
satisfied, it could not thereafter, seek to revive the same on the allegation that the title in question was
subsequently annulled, considering that she was not made a party on the occasion of such nullification.

If it were otherwise, then the cardinal requirement that no party should be made to suffer in person or
property without being given a hearing would be brushed aside. The doctrine consistently adhered to by
this Court whenever such a question arises in a series of decisions is that a denial of due process suffices
to cast on the official act taken by whatever branch of the government the impress of nullity. 5

A recent decision, Macabingkil v. Yatco, 6 possesses relevance. "A 1957 decision, Cruzcosa v.
Concepcion, is even more illuminating in so far as the availability of the remedy sought is concerned. In
the language of this Court, speaking through Justice J. B. L. Reyes: `The petition is clearly meritorious.
Petitioners were conclusively found by the Court of Appeals to be co-owners of the building in question.
Having an interest therein, they should have been made parties to the ejectment proceedings to give
them a chance to protect their rights; and not having been made parties thereto, they are not bound and
can not be affected by the judgment rendered therein against their co- owner Catalino Cruzcosa, Jr. . . .
Two due process cases deal specifically with a writ of execution that could not validly be enforced against

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a party who was not given his day in court, Sicat v. Reyes, and Hamoy v. Batingolo. According to the
former: `The above agreement, which served as basis for the ejectment of Alipio Sicat, cannot be binding
and conclusive upon the latter, who is not a party to the case. Indeed, that order, as well as the writ of
execution, cannot legally be enforced against Alipio Sicat for the simple reason that he was not given his
day in court. From the latter: `The issue raised in the motion of Rangar is not involved in the appeal for it
concerns a right which he claims over the property which has not so far been litigated for the reason that
he was not made a party to the case either as plaintiff or as defendant. He only came to know of the
litigation when he was forced out of the property by the sheriff, and so he filed the present motion to be
heard and prove his title to the property. This he has the right to do as the most expeditious manner to
protect his interest instead of filing a separate action which generally is long, tedious and protracted."

Reinforcement to the above conclusion comes from a codal provision. According to the Civil Code: 7 "The
vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for
eviction at the instance of the vendee." While not directly in point, the principle on which the above
requirement is based sustains the decision of the lower court. In effect, appellant bank would hold
appellee Bautista liable for the warranty on her title, its annulment having the same effect as that of an
eviction. In such a case, it is wisely provided by the Civil Code that appellee Bautista, as vendor, should
have been summoned and given the opportunity to defend herself. In view of her being denied her day in
court, it would follow, if the intent of the above codal provision were to be respected, that she is not
"obliged to make good the proper warranty."cralaw virtua1aw library

In the suit before the lower court, the Director of Lands and the National Treasurer of the Philippines were
likewise made defendants by appellant bank because of its belief that if no right existed as against
appellee Bautista, recovery could be had from the Assurance Fund. Such a belief finds no support in the
applicable law, which allows recovery only upon a showing that there be no negligence on the part of the
party sustaining any loss or damage or being deprived of any land or interest therein by the operation of
the Land Registration Act 8 This certainly is not the case here, plaintiff-appellant being solely responsible
for the plight in which it now finds itself. Accordingly, the Director of Lands and the National Treasurer of
the Philippines are likewise exempt from any liability.

WHEREFORE, the judgment appealed from is affirmed, with costs against the Development Bank of the
Philippines.

Torres v. Court of Appeals, G.R. No. L-63046, June 21, 1990

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-63046 June 21, 1990

MARIANO TORRES Y CHAVARRIA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE FERNANDEZ,

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ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the NATIONAL TREASURER, as Custodian of
the Assurance Fund, respondents.

Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for petitioner.

Albon, Serrano & Associates for private respondents.

T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 62248-R entitled
"Mariano Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.," which reversed the decision of the
then Court of First Instance of Manila, Branch 7, by holding that it is the respondent Rosario Mota who is
legally entitled to the disputed realties, being an innocent mortgagee and later the highest bidder when
the properties were supposedly foreclosed, and not the petitioner Mariano Torres, the defrauded owner
thereof; and of the resolution of that Court denying Torres' motion for reconsideration.

The parcel of land located at the comer of Quezon Boulevard and Raon Street (now Gonzalo Street), and
the building erected thereon known as "M. Torres Building" is owned by Mariano Torres, the herein
petitioner, as evidenced by Transfer Certificate of Title No. 53628-Manila issued in his name. As far as
the records show, Torres was and still is in possession of the realties, holding safely to his owner's
duplicate certificate of title, and, at least until 1971, paying the real estate taxes due thereon, and
collecting rentals from his tenants occupying the building.

Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with the Court of First
Instance of Manila, docketed as LRC GLRO Cad. Rec. No. 133, where he, misrepresenting to be the
attorney-in-fact of Torres and falsely alleging that the a duplicate copy of TCT No. 53628 was lost,
succeeded in obtaining a court order for the issuance of another copy of the certificate.

Once in possession thereof, Fernandez forged a simulated deed of sale of the realties in his favor.
Whereupon TCT No. 53628 in the name of Torres was canceled and TCT No. 86018 was issued in
Fernandez' name.

On various dates from December, 1966 to November, 1967 Fernandez mortgaged the realties to Rosario
Mota, wife of Ernesto Cue, and also to Angela Fermin, who later assigned her credit to the spouses Cue.
The mortgages were annotated at the back of TCT No. 86018 and so was the deed of assignment.

Torres, who up to this time still had possession of his owner's duplicate certificate of title and who was still
collecting rentals from the occupants of the subject building, upon Teaming of the fraud committed by
Fernandez, caused, on March 18, 1968, the annotation on the latter's TCT a notice of adverse claim.

On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT No. 86018 as well
as the proceedings in LRC GLRO Cad. Rec. No. 133. On April 2, 1968, a notice of lis pendens was
annotated at the back of Fernandez' TCT.

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In the meantime, Fernandez failed to pay his various loans which prompted the Cues to institute an
extrajudicial foreclosure of the mortgage.

On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue for the annulment
of the mortgage with preliminary injunction.

After the foreclosure was enjoined, the parties entered into an amicable settlement, approved by the court
whereby it was stipulated that Fernandez acknowledged and promised to pay his debt to the Cues for
Five Hundred Sixty-Two Thousand Nine Hundred Fifty-Five and 28/100 (P562,955.28) Pesos on or
before, March 30, 1970, while the spouses bound themselves to execute and deliver, within ten (10) days
from receipt of the sum mentioned such documents as are necessary to release the mortgages in favor of
defendants on plaintiffs' property.

Before Fernandez could pay his obligation under the settlement agreement, a decision was rendered in
Civil Case No. 72494 where it was declared that the proceedings held in LRC GLRO Cad. Rec, No. 133
was void and that TCT No. 86018, issued in the name of Fernandez, is without force and effect as TCT
No. 53628 in the name of Torres is the true and legal evidence of ownership of the subject immovables.
Fernandez appealed from this decision to the Court of Appeals where it was docketed as CA-G.R. No.
46386-R. The Court of Appeals, on April 20, 1979, affirmed the decision of the trial court. There being
nothing on the records that would indicate that the judgment of the appellate court was elevated here, it
would appear that it had become final and executory.

But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez failed to comply with
his obligation under the amicable settlement and whereupon the Cues applied for and were granted a writ
of execution. The subject realties were then levied upon and sold at public auction where Rosario Mota
was the highest bidder.

On August 31, 1971, the redemption period for the subject immovables having lapsed without Fernandez
nor Torres redeeming the properties, Rosario Mota was issued the Sheriffs Deed of Sale. Thereafter, TCT
No. 86018 was canceled and TCT No. 105953 was issued in her name.

On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M. Torres Building" that
she is the new owner thereof and henceforth, payment of their rentals should be made to her.

On December 17, 1971 Torres filed a complaint, which later gave rise to this petition, with the Court of
First Instance of Manila, docketed as Civil Case No. 85753, against Fernandez and his spouse and the
Cues to restrain the latter from collecting rentals and for the declaration as void TCT No. 105953. The
Cues in turn filed a cross-claim against Fernandez spouses and a third party complaint against the
National Treasurer as the custodian of the Assurance Fund.

During the proceeding, Mariano Torres, having died sometime in 1974, was substituted by his widow. On
June 3, 1977, the trial court rendered its decision declaring TCT No. 105953 in the name of Rosario Mota
nun and void as it upheld the validity of TCT No. 53628 in the name of Torres as the true evidence of title
to the disputed realties, and at the same time dismissing the Cue's third party complaint and cross claim.

The decision was reviewed by the respondent court at the instance of the Cues which, as
aforementioned, reversed the trial court in its decision dated July 30, 1982 and the Resolution of January
14, 1983. Hence, this petition.

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There is nothing on the records which shows that Torres performed any act or omission which could have
jeopardized his peaceful dominion over his realties. The decision under review, however, in considering
Mota an innocent mortgagee protected under Section 55 of the Land Registration Law, held that Torres
was bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota was the
highest bidder, also bound Torres and concluded that the certificate of title issued in the name of Mota
prevails over that of Torres'. As correctly pointed out by Torres, however, his properties were sold on
execution, and not on foreclosure sale, and hence, the purchaser thereof was bound by his notice of
adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if We grant
Mota the status of an innocent mortgagee, the doctrine relied upon by the appellate court that a forged
instrument may become the root of a valid title, cannot be applied where the owner still holds a valid and
existing certificate of title covering the same interest in a realty. The doctrine would apply rather when, as
in the cases for example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951,
February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru
insidious means obtains the owner's duplicate certificate of title, converts it in his name, and subsequently
sells or otherwise encumbers it to an innocent holder for value, for in such a case the new certificate is
binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and
existing certificate of title, his would be indefeasible as against the whole world, and not that of the
innocent holder's. "Prior tempore potior jure" as We have said in Register of Deeds v. Philippine National
Bank, No. L-17641, January 30, 1965, 13 SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil.
590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791. in C.N.
Hodges v. Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid down the
doctrine that:

The claim of indefeasibility of the petitioner's title under the Torrens land title system
would be correct if previous valid title to the same parcel of land did not exist. The
respondent had a valid title ... It never parted with it; it never handed or delivered to
anyone its owner's duplicate of the transfer certificate of title, it could not be charged with
negligence in the keeping of its duplicate certificate of title or with any act which could
have brought about the issuance of another certificate upon which a purchaser in good
faith and for value could rely. If the petitioner's contention as to indefeasibility of his title
should be upheld, then registered owners without the least fault on their part could be
divested of their title and deprived of their property. Such disastrous results which would
shake and destroy the stability of land titles had not been foreseen by those who had
endowed with indefeasibility land titles issued under the Torrens system. Veronica
Bareza perpetrated the fraud by making false representations in her petition and the title
issued to her being the product of fraud could not vest in her valid and legal title to the
parcel of land in litigation. As she had no title to the parcel of land, in the same way that a
thief does not own or have title to the stolen goods, she could not transmit title which she
did not have nor possess.

We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra, where We noted that
said ruling is "a mere affirmation of the recognized principle that a certificate is not conclusive evidence of
title if it is shown that the same land had already been registered and an earlier certificate for the same
land is in existence." Again in the case of Baltazar v. Court of Appeals, G.R. No. 78728, December 8,
1988, 168 SCRA 354, We held that as between two persons both of whom are in good faith and both
innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the
transfer of a vendor bereft of any transmissible rights.

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In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was an innocent
mortgagee would be futile because, as above shown, no certificate of title covering the subject realties in
derogation of Torres' certificate of title may validly be issued.

Then it becomes evident that the remaining possible remedies of the Cues are to go against Fernandez
or the Assurance Fund, as they in fact had done in the lower court by filing a cross claim and third party
complaint. The lower court dismissed the Cues' cross-claim against Fernandez reasoning out that their
remedy is to cause the final judgment (compromise agreement) in Civil Case No. 75643 executed. This,
of course, is correct since the rights and obligations of both parties had been determined in that case.

The trial court also dismissed the Cues' third party complaint against the Treasurer of the Philippines as
custodian of the Assurance Fund after finding them negligent in protecting their interest. The trial court
recognized the principle that a person dealing with registered lands need not go beyond the certificate of
title but nevertheless pointed out that there are circumstances in this case which should have put the
Cues on guard and prompted them to investigate the property being mortgaged to them, thus:

The property in question is a very valuable property, in fact accepted by defendants Mota
and Medina Cue as collateral for more than half a million pesos in loans granted by them
to Fernandez. Its value lies principally in its income potential, in the form of substantial
monthly rentals. Certainly, the registered title does not yield any information as to the
amount of rentals due from the building, much less on who is collecting them, or who is
recognized by the tenants as their landlord. Any prospective buyer or mortgagee of such
a property, if prudent and in good faith, is normally expected to inquire into all these and
related facts and circumstances.

Besides, by the course of visible dimensions of the M. Torres Building, it should be

readily obvious to any one that the area of the two lots ... covered by TCT No. 86018
cannot accommodate the building, as in fact it also rests upon a lot covered by TCT No.
56387, and partly upon a lot leased by (Torres) from the City of Manila. Had (the Cues)
known of this fact would they have accepted the mortgage alone over TCT No. 86018?
The answer is obvious. And yet, to all indications, they never bothered to look into this
fact about the M. Torres Building.

xxx xxx xxx

Another thing that defendants Mota and Medina Cue must have investigated, as any
prudent buyer or mortgagee should before consummating any transaction on real
property, in the matter of payment of taxes on the property. After all, the big value of the
property in question necessarily means that even real estate taxes on it alone would
involve big amounts of money, and if there are tax arrearages, any buyer or subsequent
owner of the property wig have to come face to face with the tax hen attaching to the
property wherever its owner may be. ... (P. 257, Record on Appeal)

We likewise take note of the manifestation of the Office of the Solicitor General that the Cues failed to
contest the ruling of the trial court negating the liability of the Assurance Fund. For these reasons, We
hold that the Cues' remedy merely is to go against Francisco Fernandez or rather his estate since record
shows that he died sometime in 1983.

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ACCORDINGLY, the decision and resolution under review are REVERSED and the decision of the then
Court of First Instance, Branch 7, Manila in Civil Case No. 85753 is REINSTATED.

SO ORDERED.

X. Registration of Patents

CHAPTER VIII (Sec. 103)

1. Certificate of Titles pursuant to patents (Sec. 103)

Yap v. Republic, G.R. No. 199810, March 15, 2017

March 15, 2017

G.R. No. 199810

BEVERLY ANNE C. YAP, Petitioner

vs
REPUBLIC OF THE PHILIPPINES, represented by THE REGIONAL EXECUTIVE DIRECTOR,
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Respondent

DECISION

REYES, J.:

This is a petition for review on certiorari1 seeking to annul and set aside the Decision2 dated June 30,
2011 and, Resolution3 dated November 14, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 01753-
MIN which reversed and set aside the Decision4 dated October 24, 2008 of the Regional Trial Court
(RTC) of Davao City, Branch 16, in Civil Case No. 29,705-03, dismissing the complaint for reversion of a
parcel of land.

Antecedent Facts

Consuelo Vda. de dela Cruz applied for free patent over a parcel of land constituting about 1,292 square
meters, designated as Lot No. 9087, Cad. 102, located in Daliao, Toril, Davao City. As she could not wait
for the approval of her application, she executed a Deed of Waiver/Quitclaim 5 on November 25, 1981 in
favor of Rollie Pagarigan (Pagarigan).6

Pagarigan filed his own Free Patent Application (FPA)7 and subsequently, Free Patent No. (XI-1)5133
was issued to him over said lot. Original Certificate of Title (OCT) No. P-111828 was thereby issued in his
name on November 25, 1982.9

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On September 5, 1989, Pagarigan mortgaged the lot to Banco Davao-Davao City Development Bank (the
Bank). For failure to pay his loan, the property was foreclosed, and was eventually sold to the Bank at
public auction on October 26, 1990. These proceedings were duly annotated in the title.10

However, the land covered by OCT No. P-11182 was allegedly occupied by Teodoro Valparaiso and
Pedro Malalis (protestants). On October 24, 1990, the protestants filed a formal protest with the Bureau of
Lands (Bureau). They prayed for the recall of the free patent issued to Pagarigan, and for the institution of
a corresponding action for reversion considering that they have been in adverse, exclusive, and
continuous occupation of the subject property since 1945, cultivating it, and planting various
crops, nipa palms and coconut trees on said land.11

On January 2 7, 1992, the protestants caused the annotation of a notice of lis pendens in OCT No. P-
11182. Assigned as Entry No. 647677, said notice of lis pendens pertained to Civil Case No. 20-435-
912 instituted by the protestants against Pagarigan, Menardo Metran and Rene Galope to enjoin them
from demolishing the former's houses pending the determination of the Department of Environment and
Natural Resources (DENR) on the propriety of cancelling the title obtained by Pagarigan. 13

The administrative protest of the protestants reached the Office of the Secretary of the DENR. On May
15, 1995, Secretary Angel C. Alcala rendered a Decision14 against Pagarigan, the salient portion and
the fallo of which read as follows:

From the Investigation Reports submitted by both the Department's Regional Office involved and this
Office as well as from the other pieces of evidence available, both documentary and testimonial, it is
obvious that actual fraud and bad faith have been committed by [Pagarigan] in his subject public land
application which led to the issuance of the title. The following facts and circumstances are
uncontroverted, to wit; that the [protestants] have been in actual occupation of the land in dispute since
1945 and have introduced improvements thereon; that [Pagarigan] never occupied the same nor his
predecessor-in-interest, Consuelo dela Cruz, that [Pagarigan] misrepresented in his application that he
was the actual occupant and that there were no others who occupied the lot in dispute; that the title was
issued sans an actual ground survey; and that [Pagarigan] did not post a copy of his Notice for [FPA] on
both the Bulletin Boards of Daliao and Lizardo as required by law.

xxxx

WHEREFORE, the instant appeal is hereby given DUE COURSE and the subject Decision appealed
from SET ASIDE and REVOKED. Consequently, the Regional Executive Director (RED), DENR Region
XI, Davao City, is hereby ordered to institute an action for cancellation of Original Certificate of Title
(OCT) No. V-11182 of the Registry of Deeds of Davao City covering Lot No. 9087, Cad-102, and for the
reversion of the property covered thereby to the government.

After the cancellation of the subject title and the land already reverted to the government, Regional.
Executive. Director (RED) concerned shall then order the ground survey of the land in dispute and give
due course to the public land applications of the [protestants].

so ORDERED.15

Meanwhile, on November 5, 1992, without consolidating title over the land in its name, the Bank sold the
subject property to herein petitioner Beverly Anne C. Yap (Yap) and Rosanna F. Villamor (Villamor). Upon

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the execution of the deed of sale, OCT No. P-11182 was delivered to them and Transfer Certificate of
Title No. 36698316 was eventually issued in the name ofYap and Villamor on December 16, 2003. 17

On February 28, 1997, the Department of Transportation and Communication filed a complaint for
expropriation of a portion of the subject lot before the RTC of Davao City, Branch 13, docketed as Civil
Case No. 25,084-97.18

On February 19, 2003, the RTC Branch 13 rendered its Decision.19 Confronted with the issue of who
among the claimants shall be entitled to just compensation, the trial court ruled in this wise:

WHEREFORE, it is the judgment of this court that[:]

1. The plaintiff is entitled to expropriate the land subject of this case for the purpose of road right of way to
the Davao Fish Port, which is for public use;

2. The just compensation for the land is 278,[000].00;

3. [Villamor and Yap] are the ones entitled to the payment of just compensation for the property subject of
this case, and plaintiff is directed to pay the said amount to the said defendants;

4. The Commissioner's Fee of 3,850.00 shall be paid by plaintiff to Asian Appraisal Company, Inc., and
may be deducted from the just compensation for the land being expropriated.

This case is now considered closed.

SO ORDERED.20

Ruling of the RTC

On May 22, 2003, the respondent, through the Office of the Solicitor General (OSG), filed the Complaint
for Cancellation of Patent, Nullification of Title and Reversion with the RTC of Davao City.21 The case was
raffled to Branch 16 thereof.

On October 24, 2008, the RTC Branch 16 rendered a Decision22 dismissing the respondent's complaint.
The court ruled that since the subject land has already been sold to third persons, it must be shown that
the latter were part of the fraud and/or misrepresentation committed by the original grantee, or at least
were aware of it. However, since the RTC Branch 13 already declared in its decision in Civil Case No.
25,084-97 that Yap and Villamor were purchasers in good faith and for value of the land in question, RTC
Branch 16 maintained that, as a court of co-equal jurisdiction, it is bound by the said finding under the
principle of conclusiveness of judgment. Moreover, the fact that it took the respondent 26 years, from the
issuance of the free patent before it instituted an action for reversion, militates against its
cause. Thefallo of the trial court's decision reads:

IN VIEW of the foregoing, judgment 1s hereby rendered dismissing the instant complaint.

Defendants' [sic] [Bank] and Pagarigan compulsory counterclaim[ s] are likewise dismissed in the
absence of proof that there was malice or bad faith on [the respondent's] part when it sought the
reversion of the property.

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The dismissal of the action necessarily carries with it the dismissal of defendant's [sic] [Bank] cross-claim
against [Pagarigan].

SO ORD[E]RED.23

Ruling of the CA

The respondent elevated its case to the CA. On June 30, 2011 , the CA rendered the assailed
Decision24 reversing that of the trial court. In so ruling, the CA adopted the findings of the DENR as to the
commission of fraud by Pagarigan in his FPA, and held that neither the Bank nor Yap and Villamor were
innocent purchasers for value. Further, the CA maintained that the decision of the RTC Branch 13 did not
constitute res judicata insofar as the same has not yet attained finality. The fallo of the CA decision reads:

WHEREFORE, We GRANT the appeal and REVERSE the decision of the [RTC]. We declare Free Patent
No. (XI-1)5133 and [OCT] No. P-11182 issued in the name of [Pagarigan], and [TCT] No. T-366983 in the
name of [Yap] and [Villamar], and all subsequent [TCTs] derived therefrom, as null and void. We order
the reversion of Lot 9087, Cad. 102, [l]ocated in Daliao, ToriI, Davao City, to the mass of public domain.

SO ORDERED.25

The Bank,26 Yap,27 and Villamor28 sought reconsideration of the CA decision, but their motion was evenly
denied in the Resolution29 dated November 14, 2011.

Hence this petition filed solely by Yap.

Yap propounds the following assignments of errors:

I. Whether or not the decision of the CA is not in accord with the applicable decision enunciated by the
Court in the case of Spouses Macadangdang v. Spouses Martinez;30

II. Whether or not the CA departed from the rule declared by the Court in the case of Saad Agro-
Industries, Inc. v. Republic of the Philippines,31 that in reversion proceedings the same must be proved by
clear and convincing evidence, mere preponderance of evidence not even being adequate; and

III. Whether or not the decision of the CA runs counter to the rule on res judicata.321wphi1

Yap asserts that she and Villamor purchased the subject property in good faith and for value. She
maintains that on its face, nothing appears in OCT No. P-11182 indicating that some other person has a
right to, or interest over the property covered thereby. As such, there was no obligation on their part to
look beyond the certificate of title to determine the legal condition of the concerned property.

Granting that a notice of lis pendens was annotated in OCT No. P- 11182 filed before the Register of
Deeds of Davao City, the same, however, was not offered in evidence and should not have been
considered. Accordingly, the presumption that Yap and Villamor were purchasers in good faith and for
value was not effectively rebutted.

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Moreover, in the case for expropriation heard before the RTC Branch 13, they were already adjudged as
innocent purchasers for value. Under the principle of res judicata, it was but proper for RTC Branch 16 to
uphold said pronouncement. Accordingly, it was an error on the part of the CA to reverse the same.

Invoking the Court's ruling in Saad Agro-Jndustries,33 Yap asserts that the respondent failed to discharge
the burden of proving the alleged fraud and misrepresentation which attended Pagarigan's FPA.

Ruling of the Court

Yap's contentions are untenable. The decision of the CA does not run counter to the rule on
conclusiveness of judgment.

Yap asserts that the CA erred in setting aside the decision of RTC Branch 16 in violation of the rule
on res judicata. It was a finding already made by the RTC Branch 13, a co-equal branch that the land is
now in the hands of innocent purchasers for value. Thus, the respondent's complaint for reversion must
be dismissed on the basis of the principle of conclusiveness of judgment.

The Court does not agree.

In a catena of cases, the Court discussed the doctrine of conclusiveness of judgment, as a concept of res
judicata as follows:

The second concept - conclusiveness of judgment - states that a fact or question which was in issue in a
former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is
conclusively settled by the judgment therein as far as the parties to that action and persons in privity with
them are concerned and cannot be again litigated in any future action between such parties or their
privies, in the same court or any other court of concurrent jurisdiction on either the same or different
cause of action, while the judgment remains unreversed by proper authority. It has been held that in order
that a judgment in one action can be conclusive as to a particular matter in another action between the
same parties or their privies, it is essential that the issue be identical. If a particular point or question is in
issue in the second action, and the judgment will depend on the determination of that particular point or
question, a former judgment between the same parties or their privies will be final and conclusive in the
second if that same point or question was in issue and adjudicated in the first suit x x x. Identity of cause
of action is not required but merely identity of issue.

Justice Feliciano, in Smith Bell & Company (Phils.), Inc. v. Court of Appeals x x x, reiterated Lopez v.
Reyes x x x in regard to the distinction between bar by former judgment which bars the prosecution of a
second action upon the same claim, demand, or cause of action, and conclusiveness of judgment which
bars the relitigation of particular facts or issues in another litigation between the same parties on a
different claim or cause of action.

The general rule precluding the re-litigation of material facts or questions which were in issue and
adjudicated in former action are commonly applied to all matters essentially connected with the subject
matter of the litigation. Thus, it extends to questions necessarily implied in the final judgment, although no
specific finding may have been made in reference thereto and although such matters were directly
referred to in the pleadings and were not actually or formally presented. Under this rule, if the record of
the former trial shows that the judgment could not have been rendered without deciding the particular
matter, it will be considered as having settled that matter as to all future actions between the parties and if

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a judgment necessarily presupposes certain premises, they are as conclusive as the judgment
itself.34 (Emphasis and underlining ours, and emphasis in the original deleted)

In Nabus v. CA,35 the Court stressed that when a party seeks relief upon a cause of action different from
the one asserted by him in a previous one, the judgment in the former suit is conclusive only as to
such points or questions as were actually in issue or adjudicated therein. 36 However, in Calalang v.
Register of Deeds of Quezon City,37 the Court clarified that the bar on re-litigation of a matter or question
extends to those questions necessarily implied in the final judgment, although no specific finding may
have been made in reference thereto, and although those matters were directly referred to in the
pleadings and were not actually or formally presented. 38 "If the record of the former trial shows that
the judgment could not have been rendered without deciding a particular matter, it will be
considered as having settled that matter as to all future actions between the parties." 39 Verily, as
developed, these principles now embody paragraph (c) of Section 47, Rule 39 of the Rules of Court,
which reads:

(c) In any other litigation between the same parties or their successors in interest, that only is deemed to
have been adjudged in a former judgment or final order which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto.

Guided by the foregoing, the Court finds that RTC Branch 16 falsely appreciated the decision of RTC
Branch 13. The Court quotes the pertinent portions of the Decision dated February 19, 2003 of the RTC
Branch 13:

THE COURT'S RULING:

CLAIMS OF [THE PROTESTANTS]:

[The protestants] claim that the decision of the Secretary of the DENR in effect conferred ownership of
the land to them, so that they should be paid the compensation and not defendants Yap and Villamar. In
fact, defendant Malalis had declared the property for taxation purposes, and had paid the taxes thereon
from the time they had occupied the land.

[The protestants] alleged that the land subject of this case is still in the name of [Pagarigan], and OCT No.
P-11182 has not yet been cancelled and transferred in the names of defendants Yap and Villamar, who
never even set foot on the land, nor declared the land for taxation purposes. The alleged sale of [the
Bank] of the land to Yap and Villamor did not confer ownership of the land to them, because the land had
not been delivered to them by the owner, and they have not exercised ownership over the same. In short
their claim of ownership is based on a technicality, and no amount of technicality may serve as a solid
foundation for the enjoyment of the fruits of fraud, [the protestants] alleged.

CLAIMS OF DEFENDANTS YAP AND VILLAMOR:

Defendants Yap and Villamar for their part, dispute the claim of [the protestants]. They alleged that they
were buyers in good faith of the property, and in fact, the owner's copy of OCT No. P-11182 has been
delivered to them by [the Bank]. They alleged that the title which was issued to [Pagarigan] cannot be
attacked collaterally as in this case. There should be a case filed in court to annul the title if indeed the
same was fraudulently issued. For as long as the title is not yet declared null and void, the same remains
valid, and whoever succeeds to the same is the owner of the land, they alleged. Moreover, since they are

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purchasers in good faith, and for value, they have a right to be protected, defendants Yap and Villamar
alleged.

THE COURT'S RULING:

The Decision of the Secretary of the DENR, in the case cited by [the protestants] cannot justify the court
to declare that the title issued to [Pagarigan] is void, and that [the protestants] are the owners of the
property in question.

As correctly stated by defendants Yap and Villamar in their Memorandum, a Torrens title cannot be
collaterally attacked. The title must be attacked directly in a case filed in court specifically to annul the
said title. The alleged fraud in the issuance of OCT No. P-11182 therefore cannot be raised in this case,
and the court will not consider the decision of the DENR Secretary to say that the title of [Pagarigan] is
void, and that the [protestants] are the owners of the land subject of this case.

Moreover, a Torrens title has the presumption of having been validly issued, and the defendants Yap and
Villamor are not expected to look beyond the title to determine its validity. They are purchasers in good
faith and for value, and are therefore entitled to the protection of the court.

Contrary to the allegation of [the protestants], there was in fact a valid delivery of the land to defendants
Yap and Villamor. The execution of a Deed of Sale in their favor by defendant [Bank], and delivery to
them of the owner's copy of OCT No. P-11182 is a constructive delivery of the property sold to them.

Although defendants Yap and Villamar had not taken actual physical possession of the property covered
by OCT No. P-11182, the same did not divest them of the ownership of the land covered by the said title.
The occupation and possession of [the protestants] of the land in question did not ripen into ownership
because their occupation (even in the concept of an owner) cannot defeat a Torrens title. OCT No. P-
11182 is presumed to be valid until declared void by the courts.40

The foregoing shows that the question of whether or not Yap and Villamar are innocent purchasers was
not an actual issue of fact in the case before the RTC Branch 13, and which called for said court's
adjudication. "An issue of fact is a point supported by one party's evidence and controverted by
another's."41 That Yap and Villamor were buyers in good faith is merely an allegation which was not
proven in court. The RTC Branch 13 did not actually make any clear pronouncement on the matter.

The expropriation proceeding was filed on February 28, 1997. The protestants caused the annotation of a
notice of lis pendens on the original copy of OCT No. P-11182 on January 27, 1992. Accordingly, if
indeed the question on whether Yap and Villamar are buyers in good faith was an actual issue of fact
before the expropriation proc;eeding, the protestants could have easily controverted such claim by the
mere expedience of presenting a certified original copy of OCT No. P-11182. Forsooth, the notice at the
back of a Torrens title serves as notice to the whole world of the pending controversy over the land so
registered.42

The RTC Branch 13 basically anchored its judgment on the indefeasibility of a Torrens title. Pursuant to
the well-settled rule that a certificate of title cannot be subject to collateral attack and can only be altered,
modified, or cancelled in a direct proceeding in accordance with law,43 it was clear that the trial court was
without jurisdiction in an expropriation proceeding, to rule whether the title issued to Pagarigan is void -
notwithstanding the decision of the DENR Secretary. Thereupon, since the position of the protestants

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rests mainly on the validity of Pagarigan's title which cannot be considered in the action, RTC Branch 13,
in effect, posited that there was no legal way for it to rule otherwise.

Accordingly, and as similarly advanced by the OSG in its Comment, the RTC Branch 13's pronouncement
that Yap and Villamor were buyers in good faith was, at best, a mere obiter dictum. Contrary to Yap's
claim, there was nothing final or conclusive with the decision of the RTC Branch 13 which the CA should
be bound.

Neither the Bank, nor Yap and Villamor were purchasers in good faith and for value. Reversion of subject
lot is in order.

"[F]actual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise
in matters within their respective jurisdictions, are generally accorded not only respect but even finality,
and bind the Court when supported by substantial evidence." 44

The fact that Pagarigan fraudulently secured his free patent was duly established by the investigation
conducted by the DENR through Senior

Special Investigator Domingo Mendez. The decision of the DENR is very clear in this regard, thus:

From the Investigation Reports submitted by both the Department's Regional Office involved and this
Office as well as from the other pieces of evidence available, both documentary and testimonial, it is
obvious that actual fraud and bad faith have been committed by [Pagarigan] in his subject public land
application which led to the issuance of the title. The following facts and circumstances are
uncontroverted, to wit; that the [protestants] have been in actual occupation of the land in di spute since
1945 and have introduced improvements thereon; that [Pagarigan] never occupied the same nor his
predecessor-in-interest, Consuelo de la Cruz; that [Pagarigan] misrepresented in his application that he
was the actual occupant and that there were no others who occupied the lot in dispute; that the title was
issued sans an actual ground survey; and that [Pagarigan] did not post a copy of his Notice for [FPA] on
both the Bulletin Boards of Daliao and Lizardo as required by law.45 (Emphasis ours)

Thus, the DENR ordered for the institution of the present action seeking the cancellation of the certificate
of title issued in the name of Pagarigan, and for the reversion of the land covered thereby to the
government.

However, as adverted to above, Section 32 of Presidential Decree No. 1529 mandates that for a
reversion case to prosper, it is not enough to prove that the original grantee of a patent has obtained the
same through fraud; it must also be proven that the subject property has not yet been acquired by an
innocent purchaser for value, because fraudulent acquisition cannot affect the titles of the latter.

Henceforth, the ultimate resolution of this case boils down to the determination on whether the
subsequent conveyances of the subject lot from Pagarigan were made to innocent purchasers for value.
Specifically, based on the records, can we regard the Bank, and thereafter, Yap and Villamor as innocent
purchasers for value?

The Court answers in the negative.

Verily, the Court is in full accord with the following disquisitions of the CA on the matter, thus:

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It cannot be overemphasized that [the Bank], being in the business of extending loans secured by real
estate mortgage, is familiar with rules on land registration. As such, it was, as here, expected to exercise
more care and prudence than private individuals in its dealings with registered lands. Accordingly,
given inter alia the suspicion-provoking presence of occupants other than the owner on the land to be
mortgaged, it behooved them to conduct a more exhaustive investigation on the history of the mortgagor's
title. That appellee Bank accepted in mortgage the property in question notwithstanding the existence of
structures on the property and which were in actual, visible, and public possession of persons other than
the mortgagor, constitutes gross negligence amounting to bad faith.46(Citation omitted)

Yap and Villamor are not innocent purchasers for value.

As pointed out by the CA, the respondent argued that at the time Yap and Villamar purchased the said lot
from the Bank, a notice of lis pendens was already annotated on OCT No. P-11182; hence, they cannot
be considered as innocent purchasers for value. Yap and Villamor, on the other hand, contended that the
owner's duplicate copy they received from the Bank did not contain any annotations of encumbrance or
liens; hence, they cannot be bound by such annotation.47

In the present petition, Yap maintains that the presumption that she and Villamor are buyers in good faith
and for value has not been rebutted. She adds that even if it is assumed, for the sake of argument, that
their predecessor-in-interest committed fraud and misrepresentation, their title as innocent purchasers
and for value will not in any way be affected.48

This Court cannot sanction Yap's assertion. Time and again, the Court has ruled that the burden of proof
to establish the status of a purchaser and registrant in good faith lies upon the one who asserts it.
This onus probandi cannot be discharged by mere invocation of the legal presumption of good faith. 49

It must be emphasized that aside from the fact that a notice of lis pendens was already annotated on
OCT No. P-11182 even before Yap and Villamar purchased the subject property, it was also established
that when they did so, the said property was still registered in the name of Pagarigan since the Bank did
not consolidate its title thereto.50Stated simply, Yap and Villamor purchased the subject property not
from the registered owner.

In Trifonia D. Gabutan, et al. v. Dante D. Nacalaban, et al.,51 the Court held that:

A buyer for value in good Faith is one who buys property of another, without notice that some other
person has a right to, or interest in, such property and pays full and fair price for the same, at the time of
such purchase, or before he has notice of the claim or interest of some other persons in the property. He
buys the property with the well-founded belief that the person from whom he receives the thing had title to
the property and capacity to convey it.

To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the
title to the property. He need not prove that he made further inquiry for he is not obliged to explore
beyond the four comers of the title. Such degree of proof of good faith, however, is sufficient only when
the following conditions concur: first, the seller is the registered owner of the land; second, the latter is in
possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of
some other person in the property, or of any defect or restriction in the title of the seller or in his capacity
to convey title to the property.

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Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the
latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller's title and capacity to transfer any interest in the
property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied
on the face of the title; he must now also show that he exercised reasonable precaution by inquiring
beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.52
(Emphasis and italics in the original)

Verily, as the Court held in a catena of cases:

[T]he law protects to a greater degree a purchaser who buys from the registered owner himself.
Corollarily, it requires a higher degree of prudence from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. While one who buys from the
registered owner does not need to look behind the certificate of title, one who buys from one who is not
the registered owner is expected to examine not only the certificate of title but all factual circumstances
necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to
transfer the land.

This Court has consistently applied the stricter rule when it comes to deciding the issue of good faith of
one who buys from one who is not the registered owner, but who exhibits a certificate of title. 53(Emphasis
in the original)

Neither estoppel nor laches lies

against the respondent m the
present case

Citing the cases of Saad Agro-Jndustries54 and Republic of the Philippines v. CA,55 the RTC Branch 16
opined that in an action for reversion, the defenses of equitable estoppel, laches and Torrens System in
land titles are available - without, however, stating that the foregoing also applies in this case, and how.

In any event, neither of said cases is on all fours with the present case. Said cases did not dwell on
whether an FPA was granted through the employment of fraud and/or misrepresentation, nor the question
of whether the concerned properties were conveyed to innocent purchasers.

In Saad Agro-Industries, free patent was alleged to have been mistakenly issued over a property that was
claimed by therein respondent as inalienable for being part of a track of land classified as forest land.
However, it was established that government has not yet classified the lot in question as forest reserve
prior to the issuance of the concerned free patent. Moreover, it was also established that therein subject
property was already conveyed to an innocent purchaser for value, Saad Agro-Industries, Inc. before the
action for reversion was instituted.

In Republic of the Philippines v. CA,56 therein petitioner instituted an action to annul the certificates of title
that were issued on the basis of a null and void subdivision plan. While therein petitioner sufficiently
proved that the actual area of the disputed property was unduly enlarged in the said subdivision plan, it,
however, presented no proof that therein respondent committed fraud when it submitted the subdivision
plan to the Land Registration Commission for approval. Since the plan was presumed to have been
subjected to investigation, study and verification by said commission, there was no one to be blamed
except therein petitioner, acting through said body, itself. Thus, for having allowed and approved the

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subdivision plan, the government was held to be in estoppel to question the same, and seek the
annulment of titles issued pursuant thereto. Moreover, when the action was instituted, the subdivided
properties were already sold to innocent purchasers for value. Additionally, although therein petitioner
asserted that the action was instituted to protect the integrity of the Torrens System, it was, however,
unjustifiable that it took nearly 20 years before therein petitioner acted on the matter. Verily, therein
petitioner's prolonged inaction was held as tantamount to laches.

In the instant case, it was established that Pagarigan's FPA was secured on the basis of his fraudulent
representations.1wphi1 The respondent cannot be faulted for having been misled into believing that an
applicant is legally qualified to be granted free patent as to render it estopped from asserting its right to
recover its own property. While the action for reversion was instituted only in 2003, the circumstances
leading to the institution of the case hardly spells inaction or neglect on the part of the respondent as to
be considered guilty of laches.

Forsooth, there was no prolonged inaction on the part of the respondent in this case. This can be gleaned
in the decision57 of the DENR Secretary. Shortly after the protestants filed a formal protest with the
Bureau on October 24, 1990, the Officer-in-Charge, Regional Executive Director (RED) of the DENR
Region XI, Davao City immediately ordered an investigation on November 15, 1990,58 and the same
commenced on November 19, 1990. On February 14, 1994, the RED issued a decision dismissing the
protestants' protest.59 Undaunted, the protestants elevated their case to the Office of the DENR
Secretary. On May 15, 1995, the DENR Secretary set-aside the RED's decision and ordered the
institution of appropriate action for the cancellation of OCT No. P-11182, and for the reversion of the
property covered thereby to the government.

The instant action does not

undermine the indefeasibility of
Torrens title

In the case of Lorzano v. Tabayag, Jr.,60 the Court reiterated that a Torrens title emanating from a free
patent which was secured through fraud does not become indefeasible because the patent from whence
the title sprung is itself void and of no effect whatsoever. Thus:

Once a patent is registered and the corresponding certificate of title is issued, the land covered thereby
ceases to be part of public domain and becomes private property, and the Torrens Title issued pursuant
to the patent becomes indefeasible upon the expiration of one year from the date of such issuance.
However, a title emanating from a free patent which was secured through fraud does not become
indefeasible, precisely because the patent from whence the title sprung is itself void and of no effect
whatsoever.61

On this point, the Court's ruling m Republic v. Heirs of Felipe Alejaga, Sr.62 is instructive:

True, once a patent is registered and the corresponding certificate of title [is] issued, the land covered by
them ceases to be part of the public domain and becomes private property. Further, the Torrens Title
issued pursuant to the patent becomes indefeasible a year after the issuance of the latter. However, this
indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. Well-settled is the
doctrine that the registration of a patent under the Torrens System does not by itself vest title; it merely
confirms the registrant's already existing one. Verily, registration under the Torrens System is not a mode
of acquiring ownership.63 (Citations omitted)

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A fraudulently acquired free patent

may only be assailed by the
government m an action for
reversion

Nonetheless, a free patent that was fraudulently acquired, and the certificate of title issued pursuant to
the same, may only be assailed by the government in an action for reversion, pursuant to Section 101 of
the Public Land Act. In Sherwill Development Corporation v. Sitio Sta. Nino Residents Association,
Inc.,64 the Court pointed out that:

It is also to the public interest that one who succeeds in fraudulently acquiring title to a public land should
not be allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru
its duly-authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to
the end that the Republic, thru the Solicitor General or any other officer who may be authorized by Jaw,
may file the corresponding action for the reversion of the land involved to the public domain, subject
thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility
of a title over land previously public is not a bar to an investigation by the Director of Lands as to how
such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had
been committed in securing such title in order that the appropriate action for reversion may be filed by the
Government.65

WHEREFORE, the petition is hereby DENIED. The Decision dated June 30, 2011 and Resolution dated
November 14, 2011 of the Court of Appeals in CA-GR. CV No. 01753-MIN are AFFIRMED.

SO ORDERED.

Alonzo v. CCC, G.R. No. 188471, April 20, 2010

DECISION

BERSAMIN, J.:

By petition for review on certiorari, the petitioners appeal the order dated December 28, 2007 of the
Regional Trial Court (RTC), Branch 20, in Cebu City, denying the motion for issuance of writ of
execution of the Office of the Solicitor General (OSG) in behalf of the Government, and the order dated
April 24, 2009, denying their motion for reconsideration filed against the first order.

Antecedents

The antecedent facts are those established in Alonso v. Cebu Country Club,[1] which follow.

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Petitioner Francisco M. Alonso (Francisco) was the only son and sole heir of the late spouses
Tomas N. Alonso and Asuncion Medalle. Francisco died during the pendency of this case, and was
substituted by his legal heirs, namely: his surviving spouse, Mercedes V. Alonso, his son Tomas V.
Alonso (Tomas) and his daughter Asuncion V. Alonso.[2]

In 1992, Francisco discovered documents showing that his father Tomas N. Alonso had acquired
Lot No. 727 of the Banilad Friar Lands Estate from the Government in or about the year 1911; that the
original vendee of Lot No. 727 had assigned his sales certificate to Tomas N. Alonso, who had been
consequently issued Patent No. 14353; and that on March 27, 1926, the Director of Lands had executed
a final deed of sale in favor of Tomas N. Alonso, but the final deed of sale had not been registered with
the Register of Deeds because of lack of requirements, like the approval of the final deed of sale by the
Secretary of Agriculture and Natural Resources, as required by law. [3]

Francisco subsequently found that the certificate of title covering Lot No. 727-D-2 of the Banilad
Friar Lands Estate had been administratively reconstituted from the owners duplicate of Transfer
Certificate of Title (TCT) No. RT-1310 in the name of United Service Country Club, Inc., the predecessor
of respondent Cebu Country Club, Inc (Cebu Country Club); and that upon the order of the court that had
heard the petition for reconstitution of the TCT, the name of the registered owner in TCT No. RT-1310
had been changed to that of Cebu Country Club; and that the TCT stated that the reconstituted title was a
transfer from TCT No. 1021.[4]

It is relevant to mention at this point that the current TCT covering Lot 727-D-2 in the name of
Cebu Country Club is TCT No. 94905, which was entered in the land records of Cebu City on August 8,
1985.[5]

With his discoveries, Francisco formally demanded upon Cebu Country Club to restore the
ownership and possession of Lot 727-D-2 to him. However, Cebu Country Club denied Franciscos
demand and claim of ownership, and refused to deliver the possession to him. [6]

On September 25, 1992, Francisco commenced against Cebu Country Club in the RTC
in Cebu City an action for the declaration of nullity and non-existence of deed/title, the cancellation of
certificates of title, and the recovery of property. On November 5, 1992, Cebu Country Club filed its
answer with counterclaim.[7]

On May 7, 1993, the RTC decided in favor of Cebu Country Club.

Both parties appealed to the Court of Appeals (CA), which ultimately affirmed the RTC on March
31, 1997. Thus, Francisco filed a motion for reconsideration, which was denied on October 2, 1997.[8]

Nothing daunted, Francisco appealed to this Court (G.R. No. 130876).

On January 31, 2002, this Court decided G.R. No. 130876, decreeing:

WHEREFORE, we DENY the petition for review. However, we SET ASIDE the
decision of the Court of Appeals and that of the Regional Trial Court, Cebu City, Branch
08.

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IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in

Civil Cases No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the
Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and 253
legally belongs to the Government of the Philippines. [9]

The petitioners sought a reconsideration. On December 5, 2003, however, the Court denied
their motion for reconsideration.[10] Hence, the decision in G.R. No. 130876became final and executory.

In late 2004, the Government, through the OSG, filed in the RTC a motion for the issuance of a
writ of execution.[11] Cebu Country Club opposed the motion for the issuance of a writ of execution in due
course.

Later on, the proceedings on the OSGs motion for the issuance of a writ of execution at the
instance of Cebu Country Club in deference to the on-going hearings being conducted by the Committee
on Natural Resources of the House of Representatives on a proposed bill to confirm the TCTs and
reconstituted titles covering the Banilad Friar Lands Estate in Cebu City. [12] The Congress ultimately
enacted a law to validate the TCTs and reconstituted titles covering the Banilad Friar Lands Estate
in Cebu City. This was Republic Act No. 9443,[13] effective on July 27, 2007.

Thereafter, both Cebu Country Club and the OSG brought the passage of R.A. No. 9443 to the
attention of the RTC for its consideration in resolving the OSGs motion for the issuance of a writ of
execution.[14] On December 28, 2007, therefore, the RTC denied the OSGs motion for the issuance of a
writ of execution through the first appealed order.[15]
The petitioners filed a motion for reconsideration dated February 1, 2008, questioning the denial
of the OSGs motion for the issuance of a writ of execution.[16]

Upon being directed by the RTC to comment on the petitioners motion for reconsideration, the
OSG manifested in writing that the Government was no longer seeking the execution of the decision in
G.R. No. 130876, subject to its reservation to contest any other titles within the Banilad Friar Lands
Estate should clear evidence show such titles as having been obtained through fraud. [17]

After the filing of the OSGs comment, the RTC issued the second appealed order, denying the
petitioners motion for reconsideration, giving the following reasons:

1. The party who had a direct interest in the execution of the decision and the
reconsideration of the denial of the motion for execution was the Government,
represented only by the OSG; hence, the petitioners had no legal standing to file
the motion for reconsideration, especially that they were not authorized by the OSG
for that purpose;

2. R.A. No. 9443 confirms and declares as valid all existing TCTs and reconstituted
titles; thereby, the State in effect waived and divested itself of whatever title or
ownership over the Banilad Friar Lands Estate in favor of the registered owners
thereof, including Lot 727 D-2; and

3. The situation of the parties had materially changed, rendering the

enforcement of the final and executory judgment
unjust, inequitable, and impossible, because Cebu Country Club was
now recognized by the State itself as the absolute owner of Lot 727 D-2.[18]

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Hence, the petitioners appeal by petition for review on certiorari.

Contentions of the Petitioners

The petitioners challenge the orders dated December 28, 2007 and April 29, 2009, because:

1. R.A. No. 9443 did not improve Cebu Country Clubs plight, inasmuch as R.A. No.
9443 presupposed first a sales certificate that lacked the required signature, but
Cebu Country Club did not have such sales certificate. Moreover, the titleholders
were in fact the owners of the lands covered by their respective titles, which was not
true with Cebu Country Club due to its being already adjudged with finality to be not
the owner of Lot 727-D-2. Lastly, Cebu Country Clubs title was hopelessly defective,
as found by the Supreme Court itself;

2. The doctrine of law of the case barred the application of R.A. No. 9443 to Cebu
Country Club;

3. The RTCs declaration that R.A. No. 9443 confirmed Cebu Country Club as the
absolute owner of Lot 727-D-2 despite the prior and final judgment of the Supreme
Court that Cebu Country Club was not the owner was unconstitutional, because it
virtually allowed the legislative review of the Supreme Courts decision rendered
against Cebu Country Club;

4. The use of R.A. No. 9443 as a waiver on the part of the Government vis--vis Cebu
Country Club was not only misplaced but downrightly repugnant to Act 1120, the law
governing the legal disposition and alienation of Friar Lands; and

5. The petitioners had the requisite standing to question the patent errors of the RTC,
especially in the face of the unholy conspiracy between the OSG and Cebu Country
Club, on the one hand, and, on the other hand, the passage of R.A. No. 9443 and
DENR Memorandum No. 16, both of which in fact made their predecessor Tomas N.
Alonsos sales certificate and patent valid.[19]

Issues

The Court confronts and resolves the following issues, to wit:

1. Whether or not the petitioners were the real parties-in-interest to question the denial
by the RTC of the OSGs motion for the issuance of a writ of execution;

2. Whether or not R.A. No. 9443 gave the petitioners a legal interest to assail the
RTCs orders; and

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3. Whether or not the petitioners can appeal by petition for review on certiorari in
behalf of the OSG.

Ruling

The petition for review is denied due course.

A.
Preliminary Considerations:
Petitioners contravene the hierarchy of courts,
and the petition is fatally defective

Before delving on the stated issues, the Court notes that the petitioners are guilty of two violations
that warrant the immediate dismissal of the petition for review on certiorari.

The first refers to the petitioners breach of the hierarchy of courts by coming directly to the Court
to appeal the assailed issuances of the RTC via petition for review on certiorari. They should not have
done so, bypassing a review by the Court of Appeals (CA), because the hierarchy of courts is essential to
the efficient functioning of the courts and to the orderly administration of justice. Their non-observance of
the hierarchy of courts has forthwith enlarged the docket of the Court by one more case, which, though it
may not seem burdensome to the layman, is one case too much to the Court, which has to devote time
and effort in poring over the papers submitted herein, only to discover in the end that a review should
have first been made by the CA. The time and effort could have been dedicated to other cases of
importance and impact on the lives and rights of others.

The hierarchy of courts is not to be lightly regarded by litigants. The CA stands between the RTC
and the Court, and its establishment has been precisely to take over much of the work that used to be
done by the Court. Historically, the CA has been of the greatest help to the Court in synthesizing the
facts, issues, and rulings in an orderly and intelligible manner and in identifying errors that ordinarily might
escape detection. The Court has thus been freed to better discharge its constitutional duties and perform
its most important work, which, in the words of Dean Vicente G. Sinco,[20] is less concerned with the
decision of cases that begin and end with the transient rights and obligations of particular individuals but
is more intertwined with the direction of national policies, momentous economic and social problems, the
delimitation of governmental authority and its impact upon fundamental rights.[21]

The need to elevate the matter first to the CA is also underscored by the reality that determining
whether the petitioners were real parties in interest entitled to bring this appeal against the denial by the
RTC of the OSGs motion for the issuance of a writ of execution was a mixed question of fact and law. As
such, the CA was in the better position to review and to determine. In that regard, the petitioners violate
Section 1, Rule 45 of the 1997 Rules of Civil Procedure, which demands that an appeal by petition for
review on certiorari be limited to questions of law.[22]

The second violation concerns the omission of a sworn certification against forum shopping from the
petition for review on certiorari. Section 4, Rule 45 of the 1997 Rules of Civil Procedure requires that the

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petition for review should contain, among others, the sworn certification on the undertakings provided in
the last paragraph of Section 2, Rule 42 of the 1997 Rules of Civil Procedure, viz:

Section 2. xxx

The petitioner shall also submit together with the petition a certification under oath
that he has not theretofore commenced any other action involving the same issues in the
Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal
or agency; if there is such other action or proceeding, he must state the status of the
same; and if he should thereafter learn that a similar action or proceeding has been filed
or is pending before the Supreme Court, the Court of Appeals, or different divisions
thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid
courts and other tribunal or agency thereof within five (5) days therefrom. (n)

Only petitioner Tomas V. Alonso has executed and signed the sworn certification against forum
shopping attached to the petition. Although neither of his co-petitioners Mercedes V. Alonso and
Asuncion V. Alonso has joined the certification, Tomas did not present any written express authorization
in his favor authorizing him to sign the certification in their behalf. The signing of the certification by only
one of the petitioners could not be presumed to reflect the personal knowledge by his co-petitioners of the
filing or non-filing of any similar action or claim.[23] Hence, the failure of Mercedes and Asuncion to sign
and execute the certification along with Tomas warranted the dismissal of their petition.[24]

B.
Petitioners are not proper parties
to appeal and assail the order of the RTC

The petitioners are relentless in insisting that their claim to Lot No. 727-D-2 of the Banilad Friar
Lands Estate should be preferred to that of Cebu Country Club, despite the final judgment in G.R. No.
130876 being adverse to their claim. Their insistence raises the need to resolve once and for all whether
or not the petitioners retained any legal right to assert over Lot No. 727-D-2 following the Governments
manifest desistance from the execution of the judgment in G.R. No. 130876 against Cebu Country Club.

The above-noted defects of the petition for review notwithstanding, therefore, the Court has now
to address and resolve the stated issues on the sole basis of the results the Court earlier reached in G.R.
No. 130876. In this regard, whether or not the petitioners are the proper parties to bring this appeal is
decisive.

After careful consideration, the Court finds that the cause of the petitioners instantly fails.

In G.R. No. 130876, the Court found that the petitioners did not validly acquire ownership of Lot
No. 727-D-2, and declared that Lot No. 727 D-2 legally belonged to the Government, thus:

The second issue is whether the Court of Appeals erred in ruling that the Cebu
Country Club, Inc. is owner of Lot No. 727.

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Admittedly, neither petitioners nor their predecessor had any title to the land
in question. The most that petitioners could claim was that the Director of Lands issued
a sales patent in the name of Tomas N. Alonso. The sales patent, however, and even
the corresponding deed of sale were not registered with the Register of Deeds and
no title was ever issued in the name of the latter. This is because there were basic
requirements not complied with, the most important of which was that the deed of sale
executed by the Director of Lands was not approved by the Secretary of
Agriculture and Natural Resources. Hence, the deed of sale was void. Approval by
the Secretary of Agriculture and Commerce is indispensable for the validity of the sale.
Moreover, Cebu Country Club, Inc. was in possession of the land since 1931, and had
been paying the real estate taxes thereon based on tax declarations in its name with the
title number indicated thereon. Tax receipts and declarations of ownership for taxation
purposes are strong evidence of ownership. This Court has ruled that although tax
declarations or realty tax payments are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of owner for no one in
his right mind will be paying taxes for a property that is not in his actual or constructive
possession.

Notwithstanding this fatal defect, the Court of Appeals ruled that there was
substantial compliance with the requirement of Act No. 1120 to validly convey title to said
lot to Tomas N. Alonso.

On this point, the Court of Appeals erred.

Under Act No. 1120, which governs the administration and disposition of friar
lands, the purchase by an actual and bona fide settler or occupant of any portion of friar
land shall be agreed upon between the purchaser and the Director of Lands, subject to
the approval of the Secretary of Agriculture and Natural Resources (mutatis mutandis).

In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this
Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and
Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously,
both instruments do not bear the signature of the Director of Lands and the Secretary of
the Interior. They also do not bear the approval of the Secretary of Agriculture and
Natural Resources.

Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled
categorically that approval by the Secretary of Agriculture and Commerce of the sale
of friar lands is indispensable for its validity, hence, the absence of such approval
made the sale null and void ab-initio. Necessarily, there can be no valid titles issued on
the basis of such sale or assignment. Consequently, petitioner Franciscos father did
not have any registerable title to the land in question. Having none, he could not
transmit anything to his sole heir, petitioner Francisco Alonso or the latters heirs.

In a vain attempt at showing that he had succeeded to the estate of his father,
on May 4, 1991, petitioner Francisco Alonso executed an affidavit adjudicating the entire
estate to himself (Exh. Q), duly published in a newspaper of general circulation in the
province and city of Cebu (Exh. Q-1). Such affidavit of self-adjudication is inoperative, if
not void, not only because there was nothing to adjudicate, but equally important

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because petitioner Francisco did not show proof of payment of the estate tax and submit
a certificate of clearance from the Commissioner of Internal Revenue. Obviously,
petitioner Francisco has not paid the estate taxes.

Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M.
Alonso or the latters heirs are the lawful owners of Lot No. 727 in dispute. xxx.[25]

The pronouncement in G.R. No. 130876 renders beyond dispute that the non-execution of the
judgment would not adversely affect the petitioners, who now hold no right whatsoever in Lot No. 727-D-
2. Otherwise put, they are not the proper parties to assail the questioned orders of the RTC, because they
stand to derive nothing from the execution of the judgment against Cebu Country Club.

Every action must be prosecuted or defended in the name of the real party in interest, unless
otherwise authorized by law or the rules.[26] A real party in interest is one who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. [27] Interest within the
meaning of the rule means material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental interest. The rule refers to
a real or presentsubstantial interest, as distinguished from a mere expectancy; or from a future,
contingent, subordinate, or consequential interest.[28] One having no right or interest to protect cannot
invoke the jurisdiction of the court as a party-plaintiff in an action.[29]

Thus, an appeal, like this one, is an action to be prosecuted by a party in interest before
a higher court. In order for the appeal to prosper, the litigant must of necessity continue to hold
a real or present substantial interest that entitles him to the avails of the suit on appeal. If he does not, the
appeal, as to him, is an exercise in futility. So it is with the petitioners!

In contrast, the Government, being the legal owner of Lot No. 727-D-2, is the only party adversely
affected by the denial, and is the proper party entitled to assail the denial.[30] However, its manifest
desistance from the execution of the decision effectively barred any challenge against the denial, for its
non-appeal rendered the denial final and immutable.

C.
R.A. No. 9443 gives petitioners no legal interest
to assail the denial of the motion for execution

Section 1 of R.A. No. 9443 provides:

Section 1. All existing Transfer Certificates of Title and Reconstituted

Certificates of Title duly issued by the Register of Deeds of Cebu Province and/or
Cebu City covering any portion of the Banilad Friar Lands Estate, notwithstanding
the lack of signatures and/or approval of the then Secretary of Interior (later Secretary of
Agriculture and Natural Resources) and/or the then Chief of the Bureau of Public Lands
(later Director of Public Lands) in the copies of the duly executed Sale Certificates and
Assignments of Sale Certificates, as the case may be, now on file with the Community

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Environment and Natural Resources Office (CENRO), Cebu City, are hereby declared
as valid titles and the registered owners recognized as absolute owners thereof.

The law expressly declares as valid (a)ll existing Transfer Certificates of Title and Reconstituted
Certificates of Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any
portion of the Banilad Friar Lands Estate, and recognizes the registered owners as absolute owners. To
benefit from R.A. No. 9443, therefore, a person must hold as a condition precedent a duly issued Transfer
Certificate of Title or a Reconstituted Certificate of Title.

Although Lot 727-D-2 was earlier declared to be owned by the Government in G.R. No. 130876,
R.A. No. 9443 later validated Cebu Country Clubs registered ownership due to its holding of TCT No. RT-
1310 (T-11351) in its own name. As the OSG explained in its manifestation in lieu of comment[31] (filed in
the RTC vis--vis the petitioners motion for reconsideration against the RTCs denial of the
OSGs motion for issuance of a writ of execution), the enactment of R.A. No. 9443 had mooted the final
and executory Decision of the Supreme Court in Alonso v. Cebu Country Club, Inc., docketed as G.R. No.
130876, which declared the Government as the owner of Lot 727-D-2 based on the absence of signature
and approval of the then Secretary of Interior; and that the decision in G.R. No. 130876 had ceased to
have any practical effect as the result of the enactment of R.A. No. 9443, and had thereby become
academic.[32]

On the other hand, the petitioners could not benefit from R.A. No. 9443 because of their non-
compliance with the express condition of holding any Transfer Certificate of Title or Reconstituted
Certificate of Title respecting Lot 727-D-2 or any portion thereof.

The appropriate recourse for the petitioners, if they persist in the belief that the TCT of Cebu
Country Club should be nullified, is to compel the OSG through the special civil action for mandamus to
commence the action to annul on the ground that Cebu Country Club had obtained its title to Lot 7217-D-
2 through fraud. Yet, that recourse is no longer availing, for the decision in G.R. No. 130876 explicitly
found and declared that the reconstituted title of Cebu Country Club had not been obtained through fraud.
Said the Court:

On the question that TCT No. RT-1310 (T-11351) bears the same number as
another title to another land, we agree with the Court of Appeals that there is nothing
fraudulent with the fact that Cebu Country Club, Inc.s reconstituted title bears the
same number as the title of another parcel of land. This came about because under
General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947, and
Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were in force
at the time the title was reconstituted on July 26, 1948, the titles issued before the
inauguration of the Philippine Republic were numbered consecutively and the titles
issued after the inauguration were numbered also consecutively starting with No. 1, so
that eventually, the titles issued before the inauguration were duplicated by titles issued
after the inauguration of the Philippine Republic. xxx.
xxx
Petitioners next argue that the reconstituted title of Cebu Country Club, Inc.
had no lawful source to speak of; it was reconstituted through extrinsic and
intrinsic fraud in the absence of a deed of conveyance in its favor. In truth,
however, reconstitution was based on the owners duplicate of the title, hence, there
was no need for the covering deed of sale or other modes of
conveyance. Cebu Country Club, Inc. was admittedly in possession of the land

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since long before the Second World War, or since 1931. In fact, the original title
(TCT No. 11351) was issued to the United Service Country Club, Inc. on November
19, 1931 as a transfer from Transfer Certificate of Title No. 1021. More
importantly, Cebu Country Club, Inc. paid the realty taxes on the land even before
the war, and tax declarations covering the property showed the number of the TCT
of the land. Cebu Country Club, Inc. produced receipts showing real estate tax
payments since 1949. On the other hand, petitioner failed to produce a single receipt of
real estate tax payment ever made by his father since the sales patent was issued to his
father on March 24, 1926. Worse, admittedly petitioner could not show any [T]orrens title
ever issued to Tomas N. Alonso, because, as said, the deed of sale executed on March
27, 1926 by the Director of Lands was not approved by the Secretary of Agriculture and
Natural Resources and could not be registered. Under the law, it is the act of registration
of the deed of conveyance that serves as the operative act to convey the land registered
under the Torrens system. The act of registration creates constructive notice to the whole
world of the fact of such conveyance. On this point, petitioner alleges that Cebu
Country Club, Inc. obtained its title by fraud in connivance with personnel of the
Register of Deeds in 1941 or in 1948, when the title was administratively
reconstituted. Imputations of fraud must be proved by clear and convincing
evidence. Petitioner failed to adduce evidence of fraud. In an action for re-
conveyance based on fraud, he who charges fraud must prove such fraud in obtaining a
title. In this jurisdiction, fraud is never presumed. The strongest suspicion cannot
sway judgment or overcome the presumption of regularity. The sea of suspicion has
no shore, and the court that embarks upon it is without rudder or compass. Worse, the
imputation of fraud was so tardily brought, some forty-four (44) years or sixty-one
(61) years after its supposed occurrence, that is, from the administrative reconstitution
of title on July 26, 1948, or from the issuance of the original title on November 19,
1931, that verification is rendered extremely difficult, if not impossible, especially
due to the supervening event of the second world war during which practically all
public records were lost or destroyed, or no longer available.[33]

IN VIEW OF THE FOREGOING, the petition for review on certiorari is denied for lack of merit.

The Court declares that Cebu Country Club, Inc. is the exclusive owner of Lot No.727-D-2 of the
Banilad Friar Lands Estate, as confirmed by Republic Act No. 9443.

Costs of suit to be paid by the petitioners.

SO ORDERED.

Egao v. CA, G.R. No. L79787, June 29, 1989

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Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-79787 June 29, 1989

APOLONIO EGAO AND BEATRIZ EGAO, petitioners,

vs.
THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO
BONTILAO, respondents.

Eliud J. Pailagao for petitioners.

Guerrero A. Adaza for private respondents.

PADILLA, J.:

This is a land dispute which culminated in the filing by private respondents Severo Dignos and Severo
Bontilao of a verified complaint for Quieting of Title and/or Recovery of Possession and Ownership before
the RTC of Manolo Fortich, Bukidnon, * against petitioners Apolonio and Beatriz Egao.

Private respondents' complaint alleged that they are the legitimate owners and possessors of two (2)
parcels of land situated at Lonocan, Manolo Fortich, Bukidnon, per deed of absolute sale dated 21
December 1979 which, among others, recited thus:

WHEREAS, the abovementioned Parcels of land Lot No. 662 is covered by Original
Certificate of Title No. P-3559 Free Patent No. 298112 registered in the name of
APOLONIO EGAO married to Beatriz Menosa and Lot No. 661 is covered by Original
Certificate of Title No. P-3558 Free Patent No. 303249 registered in the name of
RAULITA CONEJOS married to Pedro Conejos, all transcribed in the Registration Book
in the Register of Deeds for the Province of Bukidnon;

WHEREAS, Lot No. 662 has been transferred in ownership from BEATRIZ MENOSA
EGAO, married to Apolonio Egao in favor of ROBERTO N. MARFORI per Deed of
Absolute Sale executed before Tommy C. Pacana, Notary Public of Cagayan de Oro City
entered in his Notarial Registry under Doc. No. 75; Page No. 15; Book V Series of 1965;
and Lot No. 661 likewise has been transferred in ownership from RAULITA R. CONEJOS
in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed before Tommy
C. Pacana, Notary Public of Cagayan de Oro City, dated June 3, 1965, entered in his
Notarial Registry under Doc. No. 20; Page 4; Book V; Series of 1965.

WHEREAS, the VENDEES herein is [sic] aware of the fact that the Certificate of Title
over the abovementioned parcels of land have not yet been transferred in favor of
ROBERTO N. MARFORI except for the tax declarations but that the VENDOR herein is

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in actual, physical, continuous, uninterrupted, and adverse possession of the above

described parcels of land free from all liens and encumbrances whatsoever; 1

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxes
paid by private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegally
portions of the land. 2

Petitioners' answer to the complaint asserted that Apolonio Egao is the registered owner of the parcel of
land known as Lot No. 662, Pls 854 with an area of 3,451 sq. meters evidenced by OCT No. P-3559
issued by the Register of Deeds of Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965;
that he (Apolonio Egao) and his family have been in actual, physical, adverse, open and continuous
possession thereof even before the issuance to him of the free patent; that the land has never been sold
by reason of the prohibition against alienation under Commonwealth Act No. 141 (Public Land Law); and
that the instant case was the fourth in a series filed against the Egaos and is part of respondents' scheme
to grab said parcel of land from the petitioners.

Judge Felicidario M. Batoy ruled in favor of the Egaos, herein petitioners (defendants in the court a quo),
ordering respondent Severo Bontilao (plaintiff in the court a quo) to immediately deliver to the Egaos the
owner's duplicate copy of Original Certificate of Title No. P-3559. Said trial judge held:

In the instant case, granting arguendo, that defendants executed the 2 documents in
favor of Marfori (Exhs. A & B) after the filing of the application for free patent but before
the issuance of the latter, without the approval of the Director of Lands, upon issuance of
Free Patent No. 29811 2 on August 12, 1965, the said deeds of sale (Exhs. A & B)
were ipso facto cancelled or superseded by said free patent. Moreover, it appears from
the evidence that defendants never vacated or abandoned their possession of Lot No.
662 as they have continuously lived on said lot since 1950, a fact admitted by the
plaintiffs themselves. And as long as Original Certificate of Title No. P-3559 remains in
the name of defendant Apolonio Egao, married to Beatriz Menoza Egao, this is the
ultimate and best evidence of title granted by the government which must be honored
and respected by the courts. In a nutshell, the plaintiffs miserably failed to present or
show any title to Lot No. 662, PLS-854 which should be quieted or freed from any cloud
of doubt as prayed for in their complaint and they further failed to show that they are
entitled to the ownership and possession to Lot No. 662, PLS-854. 3

Private respondents went to the Court of Appeals in CA-G.R. No. 09539. Setting aside the RTC decision,
the appellate court ** held, in part, thus-

That the land is titled in the name of defendant Apolonio Egao is not in question. The
main point in issue is whether defendants could validly sell the land to Marfori who in turn
transferred ownership thereof to the plaintiff. 4

Marfori and Egao were both held by the Court of Appeals in pari delicto for violating the five (5) year
restriction under Sec. 118, Commonwealth Act No. 141 as amended by Act No. 496 against
encumbrance or alienation of lands acquired under a free patent or homestead; hence, they cannot,
according to the appellate court, seek affirmative relief, but respondents on the other hand were declared
innocent purchasers for value who obtained the owner's duplicate copy of the OCT (still in the name of

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the Egaos) from Marfori who transferred to them (respondents) physical possession of the property.
Finally, the Court of Appeals held:

WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is
rendered:

1. Declaring the plaintiffs as the absolute owners of the land known as

Lot No. 662, Pls-854 of the Land Registry of Bukidnon;

2. Ordering the Register of Deeds of Bukidnon to effect the cancellation

of Original Certificate of Title No. P-3559 in the name of Apolonio Egao
and in lieu thereof, another one be issued in the names of plaintiffs, after
payment of the proper fees;

3. Ordering the defendants to surrender peaceful possession of the land

to plaintiffs and to desist from further disturbing the possession over the
land of plaintiffs;

4. Ordering the defendants to pay the costs.

SO ORDERED. 5

Petitioners turn to this Court for relief, assailing the appellate court for allegedly committing grave abuse
of discretion amounting to lack of jurisdiction in holding that:

a. Petitioners sold Lot 662 to Roberto Marfori;

b. It was only in 1983 when Petitioners wrested possession over the land
from private respondents;

c. Petitioners never denied the sales made in favor of Marfori, in their

answer;

d. Private Respondents are "innocent purchasers for value. 6

and/or for allegedly deciding questions of substance not in accordance with law and/or applicable
decisions of this Court.

Without giving due course to the petition, the Court required respondents to comment. 7 After comment,
the Court resolved to require petitioners to file a reply, which they did. Respondents filed a rejoinder.
Considering the allegations, issues and arguments adduced, the Court resolved to give due course to the
petition. Upon submission by the parties of their respective memorandum, the petition was submitted for
decision. 8

Validity of the Deeds of Sale executed between Marfori (as purchaser) and the petitioners (as sellers) is
the main issue to be resolved, in determining respondents' right over the disputed land, the respondents
being the transferees of Marfori.

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It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on
12 August, 1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation or
encumbrance, within a period of five (5) years from the date of issuance of the patent, of lands acquired
under free patent or homestead. Assuming, arguendo, the authenticity of the Deeds of Sale executed by
the Egaos in favor of Marfori over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14
January and 6 October 1965, it clearly appears that all deeds were executed within the prohibited period
of five (5) years. As correctly found by the appellate court-

Section 124 of the Public Land Act provided [sic] that any acquisition, conveyance,
abenation, transfer or other contract made or executed inviolation of any of the provisions
of Sections 118,121,120,122 and 123 of this Act shall be unlawful, null and void from its
execution and shall produce the effect of annulling and cancelling the grant, title, patent
or permit originally issued, recognized or confirmed, actually or prescriptively, and cause
the reversion of the property and its improvements to the state. 9

Petitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori,
asserting continued ownership over the land by virtue of a Torrens Certificate of Title issued in their
name. While the Court is not satisfied with respondents' explanation of their failure to present the notaries
public (who were residents of a neighboring province) to affirm their participation in the preparation of the
Deeds, the Court also finds as insufficient the mere denials by petitioners as to due execution and
authenticity of said Deeds of Sale. A notarial document is evidence of the facts in clear unequivocal
mariner therein expressed. It has in its favor the presumption of regularity To contradict all these there
must be evidence that is clear, convincing and more than merely preponderant. 10 The question of
authenticity being one of fact, the Court will not disturb the conclusions of the Court of Appeals on the
matter.

Original Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a few
months after the execution by the Egaos of the last Deed of Sale in favor of Marfori. 11 The OCT is
registered in the name of the Egaos, herein petitioners.

A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A
registered title under the Torrens system cannot be defeated by prescription. The title, once registered, is
notice to the world. All persons must take notice. No one can plead ignorance of the registration. 12

Contrary to the appellate court's conclusion, respondents are not innocent purchasers for value. 13 An
"innocent purchaser for value" is deemed, under the Torrens system, to include an innocent lessee,
mortgagee or other encumbrancer for value. 14 Where a purchaser neglects to make the necessary
inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility
of the existence of a defect in his vendor's title, and relying on the belief that there was no defect in the
title of the vendor, purchases the property without making any further investigation, he cannot claim that
he is a purchaser in good faith for value. 15

Furthermore, a private individual may not bring an action for reversion or any action which would have the
effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with
the result that the land covered thereby will again form part of the public domain, as only the Solicitor
General or the officer acting in his stead may do so. 16

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The rule of pari delicto non oritur actio (where two persons are equally at fault neither party may be
entitled to relief under the law), admits of exceptions and does not apply to an inexistent contract, such
as, a sale void ab initiounder the Public Land Act, when its enforcement or application runs counter to the
public policy of preserving the grantee's right to the land under the homestead law. 17

Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration
Act (Act No. 496) expressly provides that the registration of the Deed is the operative act that binds or
affects the land insofar as third persons are concerned. The law requires a higher degree of prudence
from one who buys from a person who is not the registered owner, when the land object of the transaction
is registered land. While one who buys from the registered owner need not look behind the certificate of
title, one who buys from another who is notthe registered owner is expected to examine not only the
certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the
title of the transferor, or in his capacity to transfer the land. Failing to exercise caution of any kind
whatsoever is tantamount to bad faith.18

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void
(Sec. 124, Public Land Act). No title passed from the Egaos to Marfori which could be validly transferred
to herein respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of that which
does not belong to him).19

While the government has not taken steps to assert its title, by reversion, to a homestead sold in violation
of the Public Land Act, the vendor or his heirs is better entitled to the possession of the said, the vendee
being in no better situation than any intruder.20

Accordingly, respondents who are not innocent purchasers for value have no standing to question
petitioners' right to the land and to file an action for quieting of title.

WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSED
and SET ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physical
possession of the disputed property. Respondents are ordered to deliver the owner's duplicate copy of
the OCT (No. P-3559) to petitioners, without prejudice to an action for reversion of the land, which may be
instituted by the Solicitor General for the State.

Let a copy of this decision be furnished the Solicitor General.

SO ORDERED.

2. An Act Authorizing the Issuance of Free Patents to Residential Lands (R.A. 10023)

XI. Certification of Land Transfer (Sec. 105)

1. Certificate of Land Transfer (Sec. 105)

2. Comprehensive Agrarian Reform Law of 1998, R.A. 6657

XII. Petitions and Actions after Original Registration

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CHAPTER X (Sections 107 110)

1. Surrender Withheld Duplicate Certificate (Sec. 107)

Ligon v. CA, G.R. No. 107751, June 1, 1995

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 107751 June 1, 1995

LETICIA P. LIGON, petitioner,

vs.
COURT OF APPEALS, JUDGE CELIA LIPANA-REYES, Presiding Judge, Branch 81, Regional Trial
Court of Quezon City, Iglesia ni Kristo and the Register of Deeds of Quezon City, respondent.

BELLOSILLO, J.:

This is a petition for review of the decision of the Court of Appeals which affirmed the order of the
Regional Trial Court of Quezon City, Br. 82, granting the motion of respondent of Iglesia ni Kristo to direct
petitioner to surrender the owner's duplicate of the certificates of title in her possession.

On 19 October 1990 respondent Iglesia ni Kristo (INK) filed with the Regional Trial Court of Quezon City a
complaint 1 for specific performance with damages against the Islamic Directorate of the Philippines (IDP)
docketed as Civil Case No. Q90-6937. Respondent INK alleged in its complaint that by virtue of an
Absolute Deed of Sale dated 20 April 1989 IDP sold to it two (2) parcels of land located at Tandang Sora,
Barrio Culiat, Quezon City, both of which IDP is the registered owner. The parties stipulated in the deed
of sale that the IDP shall undertake to evict all squatters and illegal occupants in the property within forty-
five (45) days from the execution of the contract.

IDP failed to fulfill this obligation. Hence INK prayed that the trial court order IDP to comply with its
obligation of clearing the subject lots of illegal occupants and to pay damages to INK.

IDP alleged in its answer that it was INK which violated the contract by delaying the payment of the
purchase price and prayed that the contract of sale be rescinded and revoked.

On 15 June 1991 INK filed a motion for partial summary judgment on the ground that there was actually
no genuine issue as to any material fact.

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On 12 September 1991 the trial court rendered partial judgment, and on 7 October 1991 an amended
partial judgment granting the reliefs prayed for by INK except the prayer for damages which was to be
resolved later.

On 22 January 1992 INK filed a motion in the same case praying that petitioner Leticia Ligon, who was in
possession of the certificates of title over the properties as mortgagee of IDP, be directed to surrender the
certificates to the Register of Deeds of Quezon City for the registration of the Absolute Deed of Sale in its
name. INK alleged that the document could not be registered because of the refusal and/or failure of
petitioner to deliver the certificates of title despite repeated requests.

On 31 January 1992 petitioner Ligon filed an opposition to the motion on the ground that the IDP was not
served copy of the motion, and the ownership of the INK over the property was still in issue since
rescission was sought by the IDP as a counterclaim. She prayed that the motion be denied, but should it
be granted, the Register of Deeds be directed after registration to deliver the owner's duplicate copies of
the new certificates of title to her.

On 15 February 1992 petitioner filed a Supplemental Opposition questioning the jurisdiction of the trial
court because the motion involved the registrability of the document of sale, and she was not made a
party to the main case.

On 2 March 1992 the trial court granted the motion of INK and ordered petitioner to surrender to INK the
owner's copy of RT-26521 (170567) and RT-26520 (176616) in open court for the registration of the
Absolute Deed of Sale in the latter's name and the annotation of the mortgage executed in favor of
petitioner on the new transfer certificates of title to be issued to INK.2

On 6 April 1992, on motion of petitioner Ligon, the trial court reconsidered its order by directing her to
deliver the certificates of title to the Register of Deeds of Quezon City. 3

Petitioner filed a petition for certiorari with the Court of Appeals seeking the annulment of the two (2)
orders. However, on 28 October 1992 the Court of Appeals dismissed the petition and affirmed the orders
of the trial court.

Petitioner now comes to us alleging that the trial court erred: (a) in ruling that it had jurisdiction over
petitioner; (b) in upholding the orders of the trial court even as they violated the rule prohibiting splitting of
a single cause of action and forum-shopping; (c) in holding that INK is the owner of the property and
entitled to registration of its ownership; and, (d) in holding that INK has a superior right to the possession
of the owner's copies of the certificates of title.

Upon prior leave, the IDP intervened alleging that prior to the issuance by the trial court of the order of 2
March 1992, its legal Board of Trustees filed a motion for intervention informing said court that the sale of
the properties was not executed by it but was made possible by a fake Board of Trustees, hence, the sale
is void. The trial court denied the motion since jurisdiction over the incident properly belonged to the
Securities and Exchange Commission (SEC). Conformably therewith, IDP brought the matter before the
SEC which later declared that the sale of the properties was void. Thus, IDP banks on this favorable
decision in similarly seeking the nullification of the questioned orders of the trial court.

Under our land registration law, no voluntary instrument shall be registered by the Register of Deeds
unless the owner's duplicate certificate is presented together with such instrument, except in some cases

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or upon order of the court for cause shown. In case the person in possession of the duplicate certificates
refuses or fails to surrender the same to the Register of Deeds so that a voluntary document may be
registered and a new certificate issued, Sec. 107, Chapter 10, of P.D. No. 1529 clearly states:

Sec. 107. Surrender of withheld duplicate certificates. Where it is necessary to issue a

new certificate of title pursuant to any involuntary instrument which divests the title of the
registered owner against his consent or where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to surrender the owner's
duplicate certificate of title, the party in interest may file a petition in court to compel
surrender of the same to the Register of Deeds. The court, after hearing, may order the
registered owner or any person withholding the duplicate certificate to surrender the
same and direct the entry of a new certificate or memorandum upon such surrender. If
the person withholding the duplicate certificate is not amenable to the process of the
court, or if for any reason the outstanding owner's duplicate certificate cannot be
delivered, the court may order the annulment of the same as well as the issuance of a
new certificate of title in lieu thereof. Such new, certificate and all duplicates thereof shall
contain a memorandum of the annulment of the outstanding duplicate.

Before the enactment of P.D. No. 1529 otherwise known as the Property Registration Decree, the former
law, Act No. 496 otherwise known as the Land Registration Act, and all jurisprudence interpreting the
former law had established that summary reliefs such as an action to compel the surrender of owner's
duplicate certificate of title to the Register of Deeds could only be filed with and granted by the Regional
Trial Court sitting as a land registration court if there was unanimity among the parties or there was no
adverse claim or serious objection on the part of any party in interest, otherwise, if the case became
contentious and controversial it should be threshed out in an ordinary action or in the case where the
incident properly belonged.4

Under Sec. 2 of P.D. No. 1529, it is now provided that "Courts of First Instance (now Regional Trial
Courts) shall have exclusive jurisdiction over all applications for original registration of titles to lands,
including improvements and interest therein and over all petitions filed after original registration of title,
with power to hear and determine all questions arising upon such applications or petitions." The above
provision has eliminated the distinction between the general jurisdiction vested in the regional trial court
and the limited jurisdiction conferred upon it by the former law when acting merely as a cadastral court.
Aimed at avoiding multiplicity of suits the change has simplified registration proceedings by conferring
upon the regional trial courts the authority to act not only on applications for original registration but also
over all petitions filed after original registration of title, with power to hear and determine all questions
arising upon such applications or petitions.5

The principal action filed by INK in Civil Case No. Q-90-6937 before the trial court was for specific
performance with damages based on a document of sale. Such action was well within the exclusive
jurisdictions of the Regional Trial Court.6 When IDP, the defendant in the trial court, did not question the
genuineness and validity of said deed of sale and its obligations thereunder, the summary judgment
issued by the court granting the reliefs sought by INK was also an exercise of its general jurisdiction.

Hence, when INK filed a motion for the issuance of an order from the same court to compel the holder of
the duplicate certificates of title to surrender the same to the Register of Deeds for the registration of the
deed of sale subject of the principal action, the motion was a necessary incident to the main case. When
the sale of the property was upheld by the court in its judgment and the defendant was directed to comply

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with its terms and conditions, the right of INK to have the same registered with the Register of Deeds
could not be disregarded. To assert and enjoy its right, INK should be allowed to seek the aid of the court
to direct the surrender of the certificates of title. Since Regional Trial Courts are courts of general
jurisdiction, they may therefore take cognizance of this case pursuant to such jurisdiction. 7 Even while
Sec. 107 of P.D. 1529 speaks of a petition which can be filed by one who wants to compel another to
surrender the certificates of title to the Register of Deeds, this does not preclude a party to a pending
case to include as incident therein the relief stated under Sec. 107, especially if the subject certificates of
title to be surrendered are intimately connected with the subject matter of the principal action. 8 This
principle is based on expediency and in accordance with the policy against multiplicity of suits.

The records of the case show that the subsisting mortgage lien of petitioner appears in the certificates of
title Nos. 26520 and 26521. Hence, the order of the trial court directing the surrender of the certificates to
the Register of Deeds in order that the deed of sale in favor of INK can be registered, cannot in any way
prejudice her rights and interests as a mortgagee of the lots. Any lien annotated on the previous
certificates of title which subsists should be incorporated in or carried over to the new transfer certificates
of title. This is true even in the case of a real estate mortgage because pursuant to Art. 2126 of the Civil
Code it directly and immediately subjects the property upon which it is imposed, whoever the possessor
may be, to the fulfillment of the obligation for whose security it was constituted. It is inseparable from the
property mortgaged as it is a right in rem a lien on the property whoever its owner may be. It subsists
notwithstanding a change in ownership; in short, the personality of the owner is disregarded. Thus, all
subsequent purchasers must respect the mortgage whether the transfer to them be with or without the
consent of the mortgagee, for such mortgage until discharged follows the property. 9 It is clear therefore
that the surrender by petitioner of the certificates of title to the Register of Deeds as ordered by the trial
court will not create any substantial injustice to her. To grant the petition and compel INK to file a new
action in order to obtain the same reliefs it asked in the motion before the trial court is to encourage
litigations where no substantial rights are prejudiced. This end should be avoided. Courts should not be
so strict about procedural lapses that do not really impair the proper administration of justice. The rules
are intended to insure the orderly conduct of litigations because of the higher objective they seek, which
is, to protect the parties' substantive rights. 10

WHEREFORE, the appealed decision of the Court of Appeals dated 28 October 1992 is AFFIRMED.

SO ORDERED.

Toledo Banaga v. CA, G.R. No. 127941, January 28, 1999

FIRST DIVISION

[G.R. No. 127941. January 28, 1999]

BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners, vs. COURT OF APPEALS and
CANDELARIO DAMALERIO respondents.

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DECISION

MARTINEZ, J.:

The Court of Appeals (CA), in a decision penned by then Justice Ricardo J.

Francisco,[1] categorically declared private respondent as the absolute owner of the land subject of this
case. That decision was affirmed by this Court, became final and executory and was remanded to the
lower court for execution. But the Register of Deeds frustrated private respondents judicially determined
right as it refused to issue Certificates of Title in his name on the ground that the matter should be
referred en consulta to the Register of Deeds before petitioners title can be cancelled and a new one
issued in the name of the winning party herein private respondent. So, for the third time, this simple
redemption case which commenced in the 1980s is again before this Court.

Here is a summary of the facts, over which there is no dispute:

In an action for redemption filed by petitioner Banaga, the trial court declared that she had lost her
right to redeem her property earlier foreclosed and which was subsequently sold at public auction to
private respondent.[2] Certificates of Title covering the said property were issued to private respondent
over which petitioner Banaga annotated on March 3, 1983 a notice of lis pendens.[3] On appeal by
petitioner Banaga, the CA reversed the decision of the trial court and allowed the former to redeem the
property within a certain period.[4] Private respondents petition to this Court was dismissed [5] and the
decision became final.

On June 11, 1992, petitioner Banaga tried to redeem the property by depositing with the trial court
the amount of redemption which was financed by her co-petitioner Tan. Private respondent opposed the
redemption arguing that it was made beyond the time given to her by the court in the earlier
case. However, the lower court issued an order on August 7, 1992 upholding the redemption and ordered
the Register of Deeds to cancel private respondents Certificates of Title and issue new titles in the name
of petitioner Banaga.[6] When his motion for reconsideration was denied by the trial court in an order
dated January 4, 1993, private respondent filed a petition for certiorari with the CA which was docketed
as CA-G.R. No. 29869. On January 11, 1993, private respondent caused the annotation of said petition
as another notice of lis pendens on the Certificates of Title. Three days later, the CA issued a temporary
restraining order to enjoin the execution of the August 7, 1992 and January 4, 1993 orders.

Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to petitioner Tan with
the deed of absolute sale mentioning private respondents certificate of title which was not yet
cancelled.Notwithstanding the notice of lis pendens, petitioner Tan subdivided the property in question
under a subdivision plan, which she made not in her name but in the name of private respondent. There
being no preliminary injunction issued and with the expiration of the TRO, petitioner Tan asked the
Register of Deeds to issue new titles in her name. On March 24, 1993, such titles were issued in
petitioner Tans name but it still carried the annotations of the two notices of lis pendens. Upon learning of
the new title of petitioner Tan, private respondent impleaded the former in his petition in CA-G.R. No.
29869.

On October 28, 1993, the CA set aside the August 7, 1992 and January 4, 1993 orders of the trial
court and declared private respondent absolute owner of the subject property. The CA disposed of the
petition as follows:

WHERFORE, in view of the foregoing considerations, the instant petition is hereby GRANTED. The
orders issued by public respondent judge dated August 7, 1992 and January 4, 1993 are hereby ordered
SET ASIDE and a new one is hereby entered declaring petitioner as the absolute owner of the parcels of

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land subject of redemption for failure of private respondent to exercise the right of redemption within the
thirty (30) day period previously granted her by this court. [7]

That decision became final and executory after petitioner Banagas petition for review was dismissed
by this Court for lack of merit.[8] Upon motion of private respondent, the trial court issued a writ of
execution on December 27, 1994 ordering the Register of Deeds to reinstate the Certificates of Title in
the name of the movant herein private respondent. In its order which petitioners did not contest, the
court a quo said that:

Although there is no specific pronouncement in the decision of the Court of Appeals that reverts the titles
to the land subjects of redemption to the defendant, the fact that it declared the petitioner (Damalerio) as
the absolute owner of the lands entitles him to writ of execution issuing from this court directing the
Register of Deeds to reinstate his titles to his name. As it is implied from the decision declaring him the
absolute owner of the lands that the titles to the land be reverted to him (See Uy v. Capulong, 221 SCRA
87).

Let therefore a writ of execution issue in this case to enforce the decision of the Court of Appeals. In this
connection, the Register of Deeds of the Registry of Deeds for General Santos City is hereby ordered to
reinstate the titles of Candelario B. Damalerio - Transfer Certificates of Title No. T- 19570 and T-19571,
both of the Registry of Deeds from General Santos City. [9]

But the Register of Deeds refused to comply with the writ of execution alleging that the Certificates of
Title issued to petitioner Tan must first be surrendered. Accordingly, private respondent moved to cite the
Register of Deeds in contempt of court which was denied, as the trial court ruled on January 11, 1995 that
the formers remedy is by consulta to the Commissioner of Land Registration.[10] In another order (dated
March 29, 1996), the trial court likewise denied private respondents motion for the issuance of a writ of
possession ruling that the latters remedy is a separate action to declare petitioner Tans Certificates of
Title void. Aggrieved, private respondent again elevated the case to the CA via a petition
for certiorari and mandamus[11] assailing the above-mentioned two orders of the court a quo naming as
respondents the trial court judge, the Register of Deeds and the petitioners. On November 7, 1996, the
CA rendered a decision granting the petition and, among others, set aside the assailed orders of the trial
court. The dispositive portion of the CA decision reads:

WHEREFORE, in view of all the foregoing considerations, the petition is GRANTED. Judgment is hereby
rendered:

1) setting aside the orders of the respondent judge dated January11, 1995 and March 29, 1996;

2) declaring the title issued to Biblia Toledo-Banaga, Jovita Tan and to those other subsequent
transferee or transferees, if any, as null and void;

3) ordering the Register of Deeds of General Santos City to issue new certificates of title to
Candelario Damalerio over the parcels of land in question;

4) ordering the respondent court to issue writ of execution for the enforcement of this decision
and of the decision in CA-G.R. SP No. 29868 (sic), as well as a writ of possession for the
delivery to petitioner Damalerio of the Physical possession of the parcels of land subject
matter of this case.

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SO ORDERED.[12]

Upon denial by the CA of their motion for reconsideration, petitioners filed the instant petition
for certiorari and mandamus. The Court, however, is puzzled why petitioners, in their petition, would seek
to set aside the two orders (January 4, 1995 and March 29, 1996) of respondent judge who was not
named in their petition.[13] Assuming this to be a mere lapsus since they also confusingly refer to Banaga
and Tan as private respondent and to Damalerio as petitioner, [14] the petition is still utterly without merit. It
is petitioners stand (1) that petitioner Tan is a buyer in god faith and (2) that the remedy of private
respondent to secure the titles in his name is by consulta to the Land Registration Commissioner and not
through contempt.

The Court is not convinced of the arguments proffered by petitioners.

By arguing that petitioner Tan was a buyer in good faith, petitioners in effect raise once more the
issue of ownership of the subject property. But such issue had already been clearly and categorically
ruled upon by the CA and affirmed by this Court, wherein private respondent was adjudged the rightful
and absolute owner thereof. The decision in that case bars a further repeated consideration of the very
same issue that has already been settled with finality. To once again re-open that issue through a
different avenue would defeat the existence of our courts as final arbiters of legal controversies. Having
attained finality, the decision is beyond review or modification even by this Court.[15]

Under the principle of res judicata, the Court and the parties, are bound by such final decision,
otherwise, there will be no end to litigation. It is to the interest of the public that there should be an end to
litigation by the parties over a subject fully and fairly adjudicated, and an individual should not be vexed
twice for the same cause.[16] All the elements of res judicata are present in this case, which are:

(a) the former judgment must be final;

(b) the court which rendered judgment had jurisdiction over the parties and the subject matter;

(c) it must be a judgment on the merits;

(d) and there must be between the first and second actions identity of parties, subject matter,
and cause of action.[17]

The judgment in the redemption suit had long become final and executory; there is no question that
the court had jurisdiction over the parties and the subject matter; it involves an adjudication on the merits
of the case as the court discussed and passed upon petitioner Banagas right of redemption which she did
not timely exercise and as a consequence, lost her claim of ownership of the lot. Both petitioners and
private respondent are parties to the earlier cases, disputing the same parcel of land with both opposing
parties claiming ownership thereof. Certainly, res judicata had set in. Besides, once a judgment had
become final and executory, it can no longer be disturbed no matter how erroneous it may be. In any
case, no such error was attributed to in this case.

Contrary to petitioners argument, private respondents remedy is not a direct or independent civil
action for cancellation of petitioner Tans titles. The facts, circumstances, evidence and arguments
invoked in this derailed final and executory decision are the very same matters that will be established
assuming such independent suit is legally warranted. It does not matter whether the former case was a
redemption suit and the new one will be for cancellation of title because the test of identity of causes of
action is not in its form but whether the same evidence would support and establish the former and
present causes of action.[18]

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Petitioners other contention that the execution of the final and executory decision - which is to issue
titles in the name of private respondent - cannot be compelled by mandamus because of the formality that
the registered owner first surrenders her duplicate Certificates of Title for cancellation per Section 80 of
Presidential Decree 1529[19] cited by the Register of Deeds,[20] bears no merit. In effect, they argue that
the winning party must wait execution until the losing party has complied with the formality of surrender of
the duplicate title. Such preposterous contention borders on the absurd and has no place in our legal
system. Precisely, the Supreme Court had already affirmed the CAs judgment that Certificates of Title be
issued in private respondents name. To file another action just to compel the registered owner, herein
petitioner Tan, to surrender her titles constitute violation of, if not disrespect to, the orders of the highest
tribunal. Otherwise, if execution cannot be had just because the losing party will not surrender her titles,
the entire proceeding in the courts, not to say the efforts, expenses and time of the parties, would be
rendered nugatory. It is revolting to conscience to allow petitioners to further avert the satisfaction of their
obligation because of sheer literal adherence to technicality, [21] or formality of surrender of the duplicate
titles. The surrender of the duplicate is implied from the executory decision since petitioners themselves
were parties thereto. Besides, as part of the execution process, it is a ministerial function of the Register
of Deeds to comply with the decision of the court to issue a title and register a property in the name of a
certain person, especially when the decision had attained finality, as in this case.

In addition, the enforcement of a final and executory judgment is likewise a ministerial function of the
courts[22] and does not call for the exercise of discretion. Being a ministerial duty, a writ of mandamus lies
to compel its performance.[23] Moreover, it is axiomatic that where a decision on the merits is rendered
and the same has become final and executory, as in this case, the action on procedural matters or issues
becomes moot and academic.[24] Thus, the so-called consulta to the Commissioner of Land Registration,
which is not applicable herein, was only a naive and belated effort resorted to by petitioners in order to
delay execution. If petitioners desire to stop the enforcement of a final and executory decision, they
should have secured the issuance of a writ of preliminary injunction, [25] but which they did not avail
knowing that there exists no legal or even equitable justifications to support it.

At any rate, at the time petitioner Banaga sold the property to petitioner Tan, the latter was well
aware of the interest of private respondent over the lot. Petitioner Tan furnished the amount used by
petitioner Banaga for the attempted redemption. One who redeems in vain a property of another acquires
notice that there could be a controversy. It is for the same reason that petitioner Tan was included as
party to the case filed in court. Worse, at the time of the sale, petitioner Tan was buying a property not
registered in the sellers name. This clear from the deed of absolute sale which even mentioned that the
Certificates of Title is still in the name of private respondent. It is settled that a party dealing with a
registered land need not go beyond the Certificate of Title to determine the true owner thereof so as to
guard or protect her interest. She has only to look and rely on the entries in the Certificate of Title. By
looking at the title, however, petitioner Tan cannot feigned ignorance that the property is registered in
private respondents name and not in the name of the person selling to her. Such fact alone should have
at least prompted, if not impelled her to investigate deeper into the title of her seller - petitioner Banaga,
more so when such effort would not have entailed additional hardship, and would have been quite easy,
as the titles still carried the two notices of lis pendens.

By virtue of such notices, petitioner Tan is bound by the outcome of the litigation subject of the lis
pendens. As a transferee pendente lite, she stands exactly in the shoes of the transferor and must
respect any judgment or decree which may be rendered for or against the transferor. Her interest is
subject to the incidents or results of the pending suit, and her Certificates of Title will, in that respect,
afford her no special protection.[26]

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To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither
the registered owner nor was the former authorized by the latter to sell the same. She knew she was not
dealing with the registered owner or a representative of the latter. One who buys property with full
knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith [27] and cannot
claim that he acquired title in good faith as against the owner or of an interest therein.[28] When she
nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation. [29] She is bound
by the outcome of her indifference with no one to blame except herself if she looses her claim as against
one who has a superior right or interest over the property. These are the undeniable and uncontroverted
facts found by the CA, which petitioners even quote and cite in their petition. As aptly concluded by the
CA that petitioner Tan is indeed a buyer in bad faith on which the Court agrees:

Notwithstanding her constructive and actual knowledge that Damalerio was claiming the land, that the
land was in his name, and it was involved in pending litigation, Jovita Tan bought it from Banaga on
January 7, 1993. The deed of sale recites that the parcels of land sold were covered by Transfer
Certificates of Title No. __ (formerly [T-12488] T-530) and TCT No. __ (formerly [T-12488] T-530) (sic)
and TCT No. __ (formerly P-1294). (Annex F, Petition). Apart from the fact that Banaga was without any
TCT, as above stated, TCT No. T-12488 was petitioners title (Annex C, Petition). Herein private
respondent Tan was buying a land not registered in her sellers (Banagas) name, but in that of petitioner
Damalerio who had been claiming it as his own. She admitted this fact when she had the land subdivided
on February 2, 1993 not in her name but in the name of Candelario Damalerio (Annex Q,
Reply). Evidently, she was a purchaser in bad faith because she had full knowledge of the flaws and
defects of title of her seller, Banaga. X x x.

The notice of lis pendens registered on March 3, 1993 involving the land in question and private
respondent Tans actual knowledge of the then pending Civil Case No. 2556, where the question as to
whether the redemption of the land which she financed was raised, rendered her a purchaser in bad faith
and made the decision therein binding upon her.[30]

Being a buyer in bad faith, petitioner Tan cannot acquire a better rights than her predecessor in
interest,[31] for she merely stepped into the shoes of the latter. Such finding of bad faith is final and may
not be re-opened for the law cannot allow the parties to trifle with the courts.[32]

With respect to the issue of possession, such right is a necessary incident of ownership. [33] The
adjudication of ownership to private respondent includes the delivery of possession since the defeated
parties in this case has not shown by what right to retain possession of the land independently of their
claim of ownership which was rejected.[34] Otherwise, it would be unjust if petitioners who has no valid
right over the property will retain the same.[35] Thus, the CA correctly disagreed with the trial courts order
denying private respondents motion for writ of possession for the following reasons cited in its decision:

1. The order violates the doctrine laid down in Javier vs. Court of Appeals, 224 SCRA 704,
which ruled that the issuance of title in favor of a purchaser in bad faith does not exempt the
latter from complying with the decision adverse to his predecessor in interest, nor preclude him
from being reached by writ of execution;

2. Private respondent Tan was a party respondent in CA-G.R. SP No. 29869, she having been
impleaded in a supplemental petition, which this Court gave due course and required the
respondents to file their answer.The fact that she did not file any pleading, nor intervene therein
did not excuse her from being bound by the decision, otherwise all that a party respondent was
to fold his arm to prevent him from being bound by a decision in a case. Her securing titles over
the land during the pendency of said case did not protect her from the effects of said

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 Page 393 of 540

decision. The validity of tile of a purchaser of registered land depends on whether he had
knowledge, actual or constructive, of defects in the title of his vendor. If he has such knowledge,
he is a purchaser in bad faith and acquires the land subject to such defects (X x x indicates that
citations of authorities omitted) The title secured by a purchaser in bad faith is a nullity and gave
the latter no right whatsoever, as against the owner (x x x).

3. Private respondent Tans titles and those of her predecessor, Banaga, arose from the void
orders of August 7, 1992 and January 4, 1993. Since a void order could not give rise to valid
rights, said titles were also necessarily null and void (x x x).

4. Private respondents and respondent Judge executed the questioned orders of August 7,
1993 and January 4, 1993, pending review of said orders in CA-G.R. SP No. 29869. The
nullification of said orders by this out imposed upon the private respondents the obligation to
return the property to Damalerio and upon respondent Judge, upon motion for execution, to
order the cancellation of private respondents titles and the issuance of new titles to him.

5. This Court in its decision in CA-G.R. SP No. 29869 declared petitioner Damalerio absolute
owner of the property in question. Private respondents were parties litigants in said case, who
did not claim possession of the land separately from their claim of ownership thereof. Such
being the case, the delivery of possession is considered included in this Courts decision
declaring Damalerio absolute owner of the property (x x x), which can be enforced by writ of
possession (x x x). In denying petitioners motion for writ of possession, the trial court violated
said doctrines, and

6. Lastly, the effect of respondent Judges order of March 29, 1996 is to re-open the decision in
CA-G.R. SP No. 29689 for re-litigation and alteration in a separate action. For while this Court
already declared that Banagas redemption of the land financed by private respondent Tan was
invalid, and as a consequence declared Damalerio absolute owner of the property, which was
binding against private respondent Tan, as she was a respondent therein and a
purchaser pendente lite and in bad faith, the order of the respondent Court holding that another
civil action be filed to annul private respondent Tans titles would be to re-litigate such issues
and modify or alter this Courts final decision.

The respondent Court has no authority to do so.[36]

WHEREFORE, premises considered, the petition is hereby DENIED and the assailed decision of the
Court of Appeals is AFFIRMED in toto with costs against petitioners. No further proceeding will be
entertained in this case.

SO ORDERED.

2. Amendment and Alteration of Certificated (Sec. 108)

Oliva v. Republic, G.R. No. 163118, April 27, 2007

DECISION

QUISUMBING, J.:

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 Page 394 of 540

This petition for certiorari assails (1) the Decision[1] dated August 7, 2003 of the Court of Appeals
in CA-G.R. CV. No. 74409, reversing the Decision[2] dated December 13, 2001 of
the Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB, and (2) the
Resolution[3] dated March 17, 2004, denying the motion for reconsideration.

The following facts are undisputed.

Petitioner Doris Chiongbian-Oliva is the registered owner of a parcel of land in

Talamban, Cebu City, as evidenced by Transfer Certificate of Title (TCT) No. 5455. [4] This title originated
from Original Certificate of Title (OCT) No. 1066 from a free patent granted on September 11, 1969 under
Commonwealth Act No. 141,[5] as amended. The free patent, OCT No. 1066, and TCT No.
5455 contained the condition that a forty-meter legal easement from the bank of any river or stream shall
be preserved as permanent timberland.[6]

On October 1, 2001, petitioner filed a petition for reduction of legal easement docketed as SP. Proc. No.
10746-CEB before the Regional Trial Court of Cebu City, Branch 12. Petitioner alleged that the property
is residential as shown by the tax declaration[7] and the Certification[8] of the Office of the City
Assessor. Thus, the applicable legal easement is only three meters pursuant to Department of
Environment and Natural Resources (DENR) Administrative Order No. 99-21,[9] and not forty meters,
which applies to timberlands and forest lands. Petitioner also alleged that enforcing the forty-meter legal
easement would virtually deprive her of the use and enjoyment of the property since it consists only of
1,000 square meters.

The DENR countered that the property is inalienable. It also claimed that the applicant agreed on the
forty-meter legal easement when the free patent was applied for.

The trial court ruled in favor of petitioner. It said that there is no longer any reason for the forty-
meter legal easement because the property had been transformed into residential land and the area
where it is located has been reclassified as urban. Applying DENR A.O. No. 99-21, the applicable legal
easement is only three meters. The decisions decretal portion states:

WHEREFORE, premises considered, it is hereby ordered that the legal

encumbrance of forty (40) meters for river bank protection annotated on Petitioners
Transfer Certificate of Title No. 5455 be reduced to the applicable legal easement of
three (3) meters in accordance with law.

Accordingly, the Register of Deeds of Cebu City is hereby directed to cancel the
above legal encumbrance of forty (40) meters annotated on Petitioners Transfer
Certificate of Title No. 5455 and in lieu thereof, annotate the applicable legal
encumbrance of three (3) meters for river bank protection.

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 Page 395 of 540

SO ORDERED.[10]

On appeal, the Court of Appeals reversed the trial courts decision. It upheld the DENRs claim that
the property was inalienable. Accordingly, a positive act of the government was necessary to declassify it
from forest land to alienable land. Declaration of the property as residential in the tax declaration and
reclassification of the area where it is located as urban were insufficient bases to reclassify the
property. The fallo of the appellate courts decision reads:

WHEREFORE, premises considered, the Decision dated December 13, 2001, of

the Regional Trial Court, 7th Judicial Region, Branch 12, Cebu City, in SP. PROC. NO.
10746-CEB, is hereby REVERSED and SET ASIDE. No pronouncement as to costs.

SO ORDERED.[11]

The appellate court later denied petitioners motion for reconsideration.

Petitioner now raises the following issues:

I.

WHETHER OR NOT PETITIONERS LOT COVERED BY THE LEGAL ENCUMBRANCE

IS A PUBLIC LAND/LAND OF THE PUBLIC DOMAIN (AND THUS, CANNOT BE
RECLASSIFIED EXCEPT BY THE EXECUTIVE DEPARTMENT) OF THE
GOVERNMENT, OR A PRIVATE LAND.

II.

WHETHER OR NOT THE TRIAL COURT IS CORRECT IN TAKING JUDICIAL NOTICE

OF THE FACT THAT PETITIONERS LOT COVERED BY TCT NO. 5455 IS SITUATED
IN AN URBAN AREA AND NOT IN A FOREST AREA, AND IN THUS CONCLUDING
THAT THE LEGAL EASEMENT APPLICABLE FOR RIVER BANK PROTECTION IS
THREE (3) METERS AND NOT FORTY (40) METERS.

III.

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 Page 396 of 540

WHETHER OR NOT SECTION 90(i) OF C.A. NO. 141 WHICH PROVIDES FOR A
UNIFORM EASEMENT OF FORTY (40) METERS FROM THE BANK ON EACH SIDE
OF ANY RIVER, AND WHICH PRESERVES THE SAID 40-METER PORTION AS
PERMANENT TIMBERLAND REGARDLESS OF WHETHER IT IS SITUATED IN A
FOREST AREA OR AN URBAN AREA, IS STILL APPLICABLE TO LOTS SITUATED IN
AN URBAN AREA IN THE LIGHT OF THE PROVISIONS OF SUBSEQUENT
LEGISLATION, SPECIFICALLY SECTION 51 OF P.D. NO. 1067.[12]

Simply stated, the issues are: (1) Is the property public or private land? and (2) Is the applicable
legal easement forty or three meters?

On the first issue, C.A. No. 141, as amended, provides that lands of the public domain may be
classified by the President, upon the recommendation of the Secretary of Environment and Natural
Resources, into: (1) alienable or disposable; (2) timber; and (3) mineral lands. [13] However, only alienable
or disposable lands may be disposed of through any of the forms of concession enumerated in the
law.[14] A free patent is one of such concessions [15] and once it is registered and the corresponding
certificate of title issued, the land covered by them ceases to be part of the public domain and becomes
private property.[16]

Verily, by the issuance of a free patent on September 11, 1969, and the subsequent issuance of
OCT No. 1066 and TCT No. 5455, the property in this case had become private land. It is inconsistent for
an alienable land of the public domain to be covered by a free patent and at the same time retain its
character as public land.

On the second issue, Section 90(i) of C.A. No. 141 requires that a forty-meter legal easement
from the bank of any river or stream shall be preserved as permanent timberland. More specifically, it
provides:

(i) That the applicant agrees that a strip forty meters wide starting from the
bank on each side of any river or stream that may be found on the land applied for, shall
be demarcated and preserved as permanent timberland to be planted exclusively to
trees of known economic value, and that he shall not make any clearing thereon or utilize
the same for ordinary farming purposes even after patent shall have been issued to
him or a contract of lease shall have been executed in his favor. (Emphasis supplied.)

To implement this, the DENR promulgated A.O. No. 99-21 which provides the guidelines in the
processing, verification, and approval of isolated and cadastral surveys.Pertinent to this case are the
following provisions:

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 Page 397 of 540

2.1 Original Surveys:

2.1.a Public Lands:

All alienable and disposable (A and D) lands of the public domain shall
be surveyed pursuant to Section 1 Par. (1) of R.A. 1273 [C.A. No.
141, Section 90(i)] whereby a strip of forty (40) meters wide starting
from the banks on each side of any river or stream that may be found
on the land shall be demarcated and preserved as permanent
timberland.

Likewise, to be demarcated are public lands along the banks of rivers

and streams and the shores of the seas and lakes throughout their
entire length and within a zone of three (3) meters in urban areas,
twenty (20) meters in agricultural areas and forty (40) meters in
forest area, along their margins which are subject to the easement
for public use in the interest of recreation, navigation, floatage,
fishing and salvage.

xxxx

2.3 Survey of Titled Lands:

2.3.1 Administratively Titled Lands:

The provisions of item 2.1.a and 2.1.b shall be observed as the above. However,
when these lands are to be subdivided, consolidated or
consolidated-subdivided, the strip of three (3) meters which falls
within urban areas shall be demarcated and marked on the plan for
easement and bank protection.

The purpose of these strips of land shall be noted in the technical description and
annotated in the title.

xxxx

Running in parallel vein is the Water Code of the Philippines[17] which provides:

Art. 51. The banks of rivers and streams and the shores of the seas and lakes
throughout their entire length and within a zone of three (3) meters in urban areas, twenty
(20) meters in agricultural areas and forty (40) meters in forest areas, along their
margins, are subject to the easement of public use in the interest of recreation,
navigation, floatage, fishing and salvage. No person shall be allowed to stay in this zone

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 Page 398 of 540

longer than what is necessary for recreation, navigation, floatage, fishing or salvage or to
build structures of any kind.

Since the property in this case was originally alienable land of the public domain, the application
for free patent contained the condition that a forty-meter legal easement from the banks on each side of
any river or stream found on the land shall be demarcated and preserved as permanent
timberland. However, after the property was administratively titled, it underwent several surveys for
purposes of subdivision, consolidation, or consolidation-subdivision as evidenced by TCT No. 5455. This
title provides that it is a transfer from TCT Nos. 3975 and 4360 [18] and describes the property as Lot 2 of
the consolidation-subdivision plan Pcs-07-002121, being a portion of Lot 6 and 7 Pcs-07-
000974.[19] Thus, presently only three meters is required to be demarcated and preserved as permanent
timberland.

In this case, the trial court properly took judicial notice that Talamban, Cebu City is an urban
area. Judicial notice is the cognizance of certain facts which judges may properly take and act on without
proof because they already know them.[20] A municipal jurisdiction, whether designated as chartered city
or provincial capital, is considered as urban in its entirety if it has a population density of at least 1,000
persons per square kilometer.[21] The City of Cebu was created on October 20, 1934 under
Commonwealth Act No. 58.[22] It is a highly urbanized city classified as entirely urban. [23] Thus, all
its barangays, including Talamban, are considered urban.

Conformably with the foregoing considerations, the reduction of the legal easement of forty
meters on petitioners property covered by TCT No. 5455 to three meters now is in order.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated August 7, 2003
and Resolution dated March 17, 2004 of the Court of Appeals in CA-G.R. CV. No.
74409 are REVERSED, and the Decision dated December 13, 2001 of the Regional Trial Court
of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB is REINSTATED.

SO ORDERED.

Republic v. Galeno, G.R. No. 215009, January 23, 2017

DECISION

PERLAS-BERNABE, J.:

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 Page 399 of 540

Assailed in this petition for review on certiorari1 are the Decision2 dated June 27, 2013 and the
Resolution3 dated September 17, 2014 rendered by the Court of Appeals (CA) in CA-G.R. CV No. 02085,
affirming the Orders dated October 13, 20064 and January 22, 20075 of the Regional Trial Court of
Dumangas, Iloilo, Branch 68 (RTC), which allowed the correction of the area of Lot No. 2285 in Original
Certificate of Title (OCT) No. 46417 from 20,948 square meters to 21,298 square meters.

The Facts

On September 2, 2003, respondent Carmen Santorio Galeno (respondent) filed a petition 6 for correction
of the area of Lot No. 2285 covered by OCT No. 46417, Dingle Cadastre (subject property) before the
RTC. She alleged therein that she is one of the co-owners of the subject property by virtue of a Deed of
Sale7 dated July 6, 1962. The survey and subdivision of the subject property was duly approved by the
Department of Environment and Natural Resources (DENR) per its Approved Subdivision Plan of Lot No.
2285.8

Respondent further alleged that when she and her co-owners had the subject property resurveyed for the
purpose of partition, they discovered a discrepancy in the land area of the subject property as appearing
in OCT No. 46417,9 in that the title reflects an area of 20,948 square meters, while the
Certification10issued by the DENR Office of the Regional Technical Director, Lands Management
Services, shows an area of 21,298 square meters. Hence, she sought to correct the area of the subject
property in order to avoid further confusion, and claimed to have notified the adjoining owners. 11

There being no opposition to the petition, the RTC allowed the presentation of respondent's evidence ex
parte before the Branch Clerk as well as for the satisfaction of the jurisdictional requirements.12

The RTC Ruling

In an Order13 dated October 13, 2006, the RTC granted the petition upon a finding that respondent was
able to substantiate the allegations in her petition to warrant a correction of the area of the subject
property. Hence, it directed the Register of Deeds of the Province of Iloilo to correct such area in OCT No.
46417 from 20,948 to 21,298 square meters.14

Herein petitioner Republic of the Philippines (petitioner), through the Office of the Solicitor General
(OSG), filed a motion for reconsideration claiming that the adjoining owners had not been notified,
stressing that such notice is a jurisdictional requirement.15 In the Order16 dated January 22, 2007, the
RTC denied the motion, finding that a Notice of Hearing17 was sent to the adjoining owners. As such,
respondent was able to prove compliance with the said jurisdictional requirement. 18

Aggrieved, petitioner appealed to the CA.19

The CA Ruling

In a Decision20 dated June 27, 2013, the CA affirmed the RTC Order. It found that respondent, by a
preponderance of evidence, was able to prove, based on the records of the proper government
authority, i.e., the Office of the Technical Director, Land Management Services of the DENR, that the true
and correct area of the subject property was 21,298 square meters as shown in the approved plan.
Moreover, petitioner failed to rebut with contrary evidence respondent's claim that she and her co-owners
followed the boundaries in the technical description of OCT No. 46417 when they caused its resurvey. In
fact, no proof had been adduced to show that the boundaries had been altered. Also, the CA pointed out

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 Page 400 of 540

that none of the adjoining owners, who were properly notified of the proceedings and who stand to be
adversely affected by the change in the land area of the subject property, objected to respondent's
petition.21

Petitioner's motion for reconsideration22 was denied in a Resolution23 dated September 17, 2014; hence,
this petition.

The Issue Before the Court

The issue advanced for the Court's resolution is whether or not the CA erred in upholding the correction
of the area of the subject property in OCT No. 46417.

The Court's Ruling

The petition is meritorious.

A scrutiny of the evidence marked and formally offered by respondent before the court a quo shows that
the former failed to prove that there was sufficient basis to allow the correction of the area of the subject
property in OCT No. 46417 from 20,948 square meters to 21,248 square meters.

Records reveal that respondent offered in evidence the following documents: (a) the Certification24issued
by a certain Althea C. Acevedo (Acevedo), Engineer IV, Chief of the Technical Services Section of the
Office of the Regional Technical Director, Land Management Services of the DENR in Iloilo City, which
states that "the true and correct area of [L]ot 2285, Cad. 246 Dingle Cadastre is 21,928 square meters;"
(b) the technical description25 of Lot No. 2285, a copy of which was certified by Ameto Caballero
(Caballero), Chief of the Surveys Division, while another copy was certified correct by Acevedo; and (c)
the approved subdivision plan of Lot No. 2258,26 certified by Rogelio M. Santome (Santome), Geodetic
Engineer; Alfredo Muyarsas (Muyarsas), Chief of the Regional Surveys Division, and Edgardo R. Gerobin
(Gerobin), OIC, Regional Technical Director of the Land Management Services, DENR. On the strength
of these pieces of evidence, respondent sought a reconciliation of the area of the subject property with
the records of the DENR.

Unfortunately, the foregoing documentary evidence are not sufficient to warrant the correction prayed for.
The Court cannot accord probative weight upon them in view of the fact that the public officers who
issued the same did not testify in court to prove the facts stated therein.

In Republic v. Medida,27 the Court held that certifications of the Regional Technical Director, DENR
cannot be considered prima facie evidence of the facts stated therein, holding
that:ChanRoblesVirtualawlibrary
Public documents are defined under Section 19, Rule 132 of the Revised Rules on Evidence as
follows:chanRoblesvirtualLawlibrary

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or of a foreign country;chanrobleslaw

(b) Documents acknowledged before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.

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 Page 401 of 540

Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a), when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by
the officer having legal custody of the record, or by his deputy x x x.

Section 23, Rule 132 of the Revised Rules on Evidence provides:ChanRoblesVirtualawlibrary

"Sec. 23. Public documents as evidence. - Documents consisting of entries in public records made in the
performance of a duty by a public officer are prima facie evidence of the facts stated therein. All other
public documents are evidence, even against a third person, of the fact which gave rise to their execution
and of the date of the latter."
The CENRO and Regional Technical Director, FMS-DENR, certifications [do] not fall within the
class of public documents contemplated in the first sentence of Section 23 of Rule 132. The
certifications do not reflect "entries in public records made in the performance of a duty by a public
officer," such as entries made by the Civil Registrar in the books of registries, or by a ship captain in the
ship's logbook. The certifications are not the certified copies or authenticated reproductions of
original official records in the legal custody of a government office. The certifications are not even
records of public documents. x x x28 (Emphases supplied)
As such, sans the testimonies of Acevedo, Caballero, and the other public officers who issued
respondent's documentary evidence to confirm the veracity of its contents, the same are bereft of
probative value and cannot, by their mere issuance, prove the facts stated therein. 29 At best, they may be
considered only as prima facie evidence of their due execution and date of issuance but do not
constitute prima facie evidence of the facts stated therein.30

In fact, the contents of the certifications are hearsay because respondent's sole witness and attorney-in-
fact, Lea Galeno Barraca, was incompetent to testify on the veracity of their contents, 31 as she did not
prepare any of the certifications nor was she a public officer of the concerned government agencies.
Notably, while it is true that the public prosecutor who represented petitioner interposed no objection to
the admission of the foregoing evidence in the proceedings in the court below, 32 it should be borne in
mind that "hearsay evidence, whether objected to or not, has no probative value unless the proponent
can show that the evidence falls within the exceptions to the hearsay evidence rule," 33 which do not,
however, obtain in this case. Verily, while respondent's documentary evidence may have been admitted
due to the opposing party's lack of objection, it does not, however, mean that they should be accorded
any probative weight. The Court has explained that:ChanRoblesVirtualawlibrary
The general rule is that hearsay evidence is not admissible. However, the lack of objection to hearsay
testimony may result in its being admitted as evidence. But one should not be misled into thinking that
such declarations are thereby impressed with probative value. Admissibility of evidence should not be
equated with weight of evidence. Hearsay evidence whether objected to or not cannot be given credence
for it has no probative value.34chanroblesvirtuallawlibrary
Besides, case law states that the "absence of opposition from government agencies is of no controlling
significance because the State cannot be estopped by the omission, mistake or error of its officials or
agents. Neither is the Republic barred from assailing the decision granting the petition for reconstitution
[or correction of title, as in this case] if, on the basis of the law and the evidence on record, such petition
has no merit."35 Moreover, "in civil cases, the party having the burden of proof must produce a
preponderance of evidence thereon, with plaintiff having to rely on the strength of his own evidence and
not upon the weakness of the defendant's."36

In fine, the Court holds that respondent did not present any competent evidence to prove that the true and
correct area of the subject property is 21,298 square meters instead of 20,948 square meters to warrant a
correction thereof in OCT No. 46417. Accordingly, respondent's petition for the correction of the said
Certificate of Title must be denied, and the present petition be granted.

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 Page 402 of 540

WHEREFORE, the petition is GRANTED. The assailed Decision dated June 27, 2013 and the Resolution
dated September 17, 2014 rendered by the Court of Appeals in CA-G.R. CV No. 02085 are
hereby REVERSED and SET ASIDE. Carmen Santorio Galeno's petition for correction of area of Lot No.
2285 on Original Certificate of Title No. 46417 is DISMISSED.

SO ORDERED.

Paz v. Republic, G.R. No. 157367, November 23, 2011

DECISION

BERSAMIN, J.:

The petitioner assails the decision promulgated on August 1, 2002, [1] whereby the Court of Appeals (CA)
affirmed the dismissal by the Regional Trial Court (RTC), Branch 276, in Muntinlupa City of his petition for
the cancellation of a certificate of title brought under Section 108 of Presidential Decree (P.D.) No. 1529
(Property Registration Decree).

Antecedents

On November 29, 2000, the petitioner brought a petition for the cancellation of Original Certificate of Title
(OCT) No. 684 docketed as LRC Case No. 00-059. The petition, ostensibly made under Section 108 of
P.D. No. 1529, impleaded the Republic of the Philippines (Republic), Filinvest Development Corporation
(FDC), and Filinvest Alabang, Inc. (FAI) as respondents.

The petition averred that the petitioner was the owner of Parcel 1, Plan 11-69, with an area of
71,692,754 square meters, situated in Paraaque City, Pasay City, Taguig City and San Pedro, Laguna,
and Parcel 2 Plan 11-69, with a total area of 71,409,413 square meters, situated in Alabang, Muntinlupa,
Paraaque City and Las Pias City; that the total landholding of the petitioner consisted of 143,102,167
square meters, or approximately 14,310 hectares; that OCT No. 684 was registered in the name of the
Republic, and included Lot 392 of the Muntinlupa Estate with an area of approximately 244 hectares; that
Lot 392 was segregated from OCT No. 684, resulting in the issuance of Transfer Certificate of Title (TCT)
No. 185552,[2] also in the name of the Republic; that FDC and FAI developed Lot 392 into a subdivision
based on their joint venture agreement with the Government; that pursuant to the joint venture
agreement, Lot 392 was further subdivided, causing the cancellation of TCT No. 185552, and the
issuance of TCTs for the resulting individual subdivision lots in the names of the Republic and FAI; and
that the subdivision lots were then sold to third parties.

The petition for cancellation prayed as follows:[3]

xxxx

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 Page 403 of 540

WHEREFORE, it is most respectfully prayed that OCT No. 684 in the name of the
Republic of the Philippine Islands and TCT No. 185552 in the name of the Republic of the
Philippines, Book 26, Page 152, Register of Deeds, Muntinlupa City, and all subsequent
titles derived from said TCT No. 185552 as stated in paragraphs 23, 24, 25 and 28
above-quoted, Proclamation No. 1240 dated June 23, 1998, Resolution No. 01-311 of the
City of Muntinlupa dated February 7, 2001 be cancelled and in lieu thereof, and said
Register of Deeds be ordered to issue a new certificate of title in the name of Luciano P.
Paz, married to Elvira Joson, both of legal ages, Filipinos and residents of Lot 5, Block
31, Modesta Village, San Mateo, Rizal, free from all liens and encumbrances, and
defendants be ordered to vacate the property covered by said title; ordering respondents
jointly and severally to pay petitioner compensatory damages in the amount of not less
than P10 Million, moral damages in the amount of P1 Million, exemplary damages in the
amount of P1 Million and P2 Million for attorneys fees.

Petitioner prays for other reliefs just and equitable to the premises.
xxxx

On January 19, 2001, FDC and FAI moved to dismiss the petition for cancellation on the following
grounds,[4] to wit:

(1) The serious and controversial dispute spawned by the Petition for cancellation of title
is litigable in an ordinary action outside the special and limited jurisdiction of land
registration courts.The Petition is thus removed from the ambit of Sec. 108 of the
Property Registration Decree which requires, as an indispensable element for
availment of the relief thereunder, either unanimity of the parties or absence of
serious controversy or adverse claim. It authorizes only amendment and alteration of
certificates of title, not cancellation thereof;

(2) Lack of jurisdiction of the Court over the persons of the respondents who were not
validly served with summons but only a copy of the Petition;

(3) Docket fees for the Petition have not been paid.

(4) The Petition does not contain the requisite certificate of non-forum shopping.

The petitioner countered that his petition for cancellation was not an initiatory pleading that must comply
with the regular rules of civil procedure but a mere incident of a past registration proceeding; that unlike in
an ordinary action, land registration was not commenced by complaint or petition, and did not require
summons to bring the persons of the respondents within the jurisdiction of the trial court; and that a
service of the petition sufficed to bring the respondents within the jurisdiction of the trial court.
On May 21, 2001, the RTC granted FDC and FAIs motion to dismiss,[5] viz:

xxxx
The petition at bench therefore bears all the elements of an action for recovery: (A) it was
commenced long after the decree of registration in favor of the Respondent Republic of
the Philippines had become final and incontrovertible, following the expiration of the
reglementary period; for a review of the decree of registration issued to the government
of the Philippine Islands.; (B) there is an imputation of a wrongful or fraudulent titling in
the issuance of Original Certificate of Title No. 684 allegedly irregular due to the absence

Page 403 of 540

 Page 404 of 540

of survey plan, decree of registration and court records; (C) the Petition finally seeks as
its main relief the issuance of a new title to him, Luciano Paz, after Original Certificate of
Title No. 684 is invalidated, or the reconveyance of the property to him. This action
although entitled a Petition for cancellation of a title, which is a complaint by itself, is
complete with the name of the parties, the subject matter, the cause of action, and the
reliefs prayed for, which are all components of a regular complaint. It is in fact an
initiatory pleading, and is not a mere motion.

It is futile to deny that the petition is a fresh lawsuit, involving title to a land or an interest
thereon arising after the original proceeding, which should be filed and entitled under the
original land registration case under the instructions of Sec. 2 of PD 1529. Indeed, this
Section states further post registration cause of an aggrieved party who complains of
being deprived of a land wrongfully or fraudulently titled in the name of another. As such
it is fair and logical to assume that this is covered by the current rules on an initiatory
pleading and becomes vulnerable to dismissal under any grounds invoked by the
respondent which are mandatory and jurisdictional requirements under the present rules,
including the payment of docket fees and the certification of non forum shopping.
xxxx

Thence, the petitioner assailed the dismissal in the CA via petition for certiorari, ascribing grave abuse of
discretion on the part of the RTC in granting FDC and FAIs motion to dismiss.

On August 1, 2002, the CA dismissed the petition for certiorari,[6] stating:

xxxx
Petition denied.

In a special civil action for certiorari, the burden is on Petitioner to prove not merely
reversible error, but grave abuse of discretion amounting to lack or excess of jurisdiction
for the part of Public Respondent. Mere abuse of discretion is not enough (Don Orestes
Romualdez Electric Corporation, Inc. vs. NLRC, 319 SCRA 255). The mere fact that
Public Respondent does not subscribe to nor accepts Petitioners arguments or viewpoint
does not make the former guilty of committing grave abuse of discretion.

Not only that. As long as a court acts within its jurisdiction, any alleged errors committed
in the exercise thereof will amount to nothing more than errors of judgment which are
reversible by timely appeal and not by a special civil action of certiorari (Tomas Claudio
Memorial College, Inc. vs. CA, 316 SCRA 502). A Petition for Certiorari must be based
on jurisdictional grounds because, as long as the respondent acted with jurisdiction, any
error committed by him or it in the exercise thereof will amount to nothing more than an
error of judgment which may be reviewed or corrected only by appeal (Jalandoni vs.
Drilon, 327 SCRA 107).

Applying the aforecited jurisprudence to the case at bench, the Petition must fail. It is all
too obvious that Petitioner would have Us determine whether or not Public Respondent
correctly rendered judgment in ordering the dismissal of his Petition. Sadly, as the
aforecited rulings have shown, a special civil action for certiorari is a remedy designed for

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 Page 405 of 540

correction of errors of jurisdiction and not errors of judgment (Diaz vs. Diaz, 331 SCRA
302). Certiorari will not be issued to xxx correct erroneous conclusion of law or fact
(Tensorex Industrial Corp. vs. CA, 316 SCRA 471).

To reiterate, Petitioner has failed to overcome the burden of proving how Public
Respondent may be faulted with having acted with grave abuse of discretion in rendering
judgment ordering the dismissal of his Petition. That the court a quo cannot share
Petitioners interpretation of certain alleged laws and jurisprudence hardly constitute the
abuse of discretion contemplated under Rule 65 of the 1997 Rules of Civil Procedure and
as applied by the Highest Tribunal in numerous cases. Ours is not, through this Petition,
to determine whether or not Public Respondent erred in its judgment but to determine
whether or not Public Respondent court acted with grave abuse of discretion amounting
to lack or excess of jurisdiction.

WHEREFORE, foregoing premises considered, the Petition is hereby DENIED DUE

COURSE and ordered DISMISSED. Resultantly, the assailed Resolution/s are hereby
AFFIRMED, with costs to Petitioner.

SO ORDERED.

On February 24, 2003, the CA denied the petitioners motion for partial reconsideration. [7]

Hence, the petitioner has come to the Court for review, asserting the applicability of Section 108 of P.D.
1529, and insisting that his petition filed under Section 108 of P.D. 1529 should not be dismissed because
it was exempt from the requirements of paying docket fees, of service of summons, and of the certification
against forum shopping due to its not being an initiatory pleading.

Ruling

The petition for review is devoid of merit. The dismissal of the petition for certiorari by the CA was proper
and correct because the RTC did not abuse its discretion, least of all gravely.

Section 108 of P.D. No. 1529 reads as follows:

Section 108. Amendment and alteration of certificates. No erasure, alteration, or

amendment shall be made upon the registration book after the entry of a certificate of title
or of a memorandum thereon and the attestation of the same by the Register of Deeds,
except by order of the proper Court of First Instance. A registered owner or other person
having interest in the registered property, or, in proper cases, the Register of Deeds with
the approval of the Commissioner of Land Registration, may apply by petition to the court
upon the ground that the registered interest of any description, whether vested,
contingent, expectant or inchoate appearing on the certificate, have terminated and
ceased; or that new interest not appearing upon the certificate have arisen or been
created; or that an omission or an error was made in entering a certificate or any
memorandum thereon, or on any duplicate certificate: or that the same or any person in
the certificate has been changed or that the registered owner has married, or, if
registered as married, that the marriage has been terminated and no right or interest of
heirs or creditors will thereby be affected; or that a corporation which owned registered
land and has been dissolved has not yet convened the same within three years after its

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 Page 406 of 540

dissolution; or upon any other reasonable ground; and the court may hear and determine
the petition after notice to all parties in interest, and may order the entry or cancellation of
a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant
any other relief upon such terms and conditions, requiring security and bond if necessary,
as it may consider proper; Provided, however, That this section shall not be construed to
give the court authority to reopen the judgment or decree of registration, and that nothing
shall be done or ordered by the court which shall impair the title or other interest of a
purchaser holding a certificate for value and in good faith, or his heirs and assigns
without his or their written consent. Where the owners duplicate certificate is not
presented, a similar petition may be filed as provided in the preceding section.

All petitions or motions filed under this section as well as any other provision of this
decree after original registration shall be filed and entitled in the original case in which the
decree of registration was entered.

Based on the provision, the proceeding for the amendment and alteration of a certificate of title under
Section 108 of P.D. No. 1529 is applicable in seven instances or situations, namely: (a) when registered
interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and
ceased; (b) when new interests have arisen or been created which do not appear upon the certificate; (c)
when any error, omission or mistake was made in entering a certificate or any memorandum thereon or
on any duplicate certificate; (d) when the name of any person on the certificate has been changed; (e)
when the registered owner has been married, or, registered as married, the marriage has been
terminated and no right or interest of heirs or creditors will thereby be affected; (f) when a corporation,
which owned registered land and has been dissolved, has not conveyed the same within three years after
its dissolution; and (g) when there is reasonable ground for the amendment or alteration of title. [8]

We agree with both the CA and the RTC that the petitioner was in reality seeking the
reconveyance of the property covered by OCT No. 684, not the cancellation of a certificate of title as
contemplated by Section 108 of P.D. No. 1529. Thus, his petition did not fall under any of the situations
covered by Section 108, and was for that reason rightly dismissed.
Moreover, the filing of the petition would have the effect of reopening the decree of registration,
and could thereby impair the rights of innocent purchasers in good faith and for value. To reopen the
decree of registration was no longer permissible, considering that the one-year period to do so had long
ago lapsed, and the properties covered by OCT No. 684 had already been subdivided into smaller lots
whose ownership had passed to third persons. Thusly, the petition tended to violate the proviso in Section
108 of P.D. No. 1529, to wit:

xxx Provided, however, That this section shall not be construed to give the court authority
to reopen the judgment or decree of registration, and that nothing shall be done or
ordered by the court which shall impair the title or other interest of a purchaser holding a
certificate for value in good faith, or his heirs and assigns without his or their written
consent. Where the owners duplicate certificate is not presented, a similar petition may
be filed as provided in the preceding section.

Nor is it subject to dispute that the petition was not a mere continuation of a previous registration
proceeding. Shorn of the thin disguise the petitioner gave to it, the petition was exposed as a distinct and
independent action to seek the reconveyance of realty and to recover damages. Accordingly, he should
perform jurisdictional acts, like paying the correct amount of docket fees for the filing of an initiatory
pleading, causing the service of summons on the adverse parties in order to vest personal jurisdiction

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 Page 407 of 540

over them in the trial court, and attaching a certification against forum shopping (as required for all
initiatory pleadings). He ought to know that his taking such required acts for granted was immediately
fatal to his petition, warranting the granting of the respondents motion to dismiss.

WHEREFORE, the PETITION FOR REVIEW ON CERTIORARI is DENIED, and the decision of the Court
of Appeals is AFFIRMED.

The petitioner shall pay the costs of suit.

SO ORDERED.

Cabanez v. Solano, G.R No. 200180, June 6, 2016

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to reverse and set aside the Amended
Decision1 and Resolution2 of the Court of Appeals (CA), dated August 29, 2011 and January 10, 2012,
respectively, in CA-G.R. SP No. 101406.

Subject of the present controversy are two (2) parcels of land located in Alabang Hills, Muntinlupa, with
land areas measuring 739 and 421 square meters, and are covered by Transfer Certificates of Title Nos.
154626 and 154627, respectively. Appearing on the face of these titles as the registered owner is herein
respondent, "Maria Josephine S. Cabaez, of legal age, married to [herein petitioner] Benjamin H.
Cabaez x x x."

On February 12, 2007, respondent filed with the Regional Trial Court (RTC) of Muntinlupa City a "Petition
for Correction of the Name and Marital Status of the Registered Owner of Transfer Certificates of Title
(TCT) No[s.] 154626 and 154627 of the Registry of Deeds for Muntinlupa City."3 The petition was
docketed as LRC Case No. 07-007 and raffled to Branch 203. In the said petition, respondent alleged as
follows:
chanRoblesvirtualLawlibrary

xxxx

1. Petitioner is of legal age, single and a resident of #21 Dona Ines St., Alabang Hills Village, Muntinlupa
City;

2. Petitioner is the owner of two parcels of land situated in Alabang, Muntinlupa City covered by Transfer
Certificates of Title No. 154626 and 154627 issued by the Registry of Deed for Muntinlupa, though the
same were issued under the name Ma Josephine S. Cabaez, married to Benjamin H. Cabaez. x x x

3. Without knowing the legal implication, Petitioner erroneously made it appear that she is married to Mr.
Benjamin when in truth and in fact they are not married but merely living a common-law relationship

Page 407 of 540

 Page 408 of 540

4. Mr. Benjamin H. Cabaez is actually married to a certain Leandra D. Cabaez who had previously filed
a case against Petitioner, questioning the ownership of the said properties which case however was
terminated by virtue of a compromise approved by the court in an Order dated November 23, 2000. xxx

5. Mr. Benjamin H. Cabaez has also declared that he is not actually married to the Petitioner and that he
has no interest or share whatsoever in the aforesaid properties as evidenced by the hereto attached copy
of the Affidavit of Declaration Against Interest dated January 22, 2007. x x x

6. No interests or rights will be affected by the correction of the name and status of Petitioner as
registered owner of the said properties.

PRAYER

WHEREFORE, it is respectfully prayed of this Honorable Court that Petitioner's name and marital status
appearing in Transfer Certificates of Title No. 154626 and 154627 be corrected to (sic) from "MA.
JOSEPHINE S. CABAEZ, married to BENJAMIN H. CABAEZ" to ["]MARIE JOSEPHINE C. SOLANO,
single" as it is the true and actual status of petitioner.

x x x x4ChanRoblesVirtualawlibrary
The RTC then conducted hearings where respondent presented her evidence ex parte.

On June 28, 2007, the RTC of Muntinlupa, Branch 203, rendered its Decision, the dispositive portion of
which reads as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, finding the petition to be well-founded and meritorious, the same is hereby GRANTED.

Accordingly, the Register of Deeds of Muntinlupa City is directed to cause the correction of the name and
civil status of the registered owner of Transfer Certificate of Title Nos. 154626 and 154627 from MA.
JOSEPHINE S. CABAEZ, married to BENJAMIN H. CABAEZ, to MARIE JOSEPHINE C. SOLANO,
single.

SO ORDERED.5ChanRoblesVirtualawlibrary
The RTC held that from the evidence presented by herein respondent, it has been satisfactorily
established that the subject properties should indeed be in respondent's name and that her status should
be "single".

On November 23, 2007, herein petitioner filed with the CA a Petition for Annulment of Judgment 6assailing
the above Decision of the RTC on the ground that the said trial court did not acquire jurisdiction over the
subject matter of the case because respondent's petition was not published in a newspaper of general
circulation and that petitioner and other persons who may have interest in the subject properties were not
served summons.

On January 27, 2011, the CA rendered a Decision, disposing as follows:

chanRoblesvirtualLawlibrary
WHEREFORE, the instant Petition for Annulment of Judgment is hereby GRANTED. The Decision dated
28 June 2007 of the Regional Trial Court of Muntinlupa City, Branch 203, in LRC Case No. 07-007,
is ANNULLED and SET ASIDE.

Page 408 of 540

 Page 409 of 540

SO ORDERED.7ChanRoblesVirtualawlibrary
The CA ruled, among others, that respondent's petition for correction of her name and marital status as
appearing in the subject TCTs should have been published in accordance with Rule 108 of the Rules of
Court and that respondent failed to present sufficient evidence to prove compliance with such
requirement. The appellate court also held that respondent also failed to serve summons upon petitioner,
which is in violation of the latter's right to due process and of the principle of fair play.

Respondent then filed a Motion for Reconsideration8 contending, among others, that the provisions of PD
1529, and not Rule 108 of the Rules of Court, should be applied in the present case; posting of the notice
of hearing of respondent's petition is deemed constructive notice to the whole world, including petitioner;
the petition filed by respondent is an action in rem where jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the court, provided that the court acquires jurisdiction over
the res.

After petitioner filed its Comment,9 the CA rendered its presently assailed Amended Decision and
disposed, thus:
chanRoblesvirtualLawlibrary
WHEREFORE, the Motion for Reconsideration is hereby GRANTED. The Decision dated 28 June 2007
of the Regional Trial Court or Muntinlupa City, Branch 203, in LRC Case No. 07-007, is REINSTATED.
Perforce, the Petition for Annulment of Judgment is DENIED.

SO ORDERED.10ChanRoblesVirtualawlibrary
This time, the CA agreed with respondent and ruled that PD 1529 is the governing law and that there is
nothing under the pertinent provisions of the said law which states that publication is a requirement for the
RTC to acquire jurisdiction over respondent's petition. The CA also ruled that petitioner failed to prove the
existence of extrinsic fraud as a ground for annulment of the assailed judgment of the RTC.

Aggrieved, petitioner filed a Motion for Reconsideration.11

However, in its Resolution of January 10, 2012, the CA denied petitioner's Motion for Reconsideration.

Hence, the present petition for review on certiorari based on the following grounds:
chanRoblesvirtualLawlibrary
A.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN AMENDING ITS
ORIGINAL DECISION DATED JANUARY 27, 2011 CONSIDERING THAT THE REQUIREMENTS OF
PUBLICATION AND SUMMONS WERE NOT COMPLIED WITH.

B.

WHETHER OR NOT THE PROCEEDING PROVIDED FOR UNDER SECTION 108 OF PRESIDENTIAL
DECREE NO. 1529 IS SUMMARY IN NATURE ALBEIT THE EVIDENT PRESENCE. OF OTHER
INTERESTED PARTIES THAT MAY BE AFFECTED BY THE JUDGMENT AS A RESULT OF EX-
PARTE PROCEEDINGS.

C.

Page 409 of 540

 Page 410 of 540

WHETHER OR NOT THE RULING OF THE HONORABLE SUPREME COURT IN THE CASE OF CHAN
V. COURT OF APPEALS (298 SCRA 713, 733) APPLIES IN THE INSTANT CASE WHERE IT WAS
RULED THAT MERE NOTICE TO THE REGISTER OF DEEDS WAS A SUBSTANTIAL COMPLIANCE.

D.

WHETHER OR NOT AMENDMENT AND ALTERATION OF CERTIFICATES OF TITLE PROVIDED FOR

UNDER SECTION 108 OF PD 1529 IS AN IN REM PROCEEDINGS THAT REQUIRES STRICT
COMPLIANCE WITH THE PUBLICATION REQUIREMENT.

E.

WHETHER OR NOT SECTIONS 3 AND 4 OF RULE 108 OF THE RULES OF COURT SUPPLETORILY
APPLY TO THE PROCEEDINGS PROVIDED FOR UNDER SECTION 108 OF PD 1529 WHEREIN THE
REQUIREMENT OF PUBLICATION IS MANDATORY.

F.

WHETHER OR NOT THE PHRASE "THE COURT MAY HEAR AND DETERMINE THE PETITION
AFTER NOTICE TO ALL PARTIES IN INTEREST" IN SECTION 108 OF PD 1529 INCLUDES
PUBLICATION AND SERVICE OF SUMMONS.

G.

WHETHER OR NOT THE COURT A QUO ACQUIRED JURISDICTION OVER THE SUBJECT MATTER
OF THE PETITION IN THE ABSENCE OF SUMMONS AND PUBLICATION.

H.

WHETHER OR NOT PETITIONER IS AN INDISPENSABLE PARTY IN THE PETITION FOR

CORRECTION OF NAME AND MARITAL STATUS IN THE TRANSFER CERTIFICATE OF TITLE NO.
154627 AND 154628.

I.

WHETHER OR NOT LEANDRA D. CABAEZ IS ENTITLED TO NOTICE AND SERVICE OF SUMMONS

BY VIRTUE OF THE DECISION OF THE REGIONAL TRIAL COURT OF MAKATIY CITY-BRANCH 137
TO THE EFFECT THAT THE PARCELS OF LAND LEGALLY BELONGED TO THEIR CONJUGAL
PROPERTY.

J.

WHETHER OR NOT AN AFFIDAVIT THE CONTENTS OF WHICH WAS NOT TESTIFIED TO HAS
PROBATIVE VALUE.

K.

WHETHER OR NOT THE SECURITY OR BOND MENTIONED IN SECTION 108 OF PD 1529 BEFORE

Page 410 of 540

 Page 411 of 540

ENTRY OF CORRECTION OR ALTERATION MAY BE MADE IS MANDATORY TO PROTECT THE

INTEREST OF THIRD PERSON.

L.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS [IS] PROCEDURALLY CORRECT IN

ADMITTING THE SUPPLEMENTAL MEMORANDUM OF THE RESPONDENT DESPITE THE FACT
THAT THE PETITION WAS ALREADY LONG SUBMITTED FOR
DECISION.12ChanRoblesVirtualawlibrary
The Court finds merit in the petition, but for reasons which are not identical as those espoused by
petitioner.

At the outset, it bears to reiterate that the CA ruled on the basis of the provisions of Presidential Decree
No. 1529 (PD 1529), otherwise known as the Property Registration Decree. Specifically, the CA cited
Sections 2 and 108 of the said law, which provide as follows:
chanRoblesvirtualLawlibrary
Section 2. Nature of registration proceedings; jurisdiction of courts. Judicial proceedings for the
registration of lands throughout the Philippines shall be in rem and shall be based on the generally
accepted principles underlying the Torrens system.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of title
to lands, including improvements and interests therein, and over all petitions filed after original registration
of title, with power to hear and determine all questions arising upon such applications or petitions. The
court through its clerk of court shall furnish the Land Registration Commission with two certified copies of
all pleadings, exhibits, orders, and decisions filed or issued in applications or petitions for land
registration, with the exception of stenographic notes, within five days from the filing or issuance thereof.
(emphasis supplied)

Section 108. Amendment, and alteration of certificates. No erasure, alteration, or amendment shall be
made upon the registration book after the entry of a certificate of title or of a memorandum thereon and
the attestation of the same be Register of Deeds, except by order of the proper Court of First Instance. A
registered owner of other person having an interest in registered property, or, in proper cases, the
Register of Deeds with the approval of the Commissioner of Land Registration, may apply by petition to
the court upon the ground that the registered interests of any description, whether vested, contingent,
expectant or inchoate appearing on the certificate, have terminated and ceased; or that new interest not
appearing upon the certificate have arisen or been created; or that an omission or error was made in
entering a certificate or any memorandum thereon, or, on any duplicate certificate; or that the same or
any person on the certificate has been changed; or that the registered owner has married, or, if registered
as married, that the marriage has been terminated and no right or interests of heirs or creditors will
thereby be affected; or that a corporation which owned registered land and has been dissolved has not
convened the same within three years after its dissolution; or upon any other reasonable ground; and the
court may hear and determine the petition after notice to all parties in interest, and may order the entry or
cancellation of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant
any other relief upon such terms and conditions, requiring security or bond if necessary, as it may
consider proper; Provided, however, That this section shall not be construed to give the court authority to
reopen the judgment or decree of registration, and that nothing shall be done or ordered by the court
which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith,
or his heirs and assigns, without his or their written consent. Where the owner's duplicate certificate is not
presented, a similar petition may be filed as provided in the preceding section. (emphasis supplied)

Page 411 of 540

 Page 412 of 540

All petitions or motions filed under this Section as well as under any other provision of this Decree after
original registration shall be filed and entitled in the original case in which the decree or registration was
entered.
The Court notes that the petition was clearly one which was filed after original registration oi title, as
provided under the abovequoted Section 2 of PD 1529. Moreover, respondent's petition was filed with the
RTC for the purpose of correcting supposed errors which were committed when entries were made in the
subject TCTs, as contemplated under Section 108 of the same law.

However, under settled jurisprudence, the enumerated instances for amendment or alteration of a
certificate of title under Section 108 of PD 1529 are non-controversial in nature.13 They are limited to
issues so patently insubstantial as not to be genuine issues. The proceedings thereunder are summary in
nature, contemplating insertions of mistakes which are only clerical, but certainly not controversial issues.

As early as the case of Tangunan v. Republic of the Philippines14, which was later cited in Angeles v.
Razon, et al.15, this Court, sitting en banc, ruled that:
chanRoblesvirtualLawlibrary
x x x the lower court did not err in finding that it lacks jurisdiction to entertain the present petition for the
simple reason that it involves a controversial issue which takes this case out of the scope of Section 112
of Act No. 496 [now Section 108 of PD 1529]. While this section, among other things, authorized a person
in interest to ask the court for any erasure, alteration, or amendment of a certificate of title "upon the
ground that registered interests of any description, whether vested, contingent expectant, or inchoate,
have terminated and ceased", and apparently the petition comes under its scope, such relief can only be
granted if there is unanimity among the parties, or there is no adverse claim or serious objection on the
part of any party in interest; otherwise the case becomes controversial and should be threshed out in an
ordinary case or in the case where the incident properly belongs. Thus, it was held that "It is not proper to
cancel an original certificate of Torrens title issued exclusively in the name of a deceased person, and to
issue a new certificate in the name of his heirs, under the provisions of Section 112 of Act No. 496, when
the surviving spouse claims right of ownership over the land covered by said certificate." And, in another
case, where there was a serious controversy between the parties as to the right of ownership over the
properties involved, this court held, "that following the principle laid down in the decision above cited, the
issues herein should be ventilated in a regular action x x x."16 (citations omitted)
In the present case, the Court notes that in a separate action for annulment of title and recovery of
ownership filed by petitioner's wife against respondent, the RTC of Makati City, Branch 137, in its decision
in Civil Case No. 91-2648, dated July 5, 1993, made a categorical finding that petitioner and his wife are
the lawful owners of the subject properties and ordering respondent to surrender possession thereof to
the said spouses.17 This RTC judgment was later affirmed by the CA in its Decision18 in CA-G.R. CV No.
49446, dated April 29, 1997. Respondent, on the other hand, claims that she together with petitioner and
his wife subsequently executed an amicable settlement dated June 22, 2000, which was approved by the
RTC, wherein petitioner's wife waived her rights and interests over the said properties. She also alleged
that petitioner executed an Affidavit of Declaration Against Interest, dated January 22, 2007, indicating
that he has no right or interest over the subject properties. Petitioner, nonetheless, claims that he
executed a subsequent Affidavit of Non-Waiver of Interest, dated January 14, 2008, claiming that he was
deceived by respondent into signing the said Affidavit of Declaration Against Interest and that he was
seriously ill at the time that he affixed his signature.

From the foregoing, there is no question that there is a serious objection and an adverse claim on the part
of an interested party as shown by petitioner's subsequent execution of his Affidavit of Non-Waiver of
Interest. The absence of unanimity among the parties is also evidenced by petitioner's petition seeking

Page 412 of 540

 Page 413 of 540

the annulment of the RTC Decision which granted respondent's petition for correction of entries in the
subject TCTs. These objections and claims necessarily entail litigious and controversial matters making it
imperative to conduct an exhaustive examination of the factual and legal bases of the parties' respective
positions. Certainly, such objective cannot be accomplished by the court through the abbreviated action
under Section 108 of PD 1529. A complete determination of the issues in the present case can only be
achieved if petitioner and his wife are impleaded in an adversarial proceeding.

In addition, the Court finds apropos to the instant case the ruling in the similar case of Martinez v.
Evangelista19 where the petitioner in the said case, being the registered owner of certain real properties,
sought to strike out the words "married to x x x" appearing in the Transfer Certificates of Title covering the
said properties on the ground that the same was so entered by reason of clerical error or oversight and in
lieu thereof the word "single" be substituted, which according to the petitioner in the said case is his true
and correct civil status. This Court held that:
chanRoblesvirtualLawlibrary
x x x x changes in the citizenship of a person or in his status from legitimate to illegitimate or from married
lo not married are substantial as well as controversial, which can only be established in an appropriate
adversary proceeding as a remedy for the adjudication of real and justifiable controversies involving
actual conflict of rights the final determination of which depends upon the resolution of issues of
nationality, paternity, filiation or legitimacy of the marital status for which existing substantive and
procedural laws as well as other rules of court amply provide. 20ChanRoblesVirtualawlibrary
In the present case, it is now apparent that before the trial court can alter the description of the civil status
of respondent in the transfer certificates of title in question, it will have to receive evidence of and
determine respondent's civil status. This requires a full dress trial rendering the summary proceedings
envisaged in Section 108 of PD 1529 inadequate.

Finally, it is settled that a land registration case is a proceeding in rem, and jurisdiction in rem cannot be
acquired unless there be constructive seizure of the land through publication and service of
notice.21However, as found by the CA, respondent failed to comply with the said requirements. In all
cases where the authority of the courts to proceed is conferred by a statute, and when the manner of
obtaining jurisdiction is mandatory, it must be strictly complied with, or the proceedings will be utterly
void.22 It is wrong for the CA to rule in its Amended Decision that publication is not a jurisdictional
requirement for the RTC to take cognizance of respondent's petition. The appellate court's reliance on the
case of Chan v. Court of Appeals23 is misplaced. In the said case, this Court considered the notice to the
Register of Deeds as substantial compliance with the notice and publication requirements of the law
simply because in the petition for correction filed by the petitioner therein, only the said petitioner and the
Register of Deeds had an interest in the correction of titles sought for. This Court ruled that there is
therefore no necessity to notify other parties who had no interest to protect in the said petition. This is not
true, however, in the present case. As discussed above, on the bases of petitioner's serious objection and
adverse claim, it is apparent that he has an interest to protect. Thus, the ruling in Chan finds no
application in the instant case.chanrobleslaw

WHEREFORE, the instant petition is GRANTED. The Amended Decision and Resolution of the Court of
Appeals, dated August 29, 2011 and January 10, 2012, respectively, in CA-G.R. SP No. 101406,
are REVERSED and SET ASIDE. The Decision of the Court of Appeals, dated January 27, 2011, which
annulled the June 28, 2007 Decision of the Regional Trial Court of Muntinlupa City, Branch 203,
is REINSTATED.

SO ORDERED.

Page 413 of 540

 Page 414 of 540

3. Notice and Replacement of Lost Duplicate Certificate (Sec. 109)

Coombs v. Castaeda, G.R. No. 192353

March 15, 2017

G.R. No. 192353

MERCEDITA C. COOMBS, Petitioner

vs
VICTORIA C. CASTANEDA, VIRGILIO VELOSO SANTOS, SPS. PANCHO & EDITH LEVISTE, BPI
FAMILY SAVINGS BANK and the REGISTER OF DEEDS OF MUNTINLUPA CITY, Respondents

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended,
seeking to reverse and set aside the Resolutions dated April 30, 20091 and May 25, 20102 of the Court of
Appeals in CA-G.R. SP No. 107949.

This case stemmed from a petition for annulment of judgment to declare the Decision3 dated August 26,
2004 of the Regional Trial Court (RTC), Branch 206, Muntinlupa City in LRC Case No. 04-035 as null and
void, filed by herein petitioner Mercedita C. Coombs (Coombs) before the Court of Appeals. The
dispositive portion of the RTC Decision reads:

WHEREFORE, judgment is hereby rendered declaring the lost owner's duplicate copy of Transfer
Certificate of Title [No.] 6715 of the Registry of Deeds of Muntinlupa City as null and void. Accordingly,
the Register of Deeds of Muntinlupa City is ordered to issue a new owner's duplicate copy of the said
TCT No. 6715 under the same terms and conditions as the original thereof and to include thereon all
annotations which have not been lawfully ordered cancelled by the Court upon payment of all fees
prescribed by law.4

Petitioner Coombs narrated in the said petition that she is the owner of the real property covered by
Transfer Certificate of Title (TCT) No. 6715 situated on Apitong Street, Ayala Alabang, Muntinlupa City;
that sometime in March 2005, when she tried to pay the real property tax due relative to the real property
covered by TCT No. 6715, she was told that said real property was no longer listed under her pame; that
upon further verification, she came to know that TCT No. 6715 had already been cancelled and had been
replaced by TCT No. 14115 issued in the name of herein respondent Virgilio Veloso Santos (Santos); that
TCT No. 6715 was ordered cancelled by the RTC in a Decision dated August 26, 2004 in LRC Case No.
04-035, entitled "In Re: Petition for the Issuance of Second Owner's Duplicate Copy of Transfer
Certificate of Title No. 6715, [by J Mercedita C. Coombs, represented by her Atty.-in-Fact
Victoria C. Castaneda"; that she neither authorized Victoria C. Castaneda (Castaneda) to file petition for
issuance of a second owner's duplicate copy of TCT No. 6715 sometime in 2004, nor asked her to sell
the subject property to herein respondent Santos; that Santos, in tum, sold the same to herein
respondents Pancho and Edith Leviste (spouses Leviste ); that the spouses Leviste executed a real

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 Page 415 of 540

estate mortgage over the subject property in favor of herein respondent Bank of the Philippine Islands
Family Savings Bank (BPI Family).5

Petitioner Coombs anchored her prayer for the annulment of the R TC Decision on the ground that, since
the owner's duplicate copy of TCT No. 6715 had never been lost as it had always been in her
custody,6 the RTC did not acquire jurisdiction over the subject matter of LRC Case No. 04-035.

The Assailed Court of Appeals Resolutions

In its Resolution dated April 30, 2009, relying on Section 1, Rule 47 of the Revised Rules of Court, the
Court of Appeals dismissed the petition for annulment of judgment. According to the appellate court

A careful reading of the petition reveals that there is no allegation in the petition that the petitioner has
failed to avail of any of the aforementioned remedies in Section 1 through no fault of his before instituting
the herein petition. This is an important condition for the availment of this remedy. The petition is also not
sufficient in substance. Under Section 2[,] Rule 47 of the Rules of Civil Procedure, the grounds for
Annulment of Judgment are: (a) lack of jurisdiction of the lower court; and (b) extrinsic fraud. Obviously,
the ground relied upon in the present action is extrinsic fraud. However, the petitioner failed to state the
facts constituting extrinsic fraud as a ground. Since the petitioner failed to avail [of] any of aforementioned
remedies in Section 1 without justification and that the ground relied upon was not substantiated, this
petition has no prima facie merit.7

Petitioner Coombs moved for the reconsideration of the above-quoted Resolution. She insisted that her
petition was grounded on lack of jurisdiction, not extrinsic fraud. In fact, she explicitly spelled out in her
petition that the RTC did not have jurisdiction over the subject matter in LRC Case No. 04-035 because
the owner's duplicate copy of TCT No. 6715 was never lost.

In its assailed Resolution dated May 25, 2010, the Court of Appeals denied the said motion and explained
that the RTC has jurisdiction over all proceedings involving title to real property and land registration
cases.

Thus, it had jurisdiction over the subject matter of LRC Case No. 04-035. It further held that petitioner
Coombs failed to append affidavits of witnesses or documents supporting her cause of action as required
by Section 4, Rule 47 of the Rules of Court. It cited Veneracion v. Mancilla,8 where it was held that failure
to append the necessary documents may prompt the appellate court to dismiss the petition outright or
deny the same due course. The dispositive portion of the Resolution reads:

WHEREFORE, premises considered, the instant motion is DENIED. Accordingly, the instant petition is
DISMISSED WITH FINALITY.9

Hence, the present petition raising the following arguments:

First, petitioner Coombs asserts that she was never notified about the proceedings in LRC Case No. 04-
035. Being a stranger to the case, she could not have availed of any of the remedies mentioned in
Section 1, Rule 4 7 of the Rules of Court to question the RTC Decision. She claims that she only found
out about the RTC's decision sometime in March 2005 in the course of paying for real estate taxes due on
the subject property. By that time, the R TC decision had already become final and executory. Thus, the
failure to allege these circumstances is not fatal to her petition.10

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Second, citing the Court's rulings in Strait Times, Inc. v. Court of Appeals,11 Serra Serra v. Court of
Appeals,12Alabang Development Corporation v. Valenzuela, 13 and Demetriou v. Court of
Appeals,14 petitioner Coombs maintains that the RTC did not have jurisdiction over the subject matter in
LRC Case No. 04-035 because the owner's duplicate copy of the TCT sought to be annulled was never
lost and had always been in her possession.15

Third, petitioner Coombs insists that she appended all the relevant documents to support her Petition for
Annulment of Judgment. But she did not append any witnesses' affidavits because she does not have any
witness other than herself. Besides, all the facts that may be set out in a separate affidavit are already
averred in the present petition. Thus, lack thereof should not result in the petition's outright dismissal. 16

Ultimately, Coombs prays for the following reliefs:

1. [T]hat this petition be given due course and that the assailed Resolutions of the Court of Appeals be
reversed and set aside;

2. [T]hat the Honorable Court of Appeals be directed to give due course to the petitioner's petition for
annulment of judgment, declaration of nullity of sales and titles, and damages, and to conduct further
proceedings thereon.17

On the other hand, the spouses Leviste maintains (a) that petitioner Coombs' petition was grounded on
extrinsic fraud and she failed to properly allege the facts constituting this ground; (b) that the petition is
infirm because petitioner Coombs did not comply with the requirements of alleging her failure to resort to
ordinary remedies, as enumerated in Section 1, Rule 47 of the Rules of Court and appending the
appropriate documents in support of her cause of action; and (c) that petitioner Coombs admitted that a
new owner's duplicate copy of TCT No. 6715 was issued by virtue of the RTC Decision. And, for their last
point, they argue that the Petition for Annulment of Judgment is actually a collateral attack on their title
that is not permitted pursuant to Section 48 of Presidential Decree No. 1529, which states that a
certificate of title cannot be altered, modified, or cancelled, except in a direct proceeding in accordance
with the law.18

For their part, respondent BPI Family contends that it should not have been impleaded in the present
petition. It maintains that it is simply a mortgagee in good faith and for value in relation to the subject lot
covered by TCT No. 6715. And the present petition seeks to nullify the RTC Decision to which the
respondent bank was never a party of. Thus, BPI Family claims that the Court has no jurisdiction over it. 19

The Issue

We are now left to resolve the lone issue of whether or not the Court of Appeals erred when it dismissed
outright petitioner Coombs' petition for annulment of judgment.

The Ruling of the Court

The petition is meritorious.

The Court of Appeals erred when it dismissed outright the petition for annulment of judgment.

The grounds for annulment of judgment are set forth in Section 2, Rule 47 of the Rules of Court, viz.:

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Section 2. Grounds for annulment. - The annulment may be based only on the grounds of extrinsic fraud
and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion
for new trial or petition for relief.

Contrary to the findings of the Court of Appeals, the Petition for Annulment of Judgment filed by petitioner
Coombs was clearly grounded on lack of jurisdiction of the RTC over the subject matter of the case, and
not extrinsic fraud.

In her petition, petitioner Coombs averred as follows:

13. Since the owner's duplicate copy of TCT No. 6715 is not lost or destroyed, but is in fact in the
possession of the petitioner, there is no necessity for the petition filed in the trial court. The Regional Trial
Court Branch 206 in Muntinlupa City never acquired jurisdiction to entertain the petition and order the
issuance of a new owner's duplicate certificate. Hence, the newly issued duplicate of TCT No. 6715 is null
and void.20

Simply stated, petitioner Coombs sought to annul the RTC Decision for being rendered without
jurisdiction. According to her, the RTC did not acquire jurisdiction over the subject matter of LRC Case
No. 04-035-one for the reconstitution of a lost certificate of title-because the owner's duplicate copy of
TCT No. 6715 was never lost in the first place, which argument has been upheld by the Court in a catena
of cases that she cited to support her assertion.

To Our mind, the above-stated allegations made out a prima facie case of annulment of judgment to
warrant the Court of Appeals' favorable consideration.1wphi1

In Manila v. Manzo,21 the Court held that in a petition for annulment of judgment grounded on lack of
jurisdiction, it is not enough that there is an abuse of jurisdictional discretion. It must be shown that the
court should not have taken cognizance of the case because the law does not confer it with jurisdiction
over the subject matter.

It is doctrinal that jurisdiction over the nature of the action or subject matter is conferred by law. Section
10 of Republic Act No. 2622 vests the RTC with jurisdiction over the judicial reconstitution of a lost or
destroyed owner's duplicate of the certificate of title. However, the Court of Appeals erred when it ruled
that the subject matter of LRC Case No. 04-035 was within the RTC's jurisdiction, being a court of general
jurisdiction.

In a long line of cases,23 the Court has held that the RTC has no jurisdiction when the certificate sought to
be reconstituted was never lost or destroyed but is in fact in the possession of another person. In other
words, the fact of loss of the duplicate certificate is jurisdictional.

Thus, petitioner Coombs' mere allegation that the owner's duplicate copy of TCT No. 7615 was never lost
and has in fact always been with her gave rise to a prima facie case of the RTC's lack of jurisdiction over
the proceedings in LRC Case No. 04-035. This is exactly the situation a petition for annulment of
judgment aims to remedy.

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Moreover, the Court of Appeals' dismissal based on technical grounds (i.e., failure to allege that she did
not avail of a motion for new trial, appeal, petition for relief, or other appropriate remedies and failure to
append the affidavits of witnesses or documents supporting the cause of action of her petition) was also
erroneous.

First, when a petition for annulment of judgment is grounded on lack of jurisdiction, the petitioner need
not allege that the ordinary remedy of new trial or reconsideration of the judgment sought to be annulled
are no longer available through no fault of her own. This is because a judgment rendered without
jurisdiction is fundamentally void. Thus, it may be questioned any time unless laches has already set
in.241wphi1

Second, petitioner Coombs in fact was able to attach to her petition documents supporting her cause of
action.

Verily, our ruling in Veneracion25 required the petitioners to: (a) allege with particularity in their petition the
facts and the law relied upon for annulment as well as those supporting their cause of action, and (b)
attach to the original copy of their petition the affidavits of their witnesses and documents supporting their
cause of action.

In the present case, petitioner Coombs' Petition for Annulment of Judgment was grounded on lack of
jurisdiction. Based on our review of the records, she annexed to her petition the owner's duplicate copy of
TCT No. 6715 and the RTC Decision - which sufficiently support the petition's cause of action. A copy of
the TCT alleged (in LRC Case No. 04-035) to have been missing supports the claim that the same was
never lost. In the same vein, a copy of the RTC Decision, in conjunction with supporting jurisprudence,
supports petitioner Coombs' averment that said decision was rendered without jurisdiction. Her
allegations coupled with the appropriate supporting documents give rise to a prima facie case that the
RTC did not have jurisdiction over the subject matter in LRC Case No. 04-035.

As we ruled in Tan Po Chu v. Court of Appeals,26 if allegations of this nature turned out to be true, the
RTC Decision would be void and the Court of Appeals would have been duty-bound to strike it
down. Thus, the appellate court erred when it brushed aside this duty and dismissed the case outright
based on a strict interpretation of technical rules.

WHEREFORE, the petition is hereby GRANTED. The Resolutions dated April 30, 2009 and May 25,
2010 of the Court of Appeals in CA-G.R. SP No. 107949 are SET ASIDE. The Court of Appeals is
directed to REINSTATE the Petition for Annulment of Judgment in CA-G.R. SP No. 107949 and to
proceed hearing the same with dispatch.

SO ORDERED.

Tan Po Chu v. CA, G.R. No. 184348, April 4, 2016

DECISION

BRION, J.:

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This is a petition for certiorari filed by Tan Po Chu from the January 16, 2008 and July 16, 2008
resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 101727.1 The CA dismissed outright Tan's
petition for annulment of the Regional Trial Court's (RTC) decision in LRC CASE No. 2005-771-MK2 on
the grounds that the petition suffered from procedural infirmities and lacked substantial merit.

Antecedents

Fiber Technology Corporation (FiberTech) was a Philippine corporation with Securities and Exchange
Commission (SEC) Registration No. 0000142818. It was also the registered owner of a parcel of land in
Marikina (subject lot) covered by Transfer Certificate of Title (TCT) No. 157923 entered on November 28,
1988. The SEC allegedly revoked FiberTech's registration on September 29, 2003. 3

On April 4, 2005, respondent Felix Chingkoe executed an affidavit of loss of TCT No. 157923 allegedly on
behalf of FiberTech.4

On June 2, 2005, FiberTech - supposedly represented by respondent Rodrigo Garcia pursant to a

December 2, 2004 Board Resolution5 - filed a petition for the reissuance/replacement of its owner's
duplicate of TCT No. 157923. The petition was based on the affidavit of loss that Felix executed. The
petition alleged: (1) that Felix and his wife Rosita acquired 3 00% ownership of FiberTech in 2004
pursuant to an award by the National Labor Relations Commission (NLRC); (2) that Felix was elected
Corporate Secretary soon after; (3) that Felix asked the former directors and officers of FiberTech to turn
over the owner's duplicate of TCT No. 157923, but the latter denied knowledge or possession thereof;
and (4) that after conducting an exhaustive search, the subject title was nowhere,to be found. 6

The petition was raffled to the RTC, Marikina City, Branch 193 and docketed as LRC Case No. 2005-
771-MK.

On July 23, 2006, the RTC granted the petition. It declared the owner's duplicate copy of TCT No. 157923
as lost and ordered its reissuance.7

On December 21, 2007, Tan Po Chu - mother of Fibertech's incorporators Faustino and respondent Felix
Chingkoe - filed a petition before the CA for annulment of judgment against the RTC's decision. 8 The
petition was docketed as CA-G.R. SP No. 101727 with Tan Po Chu and FiberTech as petitioners.

Tan alleged: (1) that the missing owner's duplicate of TCT was in her custody as the responsible officer of
FiberTech; (2) that Felix was aware of this fact; (3) that Felix committed perjury when he executed the
Affidavit of Loss; (4) that Felix and Rosita had not acquired 100% ownership of FiberTech; (5) that Rosita
and Rodrigo Garcia were not even stockholders of record in Fibertech; and (6) that the respondents had
no authority to file the petition for reissuance of the owner's duplicate copy on behalf of FiberTech.9

Citing New Durawood Co. v. Court of Appeals10 and Serra Serra v. Court of Appeals,11 Tan further argued
that if an owner's duplicate TCT has not been lost, but is in fact possessed by another person, then the
reconstituted title is void and the court that rendered the decision never acquired jurisdiction.

However, the CA dismissed Tan's petition outright on January 16, 2008 on the grounds that the petition
suffered from procedural infirmities and lacked substantial merit.12

The CA observed that: (1) the verification and certification of non-forum shopping were executed alone by
Tan Po Chu without showing that she had the authority to sign for and on behalf of the corporation; (2)

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Tan's actual address was not indicated in the petition as required by Rule 46, Section 3; and (3) the
attached copy of the owner's duplicate TCT No. 157923 was not a certified true copy.

The CA also brushed aside Tan's substantive argument. It held that the RTC acquired jurisdiction over
the case after complying with the notice and hearing requirements under Section 109 of Presidential
Decree (P.D.) No. 1529 or the Property Registration Decree.13

Tan moved for reconsideration. However, on July 16, 2008, the CA denied the motion, insisting that Tan's
assertion that the RTC lacked jurisdiction was without merit.14

On September 19, 2008, Tan filed the present petition for certiorari.

The Petition

Tan argues that the CA committed grave abuse of discretion in ruling that her allegation of the RTC's lack
of jurisdiction was not meritorious. She maintains that the respondents misled the RTC because: (1) Felix
and Rosita never became 100% owners of FiberTech; and (2) they knew that the "missing" owner's
duplicate was in her possession. Pursuant to the cases of New Durawood, Serra Serra, Strait Times v.
CA,15 and Demetriou v. CA,16 the RTC never acquired jurisdiction to reconstitute the owner's duplicate
TCT.

The respondents counter that the CA did not commit grave abuse of discretion in dismissing the petition.
Further, assuming the CA decided in a manner contrary to prevailing jurisprudence, then it only
committed an error of law and not an error of jurisdiction. They conclude that Tan's resort to a special civil
action of certiorari was unwarranted because the correct remedy would have been to appeal the
dismissal of her petition.

Our Ruling

At the outset, we observe that Tan resorted to the wrong remedy by filing a petition for certiorari under
Rule 65. The. Rules of Court explicitly authorizes the CA to dismiss outright a petition for annulment of
judgment if the court finds no substantial merit in the petition.

Section 5. Action by the court. - Should the court find no substantial merit in the petition, the same may
be dismissed outright with specific reasons for such dismissal.

Should prima facie merit be found in the petition, the same shall be given due course and summons shall
be served on the respondent.17ChanRoblesVirtualawlibrary
Accordingly, outright dismissal of Tan's petition is within the jurisdiction of the CA and its correctness may
be reviewed through an appeal by certiorari under Rule 45.

Certiorari is an extraordinary remedy of last resort for when another remedy is present, certiorari is not
available.18 It is a limited form of review confined to errors of jurisdiction. An error of jurisdiction is one
where the officer or tribunal acted without or in excess of its jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction.19 On the other hand, an error of judgment is one which the
court may commit in the exercise of its jurisdiction. 20 They only involve errors in the court or tribunal's
appreciation of the facts and of the law.21 Errors of jurisdiction are reviewable on certiorari; errors of

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judgment, only by appeal.22

Ordinarily, this Court would have dismissed the petition outright for being an improper remedy. As a
general rule, certiorari will not lie as a substitute for an appeal. However, an exception to this rule is
where public welfare and the advancement of public policy so dictates.23

This Court cannot ignore the implications if the petitioner's allegations - that she has the original owner's
duplicate TCT of the subject lot and that the SEC revoked FiberTech's registration in 2003 - are true.
There will currently exist two owner's duplicate TCTs over the same property possessed by two
contending factions in an intra-corporate dispute of a defunct corporation. This anomalous situation can
potentially bring considerable hann to the general public and to the integrity of our Torrens system. This
Court, therefore, cannot simply leave the parties as they were.

The CA committed a grave error when it brushed aside Tan's argument that the RTC rendered its
decision without jurisdiction. It ruled that the replacement of a lost duplicate certificate is a proceeding in
rem, directed against the whole world; therefore, the RTC acquired jurisdiction when it complied with the
notice and hearing requirements under Section 109ofP.D. 1529.

The CA completely missed the point because Tan did not assail the RTC's jurisdiction by alleging
noncompliance with the requirements of notice and hearing; she questioned the RTC's jurisdiction over
the res by claiming that the allegedly lost owner's duplicate was, in fact, not lost but was in her custody.
Therefore, the RTC's compliance with Section 109 of P.D. 1529 was irrelevant.

We have consistently held that when the owner's duplicate certificate of title has not been lost, but is in
fact in the possession of another person, then the reconstituted certificate is void because the court failed
to acquire jurisdiction over the subject matter - the allegedly lost owner's duplicate.24 The correct remedy
for the registered owner against an uncooperative possessor is to compel the surrender of the owner's
duplicate title through an action for replevin.

A judgment void for want of jurisdiction is no judgment at all.25 It has been held to be a lawless thing,
which can be treated as an outlaw and . slain at sight, or ignored wherever and whenever it exhibits its
ugly head.26 It may be attacked at any time.

If Tan's allegation were true, then the RTC's judgment would be void and the CA would have been duty-
bound to strike it down. The CA could have nipped this anomalous situation in the bud before it could
cause any harm to innocent third persons. However, the CA opted to turn its back on this duty and
dismiss the case outright based on rigid technicalities and on irrelevant considerations regardless of the
implications to the general public.

Moreover, the CA's dismissal based on technical grounds was erroneous. The CA raised the following
procedural infirmities:
chanRoblesvirtualLawlibrary
...(1) the verification and certification of non-forum shopping was executed alone by affiant Tan Po Chu
without any showing that [s]he had the authority to sign for and in behalf of petitioner corporation pursuant
to Sec. 5(1), Rule 7 and Sec. 4(3), Rule 47 of the 1997 Revised Rules of Civil Procedure considering that
[s]he is one of the incorporators and stockholders of her co-petitioner corporation; (2) The actual address
of petitioner Tan Po Chu is not indicated in the petition as required by Sec. 3 (1), Rule 46 of the same
Rule; (3) The copy of the owner's duplicate of TCT No. 157923 is not certified as a true copy of the

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original owner's duplicate by the proper government agency as alleged by the

petitioners.27ChanRoblesVirtualawlibrary
First, we note that Tan alleged that FiberTech's corporate existence had already ceased when the SEC
revoked its corporate registration on September 29, 2003, and that she was a trustee of the corporation
for the purpose of its dissolution.28 We note further that the petition for annulment was filed in the names
of both FiberTech and Tan Po Chu.

While FiberTech may no longer have judicial personality to initiate the suit or authorize Tan Po Chu to file
the case, Tan Po Chu remained a real party-in-interest as the lawful possessor of the allegedly lost
owner's duplicate TCT. The respondents could not legally oust her of this possession by reconstituting the
owner's duplicate instead of filing an action for replevin. Therefore, the verification and certification of non-
forum shopping remained valid with respect to Tan Po Chu even though it might have been defective with
respect to FiberTech.

Second, we also note that Tan Po Chu submitted her address in her motion for reconsideration to cure
the defect in the petition.29 Her motion for reconsideration substantially complies with Rule 46, Section 3
of the Rules of Court.

Finally, a petition for annulment of judgment only requires the inclusion of a clearly legible duplicate
original or certified true copy of the judgment, order, resolution, or ruling subject thereof. 30 It does not
require the petitioner to annex certified true copies or duplicate originals of his evidence to the petition
because these may be presented during the evidentiary hearings of the case. To our mind, none of the
procedural infirmities warranted the CA's outright dismissal of the case.

Grave abuse of discretion is the capricious and whimsical exercise of judgment equivalent to an evasion
of positive duty, or a virtual refusal to act

Gocheco v. Estacio, G.R. No. L-15183, October 30, 1962

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-15183 October 30, 1962

IN RE: ORIGINAL CERTIFICATE OF TITLE NO. O-1385, SP. NO. 695, BOOK NO. 1-5, PATENTEE
PAULINO P. GOCHECO, CESARIO GOCHECO, petitioner-appellant,
vs.
FRANCISCO T. ESTACIO, ET AL., oppositors-appellees.

Climaco and Azcarraga for petitioner-appellant.

Antonio M. Ceniza for oppositors-appellees.

PAREDES, J.:

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Cesario Gocheco is a legitimate son of Paulino P. Gocheco registered owner of a parcel of land, with
improve comments, in Margosatubig, Zamboanga del Sur, as evidenced by Original Certificate of Title
No. O-1385 of the Register of Deeds for the said province. The owner's duplicate copy of the said original
certificate of title was lost, and notwithstanding diligent search to ascertain its whereabouts, the said
owner's duplicate copy has not been found. However, in the records of the Register of Deeds of
Zamboanga del Sur, the original of the above number certificate No. O-1385 of title is found intact and
complete in Sp. No. 695, Book No. 1-5 patentee Paulino P. Gocheco.

On January 18, 1957, Cesario Gocheco, in his capacity as heir of the registered owner, filed a petition
before the trial court to require the Register of Deeds of Zamboanga del Sur to issue another owner's
duplicate copy of the O.C.T. No. O-1385, in lieu of the owners copy which was lost, copy of which petition
was served to the Register of Deeds, thru the Provincial Fiscal, on April 30, 1957. Francisco T. Estacio
and others opposed the petition, claiming that they have been in continuous, peaceful, lawful, public and
adverse possession of the property covered by O.C.T. No. O-1385. On June 1, 1957, petitioner replied,
stating that the oppositors can not intervene in the petition for want of personality Industrial that to allow
them to claim ownership and/or possession of the subject property would defeat and destroy the
indefeasibility of title guaranteed and protected by Act No. 496.

On June 29, 1957 petitioner appeared in Court and submitted his oral and documentary evidence.
Notwithstanding notice of hearing served upon them, the oppositors or their counsel failed to appear. On
the same day, however, the trial court entered an order suspending hearing of the petition and required
the petitioner to publish within 30 days his petition or to file a testate or intestate proceeding, and to
secure the appointment of a legal representative to the estate of registered owner and the ultimate
declaration of heirs. For failure of petitioners to comply with the order, on August 23, 1957, the oppositors
filed an ex-parte motion to dismiss the petition. The Court, instead, on August 24, 1957 gave the
petitioner 10 days within which to show cause why the petition should not be dismissed. On September 3,
1957, petitioner filed his "constancia" manifesting that he was submitting his case, on the evidences
adduced in the hearing. On September 9, 1957, the trial court dismissed the petition against which
petitioner interposed the present appeal.

Petitioner-appellant alleges that the trial court erred (1) in requiring him to publish the petition for the
issuance of a new owner's duplicate copy of O.C.T. No. O-1385; (2) in requiring him to secure the
appointment of a legal representative to the estate of the original registered owner, Paulino P. Gocheco
and to obtain a judicial declaration of his lawful heirs before giving due course to his petition and (3) in
dismissing the petition.

The petition is only for the issuance of an owner's duplicate copy of O.C.T. No. O-1385, in lieu of the one
that was lost. Section 109 of Act No. 496, as amended, provides:

SEC. 109. If a duplicate certificate is lost or destroyed or cannot be produced by a guarantee,

heir, devisee, assignee, or other person applying for the entry of a new certificate to him or for the
registration of any instrument, a suggestion of the fact of such loss or destruction may be filed by
the registered owner or other person in interest and registered. The court may thereupon, upon
the petition of the registered owner or other persons in interest, after notice and hearing direct the
issue of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued
in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and credit
as the original duplicate for all the purposes of this act.

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In view of the existence of the complete record in the Register of Deeds of Zamboanga del Sur, of the
original of the certificate of title in question, which appears in Book No. 1-5 of the said Register of Deeds'
Office (Exh. A) and of the fact that the present petition is not one for reconstitution as provided by
Republic Act No. 26, there is no necessity for publishing notice of the hearing thereof. And the petition,
coming as it does, under the provisions of Section 109, aforequoted, there is likewise no need to first
secure the appointment of a legal representative of the estate and the declaration of the lawful heirs of
the deceased Paulino P. Gocheco. The petition does not at all seek the distribution of the decedents
estate. The owner's duplicate copy to be issued will be only an owner's duplicate copy of the O.C.T. No.
O-1385 and the petitioner is a person in interest is he is a legal heir, according to his uncontroverted
verified petition.

The oppositors-appellees, who had not chosen to file their brief, have no personality to intervene and their
grounds of intervention, namely, that they have been in public, continuous, peaceful, adverse and lawful
possession of the property is immaterial, impertinent and of no consequence, in the present proceeding.
Their claim of ownership or possession of the property can be properly instituted in a separate,
independent and ordinary civil action.

IN VIEW HEREOF, the order of June 29, 1957 of the Trial Court, appealed from, is set aside, and another
entered, directing the Register of Deeds of Zamboanga del Sur, to issue to the petitioner a new owner's
duplicate copy which was lost. With costs on the oppositors-appellees.

4. Reconstitution of Lost or Destroyed Original Torrens Title (Sec. 110)

Saint Mary Crusade v. Riel, G.R. No. 176508, January 12, 2015

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 176508 January 12, 2015

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN FOUNDATION, INC., Petitioner,

vs.
HON. TEODORO T. RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT, NATIONAL
CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON CITY, Respondent.

x-----------------------x

UNIVERSITY OF THE PHILIPPINES, Intervenor.

DECISION

BERSAMIN, J.:

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A petition for the judicial reconstitution of a Torrens title must strictly comply with the requirements
prescribed in Republic Act No. 26;1 otherwise, the petition should be dismissed.

This case is a direct resort to the Court by petition for certiorari and mandamus. The petitioner applied for
the judicial reconstitution of Original Certificate of Title (OCT) No. 1609 of the Register of Deeds of
Quezon City, and for the issuance of a new OCT in place thereof, docketed as L.R.C. Case No. Q-18987
(04), but respondent Acting Presiding Judge of Branch 85 of the Regional Trial Court (RTC) in Quezon
City dismissed the petition for reconstitution through the assailed order dated September 12, 2006. The
petitioner alleges that the respondent Judge thereby committed grave abuse of discretion and unlawful
neglect of performance of an act specifically enjoined upon him. Equally assailed is the ensuing denial of
its motion for reconsideration through the order dated February 5, 2007.

The antecedents follow.

On October 28, 2004, the petitioner claimed in its petition for reconstitution that the original copy of OCT
No. 1609 had been burnt and lost in the fire that gutted the Quezon City Register of Deeds in the late
80s. Initially, respondent Judge gave due course to the petition, but after the preliminary hearing, he
dismissed the petition for reconstitution through the first assailed order of September 12, 2006, 2 to wit:

With the receipt of Report dated July 14, 2006 from Land Registration Authority (LRA) recommending that
the petition be dismissed, and considering the Opposition filed by the Republic of the Philippines and
University of the Philippines, the above-entitled petition is hereby ordered DISMISSED.

On October 11, 2006, the petitioner moved for reconsideration of the dismissal, 3 attaching the following
documents to support its petition for reconstitution, namely: (1) the copy of the original application for
registration dated January 27, 1955; (2) the notice of initial hearing dated June 23, 1955; (3) the letter of
transmittal to the Court of First Instance in Quezon City; (4) the copy of the Spanish Testimonial Title No.
3261054 dated March 25, 1977 in the name of Eladio Tiburcio; (5) the copy of Tax Assessment No.
14238; and (6) the approved Plan SWD-37457.

On February 5, 2007, the RTC denied the motion for reconsideration for lack of any cogent or justifiable
ground to reconsider.4

Hence, on February 22, 2007, the petitioner came directly to the Court alleging that respondent Judge
had "unfairly abused his discretion and unlawfully neglected the performance of an act which is
specifically enjoined upon him as a duly [sic] under Rule 7, Section 8, of the Revised Rules of
Court;"5 that "in finally dismissing the herein subject Petition for Reconsideration, respondent Honorable
Acting Presiding Judge has acted without and in excess of his authority and with grave abuse of
discretion to the further damage and prejudice of the herein petitioner;" 6 and that it had no other remedy
in the course of law except through the present petition for certiorari and mandamus.

Issues

The Court directed respondent Judge and the Office of the Solicitor General (OSG) to comment on the
petition for certiorari and mandamus. Respondent Judge submitted his comment on May 23, 2007, 7 and
the OSG its comment on July 19, 2007.8 On November 13, 2007, the University of the Philippines (UP)
sought leave to intervene, attaching to its motion the intended comment/opposition-in-intervention.9 The
motion for the UPs intervention was granted on November 28, 2007.10 In turn, the petitioner presented its

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consolidated reply on February 8, 2008.11 The parties, except respondent Judge, then filed their
memoranda in compliance with the Courts directive.

Respondent Judge justified the dismissal of the petition for reconstitution by citing the opposition by the
OSG and the UP, as well as the recommendation of the Land Registration Authority (LRA). He pointed
out that the petitioner did not present its purported Torrens title to be reconstituted; that the petitioners
claim was doubtful given the magnitude of 4,304,623 square meters as the land area involved; 12 and that
the UPs ownership of the portion of land covered by petitioners claim had long been settled by the Court
in a long line of cases.13

The OSG and the UP argued that by directly coming to the Court by petition for certiorari and mandamus,
the petitioner had availed itself of the wrong remedies to substitute for its lostappeal; that the correct
recourse for the petitioner was an appeal considering that the two assailed orders already finally disposed
of the case; that the petitioner intended its petition for certiorari and mandamus to reverse the final
orders;14 that the petitioner further failed to observe the doctrine of hierarchy of courts, despite the Court
of Appeals (CA) having concurrent jurisdiction with the Court over special civil actions under Rule
65;15 that the RTC would have gravely erred had it proceeded on the petition for reconstitution despite the
petitioner not having notified the adjoining owners of the land or other parties with interest over the
land;16 that the petitioner had no factual and legal bases for reconstitution due to its failure to prove the
existence and validity of the certificate of title sought to be reconstituted, in addition to the ownership of
the land covered by the petition for reconstitution being already settled in a long line of cases; that the
petitioners claim over the land was derived from the Deed of Assignment executed by one Marcelino
Tiburcio the same person whose claim had long been settled and disposed of in Tiburcio v. Peoples
Homesite and Housing Corporation and University of the Philippines (106 Phil. 477), which vested title in
the UP, and in Caero v. University of the Philippines (437 SCRA 630); and that the Deed of Transfer and
Conveyance dated November 26, 1925 executed by Tiburcio in favor of St. Mary Village Association, Inc.
was not a basis for the judicial reconstitution of title accepted under Section 2 of Republic Act No. 26.

In its memorandum, the petitioner indicates that the RTC gravely abused its discretion amounting to
lackor excess of its jurisdiction in dismissing its petition for reconstitution on the basis of the
recommendation of the LRA and the opposition of the Republic and the UPdespite having initially given
due course to the petition for reconstitution. It urges that the dismissal should be overturned because it
was not given a chance to comment on the recommendation of the LRA, or to controvert the oppositions
filed.17 It contends that the LRA report did not substantiate the allegation of dismissal of the application for
registration of Marcelino Tiburcio on October 17, 1955, in addition to the veracity of the report being
questionable by virtue of its not having been under oath.18

Ruling

The petition for certiorari and mandamus, being devoid of procedural and substantive merit, is dismissed.

Firstly, certiorari, being an extraordinary remedy, is granted only under the conditions defined by the
Rules of Court. The conditions are that: (1) the respondent tribunal, board or officer exercising judicial or
quasi judicial functions has acted without or inexcess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (2) there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law.19Without jurisdiction means that the court acted with
absolute lack of authority; there is excess of jurisdiction when the court transcends its power or acts
without any statutory authority; grave abuse of discretionimplies such capricious and whimsical exercise

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of judgment as to be equivalent to lack or excess of jurisdiction; in other words, power is exercised in an

arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such exercise isso
patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the
duty enjoined or to act at all in contemplation of law.20

The petition for certiorari and mandamus did not show how respondent Judge could have been guilty of
lacking or exceeding his jurisdiction, or could have gravely abused his discretion amounting to lack or
excess of jurisdiction. Under Section 1221 of Republic Act No. 26, the law on the judicial reconstitution of a
Torrens title, the Regional Trial Court (as the successor of the Court of First Instance) had the original and
exclusive jurisdiction to act on the petition for judicial reconstitution of title. Hence, the RTC neither lacked
nor exceeded its authority in acting on and dismissing the petition. Nor did respondent Judge gravely
abuse his discretion amounting to lack or excess of jurisdiction considering that the petition for
reconstitution involved land already registered in the name of the UP, as confirmed by the LRA. Instead, it
would have been contrary to law had respondent Judge dealt with and granted the petition for judicial
reconstitution of title of the petitioner.

Secondly, the petitioner did not present the duplicate or certified copy of OCT No. 1609. Thereby, it
disobeyed Section 2 and Section 3 of Republic Act No. 26, the provisions that expressly listed the
acceptable bases for judicial reconstitution of an existing Torrens title, to wit: Sec. 2. Original certificates
of titleshall be reconstituted from such of the sources hereunder enumerated asmay be available, in the
following order:

(a) The owner's duplicate of the certificate of title;

(b) The co-owner's, mortgagee's,or lessee's duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to
which the original certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder enumerated
asmay be available, in the following order:

(a) The owner's duplicate of the certificate of title;

(b) The co-owner's, mortgagee's,or lessee's duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;

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(d) The deed of transfer or other document, on file in the registry of deeds, containing the
description of the property, or an authenticated copy thereof, showing that its original had been
registered, and pursuant to which the lost or destroyed transfer certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

Thirdly, with the questioned orders of the RTC having finally disposed of the application for judicial
reconstitution, nothing more was left for the RTC to do in the case. As of then, therefore, the correct
recourse for the petitioner was to appeal to the Court of Appeals by notice of appeal within 15 days from
notice of the denial of its motion for reconsideration. By allowing the period of appeal toelapse without
taking action, it squandered its right to appeal. Its present resort to certiorari is impermissible, for an
extraordinary remedy like certiorari cannot be a substitute for a lost appeal. That the extraordinary
remedy of certiorari is not an alternative to an available remedy inthe ordinary course of law is clear from
Section 1 of Rule 65, which requires that there must be no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law. Indeed, no error of judgment by a court will be corrected by
certiorari, which corrects only jurisdictional errors.22

Fourthly, the filing of the instant special civil action directly in this Court is in disregard of the doctrine of
hierarchy of courts. Although the Court has concurrent jurisdiction with the Court of Appeals in issuing the
writ of certiorari, direct resort is allowed only when there are special, extraordinary or compelling reasons
that justify the same. The Court enforces the observance of the hierarchy of courts in order to free itself
from unnecessary, frivolous and impertinent cases and thus afford time for it to deal with the more
fundamental and more essential tasks that the Constitution has assigned to it. 23 There being no special,
important or compelling reason, the petitioner thereby violated the observance of the hierarchy of courts,
warranting the dismissal of the petition for certiorari.

Finally, the land covered by the petition for judicial reconstitution related to the same area that formed the
UP campus.1wphi1 The UPs registered ownership of the land comprising its campus has long been
settled under the law. Accordingly, the dismissal of the petition for judicial reconstitution by respondent
Judge only safeguarded the UPs registered ownership. In so doing, respondent Judge actually heeded
the clear warnings to the lower courts and the Law Profession in general against mounting or abetting any
attack against such ownership. One such warning was that in Caero v. University of the Philippines,24 as
follows:

We strongly admonish courts and unscrupulous lawyers to stop entertaining spurious cases seeking
further to assail respondent UPs title. These cases open the dissolute avenues of graft to unscrupulous
land-grabbers who prey like vultures upon the campus of respondent UP. By such actions, they wittingly
or unwittingly aid the hucksters who want to earn a quick buck by misleading the gullible to buy the
Philippine counterpart of the proverbial London Bridge. It is well past time for courts and lawyers to cease
wasting their time and resources on these worthless causes and take judicial notice of the fact that
respondent UPs title had already been validated countless times by this Court. Any ruling deviating from
such doctrine is to be viewed as a deliberate intent to sabotage the rule of law and will no longer be
countenanced.25

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WHEREFORE, the Court DISMISSES the petition for certiorari and mandamus for lack of merit; and
ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

Republic v. Sanchez, G.R. No. 146081, July 17, 2006

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Decision[2] dated 31 August 2000 and Resolution dated 17 November
2000 of the Court of Appeals. The 31 August 2000 Decision granted the petition of respondent spouses
Roberto and Marina Sanchez (respondents) to set aside the ruling of the Regional Trial Court, Quezon
City, Branch 225 (trial court) in a suit for reconstitution of title. The 17 November 2000 Resolution denied
the motion for reconsideration of petitioner Land Registration Authority (petitioner).

The Facts

On 28 May 1996, respondents filed a petition (LRC Case No. Q-96-8296) in the trial court to reconstitute
the original of Transfer Certificate of Title No. 252708 (TCT No. 252708), covering a parcel of land
measuring 2,991 square meters (Lot 1).[3] Respondents claimed that TCT No. 252708 was issued in the
name of respondent Marina Sanchez (Marina) by the Register of Deeds, Quezon City. Respondents
alleged that the original of TCT No. 252708 was among the documents destroyed by the fire which razed
the Office of the Register of Deeds, Quezon City in June 1988. Respondents sought reconstitution under
Section 3(a)[4] of Republic Act No. 26[5] (RA 26) based on Marina's duplicate title.

The trial court scheduled the case for hearing on 15 August 1996. The notice of hearing dated 30 May
1996 was published in the 8 and 15 July 1996 issues of the Official Gazette and posted at the main
entrance of the City Hall and the Hall of Justice, Quezon City on 1 July 1996. Petitioner, the Office of the
Solicitor General, the Land Management Section, Surveys Division of the Department of Environment and
Natural Resources, the Office of the Quezon City Prosecutor, and the Register of Deeds, Quezon
City were furnished copies of the notice of hearing.

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The Solicitor General filed his Comment to the petition, noting that since the petition is based on Section
3(a) of RA 26, the trial court should defer acting on the petition until the Land Registration Authority (LRA)
has submitted its Report on the petition as required under Land Registration Commission (now LRA)
Circular No. 35 (Circular No. 35).[6]

In response to the Solicitor Generals Comment, respondents submitted a Report, dated 5 September
1996 (First Report), signed by Benjamin Bustos (Bustos), Chief, Reconstitution Division, LRA. The First
Report, which was endorsed[7] to the trial court in a letter signed by Salvador L. Oriel (Oriel), Chief,
Docket Division, LRA, reads in full:

REPORT

COMES NOW the Land Registration Authority and to the Honorable Court respectfully
reports that:

(1) The present petition seeks the reconstitution of Transfer Certificate of Title No.
252708, allegedly lost or destroyed and supposedly covering Lots 12, 13, 14, 15, & 16 all
of Blocks 5, of (LRC) Psd-4786, respectively, on the basis of the owners duplicate
thereof, reproductions of which, not certified by the clerk of Court, as required under LRC
circular 35, Series of 1983, were submitted to this Authority.

(2) The technical description of the consolidation of Lots, 12, 13, 14, 15 & 16 all of Block
5, Psd-4786, appearing in the reproduction of Transfer Certificate of Title No. 252708,
respectively, have been examined and verified against the technical description on file in
the Volume 2753 in the Vault Section Docket Division, this Authority. Said technical
description when plotted in the Municipal Index Sheet No. 3669-C do [sic] not appear to
overlap previously plotted/decreed properties in the area.

The technical description of Lot 1, Pcn-04-000007 of the cosolidation [sic] of Lots 12, 13,
14, 15 & 16 of Block 5, appearing in the reproductions of Transfer Certificate of Title No.
252708, respectively have been examined and verified against the Lot Description on file
in the vault section, Docket Division, this Authority. Said technical descriptions when
plotted in the Municipal Index Sheet No. 3669-C do not appear to overlap previously
plotted/decreed properties in the area.

WHEREFORE, the foregoing information anent the lots in question is respectfully

submitted for consideration in the resolution of the instant petition, and if the Honorable
Court, after notice and hearing, finds justification pursuant to Section 15 of the Republic
Act No. 26 to grant the same, the owners [sic] duplicate of Transfer Certificate of
Title No. 252708 may be used as sources [sic] of the desired reconstitution pursuant to
Section 3 (a) of said Act. Provided, however, that in case the petition is granted, the
reconstituted title should be made subject to such encumbrances as maybe subsisting,

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and provided, further, that no certificate of title covering the same parcels of land exists in
the office of the Register of Deeds Concerned [sic].

Quezon City, Philippines, September 5, 1996.

REYNALDO Y. MAULIT

Administrator

By:

[Sgd.]

BENJAMIN M. BUSTOS

Reconstituting Officer & Chief,

Reconstitution Division[8]

As no opposition was filed against the petition, the trial court allowed respondents to present evidence ex
parte. Apart from the First Report, respondents also presented a Certification, dated 14 December 1994,
of the Quezon City Register of Deeds, that the original of TCT No. 252708 was among those destroyed in
the 1988 fire. Respondents further presented a Certification, dated 14 May 1996, of the Office of the City
Treasurer, Quezon City, confirming that respondents last paid the real estate taxes on Lot No. 1 in
January 1996.

The Ruling of the Trial Court

In its Order dated 28 October 1996 (28 October 1996 Order), the trial court granted reconstitution and
ordered TCT No. 252708 reconstituted. The 28 October 1996 Order became final on 6 January 1997. The
Register of Deeds, Quezon City issued to respondents reconstituted Transfer Certificate of Title No. RT-
115027 (252708) (TCT No. RT-115027).
In a letter dated 4 November 1997, Oriel submitted to the trial court another Report, dated 24 October
1997 (Second Report), also signed by Bustos. Oriel informed the trial court that the First Report was fake.
The Second Report, which recommended that the trial court set aside the 28 October 1996 Order, reads:

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REPORT

COMES NOW the Land Registration Authority, and to the Honorable Court respectfully
reports that:

(1) The above-entitled case appears to seek the reconstitution of Transfer

Certificate of Title No. 252708 allegedly lost or destroyed and supposedly covering Lot 1,
Pcn-04-000007, situated at Quezon City, as indicated in the copy of the Notice of
Hearing dated May 30, 1996, submitted to this Authority. Attached also to our records of
this case is a xerox copy of the purported Transfer Certificate of Title No. 252708
covering Lot 1, Pcn-04-000007 in the name of Marina Sanchez, not certified by the Clerk
of Court, as required under LRC Circular 35, Series of 1983.

(2) In the 1st Indorsement dated October 21, 1997 of Engr. Alberto H. Lingayo,
Acting Chief, Ordinary and Cadastral Decree Division, this Authority, xerox copy attached
as Annex A, the following information are stated relative to the above-entitled petition and
its enclosures[] to wit:

1. On or about October 1, 1997, a certain Marvin Bautista came to this

office to inquire about the above petition, showing a copy of the
reconstituted title No. RT-115027 (252708) and a copy of a report
purportedly issued by this Authority, xerox copies attached as Annexes B
& C;

2. We checked our records and found out that on August 6, 1996, we

sent a letter to the Clerk of Court requiring petitioner to submit to this
Authority, certain documents, however, petitioner has not yet complied
as of this date, hence, we could not have rendered a report, xerox
copy attached as Annex D;

3. On October 2, 1997, we secured from the RTC Branch 225,

Quezon City, certified copies of pertinent documents relative to the
above-petition and found out that there is indeed a copy of a fake
LRA Report, copies attached hereto;

4. Initial verification of the purported TCT No. 252708 reveals that

the same is a questionable title, because, among other reasons, the
Serial No. 3002163 appearing on the face of the certificate pertains
to x x x judicial forms issued to the Registry of Deeds of Manila on
January 13, 1976, as per records on file at the Property Section, this

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Authority; and it overlaps properties covered by TCT Nos. 187042

and 187040 when plotted on our Municipal Index Map.

5. It is suggested that this case be referred to proper authorities for

investigation and prosecution of the perpetrators, and that the order of
reconstitution rendered by the court be recommended vacated or set
aside because it was obtained through fraud and forgery.

WHEREFORE, the foregoing observation anent the lot in question is respectfully

submitted for the information and guidance of the Honorable Court, with the
recommendation that the order of reconstitution rendered relative to the purported
Transfer Certificate of Title No. 252708 be ordered vacated or set aside and the
corresponding title that was issued be declared null and void.

That the person[] or persons responsible for the reconstitution of this questionable title be
investigated and if evidence warrants be charged or prosecuted in Court.

Quezon City, Philippines, October 24, 1997.

REYNALDO Y. MAULIT

Administrator

By:

[Sgd.]

BENJAMIN M. BUSTOS

Reconstituting Officer and

Chief, Reconstitution Division[9]

On 24 March 1998, petitioner filed a Manifestation and Motion to set aside the 28 October
1996 Order. Petitioner contended that considering the Second Report, respondents petition should be
considered as having been filed under Section 3(f) [10] of RA 26, that is, based on any other
document. Petitioner pointed out that under Section 13[11] in relation to Section 12[12] of RA 26, the notice
of a petition for reconstitution of lost or destroyed titles based on Section 3(f) should not only be published

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and posted but also served on, among others, the owners of the adjoining properties. For non-compliance
with this requirement, the trial court did not acquire jurisdiction over LRC Case No. Q-96-8296.

Respondents opposed petitioners motion, primarily on the ground that the 28 October
1996 Order had become final.

The heirs of Mario Uy (Heirs), whose predecessor-in-interest allegedly owned Lot No. 12 covered by
Transfer Certificate of Title No. 187042, filed an amicus curiae brief disclosing that they have caused the
filing of criminal complaints against respondents for Falsification of TCT No. 252708 (Criminal Case No.
77668) and Use of Falsified Public Document (Criminal Case No. 90649).[13] Mario Uy and Maria Corazon
Uy-Zalamea (Zalamea), the latter being the alleged owner of Lot No. 13 covered by TCT No. 187042, had
earlier sued respondents in the Regional Trial Court, Quezon City, Branch 227 (Civil Case No. Q-96-
29545) for quieting of title, nullity of [TCT No. 252708], recovery of possession and damages. [14]

In its Order of 17 July 1998 (17 July 1998 Resolution), the trial court set aside the 28 October
1996 Order and dismissed LRC Case No. Q-96-8296. The trial court held:
Records reveal, x x x, that TCT No. 25[2]708, the title to be reconstituted, overlaps TCT
Nos. 187040 and 187042. Petitioners design of having their title reconstituted,
notwithstanding the fact that the same is covered in two other titles, eludes the
comprehension of this Court.

xxxx

The unscrupulous manner by which the petitioners misled the Court is glaring in two (2)
instances, to wit: 1) the petition unceremoniously omitted the names of the registered
owners of TCTNos. 187040 and 187042; and 2) the spurious LRA Report submitted by
the petitioners.

This Court is of the view that the failure to notify the registered owners of TCT Nos.
187040 and 187042 of the Reconstitution proceeding proved to be a mistake.

Section 13, Republic Act No. 26 x x x provides that x x x x The Court shall likewise cause
a copy of the notice to be sent, by registered mail or otherwise, at the expense of the
petitioner, to every person named therein whose address is known, at least thirty days
prior to the date of the hearing. Said notice shall state among other things, the number of
the lost or destroyed certificate[] of title[,] if known, the name of the registered owner, the
name[s] of the occupants or persons in possession of the property, the owner[s] of the
adjoining properties and all other interested parties, the location, area and boundaries of
the property, and the date on which all persons having any interest therein, must appear

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and file their claim o[r] objection to the petition. The petitioner shall, at the hearing,
submit proof of the publication, posting and service of the notice as directed by the court.

Petitioners failure to comply with this provision is a fatal defect for the same is mandatory
and jurisdictional (Ortigas and Company Limited Partnership vs. Velasco, 234 SCRA
435).

When this Court issued the questioned order dated October 28, 1996, it was under the
impression that there was no legal impediment for the reconstitution of TCT No.
252708. Had it been apprised at that time that the LRA report submitted by the petitioner
was spurious then it would not have issued the same.[15] (Italicization in the original)

Respondents sought reconsideration but the trial court denied their motion on 4 January
1999.

Respondents filed a petition for certiorari in the Court of Appeals. The appellate court initially dismissed
the petition for respondents failure to submit a certified true copy orduplicate original of the trial courts 17
July 1998 and 4 January 1999 Resolutions. However, on respondents motion, the Court of Appeals,
without giving due course to the petition, required petitioner and respondents to file Comment and Reply,
respectively.

The Ruling of the Court of Appeals

In its Decision of 31 August 2000, the Court of Appeals granted respondents petition, set aside the
trial courts 17 July 1998 and 4 January 1999 Resolutions, and reinstated the 28 October
1996 Order. The appellate court held:

The motion to set aside the [28 October 1996 Order] contemplates a petition for relief
from a final order entered against a party in any court through fraud, accident, mistake, or
excusable negligence under Rule 38 of the 1997 Rules of Civil Procedure, which must be
filed within sixty (60) days after the petitioner learns of the final order, and not more than
six (6) months after such final order was entered, and must be accompanied with
affidavits showing the fraud, accident, mistake, or excusable negligence relied upon, and
the facts constituting the petitioners good and substantial cause of action or defense, as
the case may be.

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xxxx

As mentioned previously, the LRA, represented by the OSG, contends that notice of the
petition should have been served on adjoining landowners as one of the jurisdictional
requirements, since the Authentic LRA Report of 24 October 1997 found petitioners title
to be a fake title. However, a mere LRA Report cannot declare a certificate of title
spurious without the proper court declaring its nullity and cancellation. A certificate of title
cannot be subject to collateral attack and can be altered, modified or cancelled only in a
direct proceeding in accordance with law.Incidentally, private respondents filed an action
for quieting of title, nullity of title (viz., TCT No. 252708), recovery of possession and
damages against petitioners, which is still pending before Branch 227, Regional Trial
Court of Quezon City. Until the trial court declares TCT No. 252708 to be void and orders
its cancellation, [w]e cannot but recognize the validity of the same.Granting that a
suspicion or cloud of doubt was cast on the genuineness and authenticity of petitioners
certificate of title, the same was brought to the fore belatedly. A Certificate of Finality had
already been issued on 06 January 1997. Presumably, the proper parties received a
copy of the Order dated 28 October 1996 on or before 21 December 1996. Entry of
Judgment having been made on 06 January 1997, a petition for relief from judgment
should have been filed on or before 05 July 1997. The Manifestation and Motion was
only filed on 24 March 1998, long after the order of reconstitution had become final and a
reconstituted title actually issued petitioners. There having been no sufficient evidence to
discredit petitioners duplicate of the certificate of title within the time to appeal, move for
new trial or file a petition for relief, there is no need to serve notice of the petition on the
adjoining landowners under Section 13 of RA No. 26. Said section applies only when the
source of reconstitution is other than the owners duplicate of the certificate of title. x x x
x Thus, at the time the Order of 28 October 1996 was rendered, respondent court was
properly clothed with jurisdiction. After said order became final, and the petition for relief
having been foreclosed against aggrieved parties, respondent judge was without
jurisdiction to entertain the attack against the order of reconstitution. x x x x

Moreover, it must be remembered that the fallo of the Decision dated 28 October
1996 contains a caveat, i.e., provided, however, that no certificate of title covering the
same parcel of land exists in the office of the Register of Deeds. The reconstituted title
issued petitioners militates against any doubt or suspicion cast on their title. The
Registrar of Deeds concerned would not have issued a reconstituted title had the land
covered by TCT No. 252708 already been covered by another certificate of title. Thus,
[w]e reiterate, until Branch 227, Regional Trial Court of Quezon City declares TCT No.
252708 to be void and orders its cancellation, [w]e cannot but recognize the validity of
the same.

The allegation of fraud requires a higher burden of persuasion, but this Court maintains
that the reconstitution proceeding, which has now become final, is not the proper forum
to thresh out the same. It is a fundamental rule that when a final judgment becomes
executory, it thereby becomes immutable and unalterable and any amendment or

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alteration which substantially affects a final and executory judgment is null and void for
lack of jurisdiction, including the entire proceedings held for that purpose. Thus, it is as if
no Manifestation and Motion was filed and no suspicion or cloud of doubt was cast on the
genuineness and authenticity of petitioners certificate of title by the presentation of the
LRA Report of 24 October 1997.[16]

Petitioner sought reconsideration but the appellate court denied its motion in the Resolution of 17
November 2000.

Hence, this petition. Petitioner reiterates its claim that the trial court did not acquire jurisdiction over LRC
Case No. Q-96-8296 for lack of actual notice to all interested parties as required under Section 13 in
relation to Section 12 of RA 26.

In their Comment, respondents countered that the actual notice requirement in Section 13 does not apply
to LRC Case No. Q-96-8296 because that case was based on Marinas duplicate copy of TCT No.
252708. At any rate, respondents contended that it is the posting and publication of the notice of hearing,
not its actual service, which vests jurisdiction to the trial court, citing our ruling in Calalang v. Register of
Deeds of Quezon City.[17] Lastly, respondents maintained that the 28 October 1996 Order is already final
and can no longer be set aside.

The Issue

The question is whether the trial court acquired jurisdiction over LRC Case No. Q-96-8296.

The Ruling of the Court

We hold in the negative and accordingly grant the petition.

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The Actual Notice Requirement under Section 13 in Relation

to Section 12 of RA 26 Applies Here

Respondents are correct in saying that the service of notice of the petition for reconstitution filed under
RA 26 to the occupants of the property, owners of the adjoining properties, and all persons who may have
any interest in the property is not required if the petition is based on the owners duplicate certificate of title
or on that of the co-owners, mortgagees, or lessees. This was our ruling in Puzon v. Sta Lucia Realty
and Development, Inc.,[18] involving a petition filed with the Regional Trial Court of Quezon City, Branch
80, (Branch 80) for reconstitution of the original of two Torrens certificates of title based on
Puzons duplicate certificates of title. We held in that case:

[T]he first sentence of Section 13 provides that the requirements therein pertain only to
petitions for reconstitution filed under the preceding section, Section 12, which in turn
governs those petitions based on specified sources. We quote Section 12 below:

SEC. 12. Petition for reconstitution from sources enumerated in

Section 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f) of this Act, shall
be filed with the proper Court of First Instance, by the registered owner,
his assigns, or any person having an interest in the property. The petition
shall state or contain, among other things, the following: x x x (e) the
name and addresses of the occupants or persons in possession of the
property, of the owners of the adjoining properties and of all persons who
may have interest in the property; x x x x All the documents, or
authenticated copies thereof, to be introduced in evidence in support to
the petition for reconstitution shall be attached thereto and filed with the
same: Provided, That in case the reconstitution is to be made exclusively
from sources enumerated in Section 2(f) or 3(f) of this Act, the petition
shall be further accompanied with a plan and technical description of the
property duly approved by the Commissioner of Land Registration, or
with a certified copy of the description taken from a prior certificate of title
covering the same property.

In other words, the requirements under Sections 12 and 13 do not apply to all petitions for
judicial reconstitution, but only to those based on any of the sources specified in Section
12, that is, sources enumerated in Section 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f)
of this Act.

Sections 2 and 3 of RA 26 provide as follows:

SEC. 2. Original certificates of title shall be reconstituted from

such of the sources hereunder enumerated as may be available, in the
following order:

(a) The owners duplicate of the certificate of title;

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(b) The co-owners, mortgagees, or lessees duplicate of the certificate of

title;

(c) A certified copy of the certificate of title, previously issued by the

register of deeds or by a legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the

case may be, pursuant to which the original certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property,

the description of which is given in said document, is mortgaged, leased
or encumbered, or an authenticated copy of said document showing that
its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient
and proper basis for reconstituting the lost or destroyed certificate of title.

SEC. 3. Transfer certificates of title shall be reconstituted from

such of the sources hereunder enumerated as may be available, in the
following order:

(a) The owners duplicate of the certificate of title;

(b) The co-owners, mortgagees or lessees duplicate of the certificate of

title;

(c) A certified copy of the certificate of title, previously issued by the

register of deeds or by a legal custodian thereof;

(d) The deed of transfer or other document on file in the registry of

deeds, containing the description of the property, or an authenticated
copy thereof, showing that its original had been registered, and pursuant
to which the lost or destroyed transfer certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property the
description of which is given in said documents, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its
original had been registered; and

(f) Any other document[] which, in the judgment of the court, is sufficient
and proper basis for reconstituting the lost or destroyed certificate of title.
xxx

In the present case, the source of the Petition for the reconstitution of title was petitioners
duplicate copies of the two TCTs mentioned in Section 3(a). Clearly, the Petition is
governed, not by Sections 12 and 13, but by Section 10 of RA 26. We quote said Section
10 in full:

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SEC. 10. Nothing hereinabove provided shall prevent any

registered owner or person in interest from filing the petition mentioned in
Section Five of this Act directly with the proper Court of First
Instance, based on sources enumerated in Section 2(a), 2(b), 3(a), 3(b),
and/or 4(a) of this Act: Provided, however, That the Court shall cause a
notice of the petition, before hearing and granting the same, to be
published in the manner stated in Section Nine hereof: And provided,
further, That certificates of title reconstituted pursuant to this section shall
not be subject to the encumbrance referred to in Section Seven of this
Act.

Nothing in this provision requires that notices be sent to owners of adjoining lots.
Verily, that requirement is found in Section 13, which does not apply to petitions based on
an existing owners duplicate TCT.

Put differently, Sections 9 and 10 of RA 26 require that 30 days before the date of
hearing, (1) a notice be published in two successive issues of the Official Gazette at the
expense of the petitioner, and (2) such notice be posted at the main entrances of the
provincial building and of the municipal hall where the property is located. The notice
shall state the following: (1) the number of the certificate of title, (2) the name of the
registered owner, (3) the names of the interested parties appearing in the reconstituted
certificate of title, (4) the location of the property, and (5) the date on which all persons
having an interest in the property, must appear and file such claims as they may have.

For petitions based on sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d),
3(e) and 3(f), Section 13 adds another requirement: that the notice be mailed to
occupants, owners of adjoining lots, and all other persons who may have an interest in the
property. To repeat, mailing the notice is not required for a petition based on Sections
2(a), 2(b), 3(a), 3(b) and 4(a), as in the present case.

xxxx

[T]here is no question that in [petitions for] reconstitution involving Sections 12

and 13 of RA 26], notices to adjoining owners and to the actual occupants of the
land are mandatory and jurisdictional. But in petitions for reconstitution falling under
Sections 9 and 10 of RA 26 where, as in the present case, the source is the owners
duplicate copy, notices to adjoining owners and to actual occupants of the land are not
required. When the law is clear, the mandate of the courts is simply to apply it, not to
interpret or to speculate on it.

In sum, RA 26 separates petitions for reconstitution of lost or destroyed certificates of title

into two main groups with two different requirements and procedures. Sources
enumerated in Sections 2(a), 2(b), 3(a), 3(b), and 4(a) of RA 26 are lumped under one
group (Group A); and sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d),
3(e), and 3(f) are placed together under another group (Group B). For Group A, the
requirements for judicial reconstitution are set forth in Section 10 in relation to Section 9 of
RA 26; while for Group B, the requirements are in Sections 12 and 13 of the same
law.[19] (Italicization in the original; boldfacing supplied)

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However, contrary to respondents claim, Puzon finds no application here. No report from a pertinent
government agency challenging the authenticity of Puzons duplicate certificates of title was presented
in Puzon. Thus, when Branch 80 granted reconstitution, Puzons duplicate transfer certificates of title
remained unchallenged.[20]

In contrast, the trial court in the present case was misled into treating LRC Case No. Q-96-8296 as
having been filed under Section 3(a) based on Marinas purported duplicate title. Thus, the trial court
followed Section 10[21] in connection with Section 9[22] of RA 26 to publicize LRC Case No. Q-96-8296.
Relying on the First Reports finding that TCT No. 252708 do[es] not appear to overlap previously
plotted/decreed properties in the area, the trial court granted reconstitution. However, petitioner later
informed the trial court of the First Reports spuriousness, the serious doubts on TCT No. 252708s
authenticity, and the existence of two other titles that overlapped Lot No. 1. After hearing the parties, the
trial court dismissed LRC Case No. Q-96-8296 for lack of jurisdiction as all interested parties were not
actually notified of the petition as required under Section 13 in relation to Section 12 of RA 26.

We hold that the trial court did not commit grave abuse of discretion.

We were faced with substantially the same situation in Director of Lands v. Court
of Appeals.[23] In that case, the petition for reconstitution, as in the present case, was filed under Section
3(a) of RA 26 based on an alleged owners duplicate certificate of title. However, the Director of Lands, in
an adverse Report, challenged the authenticity of the purported duplicate certificate of title. The trial court
denied reconstitution but the Court of Appeals reversed the trial courts ruling. Upon further review, we
reversed the Court of Appeals and dismissed the reconstitution petition. We held that with the Director of
Lands Report, the petition for reconstitution falls squarely under Section 3(f) of RA 26, thus:

In the instant case, the change in the number of the certificate of title sought to be
reconstituted from T-12/79 to TCT No. 42449 rendered at once the authenticity or
genuineness of respondents certificate of title under suspicion or cloud of doubt. And
since respondent alleges that the technical descriptions under both certificates of title are
identical and the same, x x x, We hold that the instant petition for judicial
reconstitution falls squarely under Section 3(f), Republic Act No. 26, because the
Director of Lands claims that the respondent's duplicate of the Certificate of Title
No. T-12/79 or TCT No. 42449 are [sic] both fake and fictitious.[24] (Emphasis supplied)

Consequently, we applied Sections 12 and 13 of RA 26 and held that for non-compliance with these
provisions, the trial court did not acquire jurisdiction over the petition for reconstitution.

Contrary to the Court of Appeals finding, the Second Report is not a collateral attack on TCT No. 252708.
Circular No. 35 requires the submission of an LRA Report in all proceedings to judicially reconstitute lost
or destroyed Torrens certificates of title.[25] Indeed, to x x x prevent duplication of titles, x x x and [the]
irregular reconstitution of lost or destroyed land certificates of title based on unauthorized sources, this

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Court issued Administrative Circular No. 7-96 (Circular 7-96) on 15 July 1996 reminding trial court judges
and clerks of courts under pain of disciplinary sanctions, x x x to comply strictly with, among others,
Circular No. 35. Trial courts hearing reconstitution petitions under RA 26 are thus duty-bound to take into
account the LRAs Report. When the trial court considered the authentic Second Report in issuing the 17
July 1998 Resolution, it merely complied with Circular 7-96.

True, petitioner submitted the Second Report after the period to appeal, or seek relief against, the 28
October 1996 Order had lapsed. However, this is no bar for the trial court to consider the Second
Report. Petitioner was not at fault when it did not submit its Report before the trial court resolved
LRC Case No. Q-96-8296. Petitioner explained that respondents failed to submit the documents
petitioner had requested in its letter of 6 August 1996. But more than this, courts have inherent power to

correct fatal infirmities in its proceedings,[26] especially if, as here, the flaw was intentionally brought about
by a party who employed deceit in misleading the trial court. To hold otherwise would render courts
helpless in maintaining the integrity of its proceedings and correspondingly embolden parties to make a
mockery of judicial rules. The trial court merely exercised such inherent power in the higher interest of
justice.[27]

The issuance by the Register of Deeds of Quezon City of TCT No. RT-115027 does not erase the doubts
the Second Report raises on the authenticity of TCT No. 252708. Nor does it negate the existence of TCT
Nos. 187040 and 187042. Paragraph 12 of Circular No. 35 requires that the Register of Deeds shall
submit written findings on the status of the title sought to be reconstituted. [28] No such written findings
exist in the records of this case. What respondents submitted was a Certification dated 14 December
1994 that the original of TCT No. 252708 was among those destroyed in the 1988 fire. This falls short of
what paragraph 12 of Circular 35 requires.

Consequently, it is Section 13 in relation to Section 12 of RA 26 which applies to LRC Case No. Q-96-
8296. Hence, in addition to its posting and publication, the notice of hearing of LRC Case No. Q-96-8296
should also have been served through mail on the owners of the adjoining properties and all persons who
may have any interest in the property.[29] The records show that neither Lot No. 1s adjoining owners [30] nor
the other interested parties, namely, Mario Uy and Maria Corazon Uy-Zalamea (Uy

and Zalamea), in whose names TCT Nos. 187042 and 187040 were issued, were notified of respondents
petition in LRC Case No. Q-96-8296.[31]

The Actual Notice Requirement in Section 13 in

Relation to Section 12, RA 26 is Jurisdictional

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That the requirement of actual notice in Section 13 in relation to Section 12 of RA 26 is jurisdictional was
settled in Director of Lands v. Court of Appeals where we held:

To ascertain whether a court has jurisdiction or not, the provisions of the law should be
inquired into (Auyong vs. Hon. Court of Tax Appeals, L-25181, Jan. 11, 1967, 19 SCRA
10). In all cases where the authority of the courts to proceed is conferred by a statute and
when the manner of obtaining jurisdiction is mandatory and must strictly be complied with,
or the proceedings will be utterly void (Caltex, et al. vs. CIR, et al., L-28472, April 30,
1968, 23 SCRA 492). So that where there is defect of publication of petition, such defect
deprives the court of jurisdiction (Po vs. Republic, L-27443, July 19, 1971, 40 SCRA 37).
And when the court a quo lacks jurisdiction to take cognizance of a case, the same lacks
authority over the whole case and all its aspects (Development Bank of the Phils.
Employees Union vs. Juan Perez, L-22584 and L-23083, May 30, 1972, 45 SCRA 179,
187). Further, absent jurisdiction the court cannot pass upon the merits of the petition
(Pinza vs. Aldovino, 25 SCRA 220, 224).

In the case at bar, the jurisdiction or authority of the Court of First Instance is conferred
upon it by Republic Act 26 entitled An Act providing a special procedure for the
reconstitution of Torrens Certificates of Title lost or destroyed, approved on September
25, 1946. The Act specifically provides the special requirements and mode of procedure
that must be followed before the court can act on the petition and grant to the petitioner
the remedy sought for. These requirements and procedure are mandatory. The
petition for reconstitution must allege the jurisdictional facts; the notice of hearing
must also be published and posted in particular places and the same sent to
specified persons. Specifically, the requirements and procedure are set forth in detail
under Sections 12 and 13 of the Act [.] x x x x[32] (Emphasis supplied)

On the particular requirement of service of notice to all interested parties, we held in the earlier case
of Manila Railroad Company v. Moya:

It is clear from section 13 of Republic Act No. 26 that notice by publication is not sufficient
under the circumstances. Notice must be actually sent or delivered to parties affected
by the petition for reconstitution. The order of reconstitution, therefore, having been
issued without compliance with the said requirement, has never become final as it
was null and void. The Manila Railroad cannot then complain that the motion to set aside
was filed beyond the reglementary period.[33] (Emphasis supplied)

We have since reiterated this ruling in Ortigas & Company Limited Partnership v.
Velasco[34] and Puzon.

Respondents erroneously invoke Calalang as authority for their claim that it is only the publication and
posting of the notice of hearing which are mandatory. The question of whether the actual notice
requirement in Section 13 in relation to Section 12 of RA 26 is mandatory and jurisdictional was not the
main issue in that case it was whether the petitioners were bound by our ruling in De la Cruz v. De la
Cruz,[35] affirming the validity of a Torrens certificate of title issued to one who had obtained the property
covered by the title through a conveyance duly recorded in the Register of Deeds of Quezon City and

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who had the title subsequently reconstituted. We answered in the affirmative and dismissed the petitions
principally on the ground of res judicata.[36] Notably, we found in Calalang that the predecessor-in-interest
of the petitioners did not own the disputed property, thus the latter could not claim any better right than
the former.

For non-compliance with the actual notice requirement in Section 13 in relation to Section 12 of RA 26,
the trial court did not acquire jurisdiction over LRC Case No. Q-96-8296. The proceedings in that case
were thus a nullity and the 28 October 1996 Order was void.

Void Rulings Subject to Challenge at any Time

In MWSS v. Sison, also involving a motion to set aside a final reconstitution order for non-compliance
with Section 13 of RA 26, we laid down the attributes of a void judgment or ruling:

x x x a void judgment is not entitled to the respect accorded to a valid judgment, but may
be entirely disregarded or declared inoperative by any tribunal in which effect is sought to
be given to it. It is attended by none of the consequences of a valid adjudication. It has no
legal or binding effect or efficacy for any purpose or at any place. It cannot affect, impair
or create rights. It is not entitled to enforcement and is, ordinarily, no protection to those
who seek to enforce. All proceedings founded on the void judgment are themselves
regarded as invalid. In other words, a void judgment is regarded as a nullity, and the
situation is the same as it would be if there were no judgment. It, accordingly, leaves the
parties litigants in the same position they were in before the trial.[37]

Guided by this rule, we had set aside so-called final reconstitution Orders for being void for non-
compliance with Section 13 of RA 26 where the Orders were challenged either through a motion filed in
the trial court issuing the reconstitution order[38] or through a petition under Rule 47 of the Rules of Court
filed with the Court of Appeals.[39] Here, petitioner availed of the former remedy.[40]

However, a modification in the disposition of LRC Case No. Q-96-8296 is in order. In its 17 July 1998
Resolution, the trial court set aside the 28 October 1996 and dismissed LRC Case No. Q-96-8296. At that
time, however, the Register of Deeds, Quezon City had already issued reconstituted TCT No. RT-
115027. That title must similarly be set aside, emanating as it did from a void ruling.

A Final Word

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Reconstitution proceedings under RA 26 has for their purpose the restoration in the original form and
condition of a lost or destroyed instrument attesting the title of a person to a piece of land. [41] Thus,
reconstitution must be granted only upon clear proof that the title sought to be restored was indeed issued
to the petitioner. Strict observance of this rule is vital to prevent parties from exploiting reconstitution
proceedings as a quick but illegal way to obtain Torrens certificates of titles over parcels of land which
turn out to be already covered by existing titles.[42] The social and economic costs of such modus
operandi cannot be underestimated.[43] As we observed in Director of Lands v. Court of Appeals:

The efficacy and integrity of the Torrens System must be protected and
preserved to ensure the stability and security of land titles for otherwise land ownership in
the country would be rendered erratic and restless and can certainly be a potent and
veritable cause of social unrest and agrarian agitation. x x x x The real purpose of the
Torrens System which is to quiet title to the land must be upheld and defended, and 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.[44]

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 31 August 2000 and
the Resolution dated 17 November 2000 of the Court of Appeals. We ENTER a new judgment declaring
the reconstitution proceedings in LRC Case No. Q-96-8296 VOID for lack of jurisdiction. Accordingly, we
declare VOID the Order dated 28 October 1996 of the Regional Trial Court of Quezon City, Branch 225
and the reconstituted Transfer Certificate of Title No. RT-115027 (252708). We direct the Register of
Deeds of Quezon City to CANCEL Transfer Certificate of Title No. RT-115027 (252708).

Let a copy of this ruling be served on the Register of Deeds, Quezon City.

SO ORDERED.

Heirs of Venturanza v. Republic, G.R. No. 149122, July 27, 2007

DECISION

GARCIA, J.:

By this petition for review under Rule 45 of the Rules of Court, petitioners seek the reversal of the
decision[1] dated January 31, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 38630, as reiterated
in its resolution of March 22, 2001, denying the petitioners motion for reconsideration. The assailed CA
decision affirmed [and dismissed the appeal taken by the petitioners from] an earlier decision of the
Regional Trial Court (RTC) of Iriga City, Branch 37, which ordered the cancellation of petitioners Transfer
Certificate of Title (TCT) No. 2574 and the reversion of the land covered thereby to the mass of the public
domain, in a suit thereat commenced for the purpose by respondent Republic of the Philippines, originally

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against the spouses Gregorio Venturanza and Mary Edwards-Venturanza, predecessors-in-interest of the
herein petitioners.
The petition traces its beginning from a complaint filed by the Republic of the Philippines, through the
Office of the Solicitor General (OSG), in the RTC of Iriga City, thereat docketed as Civil Case No. IR-122
and raffled to Branch 37 thereof, against the Venturanza couple for the cancellation of their TCT No.
2574, covering a vast track of land with a combined area of 23,944, 635 square meters located at Buhi,
Camarines Sur.

Reviewed, the records unfold the following facts and antecedents:

The title in question TCT No. 2574 of the Registry of Deeds of Camarines Sur was issued sometime in
1959 in the name of Gregorio Venturanza, married to Mary Edwards-Venturanza. The memorandum of
registration shows that TCT No. 2574 was derived from TCT No. RT-40 (140),
which is a reconstituted title issued to one Florencio Mora who sold the property therein described to
Gregorio Venturanza in 1956 for P107,730.00. The same memorandum of registration, however, does not
show when the land covered by TCT No. 2574 was originally registered and the other data were merely
noted as (NA).

In 1964, GregorioVenturanza and the then Abaca Development Board entered into an agreement for
purchase and sale of the property covered by TCT No. 2574, whereby the former agreed to convey the
property to the latter, subject to the approval of the document of sale by the concerned government office.
The final sale, however, did not materialize.

Meanwhile, it appears that in the course of the parties negotiation for the sale of the property covered by
the title in question, the governments negotiation committee assigned a deputy clerk of the Land
Registration Commission (LRC) to verify the true copies of TCT No. 2574 in the name of Gregorio
Venturanza.

Per verification, it was found out that Venturanzas TCT No. 2574, was derived from TCT No. RT-40 (140)
in the name of one Florencio Mora (Mora) which covers Lots 1, 2 and 3 of Plan RS-383-D containing a
combined area of 23,944,635 square meters or 2,394 hectares, situated in the municipality of Buhi,
Camarines Sur.

In turn, TCT No. RT-40 (140) appears to have been reconstituted from TCT No. 140 which was issued to
one Sebastian Moll on June 7, 1928.

TCT No. 140, on the other hand, appears to be a transfer from Land Registration Case (LRC) No. 3480
issued to one Casimiro Natividad.

Upon further investigation, it was discovered that the land subject of LRC No. 3480, originally registered
on July 28, 1911, covered a parcel of land consisting of only 451 square meters and situated in Tigaon,
Camarines Sur.
In the report submitted by the LRC deputy clerk, the latter made a finding that the Venturanzas TCT No.
2574, a direct transfer from TCT No. RT-40 (140) which was, in turn, derived from TCT No. 140, covers
only a parcel of land with an area of 451 square meters and not 23,944,635 square meters or 2,394
hectares which practically comprise the entire Municipality of Buhi.

Such was the state of things when, sometime in 1965, in the then Court of First Instance (now RTC) of
Camarines Sur, the Republic of the Philippines, through the OSG, filed a complaint for the Cancellation of
Transfer Certificate of Title No. 2574 and the Reversion of the Land Described Therein to the Republic of

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the Philippines. Thereat originally docketed as Civil Case No. 5973, the complaint eventually became
Civil Case No. IR-122 which was raffled to Branch 37 of the court.
On April 8, 1992, the trial court came out with its decision[2] ordering the annulment and cancellation of
the Venturanzas TCT No. 2574 and the reversion of the land covered thereby to the mass of the public
domain. Dispositively, the decision reads:

WHEREFORE, premises considered, judgment is rendered in favor of the

Republic of the Philippines and against the defendants ordering the annulment of TCT
No. 2574 in the name of Gregorio Venturanza, ordering the Register of Deeds of
Camarines Sur to cancel said title, and reverting the land covered by the questioned title,
except that which may have already been alienated by the proper authorities and lawfully
passed to private ownership, to the public domain of the Republic of the Philippines, with
costs against the defendants.

SO ORDERED.

In resolving the suit in favor of the Republic, the trial court principally anchored its judgment on the ground
that the reconstituted title issued in the name of Florencio Mora could have been fraudulently secured,
hence, does not legally exist. The court further ruled that since the reconstituted title issued to Florencio
Mora is a nullity, then the order for its reconstitution did not attain finality and therefore may be attacked
anytime.

Therefrom, the Venturanzas went on appeal to the CA in CA-G.R. CV No. 38630, arguing that Moras
reconstituted title from where their TCT No. 2574 was derived is already indefeasible on the ground that
upon the lapse of one (1) year, the decision granting reconstitution of Moras title becomes final. The
Venturanzas also claimed that they are protected by law as buyers in good faith. Lastly, they argued that
the Republics action for the cancellation of TCT No. 2574 and the reversion of the land described therein
to the mass of public domain was already barred by the decision of the CA in CA-G.R. No. 20681-R,
entitled, Florencio Mora v. Venancio Infante, et al., which granted the petition for reconstitution of Moras
TCT No. RT-40 (140).

In the herein assailed decision dated January 31, 2001, the CA affirmed that of the trial court. With their
motion for reconsideration having been denied by the CA in its resolution [3] of May 22, 2001, petitioners
as successors-in-interest of the spouses Venturanza are now with this Court via the present recourse
raising the same issues already passed upon by the appellate court.

We DENY.

Petitioners maintain that under Section 112 of Act No. 496 (Land Registration Act), Moras reconstituted
TCT No. RT-40 (140) is already indefeasible the same having attained finality one (1) year after the CA
granted its reconstitution in CA-G.R. No. 20681-R. Citing the second paragraph of Section 31 of P.D. No.
1529[4] which reads:

The decree of registration shall bind the land and quiet title thereto, subject only to such
exceptions or liens as may be provided by law. It shall be conclusive upon and against all
persons, including the National Government and all branches thereof, whether mentioned
by name in the application or notice, the same being included in the general description
to all whom it may concern,

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petitioners contend that the two courts below were without authority to annul TCT No. 2574 issued in the
name of Gregorio Venturanza.

Petitioners are wrong. Clearly, the provisions relied upon refer to original decrees of registration and not
to orders of reconstitution. As it is, petitioners cannot even seek refuge in the Land Registration Act
because the land covered by TCT No. 2574 had never been brought within the operation of said law. As
correctly pointed out by the CA to which we are in full accord:

xxx the Land Registration Act is not applicable considering that the land covered by TCT
No. 2574 had never been within the operation of the Land Registration Act because of
the irregularities attending the issuance of the reconstituted title. As found by the trial
court:

TCT No. RT-40 (140) supposedly reconstituted from TCT no. 140 in the
name of Florencio Mora consists of 2,394 hectares supposedly situated
in Buhi, Camarines Sur. It appears from the survey plan that the land
was surveyed only in 11 days, which according to Engr. Antonio
Rodriguez was quite impossible considering the rugged terrain and the
mountainous features of the area. Moreover, it covers timberland.

Significantly, from the exhibits presented by the plaintiff it can be seen

that the resurvey plan (Exh. A) shows that the survey of Lot Nos. 1, 2
and 3 was based on TCT No. 140 and it covered an area of 23,944,635
square meters and appeared to have been surveyed on January 20, to
January 31, 1953 or a period of 11 days. Exh. B shows that the area
supposedly covered by TCT 2574 is within the timberland, Project 12,
Block B, L.C. 646 and Project 19, Block ALC 761, Exh. C, the official
map of Legaspi City shows that the land covered by TCT 140, which was
issued on the basis of the resurvey (Exh. A) is a land situated in Tigaon,
Camarines Sur, while the land covered by TCT No. 40 (140) is a vast
tract of land in Buhi, Camarines Sur; that it further appears that the lots
covered by TCT No. 40 (140) were supposedly registered in GRLO Sp.
Proceedings No. 112 with an area of 23,944,635 square meters but
records of the LRC revealed that GRLO records No. 112 refers to a land
registration case in Iloilo, and not in Camarines Sur. Exh D also shows
that Mr. Florencio Mora had never applied for original registration of title
covering a land in the municipality of Buhi, Camarines Sur, and that plan
RS-383-D (without the suffix capital letter D) involving Lots 1 and 2
situated in the Municipality of Calawag, Quezon, was the subject of Land
Registration Case No. 322, GRLO Record No. 13804 with Maximina
Zepeda as applicant.

The stench of anomaly became at once pervading when we consider the

evidence submitted by the plaintiff. The land practically covers
the Municipality of Buhi and are being claimed and possessed by
claimants, who appeared as intervenors in this case. The Venturanzas
never materially and physically occupied the property because there are

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actual occupants and possessors. The Venturanzas only asserted

ownership over the property in papers but not in physical possession.[5]

As a necessary consequence, no court could have ever acquired jurisdiction to order the reconstitution of
Moras TCT No. RT-40 (140) over the land which has never been originally registered. As aptly pointed
out by the trial court:

The evidence shows that TCT No. 2574, the title in question,
derived its existence from RT-40 (140) in the name of Florencio Mora
which was a reconstituted title based on TCT No. 140 allegedly obtained
by Florencio Mora during the Japanese occupation. The records of the
Register of Deeds of Camarines Sur, however, do not show how the land
covered by TCT No. 140 supposedly in the name of Florencio Mora was
registered. Neither is there a decree number, when said decree was
entered, the OCT number or LRC Record Number. [6]

Corollarily, petitioners argument that the Republics action for the cancellation of TCT No. 2574 and the
reversion of the land covered thereby to the State is barred by the decision of the CA in CA-G.R. No.
20681-R has no leg to stand on.

Aside from the fact that no court could have ever acquired jurisdiction to order the reconstitution of Moras
title over the property which has never been originally registered, the judgment in CA-G.R. No. 20681-
R did not operate as res judicata which would bar the Republics action because there was no identity of
cause of action between CA-G.R. No. 20681-R and the instant case.

The issue in CA-G.R. No. 20681-R was whether or not Moras evidence in Special Proceedings No. 674
and the procedures adopted by him for the reconstitution of certificate of title alleged to have been lost or
destroyed were in conformity with the provisions of Republic Act No. 26. The questions of ownership and
whether or not the property or portion thereof was registrable, being a timberland, were never put at issue
in CA-G.R. No. 20681-R. Neither the non-existence of the original title from which Moras TCT No. RT-40
(140) and petitioners TCT No. 2574 were derived, nor the non-registrability of the timberland included in
the area in question which constitute Republics cause of action against the herein petitioners, were ever
raised, much less, decided by the CA in CA-G.R. No. 20681-R.
Petitioners also claim that they are protected by law considering that they were buyers in good faith.

Again, this assertion is without basis considering that Moras reconstituted TCT No. RT-40 (140), from
where petitionersTCT No. 2574 was derived, is void. The only way by which Mora could have acquired
ownership over the subject parcels of land and validly transfer that ownership to the petitioners was for
Mora to apply for their registration in his own name.

What makes petitioners cause doubly undeserving of merit is the finding of the two courts below that the
land subject matter of this case is part timberland,[7] a finding not even once disputed by petitioners. It is,
thus, safe to conclude that the land subject of TCT No. 2574 could not have been registered in the name
of petitioners or their predecessors-in-interest for the simple reason that under the Constitution,
timberlands, which are part of the public domain, cannot be alienated. [8] A certificate of title covering
inalienable lands of the public domain is void and can be cancelled in whosever hand said title may be
found.[9] Thus, we have ruled that a certificate of title is void when it covers property of the public domain

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classified as forest or timber and mineral lands. And any title issued on non-disposable lands even if in
the hands of alleged innocent purchaser for value, shall be cancelled. [10]
All told, the Court finds no reversible error in the assailed decision of the CA, affirming that of the trial
court.

WHEREFORE, the instant petition is DENIED and the assailed decision of the CA is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Republic v. Lorenzo, G.R. No. 172338, December 10, 2012

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 172338 December 10, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
CONCEPCION LORENZO, ORLANDO FONTANILLA, SAMUEL FONTANILLA, JULIET FONTANILLA,
ELIZABETH FONTANILLA, ROSELA FONTANILLA, RENATO FONTANILLA AND EVELYN
FONTANILLA,Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure assailing the
Decision 1dated April 17, 2006 of the Court of Appeals in CA-G.R. CV No. 80132, entitled "Concepcion
Lorenzo, Orlando Fontanilla, Samuel Fontanilla, Juliet Fontanilla, Elizabeth Fontanilla. RosPln Fontanilla,
Renato Fontanilla and Evelyn Fontanilla v. Republic of the Philippines." Said Court of Appeals Decision
affirmed the Decision2 dated August 26, 2003 in LRC Case No. 24-2692 of Branch 24, Regional Trial
Court (RTC), Echague, Isabela.

The genesis of the present case can be traced back to the filing before the trial court on February 11,
2002 of a Petition3 for the reconstitution of Original Certificate of Title (OCT) No. 3980 covering a parcel of
land measuring 811 square meters, situated in Echague, Isabela.

In seeking the reconstitution of OCT No. 3980, respondents averred before the trial court:

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3. That during the lifetime of Pedro Fontanilla and herein petitioner Concepcion Lorenzo, husband
and wife, respectively, they acquired a parcel of residential land, x x x;

4. That subject parcel of land is identical to Lot 18 of Echague Cadastre 210, covered by and
embraced under ORIGINAL CERTIFICATE OF TITLE NO. 3980 of the Land Records of Isabela,
in the name of Antonia Pascua as her paraphernal property and being the mother of Pedro
Fontanilla;

5. That because of the death of Pedro Fontanilla the lot as covered by the aforesaid title was
settled and adjudicated among the herein petitioners, x x x;

6. That the OWNERS DUPLICATE COPY OF OCT NO. 3980 was handed and delivered unto
the spouses Pedro Fontanilla and Concepcion Lorenzo which they have been keeping only to find
out thereafter that it was eaten by white ants (Anay);

7. That the original and office file copy of said OCT NO. 3980 kept and to be on file in the
Registry of Deeds of Isabela is not now available, utmost same was included burned and lost
beyond recovery when the office was razed by fire sometime in 1976, a certification to this effect
as issued by the office is hereto marked as ANNEX "D";

8. That for taxation purposes, the lot as covered by OCT NO. 3980, still in the name of Antonia
Pascua for Lot 18, Cad. 210, with an assessed value of P16,920.00, x x x;

9. That no mortgagees and/or lessees co-owners copy to the subject OCT NO. 3980 was ever
issued, and likewise no related documents affecting the land covered thereby is presented and
pending for registration in favor of any person whomsoever, and henceforth, it is free from lien
and encumbrance;

xxxx

11. That in support for the reconstitution of [OCT] No. 3980, the following documents which may
constitute as source or basis for the purpose are herewith submitted:

(a) S[E]PIA PLAN with Blue Prints x x x;

(b) Certified technical description of Lot 18, Cad. 210 x x x;

(c) Certification by LRA as to the non-availability of a copy of DECREE NO. 650254 x x

x[.]4

During the trial, the testimony of co-respondent Evelyn Fontanilla- Gozum was offered in order to prove
the above-mentioned allegations in the petition. In her testimony, she declared that she is the daughter of
the late Pedro Fontanilla and co-respondent Concepcion Lorenzo who, during their marriage, acquired a
parcel of land covered and embraced by OCT No. 3890 from her grandmother Antonia Pascua as
evidenced by a Deed of Sale. She also averred that the owners duplicate of the said Torrens certificate
of title was later discovered to have been eaten by termites and that the original copy of the said Torrens
certificate of title on file with the Register of Deeds of Isabela was certified to be burned and lost beyond
recovery when the office was razed by fire of unknown origin on December 4, 1976 as certified to by the

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Register of Deeds. Since both the original copy on file and the owners duplicate copy are non-existent,
she and her co-heirs, who are also co-respondents in this case, instituted the petition for reconstitution of
lost or destroyed Torrens certificate of title.5

In its Decision dated August 26, 2003, the trial court granted respondents petition and directed the
Register of Deeds of Isabela to reconstitute OCT No. 3980 in the name of Antonia Pascua on the basis of
the deed of sale, the technical description and the sketch plans, and to issue another owners duplicate
copy of the said Torrens certificate of title. The dispositive portion of the said ruling states:

WHEREFORE, premises considered, judgment is hereby rendered ordering the Register of Deeds of
Isabela to reconstitute the original copy of OCT No. 3980 in the name of Antonia Pascua, on the basis of
the deed of sale, the technical description and the sketch plans, and to issue another Owners Duplicate
of the said title after payment of the necessary legal fees.

Furnish copy of this Order to the Land Registration Authority, The Register of Deeds of Isabela and the
Office of the Solicitor General.6

Petitioner Republic of the Philippines, through the Office of the Solicitor General, appealed the ruling to
the Court of Appeals arguing that the trial court erred in granting respondents petition for reconstitution of
Torrens title since they failed to present substantial proof that the purported original certificate of title was
valid and existing at the time of its alleged loss or destruction, and that they failed to present sufficient
basis or source for reconstitution.

The Court of Appeals dismissed petitioners appeal in the assailed Decision dated April 17, 2006, the
dispositive portion of which states:

WHEREFORE, premises considered, the appeal is hereby DISMISSED for lack of merit.7

Hence, the petitioner sought relief before this Court and relied on the following grounds to support its
petition:

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS ORDER GRANTING
RECONSTITUTION OF ORIGINAL CERTIFICATE OF TITLE NO. 3980.

II

THE COURT OF APPEALS ERRED IN ITS APPLICATION OF PARAGRAPH F, SECTION 2 OF

REPUBLIC ACT NO. 26.8

On the other hand, respondents put forward the following issues for consideration:

(a) HAS THERE BEEN SUFFICIENT COMPLIANCE OF ACT 26, REQUIREMENTS

RECONSTITUTING OCT NO. 3890 AND ISSUANCE OF ANOTHER OWNERS DUPLICATE
COPY?

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 Page 453 of 540

(b) DID THE HONORABLE COURT OF APPEALS CORRECTLY SUSTAIN THE RENDERED
DECISION OF THE COURT OF ORIGIN?9

Petitioner argues that the alleged loss or destruction of the owners duplicate copy of OCT No. 3980 has
no evidentiary basis and that there is no sufficient basis for the reconstitution of OCT No. 3980. Petitioner
likewise maintains that the findings of fact of the Court of Appeals are not supported by the evidence on
record. Lastly, petitioner insists that, contrary to respondents assertion, the government of the Republic
of the Philippines is not estopped by the mistakes, negligence or omission of its agents.

For their part, respondents maintain that they have complied with Section 2 of Republic Act No. 26
considering that there was no opposition from the Office of the Solicitor General (OSG); that the OSG is
guilty of estoppel; that there was a valid basis for reconstitution of OCT No. 3980; that there was
compliance with jurisdictional requirements; that both the original file copy and the owners copy of the
subject OCT for reconstitution were lost or destroyed beyond discovery; and that questions of fact are not
subject to review by this Court.

In essence, the focal issue of the present case is whether or not the reconstitution of OCT No. 3980 was
in accordance with the pertinent law and jurisprudence on the matter.

The petition is impressed with merit.

The relevant law that governs the reconstitution of a lost or destroyed Torrens certificate of title is
Republic Act No. 26. Section 2 of said statute enumerates the following as valid sources for judicial
reconstitution of title:

SECTION 2. Original certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:

(a) The owners duplicate of the certificate of title;

(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to
which the original certificate of title was issued;

(e) A document, on file in the Registry of Deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

As borne out by the records of this case, respondents were unable to present any of the documents
mentioned in paragraphs (a) to (e) above. Thus, the only documentary evidence the respondents were

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able to present as possible sources for the reconstitution of OCT No. 3980 are those that they believed to
fall under the class of "any other document" described in paragraph (f).

In the assailed April 17, 2006 Decision of the Court of Appeals, the appellate court affirmed the trial
courts ruling by granting respondents petition for reconstitution of OCT No. 3980 merely on the bases of
a purported deed of sale,10sketch plan,11 and technical description.12 The relevant portion of said Decision
reads:

The appeal is bereft of merit.

In granting the petition, the trial court ratiocinated:

"As basis for the reconstitution of the lost title, the deed of sale, Exh "M", evidencing transaction over the
property, in addition to the sketch plan, Exh. "E" and the technical description, Exh. "D", duly approved
under (LRA) PR-02-00022-R pursuant to the provisions (of) Section 12 of Republic Act No. 26, as
embodied in the report filed by the Land Registration Authoriy, Exh. "J", would be sufficient basis for the
reconstitution of the lost title." (p. 3, Rollo, p. 38)

Appellees presented the approved sketch plan with its blue print, the certified technical description of the
subject lot, the Deed of Sale executed by Antonia Pascua, the Tax Declaration, and Tax Payment
Receipts. To the mind of this Court, there was sufficient and preponderant evidence thus presented to
warrant the reconstitution of the original of OCT No. 3980 and the issuance of another Owners Duplicate
Copy thereof. The enumeration of the preferential documents to be produced, as provided under Section
2 of Republic Act 26 had been substantially complied with. Certifications of loss of documents were
attested to by the custodian thereof, the Land Registration Authority of Ilagan, Isabela and Quezon City
(Exh. "F", Supra & Annex "H", Record, p. 13, respectively). It is on this premise that paragraph (f) of
Section 2, RA 26 comes to the fore, viz: "Any other document which, in the judgment of the court, is
sufficient and proper basis for reconstituting the lost or destroyed certificate of title."13

As correctly pointed out by petitioner, we had emphasized in Republic v. Holazo14 that the term "any other
document" in paragraph (f) refers to reliable documents of the kind described in the preceding
enumerations and that the documents referred to in Section 2(f) may be resorted to only in the absence of
the preceding documents in the list. Therefore, the party praying for the reconstitution of a title must show
that he had, in fact, sought to secure such documents and failed to find them before presentation of "other
documents" as evidence in substitution is allowed. Thus, we stated in Holazo that:

When Rep. Act No. 26, Section 2(f), or 3(f) for that matter, speaks of "any other document," it must refer
to similar documents previously enumerated therein or documents ejusdem generis as the documents
earlier referred to. The documents alluded to in Section 3(f) must be resorted to in the absence of those
preceding in order. If the petitioner for reconstitution fails to show that he had, in fact, sought to secure
such prior documents (except with respect to the owners duplicate copy of the title which it claims had
been, likewise, destroyed) and failed to find them, the presentation of the succeeding documents as
substitutionary evidence is proscribed.15 (Citation omitted.)

Furthermore, in a more recent case, this Court enumerated what should be shown before an order for
reconstitution can validly issue, namely: (a) that the certificate of title had been lost or destroyed; (b) that
the documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or
destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an

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interest therein; (d) that the certificate of title was in force at the time it was lost or destroyed; and (e) that
the description, area and boundaries of the property are substantially the same and those contained in
the lost or destroyed certificate of title.16

In the case at bar, the respondents were unable to discharge the burden of proof prescribed by law and
jurisprudence for the reconstitution of lost or destroyed Torrens certificate of title. First, respondents failed
to prove that the owners duplicate copy of OCT No. 3980 was indeed eaten by termites while in the
custody of respondent Concepcion Lorenzo and her late husband Pedro Fontanilla who, inexplicably, did
not execute an affidavit of loss as required by Section 10917 of Presidential Decree No. 1529. Second,
The Certification18 dated April 23, 2001 issued by the Register of Deeds of Ilagan, Isabela did not
categorically state that the original copy of OCT No. 3980, which respondents alleged to be on file with
said office, was among those destroyed by the fire that gutted the premises of said office on December 4,
1976. The document only stated that said office "could not

give any information/data involving the existence of Original/Transfer Certificate of Title No. Lot No. 18,
area 770 sq. m., located at Taggapan, Echague, Isabela." Third, a comparison between the
aforementioned certification and the technical description and sketch plan will reveal that there was a
discrepancy in the land area of the lot allegedly covered by OCT No. 3980. What was reflected on the
former was a land area of 770 sq. m. while the latter two documents pertained to a land area of 811 sq.
m. Furthermore, respondents were not able to show adequate proof that a Torrens certificate of title was
issued covering the subject parcel of land or that the same piece of land is what is covered by the
allegedly lost or destroyed OCT No. 3980. The Certification19 dated December 3, 2001 issued by the Land
Registration Authority (LRA) which indicates that Decree No. 650254 issued on September 1, 1937 is not
among the salvaged decrees on file in the LRA and is presumed to have been lost or destroyed as a
consequence of World War II does not support respondents assertion that OCT No. 3980 did exist prior
to its loss or destruction because said document failed to show a connection between Decree No. 650254
and OCT No. 3980. From the foregoing, it is apparent that the conclusion of the Court of Appeals that
"(t)he enumeration of the preferential documents to be produced as provided under Section 2 of Republic
Act 26 had been substantially complied with" had no foundation based on the evidence on record.

Likewise, the deed of sale purportedly between Antonia Pascua, as seller, and Pedro Fontanilla, as
buyer, which involves OCT No. 3980 cannot be relied upon as basis for reconstitution of Torrens
certificate of title. An examination of the deed of sale would reveal that the number of the OCT allegedly
covering the subject parcel of land is clearly indicated, however, the date when said OCT was issued
does not appear in the document. This circumstance is fatal to respondents cause as we have reiterated
in Republic v. El Gobierno de las Islas Filipinas20that the absence of any document, private or official,
mentioning the number of the certificate of title and the date when the certificate of title was issued, does
not warrant the granting of a petition for reconstitution. We held that:

We also find insufficient the index of decree showing that Decree No. 365835 was issued for Lot No.
1499, as a basis for reconstitution. We noticed that the name of the applicant as well as the date of the
issuance of such decree was illegible. While Decree No. 365835 existed in the Record Book of Cadastral
Lots in the Land Registration Authority as stated in the Report submitted by it, however, the same report
did not state the number of the original certificate of title, which is not sufficient evidence in support of the
petition for reconstitution. The deed of extrajudicial declaration of heirs with sale executed by Aguinaldo
and Restituto Tumulak Perez and respondent on February 12, 1979 did not also mention the number of
the original certificate of title but only Tax Declaration No. 00393. As we held in Tahanan Development
Corp. v. Court of Appeals, the absence of any document, private or official, mentioning the number

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of the certificate of title and the date when the certificate of title was issued, does not warrant the
granting of such petition.21 (Citation omitted, emphasis supplied.)

Lastly, on the peripheral issue of whether or not the OSG should be faulted for not filing an opposition to
respondents petition for reconstitution before the trial court, we rule that such an apparent oversight has
no bearing on the validity of the appeal which the OSG filed before the Court of Appeals. This Court has
reiterated time and again that the absence of opposition from government agencies is of no controlling
significance because the State cannot be estopped by the omission, mistake or error of its officials or
agents.22 Neither is the Republic barred from assailing the decision granting the petition for reconstitution
if, on the basis of the law and the evidence on record, such petition has no merit.23

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated April 17, 2006 of the
Court of Appeals in CA-G.R. CV No. 80132 and the August 26, 2003 Decision of the Regional Trial Court,
Branch 24 of Echague, Isabela are hereby REVERSED and SET ASIDE. The petition for reconstitution
is DENIED.

SO ORUERED.

5. Estoppel in Action for Cancellation of Title

Barstowe Phils. v. Republic, G.R. No. 133110, March 28, 2007

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court
seeking the reversal and setting aside the Decision,[2] dated 8 August 1997, and Resolution,[3] dated 18
March 1998, of the Court of Appeals in CA-G.R. CV No. 47522, which in turn, reversed and set aside the
Decision,[4] dated 22 December 1992, of the Quezon City Regional Trial Court (RTC), Branch 80 in Civil
Case No. Q-92-11806.

Antecedent Facts

This case involves the conflicting titles to the same parcels of land (subject lots) of
petitioner Barstowe Philippines Corporation (BPC) and the respondent Republic of

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the Philippines (Republic). The subject lots have a total area of 111,447 square meters, and are situated
along the northeastern perimeter boundary of the National Government Center in Payatas, Quezon City.

BPC traces its titles to the subject lots back to Servando Accibal (Servando) who was supposedly
issued on 24 July 1974, at 3:20 p.m., Transfer Certificates of Title (TCTs) No. 200629 and 200630 over
the subject lots. TCTs No. 200629 and 200630 were purportedly signed by Nestor N. Pena, Deputy
Register of Deeds of Quezon City. On 10 June 1988, Servando executed a Deed of Absolute Sale of the
subject lots to his son Antonio Accibal (Antonio), with the concurrence of his other heirs. Despite his prior
sale of the subject lots to Antonio, Servando, by virtue of a Deed of Conveyance, dated 8 February 1989,
transferred/conveyed the subject lots to BPC in exchange for subscription of 51% of the capital stock of
BPC, such subscription supposedly amounting to P6,000,000.00.[5] About a year after the death
of Servando on 3 October 1989, particularly on 10 October 1990, Antonio executed another Deed of
Conveyance of the subject lots in favor of BPC in exchange for subscription of 2,450 shares of its capital
stock, with an alleged total value of P49,000,000.00.[6] Due to the fire that gutted the Office of
the Quezon City Register of Deeds on 11 June 1988 and destroyed many certificates of title kept therein,
Antonio sought the administrative reconstitution of the original copies and owners duplicate copies
of TCTs No. 200629 and 200630 with the Land Registration Authority (LRA).On 12 December 1990, the
LRA issued TCTs No. RT-23687 and RT-23688 (reconstituting TCTs No. 200629 and 200630,
respectively), which were transmitted to the QuezonCity Register of Deeds and signed by Deputy
Register of Deeds Edgardo Castro on 19 February 1991. Also on 19 February 1991, TCTs No. RT-23687
and RT-23688 were cancelled and in lieu thereof, TCTs No. 30829, 30830, 30831, and 30832 in the
name of BPC were issued. BPC then acquired from the Housing and Land Use Regulatory Board
(HLURB) a permit to develop the subject lots into a residential subdivision. Subsequently, BPC entered
into Joint Venture Agreements with other corporations for the development of the subject lots into a
subdivision called Parthenon Hills.

Meanwhile, according to the Republic, prior to 14 November 1979, the subject lots were owned by First
Philippine Holdings Corporation (FPHC). As evidence of its title to the subject lots, FPHC was issued TCT
No. 257672, on an undetermined date, and TCT No. 275201, on 20 January 1981. Pursuant to a Deed of
Sale, dated 14 November 1979, FPHC sold one of the subject lots, covered by TCT No. 257672, to the
Republic for P2,757,360.00. Thus, on 22 January 1981, TCT No. 257672 was cancelled and TCT
No. 275443 was issued in place thereof in the name of the Republic. FPHC executed another Deed of
Sale on 25 March 1982 in which it sold the remainder of the subject lots, covered by TCT No. 275201, to
the Republic for P9,575,920.00. On 31 May 1982, TCT No. 275201 was cancelled and was replaced by
TCT No. 288417 issued in the name of the Republic. Because of the 11 June 1988 fire which razed
the Quezon City Office of the Register of Deeds and destroyed the original copies of TCTs No. 275443
and 288417, the Republic applied for administrative reconstitution of the same with the LRA. It was then
that the Republic came to know that another party had applied for reconstitution of TCTs No. 200629 and
200630 which also covered the subject lots. This prompted the Republic to file before the RTC on 26
March 1992 a petition for cancellation of title against Antonio, Servando, and BPC, docketed as Civil
Case No. Q-92-11806.

Civil Case No. Q-92-11806

Counsel for Antonio and the late Servando filed two successive Motions for extension of time to file the
proper pleading, dated 17 June 1992 and 1 July 1992, but despite the grant thereof by the RTC, [7] no

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such responsive pleading on behalf of Antonio and the late Servando was ever filed. Hence, on 31 July
1992, the RTC issued an Order[8]declaring Antonio and the late Servando in default.

In another Order,[9] also dated 31 July 1992, the RTC, upon the motion of BPC, allowed the latter to
continue with the development of the subject lots. It concluded that

Considering the plight of [BPC] and the possible irreparable damage that may be
caused against the residents in the surrounding developed subdivision, even as said
corporation is possessed of a good title, the court in the exercise of its discretion grants
the motion. More importantly, consideration of equity demands that the titled owner [BPC]
herein must be able to exercise all its dominical right bloosoming [sic] forth from its
ownership of the land in suit.

WHEREFORE, under cool reflection and prescinding from the foregoing, the
motion is hereby granted. [BPC] is hereby permitted and allowed to continue with the
improvement and development of the controverted property into a residential
subdivision.[10]

On 12 October 1992, the Republic filed with the Quezon City Register of Deeds a Notice
of Lis Pendens requesting the recording of the pendency of Civil Case No. Q-92-11806 on TCTs No.
30830, 30831, and 30832, all in the name of BPC.

While Civil Case No. Q-92-11806 was still pending before the RTC, there were two intervenors.
Gloria Accibal Rettoriano (Gloria) filed with the RTC a Motion for Intervention, with a Complaint in
Intervention, both dated 1 September 1992. Gloria alleged that she was the only child of Basilia
Accibal, Servandos sister; the subject lots were inherited by Basilia, Servando, and their other siblings
from their parents Martin and MauriciaAccibal; upon her mothers death, Gloria inherited and came into
possession of a portion of the subject lots with an area of about 2.5 hectares; Gloria had been
possessing, cultivating and improving her portion of the subject lots for the last 30 years; Servando,
through fraudulent means, was able to secure TCTs over all the subject lots, including Glorias portion
therein; the inclusion of Glorias portion in the TCTs of Servando and, later, in those of BPC, was done
through fraud and gross bad faith; and unless the TCTs of Servando and BPC are declared null and void,
Gloria will be deprived of her property without due process and just compensation. BPC opposed Glorias
intervention in Civil Case No. Q-92-11806 considering that she had already instituted Civil Case No. Q-
91-10933 before the RTC, Quezon City, Branch 76, seeking the annulment of TCTs No. 30830, 30831,
and 30832 of BPC based on the very same grounds she raised in her present Complaint in Intervention;
on 11 February 1992, Gloria entered into a Compromise Agreement with BPC in which she waived and
renounced any and all claims whatsoever which she may have over the titles of BPC in consideration of
the payment by the latter of P2,000,000.00; the RTC, Branch 76, after finding that the said Compromise

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Agreement was not contrary to law, morals, good customs, public order or public policy, approved the
same, thus putting an end to Civil Case No. Q-91-10933;[11] Glorias cause of action to intervene in Civil
Case No. Q-92-11806 was already barred by prior judgment in Civil Case No. Q-91-10933 and Glorias
Complaint in Intervention is tantamount to a collateral attack against a TCT. In rejecting Glorias
intervention in Civil Case No. Q-92-11806, the RTC found as follows

The motion for intervention must be denied and the complaint in intervention
therein attached must be rejected.
For one thing, herein movant Gloria Accibal Rettoriano, was the plaintiff in the
first case (RTC Br. 76 No. Q-91-10933) and with eyes wide open she entered into a
compromise agreement with [BPC], which was the basis of the 26 February 1992
decision rendered therein and it being based on a compromise agreement, said decision
became immediately final and executory.
Whether or not the decision rendered in the first case was satisfied is of no
moment in the present case, as herein movant intervenor has all the remedies to protect
her rights therein.
For another, movant intervenor Gloria Accibal Rettoriano, from her complaint in
intervention would ask for the cancellation of the titles issued to their [sic]
relative Servando Accibal and those titles duly issued and registered in the name of
[BPC]. Certainly, this can not be done, as it constitutes a collateral attack on the
questioned titles which the law and settled jurisprudence do not allow. Perforce, a
separate action against the questioned titles is the remedy available for intervenor Gloria
A. Retoriano [sic].
Accordingly, the Court finds the opposition of [BPC] to be impressed with merit
and the motion for intervention does not inspire confidence.
WHEREFORE, the subject motion for intervention is denied and the complaint in
intervention attached thereto must be rejected.[12]

Another intervenor in Civil Case No. Q-92-11806 was EL-VI Realty and Development Corporation
(ERDC) which filed with the RTC a Motion for Leave to Intervene, dated 1 September
1992. Subsequently, it filed an Answer in Intervention, dated 15 September 1992, in which, it alleged that
it acquired interest in the subject lots after having entered into a Joint Venture Agreement dated 16
January 1992, with BPC, for the development of the subject lots into a residential subdivision; the action
initiated by the Republic for the cancellation of the TCTs of BPC was already barred
by laches and estoppel because of the recognition accorded upon the said TCTs by the instrumentalities
of the Republic, particularly the Register of Deeds and the HLURB, on which the ERDC relied in all good
faith when it entered into the Joint Venture Agreement with BPC; the Republic is liable to ERDC for moral
damages and attorneys fees; should the RTC find the TCTs of BPC infirm, rendering the Joint Venture
Agreement between ERDC and BPC of no force and effect, then BPC should be held liable to ERDC,
being an innocent third party, for reimbursement of all expenses incurred by the latter in the development
of the subject lots; and should the RTC find that the TCTs of BPC are spurious, then it should be declared
in bad faith when it entered into the Joint Venture Agreement with ERDC, for which it should be liable for
exemplary damages and attorneys fees. In an Order,[13] dated 27 October 1992, the RTC
granted ERDCs Motion to Intervene and admitted its Answer in Intervention.

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After all the parties had submitted their respective Pre-Trial Briefs,[14] and upon motion by the BPC, [15] the
RTC decided the case on 22 December 1992 on summary judgment.[16] Although it found both the
Republic and the BPC as buyers in good faith, it held that the titles of BPC should prevail. It ratiocinated
thus

3. To the third issue, we rule that the title of [BPC] must prevail over that of the
[Republic].

There is no dispute that the titles of the First Philippine Holdings Corporation,
predecessor-in-interest of [Republic] were either issued in the year 1979 and 1981 (Exh.
A and B). On the other hand, there is likewise no dispute that the titles of defaulted
defendant Servando Accibal, and predecessor-in-interest of [BPC], were both issued and
registered much earlier on July 24, 1974 (Exhs. F and G, pp. 210-213, record) and/or a
difference of 5 or 6 years in point of time.

MORE, Servando Accibal, the predecessor-in-interest of [BPC] has been in the

actual and peaceful physical possession of the lots in suit before he sold them to [BPC]
on February 08, 1991. Upon registration of the same on February 19, 1991, [BPC], after
having subdivided the land into four (4) smaller lots was issued on 19 February TCT Nos.
30829, 30830, 30831, and 30832 (Exhs. 1, 2, 3 and 4).

It is true [Republic] acquired the land in suit on November 14, 1979 and for which
TCT Nos. 275443 and 288417 were issued in the years 1979 and 1981, but [Republic]
never took assertive steps to take actual possession of the land sold to it by the First
Philippine Holdings Corporation. It is even of grave doubt that the latter took actual
possession of the land before the land in suit was sold to the [Republic]. So much so, that
the area had been occupied by several squatters, one of them is Servando Accibal who
by the way, was able to have the land in suit titled in his name as early as July 24, 1974,
under TCT Nos. 200629 and 200630 of the land records of Quezon City. Further,
[Republic] and its predecessor-in-interest were not able to discover the overlapping of
their titles by the titles of Servando Accibal for a period of eighteen (18) long years
starting from July 24, 1974 to about June 10, 1992 when the LRA during a reconstitution
of the titles of [Republic] was initiated, as evidenced by a report of reconstituting officer
Benjamin A. Flestado of that office (Exh. H, pp. 214-258, record).

Simply stated, [Republic] may be guilty of LACHES.

xxxx

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Perforce, the claim of [Republic] which was probably originally VALID became a
STALE claim as the years went by. Verily, the titles of [Republic] must be cancelled and
the titles of [BPC] must be upheld and declared as good and valid titles and [BPC] is
entitled to all the rights bloosoming [sic] fourth from its dominical right of ownership.

More importantly, the predecessor-in-interest of [BPC] had been long in the

actual and physical possession of the lands in suit, while that of the predecessor-in-
interest of [Republic] was not in the actual possession of the land before the sale to
[Republic]. On the other hand, [BPC] immediately after the sale in its favor took actual,
physical and peaceful possession of the land in suit to the exclusion of all others. It has
no knowledge, actual or constructive that said parcels of land were sold to the
[Republic]. When it registered the sale, there was no inscription in the Land Registry that
the same parcels of land were earlier sold to the [Republic]. Hence, there was and is a
continuing good faith on the part of [BPC]. (Article 1544, NCC; Cruz vs Cabana, 129
SCRA 656).

In the same Decision, the RTC found certain irregularities in TCTs No. 200629 and 200630 in the name
of Servando and that the said TCTs should be cancelled, without prejudice to the rights and interests of
BPC. The RTC discussed the matter in this wise

We shall now dwell on the validity of the titles TCT Nos. 200629 and 200630,
issued in the name of Servando Accibal on July 24, 1974 by the Register of Deeds
of Quezon City. The LRA report dated 10 June 1992 (Exh. H, pp. 214-258, record) is
competent proof that indeed said titles must be cancelled. In short, the LRA found after
due investigation that the said titles of Servando Accibal were issued with certain
irregularities. It recommended the cancellation therefore, of TCT Nos. 200629 and
200630, to which the court concurs, as said report must be accorded due respect and in
the absence of fraud or irregularities that attended the investigation, which the Court finds
none, the same must be persuasive, if not conclusive. Moreover, herein
defendant Servando Accibal because of his failure to answer, despite extension of time
given him, failed to file his answer. Upon motion of [Republics] counsel, he was declared
as in default and since then, he never asked the court to lift and set aside the default
order. There is no way, his title must be cancelled. For one thing, he was not able to
present evidence to controvert the recommendation of LRA to cancel his titles. For
another, Servando Accibal is deemed to have impliedly admitted the irregularities that
attended the issuance of his aforestated titles.

However, the cancellation of the titles of Servando Accibal, would not affect the
rights and interests of [BPC] as the latter is declared to be a purchaser in good faith and

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for value. MORE, under the circumstances of the case, and even when the titles
of Servando Accibal are cancelled, the titles of [BPC] are still good and indefeasible titles,
as it is settled rule that good titles may be sustained even when the seller has spurious
titles.

As for the intervention of ERDC, the RTC addressed the same as follows

Finally, we shall next discuss the claim of intervenor EL-VI Realty and
Development Corporation. A close reading from the Joint Venture Agreement
dated January 16, 1992, shows that in case of litigation, intervenor Realty Corporation
shall have the right to suspend all development activities and the development period of 5
years shall automatically be suspended until such time as the said case is finally
settled/decided (Exh. 5 and Annex A answer in intervention pp. 109-114). Upon the
signing of the said agreement the amount of P1,500,000.00 was received by [BPC] as
advance payment of the 50-50 sharing basis in the sales proceeds. During the pre-trial
conference, herein intervenor tried to enforce a supplemental agreement dated October
15, 1992, by filing a motion for a writ of preliminary injunction with prayer for the issuance
of a restraining order. Resolution of the same was held in abeyance to await the decision
to be rendered, after [BPC] assured intervenor herein that it will abide by and strictly
comply with its commitments arising from the aforesaid agreement, after proper
accounting is made therefore. Herein intervenor admits that another financier-developer
has entered the area due to the delay of the project caused by the filing of the present
case.

MORE, due to the filing of the present case, herein intervenor was reluctant to
further finance the project because of its big exposure already
made. Hence, intervenorsworks and other activities in the area was suspended in
accordance with their Joint Venture Agreement.

Perforce, there is compelling necessity for a proper accounting, more particularly

its substantial exposure to the project, on a quantum meruit basis, in fairness to all
concerned and involved parties in the project, including but not limited to the present
contractor-developer of the area.

Finally, the RTC concluded that

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A FORTIORARI, the environmental setting and factual scenario of the case, in

relation to its legal ambience will show that the great preponderance of evidence lies in
favor of [BPC]. (Section 01, Rule 133, Revised Rules of Court), and the motion for
summary judgment is granted. The hearing as to damages, including attorneys fees shall
be scheduled soonest possible.

WHEREFORE, under cool reflection and prescinding from the foregoing,

judgment is rendered as follows:

1. Ordering the Register of Deeds of Quezon City to cancel Transfer

Certificates of Title No. 275443 and 288417 issued in the name of
the [Republic] covering the lots in suit. However, [Republic] being a
purchaser in good faith, and based on considerations of equity and
justice Barstowe Philippine[s] Corporation is ordered to re-
imburse and pay [Republic], the sum of P12,333,280.00 representing
the purchase price from the vendor, First Philippine Holdings
Corporation soonest possible;

2. Ordering the Register of Deeds of Quezon City to officially and

finally cancel from his records, Transfer Certificates of Title Nos.
200629 and 200630 issued in the name of Servando Accibal, on July
24, 1974, covering the same lots in suit (Exh. F and G, pp. 210-213,
record).

3. Declaring herein defendant Barstowe Philippines Corporation as

the absolute owner in fee simple title over the lots in suit, as
evidenced by Transfer Certificates of Title Nos. 30829, 30830, 30831
and 30832 of the land records of Quezon City, all issued on February
19, 1991 and the said titles are further more declared valid, existing
and indefeasible titles of [BPC] and as such is entitled to all the
dominical rights bloosoming [sic] forth from its ownership over the
lots in suit.

4. Ordering [BPC] to abide by and strictly comply with the terms and
conditions of the supplemental Agreement entered into by it with
herein intervenor EL-VI Realty and Development Corporation
dated October 15, 1992, after proper accounting is made;

5. Perforce, the Register of Deeds of Quezon City is likewise ordered

to cancel any and all encumbrances annotated on said titles of

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defendant corporation including, but not limited to

the lis pendens notice filed by the [Republic], if any;

6. The hearing as to damages, including the claim for attorneys fees

shall be scheduled soonest.

7. Considering the admissions and agreements of the parties during

the pre-trial conference, which are considered judicial admissions,
this decision acquires the nature of one based on a compromise
agreement. Perforce, the Court declares this decision to be
immediately final and executory.

8. No pronouncement as to costs.

Despite the promulgation of the foregoing Decision by the RTC on 22 December 1992, the
proceedings in Q-92-11806 were still far from over; significant developments still took place thereafter.

ERDC sought the execution of paragraph 4 of the dispositive portion of the RTC Decision
dated 22 December 1992. In an Order,[17] dated 13 January 1993, the RTC issued a writ of execution in
favor of ERDC, and a notice of levy on execution was accordingly made on the subject lots. In a dialogue
held between the counsels for BPC and ERDC in the chamber of the RTC Judge on 26 February 1993,
an amicable settlement was reached whereby BPC agreed to settle the claim of ERDC in the form of
developed subdivision lots in Parthenon Hills, subject to proper accounting. [18] BPC offered to ERDC 40
developed subdivision lots in Parthenon Hills, valued at P18,543,000.00, representing 65% of the total
claims (prior to proper accounting) of ERDC, which amounted to P28,787,306.32. However, ERDC
refused the offer of BPC and demanded that it be paid the total amount of its claims. It also brought to the
attention of the RTC that, in violation of their Joint Venture Agreement, BPC contracted another realty
developer for the development of Parthenon Hills. Thus, ERDC opposed the lifting of the notice of levy on
execution on the subject lots for the protection of its interests. In an Order,[19] dated 17 March 1993, the
RTC found that BPC already substantially complied with the terms of its agreement with ERDC and that
the rights and interests of the latter were well-protected and safeguarded. In the same Order, the RTC
lifted and set aside the notice of levy on execution on the subject lots. However, on 20 April 1993, ERDC
filed a Motion for Contempt[20] against BPC and informed the RTC that BPC, fraudulently, maliciously, and
in bad faith, already sold 36 of the 40 subdivision lots it earlier offered to ERDC by
accepting downpayments thereon of only 30% of the selling price. Upon further investigation, it
discovered that of the four remaining lots, two were vacant while the other two were reserved. ERDC
subsequently filed two other motions: (1) A Motion,[21] dated 29 April 1993, to set for trial the claim of
ERDC for damages. Said motion was granted, and the RTC set the hearing on 16 September 1993, at
8:30 a.m.,[22] but upon the motion of the counsel for BPC, the hearing was reset to 7 October 1993; [23] and

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(2) A Motion,[24]dated 6 September 1993, for the issuance of a partial writ of execution for the undisputed
amount of P18,543,000.00, representing 65% of the total claims of ERDC.Unfortunately, the records no
longer show the succeeding incidents concerning these motions.

In a Motion for Leave to Intervene[25] dated 8 March 1993, and the attached Complaint in
Intervention,[26] dated 10 March 1993, Kadakilaan Estate expressed its intent to intervene in Civil Case
No. Q-92-11806. It anchored its claims on the contention that the subject lots were already registered as
private property under the Spanish Mortgage Law since 18 May 1891, and under the Torrens System of
Registration since 31 August 1907, by the predecessors-in-interest of Kadakilaan Estate. The subject lots
were supposedly included in a vast track of land covered by Titulo de la Propiedad de Terrenos No. 01-4
in the name of Doa Petra Rodriguez, who transferred the same to her son, Don
Gonzalo Yanesa y Rodriguez. Kadakilaan Estate came into ownership and possession of the vast track of
land, including the subject lots, by virtue of its successive sales from Don Gonzalo Yanesa y Rodriguez
to Doa Lourdez Rodriguez Yanesa, and from the latter to Kadakilaan Estate. Kadakilaan Estate further
alleged that the Original Certificate of Title (OCT) No. 333, from which the TCTs of both BPC and the
Republic were ultimately derived, was null and void ab initio, and that the TCTs of BPC and the Republic
were spurious and likewise null and void ab initio, and without any probative value. Kadakilaan Estate
prayed for judgment declaring it the owner of the subject lots; directing the other parties to respect its
ownership, possession, rights and interests over the subject lots; and ordering the other parties to pay
just compensation, damages, and attorneys fees.The RTC, in an Order [27] dated 27 April 1993, denied the
Motion for Leave to Intervene and rejected the Complaint in Intervention of Kadakilaan Estate for the
following reasons

New intervenor Kadakilaan Estate alleges that the titles of the [Republic] and
[Antonio, Servando, and BPC] are all falsified, spurious in origin and null and
void ab initio, as the property in question were already registered as private properties of
[Kadakilaan Estates] predecessors-in-interest, under Spanish Mortgage law since May
18, 1891, and under the Torrens System, Act No. 496, as amended,
in Titulo dela propriedad de Terrenos No. 01-4.

If this is clearly so, then [Kadakilaan Estate] is attacking the validity of the titles of
[Republic] and [Antonio, Servando, and BPC] in this case. It is settled rule that titles
registered under the Torrens System cannot be the subject of a collateral
attack. Perforce, the remedy of [Kadakilaan Estate] is to file a separate action. For, if the
intervention is allowed at this late stage of the proceedings, then it will cause
unnecessary delay in the soonest termination of this case.

MORE, the law and the rules as well as jurisprudence on the matter, will only
allow in the courts discretion, intervention, before or during the trial. Certainly NOT after
the trial and with more reason intervention may no longer be allowed after the decision
has been rendered as in the present case.

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In the meantime, on 4 January 1993, the Republic filed a Notice of Appeal [28] of the RTC
Decision, dated 22 December 1992. The RTC, in an Order,[29] dated 16 February 1993, denied the
same. It reasoned that

Considering these judicial dimensions and acquiescence of the [Republic] in

open court during the hearings held and during the pre-trial conference, the court in
its dispositive portion of the questioned decision, declared it to be a judgment based on a
compromise agreement which by operation of law becomes immediately executory.

It is unfortunate that despite the above declarations of the court [Republic] failed
to ask for a clarification of the said declarations, by way of a motion for reconsideration of
the decision based on fraud, mistake or duress mandated by the rules.

The notice of appeal must be denied due course.

xxxx

WHEREFORE, prescinding from the foregoing, the notice of appeal filed by

plaintiff is rejected and denied due course.

From the foregoing RTC Order, the Republic filed with the Court of Appeals a Petition for Certiorari and
Mandamus (with Urgent Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction),
docketed as CA-G.R. SP No. 30647. The Republic primarily questioned the denial of its Notice of Appeal
by the RTC in its Order, dated 16 February 1993, on the basis that the RTC Decision of 22 December
1992 constitutes a compromise agreement, and is immediately final and executory. The Court of Appeals
issued a writ of preliminary injunction[30] enjoining the RTC from implementing and enforcing its Order,
dated 16 February 1993, during the pendency of CA-G.R. SP No. 30647 or until otherwise directed by the
appellate court. Apparently, from the denial by the RTC of its Motion for Leave to Intervene and the
rejection of its Complaint in Intervention in Civil Case No. Q-92-11806, the Kadakilaan Estate again filed a
Motion for Leave to Intervene in CA-G.R. SP No. 30647, which in a Resolution,[31] dated 13 September
1993, the Court of Appeals also denied on the following grounds

We find the stance of [Republic] and [BPC] well-grounded. Not only is

[Kadakilaan Estate] precluded by estoppel from filing the present motion, after failing to
challenge before this Court or the Supreme Court the trial courts denial of subject motion
for intervention, on April 27, 1993; it is too late for [Kadakilaan Estate] to come in at this
stage of the present litigation. Furthermore, as aptly put by the [Republic] the alleged

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rights [Kadakilaan Estate] seeks to protect here can be amply protected in an appropriate
action [Kadakilaan Estate] may later bring.

In a Decision,[32] dated 29 June 1994, the Court of Appeals granted the Republics Petition
for Certiorari and Mandamus, ruling in this wise

We rule for [Republic]. Respondent Courts conclusion lost sight of the nature of a
compromise agreement, and the circumstances under which a judgment based on a
compromise may be rendered.

xxxx

Guided by the aforecited law and jurisprudence in point, it can be safely

concluded that neither mere silence or acquiescence by the [Republic] in open court
during the hearing nor [Republics] stipulation of facts, marking of exhibits, alleged
admission of Exhibit 6 which contains [BPCs] offer of compromise during the pre-trial, be
properly considered as a compromise agreement. Had the parties really intended to enter
into a compromise to end their case, they could have executed and submitted a
compromise agreement for the approval of the trial court. But no such step was taken.

xxxx

Records readily show that due to lack of an amicable settlement or any

compromise agreement, the respondent judge directed the parties to present their
documentary exhibits so as to facilitate the trial; no longer for the purpose of settling the
case. Evidently, there was no explicit agreement nor any reciprocal concession between
the parties with an end in view of terminating the litigation. Absence of these essential
elements of a compromise inevitably results in the absence of a valid compromise
agreement. (Merced vs. Roman Catholic Archbishop, L-24614, August 17, 1967, 20
SCRA 1077). Consequently, the opinion of respondent Judge that his December 22,
1992 Decision had the nature of a judgment based on compromise, cannot be upheld.

So also, the doctrine relied on by respondents that a compromise agreement

constitutes the law between the parties and a judgment based thereon is immediately
final, executory and not appealable, is inapplicable under the premises.

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xxxx

WHEREFORE, the petition is GRANTED; the questioned order dated 16

February 1993 is SET ASIDE; and respondent court is hereby ordered to give due course
to [Republics] Notice of Appeal in Civil Case No. Q-92-11806. Costs against [BPC].

This Court, in its Resolution, dated 6 February 1995, issued in G.R. No. 117969, in effect, sustained the
afore-mentioned Decision of the Court of Appeals.

CA-G.R. CV No. 47522

Finally, the Republic was allowed to appeal the RTC Decision, dated 22 December 1992, in Civil Case
No. Q-92-11806, to the Court of Appeals, where it was docketed as CA-G.R. CV No. 47522. In a
Decision,[33] dated 8 August 1997, the Court of Appeals found in favor of the Republic, and disposed thus

WHEREFORE, premises considered, plaintiff-appellant Republic of

the Philippines appeal is GRANTED. Except for paragraph 2 of the dispositive portion of
the decision appealed from declaring TCT Nos. 200629 and 200630 in the name
of Servando Accibal null and void and ordering the Register of Deeds of Quezon City to
cancel said TCT Nos. 200629 and 200630, the appealed decision is REVERSED and
SET ASIDE and a new one entered:

(a) declaring and affirming the validity of TCT Nos. 288417 and 275443 of the
Registry of Deeds of Quezon City in the name of appellant Republic of the Philippines
and that appellant Republic has indefeasible title to the property covered thereby;

(b) declaring TCT Nos. 30829, 30830, 30831 and 30832 also of the Registry of
Deeds of Quezon City in the name of Barstowe Philippines Corporation null and void and
ordering the Register of Deeds of Quezon City to cancel said titles;

(c) ordering Barstowe Philippines Corporation to surrender to the Register of

Deeds of Quezon City the owners duplicate certificates of title of TCT Nos. 30829, 30830,
30831 and 30832 for cancellation;

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(d) enjoining defendant-appellee Barstowe Philippines Corporation

and intervenor EL-VI Realty Development Corporation from exercising any act of
ownership or possession of the land in question; and

(e) remanding the case to the court of origin for further proceedings for
determination of the crossclaim of intervenor EL-VI Realty and Development Corporation
against defendant-appellee Barstowe Philippines Corporation.

There is no pronouncement as to costs.

The Motion for Reconsideration filed by BPC was denied by the Court of Appeals in a
Resolution,[34] dated 18 March 1998.

G.R. No. 133110

Aggrieved, BPC came before this Court via a Petition for Review on Certiorari[35] under Rule 45 of the
Rules of Court, dated 28 April 1998, raising the sole issue of who between BPC and the Republic has a
better title over the subject lots. BPC prays that this Court rule in its favor, and reverse and set aside the
Court of Appeals Decision, dated 8 August 1997, in CA-G.R. CV No. 47522, based on the following
grounds

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN NOT

CONSIDERING THE GOOD FAITH OF [BPC] THOUGH IT WAS ADMITTED BY
[REPUBLIC] DURING THE PRE-TRIAL CONFERENCE.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN

UPHOLDING THE VALIDITY OF THE TITLE OF [REPUBLIC] OVER THAT OF [BPC.]

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN

ORDERING [BPC] TO SURRENDER ITS TITLE TO THE REGISTER OF DEEDS FOR
CANCELLATION[.]

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THE HONORABLE COURT OF APPEALS ERRED IN ENJOINING [BPC] FROM

EXERCISING ACTS OF OWNERSHIP OVER THE SUBJECT PARCEL OF LAND[.]

THE HONORABLE COURT OF APPEALES [sic] ERRED IN APPLYING THE

CALALANG CASE (231 SCRA 88) AS IT IS NOT APPLICABLE TO THE CASE AT
BAR[.]

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

[REPUBLIC] GUILTY OF ESTOPPEL BY LACHES[.]

After the Republic filed its Comment, dated 29 October 1998, several parties again sought to
intervene in the case.

Winnie U. Nicolas (Nicolas), through her sister and attorney-in-fact, Ditas Felicitas Nicolas-
Agbulos (Nicolas-Agbulos), and Edgardo Q. Abesamis (Abesamis), filed their respective Petitions for
Intervention, dated 22 October 1998 and 9 December 1998, respectively.

Nicolas-Agbulos invokes the provisions of the Rules of Court on the joinder of indispensable
parties and necessary parties for the complete determination of all possible issues, not only between the
parties themselves but also as regards to other persons who may be affected by the judgment. Nicolas-
Agbulos contends that she was a buyer in good faith of Lots No. 27 and 28, Block 13, of Parthenon Hills,
covered by TCTs No. 76497 and 76498, respectively, of the Quezon City Register of Deeds, derived
from TCTs No. 30830, 30831, and 30832 in the name of BPC. Nicolas-Agbulos had already partially paid
BPC for Lots No. 27 and 28 in the amount of P1,500,000.00, and the balance of P800,000.00 was
already deposited in a trust account in the name of BPC with the Far East Bank and Trust Company
(FEBTC). She bought Lots No. 27 and 28 after relying on the face of the TCTs of BPC which were intact
and subsisting in the records of the Quezon City Register of Deeds, and on the authority granted to BPC
by several government agencies, such as the HLURB, LRA, and the Register of Deeds, for the
subdivision, development, and sale of the subject lots to private individuals. She only came to know,
through her sister and attorney-in-fact, Nicolas-Agbulos, that the TCTs of BPC covering the subject lots,
which comprised the Parthenon Hills, were being assailed in Civil Case No. Q-92-11806 pending before
the RTC. Nicolas inquiry on the matter was answered by BPC with an assurance that despite the bad
publicity, Parthenon Hills was an on-going project and that she should continue paying her
installments. Acting cautiously, Nicolas-Agbulos decided that instead of paying the balance of the
purchase price for Lots No. 27 and 28 directly to BPC, she would open a trust account with FEBTC in the
name of BPC where she would deposit Nicolas-Agbulos succeeding installment payments. Nicolas-
Agbulos was compelled to intervene in the instant case because BPC made no mention of the fact that it
had already sold numerous subdivision lots in Parthenon Hills to innocent purchasers for value, either
through absolute or installment sales. She thus sought a ruling upholding the title of BPC, and
recognizing and protecting the rights of Nicolas as an innocent purchaser for value of Lots No. 27 and
28.[36]

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Abesamis seeks to intervene in the present case as an indispensable party since no complete
and conclusive determination can be had therein, which shall be legally binding and effective
on Abesamis, unless he be allowed to intervene. Abesamis claims to have acquired by purchase Lot No.
16, Block 4, of Parthenon Hills, for the purchase price of P720,000.00, and evidenced by a Deed of
Absolute Sale dated 9 June 1993. BPC processed and secured TCT No. 92270 covering Lot No. 16
in Abesamis name. He only learned that the subject lots comprising the Parthenon Hills, including his Lot
No. 16, was mired in controversy, when he attended an emergency meeting of the Homeowners
Association of Parthenon Hills. He asserts that, being a bona fide purchaser and holder of a legitimate
and indefeasible title to Lot No. 16, he had valid and enforceable rights against both BPC and the
Republic.[37]

A third Petition in Intervention, dated 8 February 1999, was filed by spouses Jacinto H. Santiago,
Jr. and Arlene C. Santiago (spouses Santiago). The spouses Santiago aver that, doing business as ACS
Trading, they entered into a supply agreement with Proven International Development Corporation
(PIDC), which had a construction contract with BPC, for the development of Parthenon Hills. The
spouses Santiago agreed to accept lots in Parthenon Hills as payment for the construction materials they
supplied BPC since the latter showed them clean TCTs to the subject lots, and HLURB licenses and
permits to develop Parthenon Hills. In payment for the construction materials delivered, and financial
assistance and various other professional services rendered by the spouses Santiago to BPC, the latter
initially executed in their favor 15 Deeds of Assignment for 15 subdivision lots in Parthenon
Hills. The TCTs for the 15 subdivision lots were transferred in the name of the spouses Santiago free from
any lien or encumbrance. The spouses Santiago mortgaged 13 of the subdivision lots with the Planters
Development Bank and sold the remaining two to different buyers. Thereafter, BPC again executed in
favor of the spouses Santigao 71 Deeds of Assignment over 71 subdivision lots in Parthenon Hills. When
the spouses Santiago attempted to transfer the TCTs covering the 71 subdivision lots to their names, they
discovered that the TCTs of BPC already bore the annotation of the notice
of lis pendens. The Quezon City Register of Deeds cancelled the TCTs of BPC covering the 71
subdivision lots and issued new ones in the names of the spouses Santiago, still bearing the annotation
of the notice of lis pendens. The spouses Santiago claim that they were unable to intervene earlier in this
case because of the pendency of the case filed by BPC against them, docketed as Civil Case No. 93-
18231, with the Quezon City RTC, Branch 84, for the annulment of the last 71 Deeds of Assignment. This
case had since been dismissed. The spouses Santiago invoke that they have sufficient interest in the
present case which would necessarily be affected by the resolution/decision thereof, and they must
necessarily intervene herein to protect their interest. The spouses Santiago pray for this Court to declare
the assignment to them by BPC of the subdivision lots as valid, and to direct both BPC and the Republic
to recognize and respect their rights and interest.[38]

BPC supports the intervention in the case by Nicolas-Agbulos and Abesamis. It explains that its
failure to mention that it has already practically sold all the subdivision lots in Parthenon Hills was not by
design, but by mere oversight.[39] However, BPC opposes the intervention of the spouses Santiago
claiming that the latter are not indispensable parties to the case; they acquired their TCTs through
fraudulent means; and Civil Case No. 93-18231 which it instituted against the spouses Santiago was
dismissed by the Quezon City RTC, Branch 84, without prejudice. According to BPC, the supply
agreement for construction materials was between the spouses Santiago and PIDC, so that it could not
be enforced against BPC. This issue, as well as the validity of the 71 Deeds of Assignment over 71
subdivision lots supposedly executed by BPC in favor of the spouses Santiago, requires the holding of a
trial, not a mere intervention.[40]

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The Republic opposed all efforts of other parties to intervene in the case. The legal interests of
Nicolas-Agbulos, Abesamis, and the spouses Santiago are totally dependent on the alleged right of
ownership of BPC, and the issues they raised are similar to those raised by BPC. The fact that Nicolas-
Agbulos and Abesamis are purchasers in good faith will not render their titles valid and indefeasible. The
titles of Servando from whom BPC acquired its titles and from whom, in turn, Nicolas-
Agbulos and Abesamis, derived their titles, were found to be spurious; and the spring cannot rise higher
than its source.[41]

In the interim, BPC filed its Reply dated 22 January 1999, to the Comment of the Republic.

This Court, in a Resolution, dated 22 March 1999, granted the motion of the Republic for the
issuance of a temporary restraining order enjoining BPC from selling the remaining unsold portions of the
subject lots and from allowing buyers to enter and occupy portions thereof.[42]

Thereafter, BPC,[43] the Republic,[44] spouses Santiago,[45] Abesamis,[46] and Nicolas-Agbulos,[47] filed their
respective Memoranda.

However, even before the case could be submitted for decision, Servandos heirs,
namely Virgilio V. Accibal (Virgilio), Virginia A. Macabudbod (Virginia), and Antonio, filed an
Urgent Ex Parte Motion to Defer Resolution of the same. Soon after, they filed a Petition for New Trial,
dated 23 May 2001.[48] Although Servandos heirs concede that the period allowed for the filing of a motion
to set aside the judgment and grant a new trial under Rule 37, Section 1 of the Rules of Court, had
already lapsed, on grounds of justice and equity, they still move that this Court grant their
Petition. Servandos heirs were allegedly prevented from participating in Civil Case No. Q-92-11806
before the RTC by the fraudulent misrepresentations of Rev. Father Antonio O. Ipo (Ipo), BPC President,
together with the BPC counsel, who convinced the nave Antonio that there was no need to worry about
the case filed by the Republic against them and to hire another counsel as the BPC counsel shall
represent all of them. Unknown to Servandos heirs, the BPC counsel neither represented them nor
included them in the Answer he filed on behalf of BPC, thus, Servandos heirs were declared in default by
the RTC. Because of the extrinsic fraud perpetrated upon them and their excusable
negligence, Servandos heirs should be granted a new trial, otherwise, they would be deprived of their
constitutional right to due process of law. According to Servandos heirs, neither BPC nor the Republic
was a purchaser in good faith who acquired clean titles to the subject lots. The BPC President Ipo,
hoodwinked Antonio into agreeing to convey the subject lots to BPC in exchange for 51% of its capital
stock. However, despite acquiring titles to the subject lots, BPC failed to transfer the promised 51% of its
capital stock. On the other hand, the TCTs of FPHC, the Republics predecessor-in-interest, were of
doubtful origin; and the Republics acquisition of the subject lots from FPHC was anomalous in the sense
that it purchased the said property through ordinary sale when it could have easily expropriated the same.

Without formally intervening in the case at bar, Sariling Sikap Pabahay (SSP), through its President, Elias
V. Esraita, submitted to this Court a letter,[49] dated 26 August 2002, together with other documents to
disprove the validity of the titles of Servando and his heirs to the subject lots. SSP is a cooperative
formed by the urban poor to help secure for its members award from the government of titles to the

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portions of the subject lots which they are presently occupying. It presented the affidavit of a certain Edith
C. Mantaring,[50] who attests that the Accibals are still misrepresenting themselves as owners of the
subject lots and fraudulently selling portions thereof to unsuspecting buyers.

This Courts Ruling

Ultimately, this Court is called upon to determine which party now has superior title to the subject lots: the
Republic, BPC, the intervenors Abesamis, Nicolas-Agbulos, and spouses Santiago, or Servandos heirs?

BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses Santiago, and Servandos heirs derived their
title to the subject lots from Servandos TCTs No. 200629 and 200630. This Court then is compelled to
look into the validity, authenticity, and existence of these two TCTs.
It is alleged by BPC and Servandos heirs that Servando was issued TCTs No. 200629 and 200630 on 24
July 1974. However, there is an absolute dearth of information and proof as to how Servando acquired
ownership and came into possession of the subject lots.

An investigation conducted by the LRA revealed even more irregularities which raised serious doubts as
to the validity and authenticity of TCTs No. 200629 and 200630. The LRA Report, dated 10 June 1992,
submitted by Investigator Benjamin A. Flestado (Flestado), found the said certificates of titles spurious
after a very detailed and exhaustive analysis of the evidence available.

First, it should be noted that despite letters sent by Investigator Flestado to BPC President Ipo, Servando,
and Antonio, requesting copies of documents to support the issuance of TCTs No. 200629 and 200630,
they failed to file a reply and furnish him with the documents requested. A certain Atty. Justino Z. Benito
(Atty. Benito) appeared before Investigator Flestado claiming to be the counsel for BPC and promising to
contact Servandos heirs. Yet, even by the time the LRA Report was finalized on 10 June 1992, Atty.
Benito still failed to submit the documents requested. Instead, he wrote letters insisting that TCTs No.
200629 and 200630 be returned to the Quezon City Register of Deeds since these certificates were
detached and transferred to [your LRA central] office for no cogent reason or purpose; and his client,
BPC, is a transferee in good faith and for value, and its titles unchallenged.

Second, although the 109-D forms on which TCTs No. 200629 and 200630 were printed appeared to be
genuine, and determined to have been issued to the Quezon City Register of Deeds on 5 July 1974, the
signature therein of the Quezon City Register of Deeds Atty. Nestor N. Pea (Atty. Pea) was forged. No
less than Atty. Pea himself refuted that the signatures on TCTs No. 200629 and 200630 were his. In his
sworn statement, he noted

A. At a glance, I am definitely sure that the signatures appearing here are not mine. My
attention is invited on the loop, on the starting point of the signature. The loop
should be sharp on the last portion of my signature. The portion going-up starts

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from a point and is also sharp because that represents hypen [sic] on letter n. I
notice in these titles my surname is typed as PENA and not PEA. If ever there is
no in the typewriter, I used to add hypen [sic] over the letter n. Besides, my
position here is indicated as Deputy Register of Deeds. I never signed titles as
Deputy Register of Deeds, during my time; and if ever a title was presented
indicating my position as Deputy Register of Deeds, I would erase the word
Deputy. Moreso, the pen used here was a sign-pen. I never used a signpen, as
shown in the other 5 titles I identified earlier.

His employment records revealed that Atty. Pea was appointed as the Quezon City Register of Deeds on
27 May 1968, and served as such until his retirement in August of 1980, so that at the time when he
supposedly signed TCTs No. 200629 and 200630 on 24 July 1974, he was the Quezon City Register of
Deeds, not the Deputy Register of Deeds.

Third, even the then incumbent Quezon City Register of Deeds Samuel Cleofe (RD Cleofe) and Deputy
Register of Deeds Edgardo Castro (DRD Castro) believed that TCTs No. 200629 and 200630 were
spurious. According to RD Cleofe, the size of the area covered by the TCTs made him highly suspicious
of the same. In Quezon City, only a few people own big tracts of land, namely, the Aranetas, Tuazons,
etc. Commonly, ordinary individuals own only 300 to 2,000 square meters of land. Both RD Cleofe and
DRD Castro identified differences in the signatures and designation of Atty. Pea appearing on the
questionable TCTs No. 200629 and 200630 compared to those on five other admittedly
authentic TCTs.[51].

Fourth, the National Bureau of Investigation (NBI), upon request of Investigator Flestado,
conducted an examination and issued Questioned Documents Report No. 636-991, dated 31 March
1992, wherein it noted significant differences in the handwriting characteristics between the
standard/sample signatures of Atty. Pea and those appearing on TCTs No. 200629 and 200630, i.e., in
the manner of execution, direction/movement of strokes, and other identifying details. The NBI concluded
that [t]he questioned and the standard/sample signatures of [N]estor N. Pea were NOT WRITTEN by one
and the same person.

Finally, Investigator Flestado made inquiries with the Land Management Bureau (LMB) regarding
the consolidation-subdivision plan Pcs-2480 and plan Psu-32606 of Lots 34 and 40 (the subject lots) as
described in TCTs No. 200629 and 200630. LMB Geodetic Surveys Division Chief Privadi J.G. Dalire, in
a letter, dated 29 November 1991, informed Investigator Flestado that LMB had no records of Pcs-2480,
while the original copy of Psu-32606 is no longer available as it had been badly damaged. Thus, there
was no record in the LMB that Lots 34 and 40, Psu-32606, were in fact consolidated and then subdivided
into Lots 3, 4, 5, and 6 pursuant to plan Pcs-2480, as mentioned in TCTs No. 200629 and 200630.

To rebut the foregoing findings of LRA Investigator Flestado, BPC presented, in support of the
authenticity and validity of TCTs No. 200629 and 200630, the LRA Resolution,[52] dated 4 November
1991, in Consulta No. 1957, and NBI Questioned Documents Report No. 585-891,[53] dated 2 September
1991. A careful study of the said documents does little to support the position of BPC.

The LRA Resolution in Consulta No. 1957 merely allowed the registration of the rescission of a
Joint Venture Agreement on TCTs No. 200629 and 200630 despite the initial adverse finding that the said

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certificates were of doubtful authenticity. It did not make any categorical finding as to the authenticity or
validity of the TCTs. In fact, the last paragraph of the said Resolution elucidated that

This resolution, however, should be understood to be limited to the issue

of registrability of the instrument sought to be registered and is without prejudice to
any action, if warranted, that may be filed in court assailing the validity or authenticity of
the certificate of titles. (Emphasis supplied.)

The NBI Questioned Documents Report No. 585-891 was even in accordance with the finding in
the LRA Report that the 109-D forms on which TCTs No. 200629 and 200630 were printed seemed to be
genuine. The NBI concluded that the words 109-D and the serial numbers printed on the forms were not
altered. The NBI did a very limited examination of the genuineness of the forms on which TCTs No.
200629 and 200630 were printed, but it did not look into the authenticity of Atty. Peas signature (which
was the subject of NBI Questioned Documents Report No. 636-991, dated 31 March 1992, mentioned in
the LRA Report) or the accuracy of the entries made therein.

The LRA Report, dated 10 June 1992, of Investigator Flestado was submitted as evidence before
the RTC. It must be emphasized that the LRA Report was extensive and thorough. Its findings are
sufficiently supported by independent and reliable proof. The BPC failed to present evidence to refute the
same. The LRA Report deserves great weight sufficient to overcome the presumption that TCTs No.
200629 and 200630 were genuine, authentic, and indefeasible.[54]

It having been established that TCTs No. 200629 and 200630 were forged and spurious, their
reconstitution was also attended with grave irregularities. Once more, this Court relies on the findings in
the LRA Report, dated 10 June 1992, of Investigator Flestado. Quezon City RD Cleofe; the unnamed
Chief of the LRA Micrographics and Computer Division; and Records Officer Viterbo Cahilig of
the Quezon City Register of Deeds, all confirmed that there were no records of any applications for
reconstitution of TCTs No. 200629 and 200630 in the name of Servando. It would seem that an LRA
employee, Cartographer Rovil Ruiz (Ruiz), made it appear that there were applications for reconstitution
of TCTs No. 200629 and 200630 filed, and which were included in Folder 1614. When Folder 1614 was
inspected, TCTs No. 200629 and 200630 were not included in its table of contents; and although the said
folder did have 44 missing pages, the missing pages pertain to the supporting documents of other TCTs,
and there was no showing that TCTs No. 200629 and 200630 and the applications for reconstitution
thereof were among these missing pages. Ruiz undertook by himself the computation of the tie-lines of
the subject lots as described in TCTs No. 200629 and 200630, the plotting, and examination of the
titles. The LRA Report thus recommended that Ruiz be administratively charged for grave misconduct, it
appearing that he was the one who facilitated the administrative reconstitution of TCTs No. 200629 and
200630.

In contrast, the Republic was able to supply Investigator Flestado with the documents supporting
the transfer of the titles to the subject lots from FPHC to the Republic, among which were the TCTs of
FPHC, the Deeds of Sale executed by FPHC to the Republic, notice to the real property owners within
300-meter radius from the area, receipts for payment of registration fees, and payment order for the
documentary stamp tax on the sales. TCTs No. 275443 and 288417 in the name of the Republic were
included in LRA Folder No. 1976-B, together with other certificates of title in the name of the
Republic. One of the applications filed by the Republic was docketed as Application for Reconstitution No.
41869. The Chief of the LRA Micrographics and Computer Division confirmed that the applications for

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reconstitution of TCTs No. 275443 and 288417 by the Republic were recorded in the computerized
Administrative Reconstitution System.

BPC was unable to attack the authenticity and validity of the titles of the Republic to the subject
lots, and could only interpose the defense that it was a buyer in good faith.Only Servandos heirs, in their
Petition for New Trial, attempted to raise doubts as to the titles of the Republic to the subject lots by
averring that the transfer thereof from FPHC to the Republic was highly irregular because the latter could
have acquired the property by expropriation. Such an averment is totally baseless. Expropriation as the
means by which the State can acquire private property is always the remedy of last resort. Expropriation
lies only when it is made necessary by the opposition of the owner of the property to the sale or by the
lack of any agreement as to the price.[55] There being, in the present case, valid and subsisting contracts
between the FPHC, the previous owner, and the Republic, the buyer, for the purchase of the subject lots
at an agreed price, there was no reason for the expropriation.
.
In consideration of all the foregoing findings, it is indubitable that TCTs No. 275443 and 288417
of the Republic covering the subject lots are authentic and valid, while TCTs No. 200629 and 200630
of Servando covering the same property are not.

However, BPC maintains that it was a purchaser in good faith, for value and without any inkling
about any flaw from Servandos titles. It points out that it purchased the subject lots from Servando on 8
February 1989 and registered the same on 19 February 1991, way before the titles of Servando were
declared null by the RTC on 22 December 1992. BPC relies on this Courts ruling in Tenio-Obsequio v.
Court of Appeals,[56] to wit

Under Section 55 of the Land Registration Act, as amended by Section 53 of

Presidential Decree No. 1529, an original owner of registered land may seek the
annulment of a transfer thereof on the ground of fraud. However, such a remedy is
without prejudice to the rights of any innocent holder for value with a certificate of title.

A purchaser in good faith and for value is one who buys the property of another,
without notice that some other person has a right to or interest in such property, and pays
a full and fair price for the same at the time of such purchase or before he has notice of
the claim or interest of some other person in the property. In consonance with this
accepted legal definition, petitioner Consorcia Tenio-Obsequio is a purchaser in good
faith. There is no showing whatsoever nor even an allegation that herein petitioner had
any participation, voluntarily or otherwise, in the alleged forgery.

xxxx

The main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the right to
rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that should impel a reasonable cautious man to make such further inquiry.
Where innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property, the court cannot disregard such rights and order
the total cancellation of the certificate. The effect of such an outright cancellation would
be to impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as to

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whether the title has been regularly or irregularly issued by the court. Every person
dealing with registered land may safely rely on the correctness of the certificate of title
issued therefor and the law will in no way oblige him to go beyond the certificate to
determine the condition of the property.

xxxx

It has been consistently ruled that a forged deed can legally be the root of a valid
title when an innocent purchaser for value intervenes. A deed of sale executed by an
impostor without the authority of the owner of the land sold is a nullity, and registration
will not validate what otherwise is an invalid document. However, where the certificate of
title was already transferred from the name of the true owner to the forger and, while it
remained that way, the land was subsequently sold to an innocent purchaser, the vendee
had the right to rely upon what appeared in the certificate and, in the absence of anything
to excite suspicion, was under no obligation to look beyond the certificate and investigate
the title of the vendor appearing on the face of said certificate.

Now the question is whether BPC qualifies as an innocent purchaser for value which acquired valid titles
to the subject lots, despite the fact that the titles of its predecessor-in-interest were found to be forged and
spurious.

This Court finds in the negative.

Foremost is the fact that there seem to be two documents by which titles to the subject lots were
transferred from the Accibals to BPC: (1) A Deed of Conveyance, dated 8 February 1989, executed
by Servando in favor of BPC, transferring to the latter titles to the subject lots in exchange for 51% of its
capital stock; and (2) A Deed of Conveyance, dated 10 October 1990, executed by Antonio in favor of
BPC, transferring to the latter the very same property in exchange for 2,450 shares in BPC. It should be
noted that even prior to these Deeds of Conveyance, Servando already transferred the subject lots by
way of a Deed of Absolute Sale, dated 10 June 1988, in favor of his son Antonio, with the concurrence of
his other heirs. Thus, by the time Servando executed the Deed of Conveyance over the subject lots in
favor of BPC on 8 February 1989, he no longer had any right to the said property, having sold the same
to Antonio. It was probably to rectify this mistake that a second Deed of Conveyance was executed by
Antonio on 10 October 1990.Comparing all these transfer documents, the LRA Report, dated 10 June
1992, prepared by Investigator Flestado noted that Servandos Tax Account Number (TAN) in the Deed of
Conveyance, dated 8 February 1989, which he executed over the subject lots in favor of BPC, was
A2140-M1746-A-1; while in the Deed of Sale, dated 10 June 1988, which he executed over the subject
lots in favor of Antonio, his TAN was 4110-241-R. Moreover, despite being executed a year
apart, Servando had the same residence certificate (No. 5901393, issued at Quezon City, on 6 April
1988) appearing in both documents.
Furthermore, BPC cannot really claim that it was a purchaser in good faith which relied upon the face
of Servandos titles. It should be recalled that the Quezon City Register of Deeds caught fire on 11 June
1988. Presumably, the original copies of TCTs No. 200629 and 200630 were burnt in the said
fire. Servandos heirs sought the administrative reconstitution of of TCTs No. 200629 and 200630 only in
December 1990. The two Deeds of Conveyance over the subject lots were executed in favor of BPC
by Servando and Antonio on 8 February 1989 and 10 October 1990, respectively, both prior to the
administrative reconstitution of TCTs No. 200629 and 200630. If BPC bought the subject lots
after TCTs No. 200629 and 200630 were destroyed when the Quezon City Register of Deeds burned

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down, but before the said certificates were reconstituted, then on the face of what titles did BPC rely on
before deciding to proceed with the purchase of the subject lots? There was no showing that there were
surviving owners duplicate copies of TCTsNo. 200629 and 200630, or even if there were, without the
original copies of the said TCTs which were stored in the Quezon City Register of Deeds and purportedly
destroyed in the fire, there would have been no way for BPC to have verified the owners duplicate copies.

In addition, without the original copies and owners duplicate copies of TCTs No. 200629 and
200630, BPC had to rely on the reconstituted certificates, issued on 12 December 1990, bearing the
following numbers: TCTs No. RT-23687 (for TCT No. 200629) and RT-23688 (for TCT No.
200630). Under section 7 of Republic Act No. 26,[57]"Reconstituted titles shall have the same validity and
legal effect as the originals thereof" unless the reconstitution was made extrajudicially.[58] In this
case, TCTs No. 200629 and 200630 were reconstituted administratively, hence, extrajudicially. In
contrast to the judicial reconstitution of a lost certificate of title which is in rem, the administrative
reconstitution is essentially ex-parte and without notice.[59] The reconstituted certificates of title do not
share the same indefeasible character of the original certificates of title for the following reason

x x x The nature of a reconstituted Transfer Certificate Of Title of registered land is similar

to that of a second Owner's Duplicate Transfer Certificate Of Title. Both are issued, after
the proper proceedings, on the representation of the registered owner that the original of
the said TCT or the original of the Owner's Duplicate TCT, respectively, was lost and
could not be located or found despite diligent efforts exerted for that purpose. Both,
therefore, are subsequent copies of the originals thereof. A cursory examination of these
subsequent copies would show that they are not the originals. Anyone dealing with such
copies are put on notice of such fact and thus warned to be extra-careful. x x x.[60]

The fact that the TCTs were reconstituted should have alerted BPC and its officers to conduct an inquiry
or investigation as might be necessary to acquaint themselves with the defects in the titles
of Servando.[61]

What is more, BPC again invokes LRA Resolution, dated 4 November 1991, in Consulta No. 1957, and
NBI Questioned Documents Report No. 585-891, dated 2 September 1991 as proof that it did inquire or
investigate into the validity and authenticity of Servandos titles. But again, it should be noted that these
documents were issued after BPC already acquired the subject lots from Servando and Antonio.

Lastly, there are serious doubts that BPC acquired the subject lots for value. The Republic bought the
subject lots from FPHC for the combined price of P12,333,280.00. BPC, on the other hand, supposedly
acquired the subject lots from Servando on 8 February 1989 in exchange for 51% of the capital stock of
BPC, with a subscription value of P6,000,000.00. In the LRA Report, dated 10 June 1992,
Investigator Flestado pointed out that in the Articles of Incorporation, dated 16 January 1989, of BPC,
submitted to the Securities and Exchange Commission (SEC) on 20 January 1989, BPC had an
authorized capital stock of only P1,000,000.00, which was divided into 10,000 shares, with a par value
of P100.00 each; and the amount of capital stock actually subscribed was P250,000.00. Therefore, in
1989, fifty-one percent of the capital stock of BPC would be 5,100 shares, with an aggregate value of
only P510,000.00. BPC is not saved by the second Deed of Conveyance, executed more than a year
later by Antonio, again transferring to BPC the subject lots in exchange for 2,450 shares in the latter, with
the alleged value of P49,000.000.00. Unless BPC is able to present proof that it applied for, and the SEC
approved, a substantial increase in its capital stock, then this Court can only assume that its capital stock
remained the same as the year before, 2,450 shares in BPC, with a par value of P100.00 each, amount

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only to P245,000.00. This Court cannot find a plausible explanation for the discrepancy in the value of
2,450 shares of BPC between the P245,000.00 it has hereby computed and the P49,000,000.00 claimed
by BPC.

For the above-stated reasons, this Court cannot declare BPC an innocent purchaser for value,
and it acquired no better titles to the subject lots than its predecessors-in-interest, Servando and Antonio.

At this point, it would seem that the Republic does hold better titles to the subject
lots. Nonetheless, another level of transactions involving the subject lots was brought by intervenors to
the attention of this Court.

From the reconstituted TCTs No. RT-23687 (200629) and RT- 23688 (200630) in the name
of Servando, BPC derived and was issued by the Quezon City Register of Deeds new
certificates, TCTs No. 30829, 30830, 30831 and 30832, in its own name. It was able to secure the
necessary licenses and permits from the appropriate government agencies to subdivide, develop, and sell
the subject lots as Parthenon Hills. The Parthenon Hills project was openly advertised and marketed, and
a substantial portion of the subject lots was already sold by BPC to the public.

Except for the spouses Santiago, BPC recognizes that the intervenors, Nicolas-
Agbulos and Abesamis, together with other legitimate homeowners in Parthenon Hills, acquired from BPC
titles to their respective subdivided lots in good faith and for value. Even the Republic could not refute that
the individuals who acquired lots in Parthenon Hills from BPC were purchasers in good faith and for
value. It insists, however, that these buyers could not acquire better titles to the property than its
predecessors-in-interest BPC, Servando, and Antonio since the spring cannot rise higher than its
source. The law must protect and prefer the lawful holder of registered title over the transferee of a
vendor bereft of any transmissible rights.[62]

It is true that the general rule is that a forged deed is a nullity and conveys no title. [63] A forged
deed may be defined as an instrument which purports to have been executed by the person or persons
whose signatures appear thereon, but which, in fact, was not executed, and the signatures thereon had
been merely imitated so as to give them the deceptive appearance of genuineness. [64] In the case at bar,
it was not any of the deeds of transfer or conveyance of the subject lots which was forged, but TCTs No.
200629 and 200630 themselves. The forged TCTs, nevertheless, just as a forged deed, can make it
appear that one had title, right, or interest to the land, when in truth, he had none, to the deprivation of the
rightful owner. It has been recognized that while a forged instrument is null and void and of no effect as
between the parties, it may nevertheless be the root of a good title; so that the title of a registered owner
who has taken it bona fide and for value, is not affected by reason of his claiming through someone, that
the registration was void because it had been procured by the presentation of a forged instrument. [65]

The forged TCTs No. 200629 and 200630 were later administratively reconstituted, and although
an investigation would show that their reconstitution was also attended with irregularities, TCTs No. RT-
23687 (200629) and RT-23688 (200630) appear, on either face, to have been duly approved by the LRA
and issued by the Quezon City Register of Deeds. With the cancellation of the reconstituted TCTs and
the issuance of new ones, TCTs No. 30829, 30830, 30831, and 30832, in the name of BPC, any trace of
forgery or irregularity as to BPCs titles was eliminated. TCTs No. 30829, 30830, 30831, and 30832 were
clean, at least, until the annotation therein of the notice of lis pendens of the Republic on 21 October
1992. It is a settled doctrine that one who deals with property registered under the Torrens system need
not go beyond the same, but only has to rely on the certificates of title. He is charged with notice only of
such burdens and claims as are annotated on the certificates. [66] Herein intervenors, Nicolas-

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Agbulos and Abesamis, before purchasing subdivision lots in Parthenon Hills, looked into the TCTs of
BPC and found nothing on the face thereof to raise doubts or suspicions as to their validity and
authenticity. Besides, BPC was the holder of licenses and permits to subdivide, develop, and sell the
subject lots as Parthenon Hills, issued by the appropriate government agencies, primarily HLURB.

This is definitely a situation which constitutes an exception to the general rule

that estoppel cannot lie against the government. The Republic v. Court of Appeals,[67]provides an
illuminating discourse on when such an exception applies, thus

Is the immunity of the government from laches and estoppel absolute? May it still
recover the ownership of lots sold in good faith by a private developer to innocent
purchasers for value, notwithstanding its approval of the subdivision plan and its issuance
of separate individual certificates of title thereto?

xxxx

The general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents. However, like all general rules, this is also subject to
exceptions, viz:

"Estoppels against the public are little favored. They should not
be invoked except in rare and unusual circumstances, and may not be
invoked where they would operate to defeat the effective operation of a
policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases where
the interests of justice clearly require it. Nevertheless, the government
must not be allowed to deal dishonorably or capriciously with its citizens,
and must not play an ignoble part or do a shabby thing; and subject to
limitations x x x the doctrine of equitable estoppel may be invoked
against public authorities as well as against private individuals."

xxxx

Significantly, the other private respondents Spouses Santos,

Spouses Calaguian, Dela Fuente and Madaya bought such "expanded" lots in good faith,
relying on the clean certificates of St. Jude, which had no notice of any flaw in them
either. It is only fair and reasonable to apply the equitable principle
of estoppel by laches against the government to avoid an injustice to the innocent
purchasers for value.

Likewise time-settled is the doctrine that where innocent third persons, relying on
the correctness of the certificate of title, acquire rights over the property, courts cannot
disregard such rights and order the cancellation of the certificate. Such cancellation
would impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance whether the
title has been regularly issued or not. This would be contrary to the very purpose of the
law, which is to stabilize land titles. Verily, all persons dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor, and the law or the

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courts do not oblige, them to go behind the certificate in order to investigate again the
true condition of the property. They are only charged with notice of the lions and
encumbrances on the property that are noted on the certificate.

When private respondents-purchasers bought their lots from St. Jude, they did
not have to go behind the titles thereto to verify their contents or search for hidden
defects or inchoate rights that could defeat their rights to said lots. Although they were
bound by liens and encumbrances annotated on the titles, private respondents
purchasers could not have had notice of defects that only an inquiry beyond the face of
the titles could have satisfied. The rationale for this presumption has been stated thus:

"The main purpose of the Torrens System is to avoid possible

conflicts of title to real estate and to facilitate transactions, relative
thereto by giving the public the right to rely upon the face of a Torrens
Certificate of Title and to dispense with the need of inquiring further,
except when the party concerned had actual knowledge of facts and
circumstances that should impel a reasonably cautious man to make
such further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus, where
innocent third persons relying on the correctness of the certificate thus
issued, acquire rights over the property, the court cannot disregard such
rights (Director of Land v. Abache, et al., 73 Phil. 606)."

In another case, this Court further said:

"The Torrens System was adopted in this country because it was

believed to be the most effective measure to guarantee the integrity of
land titles and to protect their indefeasibility once the claim of ownership
is established and recognized. If a person purchases a piece of land on
the assurance that the seller's title thereto is valid, he should not run the
risk of being told later that his acquisition was ineffectual after all. This
would not only be unfair to him. What is worse is that if this were
permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not
necessarily conclusive investigations and proof of ownership. The further
consequence would be that land conflicts could be even more abrasive,
if not even violent. The Government, recognizing the worthy purposes of
the Torrens System, should be the first to accept the validity of titles
issued thereunder once the conditions laid down by the law are satisfied.
[Italics supplied.]

Petitioner never presented proof that the private respondents who had bought
their lots from St. Jude were buyers in bad faith. Consequently, their claim of good faith
prevails. A purchaser good faith and for value is one who buys the property of another
without notice that some other person has a right to or an interest in such property; and
who pays a full and fair price for the same at the time of such purchase or before he or
she has notice of the claims or interest of some other person. Good faith is the honest
intention to abstain from taking any unconscientious advantage of another.

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It also bears to emphasize that the subject lots covered by TCTs No. 30829, 30830, 30831, and
30832 were already subdivided, and new TCTs were issued in the names of the buyers of each
subdivision lot. To order the cancellation of all these derivative titles and the return of the subdivision lots
to the Republic shall irrefragably be unjust to the innocent purchasers for value and shall wreak havoc on
the Torrens System.

Anyway, the Republic is not without recourse. It can claim damages from BPC, found herein not
to be a buyer of the subject lots in good faith. For its loss of portions of the subdivision lots to innocent
purchasers from BPC, the Republic may recover from BPC the purchase price it paid to FPHC
corresponding to such subdivision lots, with interest at 6% per annum from 26 March 1992 (the date
when the Republic instituted its petition for the cancellation of the TCTs of Servando, Antonio, and BPC)
until finality of this Decision, and 12% per annum thereafter until fully paid. [68]

Although this Court allowed in the case at bar the intervention of Nicolas-Agbulos and Abesamis,
and recognized their title to their respective subdivision lots in Parthenon Hills as purchasers in good faith
and for value from BPC, it could not do the same for the spouses Santiago, for the reason that BPC
contested their claim that they had acquired titles to the subdivision lots in Parthenon Hills in good faith
and for value, and further asserted that the spouses Santiago acquired the said subdivision lots by
fraudulent means.The allegations by the spouses Santiago of good faith, on one hand, and by BPC of
fraud, on the other, in the acquisition by the spouses Santiago of the subdivision lots in question, are
factual matters, best proven and established before the RTC, which could receive evidence in support of
each partys position during trial. Should the RTC find that the spouses Santiago have indeed acquired the
subdivision lots in good faith and for value, then their titles thereto shall, likewise, be valid and
indefeasible even against that of the Republic. However, in a contrary case, should the RTC find that the
spouses Santiago acquired the subdivision lots by fraud, then titles thereto return to BPC.

Though estoppel by laches may lie against the Republic when titles to the subdivision lots are
already in the names of the respective innocent purchasers for value from BPC, it may not be used by
BPC to defeat the titles of the Republic as regards the subdivision lots which remain unsold and the titles
to which are still in the name of BPC. It must be recalled that BPC is not a purchaser in good
faith. Estoppel, being an equitable principle, may only be invoked by one who comes to court with clean
hands.[69]

Pertinent provisions of the New Civil Code concerning builders in bad faith provide that

ART. 449. He who builds, plants, or sows in bad faith on the land of another,
loses what is built, planted or sown without right to indemnity.

ART. 450. The owner of the land on which anything has been built, planted or
sown in bad faith may demand the demolition of the work, or that the planting or sowing
be removed, in order to replace things in their former condition at the expense of the
person who built, planted or sowed; or he may compel the builder or planter to pay the
price of the land, and the sower the proper rent.

ART. 451. In cases of the two preceding articles, the landowner is entitled to
damages from the builder, planter or sower.

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ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement
for the necessary expenses of preservation of the land.

Hence, as far as the subdivision lots still in the name of BPC are concerned, the Republic has the option
to either (1) recover the said lots and demand that BPC demolish whatever improvements it has made
therein, to return the lots to their former condition, at the expense of BPC; or (2) compel BPC to pay the
price of the land. The choice can only be made by the Republic, as the rightful owner of the said subject
lots. Should the Republic choose the first option, BPC is under the obligation to return the possession of
the subdivision lots to the Republic and surrender its corresponding TCTs for cancellation and issuance
of new ones in the name of the Republic. Should the Republic select the second option, then BPC shall
pay the Republic the purchase price that the latter had paid to FPHC corresponding to such subdivision
lots, with interest at 6% per annum from 26 March 1992 until finality of this Decision, and 12% per annum
thereafter until fully paid. In either option, the Republic may claim damages from BPC, while BPC cannot
seek indemnity from the Republic for any improvements made on the subdivision lots, except if these
constitute as necessary expenses for the preservation of the land, for which it shall still be entitled to
reimbursement.

As for the Petition for New Trial filed by Servandos heirs, this Court dismisses the same for lack
of legal basis. Section 1, Rule 37 of the Rules of Court reads

SECTION 1. Grounds of and period for filing motion for new trial or
reconsideration. Within the period for taking an appeal, the aggrieved party may move
the trial court to set aside the judgment or final order and grant a new trial for one or more
of the following causes materially affecting the substantial rights of the said party:

(a) Fraud, accident, mistake or excusable negligence which ordinary prudence

could not have guarded against and by reason of which such aggrieved party has
probably been impaired in his rights; or

(b) Newly discovered evidence, which he could not, with reasonable diligence,
have discovered and produced at the trial, and which if presented would probably alter
the result.

Servandos heirs themselves admit that the period allowed for the filing of a motion to set aside
the judgment and grant a new trial under the afore-quoted provision had already lapsed, but they still pray
that this Court give due course to their Petition on the grounds of justice and equity.

In Malipol v. Lim Tan,[70] this Court ruled that

It is within the sound discretion of the court to set aside an order of default and to
permit a defendant to file his answer and to be heard on the merits even after the
reglementary period for the filing of the answer has expired, but it is not error, or an
abuse of discretion, on the part of the court to refuse to set aside its order of default and
to refuse to accept the answer where it finds no justifiable reason for the delay in the filing

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of the answer. In the motions for reconsideration of an order of default, the moving parry
has the burden of showing such diligence as would justify his being excused from not
filing the answer within the reglementary period as provided by the Rules of Court,
otherwise these guidelines for an orderly and expeditious procedure would be rendered
meaningless. Unless it is shown clearly that a party has justifiable reason for the delay,
the court will not ordinarily exercise its discretion in his favor.

In the present case, the late Servando and Antonio were already declared in default by the RTC
on 31 July 1992, after their supposed counsel failed to file an answer to the Republics petition for
cancellation of title. Nothing was heard from Servandos heirs even after the promulgation of the RTC
Decision on 22 December 1992, and the Court of Appeals Decision, dated 8 August 1997, until they filed
their Petition for New Trial, dated 23 May 2001, before this Court, or nine years from the date they were
declared in default.

According to Servandos heirs, due to the extrinsic fraud committed by the President and counsel
of BPC, they were prevented from participating in the proceedings before the trial court. They allegedly
relied on the assurance of the President and counsel of BPC that the latter shall also represent them and
their interests in the subject lots in the case.

This allegation of fraud by Servandos heirs has no leg to stand on. It should be recalled that the
late Servando and Antonio were represented by a counsel at the beginning of the proceedings before the
RTC. Their counsel even submitted two consecutive motions for extension of time to file the appropriate
pleadings. There was no explanation provided as to why, despite the grant of said motions, the counsel
still failed to file an answer to the Republics petition for cancellation of title. It is also contrary to common
human experience that Servandos heirs, by the mere assurance of the President and counsel of BPC,
adopted a totally hands-off attitude in a case where they supposedly have substantial interest. There is no
showing during the nine years when they were not participating in the court proceedings, that they, at
least, inquired into or followed-up on the status of the case with BPC. Such blind trust in the President
and counsel of BPC is surely difficult to comprehend, especially if this Court takes into account the
contention of Servandos heirs that BPC failed to deliver the shares of stock in exchange for the subject
lots. What is apparent to this Court is not the alleged fraud committed by BPC but, rather, the inexcusable
negligence of Servandos heirs when it came to protecting their titles, rights, and interests to the subject
lots, if indeed, there were still any.

Worth reproducing herein, is the conclusion[71] made by the Court of Appeals on Servandos titles

On the strength of the LRA report, Exhibit H (Record, pp. 214-258), the court a
quo found TCT Nos. 200629 and 200630, in the name of Servando Accibal and from
which the titles of defendant-appellee Barstowe Philippines Corporation were derived,
spurious, and ordered the Register of Deeds of Quezon City to officially and finally cancel
(said titles) from his records (Par. 2, dispositive portion, Decision, p. 16; Rollo, p. 71). As
explained by the court a quo:

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We shall now dwell on the validity of the titles, TCT Nos. 200629
and 200630, issued in the name of Servando Accibal on July 24, 2974 by
the Register of Deeds of Quezon City. The LRA Report dated 10 June
1992 (Exh. H, pp. 214-258, record) is competent proof that indeed said
titles must be cancelled. In short, the LRA found after due investigation
that the said titles of Servando Accibal were issued with
certain irregularties (sic). It recommended the cancellation therefore, of
TCT Nos. 200629 and 200630, to which the court concurs, as said report
must be accorded due respect and in the absence of fraud
or irregularties (sic) that attended the investigation, which the Court finds
none, the same must be persuasive, if not conclusive. Moreover, herein
defendant Servando Accibal because of his failure to answer, despite
extension of time given him, plaintiffs counsel, he was declared as in
default since then, he never asked the court to lift and set aside the
default order. There is no way, his title may be cancelled. For one thing,
he was not able to present evidence to controvert the recommendation of
the LRA to cancel his titles. For another, Servando Accibal is deemed to
have impliedly admitted the irregularties (sic) that attended the issuance
of his aforestated titles. (Decision, pp. 14-15; Rollo, pp. 69-70)

This portion of the decision ordering the cancellation of TCT Nos. 200629 and
200630 in the name of Servando Accibal was not appealed nor assigned as a counter-
assigment of error in the brief of Barstowe Philippines Corporation; hence, is now final.

Thus, the findings of this Court as to the rights of the parties involved in the present case are
summarized as follows

(1) The certificates of title acquired by Servando over the subject lots were forged and
spurious, and such finding made by both the RTC and Court of Appeals is already final and binding
on Servandos heirs;

(2) BPC did not acquire the subject lots in good faith and for value, and its certificates of
title cannot defeat those of the Republics;

(3) As between BPC and the Republic, the latter has better titles to the subject lots being
the purchaser thereof in good faith and for value from FPHC;

(4) However, considering that the subject lots had already been subdivided and the
certificates of title had been issued for each subdivision lot, which were derived from the certificates of
title of BPC, it is more practical, convenient, and in consonance with the stability of the Torrens System
that the certificates of title of BPC and its derivative certificates be maintained, while those of the
Republics be cancelled;

(5) Estoppel lies against the Republic for granting BPC governmental permits and
licenses to subdivide, develop, and sell to the public the subject lots as Parthenon Hills. Relying on the
face of the certificates of title of BPC and the licenses and permits issued to BPC by government
agencies, innocent individuals, including intervenorsNicolas-Agbulos and Abesamis, purchased
subdivision lots in good faith and for value;

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(6) The claims of the intervenor spouses Santiago that they acquired portions of the
subject lots in good faith and for value still need to be proven during trial before the court a quo. Unlike
the claims of intervenors Nicolas-Agbulos and Abesamis, which BPC admitted, the claims of the spouses
Santiago were opposed by BPC on the ground of fraud;

(7) Certificates of title over portions of the subject lots, acquired by purchasers in good
faith and for value, from BPC, are valid and indefeasible, even as against the certificates of title of the
Republic. The Republic, however, is entitled to recover from BPC the purchase price the Republic paid to
FPHC for the said portions, plus appropriate interests; and

(8) As portions of the subject lots are still unsold and their corresponding certificates of
title remain in the name of BPC, the Republic may exercise two options: (a) It may recover the said
portions and demand that BPC demolish whatever improvements it has made therein, so as to return the
said portions to their former condition, at the expense of BPC. In such a case, certificates of title of BPC
over the said portions shall be cancelled and new ones issued in the name of the Republic; or (b) It may
surrender the said portions to BPC and just compel BPC to reimburse the Republic for the purchase price
the Republic paid to FPHC for the said portions, plus appropriate interest.

WHEREFORE, premises considered, the instant Petition is hereby PARTLY GRANTED. The
Decision, dated 8 August 1997, of the Court of Appeals in CA-G.R. CV No. 47522 is
hereby REVERSED and SET ASIDE and a new one is hereby entered, as follows:

(1) In view of the finding that the Transfer Certificates of Title No. 200629 and 200630 in the
name of Servando Accibal are forged and spurious, the Quezon City Register of Deeds is ORDERED to
officially and finally cancel the same from his records;

(2) In view of the finding that the respondent Republic of the Philippines was a purchaser in good
faith of the subject lots from Philippine First Holdings Corporation, but also taking into consideration the
functioning and stability of the Torrens System, as well as the superior rights of subsequent purchasers in
good faith and for value of portions of the subject lots subdivided, developed, and sold as Parthenon Hills
from petitioner Barstowe Philippines Corporation

(a) The Quezon City Register of Deeds is ORDERED to cancel Transfer

Certificates of Title No. 275443 and 288417 in the name of respondent Republic of
the Philippines;

(b) The respondent Republic of the Philippines is ORDERED to respect and

recognize the certificates of title to the subject portions of land in the name of purchasers
of good faith and for value from petitioner Republic of the Philippines;

(c) Petitioner Barstowe Philippines Corporation is ORDERED to pay respondent

Republic of the Philippines for the purchase price the latter paid to First Philippine
Holdings Corporation corresponding to the portions of the subject lots which are already
covered by certificates of title in the name of purchasers in good faith and for value from
petitioner Barstowe Philippines Corporation, plus appropriate interest;
(d) The respondent Republic of the Philippines is ORDERED to choose one of
the options available to it as regards the portions of the subject lots which remain unsold
and covered by certificates of title in the name of petitioner Barstowe Philippines

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Corporation, either (i) To recover the said portions and demand that
petitioner Barstowe Philippines Corporation demolish whatever improvements it has
made therein, so as to return the said portions to their former condition, at the expense of
the latter, or (ii) To surrender the said portions to petitioner Barstowe Philippines
Corporation and compel the latter to reimburse the respondent Republic of the
Philippines for the purchase price it had paid to First Philippine Holdings Corporation for
the said portions, plus appropriate interest. Regardless of the option chosen by the
respondent Republic of the Philippines, it is ORDERED to reimburse
petitioner Barstowe Philippines Corporation for any necessary expenses incurred by the
latter for the said portions;

(2) In view of the finding that petitioner Barstowe Philippines Corporation is not a
purchaser and builder in good faith, and depending on the option chosen by respondent Republic of the
Philippines concerning the portions of the subject lots which remain unsold and covered by certificates of
title in the name of petitioner BarstowePhilippines Corporation, as enumerated in paragraph 2(d) hereof

(a) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(i) hereof, petitioner Barstowe Philippines Corporation is ORDERED to
demolish whatever improvements it has made on the said portions, so as to return the
same to their former condition, at its own expense. The QuezonCity Register of Deeds is
also ORDERED to cancel the certificates of title of petitioner Barstowe Philippines
Corporation over the said portions and to issue in lieuthereof certificates of title in the
name of respondent Republic of the Philippines;

(b) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(ii) hereof, petitioner Barstowe Philippines Corporation is ORDERED to
reimburse the petitioner Republic of the Philippines for the purchase price it had paid to
First Philippine Holdings Corporation for the said portions, plus appropriate interest;

(c) Petitioner Barstowe Philippines Corporaton is ORDERED to pay appropriate

damages to respondent Republic of the Philippines as may be determined by the trial
court;

(3) In view of the finding that intervenors Winnie U. Nicolas-

Agbulos and Edgardo Q. Abesamis are purchasers in good faith and for value of portions of the subject
lots subdivided, developed, and sold as Parthenon Hills from petitioner Barstowe Philippines Corporation,
it is DECLARED that their certificates of title are valid and indefeasible as to all parties;

(4) In view of the finding that the Petition for New Trial filed by the heirs of Servando Accibal,
namely, Virgilio V. Accibal, Virginia A. Macabudbud, and Antonio V. Accibal, lacks merit, the said Petition
is DISMISSED; and

(5) The case is REMANDED to the court of origin for determination of the following

(a) The validity of the claims, and identification of the purchasers, in good faith
and for value, of portions of the subject lots from petitioner BarstowePhilippines
Corporation, other than intervenors Winnie U. Nicolas-

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Agbulos and Edgardo Q. Abesamis, whose titles are to be declared valid and
indefeasible;

(b) The identification of the portions of the subject lots in the possession and
names of purchasers in good faith and for value and those which remain with
petitioner Barstowe Philippines Corporation;

(c) The computation of the amount of the purchase price which respondent
Republic of the Philippines may recover from petitioner Barstowe Philippines Corporation
in consideration of the preceding paragraphs hereof;

(d) The types and computation of the damages recoverable by the parties; and

(e) The computation and award of the cross-claim of EL-VI Realty and
Development Corporation against petitioner Barstowe Philippines Corporation.

SO ORDERED.

Republic v. CA and Santos, G.R. No. 116111, January 21, 1999

THIRD DIVISION

[G.R. No. 116111. January 21, 1999]

REPUBLIC OF THE PHILIPPINES, (Represented by the Acting Commissioner of Land

Registration), petitioner, vs. COURT OF APPEALS, Spouses CATALINO SANTOS and
THELMA BARRERO SANTOS, ST. JUDES ENTERPRISES, INC., Spouses DOMINGO
CALAGUIAN and FELICIDAD CALAGUIAN, VIRGINIA DE LA FUENTE and LUCY
MADAYA, respondents.

DECISION

PANGANIBAN, J.:

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Is the immunity of the government from laches and estoppel absolute? May it still recover the
ownership of lots sold in good faith by a private developer to innocent purchasers for value.
Notwithstanding its approval of the subdivision plan and its issuance of separate individual certificates of
title thereto?

The Case

These are the main questions raised in the Petition for Review before us, seeking to set aside the
November 29, 1993 Decision[1] of the Court of Appeals[2] in CA-GR CV No. 34647. The assailed Decision
affirmed the ruling[3] of the Regional Trial Court of Caloocan City, Branch 125, in Civil Case No. C-
111708, which dismissed petitioners Complaint for the cancellation of Transfer Certificates of Title (TCTs)
to several lots in Caloocan City, issued in the name of private respondents.

In a Resolution[4] dated July 7, 1994, the Court of Appeals denied the Republics motion for
reconsideration.

The Facts

The facts of the case are not disputed. The trial courts summary, which was adopted by the Court of
Appeals, is reproduced below:

Defendant St. Judes Enterprises, Inc. is the registered owner of a parcel of land known as Lot 865-B-1 of
the subdivision plan (LRC) PSD-52368, being a portion of Lot 865-B located in Caloocan City containing
an area of 40,623 square meters. For Lot 865-B-1 defendant St. Judes Enterprises, Inc. was issued TCT
No. 22660 on July 25, 1966.

Sometime in March 1966 defendant St Judes Enterprises, Inc. subdivided Lot No. 865-B-1 under
subdivision plan (LRC) PSD-55643 and as a result thereof the Register of Deeds of Caloocan City
cancelled TCT No. 22660 and in lieu thereof issued Certificates of Title Nos. 23967 up to 24068 inclusive,
all in the name of defendants St. Judes Enterprises, Inc. The subdivision of lot 865-B-1 [which was]
covered [by] TCT No. 22660 was later found to have expanded and enlarged from its original area of
40,523 square meters to 42,044 square meters or an increase of 1,421 square meters. This expansion or
increase in area was confirmed by the land Registration Commission [to have been made] on the
northern portion of Lot 865-B-1.

Subsequently, defendant St. Judes Enterprises, Inc. sold the lots covered by TCT Nos. 24013 and 24014
to defendant Sps. Catalino Santos and Thelma Barreto Santos[;] TCT No. 24019 to defendant Sps.
Domingo Calaguian and Felicidad de Jesus[;] TCT No. 24022 to defendant Virginia dela Fuente[;] and
TCT No. 2402[3] to defendant Lucy Madaya. Accordingly, these titles were cancelled and said defendants
were issued the following: TCT No. C-43319 issued in the name of Sps. Santos containing an area of 344
square meters[;] TCT No. 55513 issued in the name of defendants Sps. Calaguian containing an area of
344 square meters[;] TCT No. 13309 issued in the name of Sps. Santos[;] TCT No. 24069 issued in the
name of Virginia dela Fuente containing an area of 350 square meters[;] and TCT No. C-46648 issued in
the name of defendant Lucy Mandaya with an area of 350 square meters."[5]

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"[On January 29, 1985, then Solicitor General Estelito Mendoza filed] an action seeking xxx the
annulment and cancellation of Transfer Certificates of Title (TCT) Nos. 24015, 24017, 24018, 24020,
24021, 24024, 24025 and 24068 issued in the name of defendant St. Jude's Enterprises, Inc.[;] Transfer
Certificates of Title Nos. 13309 and C-43319 both registered in the name of Sps. Catalino Santos and
Thelma B. Santos[;] TCT No. 55513 registered in the name of Sps. Domingo Calaguian and Felicidad de
Jesus[;] TCT No. 24069 registered in the name of Virginia dela Fuente[;] and TCT No. C-46648 registered
in the name of Lucy Mandaya, principally on the ground that said Certificates of Title were issued on the
strength of [a] null and void subdivision plan (LRC) PSD-55643 which expanded the original area of TCT
No. 22660 in the name of St. Jude's Enterprises, Inc. from 40,623 square meters to 42,044 square meters
upon its subdivision

"Defendants Virginia dela Fuente and Lucy Mandaya were declared in default for failure to file their
respective answer within the reglementary period.

"Defendants Sps. Catalino Santos and Thelma Barreto Santos, St. Jude's Enterprises, Inc. and Sps.
Domingo Calaguian and Felicidad Calaguian filed separate answers to the complaint. Defendants Sps.
Domingo Calaguian and Sps. Catalino Santos interposed defenses, among others, that they acquired the
lots in question in good faith from their former owner, defendant St. Jude's Enterprises, Inc. and for value
and that the titles issued to the said defendants were rendered incontrovetible, conclusive and
indefeasible after one year from the date of the issuance of the titles by the Register of Deeds of
Caloocan City.

"On the other hand, defendant St. Jude's Enterprises, Inc. Interposed defenses, among others, that the
cause of action of plaintiff is barred by prior judgment; that the subdivision plan submitted having been
approved by the LRC, the government is now in estoppel to question the approved subdivision plan; and
the plaintiff's allegation that the area of the subdivision increased by 1,421 square meters is without any
basis in fact and in law."[6]

Ruling of the Trial Court

On April 30, 1991, the trial court dismissed the Complaint.[7] While the plaintiff sufficiently proved the
enlargement or expansion of the area of the disputed property, it presented no proof that Respondent St.
Jude Enterprises, Inc. (St. Jude) had committed fraud when it submitted the subdivision plan to the Land
Registration Commission (LRC) for approval. Because the plan was presumed to have been subjected to
investigation, study and verification by the LRC, there was no one to blame for the increase in the area
but the plaintiff[,] for having allowed and approved the subdivision plan. Thus, the court concluded, the
government was already in estoppel to question the approved subdivision plan.

The trial court also took into account the absence of complaints from adjoining owners whose
supposed lots [were] encroached upon by the defendants, as well as the fact that an adjoining owner had
categorically stated that there was no such encroachment. Finding that Spouses Santos, Spouses
Calaguian, Dela Fuente and Madaya had brought their respective lots from St. Jude for value and in good
faith, the court held that their titles could no longer be questioned, because under the Torrens system,
such titles had become absolute and irrevocable. As regards the Republics allegation that it had filed the
case to protect the integrity of the said system, the court said:

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xxx [S]ustaining the position taken by the government would certainly lead to disastrous
consequences. Buyers in good faith would lose their titles. Adjoining owners who were deprived of a
portion of their lot would be forced to accept the portion of the property allegedly encroached
upon. Actions for recovery will be filed right and left[;] thus instead of preserving the integrity of the
Torrens System it would certainly cause chaos rather than stability. Finally, if only to strengthen the
Torrens System and in the interest of justice, the boundaries of the affected properties of the defendants
should not be disturbed and the status quo should be maintained.[8]

The solicitor general appealed the trial courts Decision to the Court of Appeals.

Ruling of the Appellate Court

Citing several cases[9] upholding the indefeasibility of titles issued under the Torrens system, the
appellate court affirmed the trial court. It berated petitioner for bringing the suit only after nineteen (19)
years had passed since the issuance of St. Judes title and the approval of the subdivision plan. The
pertinent portion of the assailed Decision reads:[10]

xxx Rather than make the Torrens system reliable and stable, [its] act of filing the instant suit rocks the
system, as it gives the impression to Torrens title holders, like appellees, that their titles to properties can
be questioned by the same authority who had approved the same even after a long period of time. In that
case, no Torrens title holder shall be at peace with the ownership and possession of his land, for the
Commission of land Registration can question his title any time it makes a finding unfavorable to said
Torrens title holder.

Undaunted, petitioner seeks a review by this Court.[11]

The Issues

In this petition, the Republic raises the following issues for our resolution:[12]

1. Whether or not the government is estopped from questioning the approved subdivision plan which
expanded the areas covered by the transfer certificates of title in question;

2. Whether or not the Court of Appeals erred when it did not consider the Torrens System as merely a
means of registering title to land;

3. Whether or not the Court of Appeals erred when it failed to consider that petitioners complaint before
the lower court was filed to preserve the integrity of the Torrens System.

We shall discuss the second and third questions together. Hence, the issues shall be (1) the
applicability of estoppel against the State and (2) the Torrens system.

The Courts Ruling

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The petition is bereft of merit.

First Issue: Estoppel Against the Government

The general rule is that the State cannot be put in estoppel by the mistakes or error of its officials or
agents.[13] However, like all general rules, this is also subject to exceptions, viz.: [14]

Estoppels against the public are little favored. They should not be invoked except in rate and
unusual circumstances, and may not be invoked where they would operate to defeat the effective
operation of a policy adopted to protect the public. They must be applied with circumspection and should
be applied only in those special cases where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or capriciously with its citizens, and must not play
an ignoble part or do a shabby thing; and subject to limitations x x x, the doctrine of equitable estoppel
may be invoked against public authorities as well as against private individuals.

In Republic v. Sandiganbayan,[15] the government, in its effort to recover ill-gotten wealth, tried to
skirt the application of estoppel against it by invoking a specific constitutional provision. [16] The Court
countered:[17]

We agree with the statement that the State is immune from estoppel, but this concept is understood to
refer to acts and mistakes of its officials especially those which are irregular (Sharp International
Marketing vs. Court of Appeals, 201 SCRA 299; 306 [1991]; Republic v. Aquino, 120 SCRA 186 [1983]),
which peculiar circumstances are absent in the case at bar. Although the States right of action to recover
ill-gotten wealth is not vulnerable to estoppel[;] it is non sequitur to suggest that a contract, freely and in
good faith executed between the parties thereto is susceptible to disturbance ad infinitum. A different
interpretation will lead to the absurd scenario of permitting a party to unilaterally jettison a compromise
agreement which is supposed to have the authority of res judicata (Article 2037, New Civil Code), and like
any other contract, has the force of law between parties thereto (Article 1159, New Civil Code; Hernaez
vs. Kao, 17 SCRA 296 [1966]; 6 Padilla, Civil Code Annotated, 7th ed., 1987, p. 711; 3 Aquino, Civil Code,
1990 ed., p. 463). xxx.

The Court further declared that (t)he real office of the equitable norm of estoppel is limited to
supply[ing] deficiency in the law, but it should not supplant positive law. [18]

In the case at bar, for nearly twenty years (starting from the issuance of St. Judes titles in 1966 up to
the filing of the Complaint in 1985), petitioner failed to correct and recover the alleged increase in the land
area of St. Jude. Its prolonged inaction strongly militates against its cause, as it is tantamount to laches,
which means the failure or neglect, for an unreasonable and unexplained length of time, to do that which
by exercising due diligence could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.[19]

The Court notes private respondents argument that, prior to the subdivision, the surveyors erred in
the original survey of the whole tract of land covered by TCT No. 22660. So that less then the actualland
area was indicated on the title. Otherwise, the adjoining owners would have complained upon the partition
of the land in accordance with the LRC-approved subdivision plan. As it is, Florencio Quintos, the owner
of the 9,146 square-meter Quintos Village adjoining the northern portion of St. Judes property (the portion

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allegedly expanded), even attested on August 16, 1973 that there [was] no overlapping of boundaries as
per my approved plan (LRC) PSD 147766 dated September 8, 1971. [20] None of the other neighboring
owners ever complained against St. Jude or the purchasers of its property. It is clear, therefore, that there
was no actual damage to third persons caused by the resurvey and the subdivision.

Significantly, the other private respondents -- Spouses Santos, Spouses Calaguian, Dela Fuente and
Madaya -- bought such expanded lots in good faith, relying on the clean certificates of St. Jude, which
had no notice of any flaw in them either. It is only fair and reasonable to apply the equitable principle of
estoppel by laches against the government to avoid an injustice[21] to the innocent purchasers for value.

Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of
the certificate of title, acquire rights over the property, courts cannot disregard such rights and order the
cancellation of the certificate. Such cancellation would impair public confidence in the certificate of title,
for everyone dealing with property registered under the Torrens system would have to inquire in every
instance whether the title has been regularly issued or not. This would be contrary to the very purpose of
the law, which is to stabilize land titles. Verily, all persons dealing with registered land may safely rely on
the correctness of the certificate of title issued therefor, and the law or the courts do not oblige them to go
behind the certificate in order to investigate again the true condition of the property.They are only charged
with notice of the liens and encumbrances on the property that are noted on the certificate. [22]

When private respondents-purchasers bought their lots from St. Jude, they did not have to go behind
the titles thereto to verify their contents or search for hidden defects or inchoate rights that could defeat
their rights to said lots. Although they were bound by liens and encumbrances annotated on the titles,
private respondents-purchasers could not have had notice of defects that only an inquiry beyond the face
of the titles could have satisfied.[23] The rationale for this presumption has been stated thus:[24]

The main purpose of the Torrens System is to avoid possible conflicts of title to real estate and to
facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens
Certificate of Title and to dispense with the need of inquiring further, except when the party concerned
had actual knowledge of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus, where innocent third persons relying on the
correctness of the certificate thus issued, acquire rights over the property, the court cannot disregard
such rights (Director of Land v. Abache, et al., 73 Phil. 606).

In another case,[25] this Court further said:

The Torrens System was adopted in this country because it was believed to be most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the sellers title
thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after
all. This would not only be unfair to him. What is worse is that if this were permitted, public confidence in
the system would be eroded and land transactions would have to be attended by complicated and not
necessarily conclusive investigations and proof of ownership. The further consequence would be that
land conflicts could be even more abrasive, if not even violent. The Government, recognizing the worthy
purposes of the Torrens System, should be the first to accept the validity of titles issued thereunder once
the conditions laid down by the law are satisfied. [Italics supplied.]

Petitioner never presented proof that the private respondents who had bought their lots from St. Jude
were buyers in bad faith. Consequently, their claim of good faith prevails. A purchaser in good faith and
for value is one who buys the property of another without notice that some other person has a right to or

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an interest in such property; and who pays a full and fair price for the same at the time of such purchase
or before he or she has notice of the claims or interest of some other person. [26] Good faith is the honest
intention to abstain from taking any unconscientious advantage of another.[27]

Furthermore, it should be stressed that the total area of forty thousand six hundred twenty-three
(40,623) square meters indicated on St. Judes original title (TCT No. 22660) was not an exact area. Such
figure was followed by the phrase more or less. This plainly means that the land area indicated was not
precise. Atty. Antonio H. Noblejas, who became the counsel of St. Jude subsequent to his tenure as Land
Registration Commissioner, offers a sensible explanation. In his letter[28] to the LRC dated November 8,
1982, he gave the following information:

a. Records show that our client owned a large tract of land situated in an area cutting the boundary of
Quezon City and Caloocan City, then known as Lot 865-B, Psd-60608, and described in T.C.T. No.
100412, containing an area of 96,931 sq. meters, more or less.

b. It will be noted that on the northern portion of this Lot 865-B, Psd-60608, is xxx Lot 865-A, Psd-60608,
which means that at a previous point of time, these 2 lots composed one whole tract of land.

c. On December 23, 1965, Lot 865-B, Psd-60608, was subdivided into 2 lots, denominated as Lot 865-B-
1, with an area of 40,622 sq. meters, more or less, on the Caloocan side, and Lot 865-B-2, with an area
of 56,308 sq. meters, more or less, on the Quezon City side, under Plan (LRC) Psd-52368.

d. On March 1-10, 1966, Lot 865-B-1, Psd-52368, then covered by T.C.T. No. N-22660, was subdivided
into residential lots under Plan (LRC) Psd-55643, with a total area of 42,044 sq. meters, more or less.

e. It will be noted that Lot 865-B, Psd-60608, covered by T.C.T. No. 100412, contained an area
of 96,931 sq. meters, more or less, but when subdivided under Plan (LRC) Psd-52368, into 2 lots, its total
area shrank by 1 sq. meter, to wit:

Lot 865-B-1, Psd-52368 = 40,622 sq. meters

Lot 865-B-2, Psd-52368 = 56,308

96,930 sq. meters.

f. There is no allegation whatever in the Perez report that there was error in laying out the metes and
bounds of Lot 865-B-1 in Plan (LRC) Psd-55643, as specified in the Technical Description of the said lot
set forth in T.C.T. No. N-22660 covering the same. There is likewise no allegation, on the contrary there is
confirmation from the boundary owner on the northern side, Mr. Florencio Quintos, that there is no
overlapping of boundaries on the northern side of Lot 865-B-1, Psd-55643.

g. We respectfully submit that the area of 42, 044 sq. meters stated in Plan (LRC) Psd-55643 as the size
of Lot 865-B-a, is the more accurate area, confirmed by the Perez report as per surveyor[]s findings on
the ground, which rectifies previous surveryors error in computing its area as 40,622 sq. meters in Plan
(LRC) Psd-52368, which is about 3.5% tolerable error (1,422 divided by 40,622 = .035).

[h.] It is well settled that in the identification of a parcel of land covered by certificate of title, what is
controlling are the metes and bounds as set forth in its Technical Description and not the area stated

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therein, which is merely an approximation as indicated in the more or less phrase placed after the number
of square meters.

i. There is thus no unauthorized expansion of the survey occasioned by the subdivision of Lot 865-B-1
under Plan (LRC) Psd-55643; consequently, LRC Circular No. 167, Series of 1967, finds no application
thereto, as to bar the processing and registration in due course of transactions involving the subdivision
lots of our client, subject hereof. This is apart from the fact that LRC Circular No. 167 has not been
implemented by the Register of Deeds of Caloocan City or any proper government authority since its
issuance in 1967, and that, in the interest of justice and equity, its restrictive and oppressive effect on
transactions over certificates of titles of subdivisions that allegedly expanded on re-surveys, cannot be
allowed to continue indefinitely. (Italics supplied.)

The discrepancy in the figures could have been caused by the inadvertence or the negligence of the
surveyors. There is no proof, though, that the land area indicated was intentionally and fraudulently
increased. The property originally registered was the same property that was subdivided. It is well-settled
that what defines a piece of titled property is not the numerical date indicated as the area of the land, but
the boundaries or metes and bounds of the property specified in its technical description as enclosing it
and showing its limits.[29]

Petitioner miserably failed to prove any fraud, either on the part of Private Respondent St. Jude or on
the part of land registration officials who had approved the subdivision plan and issued the questioned
TCTs. Other than its peremptory statement in the Complaint that the expansion of the area was motivated
by bad faith with intent to defraud, to the damage and prejudice of the government and of public interests,
petitioner did not allege specifically how fraud was perpetrated to cause an increase in the actual land
size indicated. Nor was any evidence proffered to substantiate the allegation. That the land registration
authorities supposedly erred or committed an irregularity was merely a conclusion drawn from the table
survey showing that the aggregate area of the subdivision lots exceeded the area indicated on the title of
the property before its subdivision. Fraud cannot be presumed, and the failure of petitioner to prove it
defeats it own cause.

Second Issue: The Torrens System

True, the Torrens system is not a means of acquiring titles to lands; it is merely a system
of registration of titles to lands.[30] Consequently, land erroneously included in a Torrens certificate of title
is not necessarily acquired by the holder of such certificate. [31]

But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable
effect of the mistake or negligence of the States agents, in the absence of proof of his complicity in a
fraud or of manifest damage to third persons. First, the real purpose of the Torrens system is to quite title
to land to put a stop forever to any question as to the legality of the title, except claims that were noted in
the certificate at the time of the registration or that may arise subsequent thereto. [32] Second, as we
discussed earlier, estoppel by laches now bars petitioner from questioning private respondents titles to
the subdivision lots. Third, it was never proven that Private Respondent St. Jude was a party to the fraud
that led to the increase in the area of the property after its subdivision. Finally, because petitioner even
failed to give sufficient proof of any error that might have been committed by its agent who had surveyed
the property, the presumption of regularity in the performance of their functions must be
respected.Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to protect by

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filing this case, shall forever be sullied by the ineptitude and inefficiency of land registration officials, who
are ordinarily presumed to have regularly performed their duties.[33]

We cannot, therefore, adhere to the petitioners submission that, in filing this suit, it seeks to preserve
the integrity of the Torrens system. To the contrary, it is rather evident from our foregoing discussion that
petitioners action derogates the very integrity of the system. Time and again, we have said that a Torrens
certificate is evidence of an indefeasible title to property in favor of the person whose name appears
thereon.

WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED.

SO ORDERED.

XIII. Schedule of Fees, Special Fund

XIV. Forms Used in Land Registration and Conveyance

XV. Dealings with Unregistered Land

Chapter XIII, Sec. 113

Radiowealth v. Palileo, G.R. No. 83432, May 20, 1991

DECISION

GANCAYCO, J.:

If the same piece of land was sold to two different purchasers, to whom shall ownership belong? Article
1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be
transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2)
in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the
person who presents the oldest title, provided there is good faith. There is no ambiguity regarding the
application of the law with respect to lands registered under the Torrens System. Section 51 of
Presidential Decree No. 1529 (amending Section 50 of Act No. 496 clearly provides that the act of
registration is the operative act to convey or affect registered lands insofar as third persons are
concerned. Thus, 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 certificate of title. 1 Following this principle, this Court has
time and again held that a purchaser in good faith of registered land (covered by a Torrens Title) acquires
a good title as against all the transferees thereof whose right is not recorded in the registry of deeds at
the time of the sale. 2

The question that has to be resolved in the instant petition is whether or not the rule provided in Article

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1544 of the Civil Code as discussed above, is applicable to a parcel of unregistered land purchased at a
judicial sale. To be more specific, this Court is asked to determine who, as between two buyers of
unregistered land, is the rightful owner the first buyer in a prior sale that was unrecorded, or the
second buyer who purchased the land in an execution sale whose transfer was registered in the Register
of Deeds.chanrobles lawlibrary : rednad

The facts as found by the Court of Appeals are as follows:jgc:chanrobles.com.ph

"On April 13, 1970, defendant spouses Enrique Castro and Herminia R. Castro sold to plaintiff-appellee
Manuelito Palileo (private respondent herein), a parcel of unregistered coconut land situated in Candiis,
Mansayaw, Mainit, Surigao del Norte. The sale is evidenced by a notarized Deed of Absolute Sale (Exh.
"E"). The deed was not registered in the Registry of Property for unregistered lands in the province of
Surigao del Norte. Since the execution of the deed of sale, appellee Manuelito Palileo who was then
employed at Lianga, Surigao del Sur, exercised acts of ownership over the land through his mother
Rafaela Palileo, as administratrix or overseer. Appellee has continuously paid the real estate taxes on
said land from 1971 until the present (Exhs. "C" to "C-7", inclusive).

On November 29, 1976, a judgment was rendered against defendant Enrique T. Castro, in Civil Case No.
0103145 by the then Court of First Instance of Manila, Branch XIX, to pay herein defendant-appellant
Radiowealth Finance Company (petitioner herein), the sum of P22,350.35 with interest thereon at the rate
of 16% per annum from November 2, 1975 until fully paid, and the for the sum of P2,235.03 as attorneys
fees, and to pay the costs. Upon the finality of the judgment, a writ of execution was issued. Pursuant to
said writ, defendant provincial Sheriff Marietta E. Eviota, through defendant Deputy Provincial Sheriff
Leopoldo Risma, levied upon and finally sold at public auction the subject land that defendant Enrique
Castro had sold to appellee Manuelito Palileo on April 13, 1970. A certificate of sale was executed by the
Provincial Sheriff in favor of defendant-appellant Radiowealth Finance Company, being the only bidder.
After the period of redemption has (sic) expired, a deed of final sale was also executed by the same
Provincial Sheriff. Both the certificate of sale and the deed of final sale were registered with the Registry
of Deeds." 3

Learning of what happened to the land, private respondent Manuelito Palileo filed an action for quieting of
title over the same. After a trial on the merits, the court a quo rendered a decision in his favor. On appeal,
the decision of the trial court was affirmed. Hence, this petition for review on certiorari.

In its petition, Radiowealth Finance Company presents the following errors:jgc:chanrobles.com.ph

"1. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE DEED OF ABSOLUTE SALE
(EXHIBIT B) ALLEGEDLY EXECUTED BY ENRIQUE CASTRO IN FAVOR OF APPELLEE MANUELITO
PALILEO, WAS SIMULATED OR FICTITIOUS.

2. THE COURT OF APPEALS ERRED IN NOT FINDING APPELLEE MANUELITO PALILEO AS

ADMINISTRATOR ONLY OF THE DISPUTED PROPERTY; AND

3. THE COURT OF APPEALS ERRED IN NOT FINDING DEFENDANT-APPELLANT RADIOWEALTH

FINANCE COMPANY OWNER OF THE DISPUTED PROPERTY BY REASON OF THE CERTIFICATE
OF SALE AND THE DEED OF FINAL SALE WHICH WERE ALL REGISTERED IN THE REGISTER OF
DEEDS, HENCE, SUPERIOR TO THAT OF THE DEED OF SALE IN POSSESSION OF MANUELITO
PALILEO, FOR BEING NOT REGISTERED." 4

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As regards the first and second assigned errors, suffice it to state that findings of fact of the Court of
Appeals are conclusive on this Court and will not be disturbed unless there is grave abuse of discretion.
The finding of the Court of Appeals that the property in question was already sold to private respondent
by its previous owner before the execution sale is evidenced by a deed of sale. Said deed of sale is
notarized and is presumed authentic. There is no substantive proof to support petitioners allegation that
the document is fictitious or simulated. With this in mind, We see no reason to reject the conclusion of the
Court of Appeals that private respondent was not a mere administrator of the property. That he exercised
acts of ownership through his mother also remains undisputed.chanrobles virtual lawlibrary

Going now to the third assigned error which deals with the main issue presented in the instant petition,
We observe that the Court of Appeals resolved the same in favor of private respondent due to the
following reason; what the Provincial Sheriff levied upon and sold to petitioner is a parcel of land that
does not belong to Enrique Castro, the judgment debtor, hence the execution is contrary to the directive
contained in the writ of execution which commanded that the lands and buildings belonging to Enrique
Castro be sold to satisfy the execution. 5

There is no doubt that had the property in question been a registered land, this case would have been
decided in favor of petitioner since it was petitioner that had its claim first recorded in the Registry of
Deeds. For, as already mentioned earlier, it is the act of registration that operates to convey and affect
registered land. Therefore, a bona fide purchaser of a registered land at an execution sale acquires a
good title as against a prior transferee, if such transfer was unrecorded.

However, it must be stressed that this case deals with a parcel of unregistered land and a different set of
rules applies. We affirm the decision of the Court of Appeals.

Under Act No. 3344, registration of instruments affecting unregistered lands is "without prejudice to a third
party with a better right." The aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in ones favor does not give him any light over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody else even if the earlier sale
was unrecorded.chanrobles law library

The case of Carumba v. Court of Appeals 6 is a case in point. It was held therein that Article 1644 of the
Civil Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba
dealt with a double sale of the same unregistered land. The first sale was made by the original owners
and was unrecorded while the second was an execution sale that resulted from a complaint for a sum of
money filed against the said original owners. Applying Section 35, Rule 39 of the Revised Rules of Court,
7 this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at the
execution sale though the latter was a buyer in good faith and even if this second sale was registered. It
was explained that this is because the purchaser of unregistered land at a sheriff s execution sale only
steps into the shoes of the judgment debtor, and merely acquires the latters interest in the property sold
as of the time the property was levied upon.chanrobles virtual lawlibrary

Applying this principle, the Court of Appeals correctly held that the execution sale of the unregistered land
in favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the
time of the said execution sale.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No. 10788 is
hereby AFFIRMED. No costs.

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SO ORDERED.

XVI. Registration of Chattel Mortgages

Chapter XIV, Sec. 114 116

Sabitsana v. Muertegui, G.R. No. 181359, August 5, 2013

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 181359 August 5, 2013

SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. SABITSANA, Petitioners,

vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A. MUERTEGUI,
JR., Respondent.

DECISION

DEL CASTILLO, J.:

A lawyer may not, for his own personal interest and benefit, gamble on his client's word, believing it at
one time and disbelieving it the next. He owes his client his undivided loyalty.

Assailed in this Petition for Review on Certiorari1 are the January 25, 2007 Decision2 of the Court of
Appeals (CA) which denied the appeal in CA-G.R. CV No. 79250, and its January 11, 2008
Resolution3 denying petitioners Motion for Reconsideration.4

Factual Antecedents

On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of Sale 5 in favor of
respondent Juanito Muertegui6 (Juanito) over a 7,500-square meter parcel of unregistered land (the lot)
located in Dalutan Island, Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No.
1996 issued in 1985 in Garcias name.7

Juanitos father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took actual possession of
the lot and planted thereon coconut and ipil-ipil trees. They also paid the real property taxes on the lot for
the years 1980 up to 1998.

On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty. Clemencio C.
Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute sale.8 The sale was registered with

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the Register of Deeds on February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD No.
5327,10 was issued in Atty. Sabitsanas name. Although Domingo Jr. and Sr. paid the real estate taxes,
Atty. Sabitsana also paid real property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete
improvements on the property, which shortly thereafter were destroyed by a typhoon.

When Domingo Sr. passed away, his heirs applied for registration and coverage of the lot under the
Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana, in a letter 11 dated August 24, 1998
addressed to the Department of Environment and Natural Resources CENRO/PENRO office in Naval,
Biliran, opposed the application, claiming that he was the true owner of the lot. He asked that the
application for registration be held in abeyance until the issue of conflicting ownership has been resolved.

On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No. B-109712 for
quieting of title and preliminary injunction, against herein petitioners Atty. Sabitsana and his wife, Rosario,
claiming that they bought the lot in bad faith and are exercising acts of possession and ownership over
the same, which acts thus constitute a cloud over his title. The Complaint13 prayed, among others, that
the Sabitsana Deed of Sale, the August 24, 1998 letter, and TD No. 5327 be declared null and void and
of no effect; that petitioners be ordered to respect and recognize Juanitos title over the lot; and that moral
and exemplary damages, attorneys fees, and litigation expenses be awarded to him.

In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito is null and void
absent the marital consent of Garcias wife, Soledad Corto (Soledad); that they acquired the property in
good faith and for value; and that the Complaint is barred by prescription and laches. They likewise
insisted that the Regional Trial Court (RTC) of Naval, Biliran did not have jurisdiction over the case, which
involved title to or interest in a parcel of land the assessed value of which is merely 1,230.00.

The evidence and testimonies of the respondents witnesses during trial reveal that petitioner Atty.
Sabitsana was the Muertegui familys lawyer at the time Garcia sold the lot to Juanito, and that as such,
he was consulted by the family before the sale was executed; that after the sale to Juanito, Domingo Sr.
entered into actual, public, adverse and continuous possession of the lot, and planted the same to
coconut and ipil-ipil; and that after Domingo Sr.s death, his wife Caseldita, succeeded him in the
possession and exercise of rights over the lot.

On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told by a member of
the Muertegui family, Carmen Muertegui Davies (Carmen), that the Muertegui family had bought the lot,
but she could not show the document of sale; that he then conducted an investigation with the offices of
the municipal and provincial assessors; that he failed to find any document, record, or other proof of the
sale by Garcia to Juanito, and instead discovered that the lot was still in the name of Garcia; that given
the foregoing revelations, he concluded that the Muerteguis were merely bluffing, and that they probably
did not want him to buy the property because they were interested in buying it for themselves considering
that it was adjacent to a lot which they owned; that he then proceeded to purchase the lot from Garcia;
that after purchasing the lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then
took possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and calamansi from
the lot; and that he constructed a rip-rap on the property sometime in 1996 and 1997.

Ruling of the Regional Trial Court

On October 28, 2002, the trial court issued its Decision 15 which decrees as follows:

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WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the plaintiff and against
the defendants, hereby declaring the Deed of Sale dated 2 September 1981 as valid and preferred while
the Deed of Absolute Sale dated 17 October 1991 and Tax Declaration No. 5327 in the name of Atty.
Clemencio C. Sabitsana, Jr. are VOID and of no legal effect.

The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax Declaration No.
5327 as void and done in bad faith.

Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui, represented by his
attorney-in-fact Domingo Muertigui, Jr. the amounts of:

a) 30,000.00 as attorneys fees;

b) 10,000.00 as litigation expenses; and

c) Costs.

SO ORDERED.16

The trial court held that petitioners are not buyers in good faith. Petitioner Atty. Sabitsana was the
Muertegui familys lawyer, and was informed beforehand by Carmen that her family had purchased the
lot; thus, he knew of the sale to Juanito. After conducting an investigation, he found out that the sale was
not registered. With this information in mind, Atty. Sabitsana went on to purchase the same lot and raced
to register the sale ahead of the Muerteguis, expecting that his purchase and prior registration would
prevail over that of his clients, the Muerteguis. Applying Article 1544 of the Civil Code, 17 the trial court
declared that even though petitioners were first to register their sale, the same was not done in good faith.
And because petitioners registration was not in good faith, preference should be given to the sale in favor
of Juanito, as he was the first to take possession of the lot in good faith, and the sale to petitioners must
be declared null and void for it casts a cloud upon the Muertegui title.

Petitioners filed a Motion for Reconsideration18 but the trial court denied19 the same.

Ruling of the Court of Appeals

Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for lack of marital
consent; that the sale to them is valid; that the lower court erred in applying Article 1544 of the Civil Code;
that the Complaint should have been barred by prescription, laches and estoppel; that respondent had no
cause of action; that respondent was not entitled to an award of attorneys fees and litigation expenses;
and that they should be the ones awarded attorneys fees and litigation expenses.

The CA, through its questioned January 25, 2007 Decision,21 denied the appeal and affirmed the trial
courts Decision in toto. It held that even though the lot admittedly was conjugal property, the absence of
Soledads signature and consent to the deed did not render the sale to Juanito absolutely null and void,
but merely voidable. Since Garcia and his wife were married prior to the effectivity of the Family Code,
Article 173 of the Civil Code22should apply; and under the said provision, the disposition of conjugal
property without the wifes consent is not void, but merely voidable. In the absence of a decree annulling
the deed of sale in favor of Juanito, the same remains valid.

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The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized could not affect its
validity. As against the notarized deed of sale in favor of petitioners, the CA held that the sale in favor of
Juanito still prevails. Applying Article 1544 of the Civil Code, the CA said that the determining factor is
petitioners good faith, or the lack of it. It held that even though petitioners were first to register the sale in
their favor, they did not do so in good faith, for they already knew beforehand of Garcias prior sale to
Juanito. By virtue of Atty. Sabitsanas professional and confidential relationship with the Muertegui family,
petitioners came to know about the prior sale to the Muerteguis and the latters possession of the lot, and
yet they pushed through with the second sale. Far from acting in good faith, petitioner Atty. Sabitsana
used his legal knowledge to take advantage of his clients by registering his purchase ahead of them.

Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the requisite cause of
action to institute the suit for quieting of title and obtain judgment in his favor, and is entitled as well to an
award for attorneys fees and litigation expenses, which the trial court correctly held to be just and
equitable under the circumstances.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the instant appeal is DENIED and the Decision dated October 28,
2002 of the Regional Trial Court, 8th Judicial Region, Branch 16, Naval, Biliran, is hereby AFFIRMED.
Costs against defendants-appellants.

SO ORDERED.23

Issues

Petitioners now raise the following issues for resolution:

I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL TRIAL COURT
DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF THE FACT THAT THE
ASSESSED VALUE OF THE SUBJECT LAND WAS ONLY 1,230.00 (AND STATED MARKET
VALUE OF ONLY 3,450.00).

II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL CODE
INSTEAD OF THE PROPERTY REGISTRATION DECREE (P.D. NO. 1529) CONSIDERING
THAT THE SUBJECT LAND WAS UNREGISTERED.

III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT WAS
ALREADY BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS.

IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL
TRIAL COURT ORDERING THE PETITIONERS TO PAY ATTORNEYS FEES AND
LITIGATION EXPENSES TO THE RESPONDENT.24

Petitioners Arguments

Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the case. They argue that
since the assessed value of the lot was a mere 1,230.00, jurisdiction over the case lies with the first
level courts, pursuant to Republic Act No. 7691,25 which expanded their exclusive original jurisdiction to

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include "all civil actions which involve title to, or possession of, real property, or any interest therein where
the assessed value of the property or interest therein does not exceed Twenty thousand pesos
(20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty
thousand pesos (50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation
expenses and costs."26 Petitioners thus conclude that the Decision in Civil Case No. B-1097 is null and
void for lack of jurisdiction.

Petitioners next insist that the lot, being unregistered land, is beyond the coverage of Article 1544 of the
Civil Code, and instead, the provisions of Presidential Decree (PD) No. 1529 should apply. This being the
case, the Deed of Sale in favor of Juanito is valid only as between him and the seller Garcia, pursuant to
Section 113 of PD 1529;27 it cannot affect petitioners who are not parties thereto.

On the issue of estoppel, laches and prescription, petitioners insist that from the time they informed the
Muerteguis in writing about their purchase of the lot, or in October 1991, the latter did not notify them of
their prior purchase of the lot, nor did respondent interpose any objection to the sale in their favor. It was
only in 1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale. According to
petitioners, this seven-year period of silence and inaction on the Muerteguis part should be taken against
them and construed as neglect on their part to assert their rights for an unreasonable length of time. As
such, their action to quiet title should be deemed barred by laches and estoppel.

Lastly, petitioners take exception to the award of attorneys fees and litigation expenses, claiming that
since there was no bad faith on their part, such award may not be considered just and equitable under the
circumstances. Still, an award of attorneys fees should remain the exception rather than the rule; and in
awarding the same, there must have been an express finding of facts and law justifying such award, a
requirement that is absent in this case.

Petitioners thus pray for the reversal of the questioned CA Decision and Resolution; the dismissal of the
Complaint in Civil Case No. B-1097; the deletion of the award of attorneys fees and litigation expenses in
respondents favor; and a declaration that they are the true and rightful owners of the lot.

Respondents Arguments

Respondent, on the other hand, counters that a suit for quieting of title is one whose subject matter is
incapable of pecuniary estimation, and thus falls within the jurisdiction of the RTC. He likewise insists that
Article 1544 applies to the case because there is a clear case of double sale of the same property to
different buyers, and the bottom line thereof lies in petitioners lack of good faith in entering into the
subsequent sale. On the issue of laches/estoppel, respondent echoes the CAs view that he was
persistent in the exercise of his rights over the lot, having previously filed a complaint for recovery of the
lot, which unfortunately was dismissed based on technicality.

On the issue of attorneys fees and litigation expenses, respondent finds refuge in Article 2208 of the Civil
Code,28citing three instances which fortify the award in his favor petitioners acts compelled him to
litigate and incur expenses to protect his interests; their gross and evident bad faith in refusing to
recognize his ownership and possession over the lot; and the justness and equitableness of his case.

Our Ruling

The Petition must be denied.

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The Regional Trial Court has jurisdiction over the suit for quieting of title.

On the question of jurisdiction, it is clear under the Rules that an action for quieting of title may be
instituted in the RTCs, regardless of the assessed value of the real property in dispute. Under Rule 63 of
the Rules of Court,29 an action to quiet title to real property or remove clouds therefrom may be brought in
the appropriate RTC.

It must be remembered that the suit for quieting of title was prompted by petitioners August 24, 1998
letter-opposition to respondents application for registration. Thus, in order to prevent 30 a cloud from being
cast upon his application for a title, respondent filed Civil Case No. B-1097 to obtain a declaration of his
rights. In this sense, the action is one for declaratory relief, which properly falls within the jurisdiction of
the RTC pursuant to Rule 63 of the Rules.

Article 1544 of the Civil Code does not apply to sales involving unregistered land.

Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil Code. Both courts
seem to have forgotten that the provision does not apply to sales involving unregistered land. Suffice it to
state that the issue of the buyers good or bad faith is relevant only where the subject of the sale is
registered land, and the purchaser is buying the same from the registered owner whose title to the land is
clean. In such case, the purchaser who relies on the clean title of the registered owner is protected if he is
a purchaser in good faith for value.31

Act No. 3344 applies to sale of unregistered lands.

What applies in this case is Act No. 3344,32 as amended, which provides for the system of recording of
transactions over unregistered real estate. Act No. 3344 expressly declares that any registration made
shall be without prejudice to a third party with a better right. The question to be resolved therefore is: who
between petitioners and respondent has a better right to the disputed lot?

Respondent has a better right to the lot.

The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized deed of sale,
while the sale to petitioners was made via a notarized document only on October 17, 1991, or ten years
thereafter. Thus, Juanito who was the first buyer has a better right to the lot, while the subsequent sale to
petitioners is null and void, because when it was made, the seller Garcia was no longer the owner of the
lot. Nemo dat quod non habet.

The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him
and Garcia remains valid nonetheless. Notarization, or the requirement of a public document under the
Civil Code,33 is only for convenience, and not for validity or enforceability.34 And because it remained valid
as between Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners, for his
ownership thereof had ceased.

Nor can petitioners registration of their purchase have any effect on Juanitos rights. The mere
registration of a sale in ones favor does not give him any right over the land if the vendor was no longer
the owner of the land, having previously sold the same to another even if the earlier sale was
unrecorded.35 Neither could it validate the purchase thereof by petitioners, which is null and void.

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Registration does not vest title; it is merely the evidence of such title. Our land registration laws do not
give the holder any better title than what he actually has. 36

Specifically, we held in Radiowealth Finance Co. v. Palileo37 that:

Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third
party with a better right. The aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in ones favor does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody else even if the earlier sale
was unrecorded.

Petitioners defense of prescription, laches and estoppel are unavailing since their claim is based on a
null and void deed of sale. The fact that the Muerteguis failed to interpose any objection to the sale in
petitioners favor does not change anything, nor could it give rise to a right in their favor; their purchase
remains void and ineffective as far as the Muerteguis are concerned.

The award of attorneys fees and litigation expenses is proper because of petitioners bad faith.

Petitioners actual and prior knowledge of the first sale to Juanito makes them purchasers in bad faith. It
also appears that petitioner Atty. Sabitsana was remiss in his duties as counsel to the Muertegui family.
Instead of advising the Muerteguis to register their purchase as soon as possible to forestall any legal
complications that accompany unregistered sales of real property, he did exactly the opposite: taking
advantage of the situation and the information he gathered from his inquiries and investigation, he bought
the very same lot and immediately caused the registration thereof ahead of his clients, thinking that his
purchase and prior registration would prevail. The Court cannot tolerate this mercenary attitude. Instead
of protecting his clients interest, Atty. Sabitsana practically preyed on him.

Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him by his client, using
the same to defeat him and beat him to the draw, so to speak. He rushed the sale and registration thereof
ahead of his client. He may not be afforded the excuse that he nonetheless proceeded to buy the lot
because he believed or assumed that the Muerteguis were simply bluffing when Carmen told him that
they had already bought the same; this is too convenient an excuse to be believed. As the Muertegui
family lawyer, he had no right to take a position, using information disclosed to him in confidence by his
client, that would place him in possible conflict with his duty. He may not, for his own personal interest
and benefit, gamble on his clients word, believing it at one time and disbelieving it the next. He owed the
Muerteguis his undivided loyalty. He had the duty to protect the client, at all hazards and costs even to
himself.38

Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from the point of view that
there are possible conflicts, and further to think in terms of impaired loyalty, that is, to evaluate if his
representation in any way will impair his loyalty to a client."39

Moreover, as the Muertegui familys lawyer, Atty. Sabitsana was under obligation to safeguard his client's
property, and not jeopardize it. Such is his duty as an attorney, and pursuant to his general agency. 40

Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's lawyer, he still owed them
his loyalty.1wphi1 The termination of attorney-client relation provides no justification for a lawyer to
represent an interest adverse to or in conflict with that of the former client on a matter involving

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confidential information which the lawyer acquired when he was counsel. The client's confidence once
reposed should not be divested by mere expiration of professional employment. 41 This is underscored by
the fact that Atty. Sabitsana obtained information from Carmen which he used to his advantage and to the
detriment of his client.

from the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in pursuing the sale of
the lot despite being apprised of the prior sale in respondent's favor. Moreover, petitioner Atty. Sabitsana
has exhibited a lack of loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their
interests instead of protecting them. Over and above the trial court's and the CA's findings, this provides
further justification for the award of attorney's fees, litigation expenses and costs in favor of the
respondent.

Thus said, judgment must be rendered in favor of respondent to prevent the petitioners' void sale from
casting a cloud upon his valid title.

WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007 Decision and the
January 11, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 79250 are AFFIRMED. Costs
against petitioners.

SO ORDERED.

XVII. Consultas (Section 117)

Almirol v. Register of Deeds of Quezon City, supra

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-22486 March 20, 1968

TEODORO ALMIROL, petitioner-appellant,

vs.
THE REGISTER OF DEEDS OF AGUSAN, respondent-appellee.

Tranquilino O. Calo, Jr. for petitioner-appellant.

Office of the Solicitor General for respondent-appellee.

CASTRO, J.:

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On June 28, 1961 Teodoro Almirol purchased from Arcenio Abalo a parcel of land situated in the
municipality of Esperanza, province of Agusan, and covered by original certificate of title P-1237 in the
name of "Arcenio Abalo, married to Nicolasa M. Abalo." Sometime in May, 1962 Almirol went to the office
of the Register of Deeds of Agusan in Butuan City to register the deed of sale and to secure in his name a
transfer certificate of title. Registration was refused by the Register of Deeds upon the following
grounds, inter alia, stated in his letter of May 21, 1962:

1. That Original Certificate of Title No. P-1237 is registered in the name of Arcenio Abalo, married
to Nicolasa M. Abalo, and by legal presumption, is considered conjugal property;

2. That in the sale of a conjugal property acquired after the effectivity of the New Civil Code it is
necessary that both spouses sign the document; but

3. Since, as in this case, the wife has already died when the sale was made, the surviving
husband can not dispose of the whole property without violating the existing law (LRC Consulta
No. 46 dated June 10, 1958).

To effect the registration of the aforesaid deed of absolute Sale, it is necessary that the
property be first liquidated and transferred in the name of the surviving spouse and the heirs of
the deceased wife by means of extrajudicial settlement or partition and that the consent of such
other heir or heirs must be procured by means of another document ratifying this sale executed
by their father.

In view of such refusal, Almirol went to the Court of First Instance of Agusan on a petition
for mandamus (sp. civ. case 151), to compel the Register of Deeds to register the deed of sale and to
issue to him the corresponding transfer certificate of title, and to recover P5,000 in moral damages and
P1,000 attorney's fees and expenses of litigation. It is Almirol's assertion that it is but a ministerial duty of
the respondent to perform the acts required of him, and that he (Almirol) has no other plain, speedy and
adequate remedy in the ordinary course of law.

In his answer with counterclaim for P10,000 damages, the respondent reiterated the grounds
stated in his letter of May 21, 1962, averred that the petitioner has "other legal, plain, speedy and
adequate remedy at law by appealing the decision of the respondent to the Honorable Commissioner of
Land Registration," and prayed for dismissal of the petition.

In its resolution of October 16, 1963 the lower court, declaring that "mandamus does not lie . . .
because the adequate remedy is that provided by Section 4 of Rep. Act 1151", dismissed the petition,
with costs against the petitioner.

Hence the present appeal by Almirol.

The only question of law tendered for resolution is whether mandamus will lie to compel the
respondent to register the deed of sale in question.

Although the reasons relied upon by the respondent evince a sincere desire on his part to maintain
inviolate the law on succession and transmission of rights over real properties, these do not constitute
legal grounds for his refusal to register the deed. Whether a document is valid or not, is not for the
register of deeds to determine; this function belongs properly to a court of competent jurisdiction.1

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Whether the document is invalid, frivolous or intended to harass, is not the duty of a
Register of Deeds to decide, but a court of competent jurisdiction. (Gabriel vs. Register of Deeds
of Rizal, et al., L-17956, Sept. 30, 1953).

. . . the supposed invalidity of the contracts of lease is no valid objection to their

registration, because invalidity is no proof of their non-existence or a valid excuse for denying
their registration. The law on registration does not require that only valid instruments shall be
registered. How can parties affected thereby be supposed to know their invalidity before they
become aware, actually or constructively, of their existence or of their provisions? If the purpose
of registration is merely to give notice, then questions regarding the effect or invalidity of
instruments are expected to be decided after, not before, registration. It must follow as a
necessary consequence that registration must first be allowed, and validity or effect litigated
afterwards. (Gurbax Singh Pablo & Co. vs. Reyes and Tantoco, 92 Phil. 182-183).

Indeed, a register of deeds is entirely precluded by section 4 of Republic Act 1151 from exercising
his personal judgment and discretion when confronted with the problem of whether to register a deed or
instrument on the ground that it is invalid. For under the said section, when he is in doubt as to the proper
step to be taken with respect to any deed or other instrument presented to him for registration, all that he
is supposed to do is to submit and certify the question to the Commissioner of Land Registration who
shall, after notice and hearing, enter an order prescribing the step to be taken on the doubtful question.
Section 4 of R.A. 1151 reads as follows:

Reference of doubtful matters to Commissioner of Land Registration. When the Register

of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in
pursuance of any deed, mortgage, or other instrument presented to him for registration, or where
any party in interest does not agree with the Register of Deeds with reference to any such matter,
the question shall be submitted to the Commissioner of Land Registration either upon the
certification of the Register of Deeds, stating the question upon which he is in doubt, or upon the
suggestion in writing by the party in interest; and thereupon the Commissioner, after
consideration of the matter shown by the records certified to him, and in case of registered lands,
after notice to the parties and hearing, shall enter an order prescribing the step to be taken or
memorandum to be made. His decision in such cases shall be conclusive and binding upon all
Registers of Deeds: Provided, further, That when a party in interest disagrees with the ruling or
resolution of the Commissioner and the issue involves a question of law, said decision may be
appealed to the Supreme Court within thirty days from and after receipt of the notice thereof.

The foregoing notwithstanding, the court a quo correctly dismissed the petition for mandamus.
Section 4 abovequoted provides that "where any party in interest does not agree with the Register of
Deeds . . . the question shall be submitted to the Commissioner of Land Registration," who thereafter
shall "enter an order prescribing the step to be taken or memorandum to be made," which shall be
"conclusive and binding upon all Registers of Deeds." This administrative remedy must be resorted to by
the petitioner before he can have recourse to the courts.

ACCORDINGLY, the Resolution of the lower court of October 16, 1969, is affirmed, at petitioner's
cost.

Smith Bell & Co. v. RD, G.R. No. 24736, January 29, 1926

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DECISION

JOHNS, J. :

Upon the facts, we are clearly of the opinion that there is no merit in the first assignment of error. As the
Attorney-General points out, there was no material defect in the conveyance itself, because the
instrument was regular on its face, valid in substance, and had all of the requirements provided for in
section 127 of Act No. 496, as amended. Nothing was conveyed by the affidavits which were simply
furnished for the purpose of conforming to the requirements of the entries to be made in the registry
book.

As to the second assignment of error, it will be noted that, although the deed of sale was duly registered
on August 12, 1921, that on April 18, 1923, the land therein described was attached as the property of the
grantors in the deed. That later judgment was obtained in the attachment proceedings, execution was
issued, and that the fourth parcel of land described in the deed was advertised for sale when the grantees
notified the sheriff that it was their sole and exclusive property. The sheriff then demanded the indemnity
bond from the plaintiff in the writ, which was furnished, and the fourth parcel of land was then sold by the
sheriff to Smith, Bell & Co. as purchaser for the sum of P20,000. Later, a certificate of sale was issued
and the sale confirmed, and the sheriffs deed was executed.

Section 429 of the Code of Civil Procedure provides:jgc:chanrobles.com.ph

"Real property, standing upon the records in the name of the defendant or not appearing at all upon the
record, shall be attached by filing with the registrar of titles of land, for the province in which the land is
situated, a copy of the order of attachment, together with a description of the property attached, and a
notice that it is attached, and by leaving a similar copy of the order, description, and notice with an
occupant of the property, if there is one.

"Real property or an interest therein, belonging to the defendant and held by any other person, or
standing on the records in the name of any other person, shall be attached by filing with the registrar of
land titles in the province in which the land is situated, a copy of the order of attachment, together with a
description of the property, and a notice that such real property and any interest of the defendant therein,
held by or standing in the name of such other person (naming him) are attached; and by leaving with the
occupant, if any, and with such other person, or his agent, if known and within the province, a copy of the
order, description, and notice. The registrar must index attachments filed under the first paragraph of this
section, in the names, both of the plaintiff and of the defendant, and must index attachments filed under
the second paragraph of this section, in the names of the plaintiff and of the defendant and of the person
by whom the property is held or in whose name it stands on the records."cralaw virtua1aw library

It was under the second paragraph of this section that the property was attached as the property of the
grantors in the deed, and the attachment indexed by the registrar as therein provided. That portion of the
section deals with real property or an interest therein belonging to the defendants in the attachment suit,
which may be held by any other person, or which stands on the record in the name of any other person,
and section 450 of the Code of Civil Procedure provides:jgc:chanrobles.com.ph

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"All goods, chattels, moneys, and other property, both real and personal, or any interest therein of the
judgment debtor, not exempt by law, and all property and rights of property seized and held under
attachment in the action, shall be liable to execution. Shares and interests in any corporation or company,
and debts, credits and all other property, both real and personal, or any interest in either real or personal
property, and all other property, not capable of manual delivery, may be attached on execution, in like
manner as upon writs of attachment."cralaw virtua1aw library

And section 463 provides:jgc:chanrobles.com.ph

"Upon a sale of real property, the purchaser shall be substituted to, and acquire all the right, interest, title,
and claim of the judgment debtor thereto, subject to the right of redemption as hereinafter provided. The
officer must give to the purchaser a certificate of sale containing:jgc:chanrobles.com.ph

"1. A particular description of the real property sold;

"2. The price paid for each distinct lot or parcel;

"3. The whole price by him paid;

"4. The date when the right of redemption expires.

"When the judgment under which the sale has been made is made payable in a specified kind of money
or currency, the certificate must also show the kind of money or currency in which such redemption must
be made, which must be the same as that specified in the judgment. A duplicate of such certificate must
be filed by the officer in the office of the registrar of land titles of the province."cralaw virtua1aw library

Under section 465, if the judgment debtor redeems, he is entitled to a certificate of redemption, which
must be filed with the registrar of deeds, but if the property is not redeemed, the sheriffs deed of the
property sold must also be registered, for, under the provisions of section 1 of Act No. 2837, if not
registered, it would only be valid as between the parties, and hence in the instant case, it would not be of
any value to the purchaser at the sheriffs sale.

Section 466 of the Code of Civil Procedure provides:jgc:chanrobles.com.ph

"If no redemption be made within twelve months after the sale, the purchaser, or his assignee, is entitled
to a conveyance; or, if so redeemed, whenever sixty days have elapsed and no other redemption has
been made, notice thereof given, and the time for redemption has expired, the last redemptioner, or his
assignee, is entitled to a deed from the officer, but in all cases the judgment debtor shall have the entire
period of twelve months from the date of the sale to redeem the property. If the judgment debtor redeem,
he must make the same payments as are required to effect a redemption by a redemptioner. If the debtor
redeem, the effect of the sale is terminated and he is restored to his estate. Upon a redemption by the
debtor, the person to whom the payment is made must execute and deliver to him a certificate of
redemption acknowledged or approved before an officer authorized to take acknowledgment of
conveyances of real property. Such certificate must be filed and recorded in the office of the registrar of
land titles of the province in which the property is situated, and the registrar must note the record thereof
on the margin of the record of the certificate of sale. The payments mentioned in this section and the
preceding one may be made to the purchaser or redemptioner, or for him to the officer who made the
sale. When the judgment under which the sale has been made is payable in a specified kind of money or
currency, payments must be made in the same kind of money or currency."cralaw virtua1aw library

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Of course, if at the time the attachment was levied the grantors in the deed, the defendants in the
attachment proceedings, did not have any right, title or interest in the property, Smith, Bell & Co. did not
acquire any title to the land by the sheriffs deed. But, if it be a fact that at the time the attachment was
levied, the grantors in the deed did have an interest in the property at the time the attachment was levied,
it follows that Smith, Bell & Co. acquired that interest by and through the sheriffs deed. That is to say,
that if at the time the attachment was levied Cristina Martinez was in good faith the real owner of the
property, Smith, Bell & Co. did not acquire any title, and Cristina Martinez would be and remain the owner
of the property, the same as if it had never been sold at the sheriffs sale. But Smith, Bell & Co., having
attached the property as the property of the grantors in the deed at the time the attachment was made,
and, following the claim of Cristina Martinez, having executed a good and sufficient bond to indemnify the
sheriff in the making of the sale, and having purchased the property at the sale, and having received the
sheriffs deed, is entitled to have the result of such proceedings made a matter of official record, so as to
preserve and protect any legal rights it may have acquired in the land as a result of such proceedings,
and under the provisions of section 1 of Act No. 2837, those rights, if any, cannot be protected without the
registration of the sheriffs deed. Such registration would not legally mean that Smith, Bell & Co. was the
owner of the property described in the sheriffs deed, or any interest therein. It would simply mean that by
the sheriffs deed, Smith, Bell & Co. had acquired any right, title or interest which the grantors had in the
fourth parcel of land described in the deed at the time the attachment was levied. It might be a cloud on
the title of Cristina Martinez, and it might be necessary for her to bring a suit to remove the cloud and to
quiet her title. Be that as it may, she would be fully protected from all loss or damage by the indemnity
bond which Smith, Bell & Co. gave the sheriff, or after the deed is registered, Smith, Bell & Co. could then
maintain a suit to ascertain what rights, if any, it had acquired by the sheriffs deed in and to the fourth
parcel of land.

Although in some matters, the registrar may have some quasi-judicial power, yet a suit to quiet a title or to
ascertain and determine an interest in real property is a matter exclusively within the jurisdiction of the
courts. The title, if any, which Smith, Bell & Co. has in the fourth parcel of land by the sheriffs deed was
acquired by and through a judicial proceeding, and it has a legal right to have that title settled and
determined in the courts, and under the provisions of section 1 of Act No. 2837, without a registration of
its sheriffs deed, it would in legal effect be deprived of that right. In the registering of the sheriffs deed,
care should be taken to recite the actual facts, the source and chain of title, so as to protect the rights of
Smith, Bell & Co., and it should be done so as not to prejudice, injure or impair any rights which Cristina
Martinez may have acquired in the land by her deed, thus leaving the respective rights of each party to be
settled and determined upon proper pleadings in a judicial proceeding.

The judgment of the lower court is reversed, and following this opinion, the writ of mandamus shall issue
as prayed for by the petitioner. Neither party to recover costs. So ordered.

Avancea, C.J., Street, Malcolm, Villamor, Ostrand and Villa-Real, JJ., concur.

XVIII. Final Provisions

XIX. The Condominium Act (R.A. 4726)

1. Definition (Sec. 2, R.A. 4726)

2. Warranties and Representations
BPI v. ALS Management Corp., G.R. No. 151821, April 14, 2004

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FIRST DIVISION

[G.R. No. 151821. April 14, 2004]

BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI Investment

Corporation, petitioner, vs. ALS MANAGEMENT & DEVELOPMENT CORP., respondent.

DECISION

PANGANIBAN, J.:

Factual findings of the lower courts are entitled to great respect, but may be reviewed if they do not
conform to law and to the evidence on record. In the case at bar, a meticulous review of the facts
compels us to modify the award granted by the Court of Appeals.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the
November 24, 2000 Decision[2] and the January 9, 2002 Resolution[3] of the Court of Appeals (CA) in CA-
GR CV No. 25781. The assailed Decision disposed as follows:

WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED in toto and the instant
appeal DISMISSED.[4]

The assailed Resolution denied reconsideration.

The Facts

The facts of the case are narrated by the appellate court as follows:

On July 29, 1985, [petitioner] BPI Investment Corporation filed a complaint for a Sum of Money against
ALS Management and Development Corporation, alleging inter alia that on July 22, 1983, [petitioner] and
[respondent] executed at Makati, Metro Manila a Deed of Sale for one (1) unfurnished condominium unit
of the Twin Towers Condominium located at Ayala Avenue, corner Apartment Ridge Street, Makati, Metro
Manila designated as Unit E-4A comprising of 271 squares [sic] meters more or less, together with
parking stalls identified as G022 and G-63. The Condominium Certificate of Title No. 4800 of the Registry
of Deeds for Makati, Metro Manila was issued after the execution of the said Deed of Sale. [Petitioner]
advanced the amount of P26,300.45 for the expenses in causing the issuance and registration of the
Condominium Certificate of Title. Under the penultimate paragraph of the Deed of Sale, it is stipulated
that the VENDEE [respondent] shall pay all the expenses for the preparation and registration of this Deed

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of Sale and such other documents as may be necessary for the issuance of the corresponding
Condominium Certificate of Title. After the [petitioner] complied with its obligations under the said Deed of
Sale, [respondent], notwithstanding demands made by [petitioner], failed and refused to pay [petitioner]
its legitimate advances for the expenses mentioned above without any valid, legal or justifiable reason.

In its Answer with Compulsory Counterclaim, [respondent] averred among others that it has just and valid
reasons for refusing to pay [petitioners] legal claims. In clear and direct contravention of Section 25 of
Presidential Decree No. 957 which provides that No fee except those required for the registration of the
deed of sale in the Registry of Deeds shall be collected for the issuance of such title, the [petitioner] has
jacked-up or increased the amount of its alleged advances for the issuance and registration of the
Condominium Certificate of Title in the name of the [respondent], by including therein charges which
should not be collected from buyers of condominium units. [Petitioner] made and disseminated brochures
and other sales propaganda in and before May 1980, which made warranties as to the facilities,
improvements, infrastructures or other forms of development of the condominium units (known as The
Twin Towers) it was offering for sale to the public, which included the following:

The Twin Towers is destined to reflect condominium living at its very best.

While the twin tower design and its unusual height will make the project the only one of its kind in the
Philippines, the human scale and proportion [are] carefully maintained.

To be sure, modern conveniences are available as in the installation of an intercom system and a closed-
circuit TV monitor through which residents from their apartments can see their guests down at the lobby
call station.

Some of the features of each typical apartment unit are: x x x A bar x x x Three toilets with baths x x x.

The penthouse units are privileged with the provision of an all-around balcony. x x x

[Respondent] further averred that [petitioner] represented to the [respondent] that the condominium unit
will be delivered completed and ready for occupancy not later than December 31, 1981. [Respondent]
relied solely upon the descriptions and warranties contained in the aforementioned brochures and other
sales propaganda materials when [respondent] agreed to buy Unit E-4A of the Twin Tower(s) for the hefty
sum of P2,048,900.00 considering that the Twin Towers was then yet to be built. In contravention of
[petitioners] warranties and of good engineering practices, the condominium unit purchased by
[respondent] suffered from the following defects and/or deficiencies:

1. The clearance in the walkway at the balcony is not sufficient for passage;

2. The anodized aluminum used in the door and windows were damaged;

3. The kitchen counter tops/splashboard suffered from cracks and were mis-cut and misaligned;

4. The partition between living and masters bedroom was unpainted and it had no access for
maintenance due to aluminum fixed glass cover;

5. The varifold divider, including the bar and counter top cabinet were not installed;

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6. The toilets had no tiles;

7. No closed circuit TV was installed;

8. Rainwater leaks inside or into the condominium unit.[5]

Respondents Answer prayed that judgment be rendered ordering [petitioner] to correct such
defects/deficiencies in the condominium unit,[6] and that the following reliefs be granted:

1. The sum of P40,000.00 plus legal interest thereon from the date of extra-judicial demand, representing
the amount spent by the defendant for the completion works it had undertaken on the premises.

2. The sum of U.S.$6,678.65 (or its equivalent in the Philippine currency) representing the unearned
rental of the premises which the defendant did not realize by reason of the late delivery to him of the
condominium unit;

3. Twenty-four percent (24%) interest per annum on the agreed one (1) year advance rental and one (1)
month deposit (totaling U.S.$15,785.00) corresponding to the period January 1, 1982 to June 17, 1982,
which [petitioner] would have earned had he deposited the said amount in a bank;

4. The sum of U.S.$1,214.30 per month, commencing from May 1, 1985, which the [respondent] no
longer earns as rental on the premises because the lessee vacated the same by reason of defects and/or
deficiencies;

5. The sum of P50,000.00 plus appearance fees of P300.00 per court hearing, as attorneys fees;

6. Litigation expenses and costs of suit.[7]

On February 6, 1990, the trial court issued this judgment:

1. Ordering the [respondent] to pay [petitioner] the sum of P26,300.45, with legal interest from the filing of
the complaint up to full payment thereof, representing the amount spent for the registration of the title to
the condominium unit in [respondents] name;

2. Ordering [petitioner] to deliver, replace or correct at [petitioners] exclusive expense/cost or appoint a

licensed qualified contractor to do the same on its behalf, the following defects/deficiencies in the
condominium unit owned by the [respondent]:

a) KITCHEN

i) The sides of the kitchen sink covered with sealants as well as miscut marble
installed as filler at the right side of the sink;

ii) Miscut marble installed on both sides of the side wall above the gas range;

b) FOYERS

Water marks at the parquet flooring, near the main water supply room;

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c) MAIDS ROOM

Ceiling cut off about one (1) square foot in size and left unfinished

d) DINING ROOM

i) Water damaged parquet up to about one (1) meter from the wall underneath
the open shelves and directly behind the plant box;

ii) Plant box directly behind the dining room;

iii) The water damaged parquet flooring near the door of the dining room to the
passage way

e) MASTERS BEDROOM

i) Falling off paint layers at the bathroom wall behind the bathtub/faucet along the
passageway of the masters bedroom;

ii) Falling off water-damaged plywood ceiling in the masters bedroom bathroom;

iii) Grinders mark damage at the bathtub;

f) BALCONY WALKWAY

i) PVC pipes installed two (2) inches above floor level causing water to
accumulate;

ii) Cracks on level of wash out flooring;

iii) 14-inches passageway going to the open terrace not sufficient as

passageway;

iv) PVC pipe installed on the plant box water drained directly on the balcony floor;

g) BALCONY (OPEN) TERRACE

i) Two (2) concrete cement measuring about 6 x 4 inches with protruding live
wires, purportedly lamp posts which were not installed;

h) BOYS BEDROOM

i) Water mark on the parquet flooring due to water seepage;

ii) Asphalt plastered at the exterior wall/floor joints to prevent water seepage;

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i) ANALOC FINISH of the aluminum frames of doors and windows all around the
condominium were painted with dark gray paint to cover dents and scratches;

j) LIVING ROOM

Intercom equipment installed without the TV monitor;

k) STORAGE FACILITIES at the ground floor

3. Ordering [petitioner] to pay [respondent] the following:

a) The sum of P40,000.00 representing reimbursement for expenses incurred for the materials/labor in
installing walls/floor titles in 2 bathrooms and bar counter cabinet.

b) The sum of P136,608.75, representing unearned income for the five-month period that the defendant
had to suspend a lease contract over the premises.

c) The sum of P27,321.75 per month for a period of twenty-one (21) months (from May 1985 to January
1987), representing unearned income when defendants lessee had to vacate the premises and
condominium unit remained vacant, all with legal interest from the filing of the counterclaim until the same
are fully paid.[8]

Ruling of the Court of Appeals

On appeal, after a thorough review and examination of the evidence on record, [9] the CA found no
basis for disbelieving what the trial court found and arrived at.[10]

The appellate court sustained the trial courts finding that while [petitioner] succeeded in proving its
claim against the [respondent] for expenses incurred in the registration of [the latters] title to the
condominium unit purchased, x x x for its part [respondent] in turn succeeded in establishing an even
bigger claim under its counterclaim.[11]

Hence, this Petition.[12]

The Issues

Petitioner raises the following issues for our consideration:

I. Whether or not the Honorable Court of Appeals erred in not holding that the trial court had no
jurisdiction over the respondents counterclaims.

II. Whether or not the decision of the Court of Appeals is based on misapprehension of facts
and/or manifestly mistaken warranting a review by this Honorable Court of the factual
findings therein.

III. Whether or not the award of damages by the Honorable Court of Appeals is conjectural
warranting a review by this Honorable Court of the factual findings therein. [13]

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The Courts Ruling

The Petition is partly meritorious.

First Issue:
Jurisdiction

Contending that it was the Housing and Land Use Regulatory Board (HLURB) -- not the RTC -- that
had jurisdiction over respondents counterclaim, petitioner seeks to nullify the award of the trial court.

Promulgated on July 12, 1976, PD No. 957 -- otherwise known as The Subdivision and
Condominium Buyers Protective Decree -- provides that the National Housing Authority (NHA) shall have
exclusive authority to regulate the real estate trade and business. [14] Promulgated later on April 2, 1978,
was PD No. 1344 entitled Empowering the National Housing Authority to Issue Writs of Execution in the
Enforcement of Its Decisions Under Presidential Decree No. 957. It expanded the jurisdiction of the NHA
as follows:

SECTION 1. In the exercise of its function to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against
the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lot or condominium unit against the owner, developer, broker or salesman. (Italics ours.)

On February 7, 1981, by virtue of Executive Order No. 648, the regulatory functions of the NHA were
transferred to the Human Settlements Regulatory Commission (HSRC). Section 8 thereof provides:

SECTION 8. Transfer of Functions. -The regulatory functions of the National Housing Authority pursuant
to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the
Commission (Human Settlements Regulatory Commission). x x x. Among these regulatory functions are:
1) Regulation of the real estate trade and business; x x x 11) Hear and decide cases of unsound real
estate business practices; claims involving refund filed against project owners, developers, dealers,
brokers, or salesmen; and cases of specific performance.

Pursuant to Executive Order No. 90 dated December 17, 1986, the functions of the HSRC were
transferred to the HLURB.

As mandated by PD No. 957, the jurisdiction of the HLURB is encompassing. Hence, we said
in Estate Developers and Investors Corporation v. Sarte:[15]

x x x. While PD 957 was designed to meet the need basically to protect lot buyers from the fraudulent
manipulations of unscrupulous subdivision owners, sellers and operators, the exclusive jurisdiction vested

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in the NHA is broad and general -to regulate the real estate trade and business in accordance with the
provisions of said law.

Furthermore, the jurisdiction of the HLURB over cases enumerated in Section 1 of PD No. 1344
is exclusive. Thus, we have ruled that the board has sole jurisdiction in a complaint of specific
performance for the delivery of a certificate of title to a buyer of a subdivision lot;[16] for claims of refund
regardless of whether the sale is perfected or not;[17] and for determining whether there is a perfected
contract of sale.[18]

In Solid Homes v. Payawal,[19] we declared that the NHA had the competence to award damages as
part of the exclusive power conferred upon it -- the power to hear and decide claims involving refund
and any other claims filed by subdivision lot or condominium unit buyers against the project owner,
developer, dealer, broker or salesman.[20]

Clearly then, respondents counterclaim -- being one for specific performance (correction of
defects/deficiencies in the condominium unit) and damages -- falls under the jurisdiction of the HLURB as
provided by Section 1 of PD No. 1344.

The Applicability of Estoppel

The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck
down at any time, even on appeal before this Court.[21] Indeed, the question of jurisdiction may be raised
at any time, provided that such action would not result in the mockery of the tenets of fair play. [22] As an
exception to the rule, the issue may not be raised if the party is barred by estoppel. [23]

In the present case, petitioner proceeded with the trial, and only after a judgment unfavorable to it did
it raise the issue of jurisdiction. Thus, it may no longer deny the trial courts jurisdiction, for estoppel bars it
from doing so. This Court cannot countenance the inconsistent postures petitioner has adopted by
attacking the jurisdiction of the regular court to which it has voluntarily submitted. [24]

The Court frowns upon the undesirable practice of submitting ones case for decision, and then
accepting the judgment only if favorable, but attacking it for lack of jurisdiction if it is not. [25]

We also find petitioner guilty of estoppel by laches for failing to raise the question of jurisdiction
earlier. From the time that respondent filed its counterclaim on November 8, 1985, the former could have
raised such issue, but failed or neglected to do so. It was only upon filing its appellants brief [26] with the
CA on May 27, 1991, that petitioner raised the issue of jurisdiction for the first time.

In Tijam v. Sibonghanoy,[27] we declared that the failure to raise the question of jurisdiction at an
earlier stage barred the party from questioning it later. Applying the rule on estoppel by laches, we
explained as follows:

A party may be estopped or barred from raising a question in different ways and for different
reasons. Thus, we speak of estoppel in pais, of estoppe[l] by deed or by record, and of estoppel
by laches.

Laches, in general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should have been done earlier; it is negligence or

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omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.

The doctrine of laches or of stale demands is based upon grounds of public policy which requires, for the
peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere
question of time but is principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted.[28]

Thus, we struck down the defense of lack of jurisdiction, since the appellant therein failed to raise the
question at an earlier stage. It did so only after an adverse decision had been rendered.

We further declared that if we were to sanction the said appellants conduct, we would in effect be
declaring as useless all the proceedings had in the present case since it was commenced x x x and
compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not
only patent but revolting.[29]

Applicable herein is our ruling in Gonzaga v. Court of Appeals,[30] in which we said:

Public policy dictates that this Court must strongly condemn any double-dealing by parties who are
disposed to trifle with the courts by deliberately taking inconsistent positions, in utter disregard of the
elementary principles of justice and good faith. There is no denying that, in this case, petitioners never
raised the issue of jurisdiction throughout the entire proceedings in the trial court. Instead, they voluntarily
and willingly submitted themselves to the jurisdiction of said court. It is now too late in the day for them to
repudiate the jurisdiction they were invoking all along. [31]

Second and Third Issues:

Appreciation of Facts

It is readily apparent that petitioner is raising issues of fact that have been ruled upon by the RTC
and sustained by the CA. The factual findings of lower courts are generally binding upon this Court and
will not be disturbed on appeal, especially when both sets of findings are the same. [32] Nevertheless, this
rule has certain exceptions,[33] as when those findings are not supported by the evidence on record.

We have carefully scrutinized the records of this case and found reason to modify the award to
conform to law and the evidence. We thus address the arguments of petitioner seriatim.

Warranties and Representations

in the Brochure

The brochure that was disseminated indicated features that would be provided each condominium
unit; and that, under Section 19 of PD No. 957, would form part of the sales warranties of
petitioner.[34] Respondent relied on the brochure in its decision to purchase a unit.[35] Since the former
failed to deliver certain items stated therein, then there was a clear violation of its warranties and
representations.

The brochure says that [t]he particulars stated x x x as well as the details and visuals shown x x x
are intended to give a general idea of the project to be undertaken, and as such, are not to be relied

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[upon] as statements or representations of fact.[36] This general disclaimer should apply only to the
general concept of the project that petitioner aptly characterizes thus:

x x x [D]estined to reflect condominium living at its very best and its design x x x will make the project the
only one of its kind in the Philippines.[37]

This disclaimer, however, should not apply to the features and the amenities that the brochure
promised to provide each condominium unit. Petitioner was thus in breach when it failed to deliver a
closed-circuit TV monitor through which residents from their apartments can see their guests x x x. [38]

Storage Facilities

The trial court erred, though, in requiring petitioner to provide storage facilities on the ground floor, as
the non-delivery had not been alleged in respondents Answer with Counterclaim.[39]

It is elementary that a judgment must conform to and be supported by both the pleadings and the
evidence, and that it be in accordance with the theory of the action on which the pleadings were framed
and the case was tried.[40] Indeed, issues in each case are limited to those presented in the pleadings.[41]

We are aware that issues not alleged in the pleadings may still be decided upon, if tried with the
parties express or implied consent.[42] Trial courts are not precluded from granting reliefs not specifically
claimed in the pleadings -- notwithstanding the absence of their amendment -- upon the condition that
evidence has been presented properly, with full opportunity on the part of the opposing parties to support
their respective contentions and to refute each others evidence. [43] This exception is not present in the
case at bar.

Moreover, a cursory reading of the brochure shows that there is no promise to provide individual
storage facilities on the ground floor for each condominium unit. The brochure reads: Storage facilities in
the apartment units and the ground floor.[44] Apparent from the letter of petitioner dated June 18,
1982,[45] was its compliance with its promise of storage facilities on the ground floor. In that letter,
respondent was also informed that it may course a reservation of those facilities through the building
superintendent.

Damages for Delay in Delivery

It is undisputed that petitioner sent respondent a Contract to Sell [46] declaring that the construction
would be finished on or before December 31, 1981.[47] The former delivered the condominium unit only in
June 1982;[48] thus, the latter claims that there was a delay in the delivery.

Because of this delay, the trial court ordered petitioner to pay damages of P136,608.75 representing
unearned income for the period that respondent had to suspend a lease contract.We find a dearth of
evidence to support such award.

To recover actual damages, the amount of loss must not only be capable of proof, but also be
proven with a reasonable degree of certainty. [49] The lone evidence for this award was the self-serving
testimony of respondents witness that a lease contract had indeed been intended to commence in

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January 1982, instead of the actual implementation on June 18, 1982.[50]Without any other evidence, we
fail to see how the amount of loss was proven with a reasonable degree of certainty.

Condominium Defects

The rule is that a partys case must be established through a preponderance of evidence. [51] By such
term of evidence is meant simply evidence that is of greater weight, or is more convincing than that which
is offered in opposition to it.[52] Respondent was able to establish through its witness testimony that the
condominium unit suffered from defects.[53] This testimony was confirmed by an inspection report [54] noted
and signed by petitioners representative, as well as by a commissioners report [55] prepared after an ocular
inspection by the clerk of court acting as a commissioner. Furthermore, this conclusion is supported by
the circumstances that occurred during the lease period, as evidenced by the complaint and the update
letters[56] of respondents lessee.

Petitioners contention that the claim arising from the alleged defects has already prescribed must fail
for being raised for the first time only on appeal.[57] Well-settled is the rule that issues not raised below
cannot be resolved on review in higher courts.[58]

We agree, however, that the lower courts erred in finding that there was a defect in a portion of the
balcony, which respondent alleges to be a walkway x x x [that] is not sufficient for passage. [59] Petitioner
was able to prove, however, that the specifications thereof conformed to the building plan.

Respondent contends that this portion should have been 65 to 80 centimeters wide, so that it would
be sufficient as a passageway.[60] The building plan[61] had not specified the width, however. Architect Leo
Ramos of W.V. Coscolluela & Associates, the architectural firm that prepared the building plan, testified
thus:

Q I am directing your attention xxx to a certain portion in this condominium unit x x x it appears
x x x [that] there is no measurement indicated therein, do you know why the measurement
of said portion was not indicated in the building plan?

A Normally, it is variable.

Q What do you mean by variable?

A It depends on the actual measurement of the building construction.

Q Could you please tell the Court, what x x x the purpose of the said portion of the
condominium unit [is]?

A It is used for watering the plants and the servicing of some area[s].

Q How much measurement is made to affix the portion of watering the plants?

A Approximately .50 [m].[62]

Respondent maintains that this portion should have been .80 meters (or 80 centimeters), similar to
another area in the building plan that it offered as Exhibit 2-A.[63] But an analysis of this plan reveals that
the latter area has a different width from that of the former.

It is readily apparent from the foregoing facts that the portion in controversy was not intended to be a
walkway. Thus, there was no deviation from the building plan. Because it has not been shown that this

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section was insufficient to serve the purpose for which it was intended, the lower courts erred in
considering it as defective.

Reimbursement of P40,000
for Completion Work

The lower courts did not err in ordering petitioner to correct the defects in the condominium unit, but
in requiring it to reimburse respondent in the amount of P40,000 for completion work done.

Petitioner argues that the trial courts Decision encompassed the areas beyond those alleged in
respondents Answer.[64] This contention is not convincing, because the allegations in the latter were broad
enough to cover all the defects in the condominium unit. In fact, respondent prayed that judgment be
rendered ordering [petitioner] to correct such defects x x x in the condominium unit as may be prove[d]
during the trial.[65]

Petitioner further challenges the award of P40,000 as reimbursement for completion work done by
respondent, on the ground that this claim was not proven during the trial. The latters evidence partook of
a witness testimony[66] and of a demand letter[67] sent to petitioner requesting reimbursement for
completion work done. Petitioner argues that respondent should have presented receipts to support the
expenses.[68]

We agree with petitioner. While respondent may have suffered pecuniary losses for completion work
done, it failed to establish with reasonable certainty the actual amount spent. The award of actual
damages cannot be based on the allegation of a witness without any tangible document, such as receipts
or other documentary proofs to support such claim.[69] In determining actual damages, courts cannot rely
on mere assertions, speculations, conjectures or guesswork, but must depend on competent proof and on
the best obtainable evidence of the actual amount of loss.[70]

Unearned Lease Income

Respondent entered into a lease contract with Advanced Micro Device on May 18, 1982, for the
period June 18, 1982 to June 17, 1983, with option to renew. [71] The lease -- which was for an agreed
monthly rental of P17,000 -- was renewed for a period ending May 1, 1985, when Advanced Micro Device
vacated the unit.[72] On the basis of these facts, the trial court ordered petitioner to pay damages by way
of unrealized income for twenty-one months or from May 1, 1985, until January 1987 -- when respondent
decided to move into the condominium unit, which was unoccupied by then.

Despite the defects of the condominium unit, a lessee stayed there for almost three years.[73] The
damages claimed by respondent is based on the rent that it might have earned, had Advanced Micro
Device chosen to stay and renew the lease. Such claim is highly speculative, considering that respondent
failed to adduce evidence that the unit had been offered for lease to others, but that there were no takers
because of the defects therein. Speculative damages are too remote to be included in an accurate
estimate thereof.[74] Absent any credible proof of the amount of actual damage sustained, the Court
cannot rely on speculations as to its existence and amount.[75]

We recognize, however, that respondent suffered damages when its lessee vacated the
condominium unit on May 1, 1985, because of the defects therein. Respondents are thus entitled to

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temperate damages.[76] Under the circumstances, the amount equivalent to three monthly rentals
of P17,000 -- or a total of P51,000 -- would be reasonable.

WHEREFORE, this Petition is PARTLY GRANTED, and the assailed Decision and Resolution of the
Court of Appeals MODIFIED, as follows:

Hereby DELETED is the requirement on the part of petitioner to (1) deliver storage facilities on the
ground floor; (2) pay P136,608.75 for unearned income for the five-month period that the lease contract
was allegedly suspended; (3) correct the alleged passageway in the balcony; (4) pay P40,000.00 as
reimbursement for completion work done by respondent; (5) pay P27,321.75 per month for a period of
twenty-one months for the alleged unearned income during the period when the condominium unit
remained vacant. Petitioner, however, is ORDEREDto pay P51,000 as temperate damages for the
termination of the lease contract because of the defects in the condominium unit. All other awards
are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

3. Redemption of Mortgaged Amortization

De Vera v. CA, G.R. No. 132869, October 18, 2001

SECOND DIVISION

[G.R. No. 132869. October 18, 2001]

GREGORIO DE VERA, JR., petitioner, vs. COURT OF APPEALS, Q. P. SAN DIEGO

CONSTRUCTION, INC., ASIATRUST DEVELOPMENT BANK, SECOND LAGUNA
DEVELOPMENT BANK, CAPITOL CITY DEVELOPMENT BANK, EX-OFFICIO SHERIFF OF
QUEZON CITY and/or HIS DEPUTY, respondents.

DECISION

BELLOSILLO, J.:

This is a Petition for Review, under Rule 45 of the Revised Rules of Court, of the Decision of the
Court of Appeals in CA-G.R. CV No. 37281, "Gregorio de Vera, Jr. v. Court of Appeals, QP San Diego
Construction, Inc., Asiatrust Development Bank, Second Laguna Development Bank, Capitol City
Development Bank, Ex-Officio Sheriff of Quezon City and/or his Deputy," and of its Resolution of 18
February 1998 denying petitioner's Manifestation with Motion for Reconsideration.

Respondent Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land located at 101
Panay Avenue, Quezon City, on which it built Lourdes I Condominium. On 10 June 1983, to finance its
construction and development, QPSDCI entered into a Syndicate Loan Agreement[1] with respondents
Asiatrust Development Bank (ASIATRUST) as lead bank, and Second Laguna Development Bank

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(LAGUNA) and Capitol City Development Bank (CAPITOL) as participating banks (hereafter collectively
known as FUNDERS). QPSDCI mortgaged to the creditor banks as security the herein mentioned Panay
Avenue property and the condominium constructed thereon. The mortgage deed was registered with the
Register of Deeds of Quezon City and annotated on the individual condominium certificates of title (CCT)
of each condominium unit.[2]

On 23 June 1983 petitioner Gregorio de Vera Jr. and QPSDCI, through its authorized agent Fil-
Estate Realty Corporation (FIL-ESTATE), entered into a Condominium Reservation Agreement[3] where
petitioner undertook to buy Unit 211-2C of the condominium for P325,000.00 under the following agreed
terms of payment: (a) an option money of P5,000.00 payable upon signing of the agreement to form part
of the purchase price; (b) a full downpayment of P175,675.00 broken down into the reservation fee
of P5,000.00 and three (3) equal monthly installments payable beginning the month after the signing of
the contract; and, (c) the remaining balance of P160,000.00 to be secured through petitioner's Pag-IBIG
and Open-Housing Loan. Pending release of the loan, petitioner was to avail of a bridge financing loan
with ASIATRUST or any accredited originating bank of the Pag-IBIG program.

On 2 June 1983 petitioner paid the reservation fee of P5,000.00, and on 11 July 1983 the balance of
the downpayment of P167,000.00, thus completing the downpayment of P175,675.00 well before the due
date. As incentive, petitioner was given a full discount on cash payment by QPSDCI to bring the total
payment to P184,040.00.

Pursuant to their Condominium Reservation Agreement, petitioner submitted through FIL-ESTATE

his application for the Pag-IBIG loan. On 28 December 1983 ASIATRUST as originating bank notified
FIL-ESTATE that petitioner's Pag-IBIG loan application had been approved.[4] In a letter dated 18 January
1984 QPSDCI President Quintin P. San Diego forwarded the letter to petitioner. However, the amount
approved was only P139,100.00 and not P160,000.00. Additional charges further reduced the amount
to P117,043.33.

Petitioner De Vera Jr. approached QPSDCI to have the P12,040.00 discount credited to his
additional equity. Since the resultant net loan of P117,043.33 was insufficient to cover the balance of the
purchase price, De Vera Jr. negotiated with QPSDCI to defer payment of the P23,916.67 deficiency until
the project was completed and the unit was ready for turnover. QPSDCI agreed.[5]

The condominium project was substantially completed in June 1984 and the unit was turned over to
De Vera Jr. the following month. Accordingly, petitioner paid QPSDCI the P23,916.67 shortfall between
the balance and the granted loan.

On 26 June 1984 ASIATRUST through its Vice-President Pedro V. Lucero and Manager Nicanor T.
Villanueva wrote to QPSDCI asking the unit buyers to pay in advance the costs of the transfer of titles
and registration of their Pag-IBIG loan mortgages.[6] QPSDCI forwarded the letter to De Vera Jr. and
requested that he pay the amount to QPSDCI.[7] As ASIATRUST indicated that the amount be paid
directly to it, De Vera Jr. went to the bank for clarification. On 23 August 1983, after learning that
ASIATRUST was in possession of the certificate of title, De Vera Jr. paid the transfer expenses directly to
ASIATRUST.

On 17 September 1984 ASIATRUST sent another notice of approval[8] to QPSDCI and De Vera Jr.
with the notation, "additional equity of all accounts have (sic) to be paid directly to the Bank."

On 3 October 1984 ASIATRUST wrote another letter[9] asking QPSDCI to advise the unit buyers,
among others, to pay all additional and remaining equities on 10 October 1984; that their Pag-IBIG loan
mortgages would be registered only upon payment of those equities; and, that loan mortgages registered
after 31 October 1984 would be subject to the increased Pag-IBIG interest rates.

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On 12 October 1984 ASIATRUST also wrote a letter to petitioner and signed by its Assistant
Manager Leticia R. de la Cruz informing him that his housing loan would only be implemented upon the
following conditions: (a) Payment of the remaining equity directly to ASIATRUST Development Bank; and
(b) Signing of all Pag-IBIG documents not later than 20 October 1984, so his mortgages could be
registered on or before 31 October 1984. Mortgages registered beyond said date shall subject the Pag-
IBIG loan to the increased interest rates of the National Home Mortgage Finance Corp. (per Circular #27
dated June 21, 1984).

According to petitioner, the letter came as a total surprise to him; all the while he thought that his
loan had already been released to QPSDCI and the titles transferred to his name; he promptly wrote
ASIATRUST to seek clarification; ASIATRUST responded by informing De Vera Jr. that the
developmental loan agreement between QPSDCI and the three (3) banks, under which the individual
titles of the condominium units were mortgaged in favor of the FUNDERS to secure the loan, shall be
paid out of the net proceeds of the Pag-IBIG loans of the buyers; that the total amount of loan from the
FUNDERS was distributed among all condominium units such that each unit had to bear a certain portion
of the total loan, or a "loan value;" that per agreement with QPSDCI, ASIATRUST would only grant the
Pag-IBIG Housing Loan with the release of the mortgage liens, which could not be released unless the
buyers fully paid their respective loan values; and that petitioner's equity payments to QPSDCI had not
been remitted to the bank.

On 30 May 1985 ASIATRUST informed QPSDCI that it could no longer extend the bridge financing
loan to some of the buyers, including petitioner, for various reasons, [10] among which was that petitioner
had already exceeded the age limit, hence, he was disqualified.[11]

After learning of the disapproval of his loan, petitioner wrote the president of QPSDCI to make
arrangements to settle his balance. Since petitioner had already invested a substantial amount in
remodelling and improving his unit, rescinding the sale was no longer a viable option. Consequently, he
only asked the president of QPSDCI for some assurance that the title would be turned over to him upon
full payment.

In response, QPSDCI suggested that petitioner deal directly with ASIATRUST for any matter
regarding the sale of the unit.[12] President San Diego explained that "as far as we are concerned we have
sold to you our property at a certain price and we have correspondingly issued to your goodself, thru the
Bank, a Deed of Absolute Sale for the unit we sold to you taking into consideration that the Bank has
approved your loan per their advice dated December 28, 1983 and presumably credited us for the
approved amount of loan."

As petitioner failed to obtain the housing loan, he was not able to pay the balance of the purchase
price. QPSDCI sent him a letter[13] dated 6 August 1987 presenting him with two options: (a) to pay the
remaining balance of the purchase price, with interest, which had already ballooned to P263,751.63, on
or before 15 August 1987; or, (b) to pay rent for the use of the unit from 28 July 1984 to June 1987.

On 20 May 1988 petitioner, upon discovering that the FUNDERS had already published a
notice[14] of extrajudicial foreclosure of the mortgage, filed a complaint against respondents for damages
and injunction with urgent prayer for issuance of a writ of preliminary injunction, annulment of mortgage
based on fraud, with urgent prayer for the issuance of a writ of preliminary attachment and specific
performance. The complaint was docketed as Civil Case No. Q-53737 and subsequently raffled to Branch
107 of the Regional Trial Court of Quezon City.

Meanwhile, QPSDCI failed to pay its obligations to the FUNDERS. On 23 May 1988 ASIATRUST
extrajudicially foreclosed the mortgage on twenty-seven (27) condominium units, including that of

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petitioner De Vera Jr. The units were sold at public auction, with the FUNDERS as the highest
bidder. The certificate of sale was issued and annotated on the CCTs.

On 3 March 1992 the trial court rendered judgment "directing the defendants (herein respondents) to
pay to the plaintiff (herein petitioner) jointly and severally the sum equivalent to the penalties and charges
plus whatever amount may be necessary to redeem Unit 211-2C from any lien and encumbrances so that
the title may be released and delivered to the plaintiff, free from any lien and encumbrances, subject only
to the deduction of his unpaid balance of P139,000.00, which the plaintiff should pay out of his own funds,
plus exemplary damages of P100,000.00 each and to pay plaintiff attorney's fees jointly and severally x x
x P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's prayer for moral damages
and dismissed defendants' counterclaim against the plaintiff and cross-claims against each other.[15]

The Court of Appeals affirmed the decision of the trial court with the modification that respondents
were ordered solidarily to pay petitioner P50,000.00 as nominal damages, but the award for actual and
exemplary damages was deleted.

On 9 July 1997 petitioner filed a "Compliance with Manifestation and Motion for Extension of Time to
File Motion for Reconsideration" alleging that he received the decision of the Court of Appeals on 4 July
1997 and requesting a thirty (30)-day extension within which to file a motion for reconsideration. The
motion was denied by respondent appellate court.

On 8 August 1997 petitioner filed a "Manifestation with Motion for Reconsideration," and on 6
February 1998 a "Compliance with Motion to Resolve Manifestation with Motion for Reconsideration,"with
respondent court. Reckoning the deadline of the period to file a motion for reconsideration at 19 July
1997, the Court of Appeals denied petitioner's Motion for Reconsideration for having been filed out of
time. Hence, the instant petition for review on certiorari.

Petitioner assails the 18 February 1998 Resolution denying his Motion for Reconsideration, asserting
that the Court of Appeals should not have denied his motion on mere technicality. Petitioner claims that
his counsel was not notified of the Court of Appeals' decision. The Notice of Judgment[16] of the decision
of the Court of Appeals shows that the same was served on petitioner Gregorio de Vera himself and not
on his counsel. Petitioner asserts that service to a party is allowed only if the party is not represented by
counsel. But if he is represented by a counsel, then service shall be made upon his counsel unless
service upon the party himself is ordered by the court. Unless so ordered, service on the party himself
who is represented by counsel is not notice in law, hence, invalid. [17]

Furthermore, justice will be better served by entertaining this petition than by dismissing it outright. It
is always in the power of this Court to suspend its own rules, or to except a particular case from its
operation, whenever the purposes of justice require it.[18]

The trial court found that petitioner's failure to pay the balance of the price of Unit 211-2C was not his
fault. It also found that petitioner was a real party in interest to annul the loan agreement between
QPSDCI and the FUNDERS, and that he had priority in right to the unit over the FUNDERS. The trial
court rejected QPSDCI's counterclaim against petitioner for rentals and sustained petitioner's claim for
damages against private respondents.

The Court of Appeals ruled that the regular courts had no jurisdiction over the subject matter of the
case, the proper venue being the Housing and Land Use Regulatory Board (HLURB). However,
respondents were estopped from questioning jurisdiction because they filed counterclaims in the lower
court.

As to the issue of who had superior right over the Unit 211-2C, the Court of Appeals ruled in favor of
petitioner, holding that the mortgage in favor of ASIATRUST, which was the basis for its title, did not bind

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petitioner inasmuch as the same was not registered with the National Housing Authority (NHA), contrary
to the mandate of Sec. 18 of PD 957, or "The Subdivision and Condominium Buyers' Protective
Decree."[19] The appellate court further found that QPSDCI breached its warranties as seller under Art.
1547, and also violated its obligation to deliver to petitioner a clean title as required by Sec. 4 of PD
957. It declared that delivery of the unit to petitioner operated to transfer ownership to him from QPSDCI.

Respondents did not appeal. Petitioner contests the decision of the Court of Appeals only insofar as
it deleted the award of actual and exemplary damages and attorney's fees. The only issue to be
addressed by this Court therefore is the propriety of the award of damages in favor of petitioner.

In finding QPSDCI liable for damages, the trial court held -

x x x it (QPSDCI) has not exerted any reasonable diligence or effort to procure the issuance of the title to
the plaintiff. All that it did was to refer the plaintiff to the Funder(s), alleging that he (plaintiff) should
transact business with them as the matter of loan is between the plaintiff and the Funder(s), and they had
nothing to do with it. However, it collected the additional equity and never forwarded the same to the
Funder(s) nor informed the latter of plaintiff's payment thereof. Thus, to the mind of Asiatrust, plaintiff
never paid the additional equity, although per records of the Seller, he already had.

All these show negligence on the part of the Seller to perform its obligations under the contract -- to the
detriment of the plaintiff, for which it should be liable for damages under Art. 2201 of the Civil Code, for
the natural and probable consequences of the breach of the obligation which the parties, specially the
Seller, should have forseen or could have reasonably forseen at the time the obligation was contracted.

As to respondent ASIATRUST, the trial court held that its failure to notify petitioner of the required
steps to be taken after the approval of the loan, of the requirement that additional equity be paid directly
to the bank and other important aspects of the bridging loan, made it liable for damages under the
general provisions on torts under Art. 2176 of the Civil Code, in relation to Art. 2202.

In deleting the award for damages, the respondent Court of Appeals explained -

As earlier found, QPSDCI failed to comply with its warranties as seller. Unfortunately, plaintiff-appellee
posits the propriety of the award of actual damages only in the probable sense: that such award is to the
amount of interests, penalties and other charges as plaintiff may stand liable for by reason of the non-
payment of the purchase price. In other words, plaintiff-appellee admits not having suffered damages in
consequence of non-compliance of seller's warranties. Since actual damages are predicated on such
pecuniary loss as duly proved, the award of the lower court therefor is plainly not in order x x x (citations
omitted).

We agree with the respondent Court of Appeals on this point. Petitioner did not present any proof
that he suffered any damage as a result of the breach of seller's warranty. He did not lose possession of
his condominium unit, although the same had not yet been registered in his name. In his Consolidated
Reply, petitioner came up with this feeble argument for claiming actual damages, a rehash of his motion
for reconsideration with the Court of Appeals -

Petitioner reiterates that the compensatory damages awarded is to the amount of interests, penalties and
other charges as (he) may stand liable for by reason of the non-payment of the balance of the purchase
price of Unit #211 in consequence of the respondent's fault or negligence as evidenced by Exhs. S and S-
1. The compensation is the same amount as whatever the liability may be and therefore merely offsets
the liability x x x x

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The cost of clearing the CCT of liens and encumbrances and transferring it to the name of the petitioner
are also part of the actual or compensatory damages and are its own proof.

Article 2199 of the Civil Code provides that one is entitled to adequate compensation only for such
pecuniary loss suffered by him as is "duly proved."[20] This provision denies the grant of speculative
damages, or such damage not actually proved to have existed and to have been caused to the party
claiming the same.[21] Actual damages, to be recoverable, must not only be capable of proof, but must
actually be proved with reasonable degree of certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and amount of damages. [22]

This does not mean however that petitioner is liable to private respondents for penalties, interests
and other charges that accrued by reason of non-payment of the balance of the purchase
price.Respondent ASIATRUST had made several representations to petitioner that his loan had been
approved. The tenor of the letters sent by ASIATRUST would lead a reasonable man to believe that there
was nothing left to do but await the release of the loan. ASIATRUST cannot hide behind the pithy excuse
that the grant of the bridge financing loan was subject to the release of the Pag-IBIG loan. The essence of
bridge financing loans is to obtain funds through an interim loan while the Pag-IBIG funds are not yet
available. To await the release of the Pag-IBIG loan would render any bridge financing nugatory. Thus,
we agree with the trial court when it said that "the conclusion is inevitable that although the plaintiff was
not able to pay, he was a victim of circumstances and his failure was not due to his own fault."

Furthermore, Sec. 25 of PD 957 provides:

Sec. 25. Issuance of Title. - The owner or developer shall deliver the title of the lot or unit to the buyer
upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in
the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the
lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall
redeem the mortgage or the corresponding portion thereof within six months from such issuance in order
that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance
herewith.

From the foregoing it is clear that upon full payment, the seller is duty-bound to deliver the title of the
unit to the buyer. Even with a valid mortgage over the lot, the seller is still bound to redeem said mortgage
without any cost to the buyer apart from the balance of the purchase price and registration fees. It has
been established that respondent QPSDCI had been negligent in failing to remit petitioner's payments to
ASIATRUST. If QPSDCI had not been negligent, then even the possibility of charges, liens or penalties
would not have arisen. Therefore, as between QPSDCI and petitioner, the former should be held liable for
any charge, lien or penalty that may arise. However, it was error for the trial court to remedy the situation
in the form of an award for damages because, as discussed earlier, the basis for the same does not
appear indubitable.

Part of the confusion lies in the deficiency of the trial court's decision. It had found that petitioner had
superior right to the unit over the FUNDERS and the mortgage in favor of the FUNDERS was contrary to
Condominium laws. Therefore, the proper remedy was to annul the mortgage foreclosure sale and the
CCT issued in favor of ASIATRUST, and not merely decree an award for damages. We held in Union
Bank of the Philippines v. HLURB -[23]

Clearly, FRDC's act of mortgaging the condominium project to Bancom and FEBTC, without the
knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now
HLURB) as required by P.D. No. 957, was not only an unsound real estate business practice but also

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highly prejudicial to the buyer David, (who) has a cause of action for annulment of the mortgage, the
mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP and
FEBTC as highest bidders of the sale.

These remedies were clearly within those sought for in petitioner's complaint. The trial court should
have also ordered QPSDCI to credit petitioner's payments to his outstanding balance and deliver to
petitioner a clean CCT upon full payment of the purchase price as mandated by Sec. 25 of PD 957.

We note that petitioner, believing that he won, did not appeal the trial court's decision. Petitioner is
partly to blame for the difficult situation he is in, having filed his complaint with the regular courts instead
of the HLURB. Nevertheless, both trial court and the Court of Appeals found that petitioner had superior
rights over the condominium unit, that petitioner was not bound by the mortgage in favor of the
FUNDERS and, that QPSDCI violated its contract with petitioner by its failure to remit the latter's
payments. Such findings are uncontested before us and provide enough ground to warrant the
modification of the ruling, so that full relief may be accorded to petitioner. The general rule that an
appellate court may only pass upon errors assigned may be waived, and the appellate court may
consider matters not assigned when consideration of which is necessary in arriving at a just decision and
complete resolution of the case or serve the interests of justice or to avoid dispensing piecemeal
justice.[24]

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 37281 is
MODIFIED thus -

(a) The mortgage over Unit 211-2C of Lourdes I Condominium covered by CCT No. 2307 as well as
its foreclosure sale is declared NULL and VOID. The Ex-Officio Sheriff of Quezon City is ordered to
cancel the certificate of sale in favor of ASIATRUST Development Bank over the aforesaid Unit 211-2C
and the Register of Deeds of Quezon City to cancel the Annotation of the Real Estate Mortgage (Entry
No. 7714) and the Annotation of the Certificate of Sale (Entry No. 8087); and

(b) Respondents Q. P. San Diego Construction, Inc., and ASIATRUST are ordered to credit all
payments made by petitioner Gregorio de Vera Jr., to his outstanding balance, and to deliver to petitioner
the certificate of title over Unit 211-2C, Lourdes I Condominium, upon full payment of the purchase price,
free from all penalties, liens, charges, except those accruing after finality of this Decision.

The award of nominal damages in favor of petitioner in the amount of P50,000.00 is AFFIRMED.

SO ORDERED.

4. Suspension of Monthly Amortization

Gold Loop Properties, Inc. v. CA, G.R. No. 122088, January 26, 2001

FIRST DIVISION

[G.R. No. 122088. January 26, 2001]

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 Page 530 of 540

GOLD LOOP PROPERTIES, INC. and EMMANUEL R. ZAPANTA, petitioners, vs. THE COURT OF
APPEALS, BHAVNA HARILELA SADHWANI and RAMESHJ. SADHWANI, represented by
their attorney-in-fact PURSHUTAM DIALANI, respondents.

DECISION

PARDO, J. :

The case before the Court is an appeal via certiorari from the decision[1] of the Court of Appeals
dismissing the petition for certiorari assailing the decision of the Senior Deputy Executive Secretary,
Office of the President sustaining the ruling of the Housing Land Use and Regulatory Board of
Commissioners requiring petitioners to furnish private respondents with copy of the contract to sell and to
accept the balance of the purchase price of a condominium unit.

On July 16, 1988, private respondents Bhavna Harilela and Ramesh Sadhwani (hereinafter referred
to as Sadhwanis) submitted through St. Martin Realty Corporation, a realtor agent of petitioner Gold Loop
Properties, Inc. (hereinafter referred to as GLPI), a signed pro forma reservation application addressed to
GLPI for the purchase of one (1) condominium unit at Gold Loop Towers residential complex, located in
Ortigas Complex, Pasig. One of the terms of the reservation was the execution of a contract to sell once
the downpayment was paid in full. Upon submission of the reservation, the Sadhwanis issued a check for
P50,000.00 to cover the reservation fees to Josephine Flores Guina, agent of St. Martin Realty who
issued a receipt to them.

On November 18, 1988, the Sadhwanis paid GLPI the amount of P819,531.25. Subsequently,
Bhavna Harilela signed a Contract To Sell[2] with GLPI, represented by its President Emmanuel Zapanta.
Ms. Guina assured them that they would be furnished with a copy of the contract after its notarization,
and that the amount, representing the balance of the purchase price, would be included in a loan
application with a bank. However, the contract to sell was not notarized, as the private respondents were
not able to supply GLPI with a copy of their passports.

Under the contract, GLPI agreed to sell to Sadhwanis a 198.75 square meters condominium unit
particularly Unit R-84 of Southwest Tower. The contract price was P2,484,375.00, inclusive of a
reservation deposit of P50,000.00.

The Contract to Sell, Section 3, provides:

Section 3. PURCHASE PRICE AND TERMS OF PAYMENT.

(a) The purchase price of the UNIT, exclusive of interest shall be TWO MILLION FOUR HUNDRED
EIGHTY FOUR THOUSAND THREE HUNDRED SEVENTY FIVE (P2,484,375.00) Pesos, Philippine
Currency, payable as follows:

Amount Due Date

Downpayment of 35% P869,531.25

Less: Reservation 50,000.00 July 16, 1988

Net Downpayment 819,531.25 Oct. 21, 1988

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Balance Payable P1,614,843,80

thru the bank designated by the SELLER and subject to standard banking requisites and approval.

NOTE: In the event of non-approval of the loan by the bank, the BUYER commits to adopt the Co-
Terminus Payment Plan retroactive to the date of scheduled downpayment as reflected above. This plan
requires the payment of non-interest bearing equal monthly installments spreads on the full balance of the
purchase price commencing 30 days after the scheduled downpayment up to January 1990. [3]

GLPI informed the Sadhwanis that the bank loan accommodation which was to serve as payment of
the balance of the purchase price was disapproved, and thus, per the terms of the
Contract to Sell, thebalance would become payable through the Co-terminus Payment Plan schedule of
payments, in implementation of which petitioners were informed by letter[4] dated March 15, 1989, which
pertinently reads:

Despite diligent efforts and ardent representations on our part to have the approval of the loan in
accordance with the Contract, such approval could not be obtained for the reason that banks are not
willing to extend a loan to be secured by a still ongoing project. Accordingly, the balance of the purchase
price should now be paid in equal monthly installments until January 1990 pursuant to the aforequoted
provision. The schedule of these payments in implementation of this Co-Terminus Payment Plan should
be as follows:

Date of Payment Amount

March 20, 1989 (Covering

the period from Nov. 21,
1989 to March 21, 1989) P538,281.25
April 20, 1989 107,626.25
May 20, 1989 107,626.25
June 20, 1989 107,626.25
July 20, 1989 107,626.25
August 20, 1989 107,626.25
September 20, 1989 107,626.25
October 20, 1989 107,626.25
November 20, 1989 107,626.25
December 20, 1989 107,626.25
January 20, 1989 107,626.25

TOTAL P1,614,843.80

By letter[5] dated March 16, 1989, addressed to GLPI, the Sadhwanis offered to resell their rights to
the condominium unit they purchased. The letter contained proposals which read:

Per our verbal agreement, this comes to formalize the earnest intention of my clients,
Spouses Ramesh and Anita Sadhwani, to sell their rights over Unit R-84 of the Gold Loop Towers, under
the following terms and conditions:

ACQUISITION:

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198.75 sq. m. @ 12,500 per sq. m. = P2,484,375.00

Less: 35% downpayment paid 11-15-88 869,531.25
Balance = 1,614,843.75

Monthly amortization payable in = 89,713.54

18 months starting December 1988
until May 1990 @ 3% penalty for
delayed amortization = _________3%
Penalty per month = P 2,691.41
x 3 months
Total Penalty = P 8,074.22

RE-SALE:

198.75 sq. m. @ P14,500.00

per sq. m. = P2,881,875.00

Less: Balance = 1,614,843.75

1,267,031.25

Less: Interest for delayed

Amortization = 8,074.22

Net cash involved payable

in 6 months = P1,258,957.03

Petitioners rejected the offer on the resale of the rights over the condominium unit proposed by
private respondents because the offer was unreasonable, unfair and inequitable.

On March 19 and April 25, 1989, respondent Ramesh J. Sadhwani demanded a copy of the contract
to sell, noting that his wife had no official document to show that she bought a condominium unit from
GLPI and there were conditions and/or stipulations in the contract which she could not be expected to
comply with, unless a copy of the same be given to her. By letter dated May 22, 1989 to GLPI,
respondent Sadhwanis counsel made a formal demand for the delivery to him of a copy of the contract to
sell.

Spouses Sadhwanis failed to pay any of the monthly amortizations in the payment plan.

On August 7, 1989, petitioners sent a letter demanding payment of the balance amounting to
P1,614,814.80, and informed the Sadhwanis that GLPI will rescind the Contract to Sell and automatically
forfeit their down payment should they fail to pay within five (5) days from receipt of the letter in
accordance with section 8 of the contract to sell.[6]

On August 14, 1990, spouses Sadhwanis filed with the Housing and Land Use Regulatory Board
(hereinafter referred to as HLURB), a complaint for specific performance with an alternative prayer for
refund against GLPI. Spouses Sadhwanis prayed that they be furnished with a copy of the contract to sell
and allowed them to remit the balance of the consideration to GLPI and to deliver to them the title and
possession of the condominium unit, or to be reimbursed of the amount they paid with interest and
damages.[7]

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On October 8, 1990, petitioners filed with the HLURB an answer to the complaint and subsequently,
the parties submitted their position papers.

On October 2, 1992, HLURB Arbiter Roberto F. Paras rendered a decision, the dispositive portion of
which provides:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering respondents Gold Loop Properties, Inc. and St. Martin to furnish complainants with a copy of
the subject Contract to Sell and to accept complainants payment of the agreed purchase price balance of
the Condominium unit described in the said Contract to Sell;

2. Ordering said respondents to deliver possession of and to effect the transfer of title to the subject
condominium unit in favor of the complainants after full payment of the purchase price;

In the event compliance with the above dispositive portion is no longer possible, respondents instead are
hereby ordered to jointly and severally reimburse complainants the amount of Eight Hundred Seventy
Eight Thousand Three Hundred Sixty Six Pesos and Thirty Five Centavos (P878,366.35) representing
complainants reservation deposit and downpayment, with legal interest from the time of the filing of this
complaint;

3. Ordering respondents jointly and severally to pay complainants (a) moral damages in the amount of
Ten Thousand Pesos (P10,000.00), and (b) attorneys fees in the amount of Thirty Thousand Pesos
(P30,000.00);

4. Dismissing respondents counterclaim for lack of merit.

IT IS SO ORDERED.[8]

On November 16, 1992, petitioners appealed to the HLURB Board of Commissioners, Quezon City
while private respondents interposed a partial appeal thereto.

On October 11, 1993, the HLURB Board of Commissioners rendered a decision, the dispositive
portion of which reads:

WHEREFORE, premises considered, respondents appeal is hereby DENIED and complainants Partial
Appeal is hereby given due course and the Decision subject of this Appeal is hereby MODIFIED by
DELETING the second paragraph of order number two. Accordingly, complainants are directed to pay the
balance of the purchase price, without interest, within 30 days from receipt hereof while respondents are
ordered to accept said payment and turn over to complainants the unit subject of said contract to sell.

All other aspects of the decision is hereby AFFIRMED IN TOTO.

SO ORDERED.[9]

On January 7, 1994, petitioners elevated the case to the Office of the President.

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On August 24, 1994, Senior Deputy Executive Secretary Leonardo A. Quisumbing[10] rendered a
decision[11] dismissing petitioners appeal. He also denied petitioners motion for reconsideration [12] in a
Resolution[13] dated December 22, 1994.

On March 22, 1995, petitioners filed with the Supreme Court a special civil action for certiorari
assailing the decision of the Senior Deputy Executive Secretary, Office of the President. In a resolution
dated April 4, 1995, the Court referred the case to the Court of Appeals for proper disposition. [14]

On June 22, 1995, the Court of Appeals promulgated its decision dismissing the petition.[15] The
court ruled that the failure of petitioners to give respondents a copy of the contract to sell sued upon,
despite repeated demands therefor, and notwithstanding the payment of P878,366.35, was a valid ground
for private respondents to suspend their payments. And given the fact that the contract to sell was in
writing, the Sadhwanis, as buyers, were entitled to a copy. Their request for a copy sprung from their
desire to comply with what was incumbent upon them to perform thereunder. While buyers do not need a
copy of the contract to know the stipulated purchase price, the schedule of payments and the outstanding
balance, the contract to sell, being an eight paged single-spaced document, broken down into twelve
sections, spelling out the parties respective monetary and non-monetary rights and obligations, the
buyers could not be expected to recall each and every detail of the stipulations of the contract without a
copy of the contract to guide them.

On July 14, 1995, petitioners filed with the Court of Appeals a motion for
reconsideration.[16] However, the court denied the motion.[17]

Hence, this petition.[18]

Petitioners contend that private respondents are not entitled to suspend payment of their monthly
amortizations because of the alleged failure of petitioners to furnish them copy of the contract to sell and
that private respondents used the alleged failure to give them copy of the contract as an excuse for
defaulting in their contractual obligation to pay the installments. Petitioners insist that private respondents
were given copy of the contract to sell. Petitioners pointed out that under the contract, they had the right
to rescind the contract in case private respondents breached the contract.

In their Comment[19] and Memorandum,[20] private respondents alleged that they have not in fact
received a copy of the contract to sell. Private respondents likewise averred that petitioners assertion is
premised on its completely wrong proposition that private respondents had given petitioners a reason to
rescind the contract to sell. What was really in issue was that it was petitioners that gave them sufficient
and well-founded cause to suspend payment of their monthly amortizations on the condominium unit.

We agree with private respondents.

The core issue actually boils down to the question of whether or not respondents may suspend
payment of their monthly amortizations due to failure of petitioners to furnish them copy of the contract to
sell.

Time and again, the Court had occasion to reiterate the well-established rule that findings of fact of
the Court of Appeals are conclusive on the parties and are not generally reviewable by this Court. [21]We
find no compelling reason to disturb the factual findings of the Court of Appeals, in the absence of
showing that the present case falls within the exceptions to this rule. [22] When supported by sufficient
evidence, the findings of fact of the Court of Appeals affirming those of the trial court, are not to be
disturbed on appeal. The rationale behind this doctrine is that review of the findings of fact of the Court of
Appeals is not a function that the Supreme Court normally undertakes. In the case at bar, we subscribe to
the findings of fact of the Court of Appeals when it held that:

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x x x Private respondents were indeed justified in suspending payment of their monthly

amortizations. The failure of petitioners to give them a copy of the Contract to Sell sued upon, despite
repeated demands therefor, and notwithstanding the private respondents payment of P878,366.35 for the
subject condominium unit was a valid ground for private respondents to suspend their payments. x x x

xxx

And contrary to petitioners stance, records disclose that they were the ones who did fraudulent acts
against private respondents by entering into a Contract to Sell with the latter and accepting their
downpayment of P878,366.35, withholding a copy thereof for no valid reason at all, and then threatening
them with rescission and forfeiture, when private respondents only suspended payment of the balance of
the purchase price while waiting for their copy of the Contract to Sell.[23]

The private respondents are entitled to a copy of the contract to sell, otherwise they would not be
informed of their rights and obligations under the contract. When the Sadhwanis parted with P878,366.35
or more than one third of the purchase price for the condominium unit, the contract to sell, or what it
represents is concrete proof of the purchase and sale of the condominium unit.

WHEREFORE, the Court hereby DENIES the petition for review on certiorari, for lack of merit. The
Court AFFIRMS the decision of the Court of Appeals in CA-G.R. SP No. 36977 affirming the order for
delivery of a copy of the contract to sell to private respondents and to accept payment of the balance of
the purchase price and deliver title over the condominium unit to the private respondents upon full
payment of the balance of the purchase price.

No costs.

SO ORDERED.

5. Alteration of Plans
G.O.A.L. Inc. v. CA, G.R. No. 118822, July 28, 1997

FIRST DIVISION

[G.R. No. 118822. July 28, 1997]

G.O.A.L., INC., petitioner, vs. COURT OF APPEALS, OFFICE OF THE RESIDENT LEGAL AFFAIRS,
HOUSING AND LAND USE REGULATORY BOARD, RIZALINO SIMBILLO, WILLIAM ONG,
HERMINIA MESINA, SELFA MARTINEZ, FILOMENO TENG, RAFAEL JAVIER, FERNANDO
DEL MUNDO, MILDRED PAREJA, REMEDIOS LASQUETE, GEORGE CABIGAN, and
ARCADIO SAMPANG, respondents.

DECISION

BELLOSILLO, J.:

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G. O. A. L., INC. (GOAL), in this petition for review on certiorari, seeks to set aside part of the
decision of the Court of Appeals dated 28 September 1994 [1] which affirmed the decision of the Office of
the President Legal Affairs (OPLA) that earlier likewise affirmed the decision of the Housing and Land
Use Regulatory Board (HLURB). Petitioner confines its petition to the construction of the fifth floor of
Gemin I Condominium and all works related thereto, including the issuance of title to private respondent
Teng and providing free parking spaces for the condominium units.[2]

On 23 May 1983 GOAL and the National Housing Authority (NHA) entered into an agreement
whereby NHA extended to GOAL a loan of P4.425 million for the construction of Gemin I Condominium at
941 Gonzales St., Ermita, Manila. Sometime in 1984 a Contract Agreement was entered into between
GOAL and Matson International Corporation for the construction of the condominium within one (1) year
at the cost of P4.2 million. However, in the later part of 1984, the contractor abandoned the project with
only 60% of it finished. In 1985 GOAL offered the condominium units for sale with private respondents
among its buyers. To remedy the situation brought about by the abandonment of the project by the first
contractor, GOAL subsequently pursued the construction of the fifth floor with NHA granting additional
funding on the condition that it would hold on to the condominium certificates of title of private
respondents.

In August 1989 private respondents filed with the Housing and Land Use Regulatory Board
(HLURB), Office of Appeals, Adjudication and Legal Affairs (OAALA), a complaint against GOAL. Among
the issues raised were the illegal construction of the fifth floor of Gemin I Condominium, the failure to
deliver the title of private respondent Filomeno Teng despite his repeated demands, and the failure to
provide adequate parking spaces for the unit owners.

On 31 March 1989 OAALA rendered its decision ordering GOAL, inter alia, (a) to stop the
construction of the fifth floor, (b) to deliver the title of private respondent Teng, and (c) to provide
adequate parking space for the unit owners.[3]

On appeal to the Office of the President Legal Affairs (OPLA) and subsequently to the Court of
Appeals, the decision rendered by the HLURB-OAALA was affirmed in toto. Petitioner's motion for
reconsideration was denied. Hence this petition.

Petitioner imputes error to the Court of Appeals in not finding the true facts of the case that greatly
affected its decision, and its decision being contrary to law.

GOAL contends that the Court of Appeals failed to appreciate the fact that the construction of the
fifth floor was with the written approval of public respondent HLURB as required by Sec. 22 of P.D. 957
which provides -

Sec. 22. Alteration of Plans. - No owner or developer shall change or alter the roads, open spaces,
infrastructures, facilities for public use and/or other form of subdivision development as contained in the
approved subdivision plan and/or represented in its advertisements, without the permission of the
Authority and the written conformity or consent of the duly organized homeowners association, or in the
absence of the latter, by majority of the lot buyers in the subdivision (underscoring supplied).

The above provision is clear. We do not have to tussle with legal hermeneutics in the interpretation
of Sec. 22 of P.D. 957. The written approval of the National Housing Authority alone is not sufficient. It
must be coupled with the written conformity or consent of the duly organized homeowners association or
the majority of the lot buyers. Failing in this, the construction of the fifth floor is violative of the decree
invoked. The Court of Appeals simply applied the law, and correctly so.

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Petitioner likewise contends that it should not have been faulted for failing to deliver the title to
private respondent Teng as the proximate cause thereof was the abandonment of the construction project
by the first contractor, hence, due to force majeure.[4]

We cannot sustain petitioner. There is no one else to blame but itself. Upon full payment of the
agreed price, petitioner is mandated by law to deliver the title of the lot or unit to the buyer. Both the
Contract to Sell of petitioner and private respondents, and Sec. 25 of P.D. 957 state -

Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment by the vendees of the full
amount of the purchase price stipulated under Sec. III hereof, the assessments and expenses under Sec.
IV and otherwise upon compliance by the VENDEES of all obligations therein, the VENDOR will convey
to the VENDEE all rights and interests of the former and to the Unit, subject hereof together with the
interest in the common area and in the Condominium Corporation appurtenant to such unit x x x x

Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall deliver the title of the lot or unit to the
buyer upon full payment of the lot or unit x x x x In the event a mortgage over the lot or unit is outstanding
at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or
the corresponding portion thereof within six months from such issuance in order that the title over any
paid lot or unit may be secured and delivered to the buyer in accordance herewith.

Petitioner also attempts to justify its failure to deliver the certificate of title of private respondent Teng
by claiming that it used the title as part collateral for the additional loan NHA had extended for the
construction of the fifth floor.

The Court observes the frequent allusion of petitioner to its predicament brought about by the
abandonment of the project by the first contractor. But such is irrelevant in light of Sec. 25 of P.D. 957 as
well as of the Contract to Sell of the parties. While we empathize with petitioner in its financial dilemma
we cannot make innocent parties suffer the consequences of the formers lack of business acumen. Upon
full payment of a unit, petitioner loses all its rights and interests to the unit in favor of the
buyer. Consequently, it has no right to use the certificate of title of respondent Teng as collateral for a
new loan. The title of Teng must be released to him as provided by law.

With respect to the second issue, petitioner contends that the decision of the Court of Appeals is
contrary to law considering that under Sec. 12-D, No. 2, Rule V of the Implementing Rules of P.D. 957,
what should be given for free are only off-street parking spaces and not indoor parking areas.

Petitioner is wrong. It has for purposes of its own construed off-street to mean not including
indoor. On the other hand, the law does not exclude indoor parking. What it specifically excludes is street
parking. Therefore, parking may be in the basement or, in the absence thereof, in the first floor.

Furthermore, at this point, a definition of terms may be necessary. In a condominium, common areas
and facilities are portions of the condominium property not included in the units, whereas, a unit is a part
of the condominium property which is to be subject to private ownership. [5] Inversely, that which is not
considered a unit should fall under common areas and facilities.

Hence, the parking spaces not being subject to private ownership form part of the common area over
which the condominium unit owners hold undivided interest. As such, petitioner cannot invoke Sec. I, Art.
III, of the Bill of Rights which provides that No person shall be deprived of life, liberty or property without
due process of law. Petitioner alone does not own the parking area. The parking space is owned in
common by the developer and the unit owners. Private respondents must be allowed to use the parking
area.

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Finally, petitioner contends that the payment of P10,000.00 as moral damages and P5,000.00 as
exemplary damages plus P5,000.00 as attorney's fees is too much of a penalty.However, the Court of
Appeals upheld these awards holding that -

In the light of the foregoing premises, we sense no error in the award of attorney's fees, moral and
exemplary damages, and administrative fines against petitioner. This is allowed by the provisions of civil
law and under Secs. 38 and 39 of P.D. 957:

Sec. 38. Administrative Fines. - The Authority may prescribe and impose fines not exceeding ten
thousand pesos for violations of the provisions of this Decree or any rule or regulation thereunder. Fines
shall be payable to the Authority and enforceable through writs of execution in accordance with the
provisions of the Rules of Court.

Sec. 39. Penalties - Any person who shall violate any of the provisions of this Decree and/or any rule or
regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not
more than twenty thousand (P20,000.00) pesos and/or imprisonment of not
more than ten years: Provided, that in the case of corporations, partnership, cooperatives, or
associations, the President, manager, or Administrator or the person who has charge of the
administration of the business shall be criminally responsible for any violation of this Decree and/or the
rules and regulations promulgated pursuant thereto.[6]

Petitioner can hardly be excused for its failure to comply with the provisions of P.D. 957 by claiming
ignorance of the requirements of the decree and that a mistake upon a doubtful or difficult question of law
may be the basis of good faith. Being engaged in a business affected by P.D. 957, petitioner should be
aware of its provisions and its mandates which, as can be readily perceived, are clear, simple and
unmistakable.[7]

WHEREFORE, finding no error in the Decision sought to be reviewed, the petition is DENIED. Costs
against petitioner.

SO ORDERED

XX. Subdivision and Condominium Protective Buyers Decree (P.D. 957)

1. Jurisdiction of the HLURB

Ortigas v. CA, G.R. No. 129822, June 20, 2012

DECISION

ABAD, J.:

This case resolves the question of jurisdiction of the Regional Trial Court over a complaint filed against a
subdivision owner.

The Facts and the Case

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Petitioner Ortigas & Company, Limited Partnership (Ortigas), a realty company, developed the
Ortigas Center that straddled the three cities of Mandaluyong, Quezon, and Pasig. This case concerns
the Pasig City side of the commercial district known as the Ortigas Center, known in 1969 as Capitol VI
Subdivision.

In 1994 respondent City of Pasig (the City) filed a complaint against Ortigas and Greenhills Properties,
Inc. (GPI) for specific compliance before the Regional Trial Court (RTC) of Pasig in Civil Case 64427. The
City alleged that Ortigas failed to comply with Municipal Ordinance 5, Series of 1966 (MO 5) which
required it to designate appropriate recreational and playground facilities at its former Capitol VI
Subdivision (regarded as a residential site), now the Pasig City side of the Ortigas Center. Further, the
City alleged that despite the fact that the plan was only approved by the Municipal Council as to layout,
petitioner proceeded to develop the property without securing a final approval.

The City impleaded GPI as the party to whom Ortigas sold a piece of property within the subdivision.

In answer, Ortigas alleged that its development plan for the subject land was for a commercial
subdivision, outside the scope of MO 5 that applied only to residential subdivisions; that the City cannot
assail the validity of that development plan after its approval 25 years ago. Its development plan had been
approved: (1) by the Department of Justice through the Land Registration Commission on June 16, 1969;
(2) by the Municipal Council of Pasig under Resolution 128 dated May 27, 1969; and (3) by the Court of
First Instance of Rizal, Branch 25 in its Order dated July 11, 1969.

Ortigas further alleged that only in 1984, 15 years after the approval of its plan, that the National Housing
Regulatory Commission imposed the open space requirement for commercial subdivisions through its
Rules and Regulations for Commercial Subdivision and Commercial Subdivision Development.

The case was heard on pre-trial but before it could be terminated, on January 23, 1996 Ortigas filed a
motion to dismiss the case on the ground that the RTC had no jurisdiction over it, such jurisdiction being
in the Housing and Land Use Regulatory Board (HLURB) for unsound real estate business practices.

On April 15, 1996 the RTC denied the motion to dismiss. [1] It held that HLURBs jurisdiction pertained to
disputes arising from transactions between buyers, salesmen, and subdivision and condominium
developers. In this case, the City is a local government unit seeking to enforce compliance with a
municipal ordinance, an action that is not within the scope of the disputes cognizable by the HLURB. With
the denial of its motion for reconsideration on August 7, 1996, Ortigas filed a petition for certiorari before
the Court of Appeals (CA) to challenge the RTCs actions.

On February 18, 1997 the CA rendered judgment, affirming the RTCs denial of the motion to
dismiss.[2] The appellate court ruled that the City sought compliance with a statutory obligation enacted to
promote the general welfare (Section 16, Local Government Code) which invariably includes the
preservation of open spaces for recreational purposes. [3] Since the City was not a buyer or one entitled to
refund for the price paid for a lot, the dispute must fall under the jurisdiction of the RTC pursuant to
Section 19 of The Judiciary Reorganization Act of 1980.[4]

The CA denied Ortigas motion for reconsideration on June 27, 1997, prompting it to file the present
petition for review.

The Issue Presented

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The sole issue in this case is whether or not the CA erred in affirming the lower courts ruling that
jurisdiction over the Citys action lies with the RTC, not with the HLURB.

The Courts Ruling

Ortigas maintains that the HLURB has jurisdiction over the complaint since a land developer's failure to
comply with its statutory obligation to provide open spaces constitutes unsound real estate business
practice that Presidential Decree (P.D.) 1344 prohibits. Executive Order 648 empowers the HLURB to
hear and decide claims of unsound real estate business practices against land developers.

Ultimately, whether or not the HLURB has the authority to hear and decide a case is determined
by the nature of the cause of action, the subject matter or property involved, and the parties. [5] Section 1
of P.D. 1344[6] vests in the HLURB the exclusive jurisdiction to hear and decide the following cases:

(a) unsound real estate business practices;

(b) claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker, or
salesman; and

(c) cases involving specific performance of contractual and statutory obligations

filed by buyers of subdivision lots or condominium units against the owner, developer,
dealer, broker or salesman.

Unlike paragraphs (b) and (c) above, paragraph (a) does not state which party can file a claim
against an unsound real estate business practice. But, in the context of the evident objective of Section 1,
it is implicit that the unsound real estate business practice would, like the offended party in paragraphs (b)
and (c), be the buyers of lands involved in development. The policy of the law is to curb unscrupulous
practices in real estate trade and business that prejudice buyers.

This position is supported by the Courts statement in Delos Santos v. Sarmiento[7] that not every
case involving buyers and sellers of subdivision lots or condominium units can be filed with the
HLURB. Its jurisdiction is limited to those cases filed by the buyer or owner of a subdivision lot or
condominium unit and based on any of the causes of action enumerated in Section 1 of P.D. 1344.

Obviously, the City had not bought a lot in the subject area from Ortigas which would give it a
right to seek HLURB intervention in enforcing a local ordinance that regulates the use of private land
within its jurisdiction in the interest of the general welfare. It has the right to bring such kind of action but
only before a court of general jurisdiction such as the RTC.

WHEREFORE, the Court DISMISSES the petition, AFFIRMS the Court of Appeals Decision in CA-G.R.
SP 42270 dated February 18, 1997, and ORDERS the Regional Trial Court of Pasig City, Branch 166, to
hear and decide the case before it with deliberate dispatch.

SO ORDERED.

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