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1. BALDOZ V. PAPA, G.R. NO. L-18150.

JULY 30, 1965

EN BANC

G.R. No. L-18150 July 30, 1965

SUPERIOR BALDOZ, plaintiff-appellant,


vs.
SERAPIA PAPA, ET AL., defendants-appellees.

Rufino E. Gonzales for plaintiff-appellant.


Senciano E. Magino for defendants-appellees.

DIZON, J.:

On January 7, 1957, the spouses Bruno Papa and Valentina Agaceta, parents of herein appellees, applied for the
registration under Act 496 of a parcel of land (Psu-59688) containing an area of 37,671 sq. meters in the Court of First
Instance of Pangasinan (Case No. 2215, L.R.C. Record No. 12389). After the requisite publication of the application in
the Official Gazette, the case was called for hearing on May 16, 1957 in the course of which an order of general default
was entered. On the same date, however, Baldomero Baldoz father of herein appellant, filed a petition to lift the order
of default as against him and praying that his opposition to the application, thereto attached, be admitted. On the same
date, the court granted the petition, and the case was reset for hearing on October 1, 1958. Prior to this date, however,
oppositor Baldoz died. His son, herein appellant Superior Baldoz appears not to have informed the court about his
father's death. As a result, the notice of the hearing scheduled for October 1, 1958 was addressed to the latter and was
returned unserved.

On September 11, 1958, appellees were allowed to substitute the original applicants from whom they appeared to have
purchased the land in question.

At the scheduled hearing on October 1, 1958, appellees and their counsel were present but there was no appearance
for any oppositor. Upon motion of the former, the court allowed them to present evidence in support of their application
while, at the same time, declaring the original oppositor Baldomero Baldoz in default for nonappearance. On October
10, 1958, the latter's counsel filed a motion to set aside the order of default alleging that the reason for the
nonappearance of oppositor Baldoz was his death on July 28, 1957 and praying that his son, appellant herein, be
substituted as party-oppositor. Although this motion was denied on October 31 of the following year, appellant appears
not to have appealed from the order of denial aforesaid.

On February 16, 1959, the court rendered judgment decreeing the registration of the parcel of land described in Psu
59688 in favor of appellees. After this judgment had become executory, the court issued an order for the issuance of
the decree on May 4, 1959. By virtue thereof, the Land Registration Commission issued on June 16, 1959 Decree No.
N-1779, and pursuant thereto the Register of Deeds of Pangasinan subsequently issued Original Certificate of Title No.
15264 in their names.

On June 17, 1959, appellees filed a "Motion for Issuance of Writ of Demolition" and a "Motion for Issuance of Writ of
Possession," to which appellant filed an "Opposition to the Petition for Demolition for Fences and Counter Petition to
Stay Effects of Judgment." The opposition was denied in an order of February 9, 1960. Three weeks later, appellant
commenced the present action in the Court of First Instance of Pangasinan (Civil Case No. D-1036) against appellees
for the annulment of the decision in Registration Case No. 2215, on the ground (1) that the court in said case committed
a reversible error in declaring oppositor Baldoz in default despite his having filed a written opposition which was duly
admitted by it and (2) that its order denying appellant's motion for substitution as oppositor therein has deprived him
of his day in court.

Appellees moved to dismiss the complaint on the following grounds: that appellant had no legal capacity to sue; that
the complaint stated no cause of action; and that the cause of action is barred by prior judgment or by the statute of
limitations.

On September 30, 1960, the court issued an order dismissing the complaint on the grounds (1) that the final judgment
in Registration Case No. 2215 is res judicata in the present action and (2) that the instant action, being in the nature of
a petition for review of a decree, cannot prosper because it was filed more than one year from the date of the issuance
of the decree and because it is not based on fraud as provided for in Section 38 of Act 496. The present is an appeal
from said order.

Appellant contends that when the lower court rendered its judgment it had already lost its jurisdiction over the person
of Baldomero Baldoz who had died on July 28, 1958 a fact known to said court since October 10, 1958 when the heirs
of said deceased filed their motion for leave to take his place as oppositor.

We find this to be without merit.

As stated heretofore, the motion aforesaid filed by appellant and his co-heirs was denied by the lower court. The order
of denial was obviously final and conclusive upon the matter of their right to substitute the deceased. On the other
hand, it seems clear that by filing said motion and asking for an affirmative relief, appellant and his co-heirs had
submitted to the jurisdiction of the court. This notwithstanding, they failed to appeal from the order of denial, with the
result that the same as well as the registration proceedings must now be deemed final and conclusive against them.

In the remaining assignment of errors, appellant assails the ruling of the trial court to the effect that the judgment
rendered in the registration proceedings is res judicata, This We also find to be without merit.

It is settled that registration proceedings are in rem binding upon the whole world and that a final decree of
registration issued therein in accordance with law is reviewable only within one year and upon the ground of fraud. The
allegations of the complaint filed below do not make out any case of fraud justifying the reopening of such decree. This,
on the one hand. On the other, any petition to set aside the decree and reopen the registration proceedings must be
filed within one year from the issuance thereof, not in the form of a separate action like the present but in the form of
a motion filed in the same registration proceeding where the decree was issued.

WHEREFORE, the decision appealed from is affirmed, with costs.

2. CAL, JR. V. ZOSA, G.R. NO. 152518. JULY 31, 2006

SECOND DIVISION

SPOUSES PRISCO P. CAL, JR. G.R. No. 152518


and ALICE CANOY CAL,
Petitioners, Present:

PUNO, J., Chairperson,


-versus- SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
MARIANO A. ZOSA, substituted by FILOMENA
REYES-ZOSA, WINFRED R. ZOSA, GLORIA
ZOSA-SENO, EMMANUEL R. ZOSA, ZELDA Promulgated:
ZOSA-VILLALON, and MARGARET ZOSA-
COLE, July 31, 2006
Respondents.

x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil

Procedure, as amended, assailing the February 11, 2002 Decision [1] of the Court of Appeals in CA-G.R. CV No. 65860,

entitled Spouses Prisco, Jr. and Alice Cal, petitioners, versus Mariano A. Zosa, respondent.

Vidal Jimeno, a resident of Barili, Cebu died intestate. He was survived by his widow, Salud Montemayor Jimeno,

and their four children namely: Jaime, Jesus, Oscar and Annie, all surnamed Jimeno. They all inherited his estate,
including a parcel of land, located in Bulongan, Toledo City, covered by Tax Declaration No. 03320.

On September 17, 1949, Salud filed with the then Court of First Instance (CFI) of Cebu a Petition for Letters of
Administration over the estate of her husband, docketed as Special Proceedings No. 570-R.
Thereafter, Salud died intestate and was survived by her four children. On May 28, 1952, they filed with the

then CFI of Cebu a Petition for Letters of Administration over the estate of their parents, docketed as Special Proceedings
No. 932-R.

Later, the two cases were consolidated in one branch of the court.

Thereafter, Atty. Mariano A. Zosa, the herein original respondent, was hired by the four children as their

counsel. On August 28, 1957, they executed a Deed of Assignment conveying to him all their rights and interests

in the parcel of land in Bulangan, Toledo City as payment for his legal services. On December 18, 1964, the trial court
issued an Order in Special Proceedings No. 932-R approving the Deed of Assignment.

On various dates, the four siblings again sold their pro-indiviso shares in the same lot to spouses Felix and
Pacita Barba.

In the meantime, the Bureau of Lands effected a cadastral survey of the lots located in Toledo City. The parcel

of land covered by Tax Declaration No. 03320, sold by the Jimeno siblings to both Atty. Zosa and spouses Barba,
was identified as Lot 3616 in LRC Cadastral Records No. N-585.[2]

The Director of the Bureau of Lands then filed with the City Court of Toledo City a Petition for the Registration

of Lot 3616 in the name of any claimant found to be entitled thereto, docketed as Cadastral Case No. N-3-T. Later, the

records of the case were elevated to the Regional Trial Court (RTC), Branch 10, Cebu City, which has jurisdiction over

the case considering the value of the lot involved. It was docketed as Cadastral Case No. N-2-T.

Respondent Atty. Zosa filed an answer[3] claiming ownership of Lot 3616. He attached Tax Declaration No.

03320 and the December 18, 1964 Order of the court in Special Proceedings No. 932-R approving the sale of the lot to
him by the Jimenos.

Felix Barba, also filed his answer,[4] opposing respondents claim. He alleged that he is the owner of the lot by

virtue of the various Deeds of Absolute Sale executed in his favor by the Jimeno children. Despite his adverse claim,

Felix Barba still sold the same lot to spouses Crispin Tango-an and Conchita Dacalus, who in turn, sold it to
spouses Prisco Cal, Jr. and Alice Canoy, herein petitioners.

Meanwhile, on February 18, 1988, the RTC, Branch 10, Cebu City, sitting as a cadastral court, issued
an Order adjudicating Lot No. 3616 in favor of Atty. Zosa. The trial court held:

The Court finds merit in Zosas application.

First and foremost to be considered is that when the deeds of sale were executed by the Heirs
of Vidal Jimeno in favor of Barba the administration proceedings for the settlement of the estate of Vidal
Jimeno and Salud Montemayor has not yet been terminated. In fact, the deeds of sale required approval
of the court in order that it could be registered. The administration proceedings not having been
terminated yet, there was no summation of the estate of Vidal Jimeno minus the obligations both from
private persons and from the government. In other words, there was no total settlement yet of the
obligations left by the estate of the deceased and residue been fully determined which the heirs may
inherit. Moreover, the sale to Barba by the heirs of Vidal Jimeno failed to comply with the requirements
laid down by Rule 74 of the Rules of Court. Claimant Zosa, being the lawyer of the administration case
should be considered as one of the creditors of the estate of Vidal Jimeno. The order which approved
the cession and assignment executed by the heirs of Jimeno in favor of Zosa in consideration of his
services is already final and executory. Necessarily, therefore, claimant Zosa has a better right over and
above the claim of Barba.

Felix Barba interposed an appeal to the Court of Appeals, docketed as CA G.R. CV No. 22941, entitled Director of Lands
v. Felix Barba.

On January 29, 1992, the Court of Appeals rendered its Decision[5] affirming the Order of the cadastral court.

On February 22, 1992, the Decision became final and executory. The records were thus remanded to the cadastral
court.

On July 3, 1992, the cadastral court issued an Order directing the Director of the Bureau of Lands to issue the
corresponding Decree in favor of Atty. Zosa.

On November 18, 1992, the Land Registration Commission issued Decree No. N-199584 over Lot 3616 in the name of

Atty. Mariano Zosa. Accordingly, on December 9, 1992, Original Certificate of Title (OCT) No. O-203 was issued in his

name. As a new owner, he had the property declared in his name for taxation purposes under Tax Declaration No.
50568.

On November 30, 1993, petitioners filed with the RTC, Branch 29, Toledo City, a Petition for Review or Reopening of
the Decree in LRC Case No. N-3-T[6] entitled Spouses Prisco Cal v. Mariano Zosa, docketed as LRC Case No. 92.

Petitioners alleged that respondent Atty. Zosa acquired the Decree through extrinsic fraud; and he failed to adduce
evidence to prove his claim.

After hearing, or on September 28, 1999, the trial court rendered a Decision[7] dismissing petitioners complaint and

declaring that Atty. Zosa is the true and lawful owner of Lot3616 and OCT No. O-203 was lawfully issued and registered
in his name.

Petitioners interposed an appeal to the Court of Appeals, docketed as CA G.R. CV No. 65860.

On February 11, 2002, the appellate court rendered the assailed Decision[8] holding that:

We do not agree with the appellants. Central to the issue is Section 38 of Act 496, as amended,
quoted, infra:

SEC. 38. x x x Such decree shall not be opened by reason of the absence, infancy or other disability of
any person affected thereby, nor by any proceeding in any court for reversing judgments or decree,
subject, however, to the right of any person deprived of land or of any state or interest therein by decree
of registration obtained by fraud to file in the competent Court of First Instance a petition for review
within one year after entry of the decree provided no innocent purchaser for value has acquired an
interest. x x x (idem, supra)
A re-opening or review of a Decree, issued by the trial court, on the ground of fraud is allowed, provided
that the following elements are present, namely:

x x x (1) that the petitioner has real or dominical right; (2) that he has been deprived
thereof; (3) through fraud; (4) that the petition is filed within one year from the issuance of the
decree; and(5) that the property has not as yet been transferred to an innocent purchaser. (Pascual
Libudan v. Heirs of Jose Palma Gil, 45 SCRA 17, at page 27, supra)

Our Supreme Court emphasized in the above case that fraud envisaged in the law is extrinsic or
collateral fraud, as distinguished from intrinsic fraud, x x x

xxx

The fraud is that which affects and goes into jurisdiction of the court. And the reason detre of the
principle is that equity will enjoin a party from enforcing a judgment which he has obtained by means
of fraud. Fraud will vitiate a judgment and a court of equity may declare it a nullity. Equity has so great
an abhorrence of fraud that it will set aside its own decrees if founded thereupon.

xxx

Intrinsic fraud, in contrast, does not go into or affect the jurisdiction of the trial court. Where the
fraud, alleged or invoked by a losing party, is based on facts which were controverted and litigated by
the parties and resolved by the court after due trial, such fraud does not affect the jurisdiction of the
court. Whether the resolution of the court on the issue of fraud is correct or not and, in the meantime,
the Decision of the court has become final and executory and a Decree had already been issued, the
same cannot be impugned in a separate or collateral proceeding. x x x

xxx

In the present recourse, the issue of whether or not Felix Barba and his successor-in-interest or the
appellee was in actual or constructive possession of the property and the lawful owner of the property
was posed to the court a quo for resolution and litigated by the parties. Felix Barba filed
his Answer/Claim and adduced evidence. Hence, he was not deprived of an opportunity to oppose the
claim of the appellee and adduce evidence in support of his claim. After calibration of the evidence of
the parties, the court a quo decreed the property to and under the name of the appellee. The Order of
the court a quo was appealed to the Court of Appeals and the latter affirmed the Order of the court a
quo x x x

Hence, the present petition raising the following issues:

I.

WHETHER OR NOT DECREE NO. N-199584 ISSUED OUT OF CADASTRAL CASE NO. N-2-T, LRC RECORD
NO. 585, CADASTRAL CASE 3, TOLEDO CADASTRE, INVOLVING LOT 3616 SITUATED AT BULONGAN,
TOLEDO CITY, THAT LED TO THE ISSUANCE OF OCT NO. O-203 IN HEREIN RESPONDENTS NAME, WAS
ATTENDED WITH ACTUAL FRAUD WITHIN THE LEGAL CONTEMPLATION OF SECTION 32, PRESIDENTIAL
DECREE (P.D.) NO. 1529 (FORMERLY SECTION 38 OF ACT 496) OTHERWISE KNOWN AS THE PROPERTY
REGISTRATION DECREE.

II.

WHETHER OR NOT PETITIONERS ARE BOUND BY THE JUDGMENT RENDERED IN CA-G.R. CV No. 22941,
THUS MAKING THE PROCEEDINGS AT BAR ALREADY BARRED LEGALLY.

In their Comment, the lawful heirs of Atty. Zosa, now herein respondents, maintain that their father did not commit any

extrinsic fraud; that petitioners were not deprived of their day in court; that their predecessor, Felix Barba, ably opposed

Atty. Zosas claim in the cadastral proceedings; and that their conflicting claims were fully ventilated as they were

allowed by the cadastral court to present their respective evidence.

The petition must fail.

The right of a person deprived of land or of any estate or interest therein by adjudication or confirmation of title
obtained by actual or extrinsic fraud is recognized by law under Section 32 of P.D. No. 1529,[9] thus:

Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened
or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by
any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the
government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication
or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance (now the Regional
Trial Court) a petition for reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such petition be entertained by
the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may
be prejudiced. x x x (emphasis supplied)

Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception

practiced by means of the misrepresentation or concealment of a material fact. Constructive fraud is construed as a

fraud because of its detrimental effect upon public interests and public or private confidence, even though the act is not
done with an actual design to commit positive fraud or injury upon other persons.[10]

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain

to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated

therein. Fraud is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case

to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is

procured, so that there is not a fair submission of the controversy.[11]Extrinsic fraud is also actual fraud, but collateral
to the transaction sued upon.[12]

The "fraud" contemplated by Section 32, P.D. No. 1529 is extrinsic. For fraud to justify a review of a decree, it

must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case
where the judgment sought to be annulled was rendered.[13]

Thus, relief is granted to a party deprived of his interest in land where

the fraud consists in a deliberate misrepresentation that the lots are not contested when in fact, they are; or in willfully

misrepresenting that there are no other claims; or in deliberately failing to notify the party entitled to notice; or in

inducing him not to oppose an application; or in misrepresenting about the identity of the lot to the true owner by the

applicant causing the former to withdraw his application. In all these examples, the overriding consideration is that the

fraudulent scheme of the prevailing litigant prevented a party from having his day in court or from presenting his
case. The fraud, therefore, is one that affects and goes into the jurisdiction of the court.[14]

On the other hand, we have repeatedly held that relief on the ground of fraud will not be granted where

the alleged fraud goes into the merits of the case, is intrinsic and not collateral, and has been controverted
and decided, [15] like what is very much obtaining in the present case.

Here, petitioners failed to prove that then respondent Atty. Zosa committed acts constituting extrinsic fraud in

obtaining OCT N0. O-203. Indeed, there is no showing how Felix Barba, petitioners predecessors-in-interest, was
prevented by the said respondent from presenting his case.

WHEREFORE, the petition is DENIED. Costs against petitioners.

3. CRISOLO V. CA, G.R. NO. L-33093 DECEMBER 29, 1975

G.R. No. L-33093 December 29, 1975


SOLEDAD DE G. CRISOLO, IN HER BEHALF AND AS GUARDIAN OF NOEL CRISOLO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ALBERTA REINOSO, AS GUARDIAN OF PELAGIO
REINOSO, respondents.
M. T. Macaraeg and D. C. Macaraeg for petitioner.
No appearance for respondents.

ESGUERRA, J.:

Petition for review on certiorari of the decision of the Court of Appeals in its CA-G.R. No. 38422-R, setting aside the
order of the trial court of May 13, 1966, denying the petition for review of private respondent Alberta Reinoso, as
guardian of Pelagio Reinoso, in Land Registration Case No. A-154, LRC Record No. N-23728, and ordering the remand
of the case to the trial court (Court of First Instance of Pangasinan, Branch VII) for further proceedings under Section
38 of Act No. 496.

The uncontroverted facts of the case as found by the Court of Appeals are, more or less, as follows:

On August 20, 1965, judgment was rendered by the Court of First Instance, Branch VII, of Pangasinan,
ordering the registration of Lots 1 and 2, Plan Psu-189357, Exhibit A, situated in the Poblacion of Mabini,
Pangasinan, and more particularly bounded and described in the technical descriptions (Exhibits B and
B-1) in the name of applicant spouses, Pedro C. Crisolo and Soledad de G. Crisolo. On September 20,
1965, the court ordered the issuance of the Decree, followed three months later by writ of possession
in favor of the spouses.

"On February 15, 1966, within one year from the issuance of the decree, Alberta Reinoso, as guardian of her brother
Pelagio who was allegedly confined in the National Psychopatic Hospital filed a Petition for Review under Section 38 of
Act 496. Among the allegations of the petition are the following:

4. That sometime in 1952, the applicants herein, Pedro Crisolo and Soledad de Guzman, taking
advantage of the insanity and incapacity of said Pelagio Reinoso by means of brazen and actual fraud
induced and/or caused Pelagio Reinoso to sign a Deed of Exchange whereby the above-described
property was exchanged for defendants' property ... .

5. That in pursuance of the fraud attendant at the time said Deed of Exchange was executed, the
applicants never delivered the possession of the property described under par. 4 hereof to herein
guardian not to any representatives of incompetent Pelagio Reinoso;

6. That while Pelagio Reinoso was confined in the National Psychopatic Hospital, the applicants herein
instituted a Land Registration case numbered and docketed in this Honorable Court as LRC No. 154 and
were able to obtain a decree therefor, based on the fictitious and fraudulent Deed of Exchange referred
to, a copy of which is hereto attached as Annex "B" and also made integral part of this petition.

"Acting on the foregoing petition, the lower court, considering applicants' opposition and the respective memoranda of
the contending parties, issued the order of May 13, 1966, finding no merit in the petition for review and denying the
same. From the adverse order of May 13, 1966, Alberta Reinoso filed the instant appeal. In the meanwhile, the
demolition of the house belonging to oppositor Alberta Reinoso on the land in controversy was stayed until further orders
in view of the instant appeal.

"In attacking the order of the lower court denying the petition for review of decree, appellant has ascribed four errors
which may be boiled down to the question of whether the lower court erred in denying the petition for reopening."

While the appeal was pending in the Court of Appeals, herein petitioner filed therein a Motion to Remand the Case to
the Supreme Court, claiming that the appeal involves purely question of law and, therefore, falls within the exclusive
jurisdiction of the Supreme Court. (Annex "A", Petition for Review on Writ of Certiorari, p. 1 of Rollo). The Court of
Appeals, nevertheless, on November 11, 1970, rendered the decision now subject of this instant petition for certiorari,
the dispositive portion of which reads as follows:

WHEREFORE, the order dated May 13, 1966, is hereby set aside and the case remanded to the trial
court for further proceedings under Section 38 of Act No. 496. No pronouncement as to costs.

From the aforementioned decision, after a motion for reconsideration had been denied, herein petitioner interposed this
appeal for review and reversal thereof.

Petitioner herein ascribes four errors which, however, boil down to two (2) main issues, as follows:

I. Whether or not the appeal in question is within the jurisdiction of the respondent Court of Appeals;
and

II. Whether or not an oppositor in a land registration case, after having abandoned his opposition thereto
and a decision and a decree had been issued in the case, is entitled to a reopening of the decree of
registration by means of a petition for review under Section 38 of Act 496.

The second issue is certainly the primordial question to be resolved in the instant petition for certiorari and on it hinges
the determination of this appeal.
Petitioner herein avers that during the hearing of the petition for review or reopening of the decree of registration no
oral or documentary evidence was presented by private respondent Reinoso to prove the grounds alleged by him in said
petition; that no affidavit of merits was submitted or attached to the petition for review; that no question of fact was
decided by the lower court in its order of May 13, 1966, denying the petition and which was the subject of appeal to the
Court of Appeals; that the issues involved in the petition for review and/or to reopen are the same legal issues involved
in the instant appeal which are, (1) whether or not Pelagio Reinoso is entitled to a review or reopening of the decree of
registration, considering that he was a party oppositor in the original land registration case; (2) whether or not the
intrinsic fraud alleged in the petition for review is a good ground for the reopening of the decree of registration; (3)
whether or not fraud which is merely alleged and not proved, can be a valid ground for the reopening or review of a
decree of registration (P. 8, Brief for the herein petitioner-appellant); and that the aforestated issues involve purely
questions of law and hence are within the exclusive appellate jurisdiction of the Supreme Court.

Petitioner contends that Pelagio Reinoso, the ward of respondent Alberta Reinoso, for whose benefit the petition for
review and/or to reopen was filed, announced his opposition during the initial hearing of the original land registration
proceedings, duly assisted by his counsel, Atty. Orlando Catalan, on September 2, 1963 and was given 15 days within
which to formalize his opposition in writing (P. 1, Decision of the lower court dated 20 August, 1965, pp. 26-30, ROA);
that Pelagio Reinoso failed to formalize in writing his announced opposition within the period given him by the trial court
and so his opposition was ordered dismissed; that private respondent was, therefore, afforded his day in court to prove
his right to the land subject of registration but forfeited the opportunity given him by sleeping on his rights; that the
persons contemplated in Section 38 of Act 496, who are entitled to a review of a decree of registration, are those who
had no opportunity to be heard in the original land registration case and/or had not been party oppositors therein; and
that the private respondent should not be given another day in court for he had been so afforded once but forfeited it
through his own negligence.

Petitioner further maintains that the fraud alleged in the petition for review of the decree of registration, which allegedly
consisted in the taking advantage of the alleged insanity of Pelagio Reinoso by herein petitioner in securing the execution
of the deed of exchange of properties by and between the petitioner and the private respondent-ward, was not proved;
that no iota of proof on this matter was ever presented by private respondent; and that, consequently, in order that a
decree of registration may be set aside and ordered reopened, the allegation of fraud must firstly be duly established
by proper evidence.

-I-

While it is true that the question as to whether any particular transaction shows fraud or not is a question of fact (Grey
Alba, et al. vs. De la Cruz, No. 5246, September 16, 1910, 17 Phil. 49, 58), yet the question raised on appeal, according
to the very decision of the respondent Court of Appeals itself, is "the question of whether the lower court erred in
denying the petition for reopening" on the ground that the defense of fraud, which consisted of the alleged nullity of the
deed of exchange, was available to the private respondent during the proceedings in the original land registration case,
but was never availed of when he abandoned his opposition to the registration of the land involved. Under the
circumstances of the case the aforementioned question elevated to the Court of Appeals certainly involves purely a
question of law and therefore beyond jurisdiction of the Court of Appeals.

We have held in numerous cases that a question of law is one which does not call for an examination of the probative
value of the evidence presented by the parties-litigants. There is a question of law when the doubt or difference of
opinion arises as to what is the law on a certain state of facts. And, consequently, there is a question of fact when the
doubt or difference arises as to the truth or the falsehood of the alleged facts. (Ramos, et al. vs. Pepsi-Cola Bottling Co.
of the P.I., et al., L-22533, February 9, 1967, 19 SCRA 289; Goduco vs. C.A., L-17647, February 28, 1964, 10 SCRA
275; Yupangco & Sons, Inc. vs. Commissioner of Customs, L-22259, January 19, 1966, 16 SCRA 1; Butuan Sawmill,
Inc. vs. C.A., L-20601, February 26, 1966, 16 SCRA, 277; Salazar vs. de Castrodes, et al., L-25949, May 22, 1969, 28
SCRA 299). The question raised on appeal to the Court of Appeals being one of law, the same falls squarely within the
exclusive appellate jurisdiction of this Court. The law on this score is clear as provided in Section 17 of the Judiciary Act
of 1948, to wit:

SEC. 17. Jurisdiction of the Supreme Court - ...

The Supreme Court shall have exclusive jurisdiction to review, revise, reverse, modify or affirm on
appeal, certiorari or writ of error, as the law or rules of court may provide, final judgments and decrees
of inferior courts as herein provided, in

xxx xxx xxx

(6) All other cases in which only errors or questions of law are involved.

This Court has always been a stickler for consistency in the judicious application of the laws of the land and shall continue
exerting its efforts towards this end in order to attain maximum efficiency and decorum in all courts, which under the
present Constitution, are now under the administrative supervision and stewardship of this Court. What the Court of
Appeals should have done was to certify the appeal to this Court for final disposition on its merits. Its failure to do so is
indeed unfortunate, to say the least, as further delay was incurred in the disposition of this case.

-II-

On the primary question of whether or not an oppositor, after abandoning his opposition in a land registration case and
after a decision had been rendered and a decree of registration issued thereunder, is entitled to a reopening of the
proceedings by means of a petition for review based on fraud under Section 38 of Act 496, We are of the opinion that
he is not so entitled.
The record shows that private respondent had been duly afforded the opportunity to object to, the registration and
substantiate the same. The decision of the lower court dated August 20, 1965, (pp. 26-30), ROA) categorically states:

Atty. Orlando Catalan, also appeared to announce the opposition of Pelagio Reinoso and his children,
Alberta Reinoso and Brigido Reinoso. This announced oppositions refer to both lots of the application.
The oppositors were given 15 days to submit their announced opposition in writing. The records show
that the oppositors Alberta Reinoso and Brigido were the only ones who have perfected their opposition.
During the hearing on March 5, 1964, upon motion by the counsel for the applicants, the announced
opposition of the oppositors Pelagio Reinoso and his children were considered abandoned.

The person(s) contemplated under Section 38 of Act 496, to be entitled to a review of a decree of registration, are those
who were fraudulently deprived of their opportunity to be heard in the original registration case. Such is not the situation
of the private respondents here. They were not denied their day in court by fraud, which the law provides as the sole
ground for reopening of the decree of registration. In fact they opposed the registration but failed to substantiate their
opposition. In Salomon, et al. vs. Bocauto, et al., No. 47900, March 15, 1941, 71 Phil. 363, 365, a petition for review
of a decree of registration was, among other grounds, properly denied for "both petitioners had notice of the original
registration proceedings, but failed to put up any claim and to show title in themselves."

Mere allegation of fraud is not enough. Specific, intentional acts to deceive and deprive another of his right, or in some
manner injure him, must be alleged and proved. There must be actual or positive fraud as distinguished from
constructive fraud to entitle one to the reopening of a decree of registration. And it must be extrinsic and not intrinsic
fraud. (Grey Alba vs. De la Cruz, supra, 17 Phil. 49, 57). This is necessary to maintain the stability of judicial decisions
and save the precious time of the courts from being wasted by unnecessary proceedings. Otherwise, We will be opening
the floodgate of delay in the disposition of cases and thus contributing to the perennial problem of the clogging of court
dockets. No premium should be given to sheer negligence of parties, otherwise we will encourage delay in the
administration of justice.

WHEREFORE, the decision of the Court of Appeals dated November 11, 1970, is reversed and set aside. The judgment
of the trial court of May 13, 1966, denying the petition for review and/or to reopen decree of registration in Land
Registration Case No. A-154, LRC Reg. No. 23728, is hereby ordered reinstated and affirmed, without prejudice to
whatever right, if any, that may still be availed of under existing law by the private respondent.

Costs against private respondent.

SO ORDERED.

4. FIL-ESTATE MANAGEMENT V. TRONO, G. R. NO. 130871. FEB. 17, 2006

FIL-ESTATE MANAGEMENT INC., MEGATOP G. R. No. 130871


REALTY DEVELOPMENT, INC., PEAKSUN
ENTERPRISES AND EXPORT CORP., ARTURO Present:
DY, AND ELENA DY JAO,
Petitioners, PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - *CORONA,

AZCUNA, and
GEORGE H. TRONO, MA. TERESA TRONO, MA. GARCIA, JJ.
VIRGINIA TRONO, JESSE TRONO, MA.
CRISTINA TRONO, PATRICIA TRONO, MA.
DIVINA TRONO, INOCENCIO TRONO, JR.,
CARMEN TRONO, AND ZENAIDA TRONO,
Respondents.

Promulgated:

February 17, 2006


x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the Decision[2] dated May 20, 1997 and

Resolution[3] dated September 5, 1997 of the Court of Appeals in CA-G.R. SP No. 40263, Ayala Land, Inc., Fil-estate

Management Inc., Megatop Realty Development, Inc., Peaksun Enterprises and Export Corp., Arturo E. Dy, and Elena

Dy Jao,petitioners, versus Hon. Florentino Alumbres, George H. Trono, Ma. Teresa Trono, Edgardo Trono, Ma. Virginia

Trono, Jesse Trono, Ma. Cristina Trono, Inocencio Trono, Jr., Carmen Trono, and Zenaida Trono, respondents.

The petition alleges that on November 9, 1994, George, Ma. Teresa, Edgardo, Ma. Virginia, Jesse, Ma. Cristina,

Inocencio, Jr., Carmen, and Zenaida, all surnamed Trono, herein respondents, filed with the Regional Trial Court, Branch

255, Las Pias City, an application for registration[4] of a parcel of land, docketed as LRC Case No. M-228. The land is

located at Bo. Almanza, Las Pias City, Metro Manila consisting of 245,536 square meters.

Mr. Salvador L. Oriel, Chief of the Docket Division, Land Registration Authority (LRA), issued a Notice of Initial
Hearing,[5] stating, among others, that:

NOTE: This lot is covered portion of Lot 2271 that which is overlapped by Lot 10, Psu-80886 Lot
2276, that which is overlapped by Lot 2, Psu-56007 which is also Lot 6, Psu-80886; Lot 2270, portion
of that which is overlapped by Lot 7, Psu-56007 and the whole Lot 8, Psu-56007.

On August 11, 1995, the above-named petitioners filed their opposition to LRC Case No. M-228 alleging that as

per Survey Plan Psu-31086, respondents property partly overlaps their lot. As early as April 28, 1989, this lot was

registered in their names under Transfer Certificate of Title (TCT) No. T-9182 of the Registry of Deeds of Las Pias City.

Earlier, or on July 25, 1995, Ayala Land, Inc. (Ayala Land) also filed an opposition to respondents application

for registration anchored on the ground that the land applied for overlaps the parcels of land covered by TCT Nos. T-

5331, T-41326, T-15644, T-41325, T-36979, T-36891, and T-36982 registered in its name in the Registry of Deeds,

same city.

During the hearing, respondents presented the July 24, 1995 Report of the LRA and the Survey Report of the

Land Management Services, Department of Environment and Natural Resources, showing that the land they sought to
register under Plan Psu-31086 overlaps the property already registered in the names of petitioners.

Thereafter, petitioners and Ayala Land filed their respective motions to dismiss respondents application for

registration on the ground of lack of jurisdiction. They claimed that since the property was previously Torrens registered

in their names, the trial court has no jurisdiction over the subject matter of the proceedings.

On March 4, 1996, the trial court issued a Resolution denying the motions to dismiss, holding that the Regional

Trial Court has exclusive original jurisdiction over all applications for original registration of title to lands.

Petitioners then filed with the Court of Appeals a petition for certiorari.

On May 20, 1997, the Appellate Court rendered its Decision granting the petition for certiorari, holding that:

The incontrovertibility of a title prevents a land registration court from acquiring jurisdiction over
a land that is applied for registration if that land is already decreed and registered under the Torrens
System.
The dispositive portion of the Decision reads:

WHEREFORE, the petition is GRANTED and the assailed Order dated March 4, 1996 (Annex A,
Petition) is ANNULLED and SET ASIDE. Instead, the respondent Judge is directed to DISMISS without
prejudice LRC M-228.

SO ORDERED.

Petitioners then filed their motion for partial reconsideration praying that LRC Case No. M-228 be

dismissed with prejudice and to declare that the right of respondents to file any action for reconveyance of the

property has prescribed.

Meanwhile, on July 9, 1997, Ayala Land and respondents executed a Compromise Agreement.[6] On July 10,

1997, they filed with the Court of Appeals a Motion for Judgment Based on Compromise Agreement.

On July 25, 1997, the Court of Appeals rendered an Amendatory Decision, holding that in view of the
Compromise Agreement, the case as between Ayala Land and respondents has become moot and academic.

In a Resolution dated September 5, 1997, the Appellate Court denied petitioners motion for partial
reconsideration.

Petitioners then filed the instant petition for review on certiorari ascribing to the Court of Appeals the following
errors:

IN REFUSING TO DECLARE THE DISMISSAL OF LRC M-228 TO BE WITH PREJUDICE AND THAT ANY
ACTION FOR RECONVEYANCE TO HAVE LONG AGO PRESCRIBED, THE COURT OF APPEALS DECIDED
THE ISSUE NOT IN ACCORD WITH LAW AND PERTINENT JURISPRUDENCE, IN THAT

I.

HAVING ALREADY FOUND THAT THE LAND WAS TITLED, THE COURT OF APPEALS REFUSAL TO DISMISS
THE LAND REGISTRATION CASE WITH PREJUDICE CONTRAVENES THE DOCTRINES THAT A) DECREES
OF REGISTRATION ARE IN REM, B) TITLED LANDS CANNOT BE DECREED AGAIN AND C) THERE CAN BE
NO COLLATERAL ATTACK ON TITLES.

II.

HAVING FOUND THAT THE DECREES FROM WHICH PETITIONERS TITLE IS DERIVED, WERE ISSUED IN
1966, THE COURT OF APPEALS REFUSAL TO DECLARE AS ALREADY PRESCRIBED, ANY DIRECT ATTACK
OR ACTION FOR RECONVEYANCE CONTRAVENES SECTION 32 OF PD 1529 AND THE DOCTRINES
IN CARO VS. COURT OF APPEALS AND SALVATIERRA VS. COURT OF APPEALS.

Petitioners contend that the dismissal of a subsequent application for original registration of title already covered
by a Torrens title should be with prejudice; that an action for annulment of title or reconveyance of the property

involved has prescribed; and that respondents application for registration (LRC Case No. M-228) is a collateral attack

against petitioners land titles.


In their comment, respondents claim that they were misled by their lawyers and that what they should have

filed was a complaint for nullification of titles instead of an application for registration of land.

The petition is impressed with merit.

The fundamental issue for our resolution is whether the trial court has jurisdiction over respondents application
for registration of a parcel of land.

Section 2 of Presidential Decree (PD) 1529[7] partly provides:

Sec. 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. x x x

Pursuant to the above provisions, the Regional Trial Court (formerly Court of First Instance) has the authority

to act, not only on applications for original registration of title to land, but also on all petitions filed after the original

registration of title. Thus, it has the authority and power to hear and determine all questions arising from such

applications or petitions.[8]

The Court of Appeals, therefore, erred in ruling that the Regional Trial Court, Branch 255, Las Pias City has no

jurisdiction over LRC Case No. M-228 on the ground that the land subject of respondents application for registration
was already registered in the Registry of Deeds of Las Pias City.

Significantly, even respondents themselves admit in their comment on the instant petition that what they should

have filed was a complaint for nullity of petitioners titles.

Likewise, Section 48 of PD 1529 provides:

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

Respondents application for registration of a parcel of land already covered by a Torrens title is actually a

collateral attack against petitioners title not permitted under the principle of indefeasibility of a Torrens title. It is well

settled that a Torrens title cannot be collaterally attacked; the issue on the validity of title, i.e., whether or not it was

fraudulently issued, can only be raised in an action expressly instituted for the purpose.[9] Hence, whether or not

respondents have the right to claim title over the property in question is beyond the province of the instant

proceeding. That should be threshed out in a proper action. It has been invariably stated that the real purpose of the

Torrens System is to quiet title to land and to stop forever any question as to its legality. Once a title is registered, the
owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the mirador su casa to

avoid the possibility of losing his land.[10]

In Ramos v. Rodriguez,[11] we held:

It must be noted that petitioners failed to rebut the LRA report and only alleged that the title of
the Payatas Estate was spurious, without offering any proof to substantiate this claim.TCT No. 8816,
however, having been issued under the Torrens System, enjoys the conclusive presumption of
validity. As we declared in an earlier case (Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil.
791), (t)he very purpose of the Torrens system would be destroyed if the same land may be
subsequently brought under a second action for registration. The application for registration of the
petitioners in this case would, under the circumstances, appear to be a collateral attack of
TCT No. 8816 which is not allowed under Section 48 of P.D. 1529. (underscoring ours)

Corollarily, Section 32 of the same law states:

Sec. 32. Review of decree of registration; Innocent purchaser for value. The decree of
registration shall not be reopened or revised by reason of absence, minority, or other disability of any
person adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject,
however, to the right of any person, including the government and the branches thereof, deprived of
land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual
fraud, to file in the proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the entry of such
decree of registration, but in no case shall such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein whose rights may be
prejudiced. Whenever the phrase innocent purchaser for value or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the
certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for damages against the applicant or any other
person responsible for the fraud. (underscoring ours)

A decree of registration that has become final shall be deemed conclusive not only on the questions actually

contested and determined, but also upon all matters that might be litigated or decided in the land registration

proceedings.[12]

As per records of the Registry of Deeds of Las Pias City, TCT No. T-9182[13] was registered in petitioners name

as early as April 28, 1989, or five (5) years before the filing of respondents application for registration. Thus,

it is too late for them (respondents) to question petitioners titles considering that the Certificates of Title issued to the

latter have become incontrovertible after the lapse of one year from the decree of registration.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-

G.R. SP No. 40263 are REVERSED and SET ASIDE.Respondents application for registration of land in LRC Case No.

M-228 pending before the Regional Trial Court, Branch 255, Las Pias City is ordered DISMISSED with prejudice.

SO ORDERED.

5. ALMARZA V. ARGUELLES, G.R. NO. L-49250 DECEMBER 21, 1987


G.R. No. L-49250 December 21, 1987
CRESENCIA ALMARZA, petitioner,
vs.
ASUNCION ARGUELLES, GILDA ARGUELLES, GIL PANCRUDO, BALBINA PANCRUDO and HON. JUDGE
MIDPANTAO L. ADIL, respondents.
FERNAN, J.:

From the decision dated June 2, 1978 rendered by the then Court of First Instance of Iloilo, Branch II in Civil Case No.
11051 entitled, "Asuncion Arguelles, et al., Plaintiffs, versus Cresencia Almarza, Defendant", petitioner came directly to
this Court on a lone question of law:

May the possessor en concepto de dueno of a parcel of land, after the lapse of more than ten years from
the issuance of a Torrens Certificate of Title to another person ask the latter to reconvey the land?

It was established that Lot No. 5815 of the Cabatuan Cadastre, situated in the Barrio of Sulanga Municipality of
Cabatuan, Iloilo, originally belonged to private respondents' predecessor-in-interest, Romualdo Grana. In 1929, he sold
a portion thereof consisting of 7,300 square meters, more or less, to petitioner and her husband, the late Leon Almarza.
After the sale, said portion was physically segregated from the whole lot and was taken possession of by petitioner and
her husband, who since then had been in continuous, peaceful, open and adverse possession thereof, cultivating and
gathering the produce thereof and declaring the same in their names for taxation purposes.

The document evidencing the sale in favor of petitioner and her husband was lost during the war, but sometime
thereafter, the late Laura Pancrudo, mother of private respondents Asuncion and Gilda Arguelles, executed an affidavit
acknowledging the sale of said portion to petitioner and her husband. On the basis of said affidavit and after actual
inspection of the lot, the Provincial Assessor issued a new tax declaration, Tax Declaration No. 456 beginning in the
year 1945 to Leon Almarza, annotating at the back thereof the aforementioned affidavit of the late Laura Pancrudo. The
tax declaration, covering the 7,300 sq.m. portion of Lot No. 5815 sold to petitioner and her husband was designated as
Lot No. 5815-B. On the other hand, a new tax declaration, Tax Declaration No. 3909 was issued by the Provincial
Assessor in the name of Romualdo Grana for the remaining portion of Lot No. 5815, described therein as Lot No. 5815-
A.

Sometime prior to July, 1950, Josefa Malote, mother of private respondents Gil and Balbina Pancrudo, filed for and in
behalf of her children and the late Laura Pancrudo an answer in Cadastral Case No. 78, G.L.R.O. Record No. 1321. In
support of her claim over Lot No. 5815, she presented in evidence Tax Declaration No. 3909 covering only a portion
thereof designated therein as Lot No. 5815-A and a land tax receipt dated March 30, 1950 showing payment of the real
estate tax for a portion only of Lot No. 5815 known and described in the Tax Declaration as Lot No. 5815-A.

On July 25, 1950, the cadastral court declared Gil and Balbina Pancrudo owner of one-half undivided share of Lot No.
5815 and the late Laura Pancrudo as owner of the other undivided half share. Pursuant to a decree of title, Original
Certificate of Title No. 0-134, covering the entire Lot 5815 was issued in the name of said adjudicatees on May 29,
1951.

On November 1, 1951, Laura Pancrudo died, leaving private respondents Asuncion Arguelles and Gilda Arguelles as her
only children and legal successors-in-interest.

On April 20, 1977, private respondents Asuncion and Gilda Arguelles and Gil and Balbina Pancrudo instituted before the
then Court of First Instance of Iloilo Civil Case No. 11051 against petitioner for recovery of the 7,300 sq.m. portion of
Lot No. 5815 in her possession and for damages. Basis of the action was OCT No. 0-134 issued on May 29, 1951.
Petitioner, in turn, interposed a counterclaim for reconveyance of the disputed portion of Lot No. 5815 in her favor.

After trial, the lower court rendered judgment on June 2, 1978 in favor of private respondents, ordering petitioner to
vacate the portion of Lot No. 5815 subject of the controversy and to deliver the same to private respondents, as well
as to pay the costs of suit. Petitioner's counterclaim was dismissed for the reason that although a constructive or implied
trust was constituted in favor of petitioner when the disputed portion was included in the certificate of title issued to
private respondents, petitioner's action for reconveyance had prescribed more than ten years having elapsed from the
issuance of said certificate of title.

We reverse. As between the conclusion reached by the trial court that petitioner's action for reconveyance has prescribed
and petitioner's own contention that it has not, We find that the factual backdrop of the case at bar provides tenable
reasons for sustaining the latter's position.

First. It is not disputed that petitioner has been in possession as owner of the disputed portion of Lot No. 5815 since
1929 by reason of a sale in her and her husband's favor by the original owner thereof, Romualdo Grana, predecessor-
in-interest of private respondents. Said sale was even acknowledged by Laura Pancrudo, mother of private respondents
Asuncion and Gilda Arguelles, in an affidavit annotated at the back of Tax Declaration No. 456. From that time on,
petitioner and/or her husband cultivated the land, gathered the produce thereof, declared the same in her and/or her
husband's name for taxation purposes and accordingly paid the realty taxes due thereon. In Caragay-Layno v. Court of
Appeals, 133 SCRA 718, citing Sapto, et al. v. Fabiana, 103 Phil. 683 and Faja v. Court of Appeals, 75 SCRA 441, cases
with similar factual backgrounds as the instant case, We held that prescription cannot be invoked in an action for
reconveyance, which is, in effect, an action to quiet title against the plaintiff therein who is in possession of the land in
question. The reason, We explained, is "that as lawful possessor and owner of the Disputed Portion, her cause of action
for reconveyance which, in effect, seeks to quiet title to property in one's possession is imprescriptible. Her undisturbed
possession over a period of fifty-two [52] years (48 years in this case) gave her a continuing right to seek the aid of a
Court of equity to determine the nature of the adverse claim of a third party and the effect on her title."

We further stated that if ever prescription may be invoked, it may be said to have commenced to run only from the
time the possessor was made aware of a claim adverse to his own. In the case at bar, petitioner was made aware of
such adverse claim only upon service on her of the summons in Civil Case No. 11051. As her action for reconveyance,
or to quiet title was contained in her counterclaim, the same cannot be said to have already prescribed.
Second. The evidence submitted by Josefa Malote during the Cadastral hearing consisted of tax declaration No. 3909
covering only a portion of Lot No. 5815 designated as Lot No. 5815-A and land tax receipt dated March 30, 1950 showing
payment of real estate tax for a portion only of Lot No. 5815, designated as Lot No. 5815-A in said tax declaration No.
3909. In so doing, she laid claim only to said portion of Lot No. 5815 and did not assert ownership over the disputed
portion, known as Lot No. 5815-B. This being the case, the inclusion of the disputed portion in OCT No. 0-134 is "void
and of no effect for a land registration court has no jurisdiction to decree a lot to persons who have put no claim in it
and who never asserted any right of ownership over it." 1 "The remedy of the landowner whose property has been
wrongfully or erroneously registered in another's name is, after one year from date of the decree, not to set aside the
decree, but respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the
ordinary court of justice for reconveyance or if the property has passed into the hands of an innocent purchaser for
value, for damages." 2 Petitioner availed herself of this remedy seasonably.

Third. Private respondents obtained OCT No. 0-134 on May 29,1951. Their action was instituted only on April 20, 1977,
or after a lapse of twenty-six [26] years. The neglect or failure of private respondents to assert their alleged right under
the certificate of title for such unreasonable length of time makes them guilty of laches.' They should now be held either
to have abandoned or waived whatever right they may have under said certificate of title.

Fourth. As correctly analyzed by the trial court:

Apparently, the plaintiff [private respondents] are seeking to recover the 7,300 square meters land in
question because it is included in their title. They have not rebutted the [defendant's petitioner] evidence
to the effect that they bought the area in dispute from its primitive owner, Romualdo Grana, in 1929
and the said sale was confirmed by the late Laura Pancrudo after World War II. Plaintiffs likewise have
not disputed that the defendant and her late husband have been in continuous, public, and peaceful
possession of the premises since 1929 until the filing of this case.

It seems that the plaintiffs solely anchor their right over the disputed premises on the strength of their
title over Lot 5815 which includes the area in dispute and the fact that they acquired said title in a
cadastral proceedings in 1950 which was a pro g in rem. 3

On this premise, to adjudge private respondents owner of the disputed portion of Lot No. 5815 on the basis merely of
its having been erroneously included in their certificate of title would indeed be "a sad day for the law" for then. We
shall be 4 attaching full faith and credence to a Torrens certificate of title" "oblivious to the demands of justice" and
anchoring our decision "solely on a narrow and literal reading of a statutory prescription, devoid of any shadow of moral
right. 5 Furthermore, We shall be putting a premium on land-grabbing and transgressing the broader principle in human
relations that no person shall unjustly enrich himself at the expense of another.

WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE and another one entered ordering private
respondents to cause the segregation of the disputed portion of 7,300 square meters forming part of Lot No. 5815 of
the Cabatuan Cadastre, Cadastral Case No. 78, G.L.R.O. Record No. 1321, presently occupied by petitioner and to
reconvey the same to said petitioner. After the segregation shall have been accomplished, the Register of Deeds of Iloilo
is hereby ordered to cancel OCT No. 0-134 in the names of Balbina, Gil and Laura, all surnamed Pancrudo, and thereafter
to issue a new certificate of title covering said 7,300 square meter portion in favor of petitioner and another certificate
of title in favor of private respondents covering the remaining portion of Lot No. 5815. No costs.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

6. BAUTISTA-BORJA V. BAUTISTA, G.R. NO. 136197. DECEMBER 10, 2008

NATIVIDAD BAUTISTA-BORJA, G.R. No. 136197


Petitioner,
Present:

- versus - QUISUMBING, J., Chairperson,


CARPIO MORALES,
TINGA,
ILUMINADA BAUTISTA, AUREA BAUTISTA- NACHURA,** and
RUIZ, CLARITA BAUTISTA, FLORENTINO BRION, JJ.
BAUTISTA, DIOSDADO BAUTISTA,
FRANCISCO BAUTISTA II, FRANCISCO
BAUTISTA III, DANILO BAUTISTA,
LUZVIMINDA BAUTISTA, ARTURO
BAUTISTA, LUZ BAUTISTA and PAULINO
BAUTISTA,
Respondents. Promulgated:
December 10, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CARPIO MORALES, J.:

The spouses Pablo Bautista (Pablo) and Segundina Tadiaman Bautista (spouses Bautista) died intestate in July

1980 and April 1990, respectively. Pablo was the registered owner of several agricultural lands situated in Ramon,

Isabela totaling around 30 hectares and in Llanera, Nueva Ecija totalling 17 hectares. They had five children,

namely: respondents Iluminada and Aurea, Francisco (who died in 1981), Simplicio (who died in 1986), and Natividad

(petitioner).

Francisco was survived by six children, namely: respondents Clarita, Florentino, Diosdado, Francisco II, and

Francisco III, and the now deceased Arsenio, all surnamed Bautista.

Simplicio was survived by five children, namely: respondents Danilo, Lorna, Luzviminda, Luz, and Paulino, all

surnamed Bautista.

By petitioners claim, respondents, through fraud and deception, convinced her to take possession and cultivate

the above-stated parcels of land which would eventually be partitioned; and that unknown to her, however, the titles

to the lands were cancelled by virtue of Deeds of Sale purportedly executed on different dates by her parents in favor

of her siblings Simplicio and Francisco, a fact which she came to know about only in 1994.

Petitioner thus filed on June 9, 1994 a complaint[1] before the Regional Trial Court (RTC) of Santiago City,

Isabela, docketed as Civil Case No. 2084 for Annulment of the Deeds of Sale and/or Partition of Properties alleging, inter

alia:

xxxx
13. That the aforesaid deeds of sales are either forgeries or falsifications or are all fictitious
documents, v[oi]d and ineffectual conferring no valid and legal right to the transferees for the reason
that at the time of their alleged executions the vendors were almost totally bereft of understanding,
reason and perception and especially in the case of Pablo Bautista, was so gravely ill, seriously bedridden
that he could not have gone and appeared before the Notary Public for the execution of the questionable
documents and/or could not have understood the significance and legal effect of the same;

14. That there was totally no consideration which passed between the defendants and the alleged
vendors during and at the time of the execution of the several deeds of sales which were all done to
prejudice and deprived the plaintiff of her lawful share in the inheritance of the properties left by their
deceased parents; (Underscoring supplied)

x x x x[2]

Petitioner accordingly prayed as follows:

1. Ordering the partition of the properties of spouses Pablo Bautista and Segundina Tadiaman Bautista;

2. Declaring as null and void and without any force and effect the deed of sales and/or other documents
executed to cancel and effect the transfer of the properties of Pablo Bautista and his wife to the defendants;

x x x x[3] (Underscoring supplied)

By Order of September 27, 1994, Branch 35 of the Santiago RTC, acting on the Motion to Dismiss[4] filed by
respondents which was anchored on lack of cause of action, prescription and laches, dismissed the complaint. It held

that petitioners complaint, though denominated as one for annulment of sale, was in fact based on an obligation
conferred by law, specifically an implied trust, hence, pursuant to Articles 1456 [5] and 1144[6] of the Civil Code, it had

prescribed, the same having been filed 20 years after the implied trust commenced.

In another vein, the trial court held that petitioners cause of action had prescribed as actions for reconveyance

based on implied trust prescribe in 10 years, and that laches had set in.

Petitioner elevated the case to the Court of Appeals, contending that the nature of her complaint was one

for annulment of void contracts, hence, imprescriptible; that laches does not apply, following Palmera v. Civil Service

Commission[7] which held that x x x where a defendant or those claiming under him recognized or directly or impliedly

acknowledged the existence of the right asserted by a plaintiff, such recognition may be invoked as a valid excuse for

plaintiffs delay in seeking to enforce such right; that, contrary to the trial courts ruling, her cause of action had not

prescribed, as an action to compel the trustee to convey the property registered in his name for the benefit of thecestui

que trust does not prescribe; and that the prescriptive period commences to run only when the trustee repudiates the

trust through unequivocal acts made known to thecestui que trust --- an element not satisfactorily shown in the instant

case.

By Decision of October 30, 1998,[8] the appellate court affirmed the trial courts ruling, citing Salvatierra v. Court
of Appeals[9] which held that an action for reconveyance of registered land based on implied trust, prescribes in ten (10)
years even if the decree of registration is no longer open to review.

The appellate court went on to hold that petitioner was guilty of laches, and assuming that the transfer of the

properties in favor of respondents was procured through fraud, still, her action should have been filed within four years

from the discovery of the fraud.

Hence, this petition, petitioner insisting that since her cause of action is for annulment or declaration of inexistent

contracts, the provisions on void contracts, specifically Arts. 1390[10] and 1391[11] of the Civil Code, apply, hence, her

cause of action had not prescribed, for under Article 1410 of the Civil Code, the action or defense for the declaration of

the inexistence of a contract does not prescribe.

Further, petitioner contends that even if there be implied trust, her cause of action has not prescribed because

it is anchored on the annulment of a void or inexistent contract. Corollarily, she argues that if at all, a resulting trust

and not a constructive trust was established in the case at bar, considering that she only gave her consent to respondents

upon their representation that they were going to take possession and cultivate the properties with the understanding

that they would later partition them among the legal heirs. She thus contends that the rule on imprescriptibility of

actions to recover property held in trust apply to resulting trusts, as in this case, so long as the trustee has not repudiated

the trust.

Petitioner furthermore alleges that the continued assurances of respondents that partition proceedings were

just dragging on, despite their having already transferred the titles in their names, is a clear indication that they have

not repudiated the resulting trust, the requisites for which, as enunciated in Huang v. Court of Appeals,[12] not having

been met. And she maintains that while the registration of land under the Torrens system operates as a constructive

notice to the whole world, it cannot be construed as being equivalent to a notice of repudiation, for the same cannot be

used as a shield for fraud.

On laches, petitioner cites Palmera v. CSC[13] holding that laches will not be taken against a plaintiff where the

defendant is shown to have promised from time to time to grant the relief sought.

Finally, in support of her contention that her parents never executed the questioned Deed of Sale, petitioner

submitted, for the Courts consideration, the Affidavits [14] of her sisters, herein respondents Iluminada and Aurea,
averring that, inter alia, during their lifetime, their parents could not have sold the properties to their brothers Simplicio

and Francisco and signed the deeds because they were illiterate; that they did not engage the services of Atty. Edmar

Cabucana, respondents counsel, to represent them in the case for they had no objection to the legal claim of their sister-

herein petitioner Natividad.

From the earlier quoted-allegations in petitioners complaint, it is clear that her action is one for declaration of

the nullity of the Deeds of Sale which she claims to be eitherfalsified because at the time of the execution thereof,

Pablo was already gravely ill and bedridden, hence he could not have gone and appeared before the Notary Public, much

less understood the significance and legal deeds and/or because there was no consideration therefor. Clearly, following

Article 1410 of the Civil Code, petitioners action is imprescriptible.

But even if petitioners complaint were to be taken as one for reconveyance, given that it is based on an alleged

void contract, it is just the same as imprescriptible.

xxxx

Thus, if the trial court finds that the deed of sale is void, then the action
for the declaration of the contracts nullity is imprescriptible. Indeed, the Court
has held in a number of cases that an action for reconveyance of property
based on a void contract does not prescribe. However, if the trial court finds
that the deed of sale is merely voidable, then the action would have already
prescribed.[15] (Emphasis and underscoring supplied)

At all events, since the complaint on its face does not indicate that the action has prescribed, Pineda v. Heirs of

Eliseo Guevara[16] instructs:

An allegation of prescription can effectively be used in a motion to dismiss only when the
complaint on its face shows that indeed the action has already prescribed. Otherwise, the issue of
prescription is one involving evidentiary matters requiring a full-blown trial on the merits and cannot
be determined in a mere motion to dismiss. (Emphasis and underscoring supplied)

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated October 30, 1998 affirming

the Order dated September 27, 1994 of the Regional Trial Court, Branch 35, Santiago City, Isabela, dismissing Civil

Case No. 2084 is REVERSED and SET ASIDE. The case is REMANDED to the trial court which is

DIRECTED to REINSTATE petitioners complaint to its docket and conduct appropriate proceedings thereon with

dispatch.

SO ORDERED.

7. ESCONDE V. BARLONGAY, G.R. NO. L-67583. JULY 31, 1987


G.R. No. L-67583 July 31, 1987
BASILISA S. ESCONDE, petitioner,
vs.
HON. SAMILO N. BARLONGAY and RAMON V. DELFIN, respondents.
PARAS, J.:

This is a petition for review on certiorari of the April 16, 1984 Order of the Regional Trial Court of Valenzuela, Bulacan,
Branch CLXXII, dismissing petitioner's complaint.

The facts admitted by the parties are the following:

Private respondent Ramon V. Delfin is the applicant in the "Application for Registration of Title" dated April 14, 1969,
docketed as LRC Case No. 710-V at the then Court of First Instance of Bulacan, Branch III, Valenzuela, Metro Manila
(now RTC, NCJR, Branch 171, Valenzuela). The land subject of the Application, Reconveyance and the present petition
is one and the same parcel of land containing an area of 2,273 sq. m. The application was granted in a "Decision" dated
December 8, 1969, and private respondent received copy thereof on the same date. Said parcel of land is now covered
by OCT No.-05002 issued on January 23, 1971 by the Register of Deeds of Bulacan. On February 13, 1978 said private
respondent Ramon V. Delfin as applicant in the LRC Case filed his "Petition for Writ of Possession" against the spouses
Francisco and Basilisa Esconde (Brief for Petitioner, pp. 6-7, Rollo, p. 120).

On March 6, 1978, Judge Crispin V. Bautista issued an Order denying for lack of merit the opposition filed by the Esconde
spouses to the petition for Writ of Possession.

On September 26, 1978, Judge Avelino M. Constantino, who took over the same branch presided over by Judge Bautista,
issued an Order for a writ of possession against the said spouses.

Petitioner filed with the same court a Petition to quash the Writ of Possession to which an Opposition was filed by the
private respondent (Comment, Rollo, pp. 88-90).

On October 6, 1978, herein petitioner filed with the then Court of First Instance of Bulacan, 5th Judicial District, Branch
VIII (now RTC, NCJR, Branch 172, Valenzuela, Bulacan) a complaint for reconveyance, against the herein private
respondent, docketed therein as Civil Case No. 721-V-78 (Record, pp. 24-28).

On October 14, 1978, petitioner filed an Amended Complaint with prayer for stay of execution of judgment in LRC Case
No. V-710 (Ibid., p. 29-33).

Private respondent, in a Motion to Dismiss dated December 26, 1978, moved for the dismissal of the case on the
grounds, among others, that (1) the cause of action, if any, is barred by res judicata; (2) the complaint fails to state
sufficient cause or causes of action for reconveyance; and (3) the plaintiff is barred by prescription or laches from filing
the case (Ibid, pp. 34-39).

On January 15, 1979, petitioner filed a Rejoinder to Motion to Dismiss and Motion for Leave of Court to Amend Complaint
to Include Plaintiff's Husband as Party-Plaintiff (Ibid, pp, 40-44). On the same date, the Amended Complaint was filed
(Ibid, pp. 45-50).

Private respondent filed a Reply to Rejoinder (Opposition) to Motion to dismiss with Opposition to the Motion For Leave
of Court to Amend Complaint, dated January 18, 1979 (Ibid, pp. 51-54).

On June 5, 1979, Judge Constantino denied Petition to Quash Writ of Possession (Rollo, p. 108). The Sheriff then
delivered possession to the private respondent, but then petitioner re-entered the premises and took possession thereof,
hence private respondent filed a Motion for an Alias Writ of Possession on March 2, 1983.

On March 4, 1983, an order directed the issuance of an alias writ of possession.

On March 29, 1983, the Sheriff turned over possession of the premises to the representative of the private respondent.
This notwithstanding, when private respondent went to the premises, he was barred by the petitioner from entering the
property. Consequently, private respondent asked for a writ of demolition for the removal of any construction of the
Esconde family on the premises and to cite petitioner Basilisa Esconde for contempt of court.

On November 17, 1983, private respondent moved for a second alias writ of possession in view of the failure of the
petitioner to turn over possession of the premises to private respondent and the same was granted in the Order of
November 21, 1983.

Petitioner then filed with Judge Avelino M. Constantino of the Regional Trial Court of Bulacan a Motion to Quash and/or
to Hold in Abeyance Execution of Second Alias Writ of Possession on the ground that they have filed a civil action for
reconveyance.

On February 1, 1984, petitioner filed a Motion to Expedite Resolution of Pending Incidents and Motion For Issuance of
Restraining Order and/or Preliminary Injunction (Ibid, pp. 5759).

On February 13, 1984, private respondent filed a Manifestation With Opposition to Motion for Issuance of Restraining
Order and/or Preliminary Injunction (Ibid, pp. 60-62).

Respondent Judge, in an Order dated April 16, 1984 (Ibid, pp. 63-64), dismissed the complaint for reconveyance on the
grounds: (1) that plaintiff's cause of action is barred by res judicata and (2) that the Motion to Admit Amended Complaint
and for Issuance of Restraining Order and/or Preliminary Injunction is not proper as it seeks to enjoin the enforcement
of a writ of possession issued by another branch of this Court which is not allowed. Hence, the instant petition (Ibid, pp.
10-23).

The Second Division, in a Resolution dated August 29, 1984, resolved to require the respondents to comment (Ibid, p.
75).

On October 20, 1984, respondents, in compliance with the above-mentioned Resolution, filed their Comment (Ibid, pp.
87-101).

In a Resolution dated December 3, 1984, the Second Division resolved to give due course to the petition; and to consider
respondents' comment to the petition as an answer (Ibid, p. 110).

In a letter dated January 21, 1985, counsel for the petitioner was required to file petitioner's brief (Ibid, p. 112). In
compliance therewith, said brief was filed on March 23, 1985 (Ibid., p. 120).
On April 1, 1985, petitioner filed a Motion to Include Additional Party-Respondent and Motion for the Issuance of
Preliminary Injunction, praying, among others, that the Sheriff be included as additional party-respondent (Ibid, pp.
122-126).

The Second Division, in a Resolution dated April 17, 1985, resolved to require the respondents to comment on the
motion by counsel for the petitioner to include an additional party-respondent and the motion for the issuance of a
preliminary injunction (Ibid., p. 141).

On May 7, 1985, respondents filed their Opposition to Motion to Include Additional Party-Respondent and Motion for the
Issuance of Preliminary Injunction (Ibid., pp. 142-146).

On June 21, 1985, Brief for the Respondents was filed (Ibid, p. 148).

The Second Division, in a Resolution dated November 11, 1985, resolved to consider the case submitted for deliberation
(Ibid., p. 158).

On November 26, 1985, petitioner filed a Motion for Immediate Resolution of her motion of April 1, 1985-motion to
include the Sheriff as party-respondent and for the issuance of a preliminary injunction (Ibid., pp. 159-162). This motion
of petitioner, in a Resolution dated December 11, 1985, was noted by said Division (Ibid., p. 165).

On February 1, 1986, petitioner filed an Urgent Motion, praying, among others, for the inclusion of the Sheriff as party-
respondent, and thereafter, for an injunction directing the Sheriff to restore the peaceful possession of the land to
petitioner (Ibid., pp. 166-171).

The Second Division, in a Resolution dated February 17, 1986, resolved to issue a temporary restraining order directing
the Sheriff and private respondent to refrain from enforcing and/or carrying out the Third Alias Writ of Possession (Ibid,
p. 176).

On March 4, 1986, petitioner filed a Motion to Amend Resolution and Temporary Restraining. Order both dated February
17, 1986, either nullifying the Third Alias Writ of Possession served or in the alternative to issue a mandatory injunction
(Ibid, pp. 179-183). This motion was denied by the Division in a Resolution dated May 21, 1986 (Ibid, p. 185).

The issues in this case are

1. WHETHER OR NOT PETITIONER'S CAUSE OF ACTION IS BARRED BY RES JUDICATA; and

2. WHETHER OR NOT PETITIONER'S MOTION TO ADMIT AMENDED COMPLAINT AND FOR ISSUANCE OF
RESTRAINING ORDER AND/OR PRELIMINARY INJUNCTION IS PROPER.

The petition is devoid of merit.

Land registration proceedings in this case commenced on April 14, 1969 and decision thereon was rendered on
December 8, 1969. Hence, the law in force at the time was Act 496, P.D. 1529 (otherwise known as Property Registration
Decree) having taken effect only on Jan. 23, 1979.1 The pertinent provisions of said Act 496 read:

SEC. 34. Any person claiming an interest, whether named in the notice or not, may appear and file an answer
on or before the return day or within such further time as may be allowed by the court. The answer shall state
all the objections to the application, and shall set forth the interest claimed by the party filing the same and
apply for the remedy desired, and shall be signed and sworn to by him or by some person in his behalf. (As
amended by Sec. 1, Act No. 3621).

SEC. 35. If no person appears and answers within the time allowed, the court may at once upon motion of the
applicant, no reason to the contrary appearing, order a general default to be recorded and the application to be
taken for confessed. By the description in the notice, "To all whom it may concern," an the world are made
parties defendant and shall be concluded by the default and order. After such default and order, the court may
enter a decree confirming the title of the applicant and ordering registration of the same. (As amended by Sec.
8, Act No. 1699).

On the other hand, under Rule 18 of the Rules of Court, the effect of such order is as follows:

SEC. 2. Effect of order of default. Except as provided in section 9 of Rule 13, a party declared in default shall
not be entitled to notice or subsequent proceedings, nor to take part in the trial.

Petitioner's claim that she came to know of the land registration case only upon receipt of a Petition for Writ of Possession
is completely rebutted by private respondent's evidence. In the notice of Initial Hearing (Rollo, p. 148-a) she is one of
those cited to appear; in the Survey Notification Letter (Rollo, p. 148-c) her husband was notified of the scheduled
survey of the land as indicated by his signature opposite his name and in the Surveyor's Certificate (Rollo, p. 148-b)
her husband was reported one of the adjoining owners present. There is no question that notice to her husband is notice
to her under the law, her husband being the administrator of the conjugal partnership (Art. 165, Civil Code). Otherwise
stated, there was no concealment on the part of private respondent. In fact, the records show that private respondent
stated in his application for registration of title that a portion of the land was being occupied by petitioner sometime in
September 1967, by breaking the stone wall fence without his knowledge and consent (Application for Registration of
Title; Rollo, p. 102). However, petitioner and her husband, despite the chance given them to be heard in the land
registration proceedings, opted not to appear.

Thus, as aptly stated by respondent Judge, "A land registration proceedings which is in rem, is valid and conclusive
against the whole world. The failure of the plaintiff and her husband, despite the notice of the publication and posting
by the sheriff of the notice of hearing, to oppose the defendant's application for registration will bar her from filing this
action." (Order, dated April 16, 1984; Civil Case No. 721-V-78; Rollo, p. 64).

Under Section 38 of Act 496 ... Every decree of registration shall bind the land, and quiet title thereto ... . It shall be
conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether
mentioned by name in the application, notice or citation or included in the general description "To all whom it may
concern." That under said section, this decree became conclusive after one year from the date of the entry, is not
disputed (Severino v. Severino, 44 Phil. 354 [1923]). On the contrary, this Court has invariably ruled that "Land
Registration is a proceeding in rem, and binds all persons known and unknown." (Moscoso v. C.A., 128 SCRA 70 [1984]).
It is a settled doctrine that when a decree of registration has been obtained by fraud, the party defrauded has only one
year from entry of the decree to file a petition for review before a competent court, provided that the land has not been
transferred to an innocent purchaser for value. Said Section 38 categorically declares that "upon the expiration of the
said term of one (1) year, every decree or certificate of title issued in accordance with this section shall be
incontrovertible (Albienda v. C.A., 135 SCRA 406-407 [1985]).

Hence, it was established that when no answer in writing nor any opposition is made to an application for registration
of property in Court, all the allegations contained in the application shall be held as confessed by reason of the absence
of denial on the part of the opponent. A person who has not challenged an application for registration of land even if
the appeal afterwards interposed is based on the right of dominion over the same land, cannot allege damage or error
against the judgment ordering the registration inasmuch as he did not allege or pretend to have any right to such land
(Cabanas v. Director of Lands, 10 Phil. 393).

In the same manner, it has been held that a claimant having failed to present his answer or objection to the registration
of a parcel of land under the Torrens System or to question the validity of such registration within a period of one year
after the certificate of title had been issued, had forever lost his right in said land even granting that he had any right
therein (De los Reyes v. Paterno, 34 Phil. 420).

However, an action for reconveyance is a legal and equitable remedy granted to the rightful owner of land which has
been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or
reconvey the land to him (Bilog, "Remedies Available to Aggrieved Parties As a Consequence of Registration Under the
Torrens System"; Property Registration 1979; pp. 122-123). The prevailing rule in this jurisdiction does not bar a
landowner whose property was wrongfully or erroneously registered under the Torrens System from bringing an action,
after one year from the issuance of the decree, for the reconveyance of the property in question. Such an action does
not aim or purport to re-open the registration proceeding and set aside the decree of registration, but only to show that
the person who secured the registration of the questioned property is not the real owner thereof (Rodriguez v. Toreno,
79 SCRA 357 [1977]). An ordinary civil action for reconveyance does not seek to set aside the decree but respecting
the decree as incontrovertible and no longer open to review, seeks to transfer or reconvey the land from the registered
owner to the rightful owner (Director of Lands, et al. v. Register of Deeds, et al., 92 Phil. 827 [1953]).lawph!l

Under the circumstances in the case at bar, it is apparent that reconveyance is not the proper remedy. As earlier stated,
there was no proof of irregularity in the issuance of title, nor in the proceedings incident thereto, nor was it established
that fraud had indeed intervened in the issuance of said title, and the period of one year within which intrinsic fraud
could be claimed had long expired. Under similar conditions, the Court ruled that the land should be adjudicated to the
registered owner (Paterno, et al. v. Salud, 118 Phil. 933-934 [1963]). Even more implicitly this Court held in Rural Bank
of Paranaque, Inc. v. Remolado (135 SCRA 412 [1985]) that: "Justice is done according to law. As a rule, equity follows
the law. There may be a moral obligation, often regarded as an equitable consideration (meaning compassion), but if
there is no enforceable legal duty, the action must fail although the disadvantaged party deserves commiseration or
sympathy."

Moreover, petitioner's action for reconveyance had already prescribed. An action for reconveyance of real property on
the ground of fraud must be filed within four (4) years from the discovery of the fraud. Such discovery is deemed to
have taken place from the issuance of an original certificate of title (Balbin v. Medalla, 108 SCRA 666; and Alarcon v.
Bidin, 120 SCRA 390).

The first issue being without merit and the second issue being a mere incident thereto, there appears to be no necessity
to discuss the latter.

PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed Order of the Regional Trial Court of
Valenzuela, Bulacan is hereby AFFIRMED.

SO ORDERED.

8. CAERO V. UP, G.R. NO. 156380. SEPTEMBER 8, 2004


[G.R. No. 156380. September 8, 2004]
DOMINGO A. CAERO, petitioner, vs. UNIVERSITY OF THE PHILIPPINES, respondent.
DECISION
PUNO, J.:

Before us is the petition for certiorari filed by DOMINGO A. CAERO against the UNIVERSITY OF THE PHILIPPINES
(hereinafter, referred to as UP, for brevity), assailing the Decision[1]and Resolution[2] of the Court of Appeals, which, on
December 14, 2001, reversed and set aside the decision of the lower court and dismissed petitioners Complaint for
Quieting of Title and Cancellation of Entry in the Tax Declaration.[3]

The facts show that on December 26, 1991, petitioner and his spouse Juanita L. Caero filed a petition for
reconstitution of title of a lot in Barangay Culiat, Tandang Sora, Quezon City.The petition alleged that the lot had been
registered by the Register of Deeds of Quezon City in the name of the spouses Caero, as evidenced by Transfer Certificate
of Title (TCT) No. 240042. Allegedly, however, the original copy of TCT No. 240042, in the custody of the Register of
Deeds of Quezon City, was burned when the Quezon City Hall was razed by a fire on June 11, 1998.[4] The spouses had
declared the lot for taxation purposes[5] in the year 1992. The spouses prayed that the reconstitution should be based
on their owners duplicate copy and other pertinent documents in their possession.

The petition was assigned to Branch 82 of the Regional Trial Court (RTC) of Quezon City, presided by Judge Salvador
C. Ceguera. On January 9, 1992, the trial court issued an order, [6] notifying all persons who had an interest in the
property to file their claims or objections thereto. The order stated:

Let a copy of this ORDER/NOTICE be published once a week for two (2) consecutive weeks in the Official Gazette and
that the same be also posted in the main entrance of the City Hall of Quezon City, the Bulletin Boards of this Court, the
Sheriffs Office of Quezon City and at the Barangay Hall of the Barangay where the property subject of this petition is
situated, all at the expense of the herein petitioners.Similarly, let copies of the said Order together with the petition be
furnished to all government agencies concerned, such other interested parties, the petitioners and/or counsel for their
reference, information and guidance.[7]

Hence, the trial court: 1) served copies of the Order to various government agencies, among which were the Land
Registration Authority,[8] the Land Management Bureau,[9] the Register of Deeds of Quezon City,[10] the Solicitor
General,[11] and the Office of the City Prosecutor;[12] 2) caused the publication of the Order in the Official Gazette on 10
February 1992 and on 17 February 1992;[13] and 3) posted copies of the Order at the entrance of the Quezon City Hall,
at the bulletin boards of the Quezon City Regional Trial Court, and at the CuliatBarangay Hall.[14] Despite the notices,
no opposition was filed against the petition. On April 1, 1992, it issued the Order[15] granting the petition for
reconstitution and the Register of Deeds issued TCT No. RT-57204(240042) in favor of the Caero spouses.

Sometime later, petitioner received information that respondent UP had claimed title and secured a tax declaration
in its name for the said lot. Moreover, Tax Declaration No. C-128-00026, issued by the City Assessor of Quezon City in
the name of petitioner carried an annotation that the lot appeared to duplicate the property of respondent UP under Tax
Declaration No. B-128-00238.

On September 6, 1994, petitioner filed an action[16] to quiet the title of the said lot with the RTC of Quezon City
against UP and the City Assessor of Quezon City. Petitioner relied on his reconstituted title. He averred that even before
the title was issued in his and his wifes name, his father had been in open, continuous and uninterrupted possession of
the lot. He alleged that his designated caretakers occupy the lot at present. Petitioner contended that UP has no legal
title or claim over the lot since it failed to raise objections during the reconstitution proceedings. Thus, petitioner prayed
to: 1) deny any claim which respondent UP may have over his lot; 2) cancel any land title which respondent UP has for
the property; and 3) cancel the annotation in Tax Declaration No. C-128-00026 stating that his lot appears to duplicate
respondent UPs property covered under Tax Declaration No. B-128-00238.

On September 28, 1994, defendant CITY ASSESSOR OF QUEZON CITY (City Assessor for brevity) filed its
answer[17] explaining its annotation on petitioners Tax Declaration No. C-128-00026. The City Assessor alleged that on
March 19, 1994, Caero presented his owners duplicate copy of TCT No. 240042 to declare his property for tax purposes.
When the property was plotted on the tax map, it appeared to overlap and duplicate a portion of the property owned
by respondent UP.[18] UP had declared the said property for tax purposes many years earlier, the latest declaration of
which was in 1985, under Tax Declaration No. B-128-00238, with property Index No. 15-2094, under TCT No. 192689,
dated August 15, 1973. In contrast, Caeros property was declared for tax purposes for the first time only on 19 March
1992. Prior to this date, the City Assessor had no knowledge of the existence of TCT No. 240042. Thus, the City Assessor
issued Tax Declaration No. C-128-00026, with the annotation that for taxation purposes, Caneros property appeared to
duplicate UPs property. Moreover, on May 5, 1994, the City Assessor was furnished a copy of a letter by UP, addressed
to the General Manager of the National Housing Authority, that UP owns the entirety of its campus, including the lot of
Caero.

For its part, respondent UP filed a Motion to Dismiss, alleging that it had been in open, continuous and uninterrupted
possession of the said lot from the year 1914.[19] Tracing its origin, it alleged that the government owned several parcels
of land amounting to some 4,930,981.3 square meters in Diliman, Quezon City, under TCT No. 36048, which was derived
from Original Certificate of Title No. 730, issued in 1914. On March 1, 1949, the Republic of the Philippines, through
President Elpidio Quirino, sold these lots to UP. Thereafter, TCT No. 36048 was cancelled, and in lieu thereof, TCT No.
9462 was issued in the name of UP. TCT No. 9462 was later subdivided into five (5) titles, among which is TCT No.
192689, that covers the lot being claimed by petitioner Caero. UP owns or maintains several buildings in the area,
among them, the PHILCOA Wet Market, the Asian Institute of Tourism, the Philippine Social Sciences
Building, the National Hydraulic Center, the UP Sewage Treatment Plant, the Petron Gas Station, the U.P.
Arboretum, the Campus Landscaping Office, the Philippine Atomic Energy Commission Building, and the
INNOTECH Building. Respondent UP averred that petitioner was never in possession of the lot, and his cause of action,
whether for quieting of title or annulment of title, has already prescribed. Petitioner opposed UPs Motion to
Dismiss. Finally, UP assailed the validity of the reconstitution proceedings on the ground that a jurisdictional requirement
prescribed under Republic Act (R.A.) No. 26, was not complied with as the trial court failed to notify it and the other
owners of properties adjoining the lot about the same.

Midstream, petitioner filed an Urgent Motion To Amend Complaint Or To Consolidate This Case With Other Cases
Which Have Raised The Issue Of Ownership Over The Same Property In Question Here. [20] Petitioner alleged that he
learned of the pendency of a case before Branch 84, Quezon City RTC, captioned Civil Case Q-92-11187 (Felix Rodeo,
et al. vs. Jorge Chin and Renato B. Mallari) and of Land Registration Commission (LRC) Case No. Q-5910 (92) (In Re:
Petition for Reconstitution of Original Certificate of Title No. 192689; University of the Philippines, petitioner), pending
before Quezon City RTC, Branch 105. Petitioner stated that these two cases purport to determine the ownership of the
property which is the subject of the quieting of title petition here.[21] Petitioner sought to amend his complaint to include
the parties in the aforementioned cases as defendants in the proceedings to quiet title.
UP filed its Opposition to petitioners Urgent Motion to Amend Complaint or to Consolidate with other cases. [22] It
alleged that it had not yet received a copy of the purported Amended Complaint, in violation of Section 3 of Rule 10 of
the Revised Rules of Court. It stated that Civil Case No. Q-92-11187 is an action for the cancellation/nullification of the
title of Messrs. Chin and Mallari. UP was not impleaded as a party and could not be bound by any decision rendered
therein. On the other hand, on June 17, 1994, in LRC Case No. Q-5910 (92), the RTC already granted UPs petition for
reconstitution, after denying petitioners Motion to Intervene on the ground that the issue of ownership is not involved
in reconstitution proceedings. Finally, UP claimed that there was no common question of law or fact among Civil Case
No. Q-92-11187, LRC Case No. Q-5910 (92), and the case for quieting of title. It was pointed out that petitioners Urgent
Motion merely showed that he does not even know the exact location and metes and bounds of the property he claims
to own.

Petitioner filed a Manifestation[23] with the lower court, averring that Quezon City RTC Branch 85 has issued a
judgment in Civil Case Q-93-18569 (Maria Destura vs. Jorge Chin, et al.).[24] The judgment ordered the reinstatement
of TCT No. 36048 in the names of Spouses Antonio Pael and Andrea Alcantara and Crisanto Pael. Petitioner averred that
the judgment covered their lot.[25]

Petitioners case for quieting of title was off-loaded to Branch 222 of the RTC of Quezon City. The records do not
show whether the Urgent Motion to Amend the Complaint or Consolidate the Cases was resolved by either of the two
lower courts which, exercised jurisdiction over the case.

The presentation of evidence on the Motion to Dismiss commenced on October 6, 1995. UP presented the
testimonies of the following witnesses: 1) Constantino Rosas, the City Assessor of Quezon City; 2) Mr. Nestor Dagaraga,
Chief of the Tax Mapping Division of the City Assessors Office of Quezon City; [26] 3) Engineer Ernesto Erive, Chief of
Surveys Division of the Lands Management Sector, Department of Environment and Natural Resources, National Capital
Region; and 4) Engineer Privadi J.G. Dalire, Chief of the Geodetic Surveys Division of the Land Management Bureau.

On August 15, 1997, petitioner started the presentation of his evidence. Petitioner called as his witness, Atty.
Liwliwa H. Bucu, the present Branch Clerk of Court of Quezon City RTC, Branch 82, the court which took cognizance of
petitioners reconstitution proceedings.

Both parties presented voluminous documentary evidence.

Thereafter, the trial court denied respondents Motion to Dismiss. It held that:

a) UPs claim that the action to quiet title was in actuality a petition to annul UPs title, is unsupported by evidence;

b) Prescription cannot bar petitioners action to quiet title as Caero is in possession of the land through the presence
therein of designated caretakers;

c) Since both UP and petitioner submit they are in possession of the land, a full blown trial on the merits is necessary
to enable both parties to substantiate their claims;

d) The trial court believes it can render judgment in accordance with petitioners prayer as he cannot be deemed to
be without sufficient cause of action; and

e) The presumption of regularity in the performance of official function of the trial court which granted the
reconstitution proceedings still remains, because UP has not adduced sufficient evidence, either in a proceeding to annul
the said judgment or in an answer as a special or affirmative defense.

Respondent UPs Motion for Reconsideration was denied, hence, it elevated the order to the Court of Appeals via a
petition for certiorari under Rule 65 of the Revised Rules of Court, alleging grave abuse of discretion amounting to lack
of jurisdiction on the part of the trial court. It raised the following issues:

I. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION IN HOLDING THAT THE
COMPLAINT FOR QUIETING OF TITLE IS NOT A COLLATERAL ATTACK ONTHE UNIVERSITYS TITLE.

II. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION IN HOLDING THAT THE
PROCEEDINGS IN CIVIL CASE NO. Q-91-5467 WERE VALID DESPITE LACK OF NOTICE TO THE UNIVERSITY,
AN INDISPENSABLE JURISDICTIONAL REQUIREMENT.[27]

The Court of Appeals found in favor of respondent UP. The dispositive portion of its Decision states:

WHEREFORE, premises considered, the Orders dated April 23, 1998 and September 15, 1998 of the respondent Judge
are hereby REVERSED and SET ASIDE, and respondent Domingo A. Caeros complaint for Quieting of Title and
cancellation of Entry in the Tax Declaration is hereby DISMISSED.[28]

On January 2, 2004, petitioner filed his Motion for Reconsideration of the Court of Appeals decision. UP filed its
Opposition. The Special Former Third Division of the Court of Appeals denied petitioners Motion.

On January 8, 2003, petitioner raised the matter to this Court through an ordinary appeal. Petitioner posted the
following issues:

I. Whether or not the reversal and/or nullification by the Honorable Court of Appeals of the April 23, 1998 and
September 15, 1998 orders of the Honorable Regional Trial Court of Quezon City-Branch 222, which denied
Respondents motion to dismiss the complaint in Civil Case No. Q-94-21587, is/are in accord with law and/or
with the applicable decisions of this Most Honorable Court.

II. Whether or not the Honorable Court of Appeals deprived the Petitioner of his constitutional and statutory
right to due process in oreversing and/or nullifying the April 23, 1998 and September 15, 1998 orders of
the Honorable Regional Trial Court of Quezon City-Branch 222, which denied Respondents motion to dismiss
the complaint in Civil Case No. Q-94-21587.[29]
In a Manifestation which he filed with the trial court, petitioner declared that the lot here in dispute is the same
property as the lot in Civil Case No. Q-93-18569.[30] The said case was raised to the Court of Appeals, and later to the
Supreme Court as Heirs of Pael vs. Court of Appeals.[31]

We rule that the lot subject of the case at bar belongs to respondent UP. In numerous earlier jurisprudence, we
have held that this subject lot is part of the mass of land owned by respondent UP under TCT No. 9462. The most recent
case, Heirs of Pael vs. Court of Appeals, cannot be more categorical. There, we stated:

The disputed property, however, is part of the UP Diliman Campus, covered by TCT No. 9462. It was established, after
the survey conducted by the Department of Environment and Natural Resources, National Capital Region (DENR-NCR)
that the property claimed by Chin and Mallari overlaps the property covered by UP's title. x x x

It is judicial notice that the legitimacy of UP's title has been settled in several other cases decided by this Court. The
case of Tiburcio, et al. vs. People's Homesite & Housing Corp. (PHHC), et al. (106 Phil. 477 [1959]) was an action for
reconveyance of a 430-hectare lot in Quezon City, filed by the heirs of Eladio Tiburcio against PHHC and UP. A portion
of the disputed land was covered by TCT No. 1356 registered in the name of PHHC and another portion was covered by
TCT No. 9462 registered in the name of UP. Affirming the validity of TCT No. 1356 and TCT No. 9462, this Court ruled:

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

Thus, this Court held that the decree of registration in the name of the predecessor-in-interest of PHHC and UP, as well
as the titles issued pursuant thereto have become incontrovertible.

This Court again affirmed the validity and indefeasibility of UP's title in the case of Galvez vs. Tuason (10 SCRA 344
[1964]). where Maximo Galvez and the heirs of Eladio Tiburcio sought the recovery of a parcel of land in Quezon
City registered under the names of Mariano Severo, Maria Teresa Eriberta, Juan Jose, Demetrio Asuncion, Augusto
Huberto, all surnamed Tuason y de la Paz, UP, and PHHC. This is the same land subject of the controversy in Tiburcio
vs. PHHC . This Court held in Galvez that the question of ownership of the disputed land has been thrice settled definitely
and conclusively by the courts: first, in the proceedings for the registration of the property in the name of the Tuasons;
second, in the application filed by Marcelino Tiburcio with the Court of First Instance of Rizal for registration of the
disputed property in his name which was dismissed by said court; and third, in the action for reconveyance filed by the
heirs of Eladio Tiburcio against PHHC and UP which was also dismissed by the court, which dismissal was affirmed by
this Court in Tiburcio vs. PHHC. We held that the issue of ownership of the property was already beyond review.

The rulings in Tiburcio vs. PHHC and Galvez vs. Tuason were reiterated by this Court in PHHC vs. Mencias (20 SCRA
1031 [1967]) and Varsity Hills vs. Mariano (163 SCRA 132 [1988]).

xxx

Finally, it should be emphasized that this Courts Decision in Tiburcio, et al. vs. PHHC, as well as in the subsequent cases
upholding the validity and indefeasibility of the certificate of title covering the UP Diliman Campus, precludes the courts
from looking anew into the validity of UP's title. Thus, the appellate court's discourse in the case at bar as regards the
origin of UP's certificate of title, whether it came from OCT 730 or OCT 735 is intolerable, to say the least. The rule is
that material facts or questions which were in issue in a former action and were there admitted or judicially determined
are conclusively settled by a judgment rendered therein and that such facts or questions become res judicata and may
not again be litigated in a subsequent action between the same parties or their privies, regardless of the form the issue
may take in the subsequent action, whether the subsequent action involves the same or a different form of proceedings,
or whether the second action is upon the same or a different cause of action, subject matter, claim or demand, as the
earlier action. In such cases, it is also immaterial that the two actions are based on different grounds, or tried on
different theories, or instituted for different purposes, and seek different reliefs. By the same token, whatever is once
irrevocably established as the controlling legal principle or decision continues to be the law of the case between the
same parties in the same case, whether correct on general principles or not, so long as the facts on which such decision
was predicated continue to be the facts of the case before the court. (J.C. Lopez & Associates, Inc. vs. Commission on
Audit, 364 SCRA 472 [2001], citing Veloso, Jr. vs. Court of Appeals, 261 SCRA 196 [1996].)

Our decision in the Heirs of Pael vs. Court of Appeals and petitioners admission that his lot is the same as the
lot in the said case completely negate petitioners cause of action. Hoist with his own petard, petitioner Caero is bound
by res judicata.

Petitioner avers that by filing a Motion to Dismiss based on the ground of lack of cause of action, respondent UP
admitted as facts all his allegations therein. Thus, the trial court did not err in ruling that he had sufficient cause of
action.
We do not agree. We rule that the appellate court is correct in holding that the trial court should have dismissed
the complaint to quiet title. Petitioners reconstituted title is his basis for filing the action to quiet title against respondent
UP. The reconstituted title and the proceedings from which it hailed from are, however, void.

R.A. No. 26 provides for a special procedure for the reconstitution of Torrens certificates of title that are missing
but not fictitious titles or titles which are existing. It is an absolute absurdity to reconstitute existing certificates of title
that are on file and available in the registry of deeds.33 If we were to sustain petitioners stance, the establishment of
the Torrens system of land titling would be for naught, as cases dealing with claims of ownership of registered land
would be teeming like worms coming out of the woodwork. It is self-evident that the trial courts judgment could not be
sustained. When a judgment is void for lack of jurisdiction and its nullity is shown by virtue of its own recitals, it may
be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and whenever
it exhibits its head.34 The appellate court acted in accordance with law when it granted respondents Motion to Dismiss
and set aside petitioners title.

We further note that even if the subject lot had not already been registered in the name of respondent UP, still the
reconstitution proceedings are void for lack of notice to adjoining property owners. We quote Sections 12 and 13 of
Republic Act No. 26 (An Act Providing A Special Procedure For The Reconstitution Of Torrens Certificate Of Title Lost Or
Destroyed), viz:

Sec. 12. Petitions for reconstitution from sources enumerated in Sections 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: (a) that the
owner's duplicate of the certificate of title had been lost or destroyed; (b) that no co-owner's, mortgagee's or lessee's
duplicate had been issued, or, if any had been issued, the same had been lost or destroyed; (c) the location, area and
boundaries of the property; (d) the nature and description of the buildings or improvements, if any, which do not belong
to the owner of the land, and the names and addresses of the owners of such buildings or improvements; (e) the names
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 any interest in the property; (f) a detailed description of the encumbrances,
if any, affecting the property; and (g) a statement that no deeds or other instruments affecting the property have been
presented for registration, or, if there be any, the registration thereof has not been accomplished, as yet. All the
documents, or authenticated copies thereof, to be introduced in evidence in support [of] 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.

Sec. 13. The Court shall cause a notice of the petition, filed under the preceding section, to be published at the expense
of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the
provincial building and of the municipal building of the municipality or city in which the land is situated at least thirty
days prior to the date of hearing. 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 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 names of the occupants or persons in
possession of the property, the owners 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 and file their
claim or objections 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. (Emphases ours.)

Judicial reconstitution of title partakes of a land registration proceeding. Thus, notice of the proceedings must be
given in the manner set forth by the letter of the law. 35 A cursory perusal of the petition for reconstitution36 filed by
petitioner, clearly reveals that the adjoining property owners were never mentioned and, hence, not notified. Upon
cross-examination by counsel for respondent UP, Atty. Liwliwa Bucu, the clerk of court of Branch 82, declared 37 that
aside from the notices sent to the concerned government agencies, the publication in the Official Gazette and the posting
of the Order in several conspicuous public places, no other notice was sent by the trial court to any party. Respondent
UP owns the entirety of the land surrounding the lot in issue; yet it was not notified of the reconstitution proceedings. It
is hoary doctrine that defects in the notices required under the law to be sent to interested parties, deprive the court of
jurisdiction. As early as the case of Manila Railroad Company vs. Moya,38 we had already ruled that if no notice of
the date of hearing of a reconstitution case is served on a possessor or one having interest in the property involved, he
is deprived of his day in court and the order of reconstitution is null and void, even if, otherwise, the said order should
have been final and executory.

We explained the rationale of this rule in the case of Director of Lands vs. Court of Appeals,39 viz:

x x x (S)aid defects have not invested the Court with the authority or jurisdiction to proceed with the case because the
manner or mode of obtaining jurisdiction as prescribed by the statute which is mandatory has not been strictly followed,
thereby rendering all proceedings utterly null and void. We hold that the mere Notice that "all interested parties are
hereby cited to appear and show cause if any they have why said petition should not be granted" is not sufficient for
the law must be interpreted strictly; it must be applied rigorously, with exactness and precision. x x x

The rule We have stated and quoted from Manila Railroad Company vs. Hon. Jose M. Moya, et al., supra is rightly so
because one who seeks the reconstitution of his title to property is duty-bound to know who are the occupants,
possessors thereof, or persons having an interest in the property involved, specially where the property is so [v]ast and
situated in a suitable residential and commercial location, where buildings and improvements have been or are being
constructed openly and publicly.

Particularly apt to the case at bar is the ruling of this Court in Alabang Development Corporation vs.
Valenzuela:40
Upon examination of the subject petition for reconstitution, the Court notes that some essential data required in section
12 and section 13 of Republic Act 26 have been omitted: the nature and description of the buildings or improvements,
which do not belong to the owner of the land, and the names and addresses of the owners of such buildings or
improvements, and the names 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 any interest in the property. Neither do these data appear
in the Notice of Hearing, such that no adjoining owner, occupant or possessor was ever served a copy thereof by
registered mail or otherwise.

xxx

And since the above data do not appear in the Amended Petition, the same data do not also appear in the Notice of
Hearing of the petition published in the Official Gazette. Patently, the provisions of Section 12 which enumerates
mandatorily the contents of the Petition for Reconstitution and Section 13 which similarly require the contents of the
Notice have not been complied with. In view of these multiple omissions which constitute non-compliance with the
above-cited sections of the Act, We rule that said defects have not invested the Court with the authority or jurisdiction
to proceed with the case because the manner or mode of obtaining jurisdiction as prescribed by the statute which is
mandatory has not been strictly followed, thereby rendering all proceedings utterly null and void. We hold that the mere
Notice that all interested parties are hereby cited to appear and show cause if any they have why said petition should
not be granted is not sufficient for the law must be interpreted strictly; it must be applied rigorously, with exactness
and precision.

In sum, RTC, Branch 82 never acquired jurisdiction over the reconstitution proceedings because it failed to notify
the respondent, an adjoining property owner. Its judgment must perforce be declared void. 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 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. In other words, a void judgment is regarded as a nullity, and the situation is the same as it would
be if there was no judgment. It, accordingly, leaves the parties litigants in the same position they were in, before the
trial.41

Moreover, even if the validity of petitioners title to the lot had been sustained, it cannot be overlooked that petitioner
had registered his title 18 years after respondent UP. The established rule unbent by the passage of time is that where
there are two certificates of title purporting to cover the same land, the person claiming under the certificate earlier
registered is the rightful owner of the lot in dispute.42 UPs title is earlier and should be upheld.

The appellate court also correctly ruled that petitioners action to quiet title had likewise prescribed. Petitioner tried
to avoid the bar of prescription by averring that his designated caretakers had been occupying the lot at his behest. From
the inception of petitioners action to quiet title in 1991 until the filing of his petition for certiorari before us in 2003,
neither hide nor hair of petitioners designated caretakers was ever seen or mentioned in any pleading filed before this
Court or before the lower courts. Even when faced with the threat of dismissal of his action, petitioner still maintained
the anonymity of his designated caretakers. His posture leads us to no other conclusion but that these designated
caretakers do not exist and are merely part of the myth he propagated to substantiate his claim of ownership of the
lot. In contrast, respondent UP was able to prove that it was in possession of the lot by showing the existence therein
of buildings and structures it had erected, and which it controls and maintains. Both parties were given more than ample
opportunity to substantiate their claims during the hearing of respondents Motion to Dismiss.

Petitioner asserts that he was deprived of his constitutional right to due process as his title was nullified by the
appellate court on grounds not raised in the respondents petition forcertiorari. He avers that he should have been
afforded the opportunity to establish his title in a full-blown trial based on the merits.

We are not impressed. The appellate court found that the reconstitution proceedings were void as the lot was
already registered earlier in the name of respondent. Further, it found that notice to adjoining property owners was not
given by the trial court. For this reason, it never acquired jurisdiction over the quieting of title case and all the
proceedings granting the petition for reconstitution are null and void. 43 As a rule, the findings of fact of the Court of
Appeals are final and conclusive and cannot be reviewed on appeal by this Court. 44 As there is no patent error in the
appreciation of the facts by the appellate court, we sustain its judgment.

Respondent UP had correctly availed of the remedy of certiorari when it assailed the interlocutory order of the trial
court to the appellate court. While in the regular course of appeal, the interlocutory acts of the court may be assigned
as errors, such remedy may not necessarily be adequate as it can be availed of only in the future and prejudice may
have been caused in the interim, hence certiorari is permitted to be availed of.45 In the case at bar, grave and
irrepareable damage will accrue to respondent UP had it waited to avail of the remedy of appeal.Moreover, further trial
on the merits would have been a wasteful occupation of the lower courts time and resources.

The trial court erred when it stated that petitioner should not be bound by the Courts judgments in earlier
jurisprudence where we affirmed the validity of the title of respondent UP, as he was not a party to any of these previous
cases.[32] All the foregoing cases, akin to petitioners complaint, deal with the same parcel of land or pieces thereof of
the same large mass covered by a single certificate of title, registered under the name of respondent UP. If we were to
sustain the trial courts stance that in order to be bound by such jurisprudence, one must be a party to each of the cases
aforementioned, our dockets would be clogged ad infinitum with complaints filed left and right by unscrupulous land
grabbers nipping any piece they can get from the lands of respondent. Certainly, such interpretation of the applicability
of res judicata is intolerable for it will defeat the indefeasibility of respondent UPs title. Petitioner, just like any other
litigant, is bound by our judgment that UP holds title to the lot.

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.

IN VIEW WHEREOF, the judgment of the Court of Appeals is affirmed. The petition for certiorari is
dismissed. Treble costs against the petitioner.

SO ORDERED.

9. FAJA V. CA, G.R. NO. L-45045. FEBRUARY 28, 1977


FIRST DIVISION
G.R. No. L-45045 February 28, 1977
FELIPA FAJA substituted by: NEMESIO GARDOSE, ANICIA GARDOSE and EUFROSINO GARDOSE,petitioners,
vs.
HON. COURT OF APPEALS, HON. TOMAS R. LEONIDAS, JUDGE OF THE COURT OF FIRST INSTANCE OF
CAPIZ, BRANCH III, and LEVINE FRIAL, respondents.

MUOZ PALMA, J.:

The summary judgment rendered by Judge Tomas R. Leonides of the Court of First Instance of Capiz, in Civil Case No.
M-355, entitled Levine Frial, plaintiff versus Felipa Faja, defendant", and affirmed by respondent Court of Appeals, is
sought to be set aside in this Petition for having been rendered in gross violation of law resulting in a deprivation of
petitioners' right to due process.

We find this Petition meritorious under the rule that summary judgment may be rendered only when, except as to the
amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law, which is not the situation between the parties in this case. 1

Levine Frial filed with the Court of First Instance of Capiz, Branch 111, situated in Mambusao, Capiz, a complaint
docketed as Civil Case No. M-355 for "Recovery of Possession and Damages" of a parcel of land situated in Barrio San
Agustin, Dumalag, Capiz, with an area of 235,854 square meters more or less, covered by Original Certificate of Title
No. RO-1496 in the name of Indalecio Frial, father of Levine Frial. The complaint alleged that since 1945 up to the
present (the complaint is dated April 15, 1975) the defendant Felipa Faja had been illegally possessing and occupying
the above-mentioned property without the knowledge and consent of the registered owner, Indalecio Frial now
deceased, nor of his heirs, one of whom is Levine Frial; that when plaintiff Frial came to know that Felipa Faja was
occupying the property the former immediately demanded its return but Faja refused, hence, the complaint for recovery
of possession of the land in question and the unearned income from the land during the period of not less than 30 years
amounting to around P150,000.00. 2

Defendant Felipa Faja in her Answer specifically denied under oath the allegations in the complaint as to the ownership
of plaintiff Frial, and by way of special and affirmative defenses claimed: that she is the lawful owner and in actual
possession of the property which is Identical to Lot No. 4010 of the Cadastral Survey of Dumalag, Capiz, which she
inherited from her father, Marcelino Faja, who died in 1925, the latter in turn having inherited the same property from
his father, Antonio Faja, who died in 1915; that she and her predecessors-in-interest have been in possession of the
property publicly, peacefully, continuously, and adversely, in the concept of owners, for more than 60 years, the property
having been declared for taxation purposes in the name of Marcelino Faja under Tax Declaration No. 4807, revised
under Tax Declaration No. 5523 in the year 1921, and presently in the name of Felipa Faja under Tax Declaration No.
5523 and for which the land taxes have been paid since the time Felipa Faja's predecessors have been in possession;
that Felipa Faja is actually living on the land in question, and that the same is planted with coconut trees, mangoes,
bananas, santol, buri while around 8 hectares are devoted to rice and corn that neither plaintiff Levine Frial nor his
father Indalecio Frial ever lived on or possessed said property "even for a single moment", and any Certificate of Title
secured by Indalecio Frial was obtained through fraud, deceit, and misrepresentation, the latter not being the owner
thereof and not having occupied or possessed the property in concept of owner; that as her counterclaim, defendant
Faja prays that she be declared the lawful owner of the property, that plaintiff Frial be directed to reconvey the property
to her in the sense that the Certificate of Title covering said property be cancelled and, in lieu thereof, a Transfer
Certificate of Title be issued in her favor. 3

In his Reply to Felipa Faja's, plaintiff Levine Frial denied that the Certificate of Title of Indalecio Frial was secured through
fraud and misrepresentation, and alleged that Faja's right to question the validity of the Title had prescribed. 4

After all responsive pleadings were filed, the case was called for a pre-trial conference during which Judge Leonides
directed the parties to submit memoranda on the question of whether or not a summary judgment may be
promulgated. 5

In his Memorandum filed with the trial court, plaintiff Levine Frial sustained the view that a summary judgment may
properly be issued on the basis of the pleadings inasmuch as the only issues to be resolved were:

(a) Can a registered owner of a piece of land who has acquired title thereto for almost 35 years still
recover possession thereof from actual occupants who claim long and continuous possession of the same
property but without title?

(b) Is reconveyance of a titled property still legally possible, considering that a period of more than 10
years had elapsed since the issuance of the decree of registration? (p. 36, rollo)
On the other hand, Felipa Faja in her Memorandum averred that the petition for a summary judgment should be denied
as there was a genuine controversy between the parties which required a trial on the merits and that the alleged
prescription of her counterclaim for reconveyance cannot be the subject of a summary judgment, aside from the fact
that her cause of action for the reconveyance to her of the property arose only from the moment she was served copy
of the complaint which was in 1975, consequently, her counterclaim was filed well within the statutory period. 6

In an order dated December 3, 1975, the trial Judge sustained Levine Frial's submission stating:

It appearing from the complaint and the answer, as well as the annexes, thereto, and the written
arguments of the parties, that there is no genuine issue as to material fact, except as to the amount of
(images, it is ordered that a summary judgment be as it is hereby entered in favor of the plaintiff, and
this case is set for trial on the sole issue of damages on December 22,1975, at 8:00 on the morning.

SO ORDERED. (p. 45, Ibid.)

A motion for reconsideration was filed with the trial court 7 but the same was denied for lack of merit in all order dated
February 9, 1976. 8

Because Felipa Faja died on November 25, 1975, her children, all surnamed Gardose, in substitution for their deceased
mother, filed with the Court of Appeals a Petition for certiorari (CA-G.R. No. SP-05151- R) and prayed that the
aforequoted order for summary judgment be set aside. Respondent Appellate Court through its Eighth Division dismissed
the Petition holding that " ... a summary judgment is proper as there is no genuine issue as to any material fact",
reasoning that inasmuch as the disputed property is covered by an Original Certificate of Title, any action to annul that
title on the ground of fraud prescribes after the lapse of 10 years from the issuance of the title and therefore the
counterclaim for reconveyance pleaded in the answer of Felipa Faja cannot be sustained. 9

We do not agree with respondent Court for the following reasons:

(1) The counterclaim of Felipe Faja for reconveyance to her of the litigated property has not prescribed. It is an
established rule that an action to quiet title to property in the possession of plaintiff is inprescriptible. 10 Inasmuch as it
is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has been in possession of the property since 1945 up the
present or for a period of 30 years, her cause of action for reconveyance, which in effect seeks to quiet her title to the
property, falls within that rule. If at all, the period of prescription began to run against Felipa Faja only from the time
she was served with copy of the complaint in 1975 giving her notice that the property she was occupying was titled in
the name of Indalecio Frial. 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 the 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 beclaimed only by one who is in possession. 11 No better 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.

(2) The existence of a Certificate of Title in the name of respondent Frial's father is not conclusive on the question of
ownership of the land in controversy, because the validity of such a certificate is put in issue by allegations of fraud and
misrepresentation by the defendant below, Felipa Faja. Petitioners herein correctly invoked in their Petition for certiorari
filed before respondent tribunal, what this Court stated in Monticines, et al. vs. Court of Appeals, et al., September 4,
1973, 53 SCRA 14, through Justice Enrique M. Fernando, to wit:

Nor does the mere fact that respondent-appellee Marcelo Coral could show a certificate of Torrens Title
in his favor conclude the matter, the question of fraud having been, reasonably raised and the sought.
Only recently, in Philippine Commercial and lndustrial Bank v. Villalva, (L-28194, November 24, 1972,
48 SCRA 31) this Court had occasion to state: 'There is, however, a countervailing doctrine, certainly
not of lesser weight, that mitigates the harshness of the iron-clad application of the principle attaching
full faith and credit to a Torrens certificate. It is inspired by the highest concept of what is fair and what
is equitable. It would be a sad day for the law if it were to be oblivious to the demands of justice. The
acceptance accorded the Torrens system of registration would be impaired if it could be utilized to
perpetrate fraud and chicanery. If it were thus, then no stigma would attach to a claim based solely on
a narrow and literal reading of a statutory prescription, devoid of any shadow of moral right. That is not
the juridical norm as recognized by this Court. Deceit is not to be countenanced; duplicity is not to be
rewarded Witness the favor with which jurisprudence has looked on the action for reconveyance as well
as the recognition of the constructive trust. There is thus the stress on (Emphasis Ours) 12

It is regrettable to say the least that the above pronouncements of this Court failed to impress respondent tribunal with
the merits of petitioners' case.

(3) There are material facts to be inquired into and resolved on the basis of evidence adduced by the parties which will
determine the legal precepts to be applied, among which are: (a) the circumstances which led to the issuance in 1950
of Original Certificate of Title RO-1496, a reconstituted title of a supposed Original Certificate of Title No. 23257 allegedly
issued on December 12, 1940, pursuant to a decree of registration No. 732588 dated November 5, 1940, which was
claimed to have been lost; (b) explanation, if any, for the inaction of the alleged i registered owner Indalecio Frial and
of his heirs for a period of 30 years to take possession of the land in question thereby permitting Felipa Faja to cultivate
and receive for herself the income from the produce of the land which as estimated by now respondent Frial amounted
to around P150,000.00 for the entire period; and (c) the claim of ownership and possession of Felipa Faja and her
predecessors-in- interest which allegedly date as far back as 60 years prior to the filing of Frial's complaint in 1975, and
her assertions of fraud and misrepresentation committed by Indalecio Frial in registering the property in his name. All
these matters cannot simply be summarily disposed of in favor of respondent Frial and adversely against petitioners
without evidence adduced on their conflicting claims. 13

In conclusion, We state that while this Court desires to give full encouragement to trial courts to take advantage of and
apply the provisions of the Rules of Court on summary judgment as valuable aids to an expeditious disposition of cases,
We cannot but reiterate what was said and held in Constantino Hon. Estenzo, et al., L-40403, July 31, 1975, and
reiterated in Auman, et al., vs. Hon. Estenzo, et al., L- 40500, February 27, 1976, to wit:

... The demands of a fair, impartial, and wise administration of justice call for a faithful adherence to
legal precepts on procedure which ensure to litigants the opportunity to present their evidence and
secure a ruling on all the issues presented in the respective pleadings. "Shortcuts" in judicial processes
are to be avoided where they impede rather than promote a judicious dispensation of justice.

Again, in Gregorio Lorenzo and Felisa Lavilla vs. The Hon. Numeriano G. Estenzo, et al., L43306, October 29, 1976, this
Court set aside a summary judgment rendered by respondent Judge Estenzo of the Court of First Instance of Iloilo,
reiterating the rule that summary judgment can only be entertained where there are no questions of fact in issue or
where the material allegations of the pleadings are not disputed. 14

IN VIEW OF THE FOREGOING, the appealed decision of the Court of Appeals and the disputed Order of the trial court
rendering summary judgment in favor of respondent Levine Frial are hereby set aside, and the Presiding Judge of Branch
III, Court of First Instance of Capiz, is directed to proceed with the trial on the merits of Civil Case No. M-355. With
costs against private respondent Levine Frial.

So Ordered.

10. REALTY SALES ENTERPRISE V. IAC, G.R. NO. L-67451. SEPT. 28, 1987

G.R. No. L-67451 September 28, 1987


REALTY SALES ENTERPRISE, INC. and MACONDRAY FARMS, INC., petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Special Third Civil Cases Division), HON. RIZALINA BONIFACIO VERA,
as Judge, Court of First Instance of Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON CITY DEVELOPMENT
AND FINANCING CORPORATION, and COMMISSIONER OF LAND REGISTRATION,respondents.

CORTES, J.:

The litigation over the ownership of the parcels of land which are the subject of this petition started in 1927 when an
application for their registration under the Torrens System was first filed. In the present petition for review Realty Sales
Enterprise, Inc. (hereafter referred to as Realty) and Macondray Farms, Inc. (hereafter referred to as Macondray) seek
a reversal of the Resolution of May 2, 1984 of the Intermediate Appellate Court, and an affirmance of the Court of
Appeals Decision of December 29, 1982.

Two (2) adjacent parcels of land located in Almanza, Las Pias, Metro Manila, having an aggregate area of 373,868 sq.
m., situated in the vicinity of the Ayala Alabang Project and BF Homes Paraaque are covered by three (3) distinct sets
of Torrens titles to wit:

1) TCT No. 20408 issued on May 29, 1975 in the name of Realty Sales Enterprise, Inc., which was
derived from OCT No. 1609, issued on May 21, 1958, pursuant to Decree No. N-63394 in LRC Cases
Nos. 657, 758 and 976, GLRO Record Nos. N-29882, N-33721 and N-43516, respectively.

2) TCT No. 303961 issued on October 13, 1970 in the name of Morris G. Carpo, which was derived from
OCT No. 8629, issued on October 13, 1970 pursuant to decree No. N-131349 in LRC Case No. N-11-M
(N-6217), GLRO Record No. N-32166.

3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the name of Quezon City Development
and Financing Corporation, derived from OCT No. 8931 which was issued on July 27, 1971 pursuant to
LRC Case No. P-206 GLRO Record No. N-31777.

On December 29, 1977, Morris Carpo filed a complaint with the Court of First Instance of Rizal, Branch XXIII, presided
over by Judge Rizalina Bonifacio Vera (hereafter referred to as Vera Court), for "declaration of nullity of Decree No. N-
63394 and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc., Macondray Farms, Inc. and the
Commissioner of Land Registration. Subsequently, however, Carpo withdrew his complaint as against the last named
defendant, and the answer filed on behalf of said government official was ordered stricken off the record. The complaint
alleged that TCT No. 20408 as well as OCT No. 1609 from which it was derived, is a nullity as the CFI of Rizal, Branch
VI, then presided over by Judge Andres Reyes (hereafter referred to as the Reyes Court) which issued the order dated
May 21, 1958 directing the issuance of a decree of registration, was not sitting as a land registration court, but as a
court of ordinary jurisdiction. It was further alleged that the original records of LRC Case No. 657, GLRO Record No.
29882 which was the basis for the issuance of said order of May 21, 1958, were lost and/or destroyed during World War
II and were still pending reconstitution; hence, the Reyes Court had no authority to order the issuance of a certificate
of title.

Realty and Macondray alleged in their answer that the Reyes Court was acting as a court of land registration and in
issuing the order of May 21, 1958, was actually performing a purely ministerial duty for the registration court in Case
No. 657, GLRO Record No. 29882 (and the two other cases, Cases Nos. 758 and 976, with which said case had been
jointly tried and decided) which on August 19, 1935 had rendered a decision adjudicating the two (2) lots in question
to Estanislao Mayuga (father of Dominador Mayuga, predecessor-in-interest of Realty and Macondray), which decision
was upheld by the Court of Appeals. It was alleged that it is the title of Carpo which is null and void, having been issued
over a parcel of land previously registered under the Torrens System in favor of another.

With leave of court, Realty and Macondray filed a third-party complaint against the Quezon City Development and
Financing Corporation (hereafter referred to as QCDFC) and the Commissioner of Land Registration alleging that TCTs
Nos. 333982 and 333985 in the name of QCDFC also covered the same parcels of land subject of the dispute between
Carpo and the two corporations, Realty and Macondray. They thus prayed that Decree No. N-135938 issued on July 22,
1971, OCT No. 8931 issued on July 27, 1971, as well as TCTs Nos. 333982 and 333985 derived from OCT No. 8931 be
declared null and void.

In its answer to the third-party complaint, QCDFC asserted the validity of its own title alleging that it is the title in the
name of Realty which is null and void. QCDFC also filed a fourth-party complaint against Carmelino Alvendia, Esperanza
Alvendia, Felicisimo Alvendia, Josefina Alvendia, Jacinto G. Miranda, Rosa G. Miranda, Isabel G. Miranda, and Feliciano
G. Miranda, alleging that it bought said parcels of land from them. It prayed that in the event of an unfavorable judgment
against it, fourth-party defendants be ordered to reimburse the purchase price which the corporation paid to them.
However, QCDFC failed to prosecute its case, and the fourth-party complaint was dismissed for lack of interest.

After hearing, the Vera Court rendered judgment on January 20, 1981, sustaining the title of Morris G. Carpo to the two
(2) lots in question and declaring the titles of Realty Sales Enterprise, Inc. and QCDFC null and void.

On March 20, 1981, Realty filed a Petition for certiorari with this Court docketed as G.R. No. L-56471 questioning the
decision of the lower court. It also asked that it be allowed to appear directly to this Court as it was raising only questions
of law. After respondents filed their comments to said petition, this Court passed a resolution dated October 19, 1981
referring the case to the Court of Appeals "in aid of its appellate jurisdiction for proper determination on the merits of
the appeal."

In its decision dated December 29, 1982, the Court of Appeals, through its Ninth Division, with Justice Patajo
asponente, concurred in by Justices Gopengco and Kapunan, set aside the decision of the trial court and rendered a
new one upholding the validity of the title in the name of Realty Sales Enterprise, Inc. and declaring null and void the
titles in the name of Carpo and QCDFC.

Carpo filed a motion for reconsideration with the appellate court. In the meantime, by virtue and pursuant to Batas
Pambansa Bldg. 129, or the Judiciary Reorganization Act of 1980, the Court of Appeals was reorganized into the
Intermediate Appellate Court (IAC). As a consequence, there was a re-raffling of cases and the case was assigned to
the Second Special Cases Division which, however, returned the records of the case for another re-raffling to the Civil
Cases Divisions as it deemed itself without authority to act on a civil case in view of the allocation of cases to the
different divisions of the IAC under Section 8 of BP 129. The case was then assigned to the Third Civil Cases Division,
composed of Justices de la Fuente, Coquia, Zosa and Bartolome.

Justices Coquia and Bartolome inhibited themselves, and Justices Camilon and Bidin were assigned to the Third Civil
Cases Division.

On May 2, 1984, the IAC, through its Special Third Civil Cases Division, with Justice Zosa as ponente; concurred in by
Justices Camilon and Bidin, promulgated its Resolution granting Carpo's motion for reconsideration, reversing and
setting aside the decision of December 29, 1982, and affirming the decision of the trial court. Hence, this petition
docketed as G.R. No. 67451.

Petitioners assign the following errors:

The SPECIAL THIRD CIVIL CASES DIVISION of the Intermediate Appellate Court (for brevity, referred
to herein as SPECIAL DIVISION) which promulgated the disputed RESOLUTION of May 2, 1984 had no
legal standing under the provisions of Batas Pambansa Bldg. 129 and, as such, not vested with
jurisdiction and adjudicatory power to pronounce any decision of final resolution for the Court.

II

On the assumption that the SPECIAL DIVISION is legally vested with jurisdiction and adjudicatory
powers under the provisions of BP 129, it decided questions of substance contrary to law and the
applicable decisions of the Supreme Court because:

(a) The SPECIAL DIVISION'S Resolution of May 2, 1984 amounted to a denial to the
Petitioners of their right to appeal and judicial review over fundamental issues of law
duly raised by them in their Petition for Review on certiorari (G.R. No. 56471), as
authorized by the Constitution (Art. X, sec. 5 (2) (e), the provisions of the Judiciary Act
of 1948 and Rule 42, Sec. 2 of the Rules of Court; and

(b) By its RESOLUTION of May 2, 1984, it ruled that the decision of the Court of Appeals
could not have gained the nature of a proper and valid judgment as the latter had no
power to pass upon the appealed judgment of the Court of First Instance of Rizal (the
Vera Court), as appeal and not certiorari was the proper remedy;

Furthermore, the said SPECIAL DIVISION grossly departed from the accepted and usual course of
judicial proceedings by giving a perverted and obviously unjustified and illogical interpretation of the
RESOLUTION of July 25, 1983, of the Ninth Division of the Court of Appeals, holding and declaring that
"it has in effect erased or cancelled the validity of (the DECISION of December 29, 1982), when the said
RESOLUTION merely "RESOLVED to return the records of the case ... for re-raffling and reassignment
... in view of the allocation of cases to the different Divisions of the Intermediate Appellate Court under
Section 8 of BP 129.

III

The SPECIAL DIVISION by confirming the appealed judgment of the lower court in effect sanctioned the
contemptible disregard of law and jurisprudence committed by Judge Vera, which call for an exercise of
the power of supervision;

IV

The SPECIAL DIVISION did state in its RESOLUTION of May 2, 1984 a deliberate falsehood, namely,
that Morris G. Carpo is a purchaser in good faith and for value when there is absolutely no evidence,
whether written or testimonial, that was presented by Carpo, or by anyone else that he was, in fact, a
purchaser for value and in good faith a material matter which was neither alleged nor referred to in
the complaint and in all the pleadings, nor covered by any of the exhibits presented by all of the parties
herein and solely on the bases of which the case at bar was submitted by the parties for consideration
and decision.

1. To support their contention that the Special Third Civil Cases Division of the Intermediate Appellate Court which
promulgated the Resolution of May 2, 1984 had no legal standing under the provisions of BP 129 and, as such, not
vested with jurisdiction and adjudicatory power, petitioners cite Sections 4 and 8 of BP 129, to wit:

Sec. 4. Exercise of powers and functions.The Intermediate Appellate Court shall exercise its powers,
functions and duties, through ten (10) divisions, each composed of five members. The Court may sit en
banc only for the purpose of exercise administrative, ceremonial or other non-adjudicatory functions.

Sec. 8. Grouping of Divisions.Of the ten (10) divisions, of the Court, four (4) divisions, to be known
as Civil case Divisions, shall take cognizance of appeals in civil cases originating from the Regional Trial
Court; two (2) divisions, to be known as Criminal Cases Divisions, of appeals in cases originating from
the Regional Trial Courts; and four (4) divisions, to be known as Special Cases Divisions, of original
actions or petitions, petitions for review, and appeals in all other cases, including those from
administrative agencies, except as provided in Section 9 hereof.

Except with respect to the Presiding Appellate Justice, the appointment of a member of the court should
specifically indicate whether it is for the Civil Cases Divisions, the Criminal Cases Divisions, or the Special
Cases Divisions of the Court. No member of the Court appointed to any of the three classes of
conclusions shall be assigned to any of the other classes of division except when authorized by the
Supreme Court, upon recommendation of the Intermediate Appellate Court en banc, if the exigencies of
the service so require. . . . (emphasis supplied)

As officially constituted, the Third Civil Cases Division was composed of Justice B.S. de la Fuente, as Chairman, Justices
Jorge Coquia, Mariano Zosa, and Flores Bartolome, as Members. In view, however, of the voluntary inhibition of Justices
Coquia and Bartolome from taking part in the case, Justices Bidin and Camilon were reassigned to the Third Civil Cases
Division to form the Special Third Civil Cases Division.

Petitioners argue that the so-called Special Third Civil Cases Division, not being one of the ten (10) Divisions of the
Court duly vested with jurisdiction, had no adjudicatory powers. It is also alleged that the reassignment of Justices Bidin
and Camilon is violative of the injunction against appointment of an appellate Justice to a class of divisions other than
that to which he is appointed. (Petition, pp. 21-26.)

This contention has no merit. A reading of the law will readily show that what BP 129 prohibits is appointment from
one class of divisions to another class. For instance, a Justice appointed to the Criminal Cases Divisions cannot be
assigned to the Civil Cases Divisions.

Justice Bidin was reassigned from the Fourth Civil Cases Division, while Justice Camilon was reassigned from the
Second Civil Cases Division. The two therefore come from the same class of divisions to which they were appointed.

Thus, the reassignment of Justices Bidin and Camilon to form the Special Third Civil Cases Division in view of the
voluntary inhibition of two (2) "regular" members, is still within legal bounds. Otherwise, a situation would have arisen
where a regular division could not decide a particular case because some members thereof inhibited themselves from
participating in said case.

2. The second assigned error involves a determination of the correctness of the ruling of the IAC that the CA Decision
of December 29, 1982 could not have gained the nature of a proper and valid judgment (since appeal and not certiorari
was the proper remedy) and that the Resolution of July 25, 1983 had in effect erased or cancelled the validity of said
Decision.

The IAC said in its Resolution of May 2,1984:

Said resolution of July 25, 1983, to Our view, was effectively an acknowledgment by the Division that
promulgated it that the earlier Decision dated December 29, 1983 rendered in a Special Civil Action case
for certiorari, CA-G.R. No. SP-13530, was not appropriate and beyond the authority of the Ninth Division
of the Court of Appeals to promulgate. The said Resolution was actually a statement that the Ninth
Division of the Court of Appeals had over-stepped its bounds by reviewing in certiorari proceedings a
decision in a purely civil case that should have passed through the processes of an ordinary appeal. We
are not aware of any legal doctrine that permits an appellate court to treat a petition for review on
certiorari upon purely questions of law, such as that filed by petitioners herein, as an ordinary appeal.
Neither can we find any legal basis or justification for the election by the appellate court of the essential
requisites then prescribed for the validity of an appeal, such as the submission of a formal notice of
appeal, an appeal bond and approved record on appeal. Without any of these mandatory requisites, the
appeal could not have been deemed perfected and ought to have been dismissed outright.

The Court does not agree.

There are two modes by which cases decided by the then Courts of First Instance in their original jurisdiction may be
reviewed: (1) an ordinary appeal either to the Supreme Court or to the Court of Appeals, or (2) an appeal on certiorari
to the Supreme Court. To the latter category belong cases in which only errors or questions of law are involved. Each
of these modes have different procedural requirements.

As stated earlier, Realty originally filed a Petition for certiorari with this Court docketed as G.R. No. L-56471 questioning
the decision of the Vera Court, and asking that it be allowed to appeal directly to this Court as it was raising only
questions of law. However, this Court referred the case to the Court of Appeals "in aid of its appellate jurisdiction for
proper determination on the merits of the appeal."

It may thus be observed that even this Court treated the petition first filed as an appeal, and not as a special civil action
for certiorari. After as, a petition for review by certiorari is also a form of appeal. (People v. Resuello L-30165, August
22, 1969, 69 SCRA 35).

This mode of appeal under Rule 42 is in the form and procedure outlined in Rule 45 which, unlike ordinary appeals, does
not require a notice of appeal, an appeal bond and a record on appeal.

Thus it was error for the IAC to hold that the Decision of the Vera Court "cannot be passed upon anymore in the Court
of Appeals decision because appeal and not certiorari was the proper remedy." Precisely, petitioners brought the case
to this Court on appeal, albeit by way of certiorari.

Respondent Carpo cited authorities holding that certiorari is not a substitute for appeal. Those cases are not in point.
They refer to the special civil action of certiorari under Rule 65, and not to appeal by way of certiorari under Rule 45.

Similarly, the IAC Special Civil Cases Division erred in interpreting the Resolution dated July 25, 1983 of the
Second Special Cases Division (to which the case was assigned after the reorganization under BP 129) as having "erased
or cancellation" the validity of the Decision of the Ninth Division. A perusal of said Resolution shows that it merely made
clarification about the nature of the case and why it should be reassigned to the Civil Cases Division of the IAC. There
was not the slightest implication that it "erased or cancelled" the validity of the Decision of the Ninth Division.

Even the IAC Special Third Civil Cases Division impliedly admitted the validity of the Decision of the Ninth Division when
it granted Carpo's motion for reconsideration. It would have been incongruous to grant a motion to reconsider a decision,
reverse and set it aside, if in the first place it did not have any validity. It would have been necessary only to decide its
invalidity.

3. In the third assigned error, Petitioners contend that the Vera Court, and the IAC Special Third Civil Cases Division,
erred in upholding the validity of the title in the name of Carpo and declaring null and void the titles in the names of
Realty and of QCDFC.

The basis of the complaint fired by Carpo, which was the same basis for the of the Vera Court and the IAC Special
Division, is that the Reyes Court had no authority to issue the order of May 21, 1958 directing the issuance of a decree
of registration in favor of Mayuga, predecessor-in-interest of Realty, as it was not sitting as a land registration court
and also because the original records of LRC Case No. 657, Record No. N-29882 were lost and/or destroyed during
World War II and were still pending reconstitution.

Under Act No. 496, Land Registration Act, (1902) as amended by Act No. 2347 (1914), jurisdiction over all applications
for registration of title to and was conferred upon the Courts of First Instance of the respective provinces in which the
land sought to be registered is situated.
Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the filing in court of the application for
registration, and is retained up to the end of the litigation. The issuance of a decree of registration is but a step in the
entire land registration process; and as such, does not constitute a separate proceeding.

In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador Mayuga, predecessor-in-interest of
Realty, who originally filed on June 24, 1927 a registration proceeding docketed as LRC Case No. 657, GLRO Record No.
N-29882 in the Court of First Instance of Rizal to confirm his title over parcels of land described as Lots 1, 2 and 3, Plan
Psu-47035. (Lots 2 and 3 the subject of the instant litigation among Carpo, RRealty and QCDFC.) Case No. 657 was
jointly tried with two other cases, LRC Case No. 976, GLRO Record No. 43516 filed by Eduardo Guico and LRC Case No.
758, GLRO Record No. 33721 filed by Florentino Baltazar, as the three cases involved Identical parcels of land, and
Identical applicants/oppositors.

On August 19, 1935 the CFI-Rizal acting as a land registration court issued a consolidated decision on the three cases,
the dispositive portion of which reads:

En meritos de to do lo expuesto, se ordena el registro de los lotes, 1, 2 y 3 del plans PSU-47035 a


nombre de Estanislao Mayuga, desist oposicion de Florentino Baltazar y Eduardo Guico con respects a
dichos lotes....

On appeal, the above decision of the CFI was affirmed by the Court of Appeals in its decision dated
November 17, 1939. the dispositive portion of which reads:

Por todas last consideraciones expuestas confirmamos la decision apelada en cuanto adjudica a
Estanislao Mayuga los lotes, 1, 2 y 3 de such piano y que equivalent a lost lotes, 4, 5 y 6 del plano de
Baltazar y 4 y 5 del plans de Guico.

xxx xxx xxx

Guico filed a petition for review on certiorari before this Court, but the petition was dismissed and the Court of Appeals
decision was affirmed (See Guico v. San Pedro, 72 Phil. 415 [1941]).

Before he could secure a decree of registration in his name, Estanislao died.

On May 13, 1958 Dominador Mayuga, son of Estanislao, filed a petition with the Reyes Court docketed as Case No. 2689
alleging that he was the only heir of the deceased Estanislao Mayuga and praying for the issuance of a decree of
registration over the property adjudicated in favor of Estanislao. At this point, it cannot be overemphasized that the
petition filed by Dominador is NOT a distinct and separate proceeding from, but a continuation of, the original land
registration proceedings initiated by Estanislao Mayuga, Florentino Baltazar and Eduardo Guico. In the same vein, the
Reyes Court, as Branch VI of the Court of First Instance of Rizal, was continuing in the exercise of jurisdiction over the
case, which jurisdiction was vested in the CFI-Rizal upon filing of the original applications.

On May 21, 1958 the Reyes Court issued an order granting the petition of Dominador Mayuga and directing the
Commissioner of Land Registration to issue a decree of registration over Lots 1, 2 and 3 of Plan Psu-47035, substituting
therein as registered owner Dominador Mayuga in liue of Estanislao.

Respondent Carpo, however, contends, that since the records of LRC Case No. 657 were not properly reconstituted,
then there was no pending land registration case. And since the Reyes Court was acting without a pending case, it was
acting without jurisdiction. (Respondent Carpo's Memorandum, pp, 2-8.)

He cites the case of Villegas v. Fernando (L-27347, April 29, 1969, 27 SCRA 1119) where this Court said that upon
failure to reconstitute pursuant to law, "the parties are deemed to have waived the effects of the decision rendered in
their favor and their only alternative is to file an action anew for the registration in their names of the lots in question,"
citing the case of Ambat v. Director of Lands, (92) Phil. 567 [1953]) and other cases. The basis of said ruling is Section
29 of Act No. 3110, an Act to provide an adequate procedure for the reconstitution of the records of pending judicial
proceedings and books, documents, and files of the office of the register of deeds, destroyed by fire or other public
calamities, and for other purposes.

However, the Ambat case, in so far as it ruled on the effect of failure to reconstitute records on the status of the case
in its entirety, was modified in the case of Nacua v. de Beltran, (93) Phil. 595 [1953]). where this Court said:

(W)e are inclined to modify the ruling (in the Ambat case) in the sense that Section 29 of Act No. 3110
should be applied only where the records in the Court of First Instance as well as in the appellate court
were destroyed or lost and were not reconstituted, but not where the records of the Court of First
Instance are intact and complete, and only the records in the appellate court were lost or destroyed,
and were not reconstituted. One reason for this view is that section 29 of Act 3110 is found among the
sections and provisions dealing with the reconstitution of records in the Court of First Instance in pending
civil cases, special proceedings, cadastral cases and criminal cases. A study of Act (No.) 3110 ... who
show that there are separate procedures for the reconstitution of records in the Justice of the Peace
Courts, from Sec. 48 to Sec. 53; for the reconstitution of records in the Supreme Court, now including
the Court of Appeals, from Sec. 54 to Sec. 74; for the reconstitution of records in the office of the
Register of Deeds, from Sec. 75 to Sec. 90 and for the reconstitution of destroyed records in the Courts
of First Instance, from Sec. 1 to Sec. 47, under which sections, Sec. 29 is obviously comprehended.
The whole theory of reconstitution is to reproduce or replace records lost or destroyed so that said
records may be complete and court proceedings may continue from the point or stage where said
proceedings stopped due to the loss of the records. The law contemplates different stages for purposes
of reconstitution. . . .

. . . (S)ection 4 covers the stage were a civil case was pending trial in the Court of First
Instance at the time the record was destroyed or lost; section 6 evidently refers to the
stage where the case had been tried and decided but was still pending in the Court of
First Instance at the time the record was destroyed or lost; section 6 covers the stage
where the case was pending in the Supreme Court (or Court of Appeals) at the time the
record was destroyed or lost. *

If the records up to a certain point or stage are lost and they are not reconstituted, the parties and the
court should go back to the next preceding age where records are available, but not beyond that;
otherwise to ignore and go beyond the stage next preceding would be voiding and unnecessarily ignoring
proceedings which are duly recorded and documented, to the great prejudice not only of the parties and
their witnesses, but also of the court which must again perforce admit pleadings, rule upon them and
then try the case and decide it anew,-all of these, when the records up to said point or stage are intact
and complete, and uncontroverted.

xxx xxx xxx

. . . (T)o require the parties to file their action anew and incur the expenses and (suffer) the annoyance
and vexation incident to the filing of pleadings and the conduct of hearings, aside from the possibility
that some of the witnesses may have died or left the jurisdiction, and also to require the court to again
rule on the pleadings and hear the witnesses and then decide the case, when an along and all the time
the record of the former pleadings of the trial and evidence and decision are there and are not disputed,
all this would appear to be not exactly logical or reasonable, or fair and just to the parties, including the
trial court which has not committed any negligence or fault at all.

The ruling in Nacua is more in keeping with the spirit and intention of the reconstitution law. As stated therein, "Act
3110 was not promulgated to penalize people for failure to observe or invoke its provisions. It contains no penal sanction.
It was enacted rather to aid and benefit litigants, so that when court records are destroyed at any stage of judicial
proceedings, instead of instituting a new case and starting all over again, they may reconstitute the records lost and
continue the case. If they fail to ask for reconstitution, the worst that can happen to them is that they lose the
advantages provided by the reconstitution law" (e.g. having the case at the stage when the records were destroyed).

Applying the doctrine in the Nacua decision to LRC Case No. 657, the parties thereto did not have to commence a new
action but only had to go back to the preceding stage where records are available. The land registration case itself re.
mained pending and the Court of First Instance of Rizal continued to have jurisdiction over it.

The records were destroyed at that stage of the case when an that remained to be done was the ministerial duty of the
Land Registration Office to issue a decree of registration (which would be the basis for the issuance of an Original
Certificate of Title) to implement a judgment which had become final (See Government v. Abural, 39 Phil. 996 [1919]
at 1002; Sta. Ana v. Menla, 111 Phil. 947 [1961], 1 SCRA 1294; Heirs of Cristobal Marcos v. De Banuvar, 134 Phil. 257
[1968], 26 SCRA 316). There are however authentic copies of the decisions of the CFI and the Court of Appeals
adjudicating Lots 1, 2 and 3 of Plan Psu-47035 to Estanislao Mayuga. Moreover, there is an official report of the decision
of this Court affirming both the CFI and the CA decisions. A final order of adjudication forms the basis for the issuance
of a decree of registration.

Considering that the Reyes court was actually in the exercise of its jurisdiction as a land registration court when it issued
the order directing the issuance of a decree of registration, "substituting therein as registered owner Dominador Mayuga,
in hue of the original adjudicates, Estanislao Mayuga, based on the affidavit of self-adjudication, subject to the provisions
of Sec. 4, Rule 74 of the Rules of Court," which order is in consonance with the ruling of this Court in the Guico decision,
and the decisions of the CFI-Rizal and the CA dated August 19, 1935 and November 17, 1939, respectively, We uphold
the validity of said order and rule that Judge Vera was without jurisdiction to set it aside.

4. In upholding the title of Carpo as against those of Realty and QCDFC, the Special Division also relied on Carpo's being
an innocent purchaser for value.

Whether or not Carpo is an innocent purchaser for value was never raised as an issue in the trial court. A perusal of the
records of the case reveals that no factual basis exists to support such a conclusion. Even Carpo himself cites no factual
proof of his being an innocent purchaser for value. He merely relies on the presumption of good faith under Article 527
of the Civil Code.

It is settled that one is considered an innocent purchaser for value only if, relying on the certificate of title, he bought
the property from the registered owner, "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." (Cui v. Henson, 51 Phil. 606 [1928], Fule v. De Legare, 117 Phil.
367 [1963], 7 SCRA 351.) He is not required to explore farther than what the Torrens title upon its face indicates. (Fule
v. De Legare supra.)

Carpo bought the disputed property from the Baltazars, the original registered owners, by virtue of a deed executed
before Iluminada Figueroa, Notary Public of Manila dated October 9, 1970. However, it was only later, on October 13,
1970, that the decree of registration in favor of the Baltazars was transcribed in the Registration Book for the Province
of Rizal and that an Original Certificate of Title was issued. It was on the same day, October 13, 1970, that the deed
evidencing the sale between the Baltazars and Carpo was inscribed in the Registry of Property, and the Original
Certificate of Title was cancelled as Transfer Certificate of Title No. 303961 in the name of Carpo was issued. (Exhibit
12, Rollo pp. 270-273.)

Thus, at the time of sale there was as yet no Torrens title which Carpo could have relied upon so that he may qualify
as an innocent purchaser for value. Not being a purchaser for value and in good faith, he is in no better position than
his predecessors-in-interest.

The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an oppositor in the original application
filed by Estanislao Mayuga in 1927. As stated earlier, the CFI-Rizal confirmed the title of Estanislao to Lots 1, 2 and 3
of Plan Psu-47035 "desestimando oposicion de Florentino Baltazar . . . con respeto a dichos lotes . . ." As such successors
of Florentino, they could not pretend ignorance of the land registration proceedings over the disputed parcels of land
earlier initiated by Eduardo Guico, Florentino Baltazar and Estanislao Mayuga, as when as the decisions rendered therein.

Moreover, it is not disputed that the title in the name of Dominador Mayuga, from whom Realty derived its title, was
issued in 1958, or twelve years before the issuance of the title in the name of the Baltazars in 1970.

In this jurisdiction, it is settled that "(t)he general rule is that in the case of two certificates of title, purporting to include
the same land, the earlier in date prevails . . . . In successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming under the prior certificate is entitled to the estate
or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived
directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof . . . ."
(Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915] at 595-596; Garcia V. CA, Nos. L-48971 and 49011, January 22,
1980, 95 SCRA 380.)

TCT No. 20408 derived from OCT 1609, is therefore superior to TCT No. 303961 derived from OCT 8629.

5. For its part, respondent Quezon City Development and Financing Corporation (QCDFC) alleges that it has been
improperly impleaded as thirty-party defendant inasmuch as Realty's alleged cause of action against it is neither for
contribution, indemnity, subrogation or any other relief in respect of Carpo's claim against Realty. It likewise alleges
that Realty had no cause of action against it since the third party complaint did not allege that QCDFC violated any legal
right of Realty, QCDFC also assails the Vera Court decision in that it declares QCDFC directly liable to Carpo and not to
Realty.

In the first place, QCDFC did not appeal from the decision of the Vera Court, nor from the decision of the Court of
Appeals dated December 29, 1982, nor from the resolution of the IAC Special Third Civil Cases Division dated May 2,
1984 all of which voided QCDFCs title to the disputed property. Hence, said decisions/resolution have become final
and executory as regards QCDFC.

Moreover, even as this Court agrees with QCDFC that the third-party complaint filed against it by Realty was procedurally
defective in that the relief being sought by the latter from the former is not in respect of Carpo's claim, policy
considerations and the factual circumstances of the case compel this Court now to rule as well on QCDFC's claim to the
disputed property. ** To rule on QCDFC's claim now is to avoid multiplicity of suits and to put to rest these conflicting
claims over the property. After an, QCDFC was afforded fun opportunity, and exercised its right, to prove its claim over
the land. It presented documentary as well as testimonial evidence. It was even permitted to file a fourth-party
complaint which, however, was dismissed since it failed to prosecute its case.

QCDFC derived its title from Carmelino Alvendia et. al., the original registered owners. Original Certificate of Title No.
8931 in the name of Spouses Carmelino Alvendia, et. al. was issued on July 27, 1971, or thirteen (13) years after the
issuance of Mayuga's title in 1958.

Since Realty is claiming under TCT No. 1609 which was issued earlier than OCT No. 8931 from which QCDFC's title was
derived, Realty's title must prevail over that of QCDFC.

6. During the pendency of this case, Petitioners filed a manifestation alleging that the case at bar is closely connected
with G.R. No. L-469953, Jose N. Mayuga et. al. v. The Court of Appeals, Macondray Farms, Inc., Realty Sales Enterprise,
inc., et. al. and moved for consolidation of the two cases involving as they do the same property. By Resolution of
August 29, 1984, this Court denied the motion for consolidation.

In this connection, it must be emphasized that the action filed by Carpo against Realty is in the nature of an action to
remove clouds from title to real property. By asserting its own title to the property in question and asking that Carpo's
title be declared null and void instead, and by filing the third-party complaint against QCDFC, Realty was similarly asking
the court to remove clouds from its own title. Actions of such nature are governed by Articles 476 to 481, Quieting of
Title, Civil Code (Republic Act No. 386), and Rule 64, Declaratory Relief and Similar Remedies, Rules of Court.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the
person in respect of the res, these proceedings are characterized as quasi in rem. (McDaniel v. McElvy, 108 So. 820
[1926].) The judgment in such proceedings is conclusive only between the parties. (Sandejas v. Robles, 81 Phil. 421
[1948]).

The ruling in this case is therefore without any prejudice to this Court's final determination of G.R. No. L-46953.
WHEREFORE, the Resolution of May 2,1984 of the Intermediate Appellate Court and the Decision of January 20, 1981
of the CFI-Rizal Branch XXIII, are SET ASIDE and the Decision of December 29, 1982 of the Court of Appeals is
AFFIRMED.

SO ORDERED.

11. TOLENTIN ET AL VS. LAUREL ET AL. GR NO. 181358 FEBRUARY 22,


2012
GEORGE S. TOLENTINO, MONICA S. G.R. No. 181368
TOLENTINO, GUSTAVO S. TOLENTINO,
JR., MA. MARJORIE S. TOLENTINO,
MARILYN S. TOLENTINO, MICHAEL GLEN Present:
S. TOLENTINO, MYLENE S. TOLENTINO,
MILAGROS M. GUEVARRA, MA. VICTORIA
T. RAMIREZ, LORENZA T. ANDES, VELASCO, JR., J., Chairperson,
MICHAEL T. MEDRANO and JACINTO T. PERALTA,
MEDRANO, ABAD,
Petitioners, MENDOZA, and
PERLAS-BERNABE, JJ.
- versus

PACIFICO S. LAUREL, HEIRS OF


ILUMINADA LAUREL-ASCALON, Promulgated:
CONSUELO T. LAUREL, BIENVENIDO
LAUREL, HEIRS OF ARCHIMEDES LAUREL, February 22, 2012
TEODORO LAUREL, FE LAUREL-LIMJUCO
and CLARO LAUREL,
Respondents.
x---------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and set
aside the Decision[1] and Resolution[2] of the Court of Appeals (CA), dated October 18, 2007 and January 22, 2008,
respectively, in CA-G.R. CV No. 78676.

The factual milieu follows.

Respondents, in their complaint before the Regional Trial Court, alleged that they are the registered owners of a parcel
of land situated in Barangay Balugo, Tagkawayan, Quezon, with an area of 1,056,275 square meters, covered by
Transfer Certificate of Title (TCT) No. T-43927. For several years, petitioners have been in actual possession of the
western portion of the said property with a total area of 620,000 square meters which they tried to develop into
fishponds. In the years 1993 and 1994, respondents informed petitioners, through Gustavo C. Tolentino, Sr. (Gustavo)
who was then representing them, that the area they are occupying was inside the respondents' property and, therefore,
they should vacate and leave the same. Gustavo, however, asked for time to verify respondents' claim. If found to be
true, then the petitioners were willing to discuss with respondents the improvements that they have introduced on the
subject area. Respondents have waited for almost a year for the outcome of the intended verification, but they waited
in vain until Gustavo died. Petitioners continued to develop the area they were occupying into fishponds, thereby
manifesting their unwillingness to vacate the premises and restore the possession thereof in favor of respondents.
Hence, respondents filed a suit against petitioners to recover the property and demand payment of unearned income,
attorney's fees and costs of suit.

Petitioners, as defendants in the trial court, averred in their Answer that the subject property is owned by the Republic
and they are occupying the same by virtue of a Fishpond Lease Agreement entered with the Department of Agriculture.
Thus, their stay over the property is lawful.

On August 27, 1996, petitioners were declared in default, for failure to appear at the pre-trial conference. However,
the trial court set aside the default order and reset the pre-trial conference. Despite several resetting of the pre-trial
conference of which petitioners were notified, petitioners failed to appear. Hence, on March 21, 2000, the trial court
issued an Order allowing respondents to present their evidence ex parte, instead of declaring petitioners in default.[3]

After the ex parte hearing for the reception of evidence, the RTC ruled in favor of respondents, thus:

WHEREFORE, judgment is hereby rendered to wit:

(a) Ordering the defendants [petitioners herein] George S. Tolentino, Monica S. Tolentino, Gustavo S. Tolentino, Jr.,
Ma. Marjorie S. Tolentino, Marilyn S. Tolentino, Michael Glenn St. Tolentino and Mylene S. Tolentino, their assigns, heirs
and representatives to leave and vacate the portions of land they are occupying which are part of and inside Lot 647-E
of the Subdivision Plan Csd-5627-D, covered by Transfer Certificate of Title No. T-43927 of the Office of the Register of
Deeds of Quezon immediately upon this decision becoming final and executory;

(b) Commanding the aforementioned defendants [petitioners herein] jointly and severally, to pay the plaintiffs
[respondents herein] the reasonable rental value of the areas occupied by the aforesaid defendants [petitioners herein]
at the rate of P20,000.00 per annum from October 13, 1995 until possession thereof is returned to the plaintiff.
[respondents herein]; and

(c) Enjoining the aforementioned defendants [petitioners herein] jointly and severally, to pay plaintiff [respondents
herein] attorney's fees in the amount of P20,000.00, plus litigation expenses in the sum of P10,000.00.

SO ORDERED.[4]

Aggrieved, petitioners challenged the trial court's decision before the CA. The CA dismissed petitioners' appeal and
affirmed the decision of the RTC. A motion for reconsideration was filed by the petitioners, but was denied by the CA
for lack of merit.

Petitioners then filed this present Petition for Review on Certiorari under Rule 45, raising the following issues:

1. WHETHER OR NOT PETITIONERS WERE DENIED THEIR DAY IN COURT.

2. WHETHER OR NOT IT WAS PROPER TO INCLUDE THE GOVERNMENT THRU THE DEPARTMENT OF AGRICULTURE
IN THIS CASE FOR A COMPLETE DETERMINATION OF THE CASE.

3. WHETHER OR NOT THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES FINDS APPLICATION IN THIS
CASE.

4. WHETHER OR NOT ACCION PUBLICIANA WAS THE PROPER ACTION TO BE INSTITUTED IN THIS CASE.

Petitioners maintain that they were denied their day in court, because they were not allowed to present their evidence
before the trial court which resulted in the denial of their right to due process.

We perused the records of the case and failed to see the lack of due process claimed by petitioners. On the contrary,
petitioners were given more than ample opportunity to be heard through counsel. Lest it be forgotten, petitioners were
first declared in default on August 27, 1996, for their failure to appear at the pre-trial conference. However, the trial
court set aside the default order and the pre-trial conference was set and reset for several times. Nonetheless,
petitioners failed to appear on January 9, 1998,[5] March 2, 1998,[6]May 18, 1999,[7] and March 21, 2000,[8] prompting
the trial court to allow the respondents to present their evidence ex parte. Thereafter, judgment was rendered.

Sections 4 and 5, Rule 18 of the Rules of Court provides:

Section 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.

Section 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. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his
evidence ex parte and the court to render judgment on the basis thereof.

From the foregoing, the failure of a party to appear at the pre-trial has adverse consequences. If the absent party is
the plaintiff, then his case shall be dismissed. If it is the defendant who fails to appear, then the plaintiff is allowed to
present his evidence ex parte and the court shall render judgment on the basis thereof. Thus, the plaintiff is given the
privilege to present his evidence without objection from the defendant, the likelihood being that the court will decide in
favor of the plaintiff, the defendant having forfeited the opportunity to rebut or present its own evidence.[9]
In the case at bar, the trial court gave petitioners every chance to air their side and even reconsidered its first order
declaring petitioners in default. Notwithstanding, petitioners and their counsel failed to take advantage of such
opportunity and disregarded the legal processes, by continuously failing to appear during the pre-trial of the case without
any valid cause. Clearly, when the trial court allowed the respondents to present evidence ex parte due to the
continued failure of the petitioners to attend the pre-trial conference, it did so in accordance with Rule 18 of the 1997
Rules of Civil Procedure and with due regard to the constitutional guarantee of due process. Plainly, petitioners cannot
complain that they were denied due process. What the fundamental law prohibits is total absence of opportunity to be
heard. When a party has been afforded opportunity to present his side, he cannot feign denial of due process.[10]

In The Philippine American Life & General Insurance Company v. Enario,[11] the Court held that pre-trial cannot be taken
for granted. It is not a mere technicality in court proceedings for it serves a vital objective: the simplification,
abbreviation and expedition of the trial, if not indeed its dispensation. The Court said that:

The importance of pre-trial in civil actions cannot be overemphasized. In Balatico v. Rodriguez, the Court, citing Tiu v.
Middleton, delved on the significance of pre-trial, thus:

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.[12]

Petitioners' repeated failure to appear at the pre-trial amounted to a failure to comply with the Rules and their non-
presentation of evidence before the trial court was essentiallydue to their fault.

Petitioners' assertion that it was necessary to include the government, through the Department of Agriculture, as a
party to the case, in order to have a complete determination of the case, is specious, as the same was never raised
before the RTC and the CA. It is settled that points of law, theories, issues and arguments not brought to the attention
of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as they cannot be raised for
the first time at that late stage. Basic considerations of due process impel this rule.[13]

In the same manner, the Court cannot consider petitioners' allegation that respondents failure to exhaust administrative
remedies is fatal to the cause of the respondents, as this was not raised before the trial court.

In substance, the appeal of petitioners hinges on their possession over the subject lot by virtue of an alleged Fishpond
Lease Agreement with the Department of Agriculture. They questioned the validity of the respondents' title by claiming
that since the property is owned by the government, it is part of the public domain and, therefore, cannot be privately
owned by the respondents. The petitioners' submission is not meritorious.

It is a rule that a certificate of title cannot be the subject of collateral attack. Section 48 of Presidential Decree No. 1529
provides that:

Section 48. Certificate not Subject to Collateral Attack. - A certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or canceled, except in a direct proceeding in accordance with law.
Petitioners' attack on the legality of TCT No. T-43927, issued in the name of respondents, is incidental to their quest to
defend their possession of the property in an accion publiciana, not in a direct action whose main objective is to impugn
the validity of the judgment granting the title. [14] To permit a collateral attack on the title, such as what petitioners
attempt, would reduce the vaunted legal indefeasibility of a Torrens title to meaningless verbiage.[15]

It must be pointed out that notwithstanding petitioners' submission that the subject property is owned by the Republic,
there is no showing that the Office of the Solicitor General (OSG) or its representatives initiated an action for reversion
of the subject property to become part of the public domain. All actions for the reversion to the Government of lands of
the public domain or improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead,
in the proper courts, in the name of the Republic of thePhilippines.[16] Unless and until the land is reverted to the State
by virtue of a judgment of a court of law in a direct proceeding for reversion, the Torrens certificate of title thereto
remains valid and binding against the whole world.[17]

Besides, it must be emphasized that the action filed before the trial court is an accion publiciana, which is a plenary
action for recovery of possession in an ordinary civil proceeding in order to determine the better and legal right to
possess, independently of title.[18] The objective of the plaintiffs in an 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. This adjudication, however, is not a final and
binding 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. [19]

It is undisputed that the subject property is covered by TCT No. T-43927, registered in the name of the respondents.
On the other hand, petitioners do not claim ownership, but allege that they are leasing the portion they are occupying
from the government.

Respondents' title over the subject property is evidence of their ownership thereof. It is a fundamental principle in land
registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in
favor of the person whose name appears therein.[20] It is conclusive evidence with respect to the ownership of the land
described therein.[21] It is also settled that the titleholder is entitled to all the attributes of ownership of the property,
including possession.[22] Thus, the Court held that the age-old rule is that the person who has a Torrens title over a land
is entitled to possession thereof.[23]

Petitioners' argument that an accion publiciana is not the proper remedy available for the respondents, because more
than ten (10) years had already elapsed since the dispossession of the respondents' property, does not hold water. As
the registered owners, respondents' right to evict any person illegally occupying their property is imprescriptible. In the
case of Labrador v. Perlas,[24] the Court held that:

x x x As a registered owner, petitioner has a right to eject any person illegally occupying his property. This right is
imprescriptible and can never be barred by laches. In Bishop v. Court of Appeals, we held, thus:

As registered owners of the lots in question, the private respondents have a right to eject any person illegally occupying
their property. This right is imprescriptible. Even if it be supposed that they were aware of the petitioners' occupation
of the property, and 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. This right is never
barred by laches.[25]

As a final note, the Court finds no factual and legal basis for the award of attorneys fees and litigation expenses. The
settled rule is that the matter of attorneys fees cannot be mentioned only in the dispositive portion of the decision. The
same goes for the award of litigation expenses.[26] The reasons or grounds for the award thereof must be set forth in
the decision of the court.[27] The discretion of the court to award attorney's fees under Article 2208 of the Civil Code
demands factual, legal, and equitable justification, without which the award is a conclusion without a premise, its basis
being improperly left to speculation and conjecture.[28]

In the present case, the award of attorney's fees and litigation expenses was mentioned only in the dispositive portion
of the RTC decision without any prior explanation and justification in its body, hence, the same is baseless and must be
deleted.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals, dated October 18,
2007 and January 22, 2008, respectively, in CA-G.R. CV No. 78676, are AFFIRMED with MODIFICATION that the
award of attorneys fees and litigation expenses is DELETED.
12. ALFONSO VS. PASAY CITY, 106 PHIL 1017, JANUARY 30, 1060
EN BANC

[G.R. No. L-12754. January 30, 1960.]

ESTANISLAO ALFONSO, Plaintiff-Appellant, v. PASAY CITY, defendant- appellee.

A. V. Villacorta for Appellant.

City Attorney Francisco G. H. Salva and Assistant City Attorney Herminio A. Avendao for Appellee.

SYLLABUS

1. PRESCRIPTION; REGISTERED PROPERTY CANNOT BE LOST BY PRESCRIPTION. It appears that the registered
owner with a Torrens Title of the parcel of land in the case at bar has lost possession way back in 1925 because it was
taken by the Municipality of Pasay for road purposes. It was never paid for, and the registered ownership thereof
remained in the name of the owner. No annotation on said title was made as to any right, any easement of right of way,
which the City of Pasay might have acquired over the land. The registered owner has made demands as any owner of
a valuable registered property would do but as usually the case, perhaps the demand were either ignored or action
thereon was postponed and perhaps forgotten with the changes of administrator in Pasay that occurred since 1925 up
to 1954 when the said registered owner brought the present action to recover either the possession of the parcel or its
value. Held: That registered lands are not subject to prescription, and on grounds of equity the government should pay
for private property which it appropriates, though for the benefit of the public, regardless of the passing of time.

2. EMINENT DOMAIN; SUPREME COURT ABHORS PRACTICE OF TAKING PRIVATE PROPERTY SHORT OF LEGAL PROCESS
OF EXPROPRIATION; DELAYED PAYMENT. The Supreme Court does not look with favor on the practice of the
Government or any of its branches, of taking away property from a private landowner, especially a registered one,
without going through the legal process of expropriation or a negotiated sale and paying for said property without delay.
The private owner is usually at a great and distinct disadvantage. He has against him the whole Government central or
local, that has occupied and appropriated his property, summarily and arbitrarily, sometimes if not more often, against
his consent. There is. no agreement as to its price or its rent. In the meantime, the landowner makes requests for
payment, rent, or even some understanding, patiently waiting and hoping that the Government would soon get around
to hearing and granting his claim. The officials concerned may promise to consider his claim and come to an agreement
as to the amount and time for compensation, but with the not infrequent government delay and red tape, and with the
change in administration, especially local, the claim is pigeonholed and forgotten and the papers lost, mislaid, or even
destroyed as happened during the last war. And when finally losing patience and hope, he brings a court action and
hires a lawyer to represent him in the vindication of his valid claim, he faces the government represented by no less
than the Solicitor General or the Provincial Fiscal or City Attorney, who blandly and with self-assurance, invokes
prescription. The litigation sometimes drags on for years. Held That is neither just nor fair. When a citizen, because of
this practice, loses faith in the government and its readiness and willingness to pay for what it gets and appropriates,
in the future said citizen would not allow the Government to even enter his property unless condemnation proceedings
are first initiated, and the value of the property, as provisionally ascertained by the Court, is deposited subject to his
disposal. This would mean delay and difficulty for the Government, but all of its own making.

3. ID.; TO DETERMINE DUE COMPENSATION; PRICE OR VALUE AT THE TIME OF TAKING. To determine due
compensation for lands appropriated by the government, the basis should be the price or value at the time that it was
taken from the owner and appropriated by the Government.

DECISION

MONTEMAYOR, J.:

Estanislao Alfonso is appealing from the decision of the Court of First Instance of Rizal (Pasay City Branch), dated
November 26, 1958, Civil Case No. 1489-P, dismissing his complaint on the ground of laches and prescription. The
decision is based on a stipulation of facts submitted by the parties. For this reason, we are reproducing the statement
of facts made by the trial court, which is as follows:

"The parties herein entered into a stipulation of facts. The undisputed facts are: Lot No. 4368 containing an area of
719.92 sq. meters, situated in Pasay City is covered by transfer certificate of title No. 1057 (30999) in the name of
plaintiff Estanislao Alfonso. In 1925, the then Municipality of Pasay extended Park Avenue, to public street southward
and the extension passed through lot 4368 so that said lot was thereby converted into a park of Park Avenue extension.
In converting lot No. 4368 as part of Park Avenue extension, no expropriation proceedings was instituted by the then
municipality of Pasay and neither was herein plaintiff paid any compensation for the lot. Since 1925 to the present the
lot was continually used as a part of Park Avenue extension. Because of the failure of the municipality of Pasay or its
successor, defendant Pasay City, to pay for the rental or the value of lot 4368 or to return the same when demanded
to do so by plaintiff, the latter filed the present action on July 20, 1954
This is a case where a registered owner of a parcel of land has lost possession way back in 1925 because it was taken
by a municipal corporation (Municipality of Pasay) for road purposes. It was never paid for, and so the ownership thereof
remained in the name of the registered owner. No annotation on said title was made as to any right, say easement of
right of way, which the City of Pasay might have acquired over the land. There is some doubt as to whether Estanislao
Alfonso ever made demands for the payment of his property which was taken away from him without the benefit of
either expropriation proceedings or a negotiated sale. However, there is reason to believe that Alfonso has made such
demands as any owner of a valuable registered property would do, but as usually the case, perhaps the demands were
either ignored or action thereon was postponed and perhaps forgotten with the changes of administration in Pasay that
occurred since 1925 up to 1954 when Alfonso finally brought the present action to recover either the possession of the
parcel or its value.

The present case finds it parallel in the recent case of Herrera v. Auditor General, 102 Phil., 875, decided by this Tribunal
on January 23, 1958, where a registered owner of land in Quezon City was deprived of its possession when it was taken
over by the city government for road purposes. The owner thereof made demands for the payment of his land, and
although the City Attorney of Quezon City indorsed favorable action on the claim, however, the Auditor General rejected
said claim on the ground of prescription. There, we held that registered lands are not subject to prescription, and that
on grounds of equity, the government should pay for private property which it appropriates, though for the benefit of
the public, regardless of the passing of time. This Tribunal does not look with favor on the practice of the Government
or any of its branches, of taking away property from a private landowner, especially a registered one, without going
through the legal process of expropriation or a negotiated sale and paying for said property without delay. The private
owner is usually at a great and distinct disadvantage. He has against him the whole Government, central or local, that
has occupied and appropriated his property, summarily and arbitrarily, sometimes, if not more often, against his
consent. There is no agreement as to its price or its rent. In the meantime, the landowner makes requests for payment,
rent, or even some understanding, patiently waiting and hoping that the Government would soon get around to hearing
and granting his claim. The officials concerned may promise to consider his claim and come to an agreement as to the
amount and time for compensation, but with the not infrequent government delay and red tape, and with the change
in administration, specially local, the claim is pigeonholed and forgotten and the papers lost, mislaid, or even destroyed
as happened during the last war. And when finally losing patience and hope, he brings a court action and hires a lawyer
to represent him in the vindication of his valid claim, he faces the government represented by no less than the Solicitor
General or the Provincial Fiscal or City Attorney, who blandly and with self- assurance, invokes prescription. The litigation
sometimes drags on for years. In our opinion, that is neither just nor fair. When a citizen, because of this practice loses
faith in the government and its readiness and willingness to pay for what it gets and appropriates, in the future said
citizen would not allow the Government to even enter his property unless condemnation proceedings are first initiated,
and the value of the property, as provisionally ascertained by the Court, is deposited, subject to his disposal. This would
mean delay and difficulty for the Government, but all of its own making.

In the case of Herrera v. Auditor General, supra, we said:

"Here before us is a case of a law abiding citizen and taxpayer who as far back as 1934, realizing the need of the
Government of his lot for road purposes, instead of compelling said Government to resort to expropriation proceedings,
readily and in all ingeniousness allowed the Government to immediately occupy it. In his implicit trust in his Government,
he did not even bother to require it to make a judicial deposit of the approximate value of his land, not even to make
an offer of a price it would pay for it. But since then, he has continuously asked for the payment of said fair price as a
condition precedent to his conveyance and sale of the property. But the government neglected to make an offer, much
less make payment, then evidently forgot all about it, and now it flatly refuses to pay, evidently forgetting that it had
also neglected to secure a conveyance of the property, so that Herrera, as already stated, is still the owner of the same.
In other words, there has never been a sale by Herrera to the Government. To legalize its possession of the lot, the
Government must buy it from Herrera and pay him reasonable compensation. The very Constitution enjoins it. As
already said, the Government, through the City Engineer, has made an offer of an amount, not of the lots value in the
open market, but only of its assessed value, which as everyone knows, is usually much below its real value. Herrera
either tired of waiting for payment, or in a spirit of cooperation with his Government, agreed to the amount of said
assessed value as the purchase price, and formally accepted the offer in 1955, and yet that same Government apparently
ignoring all these facts and repudiating its offer, refuses to make payment, at the same time insisting to collect and
actually collecting the real estate taxes for land which it had been occupying all these years. What we have just narrated
and described does not make and form a pretty and edifying spectacle which could be presented to the citizens and
taxpayers for their contemplation and inspiration. The only bright spots in the otherwise somber picture are the attitude
and actions taken by the District Engineer, the Quezon City Engineer, and the City Attorney, who after due investigation,
upheld the valid claim of Herrera, and recommended that he be paid just compensation. There is nothing that can more
speedily and effectively embitter a citizen and taxpayer against his Government and alienate his faith in it, than an
injustice and unfair dealing like the present case."

In the present case, Alfonso remains up to now the owner of the land in question, Lot No. 4368 of the Cadastral Survey
of Pasay, because being registered land, the City of Pasay or its predecessor, Municipality of Pasay, did not and could
not acquire it thru prescription. As registered owner, he could bring an action to recover possession at any time because
possession is one of the attributes of ownership of land. However, said restoration of possession by the City of Pasay is
neither convenient nor feasible because it is now and has been used for road purposes. So, the only relief available is
for the City of Pasay to make due compensation, which it could and should have done years ago since 1925.

As to the value of the property, although the plaintiff claims the present market value thereof, the rule is that to
determine due compensation for lands appropriated by the Government, the basis should be the price or value at the
time that it was taken from the owner and appropriated by the Government. According to the stipulation of facts, the
value of the land in 1925 was P1.25 per square meter. So, for the area of 719.92 square meters, the value will be said
area multiplied by P1.25. Inasmuch as the City of Pasay has not been paying rent for the use of the land since 1925,
thereby causing damages in favor of the owner, said damages may be assessed in the form of legal interest on the price
since 1925, up to the time when payment is made by the City of Pasay. In our opinion, the defendant city would also
pay for attorneys fees which we fix in the amount of P400.00.

In view of the foregoing, the appealed decision is reversed, with costs against defendant-appellee, Pasay City.

13. REYES V. RAVAL REYES, G.R. NOS. L-21703-04. AUGUST 31, 1966

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.

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.

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 ofres 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).

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.

Concepcion, C.J., Barrera, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.
Regala, J., took no part.

14. NATIONAL GRAINS AUTHORITY V. IAC, G.R. NO. L-68741 JAN. 28,
1988
G.R. No. L-68741 January 28, 1988
NATIONAL GRAINS AUTHORITY, plaintiff-appellee,
vs.
INTERMEDIATE APPELLATE COURT, MELECIO MAGCAMIT, NENA COSICO and EMELITA
MAGCAMIT, defendants-appellants.

PARAS, J.:

This is a petition for review of the decision of the then Intermediate Appellate Court * (now Court of Appeals) dated
January 31, 1984, reversing the decision of the Court of First Instance of Laguna and San Pablo City, 8th Judicial District,
Branch III, and of the resolution dated August 28, 1984 denying the motion for reconsideration filed thereof.

The undisputed facts of this case as found by the Trial Court and the Intermediate Appellate Court are as follows:

On December 2,1971, the spouses Paulino Vivas and Engracia Lizards, as owners of a parcel of land situated in Bo. San
Francisco, Victoria, Laguna, comprising more or less 105,710 square meters, sold for P30,000.00 said property in favor
of spouses Melencio Magcamit and Nena Cosico, and Amelita Magcamit (herein private respondents) as evidenced by
"Kasulatan Ng Bilihang Mabiling Muli." This sale with right to repurchase was recorded in the Office of the Register of
Deeds of Laguna on December 6,1971 under Act No. 3344. On January 31,1972 the sale was made absolute by the
spouses Vivas and Lizardo in favor of the private respondents for the sum of P90,000.00; P50,000.00 of which was paid
upon the execution of the instrument, entitled "Kasulatan Ng Bilihan Tuluyan," after being credited with the P30,000.00
consideration of the "Kasulatan Ng Mabibiling Muli," and the balance of P40,000.00 was to be paid the moment that the
certificate of title is issued. From the execution of said Kasulatan, private respondent have remained in peaceful, adverse
and open possession of subject property.

On February 26, 1975, an Original Certificate of Title No. T-1728 covering the property in question was issued to and in
the name of the spouses Vivas and Lizardo without the knowledge of the private respondents and on April 30, 1975,
said Spouses executed a Special Power of Attorney in favor of Irenea Ramirez authorizing the latter to mortgage the
property with the petitioner, National Grains Authority.

On May 2, 1974, the counsel for the petitioner wrote the Provincial Sheriff in Sta. Cruz, Laguna, requesting for the
extrajudicial foreclosure of the mortgage executed by Irenea Ramirez on May 18, 1975, covering, among others, the
property involved in this case covered by OCT No. T-1728, for unpaid indebtedness in the amount of P63,948.80 in
favor of the petitioner.

On May 31, 1974, the Provincial Sheriff caused the issuance of the notice of sale of the property in question, scheduling
the public auction sale on June 28, 1974. The petitioner was the highest and successful bidder so that a Certificate of
Sale was issued in its favor on the same date by the Provincial Sheriff.

On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the subject real property in
favor of itself. By virtue of the deed of absolute sale, TCT No. T-75171 of the Register of Deeds for the Province of
Laguna was issued in the name of the petitioner on July 16, 1974. It was only in July 1974, that private respondents
learned that a title in the name of the Vivas spouses had been issued covering the property in question and that the
same property had been mortgaged in favor of the petitioner. Private respondent Nena Magcamit offered to pay the
petitioner NGA the amount of P40,000.00 which is the balance of the amount due the Vivas spouses under the terms of
the absolute deed of sale but the petitioner refused to accept the payment. On July 31, 1974, counsel for private
respondents made a formal demand on the spouses Vivas and Lizardo to comply with their obligation under the terms
of the absolute deed of sale; and soon after reiterated to the NGA, the offer to pay the balance of P40,000.00 due under
the absolute deed of sale. On August 13, 1974 petitioner in its reply informed counsel of private respondents that
petitioner is now the owner of the property in question and has no intention of disposing of the same.

The private respondents, who as previously stated, are in possession of subject property were asked by petitioner to
vacate it but the former refused. Petitioner filed a suit for ejectment against private respondents in the Municipal Court
of Victoria, Laguna, but the case was dismissed.

On June 4, 1975, private respondents filed a complaint before the then Court of First Instance of Laguna and San Pablo
City, Branch III, San Pablo City, against the petitioner and the spouses Vivas and Lizardo, praying, among others, that
they be declared the owners of the property in question and entitled to continue in possession of the same, and if the
petitioner is declared the owner of the said property, then, to order it to reconvey or transfer the ownership to them
under such terms and conditions as the court may find just, fair and equitable under the premises. (Record on Appeal,
pp. 2-11).

In its answer to the complaint, the petitioner (defendant therein) maintained that it was never a privy to any transaction
between the private respondents (plaintiffs therein) and the spouses Paulino Vivas and Engracia Lizardo that it is a
purchaser in good faith and for value of the property formerly covered by OCT No. 1728; and that the title is now
indefeasible, hence, private respondents' cause of action has' already prescribed. (Record on Appeal, pp. 16-22).

After due hearing, the trial court ** rendered its decision on March 17, 1981, in favor of the petitioner, the dispositive
portion of said judgment reading as follows:

WHEREFORE, judgment is hereby rendered as follows:

(1) declaring defendant National Grains Authority the lawful owner of the property in question by virtue of its indefeasible
title to the same;

(2) ordering plaintiffs to turn over possession of the land to defendant National Grains Authority;

(3) ordering defendants-spouses Paulino Vivas and Engracia Lizardo to pay plaintiffs the sum of P56,000.00 representing
the amount paid pursuant to the Kasulatan Ng Bilihang Tuluyan marked Exhibit "3", with legal interest thereon from
January 31, 1972 until the amount is paid, to pay an additional amount of P5,000.00 for and as attorney's fees, an
additional amount of Pl0,000.00 as moral damages, another amount of P5,000.00 by way of exemplary damages and
to pay the costs of this suit. (Rollo, P. 35).

The private respondents interposed an appeal from the decision of the trial court to the Intermediate Appellate Court.

After proper proceedings, the appellate court rendered its decision on January 31, 1984, reversing and setting aside the
decision of the trial court as follows:

WHEREFORE, the decision of the lower court is hereby reversed and set aside and another one is rendered ordering the
National Grains Authority to execute a deed of reconveyance sufficient in law for purposes of registration and cancellation
of transfer Certificate of Title No. T-75171 and the issuance of another title in the names of plaintiff-appellants, and
ordering defendants-appellees Paulino Vivas and Engracia Lizardo to pay the National Grains Authority the sum of
P78,375.00 (Exh. 3) within thirty (30) days from the receipts of the writ of execution. No damages and costs. (Rollo, p.
19).

The petitioner filed a motion for reconsideration of the said decision but the same was denied. (Rollo, p. 26).
Hence, this petition.

In the resolution of May 20, 1985, the petition was given due course and the parties were required to submit
simultaneous memoranda (Rollo, p. 128). The memorandum for the petitioner was filed on July 3, 1985 (Rollo, p. 129)
while the memorandum for the private respondents was filed on August 26, 1985 1 Rollo p. 192).

The main issue in this case is whether or not violation of the terms of the agreement between the spouses Vivas and
Lizardo, the sellers, and private respondents, the buyers, to deliver the certificate of title to the latter, upon its issuance,
constitutes a breach of trust sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser
for value.

It is undisputed that: (1) there are two deeds of sale of the same land in favor of private respondents, namely: (a) the
conditional sale with right to repurchase or the 'Kasulatan Ng Bilihang Mabibiling Muli" which was registered under Act
3344 and (b) the deed of absolute sale or "Kasulatan ng Bilihang Tuluyan" which was not registered; (2) the condition
that the Certificate of Title will be delivered to the buyers upon its issuance and upon payment of the balance of
P40,000.00 is contained in the deed of absolute sale; and (3) the land in question at the time of the execution of both
sales was not yet covered by the Torrens System of registration.

It is axiomatic, that while the registration of the conditional sale with right of repurchase may be binding on third
persons, it is by provision of law "understood to be without prejudice to third party who has better right" (Section 194
of the Administrative Code, as amended by Act No. 3344). In this case, it will be noted that the third party NGA, is a
registered owner under the Torrens System and has obviously a better right than private respondents and that the deed
of absolute sale with the suspensive condition is not registered and is necessarily binding only on the spouses Vivas and
Lizardo and private respondents.

In their complaint at the Regional Trial Court, private respondents prayed among others, for two alternative reliefs, such
as: (a) to be declared the owners of the property in question or (b) to order the declared owner to reconvey or transfer
the ownership of the property in their favor.

Private respondents claim a better right to the property in question by virtue of the Conditional Sale, later changed to
a deed of Absolute Sale which although unregistered under the Torrens System allegedly transferred to them the
ownership and the possession of the property in question. In fact, they argue that they have been and are still in
possession of the same openly, continuously, publicly under a claim of ownership adverse to all other claims since the
purchase on December 2, 1971 (Rollo, p. 165). It is stressed that not until the month of July, 1974 did the plaintiff learn
that a title had been issued covering the property in question (Rollo, p. 15).

Time and time again, this Court has ruled that the proceedings for the registration of title to land under the Torrens
System is an action in rem not in personam, hence, personal notice to all claimants of the res is not necessary in order
that the court may have jurisdiction to deal with and dispose of the res. Neither may lack of such personal notice vitiate
or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated
within it, may provide for the adjudication of title in a proceeding in rem or one in the nature of or akin a to proceeding in
rem which shall be binding upon all persons, known or unknown (Moscoso vs. Court of appeals, 128 SCRA 719 [1984],
citing: City of Manila vs. Lack, et al., 19 Phil. 324, 337; Roxas vs. Enriquez, 29 Phil. 31; Director of Lands vs. Roman
Catholic Archbishop of Manila, 41 Phil. 120; Aguilar vs. Caogdan, 105 Phil. 661). It is thus evident that respondents'
right over the property was barred by res judicata when the decree of registration was issued to spouses Vivas and
Lizards. It does not matter that they may have had some right even the right of ownership, BEFORE the grant of the
Torrens Title.

Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith,
shall hold the same free from all encumbrances except those noted on the certificate and any of the encumbrances
which may be subsisting, and enumerated in the law. Under said provision, claims and liens of whatever character,
except those mentioned by law as existing, against the land prior to the issuance of certificate of title, are cut off by
such certificate if not noted thereon, and the certificate so issued binds the whole world, including the government
(Aldecoa and Co. vs. Warner Barns & Co., 30 Phil. 209 [1915]; Snyder vs. Fiscal of Cebu and Avila, 42 Phil. 766 [1922]).
Under said ruling, if the purchaser is the only party who appears in the deeds and the registration of titles in the property
registry, no one except such purchaser may be deemed by law to be the owner of the properties in question (Ibid).
Moreover, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or
adverse possession (Umbay vs. Alecha, 135 SCRA 427 [1985]).

It does not appear that private respondents' claim falls under any of the exceptions provided for under Section 44 of
P.D. 1529 which can be enforced against petitioner herein.

Thus, it has been invariably restated by this Court, that "The real purpose of the Torrens System is to quiet title to land
and to stop forever any question as to its legality. "Once a title is registered, the owner may rest secure, without the
necessity of waiting in the portals of the court, or sitting on the "mirador su casato," avoid the possibility of losing his
land." "An indirect or collateral attack on a Torrens Title is not allowed (Dominga vs. Santos, 55 Phil. 361; Singian vs.
Manila Railroad, 62 Phil. 467)."

The only exception to this rule is where a person obtains a certificate of title to a land belonging to another and he has
full knowledge of the rights of the true owner. He is then considered as guilty of fraud and he may be compelled to
transfer the land to the defrauded owner so long as the property has not passed to the hands of an innocent purchaser
for value (Angeles vs. Sania, 66 Phil. 444 [1938], emphasis supplied).

It will be noted that the spouses Vivas and Lizardo never committed any fraud in procuring the registration of the
property in question. On the contrary, their application for registration which resulted in the issuance of OCT No. 1728
was with complete knowledge and implied authority of private respondents who retained a portion of the consideration
until the issuance to said spouses of a certificate of title applied for under the Torrens Act and the corresponding delivery
of said title to them. The question therefore, is not about the validity of OCT No. 1728 but in the breach of contract
between private respondents and the Vivas spouses. Petitioner NGA was never a privy to this transaction. Neither was
it shown that it had any knowledge at the time of the execution of the mortgage, of the existence of the suspensive
condition in the deed of absolute sale much less of its violation. Nothing appeared to excite suspicion. The Special Power
of Attorney was regular on its face; the OCT was in the name of the mortgagor and the NGA was the highest bidder in
the public auction. Unquestionably, therefore, the NGA is an innocent purchaser for value, first as an innocent mortgagee
under Section 32 of P.D. 1529 and later as innocent purchaser for value in the public auction sale.

Private respondents claim that NGA did not even field any representative to the land which was not even in the
possession of the supposed mortgagors, nor present any witness to prove its allegations in the ANSWER nor submit its
DEED OF MORTGAGE to show its being a mortgages in good faith and for value (Rollo, p. 110).

Such contention is, however, untenable. Well settled is the rule that all persons dealing with property covered by a
torrens certificate of title are not required to go beyond what appears on the face of the title. When 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 (Centeno vs. Court of Appeals, 139 SCRA 545
[1985]).

More specifically, the Court has ruled that a bank is not required before accepting a mortgage to make an investigation
of the title of the property being given as security (Phil. National Cooperative Bank vs. Carandang Villalon, 139 SCRA
570 [1985]), and where innocent third persons like mortgagee relying on the certificate of title acquire rights over the
property, their rights cannot be disregarded (Duran vs. IAC, 138 SCRA 489 [1985]).

Under the circumstances, the Regional Trial Court could not have erred in ruling that plaintiffs (private respondents
herein) complaint insofar as it prays that they be declared owners of the land in question can not prosper in view of the
doctrine of indefeasibility of title under the Torrens System, because it is an established principle that a petition for
review of the decree of registration will not prosper even if filed within one year from the entry of the decree if the title
has passed into the hands of an innocent purchaser for value (Pres. Decree No. 1529, Sec. 32). The setting aside of the
decree of registration issued in land registration proceedings is operative only between the parties to the fraud and the
parties defrauded and their privies, but not against acquirers in good faith and for value and the successors in interest
of the latter; as to them the decree shall remain in full force and effect forever (Domingo vs. The Mayon Realty Corp.
et al., 102 Phil. 32 [19571). Assuming, therefore, that there was fraud committed by the sellers against the buyers in
the instant case, petitioner NGA who was not privy therein cannot be made to suffer the consequences thereof As
correctly declared by the trial court, the National Grains Authority is the lawful owner of the property in question by
virtue of its indefeasible title.

As to private respondents' alternative prayer that the declared owner be ordered to reconvey or transfer the ownership
of the property in their favor, it is clear that there is absolutely no reason why petitioner, an innocent purchaser for
value, should reconvey the land to the private respondents.

PREMISES CONSIDERED, the decision of the Court of Appeals is REVERSED and SET ASIDE, and the decision of the
Court of First Instance of Laguna and San Pablo City, now Regional Trial Court, is REINSTATED.

SO ORDERED.

15. CAJAYON V. SPOUSES BATUYONG, G.R. NO. 149118. FEBRUARY 16,


2006
G.R. No. 149118 February 16, 2006
FLAVIANA LIM CAJAYON and CARMELITA LIM CONSTANTINO, Petitioners,
vs.
SPOUSES SANTIAGO and FORTUNATA BATUYONG, Respondents.
DECISION

TINGA, J.:

This petition for review on certiorari challenges the two rulings of the Court of Appeals in CA G.R. SP. No. 50952. The
first decision dated 27 November 2000 1 upheld the ruling of the Regional Trial Court (RTC) affirming the Metropolitan
Trial Court (MeTC) order for ejectment, while the Resolution dated 5 July 20012 denied the motion for reconsideration.

First, the factual background of the case.

Flaviana Lim Cajayon and Carmelita Lim Constantino (petitioners) and Isagani P. Candelaria (Candelaria) were co-
owners of a 260-square meter lot, then covered by Transfer Certificate of Title (TCT) No. C-10870. On 1 February 1995,
a partition agreement3 was entered into by petitioners and Candelaria, wherein Lot 6-A, Psd 00-034294, containing an
area of 100 square meters, more or less, was adjudicated to Candelaria, while Lot 6-B, Psd 00-034294, containing an
area of 160 square meters, more or less, was given to petitioners. TCT No. C-10870 was cancelled and TCT No. 288500
was issued in the name of petitioners.

On 30 May 1995, Candelaria sold his property, including the improvements thereon, to Spouses Santiago and Fortunata
Batuyong (respondents). TCT No. 294743 was issued in their names over the said parcel of land. 4

On 21 May 1996, petitioners started the construction of a seven (7)-door bungalow-type building that allegedly intruded
into the lot of Respondents. At the instance of respondents, petitioners were summoned by barangay officials to a
meeting on the matter. It was then agreed upon that petitioners would defer the construction work pending the result
of a relocation survey to be conducted by a government surveyor.

A verification survey was conducted by Geodetic Engineer Florentina C. Valencia. She submitted a report dated 12
November 1996 which yielded the findings that Lot 6-A (Candelarias) and Lot 6-B (petitioners) were not correctly
positioned geographically on the ground with respect to TCT No. 294743. Thus, as per survey, sub-lot B with an area
of 10.43 square meters serves as right of way of Lot 6-B (petitioners lot) while sub-lot C with an area of 10.18 square
meters was the portion of Lot 6-A (respondents lot) presently occupied by petitioners.5

Despite the delineation of said boundaries, petitioners proceeded with the forestalled construction, allegedly occupying
at least 20.61 square meters of respondents lot, including the portion being used as right of way for petitioners tenants.

After respondents secured a permit from the barangay and the Caloocan City Building Official to fence their lot, they
made demands to petitioners to vacate the encroached portion but to no avail. Respondents brought the matter to the
barangay but no amicable settlement was reached. A Certificate to File Action was issued to them by the Barangay
Lupon Tagapayapa. A final demand was made through a letter dated 20 May 1997 upon petitioners to vacate the
encroached premises. Petitioners, however, vehemently refused to vacate and surrender the premises.

On 14 April 1997, respondents filed an ejectment case against petitioners before the Metropolitan Trial Court 6(MeTC) of
Caloocan City, docketed as Civil Case No. 23359. In a Decision 7 dated 2 July 1998, the MeTC ordered petitioners to
vacate and surrender possession of a portion of respondents lot and to pay 500.00 per month as fair rental value from
May 1996 until the premises is finally vacated, plus 5,000.00 as attorneys fees and costs of the suit.8

On appeal, the RTC9 affirmed the judgment of the MeTC.10 In doing so, the RTC debunked the three (3) arguments
posed by petitioners. First, contrary to petitioners submission, the RTC ruled that the MeTC had jurisdiction over the
instant complaint. The RTC noted that the issue of jurisdiction was never raised in the court a quo while on the other
hand, petitioners actively participated in the proceedings therein by filing their Answer and Position Paper. Evidently,
petitioners raised the question of jurisdiction as a mere afterthought as he did so only after he obtained an adverse
judgment. Second, the allegations of the complaint sufficiently averred a case for ejectment which the RTC found to be
within the jurisdiction of the court a quo. Third, the trial court ruled that petitioners categorically recognized the validity
of the verification survey done by Engineer Valencia, as shown by the presence of petitioner Flaviana Cajayon during
the verification survey and setting of monuments per survey report.11

Petitioners filed a motion for new trial and/or reconsideration but it was denied in an Order 12 dated 12 January 1999 of
the RTC. They elevated the case to the Court of Appeals by way of petition for review under Rule 42 of the Rules of
Court. On 27 November 2000, the appellate court rendered a Decision13 dismissing the petition. Holding that the
exclusive jurisdiction to try unlawful detainer cases is vested with the MeTC, the appellate court ratiocinated, thus:

The complaint in the instant case establishes jurisdictional facts necessary to sustain the action for unlawful detainer
and the remedy it seeks is merely to obtain possession of the controverted lot from Respondents. Specifically, it alleges
that sometime on May 21, 1996, petitioners started construction works in the area which intruded into a portion of
respondents property; that the parties eventually agreed to stop the construction subject to the result of a survey to
be conducted thereon; that a survey was conducted in the presence of the parties and a report was submitted by Engr.
Valencia on November 12, 1996, showing an encroachment of about 20.61 square meters of respondents lot including
that portion being used as a right of way for petitioners tenants; that even after the boundaries had been verified,
petitioners resumed the construction on the area; that despite verbal and written demands, the last of which was made
on March 20, 1999, petitioners refused to vacate and surrender the encroached area. Surely, respondents resort to
unlawful detainer when petitioners failed to leave the controverted premises upon demand is in order. 14

The appellate court also held that the fact that petitioners houses already stood on the controverted lot long before the
purchase of the land by respondents failed to negate the case for ejectment. 15 The appellate court emphasized that
prior physical possession is not a condition sine qua non in unlawful detainer cases. The court likewise sustained the
RTC findings on the validity of the verification survey conducted by Engineer Valencia that petitioners have encroached
on a 20.61 square meter portion of respondents lot.

On 5 July 2001, the Court of Appeals issued a Resolution16 denying petitioners Motion for Reconsideration.

Petitioners now come to us via the present petition, submitting as issues the question of jurisdiction and the weight to
be accorded to the verification survey results.17

Petitioners anchor their petition on the court a quos lack of jurisdiction over the instant suit. The averments in the
complaint do not make out a case for ejectment, they claim, as their entry into the disputed lot was not made by force,
intimidation, threat, strategy or stealth. Neither was their possession of the disputed property by virtue of the tolerance
of respondents or the latters predecessor-in-interest.

Respondents counter that the jurisdictional elements necessary to maintain an action for unlawful detainer clearly obtain
in the case at bar, namely: (a) after the parties agreed to the conduct of a survey by a government surveyor and after
the survey, it was determined that the structures introduced by herein petitioners have encroached a portion of herein
respondents lot; (b) notices to vacate and surrender of possession of the encroached portion were made to petitioners,
the last being on March 20, 1997; and (c) the suit was instituted on April 11, 1997 or within one (1) year from date of
last demand.18

Respondents also stress that possession of the premises by petitioners took place more than one year before the filing
of the complaint and the absence of an allegation in the complaint that such possession of the disputed portion was
merely by virtue of respondents tolerance does not deprive the lower court of its original and exclusive jurisdiction nor
will it negate respondents action for unlawful detainer.19
It is settled that jurisdiction of the court in ejectment cases is determined by the allegations of the complaint and the
character of the relief sought.20

The Complaint21 filed by respondents (plaintiffs therein) alleged these material facts:1avvphil.net

2. That defendants and Isagani P. Candelaria were the former co-owners of a certain piece of land located in Maypajo,
Caloocan City containing an area of 260 square meters, more or less, under TCT No. C-10870 issued by the Register of
Deeds of Caloocan City;

3. That on February 1, 1995, said co-owners subdivided this parcel of land by virtue of a Partition Agreement wherein
Lot 6-A, Psd 00-034294, containing an area of 100 square meters, more or less, was given to Isagani P. Candelaria,
while Lot 6-B, Psd 00-034294, containing an area of 160 square meters, more or less, was given to defendants. A copy
of said Partition Agreement is hereto attached as Annex "A";

xxx xxx xxx

5. That on May 30, 1995, Isagani P. Candelaria sold his share to the herein plaintiffs, including the improvements
thereon, in the sum of 100,000.00, under a Deed of Absolute Sale x x x;

xxx xxx xxx

7. That sometime in May 21, 1996, defendants started construction works in the area and intruded into the lot owned
by the plaintiffs causing the latter to protest and report the matter to the barangay authorities;

8. That on the same day, the parties were summoned to appear before the Barangay Chairman wherein defendants
agreed to stop the construction works, and in a subsequent conference on June 7, 1996, they agreed to defer the matter
pending the result of a survey to be conducted by a government surveyor;

xxx xxx xxx

11. That the following day, September 5, 1996, Geodetic Engineer Florentina C. Valencia conducted a survey of the
aforesaid property and placed the concrete monuments thereon in the presence of plaintiffs and defendants;

12. That on November 12, 1996, a verification survey report was submitted by Geodetic Engineer Florentina C. Valencia
together with the survey verification plan xxx;

13. That despite defendants knowledge of the property boundary, and despite repeated serious objections from
plaintiffs, defendants proceeded to construct a seven-door bungalow-type semi-concrete building, occupying at least
10.18 square meters and another 10.43 square meters for the right of way, thus encroaching upon at least 20.61 square
meters of plaintiffs lot, and further demolishing plaintiffs wall.

xxx xxx xxx

20. That despite repeated and continuous demands made by plaintiffs upon defendants, both oral and written, the last
being on March 20, 1997, defendants in manifest bad faith, wanton attitude, and in a malevolent and oppressive manner
and in utter disregard of the property rights of plaintiffs, have failed and refused, and still fail and refuse to vacate the
same up to the present time x x x.22

From the above-quoted allegations taken in tandem with the textbook distinctions between forcible entry and unlawful
detainer, it is clear that the complaint makes out a case for forcible entry, as opposed to unlawful detainer. The
distinctions between the two forms of ejectment suits, are: first, in forcible entry, the plaintiff must prove that he was
in prior physical possession of the premises until he was deprived thereof by the defendant, whereas, in unlawful
detainer, the plaintiff need not have been in prior physical possession; second, in forcible entry, the possession of the
land by the defendant is unlawful from the beginning as he acquires possession thereof by force, intimidation, threat,
strategy or stealth, while in unlawful detainer, the possession of the defendant is inceptively lawful but it becomes illegal
by reason of the termination of his right to the possession of the property under his contract with the plaintiff; third, in
forcible entry, the law does not require a previous demand for the defendant to vacate the premises, but in unlawful
detainer, the plaintiff must first make such demand, which is jurisdictional in nature.23

Respondents had been in prior physical possession of the property in the concept of owner prior to petitioners intrusion
on 21 May 1996. When petitioners encroached upon respondents lot and started construction works thereon the latter
was dispossessed of the area involved. Despite various demands by respondents to vacate, petitioners obstinately
refused to do so. Clearly, petitioners entry into the said property was illegal from the beginning, precluding an action
for unlawful detainer.

On the other hand, to establish a case of forcible entry, the complaint must allege that one in physical possession of a
land or building has been deprived of that possession by another through force, intimidation, threat, strategy or
stealth.24 It is not essential, however, that the complaint should expressly employ the language of the law. It would be
sufficient that facts are set up showing that dispossession took place under said conditions.25

The words "by force, intimidation, threat, strategy or stealth" include every situation or condition under which one
person can wrongfully enter upon real property and exclude another, who has had prior possession thereof. To constitute
the use of "force" as contemplated in the above-mentioned provision, the trespasser does not have to institute a state
of war. Nor is it even necessary that he use violence against the person of the party in possession. The act of going on
the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property,
and this is all that is necessary.26 In the case at bar, petitioners encroachment into respondents property in an
oppressive and malevolent manner, coupled with their refusal to vacate the premises despite knowledge of the proper
boundaries and heedless of respondents serious objections, indelibly connotes "force" within the meaning of the law.
Petitioners contend that while they concede they might have intruded on respondents property, the action is barred by
prescription because it was filed more than one (1) year after the occurrence of the alleged intrusion. The contention is
baseless. Section 1, Rule 70 of the Rules of Court allows a plaintiff to bring an action in the proper inferior court for
forcible entry or unlawful detainer within one (1) year, respectively, after such unlawful deprivation or withholding of
possession. In forcible entry, the one-year period is counted from the date of actual entry on the land.27

Records show that the ejectment suit was instituted on 11 April 1997. Petitioners actual entry into the property,
according to the complaint, took place on 21 May 1996. Thus, the suit was filed well within the one (1)-year period
mandated by law.

As a collateral issue, petitioners claim that they are at least entitled to the rights of a builder in good faith on the premise
that they are not the owners of the property encroached upon.

This contention is not tenable. Good faith consists in the belief of the builder that the land he is building on is his and
his ignorance of any defect or flaw in his title.28 In the instant case, when the verification survey report came to
petitioners knowledge their good faith ceased. The survey report is a professionals field confirmation of petitioners
encroachment of respondents titled property. It is doctrinal in land registration law that possession of titled property
adverse to the registered owner is necessarily tainted with bad faith. Thus, proceeding with the construction works on
the disputed lot despite knowledge of respondents ownership put petitioners in bad faith.

Now, the second issue. Petitioners question the evidentiary weight of the verification survey report. They point out that
since the survey was a unilateral act of respondents, done as it was without their consent, they should not be bound by
its findings.29

In raising the issue, petitioners are in effect asking this Court to reassess the factual findings of the courts below, a task
which is beyond this Courts domain. Factual matters cannot be raised in a petition for review on certiorari. This Court
at this stage is limited to reviewing errors of law that may have been committed by the lower courts. 30 We find no ample
reason to depart from this rule, more so in this case where the Court of Appeals has affirmed the factual findings of the
RTC and the MeTC.

Moreover, there is a presumption that official duty is regularly performed,31 i.e., government officials who perform them
are clothed with the presumption of regularity,32 as the courts below pointed out.33 In this case, the verification survey
was conducted by a government functionary.

Even prescinding from the presumption of regularity, what appears on record is that the verification survey was
conducted with the agreement of both parties and in their presence. That was the finding made by the courts below and
affirmed by the appellate court without any wrinkle.34

WHEREFORE, based on the foregoing, this Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.1avvphil.net

SO ORDERED.

16. SPS. VALENZUELA V. SPS. MANO, G.R. NO. 172611, JULY 9, 2010

SPS. FEDERICO VALENZUELA G.R. No. 172611


and LUZ BUENA-VALENZUELA
Petitioners,
Present:

CORONA, C. J., Chairperson,


- versus - BRION,*
DEL CASTILLO,
ABAD, ** and
PEREZ, JJ.
SPS. JOSE MANO, JR. and
ROSANNA REYES-MANO Promulgated:
Respondents. July 9, 2010
x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

The rule that a Torrens Certificate of Title is conclusive evidence of ownership of the land described therein[1] does not apply when

such land, or a portion thereof, was illegally or erroneously included in said title.
This Petition for Review on Certiorari[2] assails the Decision[3] dated January 16, 2006 of the Court of Appeals (CA) in CA-G.R. CV

No. 83577, which reversed and set aside the Decision[4] dated March 10, 2004 issued by the Regional Trial Court (RTC) of Bulacan,

Branch 14, in Civil Case No. 1065-M-99. Also assailed is the Resolution[5] dated May 3, 2006denying the motion for reconsideration.

Factual Antecedents

Petitioner Federico Valenzuela (Federico) is the son of Andres Valenzuela (Andres) who was the owner and possessor of a parcel of

land with an area of 938 square meters, more or less, located at Dampol 1st, Pulilan, Bulacan. The property was declared in the

name of Andres under Declaration of Real Property No. 7187[6] which described the property as follows:

Location: Dampol 1st, Pulilan, Bulacan

Boundaries:

North: Camino Provincial


East: Felisa Calderon
South: Aurea Caleon
West: Benita Bailon
Kind of Land: Residential Lot
Area: 938 square meters

Andres died on October 10, 1959, and the possession of said property was transferred to Federico. On August 5, 1980, a document

denominated as Pagmamana sa Labas ng Hukuman at Pagpaparaya o Pagkakaloob[7] was executed by the heirs of Andres who

waived all their rights to the property in favor of Federico.

Meanwhile, on February 7, 1991, a Deed of Conditional Sale[8] was executed between Feliciano Geronimo (Feliciano) and

herein respondent Jose Mano, Jr. (Jose), wherein the former agreed to sell to the latter a 2,056-square meter parcel of land located

at Dampol 1st, Pulilan, Bulacan. The corresponding Deed of Sale[9] was subsequently executed in March 1991.

On March 4, 1992,[10] Jose applied for a Free Patent and on April 10, 1992, Original Certificate of Title (OCT) No. P-

351[11] was issued in his name. This time, the property was indicated as covering an area of 2,739 square meters.

Sometime in 1997, Federico declared in his name under Tax Declaration No. 97-19005-01105[12] the property covered by

Declaration of Real Property No. 7187 in the name of Andres.

Subsequently, Jose sold a portion of the land covered by OCT No. P-351 to Roberto S. Balingcongan

(Balingcongan). On January 8, 1998, Transfer Certificate of Title (TCT) No. T-112865[13] was issued in the name of Balingcongan

covering 2,292 square meters. On the same date, TCT No. T-112864[14] was also issued in the name of Jose covering 447 square

meters.

Federico transferred his residence to Malabon and so he left the care of the property to his nephew, Vicente Joson
(Vicente). Sometime in 1999, Federico instructed Vicente to construct a perimeter fence on his property but he was prevented by

Jose, claiming that the 447 square meters was his property as reflected in his TCT No. T-112864. On the other hand, Federico is

claiming it as part of the property he inherited from his father, Andres.

When the matter could not be settled amicably, the petitioners lodged a Complaint[15] for Annulment of Title and/or

Reconveyance, Damages with the RTC of Malolos, Bulacan. The case was set for pre-trial conference[16] on March 27,

2000. Thereafter, trial ensued.

Ruling of the Regional Trial Court


The RTC found that even before Jose purchased the 2,056 square meters lot from Feliciano on February 7, 1991, he had

already caused the survey of a 2,739-square meter lot onJanuary 30, 1991. The document of sale expressly stated that the area

sold was 2,056 square meters and that the same is located in Dampol 1st, Pulilan, Bulacan. However, in March, 1991, Jose filed his

application for free patent using the survey on the 2,739 square meters. He also indicated therein that the property is located in

Dampol II, Pulilan, Bulacan and that the land described and applied for is not claimed or occupied by any person. He further claimed

that the property was public land which was first occupied and cultivated by Feliciano.

Thus, the trial court found that the preponderance of evidence showed that the disputed area of 447 square meters

rightfully belongs to Federico. This was a part of Lot No. 1306 originally owned and possessed by Andres as identified and described

in the Declaration of Real Property No. 7187.

On March 10, 2004, the trial court rendered a Decision, the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as
follows:

1. Ordering the defendants to return to the plaintiffs the disputed portion consisting of 447 square meters and
now covered by TCT No. T-112864 of the Registry of Deeds of Bulacan, in the name of Jose Mano, Jr. married to
Rosanna Reyes;

2. Ordering defendants to immediately demolish and/or remove the concrete fence erected on the premises;

3. Ordering the defendants to pay plaintiffs the amounts of P50,000.00 for moral damages; P30,000.00 for
exemplary damages and P50,000.00 for attorneys fees;

4. Ordering the Register of Deeds of Bulacan to cancel said TCT No. T-112864 of the Registry of Deeds of Bulacan;

5. Defendants to pay costs of this suit.


SO ORDERED.[17]

Ruling of the Court of Appeals

Respondents went to the CA on appeal. In a Decision[18] dated January 16, 2006, the CA reversed and set aside the ruling

of the RTC and dismissed the complaint. According to the CA, respondents satisfactorily proved their ownership over the disputed

property. The Free Patent No. 031418-92-463 and the TCT No. T-112864, as well as the tax declaration offered in evidence by

respondents are more convincing than the evidence presented by the petitioners. Also, petitioners failed to prove by clear and

convincing evidence the fact of fraud allegedly committed by Jose in obtaining title to the disputed property.

The Motion for Reconsideration filed by petitioners was denied by the CA through its Resolution[19] dated May 3, 2006.

Issues

Hence, this petition raising the following issues:

I.
Whether the CA gravely abused its discretion when it declared that petitioners were unable to prove ownership of
the disputed portion notwithstanding evidence introduced and admitted.

II.
Whether the CA gravely abused its discretion, amounting to lack of jurisdiction, when it reversed the decision of
the lower court finding fraud committed by the respondent in obtaining title to the property in question.

Simply put, the issues raised are: (1) Did the CA err in holding that the respondents are the owners of the disputed 447 square
meter property? and (2) Did the CA err in finding that no fraud was committed by the respondents in obtaining title to the disputed

property?
Petitioners Arguments

Petitioners argue that the CA erred in not holding that they are the rightful owners as Federico inherited the property from his father

Andres, who died on October 10, 1959. Jose purchased a parcel of land from Feliciano measuring only 2,056 square meters but

his application for free patent indicated a lot with a total area of 2,739 square meters. Moreover, he indicated the same to be

located at Dampol II, Pulilan, Bulacan; however, it is actually located at Dampol 1st. He also declared that the said property is not

claimed or occupied by any person but the truth is that the 447 square meters is owned and possessed by Federico.

Respondents Arguments

Respondents, on the other hand, contend that they have a better title to the property. The certificate of title issued in their name

is an absolute and indefeasible evidence of ownership of the property. It is binding and conclusive upon the whole world. There was

also no proof or evidence presented to support the alleged fraud on the part of Jose, nor was there any allegation of specific acts

committed by him which constitute fraud.

Our Ruling

After serious consideration, we find petitioners arguments to be meritorious.

There is preponderance of evidence that Federico is the owner of the disputed


property.

We rule that Federico is the owner of the disputed 447 square meter lot. The Deed of Conditional Sale described the property

purchased by Jose as follows:

A part of parcel of land (T.D. No. 14312) situated at Dampol 1st, Pulilan, Bulacan. Bounded on the North-
Lot 6225; East- Lot 1306 & 1311; South- Lot 1307 and 1308 and West- Lot 1304 & 1299.Containing an area of
Two Thousand Fifty Six (2,056) square meters, more or less. (Bulacan).

Feliciano sold a portion of Lot 1305 to Jose. After the sale was made, a Sketch/Special Plan[20] was prepared by Geodetic

Engineer Fortunato E. Chavez. It is clear from such document that Lot 1305-A representing the upper portion with an area of 1,112

square meters was retained by Feliciano and what was sold was the lower portion thereof which became Lot No. 1305-B with a

total area of 2,292 square meters. This exceeds the area of 2,056 square meters indicated in the above sale transaction.

In another Sketch/Special Plan[21] prepared by Geodetic Engineer Norberto C. Chavez, it is shown that Lot No. 10176-B

with an area of 2,292 square meters with a right of way going to Camino Provincial Highway was the one sold to Jose and which

was also sold by him to the Balingcongan spouses. This is also known as Lot No. 1305-B. TCT No. T-112865 was issued in the

name of the spouses Balingcongan. Lot No. 10175 which represents the upper portion of Lot No. 1305 was retained by

Feliciano. This is also known as Lot No. 1305-A. However, what is surprising is that the said plan showed that Lot No. 10176-A with

an area of 447 square meters had been made to appear as part of the lot sold by Feliciano to Jose. TCT No. T-112864 was issued

in the name of Jose. If indeed this disputed area is part of Lot No. 1305 then it should have been part of Lot No. 1305-A which was

retained by Feliciano as it is at the East side of the said property.

Moreover, during the ocular inspection,[22] it was observed that all the neighboring lots are either square or rectangle. There

is an old fence, measuring about 40 meters long (abutting the newly constructed fence), which bounds the true and actual area

purchased by Jose. Thus, if the old fence is followed, the land purchased would either be square or rectangular like the adjoining

lots. However, if the disputed 447 square meters would be included in the land purchased by Jose, the same would slant remarkably
to the right, to the extent of covering the entire area fronting the provincial road, which as per tax declaration of Federico, is the

boundary of his land on the north.


Furthermore, Feliciano, the owner of Lot No. 1305 from whom Jose acquired the property through sale, testified that his

lot is only about 2,000 square meters and that Andres owns the adjoining lot which is enclosed by a fence. Part of his testimony is

copied verbatim to wit:

ATTY. NATIVIDAD:

Q. But before they caused the measuring of the lot in question, do you have any idea how much is the
area of the lot?
A. About 2,000 plus, sir.

Q. This property measuring about 2,000 plus, as you mentioned a while ago before it was surveyed by
them, who is the present owner of this property?
A. Jose Mano, sir.

Q. How did Jose Mano become the owner of the property?


A. I sold it to him in 1991, sir.

xxxx

Q. Mr. Geronimo, I withdraw the manifestation.


May we further request that the description of the land indicated in the first page thereof
particularly the boundary and the area be bracketed and be marked as Exhibit D-3, your Honor.
Do you know your boundary owners of this lot located at Dampol 1st, Pulilan, Bulacan?
A. Teresa and Andres Valenzuela, sir.

Q. Who else if you know?


A. It is all that I could remember of, sir.

Q. At the time that the property was acquired from you by Jose Mano or by the defendants, do you have
any fence erected on your property?
A. None, sir. The adjacent lot has, sir.

COURT:
On all sides?

A. On Teresa and Andres Valenzuelas side, sir.

Q. They were fenced?


A. Yes, there is, sir. [23]

The testimony of Feliciano from whom Jose purchased the property coincides with the observation made during the ocular inspection

conducted by the RTC that there is an old fence, measuring about 40 meters which encloses the true and actual area purchased

by Jose. Feliciano retained the upper portion of Lot No. 1305 which eventually became Lot No. 1305-A because it is along the

national highway. The disputed 447 square meters property is located at the eastern side of Lot No. 1305-A. He gave Jose a right

of way at the western side[24] of the lot he retained for himself. This supports the theory that Feliciano was fully aware that the

property at the eastern part of his property belonged to Andres from whom Federico inherited the said lot.This is the reason why a

right of way going to the national highway was given to Jose between Lot No. 1305-A and Lot No. 1304. If the disputed property

is part of the sale as claimed by Jose then Feliciano would not have given the said right of way but would rather keep it to himself.

Settled is the rule that a person, whose certificate of title included by mistake or oversight the land owned by another, does not

become the owner of such land by virtue of the certificate alone.The Torrens System is intended to guarantee the integrity and

conclusiveness of the certificate of registration but is not intended to perpetrate fraud against the real owner of the land. The

certificate of title cannot be used to protect a usurper from the true owner.[25]

Jose committed fraud in obtaining the title to the disputed property.

Anent the second issue, we rule that Jose committed fraud in obtaining title to the disputed property. The chain of events leading
to the issuance of title in his name shows beyond cavil the bad faith or a fraudulent pattern on his part. The evidence on record

disclosed that even before Jose purchased the 2,056 square meters from Feliciano, he had already caused on January 30, 1991the

survey of a 2,739 square meters lot. Although the document of sale expressly stated that the area sold was 2,056 square meters
and is located at Dampol 1st, Pulilan, Bulacan, however, when he filed his application for free patent in March 1991, he used the

survey on the 2,739 square meters and indicated the same to be located at Dampol II, Pulilan, Bulacan. Also, in his application, he

stated that the land described and applied for is not claimed or occupied by any person when in reality the same is owned and

possessed by Federico.

Petitioners are entitled to an award of moral and exemplary damages.

Article 2217[26] of the Civil Code defines what are included in moral damages while Article 2219 enumerates the cases where they

may be recovered. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered

and not to impose a penalty on the wrongdoer.[27] The person claiming moral damages must prove the existence of bad faith by

clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights,

mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have

been willfully done in bad faith or with ill motive.[28] In the same fashion, to warrant the award of exemplary damages, the wrongful

act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in wanton,

fraudulent, reckless or malevolent manner.[29] As regards attorneys fees, the law is clear that in the absence of stipulation, attorneys

fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208[30] of the

Civil Code.

Having ruled that Jose committed fraud in obtaining title to the disputed property then he should be liable for both moral

and exemplary damages. Likewise, since petitioners were compelled to litigate to protect their rights and having proved that Jose

acted in bad faith, attorneys fees should likewise be awarded.

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision of the Court of Appeals

in CA-G.R. CV No. 83577 dated January 16, 2006 and its May 3, 2006 Resolution are REVERSED and SET ASIDE. The Decision

of the Regional Trial Court of Bulacan, Branch 14 in Civil Case No. 1065-M-99 dated March 10, 2004 isREINSTATED and

AFFIRMED.

SO ORDERED.

17. SPOUSES CHU V. BENELDA ESTATE DEVT. CORP, G.R. NO. 142313.
MARCH 1, 2001
[G.R. No. 142313. March 1, 2001]
SPOUSES MANUEL CHU, SR. and CATALINA B. CHU, the former substituted by THEANLYN B. CHU, THEAN
CHING LEE B. CHU, THEAN LEEWN B. CHU and MARTIN LAWRENCE B. CHU, the latter represented
by his mother and guardian ad litem, petitioner CATALINA B. CHU, petitioners, vs. BENELDA
ESTATE DEVELOPMENT CORPORATION, respondent.

DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision[1] and Resolution[2]of the Court of Appeals[3], dated
November 29, 1999 and March 14, 2000, respectively, which reversed the Order [4]dated March 30, 1998 of the Regional
Trial Court of Pampanga, Branch 52, denying respondents motion to dismiss as well as the Order denying respondents
motion for reconsideration, dated May 26, 1998.

The petitioners spouses Manuel Chu, Sr. and Catalina Chu (the former substituted by Theanlyn Chu, Thean Ching
Lee Chu, Thean Leewn Chu, and Martin Lawrence Chu) were the registered owners of five (5) parcels of land situated
in Barrio Saguin, San Fernando, Pampanga, covered and described in Transfer Certificate of Title Nos. 198470-R,
198471-R, 198472-R, 198473-R and 199556-R of the Registry of Deeds of the province of Pampanga.

On September 30, 1986, the petitioners executed a deed of sale with assumption of mortgage in favor of Trinidad
N. Cunanan in consideration of P5,161,090.00. Although Cunanan has actually an unpaid balance of P2,561,090.00, it
was made to appear in the deed of sale that the total consideration had been fully paid to enable Cunanan to have the
parcels of land registered in her name so that she could mortgage the same to secure a loan and thereupon pay from
the proceeds of the loan the said balance of P2,561,090.00. Their agreement, however, was that the ownership of the
properties shall remain with the petitioners until full payment of the balance of the total purchase price. Trinidad N.
Cunanan was thus able to cause the cancellation of the said titles registered in the name of the petitioners spouses
Manuel Chu, Sr. and Catalina Chu and in lieu thereof the issuance of TCTs No. 239278-R, No. 239376-R, No. 239279-
R, No. 239277-R, and No. 239280-R which are all registered in her name.
Cunanan failed to pay the balance of the total purchase price to the petitioners. Without the knowledge of the
petitioners, Cunanan sold the three (3) parcels of land to Cool Town Realty and Development Corporation, and the two
(2) other parcels of land subject of the instant case and covered by TCT Nos. 239276-R and 239277-R to the spouses
Amado and Gloria Carlos. The spouses Carlos, in turn, sold these two (2) properties to the respondent Benelda Estate
Development Corporation.

Petitioners commenced Civil Case No. G-1936 before the Regional Trial Court of Pampanga against Trinidad N.
Cunanan, Cool Town Realty and Development Corporation and the Register of Deeds of Pampanga. The petitioners
amended their complaint to include respondent Benelda Estate Development Corporation as a defendant, alleging,
insofar as the latter is concerned that:

13. That in order to cause financial damage and irreparable injury to the original plaintiffs, defendant Trinidad N.
Cunanan without any lawful right and authority whatsoever sold the remaining two (2) parcels of land involved in this
case previously covered by Transfer Certificates of Title Nos. 239276-R and 239277-R registered in her name (formerly
embraced by Transfer Certificates of Titles Nos. 198471-R and 198472-R in the names of the original plaintiffs) in favor
of the spouses AMADO E. CARLOS and GLORIA A. CARLOS, who like defendant Cool Town Realty and Development
Corporation are not also buyers for value and in good faith of the subject two (2) parcels of land as shown by Transfer
Certificates of Titles Nos. 247026-R and 246947-R both of the Register of Deeds of Pampanga, whose xerox copies are
hereto attached respectively as Annexes G, G-1, G-2, H, and H-1 hereof.

14. That likewise in order to cause further financial damage and prejudice to the plaintiffs, the spouses AMADO E.
CARLOS AND GLORIA A. CARLOS, who have never acquired valid titles over the two (2) parcels of land previously
embraced by Transfer Certificates of Titles Nos. 247026-R and 246947-R both of the Registry of Deeds of Pampanga
registered in their names referred to in the immediately preceding paragraph sold the same two (2) parcels of land on
November 13, 1995 in favor of defendant BENELDA ESTATE DEVELOMENT CORPORATION as shown by the
corresponding Deed of Absolute Sale, whose xerox copy is hereto attached as Annexes I and I-2 hereof.

15. That in view of the fact that the ownership of the five (5) parcels of land in issue in this case legally remains with
the plaintiffs, the deed of conveyances executed by defendant Trinidad N. Cunanan relative to the subject five (5)
parcels of land in litigation in favor of defendant Cool Town Realty & Development Corporation and in favor of the
spouses Amado L. Carlos and Gloria A. Carlos and the deed of absolute sale dated November 13, 1995 executed by the
spouses Amado E. Carlos and Gloria A. Carlos on lot 4224-A-2 of the subdivision plan previously covered by Transfer
Certificate of Title No. 246947-R and Lot 4224-A-3 of the subdivision plan formerly embraced by Transfer Certificate of
Title No. 247026-R both of the Registry of Deeds of Pampanga in favor of defendant BENELDA ESTATE DEVELOPMENT
CORPORATION, which are among the five (5) parcels of land involved in this case are all null and void, consequently
the said deed of conveyances did not vest valid title of ownership over the said five (5) parcels of land in controversy in
favor of defendant COOL TOWN REALTY DEVELOPMENT CORPORATION and BENELDA ESTATE DEVELOPMENT
CORPORATION because defendant Trinidad N. Cunanan, who has never been an owner of any of the five (5) parcels of
land in dispute cannot validly and legally transfer the ownership thereof in favor of any person whomsoever.

16. That despite demands made by the plaintiffs to the defendants, the latter unjustifiably failed and refused as they
still fail and refuse to reconvey the five (5) parcels of land to the said plaintiffs.[5]

The respondent filed its answer with a motion to dismiss on the ground, among others, that the amended complaint
states no cause of action against herein respondent. It alleged that respondentcorporation, through its officers, acted
in good faith in buying the properties inasmuch as it exerted all efforts to verify the authenticity of the titles and that
no defect was found therein. After the petitioner filed an opposition to the motion to dismiss, the trial court rendered a
decision denying the motion to dismiss.

The respondent filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals alleging
that the trial court committed grave abuse of discretion in denying its motion to dismiss the amended complaint. The
Court of Appeals reversed the order of the trial court and dismissed the case as against herein respondent on the ground
of lack of cause of action and for failure of the petitioners to include the spouses Carlos as indispensable parties in the
complaint.

Petitioner raises the following assignments of error:

WITH ALL DUE RESPECT TO THIS HONORABLE COURT CONTRARY TO ITS CONCLUSION IN ITS DECISION SOUGHT
TO BE SET ASIDE, PETITIONERS AMENDED COMPLAINT DATED JUNE 9, 1997 STATES A VALID CAUSE OF ACTION
AGAINST RESPONDENT BENELDA ESTATE DEVELOPMENT CORPORATION.

II

WITH ALL DUE RESPECT TO THIS HONORABLE COURT THE SPOUSES AMADO E. CARLOS AND GLORIA A. CARLOS
ARE NOT REAL AND INDISPENSABLE PARTIES IN THE CASE AT BENCH.

III

IT IS RESPECTFULLY SUBMITTED THAT THE AVERMENTS MADE IN THAT DEED OF ABSOLUTE SALE, WHOSE XEROX
COPY IS ATTACHED AS ANNEXES 1 AND 1-2 OF THE AMENDED COMPLAINT INVOLVED IN THIS CASE TO THE
EFFECT THAT THE SPOUSES AMADO E. CARLOS AND GLORIA A. CARLOS WARRANTED VALID TITLES TO AND
POSSESSION OF THE PROPERTIES SOLD AND CONVEYED AND THAT THEIR TITLES THERETO ARE FREE AND CLEAR
OF ALL LIENS AND ENCUMBRANCES OF ANY KIND WHATSOEVER CANNOT BE VALIDLY CONSIDERED IN
DETERMINING WHETHER OR NOT PETITIONERS AMENDED COMPLAINT DATED JUNE 9, 1997 STATES A VALID
CAUSE OF ACTION AGAINST RESPONDENT.
IV

IT IS RESPECTFULLY SUBMITTED THAT THE SPOUSES AMADO E. CARLOS AND GLORIA A. CARLOS CANNOT
TRANSFER VALID TITLE TO THE TWO (2) PARCELS OF LAND INVOLVED IN THIS PETITION WHICH THEY
THEMSELVES DO NOT HAVE.

IT IS RESPECTFULLY SUBMITTED THAT THE EXTRAORDINARY WRIT OF CERTIORARI IS NOT AVAILABLE TO


CHALLENGE THE ASSAILED ORDERS OF MARCH 30, 1998 AND MAY 26, 1998 WHICH ARE BOTH INTERLOCUTORY
IN CHARACTER.

A cause of action is defined as an act or omission by which a party violates a right of another. [6] The test of the
sufficiency of the facts found in a petition as constituting a cause of action is whether or not, admitting the facts alleged,
the court can render a valid judgment upon the same in accordance with the prayer thereof. [7]

In land title cases, this Court has time and again held that a 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 behind the certificate
to determine the condition of the property.[8] This person is considered in law as an innocent purchaser for value who
is defined as one who buys the property of another, without notice that some other person has a right or interest in
such property and pays a full 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.[9] In this connection, Section 53 of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, provides that:

Presentation of owners duplicate upon entry of new certificates. -No voluntary instrument shall be registered by the
Register of Deeds, unless the owners duplicate certificate is presented with such instrument, except in cases expressly
provided for in this Decree or upon order of the court, for cause shown.

The production of the owners duplicate certificate, whenever any voluntary instrument is presented for registration,
shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a
memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be
binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and
in good faith. [Italics Supplied]

xxx

Thus, a title procured through fraud and misrepresentation can still be the source of a completely legal and valid
title if the same is in the hands of an innocent purchaser for value.[10]

In a case for annulment of title, therefore, the complaint must allege that the purchaser was aware of the defect
in the title so that the cause of action against him will be sufficient. Failure to do so, as in the case at bar, is fatal for
the reason that the court cannot render a valid judgment against the purchaser who is presumed to be in good faith in
acquiring the said property. Failure to prove, much less impute, bad faith on said purchaser who has acquired a title in
his favor would make it impossible for the court to render a valid judgment thereon due to the indefeasibility and
conclusiveness of his title.

We find that the Court of Appeals did not err in dismissing the amended complaint insofar as the respondent is
concerned. The amended complaint and the annexes thereto did not allege bad faith on the part of the respondent
corporation. In fact, respondents claim that it bought the two (2) parcels of land in good faith are supported by the
Annexes I and I-2 (Deeds of Absolute Sale) attached to petitioners amended complaint. These deeds executed by the
spouses Carlos in favor of herein private respondent state that the spouses Carlos warranted valid title(s) to and
possession of the properties sold and conveyed, and furthermore declare that their titles thereto are free and clear of
all liens and encumbrances of any kind whatsoever.[11] There is no way for the trial court to render judgment against
herein respondent whose title to the subject parcels of land remains indefeasible and conclusive, there being no
allegation in the amended complaint that it allegedly acquired the said properties in bad faith.

Petitioners contend that since the ground of respondents motion to dismiss is lack of cause of action, the allegations
in the amended complaint are hypothetically assumed to be true or admitted, and consequently the respondents claim
of good faith is defeated by its knowledge of the allegedly admitted facts in the amended complaint regarding the
fraudulent circumstances involving the passing of the titles. We find that the technical or assumed admission on the
part of respondent, in such an event, does not defeat its status as an innocent purchaser for value. The defense of good
faith of respondent is valid for the reason that such mental disposition was present at the time it purchased those two
(2) parcels of land from the Carlos spouses up to the time the corresponding two (2) transfer certificates of title thereto
were issued in its favor. What is important is that when respondent bought the subject properties, it was not aware of
any defect in the covering certificates of title thereto at the time of such purchase. There is no allegation to the contrary
in the amended complaint. Therefore, the title of respondent, being that of an innocent purchaser for value, remains
valid.

By allowing the cancellation of their certificates of title and the issuance of new ones in lieu thereof in the name of
Trinidad N. Cunanan despite alleged non-payment of the full purchase price for their subject two (2) parcels of land,
the petitioners took the risk of losing their titles on the said properties inasmuch as the subject deed of sale with
assumption of mortgage constitutes their consent and announcement to the whole world that Cunanan was indeed the
legal owner of the properties by virtue of the said deed which is a public document.

Petitioners reliance on Mathay v. Court of Appeals[12] which held that No one can transfer a greater right to another
than he himself has is not applicable to the instant case for the reason that the said legal maxim, according to the same
case, only holds true if the same land had already been registered and an earlier certificate for the same is in
existence. In the case at bar, the petitioners no longer have any title to the subject two (2) parcels of land inasmuch as
petitioners spouses Manuel Chu, Sr. and Catalina B. Chu, as sellers, have consented to the cancellation of their
certificates of title in favor of Cunanan, as buyer. Thus, the conclusiveness of respondents certificates of title is binding
on the whole world including the petitioners.

Petitioners also claim that since the orders of the trial court denying their motion to dismiss are merely interlocutory,
the same cannot be the subject of a petition for certiorari. However, as correctly pointed out by the respondent, the
rule admits of an exception. Thus, where the denial of the motion to dismiss by the trial court was tainted with grave
abuse of discretion amounting to lack or excess of jurisdiction, as in the case at bar, the aggrieved party may assail the
order of denial on certiorari. A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial
justice and to prevent a substantial wrong.[13] The appellate court therefore was correct in entertaining the petition for
the reason that the trial court committed a grave abuse of discretion when it refused to dismiss the case as against
herein respondent, despite the obvious insufficiency of the amended complaint against the respondent. To implead the
herein respondent in the case at bar, absent an allegation of bad faith on its part, is to undermine a well-settled rule
protecting innocent purchasers for value and the indefeasibility and conclusiveness of certificates of title issued under
the Torrens System.

In view of the foregoing, there is no need to discuss the assignment of error as to whether the spouses Amado E.
Carlos and Gloria A. Carlos (sellers of the subject titled parcels of land to respondent) are real and indispensable parties
in the case at bar.

WHEREFORE, the petition is DENIED for lack of cause of action. With costs against the petitioners.

SO ORDERED.

18. DBP VS ACTING RD OF NUEVA ECIJA, UDK NO. 7671 JUNE 23, 1988
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:

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. 3 For 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
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. 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 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 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.
19. DELA MERCED VS. GSIS, G.R. NO. 140398. SEPTEMBER 11, 2001

[G.R. No. 140398. September 11, 2001]


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, petitioners, vs. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and SPOUSES
VICTOR and MILAGROS MANLONGAT, respondents.
DECISION

YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court of
Appeals dated May 21, 1999 in CA-G.R. CV No. 55034,[1] which reversed the decision of the Regional Trial Court of
Pasig, Metro Manila, Branch 160, in Civil Cases Nos. 51410 and 51470.[2]

The antecedent facts, as culled from the records, are as follows:

Governor Jose C. Zulueta and his wife Soledad Ramos were the owners of parcels of land consisting of 100,986
square meters, known as the Antonio Village Subdivision, Orambo, Pasig City. The parcels of land were registered in
their names under Transfer Certificates of Title Nos. 26105,[3] 37177[4] and 50256[5] of the Registry of Deeds of the
Province of Rizal.

On September 25, 1956, the Zuluetas obtained a loan of P520,000.00 from the Government Service Insurance
System, as security for which they mortgaged the lands covered by TCT No. 26105. It was expressly stipulated in the
mortgage deed that certain lots within TCT No. 26105 shall be excluded from the mortgage because they have been
either previously sold to third parties or donated to the government.

The Zulueta spouses obtained an additional loan from the GSIS on March 6, 1957 in the amount of P190,000.00,
as security for which they mortgaged the land covered by TCT No. 50256. On April 4, 1957, the Zuluetas obtained
another loan from GSIS this time in the amount of P1,000,000.00, which they secured by mortgaging parcels of land
included in TCT Nos. 26105 and 37177.

On September 3, 1957, the Zulueta spouses executed a contract to sell whereby they undertook to sell to Francisco
dela Merced and Evarista Mendoza lots identified as Lots 6, 7, 8 and 10, Block 2 (formerly Block 4), Antonio Subdivision
covered by TCT No. 26105.[6] On October 26, 1972, after full payment by Col. dela Merced of the purchase price, a Deed
of Absolute Sale was executed by the Zuluetas in his favor.

On October 15, 1957, another loan was extended by GSIS to the Zulueta spouses in the amount of P1,398,000.00,
secured by a mortgage on the properties included in TCT Nos. 26105 and 50256.

The Zuluetas defaulted in the payment of their loans. Thus, GSIS extrajudicially foreclosed the mortgages and, at
the foreclosure sale held on August 16, 1974, GSIS was awarded the mortgaged properties as the highest bidder. Since
the Zuluetas did not redeem the properties within the reglementary period, title to the properties was consolidated to
GSIS.

Later, on March 25, 1982, GSIS held a sale at public auction of its acquired assets. Elizabeth D. Manlongat and Ma.
Therese D. Manlongat, the children of Victor and Milagros Manlongat, purchased Lot 6, Block 2 of Antonio Village. [7]

On August 22, 1984, a complaint for declaratory relief, injunction and damages, docketed as Civil Case No. 51410,
was filed with the Regional Trial Court of Pasig, Branch 160, by Victor Lemonsito and several others, [8] against Benjamin
Cabusao, in his capacity as In-Charge of the Municipal Task Force on Squatters of the Municipal Engineers Office of
Pasig, spouses Domini and Olivia Suarez and spouses Victor and Milagros Manlongat.[9] Plaintiffs therein averred that
they were owners of houses in various lots in Antonio Village, having constructed the same with the permission of the
late Jose C. Zulueta before the same was foreclosed by GSIS; that defendants Suarez and Manlongat claimed to be
vendees of lots in Antonio Village; and that defendant Cabusao was threatening to demolish plaintiffs houses on the
alleged ground that they were squatters on the lots.

On September 7, 1984, Col. dela Merced also instituted Civil Case No. 51470 with the Regional Trial Court of Pasig,
Branch 154, against GSIS and the spouses Zulueta, praying, among others, that the foreclosure sale, insofar as his lots
were concerned, be declared null and void.[10]

Meanwhile, Col. dela Merced filed a complaint-in-intervention in Civil Case No. 51410,[11] wherein he prayed that
plaintiffs complaint be dismissed and defendants titles to lots 6, 7 and 8, Block 2 be declared null and void.

The complaint in Civil Case No. 51410 was dismissed for failure of plaintiffs to prosecute, but the complaint-in-
intervention of Col. dela Merced was allowed to proceed against defendants Suarez and Manlongat. [12]

On September 5, 1986, upon motion of plaintiff Col. dela Merced, the trial court ordered the consolidation of Civil
Case No. 51470 with Civil Case No. 51410.[13]

On October 23, 1987, the Regional Trial Court of Pasig, Branch 160, rendered its decision, the dispositive portion
of which reads:

WHEREFORE, judgment is hereby rendered in Civil Case No. 51410:

1. Declaring Lots 6, 7, 8 and 10 of Block 2, and Lot 8 of Block 8 which are the subject of the action, as the exclusive
property of the intervenor. Consequently, the certificates of Title of the defendants covering said property lots are
declared null and void;
and in Civil Case No. 51470:

1. Declaring the foreclosure proceedings conducted by defendant GSIS, insofar as they affected the lots in question, as
null and void, including the consolidation of ownership thereof by the GSIS, and the sale of the lots to defendant
Manlongat spouses;

2. Declaring the certificates of title issued to GSIS covering the aforesaid lots, as well as those issued to defendant
Manlongat spouses by virtue of the sale executed by the former in favor of the latter, as null and void; and directing
the Office of the Register of Deeds of Pasig, Metro Manila, to issue a new one in the name of the plaintiff Francisco
Mendoza dela Merced;

3. Ordering the defendants, jointly and severally, to pay the plaintiff the sums of P100,000.00 as moral damages;
P50,000.00 as exemplary damages; and P50,000.00 by way of attorneys fees; plus costs.

SO ORDERED.[14]

The GSIS and Manlongat spouses filed separate appeals. The Court of Appeals held that the trial court erred in
declaring defendants as having waived their right to present evidence. Thus, on April 19, 1994, the Court of Appeals
set aside the decision of the trial court and remanded the case to the lower court for the reception of evidence of
defendants Manlongat and GSIS.[15]

In the meantime, on March 19, 1988, Col. dela Merced passed away and was substituted by his heirs.

On December 27, 1996, the Regional Trial Court of Pasig, Branch 160, rendered a decision, the dispositive portion
of which reads:

WHEREFORE, judgment is hereby rendered:

1. Declaring the foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2, and Lot 8 of Block 8 and certificate of Titles issued
to GSIS covering the aforesaid lots as well as those issued to defendant Manlongat spouses as null and void;

2. Declaring plaintiff-intervenor as the true and lawful owner of the aforesaid lots;

3. Ordering the Register of Deeds of Pasig, Metro Manila to issue new titles in the name of plaintiff-intervenor or his
substituted heirs namely Blanquita dela Merced-Macatangay, Blanquita Errea dela Merced, Luis dela Merced and Maria
Olivia dela Merced Paredes;

4. Ordering defendants GSIS and spouses Manlongat jointly and severally to pay attorneys fees of P20,000.00 and to
pay the costs.

SO ORDERED.[16]

The trial court made the following findings:

The mortgage contract signed by the Zulueta spouses of the property covered by TCT No. 26105 in favor of GSIS (Exh.
C-C-1 Merced) contained the following provisions:

Note:

The following lots which form part of TCT No. 26105 are not covered by this mortgage contract due to sale to third
parties and donation to government.

1. Lots No. 1 to 13, Block No. 1 - 6,138 sq.m.

2. Lots Nos. 1 to 11, Block No. 2 - 4,660 sq.m.

3. Lot No. 15, Block No. 3 ------ 487 sq.m.

4. Lot No. 17, Block No. 4 ------ 263 sq.m.

5. Lot No. 1, Block No. 7 -------- 402 sq.m.

6. Road Lots Nos. 1, 2, 3 & 4 -- 22,747 sq.m.

Evidently, lot numbers 1 to 11, Block 2 to include plaintiff-intervenors lots were excluded from the mortgage. In fact,
in a letter dated October 1, 1956, defendant GSIS confirmed that portions of the subdivision such as lots Nos. 1 to 11,
Block 2 x x x have already been sold x x x. (Exh. B-1 Merced) The intent of the parties was clear to exclude from the
mortgage the properties claimed by plaintiff-intervenor, among others, where he introduced improvements since
1955. On October 26, 1972, the spouses Zulueta executed the corresponding deed of sale in favor of plaintiff-intervenor
(Exh. C).

The contention of defendant GSIS and defendants Victor and Milagros Manlongat that Lot Nos. 6, 7, 8 & 10 are not the
lots excluded from the mortgage by the spouses Zulueta to the GSIS cannot be given credence. Evidence reveal that
lots 6, 7, 8 and 10, Block 2, with a total area of 1,405 square meters of the Antonio Village Subdivision were excluded
from the September 25, 1956 mortgage contract executed by defendants in favor of GSIS. (Exh. C, C-1 Merced, 9-1-
95) Defendant GSIS in fact had admitted in its answer, the letter to plaintiff acknowledging that there has been no
problem with respect to Lot 8, Block 8 of the said property. Obviously, defendant recognized the ownership of intervenor
of the mentioned lots. It is further to be noted that plan Pcs-5889 was not yet in existence when the mortgage was
executed in 1956. Besides defendant GSIS had knowledge of the possession of intervenor. While the deed of sale
between the Zuluetas and plaintiff-intervenor was never registered nor annotated in the title and executed only after
one (1) year, defendant GSIS had knowledge of the possession of intervenor of the lots; that defendant GSIS was not
acting in good faith when it accepted the mortgage of the questioned lots. Plaintiff-intervenor in 1957 built a house and
introduced improvement and built a house of strong structure on lots 6 & 7 and with the other lots serving as backyard
and for 28 years had paid dues on the lots.[17]

Respondents appealed the decision to the Court of Appeals, where the same was docketed as CA-G.R. CV No.
55034. On May 21, 1999, the Court of Appeals reversed the decision of the trial court.Petitioners filed a Motion for
Reconsideration which was denied on October 4, 1999.

Hence, the instant petition for review, raising the following assignments of error:

FIRST ASSIGNMENT OF ERROR

THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN TOTALLY DISREGARDING THE ADMISSION
OF DEFENDANT GSIS THAT THE LOTS IN QUESTION WERE EXCLUDED FROM THE MORTGAGE

SECOND ASSIGNMENT OF ERROR

THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN NOT RULING THAT (A) PLAINTIFF HAS
BEEN IN POSSESSION OF THE SUBJECT LOTS SINCE 1955 CONTINUOUSLY UNTIL THE PRESENT AND (B) GSIS
HAD KNOWLEDGE OF PLAINTIFFS POSSESSION

THIRD ASSIGNMENT OF ERROR

THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN ITS FAILURE TO APPRECIATE THE
SIGNIFICANCE OF PLAINTIFFS CONTINUOUS OPEN AND ADVERSE POSSESSION IN THE CONCEPT OF OWNER FOR
28 YEARS AND THE ACTUAL KNOWLEDGE OF GSIS OF SUCH POSSESSION

FOURTH ASSIGNMENT OF ERROR

THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN RULING THAT NO JUDGMENT CAN BE
RENDERED AGAINST THE SPOUSES MANLONGAT WITHOUT VIOLATING THEIR RIGHT TO DUE PROCESS OF LAW [18]

In essence, petitioners allege that the foreclosure sale was null and void because the mortgage executed by the
parties, insofar as the properties previously sold to petitioners were concerned, was also void from the
beginning. Petitioners had been in continuous and open possession thereof before and during the time of the mortgage,
more specifically, since 1955 continuously up to the present, and GSIS had knowledge thereof. Furthermore, respondent
GSIS admitted that the lots in questions were excluded from the mortgage. Finally, under Presidential Decree No. 957,
also known as The Subdivision and Condominium Buyers Protective Decree, petitioners are entitled to the issuance of
their corresponding title over the lots after having completed their payments to the subdivision owner.[19]

Petitioners aver that when the Zuluetas mortgaged their properties to GSIS on October 15, 1957, they were no
longer the owners of the lots subject of this litigation, the same having been sold to Francisco dela Merced by virtue of
the contract to sell executed on September 3, 1957. Hence, the mortgage was void from its inception and GSIS, as
mortgagee, acquired no better right notwithstanding the registration of the mortgage. Petitioners also argued that GSIS
was a mortgagee in bad faith as it had been negligent in ascertaining and investigating the condition of the subject lots
mortgaged to it as well as the rights of petitioners who were already in possession thereof at the time of
mortgage. Furthermore, petitioners cite the judicial admission of respondent GSIS in its answer before the trial court,
wherein it recognized the rights of ownership of Francisco dela Merced over Lot 8, Block 8 and of Eva Mendoza dela
Merced over Lot 10, Block 2 of TCT 26105.

Respondent GSIS countered that it cannot be legally presumed to have acknowledged petitioners rights over Lot
8, Block 8 of TCT 26105. With regard to the possession of petitioners, respondent GSIS invoked the ruling of the Court
of Appeals that the mere possession of petitioner cannot stand against the registered titles of GSIS and its buyers,
Elizabeth and Ma. Therese Manlongat. Moreover, Lot 6, Block 2 (formerly Block 4) of the Antonio Village Subdivision
was acquired by Elizabeth Manlongat in a public bidding, as a consequence of which TCT No. PT-94007 was issued to
her. Respondent GSIS also maintained that the lots being claimed by petitioners were included in the real estate
mortgage executed by the Zuluetas in favor of GSIS; and that the inclusion of the subject lots in the mortgage was
confirmed by Manuel Ibabao, an employee of the Acquired Assets Department of GSIS.

For their part, respondent spouses Manlongat alleged that since Francisco dela Merced never registered the contract
to sell and deed of absolute sale with the Register of Deeds, the same cannot affect the rights of third persons such as
their daughter, Elizabeth Manlongat, who dealt in good faith with GSIS as the prior registered owner.

The petition is impressed with merit.

Petitioners rights of ownership over the properties in dispute, albeit unregistered, are superior to the registered
mortgage rights of GSIS over the same. The execution and validity of the contract to sell dated September 3, 1957
executed by the Zulueta spouses, as the former subdivision owner, in favor of Francisco dela Merced, are beyond
cavil. There is also no dispute that the contract to sell was entered into by the parties before the third mortgage was
constituted on October 15, 1957 by the Zuluetas in favor of GSIS on the property covered by TCT No. 26105, which
included the subject lots. Francisco dela Merced was able to fully pay the purchase price to the vendor, who later
executed a deed of absolute sale in his favor. However, the Zuluetas defaulted on their loans; hence, the mortgage was
foreclosed and the properties were sold at public auction to GSIS as the highest bidder.

In the case of State Investment House, Inc. v. Court of Appeals,[20] it was held that:

STATEs registered mortgage right over the property is inferior to that of respondents-spouses unregistered right. The
unrecorded sale between respondents-spouses and SOLID is preferred for the reason that if the original owner (SOLID,
in this case) had parted with his ownership of the thing sold then he no longer had ownership and free disposal of that
thing so as to be able to mortgage it again. Registration of the mortgage is of no moment since it is understood to be
without prejudice to the better right of third parties.

In the same vein, therefore, the registered right of GSIS as mortgagee of the property is inferior to the unregistered
right of Francisco dela Merced. The unrecorded sale between Francisco dela Merced as the vendee of the property and
the Zuluetas, the original owners, is preferred for the same reason stated above.

Respondents cannot even assert that as mortgagee of land registered under the Torrens system, GSIS was not
required to do more than rely upon the certificate of title. 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.[21]

In the case at bar, GSIS is admittedly a financing institution. In its answer to the complaint filed with the trial court,
GSIS admitted knowledge that the spouses Jose C. Zulueta and Soledad B. Ramos owned the Antonio Subdivision when
they mortgaged the same with GSIS. In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court,[22] we
held that when the purchaser or mortgagee is a financing institution, the general rule that a purchaser or mortgagee of
land is not required to look further than what appears on the face of the title does not apply. Further:

Nevertheless, we have to deviate from the general rule because of the failure of petitioner in this case to take the
necessary precautions to ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the
property they sought to mortgage. The petitioner is an investment and financing corporation. We presume it is
experienced in its business. Ascertainment of the status and condition of properties offered to it as security for the loans
it extends must be a standard and indispensable part of its operations. Surely it cannot simply rely on an examination
of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the
document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might
be an interior lot without convenient access. These and other similar factors determine the value of the property and so
should be of practical concern to the petitioner.[23]

There is nothing in the records of this case to indicate that an ocular inspection report was conducted by GSIS, or
whether it investigated, examined and assessed the subdivision lots when they were offered as security for the loans
by the original owners. The only inventory made by GSIS based on its documentary evidence was prepared by its
officers employed with the Acquired Assets Department, but that was after the foreclosure sale was already conducted
and not before the mortgage was constituted over the property. The constructive knowledge of GSIS of the defect in
the title of the subject property, or lack of such knowledge due to its negligence, takes the place of registration of the
rights of petitioners.

Likewise, in Philippine National Bank v. Office of the President,[24]24 we held that ---

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 ascertained (whether thru ocular inspection or other modes of investigation) the
actual status, condition, utilization and occupancy of the property offered as collateral. It could not have been unaware
that the property had been built on by small lot buyers. On the other hand, private respondents obviously were
powerless to discover the 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. 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. 957 termed unscrupulous
subdivision and condominium sellers.[25]

In the case at bar, GSIS admitted in its answer that it received a letter from Francisco dela Merced on August 27,
1981, stating that he had acquired the subject lots by virtue of a deed of absolute sale executed in his favor by the
Zulueta spouses.[26] GSIS also admitted the fact that on October 17, 1980, its Deputy General Counsel wrote Francisco
dela Merced stating that his claim of ownership over Block 8, Lot 8, of TCT No. 26105 had no problem; but his claim to
Lots 6, 7, 10 and 11 of Block 2, of the same title, was not very clear.[27] Clearly, therefore, GSIS had full knowledge of
the claim of ownership of dela Merced over the aforementioned lots even before their sale at public auction to Elizabeth
Manlongat.

Coming now to the last issue --- whether Elizabeth Manlongat, as purchaser of Lot 6, Block 2 at an auction sale
conducted by GSIS, had a better right than petitioners --- we must rule in the negative. It should be borne in mind that
the title of Manlongat was derived through sale or transfer from GSIS, whose acquisition over the property proceeded
from a foreclosure sale that was null and void. Nemo potest plus juris ad alium transferre quam ipse habet. No one can
transfer a greater right to another than he himself has.[28] In other words, the subsequent certificates of title of GSIS
and of Manlongat over the property are both void, because of the legal truism that the spring cannot rise higher than
the source.

Further, Manlongat cannot claim that she was a purchaser in good faith. The records categorically reflect that
neither Manlongat nor her predecessor-in-interest, GSIS, possessed the property prior to or after the former bought the
same at an auction sale. In fact, at the time the lots were sold to Manlongat, petitioners were not only in actual
possession thereof, but their father, Francisco dela Merced, had already built a house thereon. Again, a cautious and
prudent purchaser would usually make an ocular inspection of the premises, this being standard practice in the real
estate industry. Should such prospective buyer find out that the land she intends to buy is being occupied by anybody
other than the seller, who, in this case, was not in actual possession, it would then be incumbent upon her to verify the
extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary steps would
mean negligence on her part and would thereby preclude her from claiming or invoking the rights of a purchaser in good
faith.

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 Cases 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 CANCEL all
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.

20. EGAO V. CA, G.R. NO. L-79787 JUNE 29, 1989


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.

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 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 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.

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 afterthe
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

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 initio under
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.

21. FULE V. LEGARE, G.R. NO. L-17951. FEBRUARY 28, 1963

G.R. No. L-17951 February 28, 1963


CONRADO C. FULE and LOURDES F. ARAGON, petitioners,
vs.
EMILIA E. DE LEGARE and COURT OF APPEALS, respondents.
REGALA, J.:

This is a petition for certiorari to review the decision of the Court of Appeals, promulgated on November 16, 1960, in
Civil Case No. 15728-R, entitled" Emilia E. Legare, plaintiff-appellant, versus Conrado C. Fule and Lourdes F. Aragon,
defendants-appellants..

The facts of this case as found by the Court of Appeals in its decision are as follows:

This is an action for annulment of certain deeds of sale and conveyance covering a parcel of land, together with
the improvements existing thereon, situated in the municipality of San Juan, province of Rizal, and for damages.

It appears in evidence that the plaintiff, Emilia E. de Legare, was the owner of a parcel of land, together with a
residential house erected thereon, situated at No. 146 Sta. Mesa Boulevard Extension, San Juan, Rizal, her
ownership being evidenced by Transfer Certificate of Title No. 21253, issued by the Office of the Register of
Deeds of the province of Rizal. She was living in that house together with defendant John W. Legare, her adopted
son, and a maid named Purita Tarrosa. On September 26, 1951, the plaintiff, thru a public deed, constituted on
the above mentioned house and lot a first class mortgage in favor of defendant Tomas Q. Soriano to guarantee
the payment of a loan in the amount of P8,000.00. This deed of mortgage was on the same date recorded in
the Office of the Register of Deeds of the province of Rizal and annotated in the memorandum of encumbrances
of transfer certificate of title No. 21253. On account of certain partial payments made by the plaintiff and the
contracting by the latter of additional loans in small amounts from Tomas Q. Soriano the debt guaranteed by
the above mentioned mortgage was reduced to the sum of P7,000.00 as of February 23, 1953. These
transactions, however, were not annotated on the memorandum of encumbrances of the above mentioned
certificate of title.

At about 9:00 o'clock in the evening of March 29, 1953, while the plaintiff, John W. Legare, and Purita Tarrosa
were seated in the drawing room of the house above referred to, an unknown man intruded into the room,
approached the plaintiff, covered her mouth, and, pressing a knife on her side, demanded that she give him
P10,000.00 if she did not like to be killed. The plaintiff replied that she did not have that amount. Thereupon,
the intruder told the plaintiff to raise the necessary amount as he would come back the following morning and
once more threatened to kill her if she would fail to do so. After having made that threat, the intruder left the
house. John W. Legare did not call for help nor made any attempt to defend his mother, and when Purita Tarrosa
stood up to go down the house to call for a policeman, he held the latter by the hand and slapped her on the
face when she persisted in going down, telling her that the man had companions waiting downstairs.

After the intruder was gone John W. Legare approached the plaintiff, and exhibiting to her a paper told her to
sign it as with the same he could secure from the U.S. Veterans Administration the amount which they needed
to deliver to that intruder. The plaintiff, who did not know how to read nor write, although she could sign her
name, asked John W. Legare what that paper was. The latter answered that it was an application for payment
of compensation. As plaintiff had confidence in John W. Legare and prior to that occasion she had received from
the U.S. Veterans Administration a letter concerning some compensation she was to receive, she signed that
paper. After the paper was signed by the plaintiff, John W. Legare had Purita Tarrosa sign it as a witness, without
however, allowing the latter to read it.

After that paper was thus signed, John W. Legare told the plaintiff and Purita Tarrosa to pack up their things as
they were leaving the house to hide in a hotel, adding that the men who came earlier that evening were Huks.
Early the next morning John W. Legare took the plaintiff and Purita Tarrosa to the Windsor Hotel in the City of
Manila, and after conducting them to a room in the hotel, told them not to leave the room or peep out of the
window as they might be seen by the men who came to their house in the previous evening. This advise given,
John W. Legare left the hotel. The plaintiff and Purita Tarrosa stayed in that hotel for about a month and a half.
John W. Legare occasionally visited them there. In one of said occasional visits the plaintiff told John that she
wanted to go home. The latter told her that it was not yet safe for her to go home. On May 7, 1953, however,
John W. Legare came to the hotel, gave the plaintiff a five-peso bill, and told her that she could use the amount
for transportation expenses if she wanted to leave the hotel. On the following morning the plaintiff and Purita
Tarrosa left the hotel and went direct to her house at Sta. Mesa Boulevard Extension. When they arrived at the
house, however, they found that it was occupied by strangers, and that all her furniture and personal belongings
had disappeared. Inquiring from those strangers how they happened to occupy the house, the latter told her
that John W. Legare had sold the house to them and that it was no longer hers. The plaintiff thereupon sought
the help of her attorney. It was then discovered that the paper which John W. Legare had the plaintiff and Purita
Tarrosa sign in the evening of March 29, 1953 was a deed of sale of the lot and house in question in favor of
John W. Legare for the sum of P12,000.00, and that it was supposed to have been executed on the 7th day of
April, 1953, and acknowledged before a notary public on that date. Exhibit X.

It further appears that sometime prior to May 9, 1953, John W. Legare approached Elias B. Fermin, the real
estate broker who intervened in the securing of the loan contracted by the plaintiff from Tomas Q. Soriano, and
sought said broker's help to sell the lot and house in question. Elias B. Fermin accepted the commission and
offered the property in sale to defendants spouses Conrado C. Fule and Lourdes F. Aragon. Conrado C. Fule read
the title papers in the hand of John W. Legare and inspected the premises, and satisfied with the result of his
inspection, he agreed to purchase the property for P12,000.00 on condition that the sum of P7,000, the unpaid
balance of plaintiff's indebtedness to Tomas Q. Soriano secured by a mortgage thereon, would be deducted from
the price, and that he would assume said mortgage. The terms offered by Conrado C. Fule being acceptable to
John W. Legare and Tomas Soriano, the parties proceeded to formalize the contract. Accordingly, on May 9,
1953, defendant Tomas Q. Soriano executed a deed of absolute sale thereof, free of all liens and encumbrances,
in favor of defendant spouses Conrado C. Fule and Lourdes F. Aragon, Exhibit X-2, and said spouses in turn
executed in favor of Tomas Q. Soriano a deed of mortgage covering the property for the sum of P7,000.00.
Exhibit X-3. These three deeds, together with transfer certificate of Title No. 21253, issued in the name of the
plaintiff, were on that same date presented for registration in the Office of the Register of Deeds of the province
of Rizal. The latter, following the usual procedure, recorded, first, the deed of sale executed by the plaintiff in
favor of defendant John W. Legare (Exhibit 1) and issued in the name of the latter transfer certificate of title
No. 30126 which cancelled transfer certificate of title No. 21253 (Exhibit Y), then the deed of sale executed by
John W. Legare in favor of the spouses Conrado C. Fule and Lourdes F. Aragon (Exhibit X-2) and issued in favor
of the latter transfer certificate of title No. 30127 (Exhibit Y-1), which cancelled transfer certificate of title No.
30126, and then annotated on the memorandum of encumbrances of transfer certificate of title No. 30127 the
deed of mortgage (Exhibit X-1) executed in favor of Tomas Q. Soriano by said spouses. Once these were
accomplished, Elias B. Fermin and John W. Legare went back to the house of the spouses Conrado C. Fule and
Lourdes P. Aragon and gave the transfer certificate of title No. 30127. Thereupon said spouses delivered to John
W. Legare the balance of the purchase price of the property after deducting therefrom the amount of the
mortgage constituted thereon in favor of Tomas Q. Soriano, the brokerage fees and the expenses incident to
the execution and registration of said deeds and issuance of new certificates of title, which amounted to a little
P4,000.00.

Upon the evidence, the trial court rendered judgment, the dispositive part of which reads as follows:

IN VIEW OF ALL THE FOREGOING, this Court hereby orders:

1) the cancellation of Certificates of Title Nos. 30127 and 10126, thereby leaving valid TCT No. 21253 in the
name of Emilia E. de Legare together with the encumbrance thereon in favor of Tomas Q. Soriano;

2) the delivery of the possession of the premises to the plaintiff and the monthly rental of P150.00 a month
from May 9, 1953, up to and including the date on which the delivery is to be made, this obligation being
understood to be joint and several insofar as the defendants Fule and Aragon are concerned;

3) the award of P5,000.00 as moral damages in favor of the plaintiff and enforceable against John W. Legare
for the fraud perpetrated by the latter on the former;

4) the award of P1,000.00 as attorney's is fees enforceable against the defendants Fule and Aragon;

And on the cross-claim, the court orders

1) John W. Legare to refund to the spouses Fule and Aragon the amount paid by the latter on account of the
sale contained in Exhibit X-2 plus interest thereon at the legal rate from the date of the cross-claim;

2) the award of P5,000.00 as moral damages in favor of the spouses Fule and Aragon and enforceable against
John W. Legare for the misrepresentation made by him;.

3) the reimbursement to the spouses Fule and Aragon by John W. Legare of all amounts which may be paid by
the former to the plaintiff by way of rentals for the premises involved herein, as well as attorney's fees in the
amount of P1,000.00.

SO ORDERED.

The Court of Appeals, in deciding the appeal, entered a judgment the dispositive portion of which follows:.

WHEREFORE, modified as indicated above, i.e., the transfer certificate of title No. 21253 issued in the name of
Emilia E. de Legare is revived with the mortgage in favor of appellee Tomas Q. Soriano annotated on its
memorandum of encumbrances but reduced to the amount of P7,000.00, and that the award of attorney's fees
in the amount of P1,000.00 to be paid by the spouses Conrado C. Fule and Lourdes F. Aragon, in favor of the
plaintiff, is eliminated therefrom, the judgment appealed from is hereby affirmed in all other respects, without
special pronouncement as to costs in this instance.

IT IS SO ORDERED.

In elevating the judgment of the Court of Appeals to this Tribunal for review, herein petitioners discussed 6 assignments
of error. However, this Court is of the view that, in effect and substance, only one issue was raised.We have always
refrained from reviewing factual findings of the Court of Appeals and the first two errors assigned were but attempts at
disputing the same. The other four were simply detailed aspects of the one, sole issue, to wit:

Were the herein petitioners purchasers in good faith and for value of the properties here contested?

Guided by the facts found by the Court of Appeals, We hold the herein petitioners innocent purchasers for value of the
house and lot here disputed. In consequence, they are here adjudged the lawful owners thereof.

A purchaser in good faith is one who buys property of another, without notice that some other persons 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. Good faith consists in an honest intention to
abstain from taking any unconscientious advantage of another (Cui and Joven v. Henson, 51 Phil. 606). We have
measured the conduct of the petitioner spouses by this yardstick.
These facts were uncontroverted. The negotiation and transaction which eventually caused the certificate of title to be
transferred from the herein respondent to the petitioner spouses were conducted by a real estate broker licensed since
1938. Nothing in John W. Legare's person or behaviour suggested anything suspicious. He was the adopted son of the
herein respondent, and, to the time that he was contracting with the petitioner spouses, he had not been known to
commit crime or dishonesty. On the contrary, John has had previous dealings with the real estate broker during which
he exhibited the expected degree of trustworthiness.

It should be noted that the deed of sale was regular upon its face, and no one would have questioned its authenticity
since it was duly acknowledged before a notary public. Moreover, even if the petitioners had the opportunity to compare
the signature of the respondent on the deed of conveyance with a specimen of her genuine signature, the effort,
nonetheless, would have been in vain since the respondent's signature on the document was admittedly hers. Lastly, it
should not be overlooked that the respondent, during the whole period of the negotiation, was nowhere available to
confirm or deny the execution of the deed. She was then in hiding, or, hidden, at the Windsor Hotel in Manila.

The diligence and precaution observed by the petitioners themselves could hardly have been wanting. The records show
that they did not rely solely and fully upon the deed of sale in favor of John W. Legare and the fact that John had then
in his possession the corresponding certificate of title of the registered owner. They demanded more. They insisted that
the sale in favor of John W. Legare be first registered and that the transfer in their favor be thereafter likewise registered.
It was only after all these were complied with that they paid the purchase price. In other words, the petitioner spouses
relied not really on the documents exhibited to them by John W. Legare, but, on the registerability of those documents.
This in Our view, satisfies the measure of good faith contemplated by law.

It is true that at the time the herein petitioners purchased the properties from John W. Legare, he was not yet the
registered owner of the same. This fact alone, however, could not have caused the herein petitioners to lose their status
as innocent purchasers for value. It should be recalled that although the title was in the name of the respondent Emilia
E. de Legare, the certificate of title was in the possession of her adopted son, John. Under Section 55 of Act 496, as
amended, John's possession of the certificate and his subsequent production of it to the herein petitioners operated as
a "conclusive authority from the registered owner to the register of deeds to enter a new certificate."

SEC. 55. xxx xxx xxx

The production of the owner's duplicate certificate whenever any voluntary instrument is presented for
registration shall be conclusive authority from the registered owner to the register of deeds to enter a new
certificate or to make a memorandum or registration in accordance with such instrument, and the new certificate
or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor
of every purchaser for value and in good faith. ....

While it was true that the transfer in favor of John was still unregistered when he sought to sell the property to the
herein petitioners, it was not true that the latter observed no precaution whatsoever from the complication of such non-
registration. As already discussed above, the petitioners required that the registration of the previous sale (from the
respondent to John W. Legare) be first attended to and completed. After that was done and the certificate of title thereof
was issued to John by the Register of Deeds, they still withheld payment till the second sale (from John to the petitioners)
has in turn registered and the corresponding certificate of title therefor was issued in their names. It was only after all
these were followed that the entire negotiation was terminated with the payment of the balance of the purchase price.
All these, We hold, were adequate safeguards against the objection interposed. A contrary conclusion would operate to
weaken the reliance of the general public on the indefeasibility of titles registered under the Torrens System.

We have so far demonstrated the good faith of the petitioner spouses. By the very facts established by the Court of
Appeals, however, there is still another reason why the property herein in question should be adjudged to the petitioners.

Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was able to secure a
registered title to the house and lot. It was this title which he subsequently conveyed to the herein petitioners. We have
indeed ruled that a forged or fraudulent deed is a nullity and conveys no title (Director of Lands v. Addison, 49 Phil. 19).
However, We have also laid down the doctrine that there are instances when such a fraudulent document may become
the root of valid title. One such instance is where the certificate of title was already transferred from the name of the
true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For
then, the vendee had the right to rely upon what appeared in the certificate (Inquimboy vs. Cruz, G.R. No. L-13953,
July 28, 1960).

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

We have been constrained to adopt the conclusion here set forth because under the Torrens system, "registration is the
operative act that gives validity to the transfer or creates a lien upon the land (Secs. 50 and 51, Land Registration Act).
Consequently, where there was nothing in the certificate of title to indicate any cloud or vice in the ownership of the
property, or any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title upon
its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. If the
rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens system seeks to insure
would entirely be futile and nugatory. (Reynes vs. Barrera, 68 Phil. 656; De Lara and De Guzman vs. Ayroso, 50 O.G.
No. 10, 4838). The public shall then be denied of its foremost motivation for respecting and observing the Land
Registration Act. In the end, the business community stands to be inconvenienced and prejudiced immeasurably.

Furthermore, when the Register of Deeds issued a certificate of title in the name of John W. Legare, and thereafter
registered the same, John W. Legare, insofar as third parties were concerned, acquired a valid title to the house and lot
here disputed. When, therefore, he transferred this title to the herein petitioners, third persons, the entire transaction
fell within the purview of Article 1434 of the Civil Code. The registration in John W. Legare's name effectively operated
to convey the properties to him.

ART. 1434. When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller
or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee.

This Court sympathizes with the respondent. It is aware of the treacherous, painful fraud committed on her by her
adopted son. But positive provisions of law and settled jurisprudence cannot be subordinated to that feeling.

Besides, the records of this case reveal that the herein respondent is herself not entirely free from blame. We note that
when John presented to her the document which turned out to be a bed of conveyance in his favor, she readily affixed
her signature thereto upon the simple representation of John that it was a document pertaining to her claim with the
U.S. Veterans Administration. She could have asked her maid to read the contents of the same for her and yet she did
not. These, We believe, amount to a lack of prudence and precaution on the part of Mrs. Emilia de Legare.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby reversed and set aside. A new one is here
entered dismissing the respondent's complaint and declaring the petitioners herein the lawful owners of the properties
here involved. Without pronouncement as to costs.

22. POWER COMMERCIAL AND INDUSTRIAL CORP. V. CA, G.R. NO.


119745. JUNE 20, 1997

[G.R. No. 119745. June 20, 1997]


POWER COMMERCIAL AND INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS, SPOUSES
REYNALDO and ANGELITA R. QUIAMBAO and PHILIPPINE NATIONAL BANK, respondents.
DECISION

PANGANIBAN, J.:

Is the sellers failure to eject the lessees from a lot that is the subject of a contract of sale with assumption of
mortgage a ground (1) for rescission of such contract and (2) for a return by the mortgagee of the amortization
payments made by the buyer who assumed such mortgage?

Petitioner posits an affirmative answer to such question in this petition for review on certiorari of the March 27,
1995 Decision[1] of the Court of Appeals, Eighth Division, in CA-G.R. CV Case No. 32298 upholding the validity of the
contract of sale with assumption of mortgage and absolving the mortgagee from the liability of returning the mortgage
payments already made.[2]

The Facts

Petitioner Power Commercial & Industrial Development Corporation, an industrial asbestos manufacturer, needed
a bigger office space and warehouse for its products. For this purpose, on January 31, 1979, it entered into a contract
of sale with the spouses Reynaldo and Angelita R. Quiambao, herein private respondents. The contract involved a 612-
sq. m. parcel of land covered by Transfer Certificate of Title No. S-6686 located at the corner of Bagtican and St. Paul
Streets, San Antonio Village, Makati City. The parties agreed that petitioner would pay private respondents P108,000.00
as down payment, and the balance of P295,000.00 upon the execution of the deed of transfer of the title over the
property. Further, petitioner assumed, as part of the purchase price, the existing mortgage on the land. In full
satisfaction thereof, he paid P79,145.77 to Respondent Philippine National Bank (PNB for brevity).

On June 1, 1979, respondent spouses mortgaged again said land to PNB to guarantee a loan
of P145,000.00, P80,000.00 of which was paid to respondent spouses. Petitioner agreed to assume payment of the
loan.

On June 26, 1979, the parties executed a Deed of Absolute Sale With Assumption of Mortgage which contained the
following terms and conditions:[3]

That for and in consideration of the sum of Two Hundred Ninety-Five Thousand Pesos (P295,000.00) Philippine Currency,
to us in hand paid in cash, and which we hereby acknowledge to be payment in full and received to our entire satisfaction,
by POWER COMMERCIAL AND INDUSTRIAL DEVELOPMENT CORPORATION, a 100% Filipino Corporation, organized and
existing under and by virtue of Philippine Laws with offices located at 252-C Vito Cruz Extension, we hereby by these
presents SELL, TRANSFER and CONVEY by way of absolute sale the above described property with all the improvements
existing thereon unto the said Power Commercial and Industrial Development Corporation, its successors and assigns,
free from all liens and encumbrances.

We hereby certify that the aforesaid property is not subject to nor covered by the provisions of the Land Reform Code
-- the same having no agricultural lessee and/or tenant.

We hereby also warrant that we are the lawful and absolute owners of the above described property, free from any lien
and/or encumbrance, and we hereby agree and warrant to defend its title and peaceful possession thereof in favor of
the said Power Commercial and Industrial Development Corporation, its successors and assigns, against any claims
whatsoever of any and all third persons; subject, however, to the provisions hereunder provided to wit:
That the above described property is mortgaged to the Philippine National Bank, Cubao, Branch, Quezon City for the
amount of one hundred forty-five thousand pesos, Philippine, evidenced by document No. 163, found on page No. 34
of Book No. XV, Series of 1979 of Notary Public Herita L. Altamirano registered with the Register of Deeds of Pasig
(Makati), Rizal xxx;

That the said Power Commercial and Industrial Development Corporation assumes to pay in full the entire amount of
the said mortgage above described plus interest and bank charges, to the said mortgagee bank, thus holding the herein
vendor free from all claims by the said bank;

That both parties herein agree to seek and secure the agreement and approval of the said Philippine National Bank to
the herein sale of this property, hereby agreeing to abide by any and all requirements of the said bank, agreeing that
failure to do so shall give to the bank first lieu (sic) over the herein described property.

On the same date, Mrs. C.D. Constantino, then General Manager of petitioner-corporation, submitted to PNB said
deed with a formal application for assumption of mortgage.[4]

On February 15, 1980, PNB informed respondent spouses that, for petitioners failure to submit the papers necessary
for approval pursuant to the formers letter dated January 15, 1980, the application for assumption of mortgage was
considered withdrawn; that the outstanding balance of P145,000.00 was deemed fully due and demandable; and that
said loan was to be paid in full within fifteen (15) days from notice.[5]

Petitioner paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December 23, 1980, payments which were
to be applied to the outstanding loan. On December 23, 1980, PNB received a letter from petitioner which reads: [6]

With regard to the presence of the people who are currently in physical occupancy of the (l)ot xxx it is our desire as
buyers and new owners of this lot to make use of this lot for our own purpose, which is why it is our desire and intention
that all the people who are currently physically present and in occupation of said lot should be removed immediately.

For this purpose we respectfully request that xxx our assumption of mortgage be given favorable consideration, and
that the mortgage and title be transferred to our name so that we may undertake the necessary procedures to make
use of this lot ourselves.

It was our understanding that this lot was free and clear of problems of this nature, and that the previous owner would
be responsible for the removal of the people who were there. Inasmuch as the previous owner has not been able to
keep his commitment, it will be necessary for us to take legal possession of this lot inorder (sic) to take physical
possession.

On February 19, 1982, PNB sent petitioner a letter as follows:[7]

(T)his refers to the loan granted to Mr. Reynaldo Quiambao which was assumed by you on June 4, 1979
for P101,500.00. It was last renewed on December 24, 1980 to mature on June 4, 1981.

A review of our records show that it has been past due from last maturity with interest arrearages amounting
to P25,826.08 as of February 19, 1982. The last payment received by us was on December 24, 1980 for P20,283.14. In
order to place your account in current form, we request you to remit payments to cover interest, charges, and at least
part of the principal.

On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for rescission and damages
before the Regional Trial Court of Pasig, Branch 159. Then, in its reply to PNBs letter of February 19, 1982, petitioner
demanded the return of the payments it made on the ground that its assumption of mortgage was never approved. On
May 31, 1983,[8]while this case was pending, the mortgage was foreclosed. The property was subsequently bought by
PNB during the public auction. Thus, an amended complaint was filed impleading PNB as party defendant.

On July 12, 1990, the trial court[9] ruled that the failure of respondent spouses to deliver actual possession to
petitioner entitled the latter to rescind the sale, and in view of such failure and of the denial of the latters assumption
of mortgage, PNB was obliged to return the payments made by the latter. The dispositive portion of said decision
states:[10]

IN VIEW OF ALL THE FOREGOING, the Court hereby renders judgment in favor of plaintiff and against defendants:

(1) Declaring the rescission of the Deed of Sale with Assumption of Mortgage executed between plaintiff and defendants
Spouses Quiambao, dated June 26, 1979;

(2) Ordering defendants Spouses Quiambao to return to plaintiff the amount of P187,144.77 (P108,000.00
plus P79,145.77) with legal interest of 12% per annum from date of filing of herein complaint, that is, March 17, 1982
until the same is fully paid;

(3) Ordering defendant PNB to return to plaintiff the amount of P62,163.59 (P41,880.45 and P20,283.14) with 12%
interest thereon from date of herein judgment until the same is fully paid.

No award of other damages and attorneys fees, the same not being warranted under the facts and circumstances of the
case.

The counterclaim of both defendants spouses Quiambao and PNB are dismissed for lack of merit.
No pronouncement as to costs.

SO ORDERED.

On appeal by respondent-spouses and PNB, Respondent Court of Appeals reversed the trial court. In the assailed
Decision, it held that the deed of sale between respondent spouses and petitioner did not obligate the former to eject
the lessees from the land in question as a condition of the sale, nor was the occupation thereof by said lessees a violation
of the warranty against eviction. Hence, there was no substantial breach to justify the rescission of said contract or the
return of the payments made. The dispositive portion of said Decision reads:[11]

WHEREFORE, the Decision appealed from is hereby REVERSED and the complaint filed by Power Commercial and
Industrial Development Corporation against the spouses Reynaldo and Angelita Quiambao and the Philippine National
Bank is DISMISSED. No costs.

Hence, the recourse to this Court .

Issues

Petitioner contends that: (1) there was a substantial breach of the contract between the parties warranting
rescission; and (2) there was a mistake in payment made by petitioner, obligating PNB to return such payments. In its
Memorandum, it specifically assigns the following errors of law on the part of Respondent Court: [12]

A. Respondent Court of Appeals gravely erred in failing to consider in its decision that a breach of implied warranty
under Article 1547 in relation to Article 1545 of the Civil Code applies in the case-at-bar.

B. Respondent Court of Appeals gravely erred in failing to consider in its decision that a mistake in payment giving
rise to a situation where the principle of solutio indebiti applies is obtaining in the case-at-bar.

The Courts Ruling

The petition is devoid of merit. It fails to appreciate the difference between a condition and a warranty and the
consequences of such distinction.

Conspicuous Absence of an Imposed Condition

The alleged failure of respondent spouses to eject the lessees from the lot in question and to deliver actual and
physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such failure
was not stipulated as a condition -- whether resolutory or suspensive -- in the contract; and second, its effects and
consequences were not specified either.[13]

The provision adverted to by petitioner does not impose a condition or an obligation to eject the lessees from the
lot. The deed of sale provides in part:[14]

We hereby also warrant that we are the lawful and absolute owners of the above described property, free from any lien
and/or encumbrance, and we hereby agree and warrant to defend its title and peaceful possession thereof in favor of
the said Power Commercial and Industrial Development Corporation, its successors and assigns, against any claims
whatsoever of any and all third persons; subject, however, to the provisions hereunder provided to wit:

By his own admission, Anthony Powers, General Manager of petitioner-corporation, did not ask the corporations
lawyers to stipulate in the contract that Respondent Reynaldo was guaranteeing the ejectment of the occupants, because
there was already a proviso in said deed of sale that the sellers were guaranteeing the peaceful possession by the buyer
of the land in question.[15] Any obscurity in a contract, if the above-quoted provision can be so described, must be
construed against the party who caused it.[16] Petitioner itself caused the obscurity because it omitted this alleged
condition when its lawyer drafted said contract.

If the parties intended to impose on respondent spouses the obligation to eject the tenants from the lot sold, it
should have included in the contract a provision similar to that referred to in Romero vs. Court of Appeals,[17] where the
ejectment of the occupants of the lot sold by private respondent was the operative act which set into motion the period
of petitioners compliance with his own obligation, i.e., to pay the balance of the purchase price. Failure to remove the
squatters within the stipulated period gave the other party the right to either refuse to proceed with the agreement or
to waive that condition of ejectment in consonance with Article 1545 of the Civil Code. In the case cited, the contract
specifically stipulated that the ejectment was a condition to be fulfilled; otherwise, the obligation to pay the balance
would not arise. This is not so in the case at bar.

Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so. In Ang vs. C.A.,[18] rescission was
sought on the ground that the petitioners had failed to fulfill their obligation to remove and clear the lot sold, the
performance of which would have given rise to the payment of the consideration by private respondent. Rescission was
not allowed, however, because the breach was not substantial and fundamental to the fulfillment by the petitioners of
the obligation to sell.

As stated, the provision adverted to in the contract pertains to the usual warranty against eviction, and not to a
condition that was not met. The terms of the contract are so clear as to leave no room for any other interpretation.[19]

Futhermore, petitioner was well aware of the presence of the tenants at the time it entered into the sales
transaction. As testified to by Reynaldo,[20] petitioners counsel during the sales negotiation even undertook the job of
ejecting the squatters. In fact, petitioner actually filed suit to eject the occupants. Finally, petitioner in its letter to PNB
of December 23, 1980 admitted that it was the buyer(s) and new owner(s) of this lot.

Effective Symbolic Delivery

The Court disagrees with petitioners allegation that the respondent spouses failed to deliver the lot sold. Petitioner
asserts that the legal fiction of symbolic delivery yielded to the truth that, at the execution of the deed of sale, transfer
of possession of said lot was impossible due to the presence of occupants on the lot sold. We find this misleading.

Although most authorities consider transfer of ownership as the primary purpose of sale, delivery remains an
indispensable requisite as our law does not admit the doctrine of transfer of property by mere consent. [21] The Civil
Code provides that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic
delivery (Article 1498), as a species of constructive delivery, effects the transfer of ownership through the execution of
a public document. Its efficacy can, however, be prevented if the vendor does not possess control over the thing
sold,[22] in which case this legal fiction must yield to reality.

The key word is control, not possession, of the land as petitioner would like us to believe. The Court has consistently
held that:[23]

x x x (I)n order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have
had such control over the thing sold that xxx its material delivery could have been made. It is not enough to confer
upon the purchaser the ownership and the right of possession. The thing sold must be placed in his control. When there
is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the
vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the execution
of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it
himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of
another will, then fiction yields to reality -- the delivery has not been effected.

Considering that the deed of sale between the parties did not stipulate or infer otherwise, delivery was effected
through the execution of said deed. The lot sold had been placed under the control of petitioner; thus, the filing of the
ejectment suit was subsequently done. It signified that its new owner intended to obtain for itself and to terminate said
occupants actual possession thereof. Prior physical delivery or possession is not legally required and the execution of
the deed of sale is deemed equivalent to delivery.[24] This deed operates as a formal or symbolic delivery of the property
sold and authorizes the buyer to use the document as proof of ownership. Nothing more is required.

Requisites of Breach of Warranty Against Eviction

Obvious to us in the ambivalent stance of petitioner is its failure to establish any breach of the warranty against
eviction. Despite its protestation that its acquisition of the lot was to enable it to set up a warehouse for its asbestos
products and that failure to deliver actual possession thereof defeated this purpose, still no breach of warranty against
eviction can be appreciated because the facts of the case do not show that the requisites for such breach have been
satisfied. A breach of this warranty requires the concurrence of the following circumstances:

(1) The purchaser has been deprived of the whole or part of the thing sold;

(2) This eviction is by a final judgment;

(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and

(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.[25]

In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared.

Petitioner argues in its memorandum that it has not yet ejected the occupants of said lot, and not that it has been
evicted therefrom. As correctly pointed out by Respondent Court, the presence of lessees does not constitute an
encumbrance of the land,[26] nor does it deprive petitioner of its control thereof.

We note, however, that petitioners deprivation of ownership and control finally occurred when it failed and/or
discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public auction. But
this deprivation is due to petitioners fault, and not to any act attributable to the vendor-spouses.

Because petitioner failed to impugn its integrity, the contract is presumed, under the law, to be valid and subsisting.

Absence of Mistake In Payment


Contrary to the contention of petitioner that a return of the payments it made to PNB is warranted under Article
2154 of the Code, solutio indebiti does not apply in this case. This doctrine applies where: (1) a payment is made when
there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment,
and (2) the payment is made through mistake, and not through liberality or some other cause. [27]

In this case, petitioner was under obligation to pay the amortizations on the mortgage under the contract of sale
and the deed of real estate mortgage. Under the deed of sale (Exh. 2),[28] both parties agreed to abide by any and all
the requirements of PNB in connection with the real estate mortgage. Petitioner was aware that the deed of mortgage
(Exh. C) made it solidarily and, therefore, primarily[29] liable for the mortgage obligation:[30]

(e) The Mortgagor shall neither lease the mortgaged property xxx nor sell or dispose of the same in any manner, without
the written consent of the Mortgagee. However, if not withstanding this stipulation and during the existence of this
mortgage, the property herein mortgaged, or any portion thereof, is xxx sold, it shall be the obligation of the Mortgagor
to impose as a condition of the sale, alienation or encumbrance that the vendee, or the party in whose favor the
alienation or encumbrance is to be made, should take the property subject to the obligation of this mortgage in the
same terms and condition under which it is constituted, it being understood that the Mortgagor is not in any manner
relieved of his obligation to the Mortgagee under this mortgage by such sale, alienation or encumbrance; on the contrary
both the vendor and the vendee, or the party in whose favor the alienation or encumbrance is made shall be jointly and
severally liable for said mortgage obligations. xxx.

Therefore, it cannot be said that it did not have a duty to pay to PNB the amortization on the mortgage.

Also, petitioner insists that its payment of the amortization was a mistake because PNB disapproved its assumption
of mortgage after it failed to submit the necessary papers for the approval of such assumption.

But even if petitioner was a third party in regard to the mortgage of the land purchased, the payment of the loan
by petitioner was a condition clearly imposed by the contract of sale.This fact alone disproves petitioners insistence that
there was a mistake in payment. On the contrary, such payments were necessary to protect its interest as a the buyer(s)
and new owner(s) of the lot.

The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle that no one shall
enrich himself unjustly at the expense of another.[31] But as shown earlier, the payment of the mortgage was an
obligation petitioner assumed under the contract of sale. There is no unjust enrichment where the transaction, as in this
case, is quid pro quo,value for value.

All told, respondent Court did not commit any reversible error which would warrant the reversal of the assailed
Decision.

WHEREFORE, the petition is hereby DENIED, and the assailed Decision is AFFIRMED.

SO ORDERED.

23. REPUBLIC V. CA, G.R. NO. 100709. NOVEMBER 14, 1997


THIRD DIVISION
[G.R. No. 100709. November 14, 1997]
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner, vs. COURT OF
APPEALS, JOSEFINA L. MORATO, SPOUSES NENITA CO and ANTONIO QUILATAN AND THE
REGISTER OF DEEDS OF QUEZON PROVINCE, respondents.

DECISION

PANGANIBAN, J.:

Will the lease and/or mortgage of a portion of a realty acquired through free patent constitute sufficient ground for
the nullification of such land grant? Should such property revert to the State once it is invaded by the sea and thus
becomes foreshore land?

The Case

These are the two questions raised in the petition before us assailing the Court of Appeals [1] Decision in CA-G.R.
CV No. 02667 promulgated on June 13, 1991 which answered the said questions in the negative.[2] Respondent Courts
Decision dismissed[3] petitioners appeal and affirmed in toto the decision of the Regional Trial Court [4] of Calauag,
Quezon, dated December 28, 1983 in Civil Case No. C-608. In turn, the Regional Trial Courts decision dismissed
petitioners complaint for cancellation of the Torrens Certificate of Title of Respondent Morato and for reversion of the
parcel of land subject thereof to the public domain.

The Facts

The petition of the solicitor general, representing the Republic of the Philippines, recites the following facts: [5]

Sometime in December, 1972, respondent Morato filed a Free Patent Application No. III-3-8186-B on a parcel of land
with an area of 1,265 square meters situated at Pinagtalleran, Calauag, Quezon. On January 16, 1974, the patent was
approved and the Register of Deeds of Quezon at Lucena City issued on February 4, 1974 Original Certificate of Title
No. P-17789. Both the free patent and the title specifically mandate that the land shall not
be alienated nor encumbered within five (5) years from the date of the issuance of the patent (Sections 118 and 124 of
CA No. 141, as amended).

Subsequently, the District Land Officer in Lucena City, acting upon reports that respondent Morato had encumbered the
land in violation of the condition of the patent, conducted an investigation. Thereafter, it was established that the subject
land is a portion of the Calauag Bay, five (5) to six (6) feet deep under water during high tide and two (2) feet deep at
low tide, and not suitable to vegetation. Moreover, on October 24, 1974, a portion of the land was mortgaged by
respondent Morato to respondents Nenita Co and Antonio Quilatan for P10,000.00 (pp. 2, 25, Folder of Exhibits). The
spouses Quilatan constructed a house on the land. Another portion of the land was leased to Perfecto Advincula on
February 2, 1976 at P100.00 a month, where a warehouse was constructed.

On November 5, 1978, petitioner filed an amended complaint against respondents Morato, spouses Nenita Co and
Antonio Quilatan, and the Register of Deeds of Quezon for the cancellation of title and reversion of a parcel of land to
the public domain, subject of a free patent in favor of respondent Morato, on the grounds that the land is a foreshore
land and was mortgaged and leased within the five-year prohibitory period (p. 46, Records).

After trial, the lower court, on December 28, 1983, rendered a decision dismissing petitioners complaint. In finding for
private respondents, the lower court ruled that there was no violation of the 5-year period ban against alienating or
encumbering the land, because the land was merely leased and not alienated. It also found that the mortgage to Nenita
Co and Antonio Quilatan covered only the improvement and not the land itself.

On appeal, the Court of Appeals affirmed the decision of the trial court. Thereafter, the Republic of the Philippines
filed the present petition.[6]

The Issues

Petitioner alleges that the following errors were committed by Respondent Court: [7]

Respondent Court erred in holding that the patent granted and certificate of title issued to Respondent Morato cannot
be cancelled and annulled since the certificate of title becomes indefeasible after one year from the issuance of the title.

II

Respondent Court erred in holding that the questioned land is part of a disposable public land and not a foreshore land.

The Courts Ruling

The petition is meritorious.

First Issue: Indefeasibility of a Free Patent Title

In resolving the first issue against petitioner, Respondent Court held:[8]

x x x. As ruled in Heirs of Gregorio Tengco vs. Heirs of Jose Alivalas, 168 SCRA 198. x x. The rule is well-settled that an
original certificate of title issued on the strength of a homestead patent partakes of the nature of a certificate of title
issued in a judicial proceeding, as long as the land disposed of is really part of the disposable land of the public domain,
and becomes indefeasible and incontrovertible upon the expiration of one year from the date of promulgation of the
order of the Director of Lands for the issuance of the patent. (Republic v. Heirs of Carle, 105 Phil. 1227 (1959); Ingaran
v. Ramelo, 107 Phil. 498 (1960); Lopez v. Padilla, (G.R. No. L-27559, May 18, 1972, 45 SCRA 44). A homestead patent,
one registered under the Land Registration Act, becomes as indefeasible as a Torrens Title. (Pamintuan v.San Agustin,
43 Phil. 558 (1982); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v. Oliva, 113 Phil. 144 (1961); Pajomayo
v. Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA 676). (p. 203).

Again, in Lopez vs. Court of Appeals, 169 SCRA 271, citing Iglesia ni Cristo v. Hon. Judge, CFI of Nueva Ecija, Branch
I, (123 SCRA 516 (1983) and Pajomayo, et al. v. Manipon, et al. (39 SCRA 676 (1971) held that once a homestead
patent granted in accordance with the Public Land Act is registered pursuant to Section 122 of Act 496, the certificate
of title issued in virtue of said patent has the force and effect of a Torrens Title issued under the Land Registration Act.

Indefeasibility of the title, however, may not bar the State, thru the Solicitor General, from filing an action for reversion,
as ruled in Heirs of Gregorio Tengo v. Heirs of Jose Aliwalas, (supra), as follows:

But, as correctly pointed out by the respondent Court of Appeals, Dr. Aliwalas title to the property having become
incontrovertible, such may no longer be collaterally attacked. If indeed there had been any fraud or misrepresentation
in obtaining the title, an action for reversion instituted by the Solicitor General would be the proper remedy (Sec. 101,
C.A. No. 141; Director of Lands v. Jugado, G.R. No. L-14702, May 21, 1961, 2 SCRA 32; Lopez v. Padilla, supra). (p.
204).

Petitioner contends that the grant of Free Patent (IV-3) 275 and the subsequent issuance of Original Certificate of
Title No. P-17789 to Respondent Josefina L. Morato were subject to the conditions provided for in Commonwealth Act
(CA) No. 141. It alleges that on October 24, 1974, or nine (9) months and eight (8) days after the grant of the patent,
Respondent Morato, in violation of the terms of the patent, mortgaged a portion of the land to Respondent Nenita Co,
who thereafter constructed a house thereon. Likewise, on February 2, 1976 and within the five-year prohibitory period,
Respondent Morato leased a portion of the land to Perfecto Advincula at a monthly rent of P100.00 who, shortly
thereafter, constructed a house of concrete materials on the subject land. [9] Further, petitioner argues that the defense
of indefeasibility of title is inaccurate. The original certificate of title issued to Respondent Morato contains the seeds of
its own cancellation: such certificate specifically states on its face that it is subject to the provisions of Sections 118,
119, 121, 122, 124 of CA No. 141, as amended.[10]

Respondent Morato counters by stating that although a portion of the land was previously leased, it resulted from
the fact that Perfecto Advincula built a warehouse in the subject land without [her] prior consent. The mortgage executed
over the improvement cannot be considered a violation of the said grant since it can never affect the ownership. [11] She
states further:

x x x. the appeal of the petitioner was dismissed not because of the principle of indefeasibility of title but mainly due to
failure of the latter to support and prove the alleged violations of respondent Morato.The records of this case will readily
show that although petitioner was able to establish that Morato committed some acts during the prohibitory period of 5
years, a perusal thereof will also show that what petitioner was able to prove never constituted a violation of the
grant.[12]

Respondent-Spouses Quilatan, on the other hand, state that the mortgage contract they entered into with
Respondent Morato can never be considered as [an] alienation inasmuch as the ownership over the property remains
with the owner.[13] Besides, it is the director of lands and not the Republic of the Philippines who is the real party in
interest in this case, contrary to the provision of the Public Land Act which states that actions for reversion should be
instituted by the solicitor general in the name of Republic of the Philippines. [14]

We find for petitioner.

Quoted below are relevant sections of Commonwealth Act No. 141, otherwise known as the Public Land Act:

Sec. 118. Except in favor of the Government or any of its branches, units or institutions, or legally constituted banking
corporations, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five years from and after the date of issuance
of the patent or grant nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of
said period; but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations,
or corporations.

No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of
title shall be valid without the approval of the Secretary of Agriculture and Natural Resources, which approval shall not
be denied except on constitutional and legal grounds. (As amended by Com. Act No. 456, approved June 8, 1939.)

xxxxxxxxx

Sec. 121. Except with the consent of the grantee and the approval of the Secretary of Agriculture and Natural Resources,
and solely for educational, religious, or charitable purposes or for a right of way, no corporation, association, or
partnership may acquire or have any right, title, interest, or property right whatsoever to any land granted under the
free patent, homestead, or individual sale provisions of this Act or to any permanent improvement on such land. (As
amended by Com. Act No. 615, approved May 5, 1941)

Sec. 122. No land originally acquired in any manner under the provisions of this Act, nor any permanent improvement
on such land, shall be encumbered, alienated or transferred, except to persons, corporations, association, or
partnerships who may acquire lands of the public domain under this Act or to corporations organized in the Philippines
authorized therefore by their charters.

Except in cases of hereditary successions, no land or any portion thereof originally acquired under the free patent,
homestead, or individual sale provisions of this Act, or any permanent improvement on such land, shall be transferred
or assigned to any individual, nor shall such land or any permanent improvement thereon be leased to such individual,
when the area of said land, added to that of his own, shall exceed one hundred and forty-four hectares. Any transfer,
assignment, or lease made in violation hereto shall be null and void. (As amended by Com. Act No. 615, Id.)

xxxxxxxxx

Sec. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of any of
the provisions of sections one hundred and eighteen, one hundred and twenty, one hundred and twenty-one, one
hundred and twenty-two, and one hundred and twenty-three of this Act shall be unlawful and 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 presumptively, and cause the reversion of the property and its improvements to
the State. (Underscoring supplied.)

The foregoing legal provisions clearly proscribe the encumbrance of a parcel of land acquired under a free patent
or homestead within five years from the grant of such patent. Furthermore, such encumbrance results in the cancellation
of the grant and the reversion of the land to the public domain. Encumbrance has been defined as [a]nything that
impairs the use or transfer of property; anything which constitutes a burden on the title; a burden or charge upon
property; a claim or lien upon property. It may be a legal claim on an estate for the discharge of which the estate is
liable; an embarrassment of the estate or property so that it cannot be disposed of without being subject to it; an
estate, interest, or right in lands, diminishing their value to the general owner; a liability resting upon an estate. [15] Do
the contracts of lease and mortgage executed within five (5) years from the issuance of the patent constitute an
encumbrance and violate the terms and conditions of such patent? Respondent Court answered in the negative:[16]

From the evidence adduced by both parties, it has been proved that the area of the portion of the land, subject matter
of the lease contract (Exh. B) executed by and between Perfecto Advincula and Josefina L. Morato is only 10 x 12 square
meters, whereas the total area of the land granted to Morato is 1,265 square meters. It is clear from this that the
portion of the land leased by Advincula does not significantly affect Moratos ownership and possession. Above all, the
circumstances under which the lease was executed do not reflect a voluntary and blatant intent to violate the conditions
provided for in the patent issued in her favor. On the contrary, Morato was compelled to enter into that contract of lease
out of sympathy and the goodness of her heart to accommodate a fellow man. x x x

It is indisputable, however, that Respondent Morato cannot fully use or enjoy the land during the duration of the
lease contract. This restriction on the enjoyment of her property sufficiently meets the definition of an encumbrance
under Section 118 of the Public Land Act, because such contract impairs the use of the property by the grantee. In a
contract of lease which is consensual, bilateral, onerous and commutative, the owner temporarily grants the use of his
or her property to another who undertakes to pay rent therefor. [17] During the term of the lease, the grantee of the
patent cannot enjoy the beneficial use of the land leased. As already observed, the Public Land Act does not permit a
grantee of a free patent from encumbering any portion of such land. Such encumbrance is a ground for the nullification
of the award.

Moratos resort to equity, i.e. that the lease was executed allegedly out of the goodness of her heart without any
intention of violating the law, cannot help her. Equity, which has been aptly described as justice outside legality, is
applied only in the absence of, and never against, statutory law or judicial rules of procedure. Positive rules prevail over
all abstract arguments based on equity contra legem.[18]

Respondents failed to justify their position that the mortgage should not be considered an encumbrance. Indeed,
we do not find any support for such contention. The questioned mortgage falls squarely within the term encumbrance
proscribed by Section 118 of the Public Land Act.[19] Verily, a mortgage constitutes a legal limitation on the estate, and
the foreclosure of such mortgage would necessarily result in the auction of the property.[20]

Even if only part of the property has been sold or alienated within the prohibited period of five years from the
issuance of the patent, such alienation is a sufficient cause for the reversion of the whole estate to the State. As a
condition for the grant of a free patent to an applicant, the law requires that the land should not be encumbered, sold
or alienated within five years from the issuance of the patent. The sale or the alienation of part of the homestead violates
that condition.[21]

The prohibition against the encumbrance -- lease and mortgage included -- of a homestead which, by analogy
applies to a free patent, is mandated by the rationale for the grant, viz.:[22]

It is well-known that the homestead laws were designed to distribute disposable agricultural lots of the State to land-
destitute citizens for their home and cultivation. Pursuant to such benevolent intention the State prohibits the sale or
encumbrance of the homestead (Section 116) within five years after the grant of the patent. After that five-year period
the law impliedly permits alienation of the homestead; but in line with the primordial purpose to favor the homesteader
and his family the statute provides that such alienation or conveyance (Section 117) shall be subject to the right of
repurchase by the homesteader, his widow or heirs within five years. This section 117 is undoubtedly a complement of
section 116. It aims to preserve and keep in the family of the homesteader that portion of public land which the State
had gratuitously given to him. It would, therefore, be in keeping with this fundamental idea to hold, as we hold, that
the right to repurchase exists not only when the original homesteader makes the conveyance, but also when it is made
by his widow or heirs. This construction is clearly deducible from the terms of the statute.

By express provision of Section 118 of Commonwealth Act 141 and in conformity with the policy of the law, any
transfer or alienation of a free patent or homestead within five years from the issuance of the patent is proscribed. Such
transfer nullifies said alienation and constitutes a cause for the reversion of the property to the State.

The prohibition against any alienation or encumbrance of the land grant is a proviso attached to the approval of
every application.[23] Prior to the fulfillment of the requirements of law, Respondent Morato had only an inchoate right
to the property; such property remained part of the public domain and, therefore, not susceptible to alienation or
encumbrance. Conversely, when a homesteader has complied with all the terms and conditions which entitled him to a
patent for [a] particular tract of public land, he acquires a vested interest therein and has to be regarded an equitable
owner thereof.[24] However, for Respondent Moratos title of ownership over the patented land to be perfected, she
should have complied with the requirements of the law, one of which was to keep the property for herself and her family
within the prescribed period of five (5) years. Prior to the fulfillment of all requirements of the law, Respondent Moratos
title over the property was incomplete. Accordingly, if the requirements are not complied with, the State as the grantor
could petition for the annulment of the patent and the cancellation of the title.

Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title to bar the state from
questioning its transfer or encumbrance. The certificate of title issued to her clearly stipulated that its award was subject
to the conditions provided for in Sections 118, 119, 121, 122 and 124 of Commonwealth Act (CA) No. 141. Because she
violated Section 118, the reversion of the property to the public domain necessarily follows, pursuant to Section 124.

Second Issue: Foreshore Land Reverts to the Public Domain


There is yet another reason for granting this petition.

Although Respondent Court found that the subject land was foreshore land, it nevertheless sustained the award
thereof to Respondent Morato:[25]

First of all, the issue here is whether the land in question, is really part of the foreshore lands. The Supreme Court
defines foreshore land in the case of Republic vs. Alagad, 169 SCRA 455, 464, as follows:

Otherwise, where the rise in water level is due to, the extraordinary action of nature, rainful, for instance, the portions
inundated thereby are not considered part of the bed or basin of the body of water in question. It cannot therefore be
said to be foreshore land but land outside of the public dominion, and land capable of registration as private property.

A foreshore land, on the other hand has been defined as follows:

... that part of (the land) which is between high and low water and left dry by the flux and reflux of the tides x x x x
(Republic vs. C.A., Nos. L-43105, L-43190, August 31, 1984, 131 SCRA 532; Government vs. Colegio de San Jose, 53
Phil 423)

The strip of land that lies between the high and low water marks and that is alternatively wet and dry according to the
flow of the tide. (Rep. vs. CA, supra, 539).

The factual findings of the lower court regarding the nature of the parcel of land in question reads:

Evidence disclose that the marginal area of the land radically changed sometime in 1937 up to 1955 due to a strong
earthquake followed by frequent storms eventually eroding the land. From 1955 to 1968, however, gradual reclamation
was undertaken by the lumber company owned by the Moratos. Having thus restored the land thru mostly human hands
employed by the lumber company, the area continued to be utilized by the owner of the sawmill up to the time of his
death in 1965. On or about March 17, 1973, there again was a strong earthquake unfortunately causing destruction to
hundreds of residential houses fronting the Calauag Bay including the Santiago Building, a cinema house constructed of
concrete materials. The catastrophe totally caused the sinking of a concrete bridge at Sumulong river also in the
municipality of Calauag, Quezon.

On November 13, 1977 a typhoon code named Unding wrought havoc as it lashed the main land of Calauag, Quezon
causing again great erosion this time than that which the area suffered in 1937. The Court noted with the significance
of the newspaper clipping entitled Baryo ng Mangingisda Kinain ng Dagat (Exh. 11).

xxxxxxxxx

Evidently this was the condition of the land when on or about December 5, 1972 defendant Josefina L. Morato filed with
the Bureau of Lands her free patent application. The defendant Josefina Morato having taken possession of the land
after the demise of Don Tomas Morato, she introduced improvement and continued developing the area, planted it to
coconut trees. Having applied for a free patent, defendant had the land area surveyed and an approved plan (Exh. 9)
based on the cadastral survey as early as 1927 (Exh. 10) was secured. The area was declared for taxation purposes in
the name of defendant Josefina Morato denominated as Tax Declaration No. 4115 (Exh. 8) and the corresponding realty
taxes religiously paid as shown by Exh. 8-A). (pp. 12-14, DECISION).

Being supported by substantial evidence and for failure of the appellant to show cause which would warrant disturbance,
the afore-cited findings of the lower court, must be respected.

Petitioner correctly contends, however, that Private Respondent Morato cannot own foreshore land:

Through the encroachment or erosion by the ebb and flow of the tide, a portion of the subject land was invaded by the
waves and sea advances. During high tide, at least half of the land (632.5 square meters) is 6 feet deep under water
and three (3) feet deep during low tide. The Calauag Bay shore has extended up to a portion of the questioned land.

While at the time of the grant of free patent to respondent Morato, the land was not reached by the water, however,
due to gradual sinking of the land caused by natural calamities, the sea advances had permanently invaded a portion
of subject land. As disclosed at the trial, through the testimony of the court-appointed commissioner, Engr. Abraham B.
Pili, the land was under water during high tide in the month of August 1978. The water margin covers half of the
property, but during low tide, the water is about a kilometer (TSN, July 19, 1979, p. 12). Also, in 1974, after the grant
of the patent, the land was covered with vegetation, but it disappeared in 1978 when the land was reached by the tides
(Exhs. E-1; E-14). In fact, in its decision dated December 28, 1983, the lower court observed that the erosion of the
land was caused by natural calamities that struck the place in 1977 (Cf. Decision, pp. 17-18).[26]

Respondent-Spouses Quilatan argue, however, that it is unfair and unjust if Josefina Morato will be deprived of the
whole property just because a portion thereof was immersed in water for reasons not her own doing. [27]

As a general rule, findings of facts of the Court of Appeals are binding and conclusive upon this Court, unless such
factual findings are palpably unsupported by the evidence on record or unless the judgment itself is based on a
misapprehension of facts.[28] The application for a free patent was made in 1972. From the undisputed factual findings
of the Court of Appeals, however, the land has since become foreshore. Accordingly, it can no longer be subject of a
free patent under the Public Land Act. Government of the Philippine Islands vs. Cabagis[29]explained the rationale for
this proscription:

Article 339, subsection 1, of the Civil Code, reads:


Art. 339. Property of public ownership is

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
riverbanks, shores, roadsteads, and that of a similar character.

********

Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:

ARTICLE 1. The following are part of the national domain open to public use:

********

3. The Shores. By the shore is understood that space covered and uncovered by the movement of the tide. Its interior
or terrestrial limit is the line reached by the highest equinoctal tides. Where the tides are not appreciable, the shore
begins on the land side at the line reached by the sea during ordinary storms or tempests.

In the case of Aragon vs. Insular Government (19 Phil. 223), with reference to article 339 of the Civil Code just quoted,
this Court said:

We should not be understood, by this decision, to hold that in a case of gradual encroachment or erosion by the ebb
and flow of the tide, private property may not become property of public ownership. as defined in article 339 of the
code, where it appear that the owner has to all intents and purposes abandoned it and permitted it to be totally
destroyed, so as to become a part of the playa (shore of the sea), rada (roadstead), or the like. * * *

In the Enciclopedia Jurdica Espaola, volume XII, page 558, we read the following:

With relative frequency the opposite phenomenon occurs; that is, the sea advances and private properties are
permanently invaded by the waves, and in this case they become part of the shore or beach. They then pass to the
public domain, but the owner thus dispossessed does not retain any right to the natural products resulting from their
new nature; it is a de facto case of eminent domain, and not subject to indemnity.

In comparison, Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or
for the development of the national wealth.

When the sea moved towards the estate and the tide invaded it, the invaded property became foreshore land and
passed to the realm of the public domain. In fact, the Court inGovernment vs. Cabangis[30] annulled the registration of
land subject of cadastral proceedings when the parcel subsequently became foreshore land.[31] In another case, the
Court voided the registration decree of a trial court and held that said court had no jurisdiction to award foreshore land
to any private person or entity.[32] The subject land in this case, being foreshore land, should therefore be returned to
the public domain.

WHEREFORE, the petition is GRANTED. This Court hereby REVERSES and SETS ASIDE the assailed Decision of
Respondent Court and ORDERS the CANCELLATION of Free Patent No. (IV-3) 275 issued to Respondent Morato and the
subsequent Original Certificate of Title No. P-17789. The subject land therefore REVERTS to the State. No costs.

SO ORDERED.

24. SAJONAS V. CA, G. R. NO. 102377. JULY 5, 1996

[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 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]

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

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.

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 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]

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.

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 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)

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 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.

25. DIAZ-DUARTE VS. ONG, G.R. NO. 130352. NOVEMBER 3, 1998


[G.R. No. 130352. November 3, 1998]
ROGELIA P. DIAZ-DUARTE, petitioner, vs. SPS. BEN and ETHYL ONG, and the COURT OF
APPEALS, respondents.

DECISION

PUNO, J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to set aside the decision
of the Court of Appeals awarding Lot 1208 to respondent spouses Ben and Ethyl Ong.[1]

The facts are as succinctly summarized by the trial court, viz:

"Macario Diaz married Encarnacion Reyes sometime in 1895. Out of this union, Trinidad Diaz was born in 1896.
Sometime in 1903, Encarnacion Reyes died. In 1905, Macario Diaz married Cristina Pedrosa.Out of this union, x x x,
Rogelia-Diaz Duarte was born in 1910.

"Trinidad Diaz, x x x, married Filomeno Arteche. This marriage was blessed by nine children, including Encarnacion
Arteche and all the other plaintiffs in the case in the trial court. Trinidad Arteche died on March 21, 1977.

"On October 28, 1932, in Cadastral Case No. 17, GLRO Cad. Record No. 1040, Judge Luciano Ortiz adjudicated Lot 1208
of the Tacloban Cadastre, located in Marasbaras, Tacloban City, containing 26,738 square meters to `Macario Diaz
married to Cristina Pedrosa, of Tacloban, Province of Leyte, Philippines'. The decision having become final, Decree No.
639202 was issued by the General Land Registration Office on August 18, 1937, and Original Certificate of Title No.
19486 was issued.

"On April 30, 1941, Macario Diaz died and on October 2, 1962, his second wife Cristina died. On June 6, 1979, Rogelia
Diaz-Duarte issued an Affidavit of Adjudication and Sale of Lot 1208 of the Tacloban Cadastre in favor of Wilfredo M.
Corregidor for P20,000.00 before Notary Public Atty. Antonio F. Mendiola of Tacloban City who entered the same as
Doc. No. 445, Page 40, Book 29, Series of 1979. By virtue of this sale, OCT No. 19486 of Macario Diaz was cancelled
and in its place TCT No. T-17501 was issued by the Register of Deeds of Tacloban City in favor of Wilfredo Corregidor
on June 25, 1979.

"On October 12, 1979, Wilfredo Corregidor sold back Lots 1208, 3332, and 3364 of the Tacloban Cadastre to Mrs.
Rogelia Diaz-Duarte for P33,000.00 as evidenced by a deed of repurchase executed by him on said date before Notary
Public Atty. Victor C. Veloso of Tacloban City who entered the same as Doc. No. 5, Page 2, Book I, Series of 1979.

"On October 17, 1979, Mrs. Rogelia Diaz-Duarte executed an adverse claim to Lot 1208 covered by TCT No. T-17501 of
Wilfredo Corregidor on the basis of the deed of sale executed by Wilfredo to her on October 12, 1979.

"On April 10, 1980, 30 days having elapsed, the affidavit of adverse claim of Diaz-Duarte was cancelled by the Register
of Deeds of Tacloban City, albeit erroneously, pursuant to Sec. 70 of Presidential Decree No. 1529, otherwise known as
the Property Registration Decree of the Philippines.

"On February 28, 1981, notwithstanding the resale of the property made by him in favor of Mrs. Rogelia Diaz-Duarte in
1979, Wilfredo Corregidor sold again Lot 1208 to Ben S. Ong and his wife Ethyl Ong for P35,000.00 under a deed of
absolute sale executed by him on said date before a Notary Public who entered the same as Doc. No. 380, Page 79,
Book I, series of 1981.

"On July 21, 1981, Ben S. Ong mortgaged Lot 1208 and some other properties to the Rizal Commercial Banking
Corporation to secure a loan of P450,000.00.

"On February 17, 1983, Encarnacion A. Arteche and the other children and heirs of the deceased Trinidad Diaz-Arteche,
filed a civil case for recovery of Lot 1208 of the Tacloban Cadastre against herein petitioner Rogelia Diaz-Duarte, Wilfredo
Corregidor and his wife, Ben S. Ong and his wife, and the Rizal Commercial Banking Corporation and Pablo G. Amascual
Jr., the Register of Deeds of Tacloban City."[2]

On October 28, 1985, the Regional Trial Court, 8th Judicial Region decided the civil case for the recovery of Lot
1208 in favor of Encarnacion Arteche, et. al., to wit:[3]

"Wherefore, judgment is hereby rendered as follows:

"1. Declaring the affidavit of Adjudication and Sale of Lot 1208 of the Tacloban Cadastre executed by Rogelia Diaz-
Duarte on June 6, 1979 as null and void being a false document it having been established to the satisfaction of the
court that Mrs. Rogelia-Diaz Duarte is not the sole heir of Macario Diaz, original owner of Lot 1208;

"2. Ordering the Register of Deeds of Tacloban City, to cancel Transfer Certificate of Title No. T-17501 of Wilfredo
Corregidor and Roseanna F. Corregidor of Lot 1208 of the Tacloban Cadastre and all certificates of title emanating
therefrom including TCT No. 20338 of Ben S. Ong and Ethyl Ong;

"3. Ordering the Register of Deeds of Tacloban to cancel TCT No. 20338 of Ben S. Ong and his wife Ethyl Y. Ong to Lot
1208 of the Tacloban Cadastre and issue in lieu thereof a new transfer certificate of title to the following persons: Mrs.
Rogelia Diaz-Duarte, of legal age, widow and residing in Tacloban City, three-fourth or 20,052 square meters; and to
the Heirs of Trinidad Diaz Arteche, represented by Mrs. Encarnacion A. Benedicto of Tacloban City, Philippines, one-
fourth or 6,684 square meters, subject to the mortgage lien of the Rizal Commercial Banking Corporation.

"4. Ordering the defendants to pay the costs.

"SO ORDERED."

The defendants appealed but only the appeal of spouses Ben and Ethyl Ong was considered by the Court of Appeals
as Wilfredo Corregidor, Rizal Banking Corporation and Pablo Amascual failed to file their respective briefs. [4] In their
appeal, appellant-spouses raised the following errors, to wit:

"The trial court erred in admitting as evidence and giving it any probative value the parol testimony of the defendant
Rogelia Diaz-Duarte as to the affidavit of adjudication with deed of absolute sale of the land in question executed by
Rogelia Diaz Duarte in favor of Wilfredo Corregidor on June 6, 1979."

II

"The trial court erred in not finding or declaring that the affidavit of adjudication with deed of absolute sale of the land
in question executed by Rogelia Diaz Duarte in favor of Wilfredo Coregidor was valid and legal.

III

"The trial court erred in not finding or declaring the deed of repurchase of the land in question executed by Wilfredo
Corregidor in favor of Rogelia Diaz-Duarte on October 17, 1979 was absolutely simulated or fictitious.

IV

"The trial court erred in not declaring or finding that the deed of sale of the land in question executed by Wilfredo
Corregidor in favor of the spouses Ben S. Ong and Ethyl Y. Ong on February 28, 1981 as valid and legal.

"The trial court erred in not declaring or finding that Rogelia Diaz-Duarte was the sole heir of Macario Diaz with respect
to the property in question.

VI

"The trial court erred in ordering the cancellation of Transfer Certificate of Title No. T-20338 of Ben S. Ong and Ethyl Y.
Ong of the land in question and the issuance of new transfer certificates of title to Rogelia Diaz-Duarte and to the heirs
of Trinidad Diaz Arteche for the three fourth (3/4) and one fourth (1/4) portions of the land in litigation, respectively in
their names by the Register of Deeds of Tacloban City."

The appellate court sustained the fourth and sixth assigned errors of the appellant-spouses. It awarded Lot 1208
to appellant-spouses Ben and Ethyl Ong after a finding that they were buyers in good faith and for value.

Hence, this petition where Rogelia Diaz-Duarte contends:

THE COURT A QUO GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY ERRED IN HOLDING THAT THE SPOUSES ONG
WERE INNOCENT PURCHASERS FOR VALUE AND IN GOOD FAITH.

II

THE COURT A QUO GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY ERRED IN DISREGARDING THE FINDING OF
THE TRIAL COURT THAT THE SPOUSES ONG WERE BUYERS IN BAD FAITH.

III

THE COURT A QUO SERIOUSLY ERRED IN DISREGARDING THE WRONGFUL AND ILLEGAL CANCELLATION OF
PETITIONER'S ADVERSE CLAIM.

IV

THE COURT A QUO SERIOUSLY ERRED IN FINDING THAT PETITIONER HAS LOST HER RIGHTS OVER THE SUBJECT
PROPERTY.

The core issue is who between petitioner Rogelia Diaz-Duarte and respondent spouses Ong, has a better right over
Lot 1208. Petitioner claims ownership over Lot 1208 on the basis of the deed of repurchase between her and Wilfredo
Corregidor. When the latter refused to surrender TCT No. T-17501 to her, she caused to be annotated thereon a notice
of adverse claim. On the other hand, respondent spouses aver that they own Lot 1208, having bought the same from
Corregidor without knowledge of its encumbrance. They contend that petitioner's notice of adverse claim in Corregidor's
title, was already cancelled when they bought the property. Petitioner disputes the legality of said cancellation. She
maintains that the Registrar of Deeds should not have automatically cancelled the notice of adverse claim simply because
the 30-day period has lapsed.

We find for petitioner.

The good faith of appellant-spouses rests heavily on whether the notice of adverse claim on Lot 1208 was validly
cancelled by the Registrar of Deeds. The issue is no longer of first impression. In the 1996 case of Sajonas v. Court
of Appeals,[5] we explained that a notice of adverse claim remains valid even after the lapse of the 30-day period
provided by Section 70 of P.D. No. 1529 or the Property Registration Decree. Section 70 provides:

"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 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 claimant's 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."

We explained in Sajonas that for as long as there is yet no petition for its cancellation, the notice of adverse claim
remains subsisting: Thus:

"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 the 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."[6]

In a petition for cancellation of adverse claim, a hearing must first be conducted. The hearing will afford the parties
an opportunity to prove the propriety or impropriety of the adverse claim.[7] Petitioner was unlawfully denied this
opportunity when the Registrar of Deeds automatically cancelled the adverse claim. Needless to state, the cancellation
of her adverse claim is ineffective.

But this is not all. Appellant spouses alleged good faith is negated by the evidence on record. At the trial court,
respondent spouses declared that they retained Atty. Rufino Reyes to assist them in buying Lot 1208. According to Atty.
Reyes, his clients asked him to verify the status of the land from the Register of Deeds. However, he failed to do so. Had
he done so, he would have discovered the adverse claim of the petitioner over the lot. He would have also known that
the adverse claim was cancelled by the Registrar on his own and not because any petition was made by any party-in-
interest.[8] Respondent spouses are bound by the negligence of their lawyer.

Time and again, we have reiterated that 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.[9] The adverse claim of petitioner Rogelia Diaz-Duartewas annotated in Corregidor's title as early as October
17, 1979. It was existing when Corregidor sold the property to respondents Ong on February 28, 1981. Hence,
respondent spouses cannot be considered innocent purchasers for value and in good faith. Their claim over Lot 1208
must yield to the lien in favor of petitioner.[10]

IN VIEW WHEREOF, the decision of the Court of Appeals in C.A. G.R. CV No. 09598, is REVERSED and the decision
of the trial court is hereby REINSTATED. No costs.

SO ORDERED.

26. HEIRS OF MARASIGAN V. IAC, G.R. NO. L-69303. JULY 23, 1987
THIRD DIVISION
G.R. No. L-69303 July 23, 1987
HEIRS OF MARIA MARASIGAN, namely, Teofilo, Isabel, Maximina, Anicia, and Francisco, all surnamed
Marasigan, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and MARIA MARRON, respondents.

GUTIERREZ, JR., J.:


Who has a better right to the property in question, the party who bought it with a notice of lis pendens annotated at
the back of her title or the party in whose favor the notice of lis pendens was made? The appellate court answered this
question in favor of the party who had the notice annotated and who won the litigation over the property. We affirm.

The disputed property in this case is a residential lot (Lot No. 2-A) covered by Transfer Certificate of Title No. 100612
issued by the Register of Deeds of the City of Manila in the name of one Fe Springael-Bazar, married to Felicisimo Bazar.

The pertinent facts as disclosed by the record are as follows:

On April 24, 1975, Civil Case No. 97479 entitled "Maria Marron v. Felicisimo Bazar and Fe S. Bazaar" was filed before
the then Court of First Instance of Manila, Branch XIII. The action sought to compel defendants Bazar to execute a
registrable Deed of Absolute Sale of their lot covered by T.C.T. No. 100612 in favor of Maria Marron.

On January 27, 1976, while Civil Case No. 97479 was still pending, the private respondent caused the annotation of a
notice of lis pendens at the back of T.C.T. No. 100612.

On February 24, 1976, judgment was rendered in Civil Case No. 97479. The dispositive portion reads:

WHEREFORE, the Court hereby renders judgment in favor of the plaintiff and against the defendants as follows:

a) Ordering the defendants Fe Springael Bazar and Felicisimo Bazar as vendors (1) to execute in favor of the
plaintiff Maria Marron as vendee a Deed of Absolute Sale in a public instrument over the residential lot covered
by Transfer Certificate of Title No. 100612 issued by the Registry of Deeds of the City of Manila to and in the
name of Fe S. Bazar, married to Felicisimo Bazaar; and (2) to deliver to plaintiff sufficient copies of such deed
of sale, together with the Owner's copy of said Transfer Certificate of Title No. 100612, in order that the plaintiff
can register the Deed of Absolute Sale with the Registry of Deeds of the City of Manila and secure a transfer
certificate of title for the land in her name.

b) Ordering the defendants to pay to the plaintiff the sum of P500.00 Philippine Currency, as and for attorney's
fees; and

c) Ordering the defendants to pay the costs of the suit. (Rollo, p. 15).

The above judgment became final and executory so Maria Marron filed a motion for execution which was granted. A writ
of execution was issued by the court on July 12, 1976. The spouses Bazar, however, refused to surrender their title to
the property in question and to execute the required deed of sale in Marron's favor. On November 29, 1978, the lower
court finally ordered the Clerk of Court to execute the deed of sale in behalf of the erring spouses. When the said deed
was presented to the Register of Deeds of Manila for registration, the Deputy Clerk of Court was advised to secure a
court order in order that the new title issued in the name of herein petitioner Maria Marasigan could be cancelled.

It appears that on December 18, 1974, a deed of absolute sale of Lot 2-A covered by T.C.T. No. 100612 was executed
by Fe S. Bazar in favor of Maria Marasigan for and in consideration of the sum of Fifteen Thousand Pesos (P15,000.00).
However, it was only on July 5, 1977 that said deed was registered with the Registry of Deeds of Manila. Consequently,
T.C.T. No. 100612 was cancelled and a new title was issued in Maria Marasigan's name. When the Register of Deeds of
Manila issued Transfer Certificate of Title No. 126056 naming Maria Marasigan as the new owner of Lot 2-A, the notice
of lis pendens caused to be annotated by Marron on the Bazar's title was carried over on the said new title.

Meanwhile, on May 26, 1977, the Bazaars filed a petition for relief from the judgment dated February 24, 1976 in Civil
Case No. 97479. While their petition was still pending, they moved to set aside the said judgment on June 22, 1979 on
the ground of lack of jurisdiction over their persons.

On the other hand, on February 24, 1979, Marron instituted L.R.C. Case No. 7680 captioned "Maria Marron v. Maria
Marasigan" which prayed for a court order requiring the Register of Deeds of Manila to register the deed of sale executed
by the Deputy Clerk of Court in behalf of the Bazaars pursuant to the order dated November 29, 1978 of the Court of
First Instance, Manila, Branch XIII. L.R.C. Case No. 7680 was tried by the Court of First Instance of Manila, Branch IV
acting as a land registration court. Said case was dismissed for the following reason:

... This court acting as a Land Registration Court, with limited and special jurisdiction cannot act on this petition
under summary proceedings but (sic) should be ventilated before a court of general jurisdiction Branch XIII,
which issued the aforesaid Order dated November 29, 1978, the said petition is hereby dismissed for lack of
jurisdiction without prejudice on the part of the petitioner to institute the appropriate civil action before the
proper court. ... (Annex "A," p. 4, Rollo, p. 138)

On September 6, 1979, Marron filed another case docketed as Civil Case No. 126378 to have Marasigan's TCT 126056
cancelled conformably to the procedure outlined in the decision of the above land registration court. On July 30, 1980,
the parties submitted said case for decision.

On February 18, 1982, the Court of First Instance of Manila, Branch IV to which Civil Case No. 126378 was assigned
dismissed Marron's complaint for being premature since the decision rendered by the CFI, Branch XIII in Civil Case No.
97479 had not yet become final and executory considering that it was still the subject of a petition for relief from
judgment.

On appeal, the Intermediate Appellate Court, on August 7, 1984, ruled that Marron is entitled to the property under
litigation by virtue of the notice of lis pendens annotated at the back of Maria Marasigan's title. The appellate court
further ruled that the decision in Civil Case No. 97479 had become final and executory because the petition for relief
from judgment of the spouses Bazar was filed out of time. The dispositive portion of the appellate court's decision reads:

WHEREFORE, the appealed decision is hereby REVERSED and another one entered

(a) Ordering the Register of Deeds of Manila to cancel T.C.T. No. 126056 in the name of Maria Marasigan and
issue another in the name of Maria Marron by virtue of the Deed of Sale executed by the Branch Clerk of Court
of Branch XIII;

(b) Ordering the said Register of Deeds, during the pendency of this case, to refrain from registering any deed
of sale pertaining to T.C.T. No. 126056 in the name of Maria Marasigan other than that of the herein plaintiff;
and

(c) Ordering the defendant Maria Marasigan to pay attorney's fees in the amount of P10,000.00. (IAC, Decision.
Rollo, pp. 17-18).

Maria Marasigan who died in the course of the proceedings is now represented by her heirs in the instant petition which
assigns the following errors:

THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE RIGHT OF ACTION OF RESPONDENT
MARIA MARRON (AS PLAINTIFF) IN CIVIL CASE NO. 97479 HAD PRESCRIBED AND SHE INCURRED IN LACHES.

II

THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT RESPONDENT ABANDONED OR WAIVED
HER PROPERTY RIGHTS AND EFFECTS TO/OF THE DECISION IN CIVIL CASE NO. 97479, WHEN SHE FILED CIVIL CASES
NO. 7680 AND 126378, DURING ITS EFFECTIVITY.

III

THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONCLUDING THAT THE DECISION IN CIVIL CASE NO. 97479
HAS BECOME FINAL AND EXECUTORY.

IV

THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THE LACK OF JURISDICTION OF THE TRIAL COURT
IN CIVIL CASES NO. 7680 AND 126378 OVER THE PERSONS OF PETITIONERS.

THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONSIDERING THAT THE TRIAL COURT IN CIVIL CASE NO.
97479 HAS JURISDICTION OVER THE PERSONS OF DEFENDANTS SPOUSES FELICISIMO BAZAAR AND FE S. BAZAAR.

VI

THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE DEED OF ABSOLUTE SALE EXECUTED
BY THE DEPUTY CLERK OF COURT, WAS NOT LEGAL AND VALID AND WITHOUT PROOF AND EFFECT. (Brief for the
appellant, pp. 1 and 2)

We find no merit in the present petition.

There is a clear showing that although the late Maria Marasigan acquired the property in question from the Bazaars
pursuant to a deed of absolute sale on December 18, 1974 or a little over four months before the filing of Civil Case No.
97479, the transaction became effective as against third persons only on July 5, 1977 when it was registered with the
Registry of Deeds of Manila. It is the act of registration which creates constructive notice to the whole world. Section 51
of Act 496, as amended by Section 52 of the Property Registration Decree (P.D. 1529) provides:

Sec. 52. Constructive notice upon registration. Every conveyance ... 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.

Moreover, there is no question that when the late Maria Marasigan was issued her transfer certificate of title to the
subject property (T.C.T. No. 126056), the Registrar of Deeds of Manila then carried over to the new title the notice of lis
pendens which the private respondent had caused to be annotated at the back of the Bazar's title. In case of subsequent
sales or transfers, the Registrar of Deeds is duty bound to carry over the notice of lis pendenson all titles to be issued.
Otherwise, if he cancels any notice of lis pendens in violation of his duty, he may be held civilly and even criminally
liable for any prejudice caused to innocent third persons (The Director of Lands, et al. v. Reyes, 68 SCRA 177).

A notice of lis pendens means that a certain property is involved in a litigation and serves as notice to the whole world
that one who buys the same does it at his own risk (Rehabilitation Finance Corporation v. Morales, 101 Phil. 171). It
was also a clear notice to Maria Marasigan that there was a court case affecting her rights to the property she had
purchased.1avvphi1

As earlier stated it was only on July 5, 1977 that the sale between Maria Marasigan and the Bazaars became effective
as against third persons. The registration of the deed of sale over the subject property was definitely subsequent to the
annotation made on January 27, 1976. Consequently, Marasigan was bound by the outcome of the litigation against her
vendors or transferors. (See Rivera v. Tirona, et al., 109 Phil. 505).

We reiterate the established rule that:

... the filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to
therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of
the suit. 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. ... (Laroza v. Guia, 134 SCRA 34 1)

The late Marasigan's transferors did not interpose any appeal from the adverse judgment dated February 24, 1976 in
Civil Case No. 97479. The 30-day period under the old rule (Rule 41, section 3 of the Revised Rules of court now
amended by Batas Pambansa Bilang 129, section 39) within which the Bazaars may have taken an appeal started to
run from May 12, 1976 when they were served with a copy of the said decision. On June 11, 1976, the February 24,
1976 decision in Civil Case No. 97479 became final and executory. At this point after the finality of the said decision,
the Bazaars no longer had the right to alienate the property subject of the litigation. Any transaction effective during
the period of litigation is subject to the risks implicit in the notice of lis pendensand to the eventual outcome of the
litigation.

Moreover, we agree with the finding of the appellate court that the petition for relief from judgment by the Bazaars
dated May 26, 1977 was filed beyond the two periods provided in Section 3 Rule 38 of the Revised Rules of Court. There
may have been some errors in the computations but the petition itself was out of time.

Rule 38, Section 3 of said Rules provides, in part, that:

Sec. 3. Time for filing petition. ... A petition provided for in either of the preceding sections of this rule must
be verified, filed within sixty (60) days after the petitioner learns of the judgment, order or other proceeding to
be set aside, and not more than six (6) months after such judgment or order was entered or such proceeding
was taken. ...

The 60-day period must be reckoned from May 12, 1976 when the Bazaars were served with a copy of the assailed
decision. Therefore, the 60-day period expired on July 11, 1976. It was only after 379 days or more than 12 months
after they learned of the judgment that the Bazaars filed their petition for relief from said judgment. (See Domingo v.
Dela Cruz, 23 SCRA 1121) The appellate court computed the 6-month period from the date of the judgment was
rendered. Rule 38 states that the counting should commence from the entry of the judgment or order. (See Dirige v.
Biranya, 17 SCRA 840). A judgment is entered only after its finality and Civil Case No. 97479 became final on June 11,
1976. Since the records do not bear the exact date the questioned judgment was entered, the 6-month period can be
counted for purposes of our decision from July 12, 1976 when the writ of execution of the final judgment was issued.
The phrase "or other proceeding" in Section 3 of Rule 38 includes a writ of execution (Aquino v. Blanco, 79 Phil. 647).
The 6-month period from July 12, 1976 lapsed on January 8, 1977. A period of ten (10) months had already lapsed
when the Bazaars filed their petition for relief from judgment on May 26, 1977. Obviously, the petitioners cannot now
question the effects of the final and executory judgment in Civil Case No. 97479. In the words of Laroza v. Guia
(supra) they cannot render the final judgment abortive and impossible of execution. The deed of sale executed by the
Deputy Clerk of Court on behalf of the Bazar spouses pursuant to the court's judgment was valid and binding.

The petitioners cannot also raise before us the issues of prescription or laches and lack of jurisdiction over the persons
of the Bazar spouses in Civil Case No. 97479. This cannot be done in this petition which stems from Civil Case No.
126378 in the trial court and AC-G.R. No. 00183 in the appellate court. The Bazaars were the proper parties who ought
to have raised them as defenses either in a motion to dismiss or in their answer. Since they did not do so, the same
were deemed waived. (See Rule 9, section 2 of the Revised Rules of Court; MD Transit & Taxi Co., Inc. v. Estrella, 113
SCRA 378; Torreda v. Boncaros, 69 SCRA 247; Visayan Electric Co., Inc. v. Commissioner of Internal Revenue, 39 SCRA
43; Republic v. Mambulao Lumber Company, 6 SCRA 858).

WHEREFORE, in view of all the foregoing, the petition is hereby DISMISSED for lack of merit. The appellate court's
decision is AFFIRMED.

SO ORDERED.

27. VIEWMASTER CONSTRUCTION CORP. V. MAULIT, G.R. NO. 136283.


FEBRUARY 29, 2000
[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

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 ofP36,500,000.00 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.

"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.

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:
"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
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:

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 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.